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Vladimir Putin: Good afternoon.

We have gathered to discuss one of the fundamental issues, the foundations of our policy in the field of science and technology.

This meeting was prepared by the staff of three entities – the Security Council, the Presidium of the State Council and the recently created Council on Science and High Technologies. I would like to note that the latter structure – the Council on Science and High Technologies – is actually starting its work today, but let me tell you that the Council members have contributed in a very active way to the preparation of the documents we are going to discuss today.

Before we go on to discuss the documents, I would like to stress that the choice of the path of the development of Russian science is actually the choice of our nation’s future. It is directly connected with the protection of our national interests and the choice of the strategic path of development for Russia.

And yet during the past 10 years the issue has never once been taken up by the Security Council or been the subject of documents other than government ordinances. That the working group has submitted a draft of the Guidelines of Scientific and Technical Policy is very timely and useful.

Scientists, the expert community and government bodies on this occasion have worked in concert, and the document they have produced identifies not only the shortcomings in our science, but provides a short list of its priorities.

It is the first and very responsible step towards reasonable self-restraint, towards putting an end to the meaningless waste of resources. The result of the policy must be a breakthrough in areas that are true priorities for the country and for science itself. The priorities, of course, should be limited in number, as we have pointed out more than once in our meetings with the officials of the Academy of Sciences.

Proceeding from the above approach, we will have to build our managerial and research work and raise the necessary financial resources for science.

Science has long determined the development of the modern world, including bio-medical life technologies. But behind these words are the vital interests of people and the key challenges of our age.

We are talking about new drugs such as domestically produced insulin and vaccines against flu and foot-and-mouth disease, DNA diagnostics and autoimmune therapy. These are food products and the creation of transgenic plants. We are talking about new approaches to generating energy and resource-saving technologies. We are talking about predicting crises and a vision of the future. And, last but not least, it is a real and highly lucrative part of the economy.

As it is, so far we have been good only at using raw material resources. And there is not enough awareness that science for which there is no demand is a heavy burden on the budget.

Today, Russia has some catching up to do. We also need to create import-replacing technologies. In some areas, for example, in the aviation industry, it should help to make the internal market stable and stimulate new industries. And in some areas it can be on the cutting edge and offer new products and new technologies.

We already have processing technologies that can increase the value of products derived from crude oil by three or four times. The export of cultured crystals offers us the chance to become less dependent on the export of irreplaceable resources such as timber, gas and oil. Energy installations have been created, which are 1.5 times more efficient than their predecessors.

Even though we have such potential in our science and 10% of the total number of scientists in the world, we generate less than 1% of the science-intensive products on the world market.

Today everyone pays lip service to innovation, but nothing has been done in practice. Science in Russia is slow in adapting itself to the market and relies almost entirely on the government budget. The entrepreneurial sector has yet to find a common language with science. There is no legal framework or infrastructure for their mutual interest in each other.

What we have so far are elements of small-scale innovative entrepreneurship, venture capital and other risk investments in science-intensive projects. But even that experience demonstrates that it is profitable.

We need an innovative model of organisation in science, a model that meets the challenges of the times and the market economy. This must be the underlying approach not only to our innovation policy, but also to reforming science, in the first place in the Academy of Sciences. So far things have been moving too slowly.

Modernisation of domestic science is a complicated and multi-faceted process. But it should start with the fundamental areas.

First. Current government support of science – as has become obvious to everyone – is ineffective, divided as it is between different agencies and budget items, and poorly coordinated. So we need a new economics of science itself. We are talking about such things as targeted financing of efficient projects rather than organisations, a clear-cut form of the state order in the public sector of science and preferential budgeting of the government sector and fundamental research.

Second. So far we have made little progress in taking stock of the huge structure of science, its material basis and human resources. Yet there are considerable untapped resources there.

The same applies to the effects of the integration of the Academy of Sciences, higher education and applied science. To put an end to the traditional fragmentation, new organisational frameworks are needed that combine education, research, and the technical and economic implementation of projects.

By tapping internal reserves, we could release resources for the renewal of the technical base. Our equipment is on average 15 years old whereas elsewhere in the world it is five to seven years old and sometimes less. Besides, we can solve the problem of re-equipping by using our own technologies, machines and equipment.

Third. If domestic scientific products are to enjoy demand, the government should minimise spending and maximise conditions for the development of the innovation market. What is needed in the first place are clear-cut rules of regulation for the market of ideas and an innovative infrastructure, a legal framework for the commercialisation of scientific developments and the protection of intellectual property, and an accessible system of patenting and science management.

The fourth and very sensitive issue is of course, personnel. The number of scientists in Russia has dropped by half since 1991. In the last five years 800,000 people have quit science. And they are for the most part the most vigorous young people. As a result the average age of scientists in Russia is about 56.

Of course, material incentives and social guarantees are needed. To this end a decree on government assistance to young scientists was signed last week. But it is equally important to demonstrate the business potential of Russian science, and to create economic and market incentives for scientists themselves, to demonstrate that science offers prestige, success and real profits.

To conclude my opening remarks, I would like to stress that the documents being passed today must mark a turning point towards a new scientific-technical policy in Russia, a policy called upon to create conditions in which everyone will be interested in developing and supporting science.