Technological Sovereignty & Industrial Policy: Russia's Example

Today Putin met with First Deputy Prime Minister Andrei Belousov who was charged with managing a very important project, the draft law on technology policy that will provide the basis for expanding technological sovereignty—a national project—while also modifying and improving Russia’s industrial policy. What you’ll read is a prime example of what Russia’s striving to do—hone its Social-Capitalism into a high performance machine for the advancement of Russian’s and the Russian state. It’s just this sort of development of industrial capitalism that’s required to provide the basis for the sort of People Centered Development and societal supply-side economic theory Russia wants to implement having learned many lessons from the past, and not just from Russia’s past. Few will know about Mr. Belousov, but he’s a Team Putin member of some importance as you’ll read.

A. : Dear Vladimir Vladimirovich,

On your instructions, the Government adopted the Concept of Technological Development in May of this year and almost immediately started drafting the law on technological policy, which sets out the main ideas and concepts of this approved document.

I must say that the law is unique, we have not had such a law before, there are clear reasons. In fact, this is a law on the implementation of technological sovereignty.

The law is voluminous – about 75 pages, 10 chapters, 46 articles. But I would like to focus, perhaps, on three novelties that are present in this law.

The first novel. A very important point, from our point of view, is the so – called projects of technological sovereignty. We are talking about the largest projects – more than 10 billion rubles of investment, which are aimed at creating a specific product line. Examples of such projects – the Prime Minister has now identified about 10 of them as soon as the law is adopted – are machine tool construction, microelectronics, unmanned aircraft systems, diesel construction, certain types of chemicals, medical equipment, pharmaceuticals, and so on.

What is their distinctive feature? When such a large-scale project is implemented, there is a large number of participants. The first thing that is certainly fixed in the law is the presence of stable long-term demand from, as a rule, either the state or companies with state participation, which reduces the risks of project implementation for all its participants.

Second – the status of the lead performer is clearly defined. We have experience in state defense procurement with leading contractors, and it fully justifies itself, including as recent events show. The same scheme is implemented here: there may be one main contractor or several, but they must be clearly defined companies, usually private companies that enter into long-term contracts with carriers of long-term demand. This long-term contract already serves as a basis for attracting state support measures, including concessional loans, benefits and various tools that are also prescribed in the law.

Further. The responsibility of the lead contractor is to form a system of cooperation. And within the framework of the cooperation system – this is also a novelty of this law-a technological grid, technological maps are defined, that is, a list of those critical technologies that are necessary for the production of this product line of high-tech products. And, thus, the priorities of research and development work are determined. In other words, for critical technologies, these R & D projects do not appear according to priorities born in the quiet offices of scientists or, God forgive me, bureaucrats like me, but they come from very specific needs for manufacturing high-tech products.

Further. Regulatory support, staffing - it all comes down to one big project. And an example of such a project, where we are working out the technique, as they say, is just a project – on your behalf - on unmanned aircraft systems.

The second novel is projects of so-called end-to-end technologies. That is, those technologies that are breakthrough today, as a rule, will determine the appearance of production systems in the coming years, and sometimes decades.

A classic example that we are already used to is artificial intelligence. But this is not only artificial intelligence, it is also new materials with specified properties or programmable properties, it is a new generation of energy storage devices, which is extremely necessary in completely different sectors of life, it is biotechnologies, it is a generation of 6G stations, and so on.

We already have experience, also on your behalf, in developing such technologies within the framework of Government agreements with major companies. But the experience of the last few years, and especially the last year, shows that there is not enough legal framework to implement them. And it is precisely this gap that the law closes, this gap, especially since these technologies naturally flow into the projects of technological sovereignty, which I mentioned a little earlier.

And the third novel, which we also consider very important, Mr Putin – is putting the development of small technology companies on a solid legal basis.

The very concept of "small technology company" was introduced into our legal practice, into legal circulation within the framework of the law that was adopted, again on your instructions, in the spring of this year. But this, as they say, was the first approach to the projectile. We defined what these companies are, their criteria, and their selection mechanisms. But this is not enough, because we need to create a clear system for the seamless development and growth of these companies, starting from technology teams, from technology startups to so-called large companies - "unicorns" that can compete in global markets. Actually, the law closes these gaps.

We decided on the registry model, which proved to be quite good in terms of IT. A prototype of the electronic system has already been created in the Ministry of Economic Development, a platform information system. This is a state information system where a register of such companies is created. Such a register performs two functions: it serves as a showcase for large investors, venture funds, and development institutions, on the one hand, and, on the other hand, it provides a concentration of support measures and seamless opportunities for companies to grow and increase their revenue.

There are still a number of novelties, I just won't dwell on them, I'll just say that the law is currently in a high stage of preparation. I held a conciliatory meeting on the comments of the Ministry of Finance, which are the most numerous, as usual. It seems to me that we have agreed on everything, in any case, formally this stage has passed.

A few days ago, I held a meeting with law enforcement agencies regarding the so-called right to risk, which is a very important element of this law, and we also found a common understanding with the Federal Security Service and the Ministry of Internal Affairs. We are currently finishing some things, but in general, all the solutions have been found there.

I must say that a very large number of people participated in the development of this law, experts participated, the Russian Academy of Sciences took a very active part, representatives of innovative companies, deputies, members of the Federation Council participated.

Vladimir Putin: It is very important. I ask you to continue to do this, so that he does not go somewhere "to the right".

Thank you very much.

What Putin means when referring “to the right” is timing as to the right is to slow things down while to the left is to speed them up. Clearly, Putin is very confident in the work done so far and wants this man to be in charge of finishing the project. Those who’ve followed Putin over the past ten years know that one of his continuing priorities is the streamlining of the overall productive process of Russia’s economy to make it more efficient and at the same time more competitive. Thanks to the raft of illegal sanctions, Russia had to find ways to pull itself up by its own bootstraps and has done so in a manner that has provided a great number of benefits that it otherwise wouldn’t have enjoyed if allowed to remain dependent on the West. When this law is implemented, the Russian economy will be provided with another self-induced kick-in-the-pants. Expect that to happen early in 2024.

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