Exactly ten years ago I was living in a western, brand-name luxury hotel close by Moscow's most fashionable high-end shopping mall, and within walking distance of the Kremlin and Red Square. I was in Moscow working with General Leonid Shebarshin, the last Chairman of the KGB, on his English language biography. (The Bear in Winter: Apparently a life-time project, because it is still far away from publication for many strange, frustrating, fascinating, intrigue-filled reasons that are a story in themselves I hope to be allowed to tell in full some day. President Putin worked for him before the fall and afterwards; the General spoke well of him, their phone conversations in my presence were of interest only in hindsight.)
One of my strongest and most poignant memories of that long winter a decade ago was of sitting in the humongous, but so elegant lobby watching and often hearing the best minds of Russia literally begging the endless stream of carpet-bagging foreigners to buy their ideas, their discoveries, their inventions, their knowledge, their experience, even mother Russia's boundless natural resources for pennies on the U.S. Dollar or Pound Sterling and had precious few takers unless they were desperate enough to practically give it away, which all too many were and did. Like biblical locusts was the swarm of fast-talking, so snide and condescending American and European speculators as they picked every vulnerable stalk clean.
These men--and they were all men; the Russian women in the lobby, unbelievably beautiful women, were selling something else and doing much better business at top dollar U.S., may the gods bless every one of them--were some of the best scientists, professors, engineers, geologists, industrial managers the once mighty Soviet empire had produced. They were not begging to sell anything and everything they had any level of control over because they had no jobs; they had jobs, they just hadn't been paid for months, sometimes years, and were desperate to pay their rent and feed their families.
Outside the hotel, on the frozen streets of Moscow, the Russian Mafia controlled just about everything (except the traffic; a weaponless traffic cop in Moscow then wielded amazing power for reasons I still don't fully understand) and they were also selling, but at premium prices and with the advantage that stealing, beating, killing, bribing at will gave its members, whose leaders were mostly former KGB officers under the age of 40. Former KGB officers over 40 were disgusted, fervently appalled with and at the criminals that had once worked for them, and they did what they could to thwart the organized crime that was the only Russian "system" functioning in those dark years after the fall and before the rise with the new century.
The best and most influential of the latter formed legitimate companies and hired out their security expertise to western firms seeking protection from the criminal gangs, some with almost perfect rates of success. But they were expensive, exclusive and limited as to the number of clients they could service at a time. The little guy, particularly the Russian little guy, no matter his talents, degrees, or experience had little chance to hire such services--unless patronage was available to him, of course, and then money was never an issue. The bond of family and friendship goes deep into the Russian soul, admirably, endearingly so. I know, firsthand.
Much has changed in Moscow and Russia since the winter of 1996-1997, happily so, in large part at least. But still there are huge problems the Great Russian Bear must deal with if it is going to regain the luster that it once had in its prime--name a decade, or century, and regime, and then begin arguing the elements and definition of "luster" and "prime."
I am having these memories because of a column by Tom Friedman in The New York Times today. I think you should read it. Perhaps then you will understand the extreme dose of incongruity that sparked the headline above this post.
In a high-rise building with a view of Lenin's Tomb, the U.S. aerospace giant Boeing is designing key parts of its new 787 Dreamliner, using hundreds of Russian aerospace engineers. Yes, President Putin may be talking cold-war tough, but down the street from the Kremlin, America's crown jewel industrial company is using Russia's crown jewel brainpower to design its next crown jewel jetliner.
Boeing's Moscow Design Center, which employs 1,400 Russian engineers (earning less than their U.S. counterparts) on various projects, symbolizes Russia's unique potential: Russia is that rare country that not only has a treasure trove of natural resources -- oil, gas and mines -- but also has a treasure trove of human talent: engineers, mathematicians and other valuable minds.
Most nations with highly developed human talent -- like Singapore or Taiwan -- have few natural resources, and those that are rich in natural resources -- Venezuela or Sudan -- tend not to develop their people's talents. The exceptions, like Norway, which is rich in both human and natural resources, usually built their democratic institutions before they got rich on oil, so the money was well spent.
The meta-question with Russia today is this: Will it become more like Norway, a democracy enriched by oil, or more like Venezuela, a democracy subverted by oil? Is the Boeing center Russia's future or its exception?
You see signs of both trends. On the positive side, Russia has been smarter than most petro-states. It has set up a rainy day fund and tucked away $100 billion from its oil and gas windfall. Direct foreign investment in Russia hit $30 billion last year, according to The Economist, and not all of it goes to the oil and gas sector anymore.
And then there's Boeing. Its impressive Moscow center operates two shifts of engineers: 7 a.m. until 3 p.m., and 3 p.m. until 11 p.m. -- which is shortly before the workday begins in the United States. A Russian Boeing engineer might be designing part of the 787's nose during his day, and then initials and stores his work in the computer. A U.S. Boeing engineer, working on an identical computer, then picks it up during her day and engineers it some more. With regular teleconferences, it's as if they are in one virtual 24-hour office.
"There is no paper at all," said Sergei Korolev, the deputy head of Boeing Moscow. "We do the presentations electronically and have online sessions with Wichita and Seattle, and everyone looks at the same part and talks about it. Our center is the reason people are not emigrating."
But Russia has a unique legacy in aerospace from Soviet days, so the educational centers and talent were in place for Boeing to tap. What Russia still glaringly lacks is an ecosystem of secure property rights, venture capitalists and homegrown innovators, and universities and business schools churning out idea-entrepreneurs. "Made in Russia" will never be a global brand as long as research spending by Russian companies remains among the lowest in the world.
The Moscow Times recently reported that only two Russian colleges — Moscow State and St. Petersburg State -- are listed among the world's top 500 universities. When you walk down the streets in Bangalore, India's high-tech capital, it feels as if there's a computer school or English-language school on every street. You walk in Moscow, and it feels as if there is a new shoe store or beauty salon on every street.
A former top aide to President Putin remarked to me that Russia had a huge interest in building a postindustrial knowledge economy, not an energy-intensive industrial one, so it can export most of its oil and gas, not consume them at home. But that would take a big investment in education, which is not being done.
Noting that Russia today spends far less of its G.D.P. on higher education than Europe or America, Sergei Guriyev, rector of Russia’s New Economic School, wrote in The Moscow Times, "Russians simply are not prepared to pay the taxes that would be necessary to finance science and education at Soviet-era levels, and no incentives have been created to attract more private funding."
So here's my prediction: You tell me the price of oil, and I'll tell you what kind of Russia you'll have. If the price stays at $60 a barrel, it's going to be more like Venezuela, because its leaders will have plenty of money to indulge their worst instincts, with too few checks and balances. If the price falls to $30, it will be more like Norway. If the price falls to $15 a barrel, it could become more like America -- with just enough money to provide a social safety net for its older generation, but with too little money to avoid developing the leaders and institutions to nurture the brainpower of its younger generation.
Mr. Friedman's predictions, unlike his writing, has about the same level of assuredness as does the rest of his journalistic colleagues, this reporter included. Ah, but his writing is so elegantly clean.