* U.S. bosses have dropped out of upcoming Russia forum
* Chill in Russia-West relations could impact major state
* Skolkovo, Moscow financial center, could risk being
* London City Lord Mayor's expected June trip to Moscow
By Megan Davies
SKOLKOVO, Russia, May 22 Students at Moscow's
new science-focused university crowded into a lecture theatre
outside the capital earlier this month to hear Canadian-born
Nobel prizewinning molecular biologist Sidney Altman speak.
The students at Skoltech are yet to have their own campus
because it is still under construction, so the lecture was held
at the Moscow School of Management, a long dreary journey from
Moscow city centre by metro and then bus up a traffic-clogged
"By the spring of 2015 we will have some major laboratories
working here at Skolkovo in all of our disciplinary areas," said
Skoltech President Edward Crawley, who is leading efforts to
develop a university at Skolkovo, Russia's answer to Silicon
Valley, with partners such as U.S. college Massachusetts
Institute of Technology (MIT).
Russian President Vladimir Putin and other officials point
to projects like Skolkovo as an example of how Russia is
diversifying its economy away from energy. Other projects
include Russia's effort to develop Moscow as an international
financial center and to launch a state-backed private equity
But at the start of Russia's annual investment forum in St
Petersburg, from May 22-24, the environment for projects such as
the Skolkovo tech park is deteriorating. Western sanctions over
Ukraine are exacerbating Russia's economic slowdown and giving
foreign investors pause for thought.
For decades Russia has failed to deliver on promises to
modernise an economy that is focused on extracting and exporting
oil, metals and other commodities.
The chill in relations with the West following Russia's
annexation of Ukraine's Crimean peninsula make a difficult task
"All these institutions and initiatives could only work as
part of the broader Russian effort to become more integrated
with the West," said Steven Dashevsky, founder of hedge fund
Dashevsky & Partners in London. "We've seen that movement grind
to a halt effectively now."
For Skoltech students, the university is a gateway to the
world, offering the chance to do placements with MIT and other
"Even a month at MIT is enough to open your eyes," said
Jelena Nadj, an IT masters student from Serbia speaking at
Skolkovo's Hypercube by the campus construction site, where
tractors heave mounds of earth. "You change your attitude."
The collaboration with MIT was launched in 2011. The U.S.
university is helping Skoltech to conceive and launch its
graduate research university, which now has 63 masters students.
MIT said the Ukraine crisis had not affected the alliance.
"When diplomatic and political dialog becomes difficult, the
importance of educational and academic research collaborations
becomes even greater," said Professor Bruce Tidor, Faculty Lead
at MIT Skoltech Initiative, in an emailed statement.
That view is echoed by other Skoltech and Skolkovo partners
contacted by Reuters. The risk for Russia is that attracting new
money becomes difficult, however.
The Russian government has pledged 170 billion roubles ($4.9
billion) to Skolkovo, its press office said. The project has
also attracted commercial partners including U.S. chip maker
Intel, which said Skolkovo remains an important
Skoltech's international partnerships, which alongside MIT
include London's Imperial College, Zurich's ETH and the Hong
Kong University of Science and Technology, are a major draw for
"The international experience is one of the biggest
achievements of this place," said Skoltech energy masters
student Dmitry Smirnov, from Rybinsk, Russia. "Russia really
needs international experience and to build to Europe and the
Analysts say that Russia's increasingly difficult relations
with the West could result in reduced access to Western
technology for projects such as Skolkovo.
"The chill between Russia and Western countries will
undoubtedly diminish further the viability of the Skolkovo
project," said MIT Professor of the History of Science, Loren
In emailed remarks Graham also identified the typically
Russian 'top-down government-controlled' nature of the project
as an obstacle to progress.
"The real problem with Skolkovo is not based on Western
connections but with the nature of the enterprise from the
beginning," Graham said.
The deterioration of relations with the West has led to
predictions that Russia may increase business with Asia or
become more isolationist. China and Russia on Wednesday signed a
$400-billion gas supply deal, opening up a new market for Moscow
as it risks losing European customers.
In response to the West's outcry over Ukraine, Russia has
shown it is prepared to go it alone. It plans to set up a credit
card payment system to rival Visa and Mastercard
and is threatening to close U.S. GPS satellite navigation system
"The worst case is we end up with isolationism and these
organisations become sidelined and irrelevant and have a less
clear future," said Chris Weafer, senior partner with
"You can get plenty of money in the Middle East and Asia but
Russia needs partnerships with established companies with
expertise and technology and those are mainly Western
The bulk of foreign funds to state-backed private equity
fund the Russian Direct Investment Fund comes from the Middle
East and Asia.
The U.S. government is asking U.S. firms to steer clear of
Russia. Washington has told executives it is inappropriate to
visit the St Petersburg forum this week. The event is closely
associated with Putin, who usually delivers a keynote speech
promoting Russia as a place to invest.
One U.S. executive whose firm is involved in major Russian
state projects said his company was "caught between a rock and a
hard place" and "laying low until the situation becomes
Several Russian state-backed schemes have international
ties. London has partnered in a project aimed at turning Moscow
into an international financial centre.
An annual trip to Moscow associated with the project and
scheduled for June by the Lord Mayor of London is now uncertain
to go ahead, said one financial source. The City of London's
press office said no final decision had been made on the trip.
"It is a sign of the times that even at this late juncture,
clarity is not available," said the source.
TheCityUK, an organisation working on the project, said it
would continue to review its activity in the light of "the
evolving circumstances in the relationship between the UK and
Russia and assess how these might impact on the project."
($1 = 34.5447 Russian roubles)
(Additional reporting by Marc Jones in Warsaw, Mark Felsenthal
in Washington and Polina Devitt and Maria Kiselyova in Moscow;
editing by Janet McBride)