Don't Let Russian Science Suffocate
Only tiny amounts of money are required to keep alive one of Russia's true national assets
THE battle of Leningrad is being fought again. This time Russian scientists are under siege, and the enemy is not Germany but Moscow. The ignorance, indifference, and political distractions of the Yeltsin government literally are starving even the best of its scientific community to death. The average scientist makes 40,000 rubles a month - the price of a meal for one person at a good Moscow restaurant. But the crime is not that. Many people are suffering in Russia today; but for scientists, once the darlings of communism, the fall from grace has been a long one.Skip to next paragraph
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The crime is different. Russian government tax policies are killing the few geese capable of laying golden eggs for the future. The truly world-class research and development institutes and technical universities are gradually finding contracts with Western companies in a Darwinian struggle for survival. Such research and development ``centers of excellence'' are capable of surviving because they are very good. They produce something the Western market wants - outstanding new technology, original ideas. And the West provides something scientists aren't getting from the central government - cash. Not charity, but cash for value received.
The world is appreciating this talent more as contacts increase with Russia's ``best and brightest.'' Other countries are appreciating the originality and analytical strength of ``socialist'' science. A child of scarcity and an inferior material base, Russian science has bred a powerful culture of ingenuity mixed with a deep physical-mathematical understanding of processes that often exceeds Western approaches.
Companies large and small are signing research and development contracts and option agreements - United Technologies, Thompson, Siemans, Lockheed, General Atomics, General Electric, Monsanto, General Motors, Ford, Rockwell, Daewoo, and many others. Russia's top-flight science is one of its true national assets, and only tiny amounts of money are needed to keep it alive. The sums are too small to deserve the attention of large Western funding organizations that know how to spend only millions. In today's Russia, a $100,000 contract represents a huge amount of money for science that could employ 20 scientists for a year.
Moscow's advisers are so concerned with big issues of ``market reform'' - figuring out abstract ``restructuring'' schemes or worrying about their political backsides - that they can't appreciate the small but vitally important markets that are being created and then strangled by destructive Moscow tax policies. This is exacerbated by many of Moscow's innocent Western advisers whose ideologies favor a brand of capitalism no one in the West even practices. They act like people who see a drowning man and throw him a book to read on how to swim, tell him he should build better boats, and then interview him on what it feels like to swallow five gallons of water. Throwing him a simple cheap life preserver is too obvious and untheoretical, even though there is hardly any industry in the West without its own life preserver.
A generous estimate would put the current annual value of all Russian research and development contracts, special equipment purchases, and option agreements for technology rights at $50 million. This would represent 1,000 contracts with Western firms averaging $50,000. The start-up costs Western companies will pay are typically $10,000 to $100,000 - to see what Russian scientists can really deliver.
Once they show results that match their claims, the scientists' bargaining power goes up in a very disproportional fashion. But to do this, a skeptical ``show me'' attitude typical of any buyer of new technology must be overcome. This is the purpose of small test and evaluation agreements that can help keep the good laboratories going. But to levy a 32 percent profit tax on a $10,000 contract, plus 39 percent payroll tax, plus organizational overheads leaves virtually nothing for the scientific team that does the real work.
PRESIDENT Boris Yeltsin's policies are also turning some of the most dedicated people into tax-dodging criminals because they are committed to pulling themselves off the mat for the survival of their organizations. Many of the country's best scientists who stay on and struggle for $75 a month could be working in the United States for $5,000 and $10,000 a month. But they stay to fight for their country's scientific future. They are among Russia's true heroes.
The Yeltsin government should grant a tax holiday for three years on all scientific technical contracts won with foreign contractors. These include sample preparation for testing and evaluating technical claims on products or processes, task research, joint research and development, unique equipment, and option fees on property rights. Success can lead to longer-term commercial arrangements in which the Russian partner gets ongoing royalties or stock ownership in ventures in return for its intellectual property.