UPDATE 3-Russian president downloads Silicon Valley success

Wed Jun 23, 2010 9:47pm EDT

* Cisco CEO caught off guard by Medvedev's openness

* Russia plans tech city with Silicon Valley a model

* Medvedev shrugs off pessimism about ability to change

* Country needs to diversify economy from energy, metals

(Recasts with Medvedev speech at Stanford, new dateline)

By Peter Henderson

PALO ALTO, Calif., June 23 (Reuters) - Russian President Dmitry Medvedev was "inspired" by a tour of Silicon Valley on Wednesday and left determined to replicate the U.S. technology hub at home, despite pessimism that Russia could create a sufficiently open environment to nurture success.

Medvedev sent his first "tweet" message on Twitter and tried out video conferencing at Cisco Systems Inc (CSCO.O) before conferring with Apple Inc (AAPL.O) CEO Steve Jobs.

Dressed in jeans and an open collared shirt, Medvedev, 44, gave a speech at Stanford University reading from an Apple iPad.

"I wanted to see with my own eyes the origin of success," he said in Russian. "I'm inspired with what I saw here in Silicon Valley and at Stanford. In a very good way, I am kind of jealous of all you here."

Medvedev wants to curb Russia's dependence on energy and raw materials. A decade long growth spurt ended with a crash last year -- the economy contracted 7.9 percent -- and leaders are now looking for new industries.

One plan is to build an innovation city outside Moscow, and Medvedev began a trip to the United States hoping for pointers in California from Jobs and other tech titans.

Previous Russian leaders have made similar pushes to diversify the economy, without changing the country's reputation for bureaucracy and corruption. Medvedev's own efforts to curb corruption have yet to bear fruit.

There is also a wariness about the ability of Medvedev, seen as a junior partner to Prime Minister Vladimir Putin, to effect change.

"Naturally you see a certain pessimism," a Russian-speaking questioner at Stanford said of the plan for the innovation center. "It's difficult to believe in it."

Medvedev took the question in stride and said the new town, with its own regulations, tax code and more, would be built from scratch to indicate a new beginning. He repeatedly invited the Russian-speaking audience to come and help build it.

CALIFORNIA AND THE 'RESET'

President Barack Obama, who has tried to "reset" ties with Russia after tension with the previous U.S. administration, welcomed Medvedev's trip to California and cast it as an example of how relations between the countries have warmed.

But the United States still insists Russia must focus on improving protection of intellectual property if it wants to join the World Trade Organization, a subject Obama and Medvedev are expected to discuss on Thursday in Washington.

"The Russians are going to have to take the practical steps that any other prospective member of the WTO needs to take," a senior U.S. official said on condition of anonymity.

"This isn't a favor to us or to the WTO. It's deeply in the self-interest of protecting the intellectual output, the innovation that comes out of Russian industry," the official said. Medvedev promised to protect intellectual property and make Russia open as part of to-do list for his country.

Medvedev began the day in San Francisco, where he sent his first microblog from Twitter's offices.

"Hello everyone, I'm at Twitter and sending my first message," he wrote in Russian. The small messages broadcast over the Internet have become a technology hit.

Later, Medvedev was surprised at the nearly life-sized video conferencing gear at Internet equipment maker Cisco in Silicon Valley. "This is amazing," he said in English.

Cisco CEO John Chambers told Reuters after the tour that Medvedev was candid and that Cisco was ready to take "good business risks." Cisco will plow $1 billion over the next decade into Russia, including helping to build the innovation city and putting $100 million into venture capital.

"He is remarkably open. I mean, business leaders go back and forth with him. It took me almost off guard," Chambers said, calling Russia a country in transformation.

One tech star born in Russia that Medvedev did not meet is Google Inc (GOOG.O) founder Sergey Brin, who once called Russia "Nigeria with snow."

His assessment shows the challenge ahead of Russia, which rated a 2.2 out of 10 in a measure of business confidence in the 2009 Corruption Perception Index from Transparency International -- behind Nigeria.

Its best score of the last decade, 2.8 in 2004, tied Russia with Tanzania and Mozambique. (Additional reporting by Jim Christie, Arshad Mohammed and Guy Faulconbridge; editing by Chris Wilson)

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