uniqueness – no brain drain now

uniqueness – no brain drain now

Russian president Dmitry Medvedev issued a decree withdrawing Russia from the International Scientific-Technical Center (ISTC) agreement signed in November 1992 by a number of former Soviet countries as well as Canada, the United States, European Union (EU), Japan, Norway and South Korea. The ISTC was set up to prevent nuclear proliferation and redirect the former Soviet scientists' knowledge and skills of weapons of mass destruction into more peaceful and commercially appealing projects. With Russia's exit Armenia, Belarus, Georgia, Kazakhstan, Kyrgyzstan and Tajikistan remain in the ISTC, while Ukraine hosts ISTC's sister company Science and Technology Centre in Ukraine (STCU). Russia's membership will expire in six months when all ISTC members will be notified. The Russian government has not explained the reason behind the withdrawal. Significance:There are some 58,000 weapons scientists and 756 research centres in the Commonwealth of Independent States (CIS), the vast majority of whom live in Russia. The ISTC was born out of the drive to use the talents of these scientists and most importantly prevent unemployed scientists from selling their skills and expertise to other regimes after the collapse of the Soviet Union. The United States was particularly keen to see the transformation of Russian military industry into civilian commercial enterprises where the scientists could be retrained and be engaged in civilian research and development programmes away from military projects. When the ISTC was launched, the Russian government had to deal with a collapsing economy and back then the ISTC project--championed by the U.S. Chief of Staff James Baker--offered a solution to the pressing problem of unemployment among many Russian scientists. However, Russia has progressed economically since then and also adopted new foreign policy priorities. The government is keen to bring back the scientists that left the country in the years of brain-drain. It is also interested in expanding its military industry, a lucrative industry that brought in US$7.4 billion in 2009. The Russian government did not clarify the reasons behind its withdrawal but it is not a difficult decision to interpret.

uniqueness – russian economy strong now

Here's the paradox of the Russian capital markets. On the one hand, the markets appear to be booming. The economy is forecast by the International Monetary Fund to grow by 4.8% this year, the RTS Index of 50 Russian stocks was up 15% by April, although it has fallen back slightly since, and Russian exchange-traded funds have attracted around 50% of all emerging market inflows so far this year. Yet, on the other hand, Russian initial public offerings are struggling. Five Russian IPOs have been pulled this year while many of those that have managed to come to market have done so at the bottom of their price range, and traded lower still in the secondary market. Only two Russian listings this year, by state-owned bank VTB Group and internet search engine Yandex, are trading above their listing prices. So do foreign portfolio investors like Russia or don't they? The popularity of Russian ETFs this year doesn't necessarily indicate that investors favor Russia as an investment destination in itself. The increase in ETF flows are more likely to be correlated to the rise in the price of oil. "Investors have been using Russian ETFs as a proxy on rising oil prices, whether to get exposure or as a hedge," says Chris Weafer, chief strategist at Uralsib, a Russian brokerage. Riccardo Orcel, head of Central and Eastern Europe, the Middle East and Africa investment banking at Bank of America Merrill Lynch, believes Russia's economy will continue to be supported by high oil prices and is optimistic for the future. "Prospects for the country are very positive considering several headwinds faced by other countries and regions in the world," he says.