Skolkovo Valley

Russia’s Dream of Its Own Silicon Valley All But Dead

Who remembers when Russian President Dmitry Medvedev toured San Francisco in 2010 to gather ideas for creating Moscow’s very own Silicon Valley — the Skolkovo Valley?

Of course, you don’t.

Medvedev’s tour of America’s high-tech heartland included meetings with Apple, Google, Cisco, and Twitter. He was greeted by then California Governor Arnold Schwarzenegger, received a personal gift from Steve Jobs (an unreleased iPhone 4), and got personal tweeting lessons from Twitter execs.

For a while, things looked promising. Cisco agreed to invest $100 million. IBM, Intel, Microsoft, Nokia Siemens Networks, and others would also sign agreements. MIT entered into an agreement to advise on the creation of the Skolkovo Institute of Science and Technology (Skoltech). It helped recruit students and faculty, hosted Skoltech students at MIT, and allowed MIT instructors to teach and pursue research at the Russian school. By 2013, more than 1,000 startups were working on the campus of a $4 billion innovation center.

Skolkovo Institute of Science and Technology (Skoltech)
Skolkovo Institute of Science and Technology (Skoltech).

Quick Downturn

Like so many other Russian government programs, the Skolkovo Valley quickly became just another toxic cesspool of corruption and organized crime. Within a year of Vladimir Putin returning to power, Skolkovo would be raided by anti-corruption authorities and most of its senior leadership would be sacked. A few years later, Putin would order the new leadership to cut its budget by up to 40 percent.

The Dream is Dead

Putin’s invasion of Ukraine has all but destroyed the dream of building a high-tech incubator capable of competing with the U.S. and China. All of the above-mentioned companies have halted business or cut ties with Russia. And although it took longer than it should have, even MIT has severed its ties to the Skolkovo Institute of Science and Technology in Moscow (worth approx. $300 million to the university).

Ed Seidel, a computer scientist and current president of the University of Wyoming, who helped build Skoltech’s research capacity, told Science Magazine that while Skoltech survived other Russian government-induced crises this time feels different. As Russia remains a pariah, Skoltech will be crippled, Seidel said. “It leaves me heartbroken. I don’t know how they’ll recover from this.”

Other universities are terminating their study abroad programs in Russia, and some, like the University of Colorado, are liquidating their investments in Russian companies. Ohio State University announced it was canceling the purchase of robots that deliver meals for GrubHub on its campus after the meal service ended its partnership with Yandex, the Russia-based company that manufactures the robots.

U.S. sanctions are already having a massive impact on Russia’s economy, and are likely to result in massive high-tech layoffs and a significant reduction in tech investments. Russia-wide restrictions will choke off Russia’s import of technological goods critical to a diversified economy and Putin’s ability to project power, the White House said. This includes Russia-wide denial of exports of sensitive technology, primarily targeting the Russian defense, aviation, and maritime sectors to cut off Russia’s access to cutting-edge technology. In addition to sweeping restrictions on the Russian-defense sector, the U.S. imposed Russia-wide restrictions on sensitive U.S. technologies produced in foreign countries using U.S.-origin software, technology, or equipment. This includes Russia-wide restrictions on semiconductors, telecommunication, encryption security, lasers, sensors, navigation, avionics, and maritime technologies.

The European Commission suspended Russia’s participation in its flagship research program, Horizon Europe, and the national research councils of several European nations, including France, Germany, Italy, and the Netherlands, froze collaborations with Russia.