Soviets See Market Forces As Salvation For Science In Post-Perestroika Period

LENINGRAD--Dimitry Filotov is an unlikely scientific pioneer. The 30-year-old physicist, who wears a windbreaker and blue jeans in his lab and sports a shaggy head of hair, is not a member of the Soviet Academy of Sciences, the prestigious organization that dominates the country's scientific enterprise through its network of some 350,000 scientists and technicians at about 500 research institutes. Nor does he drive a Mercedes Benz, the Soviet Union's most visible status symbol. In fact, at the Science and Technology Corporation of Leningrad, where he works, he is only one of a half-dozen ordinary researchers in the institute's high-vacuum physics laboratory. Filotov, however, belongs to an elite group of Soviet scientists who are riding high on a new wave of applied research. His future prosperity is linked closely to efforts in the Soviet Union to realign the country's massive research enterprise along the lines of a market economy. This effort could lead to greater opportunities for collaboration with Western scientists, as well as cooperative ventures with Western companies. Alexander Golubok has the right idea at the right time. But the Soviet researcher is in the wrong place to develop his technology. Golubok's lab at the Science and Technology Corporation has developed a scanning tunneling microscope with analytical software and other features that Golubok claims are superior to Western products. However, the microscope will not function unless it is hooked up to a wardrobe-sized rack of electronics and cables. Since the corporation lacks the capability to fabricate the integrated circuits needed to reduce the wardrobe to a more manageable size, he must find a Western partner willing to help him turn the prototype into a product. Finding partners is made more difficult by the fact that most Soviets have no experience selling products to the West and don't understand how Western firms and markets work. Golubok's colleague, physicist Dimitry Filotov, has tried to overcome the problem by sending form letters to prospective purchasers in the West. But so far, lab director Marksen Larin hasn't gotten even a nibble. Chris Bowman, head of the electrical and computing engineering department at Carnegie Mellon University, says that Larin's product specifications and price "weren't bad." But he still wouldn't seriously consider buying one of the lab's cryogenic pumps. "They don't even have a representative in the United States," Bowman says. "Just think if you bought one now and needed a spare part in six months. It's hard enough getting parts for equipment made in Europe. I can't imagine anybody actually buying one and having to live with it." --F.G. In particular, Filotov is one of a lucky few among the 500 research scientists at the Corporation who are part of--and who have profited by--a joint marketing venture. His monthly income of 300 rubles increased substantially after he and his colleagues developed a cryogenic pump that uses inexpensive solid and liquid nitrogen to achieve extremely high vacuums. Filotov and his lab colleagues have teamed up to sell the pump to other Soviet institutions, both academic and commercial. While he declines to specify total sales, the commercial enterprise does well enough to put an extra 1,000 rubles a month into his pocket. That extra income matches the typical salary earned by the director of a large Soviet research institute. Filotov's success is part of an enormous change under way in Soviet science that has elevated the status of researchers doing applied work in many fields. The proliferation of such marketing and other types of joint ventures is only the most visible characteristic of a network of "unofficial" business relationships that is developing between scientific organizations and industrial customers in the Soviet Union. These relationships involve an increasing number of Eastern European and, on occasion, Western firms as well. Although such ventures are alien to the traditional managed economy of the past 75 years, they are thriving because of the Soviet government's stated desire for commercial payoffs from its scientific sector. In the United States, a similar movement is occurring under the name of technology transfer. Despite the different economic foundations of the two countries, officials in both nations have launched campaigns to make those government-supported scientific activities more productive. While in the U.S. the obstacles may be philosophical--the Bush administration's belief that the government should not try to pick winners and losers--in the Soviet Union the problem is the more fundamental one of insufficient capital. "It's not easy for the government to subsidize applied research," says Yuri Osipyan, vice president of the Soviet Academy of Sciences and a close adviser to President Mikhail Gorbachev on science and technology. "We have good people, but we're facing very big difficulties in supporting this type of work. The problem is not so much efficiency as it is finding the money, especially the hard currency to trade with the West." More than a year has passed since Soviet organizations were allowed to stray from the Central Plan, in which almost every aspect of commercial and scientific life has been dictated from the top down. Since then, institutes have been encouraged, prodded, and sometimes compelled to finance their own research and development from new business. The scramble is on, say institute officials, to find business partners who need scientific skills or technology and who can barter or pay for them. For one thing, Osipyan and other top administrators note, political power is devolving from the center. Bureaucratic organizations, such as the Soviet Academy of Sciences and the various government ministries, are giving way to individual institutes in setting the country's scientific agenda. For Filotov's parent company, the policy of self-financing has meant a new independence from the Soviet academy. "I've been working for the academy for more than 30 years," says Osipyan, who has done pioneering research in solid-state physics. "There were always directions [from government ministers] to do something--in chemistry, in biology, and especially in defense. Now if we need something, we can ask industry to do it for us." Soviet scientific organizations who are participating in these unofficial businesses are doing so at least in part, say officials, as a reaction to severe budget cuts that have made them chronically short of both Soviet rubles and Western convertible, or hard, currency. The lack of money is only one of many growing pains that arise from changing an entrenched system. "We've destroyed the old administrative system, but we created nothing in its place," says Osipyan. "It's not enough to just declare a market-based economy if you don't have the resources to carry it out." Moreover, says Osipyan, this emerging freedom to set policy comes at a price: "Gorbachev respects scientists, and he's invited them all to participate. But there are so many voices, sometimes it's hard to hear everybody." Editor's Note: Last March, a new Soviet organization, the Russian Academy of Sciences, had its first meeting, at which more than 400 members were elected. The aim of the new academy is to overcome what its members perceive as the shortcomings of the Soviet Academy of Sciences, which is supposed to represent the interests of the USSR's Russian republic, although only 10 percent of its membership hails from Russia. The new academy's membership includes faculty and staff of academic institutions, research centers, and Soviet academy institutes. It is composed of six sections: physics; chemistry; earth sciences; mathematics, cybernetics, and informatics; biology and medicine; and the humanities, covering the history of the science and culture of Russian citizens. The academy's president is Dmitry Mineev, head of the mineralogy and geophysics department of the Moscow Institute of Geology and Prospecting. In the following letter to The Scientist, academy vice president Sergei Kapitza, president of the Soviet Physical Society and laboratory chief of the Vavilov Institute of Physical Problems, describes the inauguration of the new group. "SCIENCE--A POWERFUL UNIFYING FACTOR IN THE MODERN WORLD" To the editor: The fundamental transformations of Soviet society triggered by President Mikhail Gorbachev have yet to have their effect on Soviet science. In many respects, the Soviet Academy of Sciences still is more of a state-run bureaucracy than many people would want it to be. The academy has proved to be rather conservative in facing the great and welcome changes happening in the Soviet Union. That is why there has been a systematic movement to change and challenge the scientific establishment of our country. Following this trend, after a long period of gestation, a new Academy of Natural Sciences of Russia has been founded. Although all other republics had such a unit, the largest republic of the Soviet Union--the Federal Republic of Russia--did not have a learned society of its own. The rationale for not having a Russian academy perhaps came from the idea, now abandoned, that it could in some way damage the standing of the Academy of Sciences of the Soviet Union. Yet with today's growing recognition of the cultural and scientific identity of our republics, it is not surprising that sooner or later an effort would be made to set one up in Russia. The first and abortive attempt to form such an institution was made a year ago as an extension of the All-Union Academy, based mainly in Novosibirsk, Siberia. This past spring, however, brought to fruition the work of a small founding group of scientists, nearly all of whom have a scientific discovery to their credit that has been recognized formally by the State Committee of Patents and Discoveries. They set up five divisions of the Russian Academy for Natural Sciences: physics; chemistry; earth sciences; biology and medicine; and mathematics and informatics. Soon afterward, a sixth division covering the humanities, known as the Russian Encyclopedia, was added to fulfill the academy's cultural mission. The founding group decided to use an election process to establish membership in the academy. This enabled them to draw on an extensive number of fine scientists who were not members of the Academy of Sciences of the USSR. Now, after the first elections, the membership has grown to 504, and we hope in the near future to expand further. The relevance of this process in the academic community to events now occurring in the Soviet Union should not be ignored. Science is a powerful unifying factor in the modern world, and when separatist forces--either ideological or political--appear, it should be the duty of scientific leaders to challenge purely nationalistic aspirations. One of the academy's most important missions is its educational and cultural role in recognizing not only the Russian contribution but also that of the German, Jewish, and Tartar cultures historically connected with Russia. Of special concern will be the recognition of the Russian cultural and scientific diaspora, those who were so desperately scattered around the world in many waves of emigration, but whose contribution to our heritage we now have learned to appreciate. The academy's charter also allows for foreign members. The new academy has yet to find its proper niche. Fundamental and applied research, education and industry, ecology and economics are high on the agenda. The activities of scientists associated with the Academy of Russia will be more problem-oriented, rather than governed by the academy's institutional structure. It does not, in fact, expect to have research institutes set up in its framework. Much effort is to be devoted to interdisciplinary studies, for which the existing highly compartmentalized academic system has proved to be quite inadequate. Of great concern here are all aspects of ecology. At present, major changes are happening in the way science is to be financed in the Soviet Union [see story on page 1], and the new Academy of Russia will try to influence this process. Another item on our agenda is the complex issue of demilitarizing science and the extent it is supported through defense agencies. On the other hand, science demands much support, as many want to commercialize fundamental research. For a number of reasons, antiscience and antitechnological trends are manifestly spreading, and this has to be combated in propagating the message of science. As opposed to the custom of the Academy of Sciences of the Soviet Union, the new academy will not pay its members any stipend; rather, a membership fee is expected. The founding members hope that all this will lead to a more democratic and independent body, following the pattern of learned societies, rather than that of the existing academy. Today, new degrees of freedom are spreading throughout our country. We can only hope that the new academy will accelerate the process of resolving our complex and impending cultural and scientific problems. S.P. KAPITZA Vice President, Russian Academy of Natural Sciences Filotov's venture is only the beginning of his institute's efforts to attract new business, both at home and abroad. With 9,000 employees and a research department of 500 scientists designing and making scientific instruments, the Corporation is a technology powerhouse and one of the Soviet Union's best bets for exporting technology. Although it has signed several joint ventures with Eastern European firms, efforts to do business in the West have progressed more slowly. So far, the firm has made only a few agreements, and it is still trying to line up Western investors to form a joint stock company. "We are engaged in scientific instrumentation, and the action in that area is definitely in the Western world," says the Corporation's director, Maxim Alexandrov. "We want to establish direct links with Western partners for transferring technology and for selling products." Part of the reason that the academy has loosened its grip on research facilities such as the Leningrad corporation is that the academy itself is strapped for cash. Last year its budget was frozen at 1.6 billion rubles, and its supply of precious hard currency needed to buy up-to-date equipment from the West has virtually dried up. There are scientific reasons as well. Soviet scientists, already far less productive than their Western counterparts because of limited access to the latest technology, worry openly about slipping even further behind. That problem is acute for physicists, chemists, and other researchers whose work relies heavily on Western computers and instruments. In addition, after years of neglect, scientists in the academy's humanities, social sciences, and biological sciences acknowledge that the infrastructure of their fields is sorely in need of expensive renovation. Academy president Gurii Marchuk maintains that the academy will be able to subsidize basic science by skimming a percentage of hard currency from the sales of products by its myriad institutes. Marchuk has signed more than 30 agreements with Western companies to develop, market, or distribute the academy's technological ideas, and another 20 are under negotiation. "By ourselves, perhaps we can only realize 50 percent of our ideas," says Marchuk. "With our contacts with Western partners, we can exploit the potential of the other 50 percent." So far, however, thanks to the endless red tape produced in setting up a business relationship in the Soviet Union, these agreements have not generated any substantial amounts of cash. For example, it took the Boston-based management firm of Arthur D. Little almost a year to win approval from various government officials to patent, develop, and market the academy's ideas in the West. Since that agreement was reached last October, Little has obtained agreements from 39 of the Soviet Academy's institutes, as well as from some of the science academies in the various Soviet republics. But Theodore Heuchling, Arthur D. Little's senior vice president, says that it's been hard to attract funds from large Western corporations interested in securing an early look at Soviet technology. "Everybody [in the Soviet Union] is scrambling around trying to become self-sufficient," he says, "but they haven't gotten very far." Heuchling also worries that his company's contract with the academy could be undermined by the erosion of authority of the Soviet Academy and the Ministry of Science and Technology, which together oversee virtually all scientific institutes. "If the institutes elect to participate [individually], then how will the ministry keep control?" he asks. With the academy no longer able to call the shots and control the purse strings, it must rely increasingly on such institutes as the Science and Technology Corporation to bring in hard currency from the West. For their part, most institute officials say they welcome the change. They note that the academy's track record in marketing is poor. Vladimir Blank, deputy director of the High Pressure Physics Institute just south of Moscow, complains about the academy's failure to sell to the West, despite the publicity that has accompanied deals with the Boston firm of Batterymarch Financial Management and with Little. "We will never sell anything through the Academy of Sciences," Blank says flatly. "We are ready to cooperate with any American company, but only without a go-between organization. The academy is far too bureaucratic. We know better ourselves what we need. They cannot help us at all." Swimming with the tide, the academy has a policy of shifting the responsibility for basic research onto institutes such as Blank's, which have generated extra cash from product sales. Although the academy froze the high-pressure institute's 3- million-ruble budget three years ago (despite inflation that runs between 10 percent and 20 percent a year), last year the institute generated an additional 3 million rubles from trade with Soviet organizations and another 1 million rubles in trade with Eastern European countries, says Blank. More and more of that money is going toward maintaining basic research, which occupies half of Blank's staff, and propping up salaries. "Our main task is to do fundamental research," says Blank. "But if we do not develop the applied research, we will not be able to develop our institute, because the state will not give us enough money." Still, it's not easy to find the hard currency needed to buy crucial Western technology and equipment. Even institutes with technologies that might hold their own in the West are hampered by a lack of certain other technologies--such as microelectronics--that would make their products marketable (see accompanying story). The change in attitudes toward commercial activities will also require rethinking by those scientists weaned on military work. Whereas traditionally military institutes have attracted the best and brightest Soviet applied scientists, that pattern may be changing as the country enters the post-Cold War era. The readjustment won't be easy. Director Vadim Tsachenko of Teknomash, a 5,000-employee manufacturer of high-performance materials for the Soviet space and aerospace industry in Moscow, says that many of his scientists are unhappy over the lack of military work. Last year Teknomash had its annual budget reduced from 43 million to 24 million rubles. The drop reflects declining orders for such sexy products as missile nose cones and fuel tanks for the Buran space shuttle. As a result, the manufacturer has refitted its factories to make timber- cutting machines for use in Soviet forests near Finland, computer-automated design and process control systems for a Bulgarian firm (in exchange for clothes and perfume), and high-precision casting lines for local Moscow factories. Though Teknomash is coping financially, many scientists who have worked on technologies not suited to civilian applications have had to undergo retraining. Many have been sent back to the academy, but most were retrained at seminars by outside experts. "Converting from military technology is mainly psychological," says Tsachenko. "Space was interesting, because there is something new all the time. Now we have routine things to do that are not as prestigious." Nobody knows where the Soviet economy is headed, of course. But the new two-tiered pay system in which applied scientists such as Filotov are awarded lucrative incentives seems certain to pinch those scientists who do fundamental research. "Joint ventures are good for me," Filotov says. "But they're not so good for my colleagues." Fred Guterl is a freelance writer based in London who visited the Soviet Union last fall.

Soviets See Market Forces As Salvation For Science In Post-Perestroika Period

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