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Vladimir Putin: Good afternoon, friends.

I was delighted and fascinated to see the newly-opened innovation centre. I have had occasion to visit some small countries, and although they are small, they have huge innovation centers and technology parks, which are so impressive that they make one feel envious.

Here we are making our first steps, but these steps are in the absolutely right direction. After making a tour of this place, and after seeing on paper and in models the whole picture that is emerging at this facility and in other scientific centres and research enterprises in Zelenograd, and in the country generally, it is clear that the prospects are excellent.

I would like to congratulate you on the Science Day holiday and wish the very best to all those present, all the people of Zelenograd and all the people who work in education and science.

Congratulations!

It is a well-known truth that if a country has no viable economy it has no present. And if it has no viable science, by which I mean science that is forward-looking, developing effectively and in demand, such a country has no future. We are used to being proud of our nation’s science. We are used to thinking that our scientists are recognised leaders in a whole number of areas of world science. That is, of course, true.

We are used to thinking that Russia’s intellectual potential is a resource that will never run out, an inexhaustible resource. And that, I think, is where we are mistaken.

There is no better cure for romanticism than reality. And today the real state of affairs in this area makes us take a long hard look at what has long been taken for granted. The science city, where we are today, is indicative in many ways and confirms what I have just said. It was built as Russia’s answer to the Silicon Valley in the United States.

But, as we have just been saying during a brief discussion with some of your colleagues, we have yet to bridge the huge gap between science and practical application of its achievements. We have never learned to put our ideas to practical use. That is why the United States, for example, controls 20% of the world market of science-intensive products, while we control only 1%.

We need to take an honest look at the causes of this situation. Our problems in the scientific and technological sphere have been building up for decades. This is not to say that only problems have been building up. If the previous decades had seen no positive development, if we had not built up potential, we would not be discussing these problems at all. But problems have been piling up for a long time. Their roots lie in monopoly and lack of transparency. Many secret research and production institutes often guarded their secrets not only against industrial espionage, but also kept them from their own industry.

With the exception of military and high prestige projects, science has been getting leftovers in the way of financing. And in the past years we have simply been saving money on science.

The militarisation of science, the gap between fundamental and applied research have prevented the outlay of huge intellectual resources from yielding due returns. So, it makes no sense to restore the funding of science in the former amounts and shape. That simply does not work today.

We need a comprehensive reform of the scientific and technological sphere. The strategic challenge facing Russia is swift modernisation of the economy. A big leap, swift modernisation are always regarded with suspicion by industry. But we do need acceleration. It is an obvious fact.

We should provide production not only with new technologies and modern equipment, but above all with new and cutting-edge ideas. And that effort should be spearheaded by representatives of out science and technology.

We have just been saying that our scientific schools and those who work in the practical sphere have an advantage in our internal market because it is easier for them to develop at home, even though our competitors are ahead of us in some areas.

The years of change have shown that the human potential of our science has proved to be critical and vital for the survival of our country. The development of the state and the market economy owe much to the powerful influx of human resources from the scientific sphere. This is the positive potential that was created during the years of Soviet government, a huge intellectual potential which has migrated, albeit with great losses, into different spheres to give a good impetus to many areas of activity in our country.

These are educated people who can think imaginatively and make independent decisions. The success of any undertaking hinges on the people involved. New forms of organisation and activities in science and science-related business have proved to be essentially effective. That is why they hold such attraction for young people. We were just saying that today a microchip costs one ruble, at the next step of the ladder it costs 10 rubles, and at the next, a hundred rubles. A tenfold increase in value at every stage.

There are many students present here. And the word “innovation”, one of the key words in the scientific community, is addressed above all to students and young people generally. They have studied mathematics, physics, electronics and are thinking about practical applications. I know it from my own experience and that of the people I am close to.

But it is even more important to learn to think freely. And to be able to protect your brainchild, to develop it, introduce it in practice and launch on the market. In these difficult times you have to be not only the authors, but also the managers of your own projects.

Science cannot develop without large-scale state support. This is particularly true of fundamental science. A break in continuity here does not just lead to a prolonged loss of momentum, but to irreparable losses. Science always works for tomorrow, but it is essential to invest in it today.

During the period of difficult economic transformations the time gap between input and return is particularly painful and difficult for the country.

We should make the maximum use of all the sources – budget and off-budget, federal and regional, private and public. The result should be a multi-channel system of funding scientific research. The recipients of funds can be both established research centres and new creative teams and scientists. We have seen some of them today in the newly-opened innovation centre.

In 1999, for the first time all the budget money earmarked for science was actually disbursed.

Today salaries in the scientific sphere are higher than the average salary in industry. While these measures are obviously not sufficient, we expect at least some early signs of returns. And the main thing is not just injection of government money, but the creation of an environment in which scientific developments can be effectively applied and, once they are vigorously introduced in practice, the people responsible for these developments should feel the difference in their pockets.

The achievements of fundamental science will remain objects of symbolic pride unless several essential issues are solved. We should put in place a system to stimulate industry’s active demand for research and development and a far-flung innovation infrastructure.

You all know that innovation centres and venture funds are widespread abroad. I actually started with this. They make a lot of money by investing in the most promising projects and scientific developments. We should not blindly copy the experience of others. But we should make intelligent use of the things that are fighting their way to recognition through bureaucratic barriers and hide-bound attitudes.

We already have our own experience of creating innovation centres, and we have some promising proposals. There are too few of them. We have looked at the map to see the density of innovation centres, for example, in the Federal Republic of Germany or in small countries such as Finland and other Scandinavian countries. So far, we are behind by several orders of magnitude.

The Ministry of Science and Technology has prepared Guidelines for the Development of Venture Investment in Science and Technology. Implementing them would attract the money of our domestic as well as foreign investors. The innovation focused technological and industrial complexes will help science-intensive products to break into domestic and foreign markets.

It is also important to support the state scientific centres, the future “growth points” in priority fields. These cannot survive without direct state support. And it is necessary to make the maximum use of the colossal scientific, technological and human resources of the military-industrial complex in the interests of the whole national economy.

But it should not be done at the expense of the defense industry. We have learned our lesson from the previous experience of its conversion to civilian uses. So far, the experience has not been very promising. I mean the attention the state has given to conversion. There have been many conversion programs, but coherent and effective state actions in the field of conversion have been few and totally insufficient.

And the last thing. Intellectual property must be brought into the economic and commercial sphere. Without it the mechanism of innovation chain – from idea to technology to competitive products – will not work.

We have been speaking about protection of intellectual property for years. The legal vacuum results in huge losses, and engenders the “brain drain.”

We have long mooted the problem of how to enhance the prestige of the engineering profession in this country. We have written many scholarly papers on the subject, but the words about enhancing the social status of Russian science have remained words on paper. And yet, it is not such a difficult thing to do.

To begin with, you have to leaf through the pages of our history, when the word “engineer” and the status of “engineer” were highly valued in Russia.

Secondly, we have to put several things together: the political will, a commitment and ability to make truly competitive products and an awareness that the value of scientific developments is tested by the market. We are not going to consign anything to the storehouse anymore.

Their economic effectiveness and the demand on the part of the domestic industry will determine Russia’s place in the international division of labour.

In conclusion let me say that we owe a debt to our science. The government is well aware of it. Debts must be repaid. It is necessary to create a system of incentives, especially for future-oriented developments, and a proper material basis for fundamental science.

The prime task of the government is to create an infrastructure for science, and to elevate the material basis to a proper level.

We should offer material incentives to the people who work in this sphere.

When I say that we are indebted to science I assume that all of us, including regional and federal officials, owe a debt to our country. We are all indebted to our Homeland, to Russia.

The government is committed to repaying its debts to science and education. I can promise you that. But I expect that all of us will repay our debt to our Homeland, to Russia. And that will undoubtedly add a new and very good impetus to the development of our country in the future.

Once again, I congratulate you on Science Day and wish you all the best.

Thank you for your attention.