Research Journal Vol. IX APRIL 2018

research Journal Vol. IX 2018 APRIL Journalresearch Vol.

usrussia.stanford.edu THE STANFORD US-RUSSIA FORUM US-RUSSIA STANFORD THE

The Stanford US-Russia Forum ∙ Research Journal ∙ Vol. IX ∙ April 2018

THE STANFORD US-RUSSIA FORUM RESEARCH JOURNAL VOL. IX, APRIL 2018 Edited by Alexis Lerner

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Printed in the United States of America THE STANFORD US-RUSSIA FORUM RESEARCH JOURNAL VOL. IX, APRIL 2018

Edited by Alexis Lerner

THE STANFORD US-RUSSIA FORUM A PREVENTIVE DEFENSE PROJECT INITIATIVE Stanford, California Waiver or Not? Considerations of NSG Membership for Non-NPT States and Prospects for US-Russia Cooperation 01 Frameworks to Advance Arctic Wind Development through US-Russia Collaboration 13 Rebuilding the Cyber Bridge of Confidence toward Establishing Bilateral Behavioral Norms for US-Russia Cooperation 23 Electronic Health Records in the United States and Russia: Challenges and Opportunities for Collaborative Leadership 31 Nation-State Adoption of Distributed Ledger Technology: How Blockchain Will Remake Traditional Nation-State Relationships 37 Promoting Business Attractiveness for the Tech Sector in Russia: Lessons from the United States and China 45 Permafrost Degradation and Coastal Erosion in the US and Russia: Opportunities for Collaboration in Addressing Shared Climate Change Impacts 57 Lessons Learned from the ISS: Enabling Future Spaceflight Collaboration for the US and Russia Stanford US-Russia Forum Journal Volume IX, April 2018 65 ARMS CONTROL Alexander Chekov, Nadya Maslennikova, Libiao Pan, Melissa Samarin, and Shana Wu ENERGY Valentina Bonello, Maxim Glagolev, and Katherine Weingartner SECURITY Andrew Carroll, Elvira Chache, and Tinatin Japaridze HEALTHCARE Brian T. Cheng, Alexandr A. Kalinin, and Marina Pokrovskaya FINTECH Jules Hirschkorn, Alexei Levanov, Anton Titov, Ryan Williams TRADE Tatiana Aleksandrina, Colton Cox, Kirill Protasov, and Boguang Yang CLIMATE Chelsea L. Cervantes de Blois, Ilya Stepanov, Kirill Vlasov, and Ellen Marguerite Ward SPACE Louise Fleischer, Carolina Moreno Aguirre, and Johannes Norheim STANFORD SURF Team

EXECUTIVE DIRECTOR Ravi Patel

PROGRAM DIRECTORS Nelson Zhao Pavel Yakushev Preface: From the Leadership DIRECTOR OF RESEARCH On behalf of the Stanford US-Russia Forum (SURF), we would like to welcome you to Alexis Lerner our program’s tenth year. SURF’s core mission is to develop the next generation of future leaders in US-Russia engagement through substantive discussion, research, and collaboration while generating innovative solutions to issues of mutual impor- PROGRAM OFFICERS tance for both countries. More than 400 students from over 85 universities have par- Kyle Duchynski ticipated since SURF’s 2008 inception. Each year the program brings 40 students from both countries together to at- Pavel Kuznetsov tend a weeklong conference in Russia in the fall, conduct research with their working group peers over the academic year, and ultimately present their work at a Andrey Bakalenko capstone conference at Stanford University in the spring. More than half of the participants are graduate students, bringing maturity and experience to complement the enthusiasm of undergraduate team members. Research themes include topics SPECIAL THANKS in international relations, the sciences, business and entrepreneurship, regional WIlliam J. Perry and humanitarian issues, and others. Started as a student initiative, SURF also emphasizes leadership experience and gives student leaders a role in organizing ele- George P. Shultz ments of the program. SURF’s mission has strong roots in the idea of track two diplomacy, the unoffi- Michael McFaul cial, informal interaction between private citizens that can help guide policymakers Deborah Gordon towards diplomatic conflict resolution and improved relations. The young leaders who comprise the SURF delegation are actively helping break down the boundar- Kathryn Stoner ies between research and policy change, bridging the gap by engaging directly with those in positions of influence. Now more than ever, the geopolitical situation be- Matthew Rojansky tween the US and Russia highlights the critical need for this type of dialogue. Olga Miller We are incredibly grateful to Renova USA and Renova Fort Ross Foundation, sponsors who make SURF possible. Thanks to their ongoing support we have been Alexei Sitnikov able to expand the SURF program, including adding a segment in Washington DC for this year’s delegation. We hope you enjoy reading the research put together by our Anatoly Antonov delegates this year! Jon Huntsman Jr. Thank you for your interest in our efforts, Sergei Petrov Edmund G. Brown Jr. Vladimir Yakushev Ravi Patel Kenneth Martinez Executive Director Preface | vii

From the Editor Dear Readers,

It is with great pleasure that I introduce the 2018 edition of the Stanford US-Russia Forum’s annual publication. In this issue, we bring together 28 sharp, young scholars from around the world to unpack complex issues related to US-Russia relations, while also fostering bi-national dialogue. Drawing from diverse linguistic, cultural, and professional backgrounds, these delegates worked collaboratively and tirelessly on the eight excellent articles included in this issue. By thinking critically about the fortification of existing ties in finance, trade, and security, to the prospects for cooperation in environment, technology, and healthcare, these eight pieces flow together seamlessly, creating an optimistic narrative about US-Russia relations in a time of increased conflict. Our journal starts with authors Alexander Chekov, Libiao Pan, Melissa Samarin, Nadya Maslennikova, and Shana Wu, in their exploration of the long-term consequences of criteria-based admission — an approach supported by both the United States and Russia — to the Nuclear Suppliers Group (NSG). In particular, these authors focus on the cases of India and Paki- stan, two states that have not signed the Non-Proliferation Treaty (NPT), and the potential ramifications of their admission to the NSG. The second article, written by Valentina Bonello, Maxim Glagolev, and Katherine Weingartner, asks how the US and Russia can mitigate high energy supply costs and the risks associated with supply disruptions in their Arctic regions. They conclude by recommending that regional actors unite to support renewable wind energy, in order to increase the resiliency of diesel-dependent energy systems in light of the Arctic’s thawing permafrost. From here, Andrew Carroll, Tinatin Japaridze, and Elvira Chache explore the psychological priors that prevent cooperation in the field of cyber-operations. They argue that the problems of cybersecurity and cyber-deterrence can only be overcome if both sides can humanize the other, thereby dissipating tensions and the further escalation of conflict, both within and beyond the cyber-sphere. In our fourth article, Marina Pokrovskaya, Brian Cheng, and Alexandr Kalinin evaluate the use of electronic health records, which have emerged in both the United States and Russia as a technological solution to facilitate the continuity of care and to improve population health. The group argues that sharing best practices regarding electronic health records presents an apolitical avenue for US-Russia collaboration. Our next pair of articles cover technological developments in the US and Russia. Representing a new SURF venture into financial technologies, Jules Hirschkorn, Alexei Levanov, Anton Titov, and Ryan Williams explore distributed ledger technology and its potential use to centralized governments and authorities at the nation-state level. Ultimately, they conclude, blockchain-type technologies represent a massive technological disruption that will likely benefit early adopters and re- shape global norms, as did the Internet in its early days. Considering more ‘traditional’ business ventures like manufacturing and entrepreneurism, Tatiana Aleksandrina, Colton Cox, Kirill Protasov, and Boguang Yang evaluate the innovation ecosystems of Moscow, Tatarstan, and Tyumen region. Utilizing the case studies of technological innovation in Silicon Valley and manufacturing production in Shenzhen, they outline how states can write policies that help firms to overcome common roadblocks, increase investment, and foster a robust digital sector. Our last two articles concern the state of our planet and what lies beyond. Writing on the topic of permafrost degradation and coastal erosion, Chelsea Cervantes de Blois, Kirill Vlasov, Ilya Stepanov, and Ellen Ward propose that the United States and Russia cooperate at the subnational level to protect their northern territories. They note that the US and Russia are among the main contributors to, and countries most impacted by, Climate Change. This reality places these two countries in a unique position to prevent further environmental degradation, both domestically and abroad. In the final article in our journal, Louise Fleischer, Carolina Moreno Aguirre, and Johannes Norheim discuss the future of space collaboration as the International Space Station, in operation since 1998, prepares to deorbit in 2024. The group suggests that space station ar- chitects review lessons learned regarding the joint ISS program before planning the proposed Deep Space Gateway, in order to improve our prospects for bilateral Deep Space exploration. Whether read in succession or independently, each article leaves its readers with renewed hope for a brighter future in US-Russia relations. And while the research in this journal discusses time-bound concerns like the coming deorbit of the International Space Station, the scholars behind these pieces represent the long, slow diplomatic efforts that build over decades. The delegates and alumni of the Stanford US-Russia Forum may be junior scholars today; but they are the CEOs, professors, and statesmen of tomorrow. By investing in relationships and retaining faith in dialogue, the SURF network illus- trates optimism in a tense political climate and promise in the long-term. Please enjoy the fruits of their hard work, critical thinking, and creative problem-solving.

Alexis Lerner Director of Research

1 Waiver or Not? Considerations of NSG Membership for Non-NPT States and Prospects for US-Russia Cooperation I. Arms Control and Nuclear Security Working Group Alexander Chekov, Nadya Maslennikova, Libiao Pan, Melissa Samarin, and Shana Wu

Abstract

Two states that have not signed the NPT, India and Pakistan, requested to join the NSG. So far, the responses worldwide have varied dramatically. Some experts and states see the two states’ request as a serious threat to the non-proliferation regime and a violation of its protocols and efforts. Others see membership in the NSG as an opportunity to hold both countries accountable as nuclear states and to include them in the non-proliferation regime in some capacity. States in support of this expansion are in the process of constructing a criteria-based approach – a series of conditions and standards that these states must meet before they are accepted formally to the NSG – as a credible commitment that would stand-in as a plausible alternative to NPT membership. Although both Russia and the US appear to support some form of a criteria-based approach, our research shows that implementing the criteria-based approach and allowing non-NPT states to join the NSG jeopardizes nuclear compliance and monitoring efforts, posing threats to and undermining the nuclear non-proliferation regime at large.

INTRODUCTION like the Nuclear Non-Proliferation Treaty (NPT), a binding agreement that sets out the standard practices and proto- he nuclear non-proliferation regime was designed to cols on non-proliferation by which many subsidiary organi- clarify deterrence and to halt the expansion of existing zations abide, including the Nuclear Suppliers Group (NSG). stockpiles, while also preserving the nuclear monop- T It is an unspoken rule and informal practice that NSG mem- oly for existing nuclear states. A secondary outcome of the bers also sign the NPT, and all current NSG members are also regime is the cultivation of international consensus regard- NPT members. The acceptance of this arrangement was not ing the reduction of nuclear weapons. Despite challenges in an issue until 2016, when India and Pakistan both formally building and maintaining this regime, the existing network applied for NSG membership without being party to the NPT. of organizations, institutions, and norms has been relatively The NSG is a fundamental part of multilateral nuclear ex- effective in curbing nuclearization and the spread of nuclear port controls. This informal group consists of 48 countries weapons (Nye 1981, 15). This success is partly due to treaties committed to limiting nuclear proliferation by monitoring export controls and dual-use technologies, as well as over- Alexander Chekov, Moscow State Institute of International Relations seeing the transparent transfer of nuclear material between (MGIMO-University), Department of International Relations and Foreign states. The NSG’s participating governments (PGs) deliberate Policy of Russia and make consensus decisions behind closed doors, though Nadya Maslennikova, Moscow State Institute of International Relations the group has no legal enforcement mechanism. Neverthe- (MGIMO - University), Masters Program on Regional Studies less it remains a critical fixture in sustaining the non-prolifer- Libiao Pan, Middlebury Institute of International Studies at Monterey, ation regime and keeping states accountable to it. Nonproliferation and Terrorism Studies The acceptance of India and Pakistan into the NSG is not Melissa Samarin, University of California, Berkeley, Department of an isolated issue. The recent discussion surrounding this Political Science topic raises serious concerns regarding the objectives and Shana Wu, Johns Hopkins University, The Paul H. Nitze School of consistency of non-proliferation at large. This situation has Advanced International Studies (SAIS), Korea Studies and China Studies 2 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX divided scholars and policy-makers alike, particularly those causes. The former focuses on a state’s willingness to ac- in the United States and Russia. NSG membership for India quire nuclear weapons, and the latter emphasizes a state’s and Pakistan may be a way to make these two countries ac- opportunity to acquire nuclear weapons (Kroenig 2009, countable nuclear states by including them in the non-pro- 161-80). From a demand-side perspective, Sagan argues liferation regime and perhaps contributing to stronger and that domestic politics and international normative factors, more stable non-proliferation efforts overall. After all, it is along with national security considerations, explain a coun- highly unlikely that either will sign the NPT under existing try’s decision to develop nuclear weapons (1996-1997). The circumstances, which would require them to give up the first model, called the security model, suggests that states nuclear weapons they already have. Instead, supporters of build nuclear weapons to increase national security against their admission laud the so-called ‘criteria-based approach’ foreign threats. This explanation flows from the realist log- – a series of standards that states must meet before being ic, which assumes an anarchic international system, and accepted – as an adequate alternative to NPT ratification. considers international institutions like the NPT as able to This criteria-based approach is currently still being formu- prevent a country from developing nuclear weapons only if lated and has received support in some form or another by neighboring countries stay non-nuclear (Sagan 1996-1997, many NSG PGs, including the US and Russia. 54-86). However, it might be inadequate to explain nuclear However, the criteria-based approach presents numer- proliferation decisions by only referring to the realist secu- ous notable concerns. First, the non-proliferation regime rity model. The dynamics in the decision-making black box relies on self-enforcement and the NSG itself has no for- also need to be examined. mal compliance mechanism. International relations theory The second model focuses on domestic politics and in- suggests the way to overcome such uncertainty and facili- ternal bureaucracy, and envisions nuclear weapons as po- tate cooperation is through iterated and credible commit- litical tools used to advance domestic and bureaucratic in- ment-making (Axelrod and Keohane 1985, 227; Abbott and terests. The domestic politics model suggests that, instead Snidal 1998, 4-5). The lack of a formal compliance mecha- of deriving from an agreed upon security decision within nism means that there is no way to ensure that India and India, it was the Chinese nuclear test in 1964 that catalyzed Pakistan will follow through on commitments within this a lengthy internal, bureaucratic debate on developing nucle- criteria-based approach. Alternatively, scholars suggest that ar weapons in India. This model argues that the pro-bomb the value of such organizations lies in their normative pow- lobby – which focuses on scientific research, political con- er, even without compliance enforcement mechanisms (Tan- cerns about Chinese nuclear developments, and a leader’s nenwald 1999). domestic legitimacy considerations – more accurately ex- This nuanced understanding points us toward the claim plains India’s nuclear weapon test in 1974, than does the that India and Pakistan are unique, per their historically hos- aforementioned security model. Moreover, according to the tile political relations. The admission of one must be accom- domestic politics model, India’s decision to nuclearize is not panied by the other in succession, in order to avoid escalat- driven by normative considerations, but more so by a doing bilateral tensions between the two competing states. Yet mestic nuclear power industry’s strategic choice to form an there is no way to ensure that employing a criteria-based alliance with the pro-bomb lobby to justify the former’s con- approach will result in equitable implementation. Should tinued existence. Considering that laboratory officials and political tensions intensify, they can plausibly spill over into scientists are key actors in India’s nuclear weapons program, larger regional and/or global conflicts. Finally, nucleariza- strengthening non-nuclear research and development pro- tion – or the acquisition of nuclear capabilities – remains of grams (as in the current US-Russia ‘Lab-to-Lab’ program) major concern to the global community, highlighted in the could weaken incentives for nuclear weapons development cases of Iran and North Korea. Any additional slippage with- (Sagan 1996-1997, 54-86). in the regime – problematized by a criteria-based approach In the third model, referenced as the norms model, the that takes a case-by-case stance toward non-proliferation acquisition of nuclear weapons and the restraint in weap- – sets a weak precedent for states already susceptible to ons development serve as important normative symbols for non-compliance and undermines existing non-proliferation the state (Sagan 1996-1997, 54-86). In other words, nucle- efforts. Employing a criteria-based approach and allowing ar weapons not only serve national security and domestic India and Pakistan into the NSG thus threatens the stabili- political purposes, but are also indicators of modernity and ty of the non-proliferation regime and jeopardizes both nu- identity in the international community (Sagan 1996-1997, clear compliance and monitoring efforts. This paper takes 54-86). From this perspective, states gain prestige by holding that stance that India and Pakistan ought not be formally nuclear weapons, which allows them to shape international admitted to the NSG through a criteria-based approach, as norms. If, for instance, the US and Russia were to pursue a this admission would reward these states after they violated joint strategy aimed at reducing nuclear weapons domesti- and withdrew from both the NPT and the non-proliferation cally, these two superpowers could also alter the norms of regime. non-proliferation in the future for other states around the globe (Sagan 1996-1997, 54-86). LITERATURE REVIEW In terms of supply-side perspectives, states with foreign The nuclear proliferation literature understands nuclear pro- nuclear support and/or internal domestic capacity tend liferation as a result of both demand-side and supply-side to develop nuclear weapons (Kroenig 2009, 162). Nuclear I. Arms Control & Security ∙ Chekhov, Maslennikova, Pan, Samarin, & Wu | 3 importers reneging on re-export guarantees, due to com- cluding academic journals, books, and official political doc- mercial or political reasons, could be a source of nuclear uments in both Russian and English. Our methodology also proliferation through covert ‘gray marketeering’ activities. includes a series of in-depth expert interviews, which were These activities include covert or official assistance, sci- conducted with academics, politicians, diplomats, and spe- entific mercenaries, and the sale, barter, or gift of nuclear cialists in both Moscow and Washington, D.C. The thematic weapons (Dunn 1977, 113). Increasing nuclear capabilities in focus of these interviews extended widely and reflect varia- states like Pakistan, Iran, or North Korea has been shown to tion in contemporary views amongst the nuclear arms con- increase the likelihood that nuclear materials will then be- trol community on this topic. come more available in international markets (Kroenig 2009, For example, the Chief Counsellor at the Department of 162). Nonproliferation and Arms Control at the Russian Ministry Last, the dual-use problem in the making of nuclear of Foreign Affairs, Mikhail Kondratenkov, confirmed that the weapons further complicates nuclear proliferation issues. NSG is currently holding serious discussions in response The isotopes uranium-235 and plutonium-239 can be used to to India and Pakistan’s bid for membership (Kondratenkov build nuclear weapons (Atomic Heritage Foundation 2014). 2017). Roland Timerbaev, Ambassador-at-large and chief But the materials and processes to make fuel grade uranium Soviet negotiator for the establishment of the NSG, point- is nearly identical to that of weapons grade material (Mathis ed out that the original purpose of forming the group was 2013, 169-85). The boundaries for civil nuclear programs to prevent non-NPT members from accessing nuclear weap- and nuclear weapon programs are easily blurred. For civil on-related materials and technologies (Timerbaev 2017). nuclear programs, less than 20 percent of the fuel needs to With this in mind, Timerbaev stated that the incorporation of be uranium-235 concentrate, whereas nuclear weapons re- non-NPT members into the group will jeopardize the original quire Highly Enriched Uranium (HEU) at a higher percentage design of the NSG. Similarly, former Russian Ambassador to of uranium-235 concentrate. However, both are easily con- India, Vyacheslav Trubnikov, expressed the view that a crite- vertible via identical centrifuge technologies (Mathis 2013, ria-based approach should not be a substitute for NPT mem- 169-85). Notably, HEU has significant medical uses, which bership as a condition for approving NSG members, because also complicates the separation of civil and weapon nucle- doing so could undermine the NPT itself (Trubnikov 2017). ar programs. Moreover, the waste of civilian nuclear energy India and Pakistan should at least agree to ratify and abide production can be reprocessed to make weapons-grade plu- by the Comprehensive Nuclear-Test-Ban Treaty (CTBT), if tonium 239 and 240 (Mathis 2013, 169-85). not the NPT, as a condition for admission. However, Former Given the previously-mentioned incentives for a coun- Director of International Cooperation Department at Rosa- try to acquire nuclear weapon capabilities and the obscure tom, Mikhail Lysenko, suggested that if the group agrees to boundary between civil and weapons-based nuclear pro- expand the NSG to non-NPT states, it could possibly lessen grams, international institutions such as the NPT and NSG the deadlock over issues of the CTBT, since it could motivate have had critical and positive effects in preventing nucle- India and Pakistan to join the CTBT and bring it that much ar proliferation (Sagan 2011, 225-44). The NSG increased closer to entering into force. He also pointed out that a coun- the cost for developing nuclear weapons. Likewise, a cor- try’s decision to join one treaty could improve the likelihood nerstone of the NSG’s success – until now – is its ability to of joining another, in this case the NPT itself (Lysenko 2017). strengthen the national export control systems of PGs (Mc- Vice President for Studies at the Carnegie Endowment for Goldrick 2011, 36). As the main treaty on controlling nuclear International Peace, Douglas Paal, suggested that the NPT proliferation, the NPT obliges nuclear weapon states to help had been effective during past decades in preventing- nu non-nuclear weapon states build civilian nuclear programs, clear proliferation, but that it needs to be reevaluated as an while preventing their escalation into weapons programs insurance strategy to make it more effective in responding (Mathis 2013, 169-85). The NSG is an important channel for to future challenges, especially as countries’ demand for nu- nuclear export control, but its criteria for membership is clear power increases. In this sense, accommodating India’s unclear and thus its stand-alone effectiveness is debatable. membership request could further weaken nuclear non-pro- As exemplified in the case of India, due to deficiencies in liferation structures (Paal 2017). the country’s current Separation Plan and 2009 safeguard Our aim is to answer the question of whether the crite- agreement (Carlson 2018, 1-11), it can be difficult to clearly ria-based approach is an appropriate course of action for the separate civil and military nuclear programs. Therefore, ad- international community. Given our question’s hypothetical mission of non-NPT member states, like India, into the NSG and policy-oriented nature – India and Pakistan have not yet must be carefully considered. The approval of India’s or Pa- been admitted to the NSG and the non-proliferation regime kistan’s membership request to the NSG involves Great Pow- has never been faced with such a situation before – we be- er politics and ought to involve changing the current consen- lieve this approach best suits our research agenda. sus-based approach to a legally-binding decision-making ANALYSIS process (Hibbs 2017). METHODOLOGY Criteria-Based Approach A criteria-based approach solution has been discussed as a Our research takes a historical discourse analysis approach possible route for countries to gain NSG membership since and draws upon both primary and secondary sources, in- India’s waiver was issued in 2008. Although many formats 4 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX exist, the latest version of the approach was modified in Fitzgerald 2008; Heinrich 2008). India wants the opportuni- 2016. This version, known as the Grossi Formula, is a 9-point ty to be a part of the international decision-making process plan that includes commitments to: 1. the verification of and gaining access to the NSG may even help it eventually clearly separated civilian and non-civilian nuclear facilities; become a permanent member of the UN Security Council 2. the reporting of all civilian nuclear facilities to the Inter- (Hibbs 2016; Swaraj 2016). Indian membership to the NSG national Atomic Energy Agency (IAEA); 3. an end to nuclear would also provide further confidence to investors within testing; 4. the issuance of a pre-plan for future nuclear inten- its domestic nuclear power projects. Commercial incen- tions and policies; 5. the strengthening of non-proliferation tives are important, in this regard, as India seeks to expand efforts; 6. the cessation of the use of any transferred nuclear nuclear trade with other countries on a fully legal basis. In material from unsafeguarded facilities; and 7. the intent to addition, the country seeks access to updated nuclear tech- join consensus with NPT member states in non-proliferation nologies and fissile materials, and wants to become a full- activities (Kimball 2017). fledged player in the international nuclear market. In 2011, The primary issue with this type of approach is that many the NSG implemented a number of new restrictions that of the points are extremely vague. For instance, it is unclear strongly prohibit the export of any dual-use technologies to what a pre-plan ought to include and is nearly impossible non-NPT signatories, which gives greater impetus for India to verify civilian and non-civilian nuclear material, especially to become a full member to the group (Viski 2012). Former within India and Pakistan. The approach is also not a univer- Indian ambassador, Ashok Sajjanhar, clearly stated, “India sal formula that can be applied to any potential government is keen to become a member of NSG in order to significantly seeking membership. Current PGs make NSG decisions and expand its nuclear power generation and also enter the ex- grant membership by consensus on a case-by-case basis. port market in coming years. Although the 2008 waiver by Thus, admission of one country does not set a precedent for NSG does provide significant possibilities to India to engage others. In the case of India and Pakistan, this presents par- in civilian nuclear trade with other countries, membership ticular concerns, as the most sustainable decision must be in the NSG will provide a legal foundation to India’s nuclear made for both states simultaneously in order to avoid undue regime” (Sajjanhar 2016). conflict. Finally, the criteria-based approach is not compre- Although the 2008 waiver was a significant milestone, hensive. It does not uphold Articles I, III.II, and VI of the NPT, many Indian officials do not feel this status fully empowers which oversee the development and exchange of nuclear the country. Its deal with the NSG still depends on the de- materials, and it does not cover provisions regarding civilian cision-making process within the group, which could still nuclear safeguard agreements and inspection. If India and negatively impact the development of India’s atomic energy Pakistan, or any other state, want to join the NSG, a crite- program. If India were able to join the NSG, it would be able ria-based approach is not an adequate way to assess com- to protect its national interests directly. It could procure crit- mitment and compliance, particularly given the motivations ical technologies and streamline the process of importing these states – India and Pakistan – have for wanting to join nuclear materials, which is currently a time-consuming and the NSG in the first place. cumbersome endeavor due to India’s intermediate status Case Study 1: India (Shaw 2016). India has tried to persuade the international communi- India applied for membership to the NSG in May 2016, al- ty that it is a responsible nuclear state with an untarnished most simultaneously with Pakistan. India has signed neither reputation.[2] But there are some serious concerns that the the NPT nor the Comprehensive Agreement on Safeguards international community must still address. For one, since with the International Atomic Energy Agency (IAEA), which India has not been clear on which specific technologies have thus far been mandatory conditions for acceptance to it wants access to, there is no way to ensure that the safe- the NSG. Signing these documents would inevitably force In- guarded materials that it would import would be used for dia to give up its military nuclear program, which it considers civilian purposes only. Additionally, the country has never to be a fundamental part of its national security; therefore, fully separated its military and civilian facilities, further frac- it is unlikely that India will ever become a signatory to either turing India from NSG guidelines. Last, given India’s chal- agreement, short of universal disarmament. Despite this, In- lenging relationship with other nuclear states, the non-pro- dia has still made every effort to gain full membership into liferation regime, and the NSG itself, there is also no way to the group.[1] In 2008, after a series of negotiations, India was discern whether India has any alternative motives to weaken granted a waiver to the NSG that allowed it to buy nuclear the NSG or the international non-proliferation regime, itself fissile materials abroad, but not the ability to import enrich- (Goldschmidt and Dalton 2011; Goldschmidt 2011). ment and reprocessing (ENR) technologies or to export any India’s bid is also a matter of political leverage in its bilat- materials. For India, the ideal situation is to be a full member eral relations with Pakistan. India and Pakistan traditionally of the NSG, which it now is actively pursuing. consider each other as threats to their respective national For India, NSG membership would be a way to gain polit- securities. If accepted to the group, India would have a legal ical prestige and recognition as an emerging world power. It right to veto Pakistan’s bid, since the NSG’s decision-mak- is eager to be recognized by the international community as ing process pivots on consensus (Krepon 2017). This is con- a ‘responsible’ and ‘legitimate’ nuclear state, even though it cerning, given their political history and the role that each has not signed documents that could restrict development country plays as a pillar in regional stability. Furthermore, of its nuclear program (Zamaraeva 2016; Varadarajan 2008; I. Arms Control & Security ∙ Chekhov, Maslennikova, Pan, Samarin, & Wu | 5 if India joins the NSG, it would be able to find other suppli- kistani leadership, Pakistan ought to have the right to use ers and would not be solely reliant on the US and Russia, nuclear weapons. Officials have been vocal about this and major nuclear trading partners that have issued some con- have defended this position publicly, which is why it is highly ditional policies on the country in the past (i.e. Agreement unlikely that Pakistan will ever sign the treaty (Haider 2002). 123) (Radyuhin and Dikshit 2016). US-India relations remain Perhaps the most questionable and negative factor from tense at times, and India would like to free itself from such the standpoint of the international community is Pakistan’s a conditional relationship. The same logic applies to China, record with and connections to illicit networks, notably the which does not support Indian admission into the NSG and A.Q. Khan Network. from whom India would like nuclear independence (Lunev A nuclear physicist and metallurgical engineer, A.Q. Khan 2016). headed Pakistan’s uranium enrichment program from 1976- Indian authorities state that they want NSG membership 2001. He utilized centrifuge technology that was legally in order to secure their access to plutonium, which is nec- acquired from URENCO, a European uranium-enrichment essary to produce Mixed-Oxide (MOX) Fuel.[3] This has been consortium. During his time at Khan Research Laboratories, a part of India’s bid platform, but the country may, in fact, Pakistan’s uranium-enrichment facility, Khan sold nuclear already have the materials that it needs for any new tech- centrifuge technologies and equipment for making enriched nologies, making its bid for NSG membership pointless (Ra- uranium to several questionable international buyers, in- mana and Raju 2016). India has also expressed eagerness to cluding Libya, North Korea, Iran, and China (Pollack 2012). gain access to dual-use enrichment technologies that would This became known as the Khan Network and these connec- make it less dependent on imported enriched uranium. tions, in conjunction with Khan’s personal association with Once again, the majority of nuclear reactors in India do not Pakistan’s atomic weapon development and program, con- rely on enriched uranium, which makes India’s bid question- tinue to mar Pakistan’s involvement with the international able. By joining the NSG, India would secure its natural ura- non-proliferation regime. Khan is considered one of the na- nium supplies, especially since its own uranium resources tion’s greatest scientists and is viewed as a hero for salvag- are of poor quality (World Uranium Mining Production 2017). ing Pakistan from potential domination of a nuclear-armed India may want access to nuclear supplies through the NSG India, but he remains a controversial figure in the non-pro- for civil atomic energy fuel production, especially since India liferation community and allegations of Pakistani state sup- suffers from fuel shortages and uses its own indigenous report for his proliferation activities continue. sources for military purposes, combining safeguarded and Despite Pakistan’s refusal to sign the NPT and its con- unsafeguarded fissile materials for MOX-fuel production. tinued denial of alleged ties to the Khan Network, from the This would be in India’s favor, since it insists that imported Pakistani perspective the country has demonstrated a solid safeguarded materials should not be subject to monitoring commitment to non-proliferation goals. The motivation for (Carlson 2015, 12). the country’s willingness to join the NSG and other multilat- It remains unclear why India feels the need to apply for eral export control regimes are based on a desire to prove NSG membership, when it already has a fully functioning that it is a responsible state with regard to nuclear weapons waiver. That waiver grants it access to most of the materials and non-proliferation. According to the Pakistan National it needs, gives it considerable leverage over Pakistan, and Command Authority, Pakistan seeks to prove that it can con- allows it some level of accountability within the non-pro- tribute constructively to the realization of a world that is free liferation regime. This is why the international community of nuclear weapons and support the goals of non-prolifera- ought to be more concerned about India’s motivations and tion on the basis of partnership and equality with the inter- intent to uphold its commitments to the NSG: its motives are national community (Kamran 2016). In terms of diplomacy multifaceted and may not be strictly for nuclear technolo- and international influence, it has enhanced its status as a gy reasons. India may be seeking greater cooperation with responsible nuclear nation by taking many practical stances the international community; however, it may also seek to to earn it international recognition. For example, after being develop more advanced ENR technologies to accumulate invited to and visiting Pakistan in early 2014, the Director funds for developing tactical nuclear weapons. Its motiva- General of the IAEA expressed confidence about the steps tion can be explained by both political and technological the country had taken in recent years to safeguard its nucle- needs, but the overwhelming narrative is that, for India, NSG ar assets (Mustafa 2014). On the domestic front, Pakistan at- admission would be a major political step. The international tributes this confidence to its strategic trade control system. community needs to be aware of this before granting India For the last 15 years, it has strengthened its national com- full membership. mand and control structure considerably, and implement- Case Study 2: Pakistan ed the Export Control Act of 2004, which is consistent with the scope of the NSG and other multilateral export control Like India, Pakistan applied for NSG membership in May regimes (Akhtar and Hussain 2010, 175-97).[4] The Export 2016. However, the international response to Pakistan’s ap- Control Act provides a specific list of technologies and goods plication was largely negative. Concerns were raised about that are subject to regulatory controls. In 2007, Pakistan also the country’s record of commitment to the non-proliferation established the Strategic Export Control Division (SECDIV) as regime and its views on nuclear exports. Like India, Pakistan part of its Foreign Affairs Ministry. The SECDIV began issuing refuses to sign the NPT and the Comprehensive Agreement export control guidelines in 2009 and also issued Internal on Safeguards with the IAEA. From the point of view of Pa- 6 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

Compliance Program Guidelines at the end of 2014. IMPLICATIONS FOR US-RUSSIA RELATIONS Pakistan sees its application to the NSG as a means to The United States and the Soviet Union played a crucial role strengthen multilateral non-proliferation regimes, but there in drafting the NPT during the 1960s and securing its signing are serious concerns from an international viewpoint about and entry into force. Since then, Moscow and Washington the validity of their stance. Pakistan already feels excluded are considered the two main nuclear powers responsible from the non-proliferation regime and slighted by the NSG’s for maintaining the non-proliferation regime. By the nature approval of a waiver for India, let alone its consideration to of US-Russia relations in the field of nuclear security, both grant India formal NSG membership. Pakistan lacks a sub- states pay serious attention to this status. The validity of this stantial incentive to continue with its ongoing international argument is supported by the fact that nuclear non-prolif- engagement with the non-proliferation regime, as long as eration issues stay separated from their domestic agendas. these tensions with India exist. In addition, given the various Even in spite of great bilateral tensions, the US and Russia insurgent and terrorist groups active within Pakistan and have always maintained a certain level of cooperation in this across the region, there are significant reasons to be worried sphere. about the potential diversion or capture of Pakistani nuclear The NSG provides a particularly good case on this ac- weapons by such groups. Furthermore, formally accepting count. Soon after entry into force of the NPT on March 5, Pakistan into non-proliferation institutions such as the NSG 1970, it became clear that the treaty itself was not a univer- may signal acceptance of its potentially illicit activities. De- sal safeguard against the further spread of nuclear weapons. spite these concerns, many observers see the inclusion of In 1974, India, which actively participated in the negotia- Pakistan into non-proliferation regimes as of benefit to the tions as a country without nuclear weapons but neverthe- international community as it may be safer and less threat- less refused to sign the NPT, conducted its first nuclear test. ening to have Pakistan inside the NSG and adhering to its It became evident that further maintenance of the non-pro- guidelines than outside any export control regime. However, liferation regime required additional strengthening of mul- as long as Pakistan expresses discontent over the inequali- tilateral export control measures beyond the regulations al- ty in recognition between itself and India over their nuclear ready adopted. It was Moscow and Washington that took the programs, there is no way to verify that Pakistan will uphold lead that same year and established the NSG. Critical to note and abide by NSG principles, were it admitted. Under the is that “regardless of their global rivalry, the two superpow- surface, its motivations to join the NSG appear to be largely ers [US and Soviet Union] throughout the Cold War cooper- driven by its competition with India and international status ated without interruption in administering the NSG and the recognition, more so than as a commitment to non-prolifer- nuclear trade regime” (Hibbs 2017). Nowadays, the US and ation practices and protocols. Russia have continued this legacy and maintain relatively For Pakistan, a positive application to the NSG would high levels of cooperation in the NSG and non-proliferation amount to global recognition of the efforts and improve- regime and share similar interests in this sphere. ments that it has made toward non-proliferation. Paki- Forty years have passed since the first Indian nuclear stan’s inclusion in the NSG would allow it to trade nuclear test, and 2018 will mark twenty years since Pakistan’s first materials under the watch of the international community test. Neither state shows any intention to abandon their nu- in an open and legitimate manner with all of the associat- clear weapons programs in exchange for peaceful atomic ed benefits. However, it is crucial to note that including Pa- energy. Once again, Russia and the US are among the lead- kistan as a member of the NSG would allow it to influence ing players shaping this framework, specifically as key deci- the non-proliferation regime and international nuclear mar- sion-makers in whether India and Pakistan would (or would ket, a fact that is particularly alarming given its potentially not) be admitted to and/or cooperate with the NSG. Both incriminating connections with nefarious networks and countries support India’s acceptance into NSG (although this groups. A negative application, particularly if rival India is support is not definitive) and oppose Pakistani admittance. accepted, would confirm Pakistani criticism that the nuclear However, as our research has shown, this may be a vol- regime is discriminatory and may harden Pakistani attitudes atile decision and the US and Russia ought to think care- toward non-proliferation; this is why the decision of mem- fully about the long-term consequences of this policy. The bership for India and Pakistan needs to be made in unison. problem goes beyond maintaining the sustainability of the But inclusion of Pakistan into the NSG would ultimately give non-proliferation regime as such, but also raises questions it greater independence, access to the international nuclear of the US and Russia’s responsibility in maintaining the said market, and opportunities to cooperate on nuclear technol- regime. Expansion of the NSG at the expense of India and/ ogy development with other world powers. Pakistan’s nucle- or Pakistan may provoke a negative reaction from certain ar energy needs are currently being addressed through its states such as China. Some countries will consider such an bilateral relationship with China, and Pakistan views nuclear expansion as evidence that the US and Russia put their own power as an important element in national energy security. economic and geopolitical interests above the maintenance Pakistan sees NSG membership as important to establish- of the nuclear non-proliferation regime. ing the peaceful use of nuclear power as part of its national Despite a less-than-optimistic trend in US-Russia rela- development, but it has yet to convince observers that it is tions, the tacit cooperation between the two states within ready to do so on the international stage. the framework of multinational institutions like the NSG since the 1970s reminds us of the fact that US-Russia coop- I. Arms Control & Security ∙ Chekhov, Maslennikova, Pan, Samarin, & Wu | 7 eration in preventing nuclear proliferation has persisted and has generally been unaffected by changes in their bilateral agendas. While the Intermediate-Range Nuclear Forces Trea- ty (INF Treaty) currently faces major challenges, both the US and Russia maintain their commitment to the NSG. Douglas Paal summarized frustrations regarding the US-Russia role in the non-proliferation regime succinctly, noting that ratio- nal discussion about the relationship is a critical and necessary measure (Paal 2017). Mikhail Kondratenkov stated that NSG expansion should not be interpreted as a major breakthrough in bilateral relations (Kondratenkov 2017). It is hard not to agree with this statement, since the group’s activities are concerned with a narrow set of problems compared to the broad scope of the US-Russia bilateral agenda. Nevertheless, the fact that this group does present a multilateral format, under which the two countries can cooperate and make a decision that can again impact non-proliferation outcomes, particularly when they share the same position on the issue, can and should be viewed as a silver lining. In the 1960s, multilateral negotiations on nuclear non-proliferation played a crucial role in establishing the diplomatic framework that was later used to pursue détente in US-Russia relations. In this regard, maintaining and promoting existing lines of diplomatic communication in nuclear non-proliferation can be a crucial factor for the future improvement of US-Russia relations. 8 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

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Frameworks to Advance Arctic Wind Development through US-Russia Collaboration II. Energy Geopolitics Working Group Valentina Bonello, Maxim Glagolev, and Katherine Weingartner

Abstract

Ice melt and permafrost thaw in the Arctic, accelerated by climate change, increase economic potential for Unit- ed States (US) and Russian companies, as well as for national and state governments to pursue hydrocarbon extraction in the Arctic regions. However, despite US and Russian leadership in oil and gas production and the fact that both hold some of the world’s largest hydrocarbon resources, their Arctic regions suffer from high energy supply costs and risks associated with supply disruptions. The US and Russia could cooperate to address similar energy security challenges in the Arctic, particularly by investing in renewable energy sources to increase the resiliency of diesel-dependent energy systems currently prevalent in these regions. This paper examines the potential to collaborate on increasing the deployment of wind energy on the national, company, and regional level, concluding that the regional level is the ideal platform for such cooperation.

INTRODUCTION ation opportunities on national, company, and state levels. Ultimately, we determine that state-level cooperation is the ce melt and permafrost thaw in the Arctic, accelerated by most advantageous for advancing wind energy development climate change, increase economic potential for United in US and Russian Arctic areas. IStates (US) and Russian companies, as well as national and state governments, to pursue hydrocarbon extraction ALASKAN INTEREST IN WIND ENERGY in Arctic regions. However, despite US and Russian leader- Increasing energy costs and demand, the want to diversify ship in oil-and-gas production and the fact that both hold and strengthen the state economy, and energy security con- some of the world’s most extensive hydrocarbon resources, cerns all support an increased interest in developing Alas- their Arctic regions suffer from high energy supply costs and ka’s wind capacity (Johnson et al. 2012). Alaska’s electric the risks of supply disruptions. The US and Russia could co- energy consumption is the second lowest in the US (Musial operate to address similar energy security challenges in the et al. 2016) and yet, many remote Alaskan communities face Arctic, particularly by investing in renewable energy sources the highest electricity costs in the nation with some paying to increase the resiliency of their diesel-dependent energy 1 USD per kilowatt-hour compared to the national average systems. The goal of this paper is to evaluate the possibili- of 0.12 USD per kilowatt-hour. This is due to the high cost of ty of US-Russia cooperation on wind power development in shipping fossil fuels, most of which are diesel, to commu- the Russian Arctic and in Alaska. We first examine the state nities by barge or plane result in these higher energy costs of wind energy and the challenges to its development in (Shaw 2017). In the midst of growing demand for heat, elec- both countries. We then assess the institutional and compa- tricity, and transportation fuel in the state, renewable energy ny-related barriers and incentives to invest in wind energy in sources (RES) like wind have the potential to save communi- Russia and in the US. Finally, we identify US-Russia cooper- ties millions of dollars annually, while keeping money in the Alaskan economy (Renewable Energy Alaska Project 2016). Valentina Bonello, The University of Texas at Austin, Lyndon B. Wind power has the potential to replace expensive diesel fuel Johnson School of Public Affairs and, as innovative approaches to diesel-wind-energy storage Maxim Glagolev, Skolkovo Institute of Science and Technology, systems develop, further wind power opportunities become Energy Systems CREI and Gazprom StroyTEK Salavat more competitive (Hirsch 2013). RES, such as wind, can offer Katherine Weingartner, The George Washington University, The energy at a known cost, which increases a community’s resil- Elliott School of International Affairs 14 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX iency to volatile fuel prices and inflation (Renewable Energy of reduced state and federal funding, successful wind devel- Alaska Project 2016). In 2016, Alaska’s utility-scale electricity opment stands to benefit from greater cooperation with the generation was made up of 42 percent natural gas, 15 per- business community. In Alaska, the company 60Hertz is in cent hydroelectricity, 10 percent coal, and 4 percent of wind the process of aggregating several onshore community wind power and biomass, collectively (US Energy Information Ad- projects to attract investors and make use of economies of ministration 2017). Greater investment in wind energy can scale (Waldholz 2017). help Alaska to reach its goal of being 50 percent powered by RUSSIAN INTEREST IN WIND ENERGY FOR THE ARCTIC RES by 2025 (Renewable Energy Alaska Project 2016), espe- REGION cially because Alaska has significant wind power potential, particularly near its coasts (Today in Energy 2015). As in the US, the Russian Arctic’s high energy costs and the threat of supply disruptions may incentivize greater invest- CHALLENGES TO WIND DEVELOPMENT IN ALASKA ment in wind development. Energy systems in the Russian Wind development in Alaska is not without its challenges. Arctic mainly consist of diesel-based generators, though In the last 60 years, the average temperature of Alaska has coal and residential oil are also used (Berdin 2017). Fossil risen by approximately 3° Fahrenheit, which is twice the fuel delivery to remote areas of the Arctic Region, which rate of the rest of the US. By mid-century, projections indi- currently operates under the Northern Delivery (‘Severniy cate an additional 2 to 4° Fahrenheit temperature increase. Zavoz’) scheme, is problematic and expensive. Deliveries Permafrost lies beneath 80 percent of Alaska’s surface (US can only take place during a short time period each year, Environmental Protection Agency 2017). Its thawing can and transportation routes are very long. Moreover, climate pose additional technical challenges to wind energy instal- change increases the risks associated with the Northern De- lation. To protect against permafrost thaw, turbines may re- livery due to weaker ice and unstable river flows (Berdin et. quire special foundation designs, thereby increasing project al. 2017). The State Commission for Arctic Development stat- costs. Heavy installation equipment such as cranes can only ed in June 2016 that up to 6-8 million tons of fossil fuels and be used when permafrost ground is frozen and waterways up to 20-25 million tons of coal are delivered each year to the are clear of ice to allow equipment to be delivered by barge, Arctic regions (Proceedings, 2016). The price for diesel deliv- putting additional strain on construction, shipping, and ered this way can reach 74 rubles per ton, while the price for maintenance costs and logistics (US Department of Energy electricity might reach 120 rubles per kilowatt-hour (IPGG SB 2015). The state of Alaska offers financial assistance to local RAS 2017). As a result, heat and power production shortages communities, where residents pay three to five times higher exist still today (Smolentcev 2012, 24), posing a challenge to electricity rates than those in urban areas (US Energy Infor- affordable and sustainable power generation. mation Administration 2017). Additionally, the majority of Without modern, efficient, and dependable energy sys- recent RES projects were funded by state and federal grants, tems, Russia cannot succeed in the rapid and large-scale de- but as the state budget has contracted, so have these grants velopment of its Arctic region, which creates an additional (Waldholz 2017). Higher upfront costs of RES, compared to incentive to invest in RES like wind. Both energy companies diesel, can make financing difficult, paving the way for alter- and the Russian Government are motivated to have sustain- native funding mechanisms on wind energy projects (Koko- able, efficient, and affordable power and heat supplies in rin et al. 2017). the region. Several scenarios are possible: renewable-based generation, diesel-based generation, and gas-based genera- CURRENT WIND RESOURCES IN ALASKA tion. A combination of these types of generation, also called Despite its challenges, Alaskan communities are investing hybrid generation, will most probably be implemented. In- in wind energy. In 2016, the city of Nome had times when corporating RES into these hybrid generation sources can wind accounted for up to 30 percent of its power (Hovey contribute to energy diversification and energy efficiency, 2017). In March 2017, 99.7 percent of Kodiak’s energy came while reducing carbon emissions and mitigating climate from RES, 20 percent of which came from wind generation change (Russian Government 2009). (Shaw 2017). Several other communities including Savoon- CHALLENGES TO WIND DEVELOPMENT IN THE RUSSIAN ga, Wales, Chevak, Emmonak, Shaktoolik, and Gambell have ARCTIC followed suit by investing in wind energy (Shaw 2017). The largest wind energy project in the state, Eva Creek, is con- The price of electricity produced through renewable energy nected to the Railbelt transmission system, which allows it systems risks not being competitive in a country where elec- to provide electricity for two-thirds of Alaska’s population tricity price is kept low through regulated gas prices (Smeets (Today in Energy 2015). Alaskan communities have also inte- 2016). However, the uncertain economic conditions of the grated renewable energy generation into microgrid systems Arctic region open up opportunities and lower the economic to maximize energy system efficiency and resilience without barriers to the implementation of renewable energy solu- the need for expensive transition lines. In the past decade, tions in the region. RES can become a beneficial tool to re- Alaska has become an international leader in microgrid de- duce the operational costs of energy systems and fuel deliv- velopment and operation. In 2015, Alaska’s over-70 microg- ery, while increasing the energy efficiency of these systems. rids accounted for 12 percent of the world’s renewably-pow- Environmental conditions are positive for RES imple- ered microgrids (University of Alaska Fairbanks 2015). In light mentation in the Arctic. Coastal areas of the Russian Arctic II. Energy Geopolitics ∙ Bonello, Glagolev, & Weingartner | 15 are well-positioned to host wind farms, as the average wind it intends to increase the share of electricity produced from speed is about 7 meters per second (Konovalova 2016; Popel RES within the Russian federation to 4.5 percent (Smeets et. al. 2015). At the same time, extreme and harsh weath- 2016, 138). To achieve this goal, Russia designed a capaci- er conditions could become a potential challenge for wind ty-based renewable energy support scheme to allow for the energy. Turbines cannot be operated under stormwind con- financing of upfront capital investments. According to this ditions complicating the potential for deployment of wind scheme, the Russian Government concedes financial guar- power in these regions. The issue of de-icing must also be antees on the domestic wholesale electricity market, up to a addressed. Test cases have shown that de-icing procedures certain installed renewable energy project capacity, includ- may consume as much electricity as the wind turbine gener- ing wind, hydroelectric, and solar projects. Such projects re- ates (Berdin 2017). Thus, new technologies must be imple- ceive a guaranteed 14 percent return on investment on their mented to satisfy the aerodynamic conditions of blades to renewable energy sales over 15 years (Smeets 2016, 143). become economically efficient. Storage of RES-generated Nevertheless, the capacity-based renewable support electricity in the Arctic also poses problems and is com- scheme does not come without downsides. First, this policy pounded by the region’s frigid temperatures. A number of does not apply to the Russian Far East, but only to West Si- energy storage technologies could be implemented, but beria and European Russia. Furthermore, in addition to the need to be adapted for the region (e.g. fuel cells and LiOn challenge of making RES cost competitive in a market of low accumulators need certain thermal conditions for efficient fossil fuel costs, the scheme only applies to the wholesale operation). market, which excludes power systems below five megawatts. Such systems are very common in technologically iso- CURRENT WIND RESOURCES IN THE RUSSIAN ARCTIC lated areas (Smeets 2016). These characteristics prevent in- There are several wind projects in the Russian Arctic oper- vestors from taking advantage of the scheme to develop RES ating across five locations, the largest of which is located in systems in remote regions of the Russian Federation. This the Chukotka Autonomous District’s Observation Cape, with policy also requires that companies responsible for accept- 2.5 megawatts (MW) of installed capacity (Shilova & Solov- ed projects have production capacity in the Russian Federa- jov, 2015). As pure wind generation poses a number of chal- tion, either by setting up their own production facilities or by lenges (for example, the need of power storage and some acquiring such capacity from companies already present in difficulties in balancing the system), a hybrid approach was the territory. This requirement, as well as the depreciation of implemented; wind-diesel or wind-solar-diesel stations the ruble, and the subsequent difficulty of the government were created in settlements with strong wind potential de- in subsidizing the scheme, could also discourage foreign in- spite relatively mild climates (Mortensen 2017). In total, five vestment in RES (Smeets 2016). hybrid wind–diesel power units operate in the Russian Arc- The question of Arctic development is being discussed tic. Due to improved economic performance, wind projects at all levels in Russia. Alexander Novak, Russia’s current are more developed in the Russian Arctic than in any other Minister of Energy, leads the Development of Energy Sys- Russian region. These projects are located on the coastline tems Group within the Governmental Commission on Arctic from Murmanskaya district to Chukotka and Kamchatka. Development. The goal of the group is to develop strategic These projects might help to save tons of diesel and reduce and long-term energy systems in the Arctic (Governmental tariffs. A number of wind projects have been initiated in the Commission on the Arctic Development 2017). Decree 1064, Arctic. For example, the Murmansk district plans to build an signed on August 31, 2017, updates the ‘Socio-Economic De- onshore wind farm on the Barents Sea coast, which will pro- velopment Program of the Arctic Zone of Russian Federation duce more than 700 kilowatt-hours per year (Regional Ener- until 2020’ (Government of the Russian Federation 2017). In gy 2017). particular, this document aims, in vague terms, to develop the Russian Arctic, though the effectiveness of this decree POTENTIAL BARRIERS AND OPPORTUNITIES FOR NA- is yet to be seen. Despite these efforts, existing policies TIONAL-LEVEL WIND DEVELOPMENT COOPERATION are still not sufficient to promote RES in the Arctic Region US and Russia National-level Renewable Energy Policies (Mortensen 2017). The institutional RES frameworks in Russia and in the US dif- Unlike Russia, the US has no federal renewable energy fer widely because of the different role that the government policy and the government, irrespective of its political ori- plays in these two countries’ energy sectors. This divide is entation, often fails to support clean energy development especially evident in the case of renewable energy policy. (Elliott 2013). According to Elliott (2013), this is largely due The largest Russian energy companies are controlled by the to Congressional opposition and the ideological shifts that state, which makes it easier for Moscow to exercise control follow each round of presidential elections. Moreover, each and set the course of the Russian energy sector. On the other state is in charge of regulating electric utilities, while only hand, the US energy industry is highly liberalized, with very wholesale transportation is regulated at the federal level, little government influence. US and Russian national-level which creates policy and investment coordination problems. approaches to RES development vary in structure and exe- In spite of these obstacles, 26 US states implemented cution, but both are currently limited in their ability to en- renewable portfolio standards (RPS), regulations that re- courage further investment in RES. quire retailers to ensure that a minimum percentage of the The Russian Government officially stated that, by 2020, electricity they supply comes from RES (Barbose 2016). The 16 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX minimum requirement is set by each state, which chooses energy sector. First, they have an interest in preserving the voluntarily whether to introduce RPS. According to the De- world’s dependence on fossil fuels and, second, they state partment of Energy’s Office of Energy Efficiency &- Renew that returns are not high enough to justify these invest- able Energy (2016), RPS were responsible for a 60 percent ments (Csómos 2015). For instance, ExxonMobil, the largest renewable energy capacity increment since 2000 (Barbose oil company in the US and in the world, does not invest in 2016, 11). Moreover, in 2013, greenhouse gas emission re- wind or solar energy. During their 2015 annual shareholder duction resulted in 7.4 billion USD in savings, compared to a meeting, Exxon CEO Rex Tillerson stressed that RES are not 1 billion USD RPS implementation cost. economical enough, and hence the company does not invest US-Russia Diplomatic Relations in the Arctic in RES as it chooses “not to lose money on purpose” (The Guardian 2015). US-Russia relations deteriorated greatly in 2017. Suspected Nevertheless, other major companies such as Shell and Russian interference in the US presidential election led to BP do invest in wind power, although they have kept such sanctions on Russian intelligence agencies and allegedly-in- investments to a minimum. For instance, Shell owns six wind volved companies. In the summer of 2017, the US Senate farms in North America, and one third of the generation ca- approved a new sanctions bill against Russia, targeting its pacity it manages in the US comes from RES (Shell n.d.). BP energy, defense, intelligence, metals, railways, and mining is the supermajor with the largest renewable energy port- sectors. In August 2017, the Russian Government required folio. The company owns 14 onshore wind sites with a total 755 US diplomatic staff in Russia to leave the country. generating capacity of 2,259 megawatts (BP n.d.). Russian Despite challenging relations between these countries, energy company Gazprom recognizes the incentives of in- the US and Russia continue to collaborate within the Arc- vesting in wind and solar power in remote areas, and today tic Council, a high-level intergovernmental forum that al- operates more than 100 off-grid renewable power systems lows for greater cooperation, coordination, and interaction (Gazprom n.d.). among Arctic States. For example, in May 2017, both coun- The incentives for oil-and-gas companies to invest in tries signed the binding Agreement on Enhancing Inter- RES, and specifically in wind energy, are mostly -econom national Arctic Scientific Cooperation in Fairbanks, Alaska ic. For example, investing in wind energy development can (“Arctic Council Ministers meet” 2017). Recent US-Russia co- help them to maintain a constant cash flow when oil and gas operation within the Arctic Council on maritime safety, inter- prices are low. Indeed, Norwegian oil-and-gas companies in- national fisheries, and the creation of an Arctic Coast Guard vested cyclically in wind power to compensate for revenue Forum further supports the idea that constructive engage- losses caused by low oil-and-gas prices (Hansen and Steen ment is possible in the Arctic. Arctic collaboration has been 2014). Moreover, investing in RES can allow big energy com- relatively insulated from the general decline of relations panies to meet the world’s energy demand by preparing for between these two countries, suggesting that it is an ideal changes in global energy consumption, which may see the place to foster improved ties (Kortunov and Oliker 2017). depletion of hydrocarbon resources in the distant future POTENTIAL BARRIERS AND OPPORTUNITIES FOR COMPA- (Csòmos 2015). NY-LEVEL WIND DEVELOPMENT COOPERATION The economic incentives of investing in RES may be especially prominent for energy companies that operate in Although state and federal government efforts had a signif- geographically remote areas, isolated from centralized pow- icant impact on RES development, individual companies er networks, where powering oil-and-gas plants becomes in the US are the actors that ultimately invest in RES and more expensive (Boute 2016). This is especially true of isolat- could, potentially, lobby against the expansion of the clean ed Arctic areas, where untapped sites can top-off, and com- energy industry (InfluenceMap, 2016). For this reason, it is pensate for, the rewards from existing extractive projects. important to analyze the incentives and the obstacles that Alternatively, many isolated systems in the Arctic regions of may push the major oil-and-gas companies to support, or to the Russian Federation and the US rely on diesel for energy work against, RES development. production, and severe weather sometimes requires diesel Renewable Energy and Oil-and-Gas Companies: a Con- to be delivered by helicopter, making the cost of diesel trans- tradiction in Terms? portation to remote areas very high (Lombardi et al. 2016). Although oil-and-gas companies have traditionally opposed According to Lombardi et al. (2016), electricity generated RES development (these companies rarely include RES in through diesel in the Russian Far East can also be expensive, their investment portfolios, and they often lobby against with prices upward of 2500 USD per MW/h (Lombardi et al. government support to the expansion of the clean energy 2016, 536). In spite of high upfront investment and storage industry); yet there may be an incentive for them to invest in system costs, wind energy production could provide a more wind in the Arctic. Economic incentives spurred by the high affordable and reliable alternative once enough systems are cost of diesel, could push the oil-and-gas industry to invest set up. Therefore, off-grid and renewable energy systems in RES. Such incentives could make US-Russia cooperation may help to reduce the costs of powering operations in the even more profitable and plausible. Russian Far East. Moreover, according to the study by Lom- According to the existing literature, there are two main bardi et al. (2016), upgrading or replacing old isolated power reasons why the supermajors of the oil-and-gas industry do system with renewable energy systems could also lead to not invest, and lobby against investments, in the renewable job creation which may further benefit companies and the II. Energy Geopolitics ∙ Bonello, Glagolev, & Weingartner | 17

State. Though economic disincentives for oil-and-gas com- couraging Russia to engage actively with the US on this proj- panies to invest in wind persist, there is evidence that such ect has the potential to not only benefit greater US-Russia investment can potentially reduce the high cost of diesel in collaboration on Arctic wind energy development, but can the technologically isolated areas in which these companies also serve to benefit renewable energy investment in other operate. parts of the Arctic. Political Obstacles Company-Level Following Russia’s formal annexation of Crimea on March On the company level, wind development can provide cost 18th, 2014, the US applied sanctions to 17 additional indi- savings in comparison to continued reliance on diesel in viduals and companies. In July of the same year, US sanc- powering energy projects. Such collaboration can be divid- tions began to target the Russian energy sector, banning ed into three categories. The first is device exchange (for ex- Rosneft and Novatek from accessing loans with more than ample, wind turbines) from American to Russian companies. 30 days of maturity. The US applied the same provision to Moreover, cooperation could consist of labor and resource Gazprombank and Vneshekonombank (Rutland 2014). After divisions among American and Russian firms; while the for- pro-Russian rebels shot down Malaysian Airline Flight 17 mer hold more advanced technologies, the latter can access in Eastern Ukraine, the US intensified its sanctions against more affordable composite materials and metals. As a re- Moscow in July 2014, adding additional Russian banks to sult, both sides may gain from this cooperation through less the list of sanctioned entities, now including Bank Moskvy, costly production. The second category consists of bilateral Rosselkhozbank, and VTB. However, the US increased the soft technology exchange, which includes control strategies maturity threshold for borrowing for Novatek, Rosneft, Gaz- and management systems. This exchange can flow in both promneft, and Transneft from 30 to 90 days (Rutland 2014, directions. Finally, American and Russian companies could 3). Moreover, the current sanction regime prohibits US com- cooperate through joint research and development efforts panies from providing technology, goods, and services that and exchanges. For instance, US and Russian companies in- facilitate deepwater, Arctic offshore, or shale oil exploration terested in Arctic development could conduct joint research and production (Department of Treasury 2014). to determine the extent of possible cost savings resulting These sanctions are designed to affect Russia’s oil indus- from substituting RES to diesel-generated electricity. try and, therefore, do not impact technology and knowledge State-Level exchange related to renewable energy system development. Although there is potential to collaborate on wind energy at Nevertheless, the sanctions also have the goal of limiting the national and company levels, we propose that state-level Russian banks’ and companies’ access to sources of cap- cooperation is the ideal platform for enhancing the US-Rus- ital with more than 30 or 90 days of maturity. As a result, sia partnership in wind development. The state-level is not the threshold may prevent Russian companies that seek to only one step removed from the politicization of national and invest in RES to look westward to obtain the capital neces- international politics, but also avoids the complex dynam- sary to develop such energy projects. This, however, does ics evident in company engagement with RES. Overcoming not mean that RES development in Russia will not happen, barriers to wind development depends on understanding an nor does it mean that Russian companies will not be able area’s specific geographic characteristics which demands a to cooperate with their US counterparts in developing re- more localized approach to problem-solving. The states of newable energy systems in the Russian Arctic. In order for Alaska and Tyumen have been identified as the most prom- collaboration to happen, however, Russian companies need ising actors for such state-to-state cooperation. Alaska and to find other sources of debt financing or choose alternative Tyumen are major energy producers that recognize the im- financing strategies. portance of reducing high energy costs while holding Arctic EXAMINING OPPORTUNITIES FOR US-RUSSIA COOPERA- territory. Both have intimate knowledge of, and interactions TION ON WIND ENERGY DEVELOPMENT with, the energy interests of companies and their respective national leaderships, making these regions key players to National-Level connect the various interests and players in the Arctic ener- Recognizing that US-Russia cooperation within the Arctic gy space. Council continues despite a decline in political relations, this Recognizing the resource limitations of both states, we forum represents a potential platform to advance US-Rus- propose that a state university be selected by each state sia collaboration on wind energy development in the Arctic. government to engage in a university research partnership In April 2017, the Arctic Council’s Sustainable Development project of one year with the goal of identifying opportunities Working Group endorsed the Arctic Renewable Energy Atlas for state-level partnership to enhance wind development. (AREA) project. The purpose of AREA is to enhance knowl- Sharing best practices on project-financing methods and edge of local adoption and best practices of RES in the Arctic. technological exchanges, particularly in the area of hybrid The project will gather renewable energy data from all eight microgrid systems, are just some potential areas of explo- Arctic countries, create a useful database of community en- ration. The state-level partnership would provide resources ergy production, consumption, and efficiency, and develop and advice where needed to the university-level partnership. a best practice guide for remote community renewable ener- As an additional benefit, this kind of bi-national engage- gy integration and efficiency, among other deliverables. En- ment could strengthen US-Russia relations at both the state 18 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX and professional levels while offering scholars a unique and valuable educational opportunity to sharpen their research. CONCLUSION Though deteriorating relations pose obstacles to US-Russia collaboration on energy, the Arctic still represents a platform for collaboration. There are incentives for both the US and Russia to enhance wind energy development on the national, company, and state levels. US and Russian cities and states can engage in information and knowledge-sharing to bolster wind development in the Arctic. On the company level, a case can be made that wind development can offer cost savings by reducing operational dependence on diesel electricity generation. On the national level, the poor state of US-Russia relations and the current sanctions should not prevent investment in wind. Rather, the two countries can collaborate on wind development within the Arctic Council, specifically through the AREA project of the Arctic Council’s Sustainable Development Working Group (Arctic Renew- able Energy Atlas 2017). We conclude with the recommendation that greater collaboration be fostered at the state level between Alaska and Tyumen, particularly by creating a state-guided university partnership to overcome barriers to greater wind energy development in their Arctic regions. II. Energy Geopolitics ∙ Bonello, Glagolev, & Weingartner | 19

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3 Rebuilding the Cyber Bridge of Confidence toward Establishing Bilateral Behavioral Norms for US-Russia Cooperation III. Security Relations and Defense Cooperation Working Group Andrew Carroll, Elvira Chache, and Tinatin Japaridze

Abstract Conflicts in cybersecurity continue to strain US-Russia relations, further intensified by allegations of malicious, Russian cyber-involvement in the 2016 US Presidential Election. Part of this conflict is due to a mutual distrust, perpetuated by a lack of commonly-accepted behavioral norms, field-specific definitions and- un derstandings, and challenges of attribution. We argue that cybersecurity, and particularly cyber deterrence, is an exercise in both psychology and technology. Therefore, it is deeply entrenched in questions regarding cross-cultural psychology and cultural exchange. In order to improve relations, and even cooperation, in the cyber-sphere, it is necessary to first humanize other actors. In our paper, we argue that bilateral coordination in the realm of cyber-operations will help to foster cultural understanding, effective communication, and stronger ties, thereby dissipating tensions and the further escalation of conflict beyond the cyber-sphere.

CYBERSECURITY AND US-RUSSIA RELATIONS of the permanent five members states of the UN Security Council. n his address to the United Nations General Assembly on Cybersecurity is a direct cause of increased strain in September 19, 2017, Secretary-General António Guterres US-Russia relations. This tension is further intensified by al- noted that cyberwarfare continues to escalate as a global I legations from top US security and intelligence professionals threat with implications of disrupting inter-state relations of malicious Russian cyber-involvement in the 2016 US Pres- and destroying the “structures and systems of modern life” idential Election (Lemire and Colvin 2017). Security concerns (Guterres 2017). He emphasized the lack of international cy- among European allies of the United States further limited bersecurity norms as a dominant reason why cyber-conflict cooperation between the US and Russia on this issue. The persists as one of the leading problems of the current era. In- Russian administration contents that the allegations are un- formation and communications technologies are an integral founded. In fact, while Russian officials have refrained from part of modern life and society; however, with greater con- any public allegations or accusations targeting the United nectivity come greater risks. Previous attempts to address States regarding cyber-related concerns, this is in direct these risks have failed, including the United Nations Global contradiction with the numerous actions and related state- Cybersecurity Index (GCI) negotiations – aimed to restrict cy- ments made by the Russian Federation, accusing the Unit- berwarfare on a multilateral level –, which finally collapsed ed States of using various (including cyber) technologies as after thirteen years in June 2017. Today, we witness signifi- tools for interfering with Russia’s domestic affairs and elec- cant gaps in security among the 134 countries surveyed in tion processes (i.e., 1996, 2000 and 2012 presidential elec- the final report of the GCI, including China and Russia, two tions) with a larger goal of Western-style democracy promotion (Malinowski 2017). Additionally, Russia condemned the Andrew Carroll, United States Air Force Academy, US Air Force United States for weaponizing cyber resources within the Academy Department of Political Science framework of the North Atlantic Treaty Organization. We ad- Elvira Chache, MGIMO, Faculty of Law and Sberbank, Cybersecurity dress these contradictions in the second half of this paper. Department The present lack of international norms of behavior in Tinatin Japaridze, Columbia University, Harriman Institute the field of cybersecurity threatens to cause expanded con- 24 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX flict between the United States and the Russian Federation. plans, although critical infrastructure is increasingly becom- Historically, security concerns and differences in perspective ing a major priority. presented barriers to US-Russia (and former Soviet). This po- Meanwhile, Russian authorities view cybersecurity as a tential for conflict is exacerbated by the borders of cybersp- piece of what is termed the “Information Sphere” (Russian acce, where physical space matters much less than in tradi- Federation 2016). The Ministry of Defense of the Russian tional warfare, there are no distinct lines or borders between Federation understands said Information Sphere as an area the private and the public, and engagements take place at of activity related to the creation, transformation, and use of “network speed” (Healey 2017). However, the two countries information, including individual and public consciousness, share many mutual interests in the uncharted field of cyber- information and telecommunications infrastructure, and in- security, from the protection of financial interests from ne- formation proper (Research Center for Information Securi- farious third parties to dissipating cyber-conflict. Despite a ty 2008, 40). Furthermore, the 2016 Doctrine of Information shared proclivity to cooperate, the US and Russia have been Security of the Russian Federation, a document put forth by unsuccessful at effectively leveraging this new field- toim the Office of the President, the domain of the Information prove relations. Sphere includes not only cybersecurity, but also tradition- While it is difficult, and perhaps unrealistic, in the current al media organizations and operations, social media plat- geopolitical environment to believe that complete trust be- forms, telecommunications networks, and subjects whose tween the two nations can develop, this paper argues that activities are connected with the formation and processing working toward building a level of confidence in actions of information, as well as a set of mechanisms for regulating and perceived intent in the field of cybersecurity will help to relevant public relations. Even within the realm of military promote improved interactions between the US and Russia operations, leading Russian military theorists and officials overall (Karaganov 2017). do not use the terms “cyberwarfare” or “cybersecurity” as do their US counterparts, instead relying on the concept of CONTRASTING DEFINITIONS AND ALLEGATIONS OF MIS- “information warfare” to encompass cybersecurity opera- CONDUCT tions (Connell and Vogler 2017). Under this model, multiple The United States and Russia remain fundamentally divided government and private sector agencies are responsible for over the issue of cybersecurity. This division stems not only providing and upholding cybersecurity within the Russian from using cyber resources subversively or to project pow- Federation. er, but also from each country’s respective, and often times Thus, the broad Russian view of integrating cybersecu- contrasting, definition and general understanding of the cy- rity as an element of the information domain across gov- ber concept, itself. ernment and private sector levels, viewed alongside the The United States (US) and the Department of Defense contrasting US idea of cybersecurity as largely a military and agency in charge of the US cyber operations define “cy- defense issue, presents a definitional conflict. Undoubtedly, berspace” as: “a global space in the digital environment, each respective country’s starkly contrasting definition of consisting of interdependent networks of information and cybersecurity has the potential to create increased division, communication infrastructures, including the Internet, com- growing lack of confidence in actions, and misunderstand- munication networks, computer networks and embedded ings of each country and their intentions among leaders and processors and controllers” (Department of Defense 2017). citizens alike. In the case of recent events, we can trace these Accordingly, the US views cybersecurity as a primarily mil- misunderstandings and their consequences in allegations of itary and defense-oriented mission. As one unnamed US cyber-misconduct by both parties against one another. State Department official said to New York Times reporters, Indeed, both the US and Russia have interfered, wheth- “We really believe it’s defense, defense, defense” (Markoff er covertly or publicly, with the other’s internal political and Kramer 2009). This is also apparent when exploring the affairs when they deemed strategic interests could beat US distribution of cybersecurity resources and funding. The stake (Burt, Hitch, Pettibone, Shillinglaw, 2017). For its part, Department of Defense retains control over the majority of the US spent billions of dollars on democracy promotion in the US’ cybersecurity assets, following an order from the 1990s Russia, considering such involvement “benign” and Commander in Chief, President Donald J. Trump in his es- motivated solely by “humanitarian concerns” (Burt, Hitch, tablishment of a new separate Cyber Combatant Command Pettibone, Shillinglaw, 2017). And, since the end of the Cold (Department of Defense 2017). The new command will over- War, the United States accused Russia of using cybersecuri- see both the US’ defensive and offensive cybersecurity ca- ty assets to impact neighbors negatively and to exert its in- pabilities, and have the authority to employ cybersecurity fluence over former Soviet satellite states. As early as 2007, resources in support of US Military and Government goals the US, alongside NATO-ally Estonia, accused Russia of us- on a global scale. What remains fundamental to the US’ ing cybersecurity resources in an offensive manner to shut viewpoint on cybersecurity is the separation of government down the government of Estonia and its ability to operate and private sector affairs. US cybersecurity initiatives largely critical systems tied to the internet through a distributed concern the US Government and the security of its agencies denial of service attack (Connell and Vogler 2017). The US and systems (i.e. energy resources and power grids). Private also accused Russia of using the Republic of Georgia during sector organizations are then largely left to manage their the 2008 Russo-Georgian war as a live testing ground for own cybersecurity operations and contingency response the combination of cybersecurity assets with conventional III. Defense Cooperation ∙ Carroll, Chache, & Japaridze | 25 military forces in an effort to weaken an opponent’s ability relations between the US and Russia, making cooperation in to communicate (Connell and Vogler 2017). In recent years, the field of cybersecurity more challenging than ever before. the United States alleged that Russia weaponized cyber PAST COOPERATION INITIATIVES AS A MODEL FOR THE resources in Ukraine to spread propaganda and to weaken FUTURE Ukrainian military forces (Gross and Greenberg 2017), and tampered with domestic elections by spreading propaganda Diplomacy in France and Germany (Simmons 2017). While recent rhetoric regarding US-Russia relations is tense, However, one of the most significant US claims regard- the two countries attempted to work together on cybersecu- ing Russia’s use of cybersecurity initiatives for diametrical- rity matters in the past. In 2009, for example, representatives ly opposed goals is the allegation of Russian involvement, from both countries tried to establish a mutual agreement and even direct meddling, in its 2016 presidential elections. for cybersecurity and the employment of cybersecurity as- The US accused Russia of using spear-phishing against the sets (Markoff and Kramer 2009). However, talks soon broke Democratic National Committee, thereby gaining high-level down over what particular method would be best to improve access to protected systems. This claim, backed by the US cooperation in this ever-changing field. Russia insisted that Central Intelligence Agency and the Office of the Director a treaty was necessary to define the scope of cybersecurity of National Intelligence, has resulted in increased strain in and establish international norms for its use (Markoff and US-Russia relations, leading to a deterioration of confidence Kramer 2009). Ideally, according to Russia, such a treaty between the two states (Shelbourne 2017). would model efforts to restrict the use of chemical weapons, Russia has also accused the United States of per- and be overseen by the United Nations. The US, however, petuating political incidents using cyber resources. Most stated that a treaty was unnecessary, instead citing its faith notably, Russia condemned the US for weaponizing cyber in international norms as a preferable avenue to cooperation resources for use by the North Atlantic Treaty Organization among international law enforcement groups like INTERPOL (NATO) through programs such as its Cyber Defense Center (Markoff and Kramer 2009). of Excellence and NATO’s counter-hybrid warfare programs, perceived to target Russia directly. Additionally, Russian offi- Nuclear Weapons cials point to the 2012 employment of the Stuxnet computer Despite the failure of recent initiatives to spur US-Russia virus against Iranian nuclear facilities as evidence of US ef- collaboration on cybersecurity, Americans and Russians can forts to utilize cybersecurity assets to harm Russia, despite both look to previous attempts at bilateral cooperation in the fact that the US has not claimed responsibility for im- other fields. Namely, negotiations and agreements regard- plementing Stuxnet (Doctrine of Information Security of the ing the testing of nuclear weapons provide an excellent ex- Russian Federation; Sanger 2012). From Russia’s perspec- ample upon which the US and Russia could potentially mod- tive, the US weaponization of cybersecurity resources is car- el cooperative efforts in the cybersecurity domain today. ried out both unilaterally and through NATO for the purpose Although cybersecurity and nuclear nonproliferation do not of potentially hurting Russia and Russia’s ability to respond seem similar at first glance — for example, the cost of nu- to threats from the alliance in the future (Connell and Vogler clear weapons greatly outweighs the costs of cybersecurity 2017). Russia retorts that the US wrongfully blames Russia in terms of potential destruction and it is far more difficult for cyber attacks without adequate evidence. In Russia’s to determine attribution in the realm of cybersecurity — the view, cyber attacks are often perpetrated not by the Russian two fields hold many commonalities between them. Signifi- government, as the US alleges, but rather by patriotic, Rus- cantly, both domains feature a superiority of offensive over sian-speaking civilians (Yusufov 2017). defensive use, the potential use for tactical and strategic While the Russian government argues that it is not con- purposes, the possibility of first and second use scenarios, nected to the patriotic, Russian-speaking civilians that carry and the likelihood of unintended consequences stemming out cyber-attacks, it does not deny that these attacks have from cascading effects caused by new technology being occurred and that they originated from within Russian bor- poorly understood (Nye 2011). With these commonalities in ders. As a result, the Russian government is able to claim mind, we can look toward efforts such as the Limited Test plausible deniability regarding the cyber-attacks. This attri- Ban Treaty and the 1987 agreement to establish Nuclear Risk bution mistake by the US, Russia argues, is a root cause of Reduction Centers between the US and the Soviet Union as the deterioration of confidence in cyber security relations, potential exemplars for the US and Russia (Department of including failed initiatives such as the 2013 negotiations State 1987). Both treaties sought to turn a zero-sum game between the Kremlin and the Obama Administration that into a positive-sum game, thereby promoting US-Russia in- sought to establish norms of conduct on communication cy- volvement by convincing both sides that their cooperation bersecurity and defense matters (White House 2017). was tantamount (Nye 2011). Ultimately, repeated allegations of misconduct regarding NATO cybersecurity resources by both states, challenges of attri- The US and Russia can also look to international organiza- bution, as well as recent actions using cybersecurity resourc- tions designed to promote reconciliation, collaboration, and es to interfere in elections, institutions, and other conflicts, understanding between states long at odds with one anoth- have served to further strain relations. This weakened con- er. The 1997 NATO-Russia Founding Act, designed to increase fidence, due to misunderstandings, has strained bilateral confidence between the US, NATO, and Russia immediately 26 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX after the Cold War, can serve as a model for cybersecurity ward and begin discussing future steps, based on mutual cooperation, given its tenets of bringing NATO and Russia respect and dignity. Furthermore, negotiations regarding together to develop broad-based norms regarding territorial acceptable norms on both sides, and the fundamentals of integrity, the use of conventional forces in Europe, and the terminology and definitions, are in dire need of clarification. recognition of sovereignty of new states (Mendelsohn 1997). We believe that vastly different definitions, contrasting in- Additionally, both parties could refer to the reinvigoration terpretations and concepts of ‘cyberspace’ and ‘information of the NATO-Russia Council in 2016 on an agenda of limited space’, and the mechanisms and procedures that take into goals as a means of restarting cooperation and communica- full account the specifics of informational and cyber tech- tion at a broad level between the US and Russia in the area nologies, must be refined, codified, and ratified. of cybersecurity (Mendelsohn 1997). With such different concepts and interpretations of ‘cyber’ versus ‘information’ space, how can all nations, let REBUILDING MUTUAL CONFIDENCE IN US-RUSSIA CYBER- alone two states, sign off? If words on paper and actions do SECURITY RELATIONS not match, which we have seen in the past months, years, The continuing drift in US-Russia relations both in cyberse- and even decades on both sides, the unfortunate end result curity and on a wider bilateral spectrum has the potential is a growing lack of confidence both between states, as well for detrimental consequences. The lack of a series of con- as in the power of international organizations to mitigate structive state-level dialogues at diplomatic, military, and the tensions that arise from this lack of confidence. A further civilian levels could have highly negative implications for complication is the fluid and malleable nature of technolo- geopolitics, domestic economies, and bilateral trade. Coop- gy, in general, and the cyber world, in particular. The field of eration in this domain is further prevented by a lack of effec- cyber is constantly evolving, and therefore, sticking to a set tive bilateral communication, the continuation of security of constructs put into writing several years or even months concerns for both countries, and a need for a collaborative earlier and abiding by such norms can be a flawed and un- framework. realistic approach at its core. Thus, regularly updating and Underneath an escalating cyber-conflict lies a growing maintaining a system of checks and balances is vital for fos- misunderstanding and lack of confidence, if not mistrust, tering a healthy bilateral relationship in practice. in both Washington and the Kremlin, which the more opti- Past efforts to regulate the use of conventional force mistic political pundits believe can be “assuaged, at least in and ease fears in both countries through initiatives like the part” (Burt, Hitch, Pettibone, and Shillinglaw 2017) through NATO-Russia Founding Act and NATO-Russia Council, in- jointly-conceived and executed programs and summits. cluding the body’s reinvigoration in 2016, are emblematic What we are witnessing today is a consequence of a lack of of avenues to build confidence in actions in both countries rules and regulations — or more specifically a lack of norms that can be re-implemented today with a focus on the cyber — that, should they be agreed upon and adopted, can help realm. By recognizing and respecting past allegations and to avoid “undue interference” in the domestic affairs of each viewpoints from both the US and Russia regarding each oth- country (Burt, Hitch, Pettibone, and Shillinglaw 2017). er’s use of cybersecurity, as well as using Cold War-era and December 2017 marked the 30th anniversary of the So- NATO-Russia cooperation initiatives as examples, rebuilding viet Union and the United States’ signing the Intermedi- confidence through actions and initiatives between the US ate-Range Nuclear Forces (INF) Treaty — an event that sig- and Russia is not only essential, but we believe also possi- nalled the end of the Cold War. And yet, three decades later, ble. Ideally, this same improved mutual trust can then be the treaty appears to be in jeopardy as the possibility of a translated into future bilateral agreements on cybersecurity nuclear arms race returns (Welna 2017). The former General norms of behavior between the US and Russia, paving the Secretary of the Soviet Union, Mikhail Gorbachev, reflected way for cooperation in other fields. on the upcoming anniversary of the signing of the treaty on CONCLUSION the strategic arms reduction. Lamenting the current state of US-Russia relations, particularly following the US allega- Conflicts in cybersecurity continue to strain US-Russia relations of the Russian Federation’s meddling in its 2016 presi- tions, further intensified by allegations of malicious, Russian dential elections, the former Soviet leader called for a sum- cyber-involvement in the 2016 US Presidential Election. Part mit between the two countries. He noted that while both of this conflict is due to a mutual distrust, perpetuated by a sides have “raised issues of compliance ... [in turn accusing lack of commonly-accepted behavioral norms, field-specific the] other of violating or circumventing” key provisions, it definitions and understandings, and challenges of attribu- is ultimately the “political will” of the two leaders that can tion. Considering this current climate, how can the US and overcome the crisis and prove “decisive” (Gorbachev 2017). Russia move forward from bilateral conflicts in the field of cyber-relations? What are the realistic chances of resuming FUTURE INITIATIVES dialogue and drafting a bilateral agreement towards finding In the spirit of General Secretary Gorbachev’s statement, we a consensus on a critical issue where one side is publicly ac- propose a renewed dialogue between the leadership of the cusing the other, while the other is neither admitting nor ful- United States and Russia. In this proposed dialogue between ly rejecting the allegations? the leadership of the two states, the frank discussion of these In this paper, we argue that rebuilding confidence and allegations by both parties is essential in order to move for- collaboration must begin with cyclically redefined, codified, III. Defense Cooperation ∙ Carroll, Chache, & Japaridze | 27 and ratified definitions and norms of engagement. While this does not mitigate the problem of ambiguous attribution in this unique and relatively new space, we suggest that solutions to cyber-conflicts exist within psychological frameworks. Even though the physical proximity of individual contact is not a factor in this exchange on the surface, the psychological factors play a vital role, as do cultural norms and cultural differences. Thus, on a large scale, the aim of improving cooperation in this field through our joint research is to change the culture of lack of trust by putting a human face to Russians and Americans. Bilateral coordination in the area of cybersecurity will help to dissipate tensions and chance for conflict, as well as foster cultural understanding, effective communication, and stronger ties for greater future cooperation and improved relations not only among the state actors but hopefully among the citizens of the two nations. 28 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

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4 Electronic Health Records in the United States and Russia: Challenges and Opportunities for Collaborative Leadership IV. Healthcare Working Group Brian T. Cheng, Alexandr A. Kalinin, Marina Pokrovskaya

Abstract Electronic health records (EHRs) have emerged as a technological solution to facilitate the continuity of care and to improve population health. Despite the promise to aid physicians and patients, efforts since 2009 to widely implement EHRs in United States healthcare systems have faced significant barriers, which have revealed the need for a different approach. Russia has a much less storied history with EHR, but Minister of Health of the Russian Federation, Veronika Skvortsova, recently announced the Ministry’s aim to universalize EHR access to improve patient care. Considering the robust opportunity for bilateral collaboration to achieve better healthcare, we evaluate the similarities and differences in EHR use between the two nations and use a comparative approach to identify growth opportunities in each country. We suggest two main practices that can augment the partnership: (1) the equitable valuation for, and open sharing of, best practices in public-private relationship management, including resource allocation, method regulation, and the financial support of businesses; (2) a science and technology transfer that can foster the adoption of EHRs, which can directly help patients as system benefactors. Healthcare is an area that both the US and Russia value greatly, and we argue that collaboration can relax currently-tense bilateral relations and set the stage for further partnership in the future.

INTRODUCTION potential to serve as partial solutions to existing healthcare problems in each nation. ealthcare is one of the few areas in which internation- An EHR is a longitudinal collection of patient health al cooperation does not require extrinsic motivation. information stored on an electronic platform, which can The United States and Russia share an interest in im- H be shared across healthcare settings via the network-con- proving health provisions for their citizens, but more nota- nected enterprise-wide information system. Such patient bly, collaboration on healthcare between the two nations records may include demographics, medical history, medi- can help to ‘thaw’ the currently frosty bilateral relationship. cation and allergies, immunization records, laboratory test As such, collaboration in healthcare may catalyze further results, radiology images, and billing information. The use productive efforts to address global challenges. One promis- of EHR systems has been shown to increase physician effi- ing realm for collaborative leadership in healthcare involves ciency and decrease human error, ease physical storage re- the novel developments in information technology (IT). IT quirements, reduce costs of care, promote evidence-based has become the principal vehicle for supporting clinical de- medicine, and improve the overall quality of care (Yina 2010; cision making, healthcare delivery, and patient engagement Fernández-Alemán et al. 2013). Indeed, the use of EHRs (Daglish and Archer 2009). Healthcare information technol- empowers patients and transforms them from passive re- ogy, especially electronic health records (EHRs), have the cipients of services to active participants in informed decision-making (Daglish and Archer 2009). Moreover, the utility Brian T. Cheng, Northwestern University, Feinberg School of of such technology — strengthened by smart-sensor systems Medicine — is not restricted to therapeutic purposes, but can also re- Alexandr A. Kalinin, University of Michigan, Department of veal trends and be used for predictive medicine. Computational Medicine and Bioinformatics Existing means of data collection can and will need to be Marina Pokrovskaya, Goethe University Frankfurt, Faculty of revised to capitalize on the technological potential of mod- Economics and Business Administration ern sensors (Ilyas 2008). Neither Russia nor the United States 32 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX have devised how to take full advantage of advancing EHR challenges associated with the efficient and productive use capabilities, and robust use of EHR represents an opportu- of the technology. nity for collaborative leadership between these countries. Adoption of EHRs in Russia Taking into consideration the differences in Russia and the For many years, healthcare was highly centralized in Russia United States’ healthcare systems, and in the accumulated (Gordeev, Pavlova, and Groot 2011), and public funding of experience among the two states in the adoption of EHRs, the healthcare system in Russia — even if historically mis- there is room for collaboration in addressing common issues managed — remains far greater than in the United States as well as overcoming shared difficulties. This study aims to (Young and Chatwood 2011). However, medical care quality evaluate the similarities and differences between health- in Russia depends heavily on urban-rural divides and a phy- care infrastructure in the two nations, to use a comparative sician’s own education, tenets, and professional experiences approach to identify deficiencies in each approach, and to (Taranik and Kopanitsa 2017). Variation in styles of practice suggest potential areas for bilateral collaboration to address make it even more urgent that EHR is widely adopted in or- outstanding issues. der to facilitate case-based reasoning in decision support ENDURING ISSUES REGARDING THE ADOPTION OF EHRS systems. The Russian EHR market is maturing alongside the IN THE US AND RUSSIA health care system with a compound annual growth rate of 10-14% since 2009 (Parikh 2015). Large private suppliers Adoption of EHRs in the US have entered the Russian EHR market to provide rapid EHR Although EHR is not a new technology in the US, its adoption data exchange and unified access to health care data, while by clinicians has been slow over recent decades. The 2009 also helping medical institutions to meet secure information passage of the Health Information Technology for Economic requirements. For example, in 2011, IBM introduced its Lotus and Clinical Health (HI-TECH) Act offered system purchase platform, an EHR platform designed for use by Russian clini- subsidies and reimbursement incentives through Medicare cians. This was touted as the maiden foray of an American and Medicaid to increase the prevalence of “meaningful use” company into the Russian EHR market, and IBM Lotus now (Middleton et al. 2013). It rewarded clinicians who took the serves nine hospitals in Russia (Parikh 2015). When IBM an- initiative to purchase EHR systems and penalized physicians nounced their Lotus Notes launch, the effort was intended who submitted Medicare claims using paper documenta- not only to digitize patient records, but also automate hos- tion. The program also contained provisions to promote pital processes. patient interaction with their own medical records, health While several review articles summarize the growing information exchange among clinicians, and stricter en- body of literature regarding US challenges in EHR adoption, forcement of medical information privacy laws. A survey by relatively few exist which describe challenges and guiding the US Department for Health and Human Services revealed solutions for Russian EHR initiatives. Common issues, in- that the number of office physicians using EHR systems including a lack of economic incentives and technical exper- creased from 57% to 87% during the 2011-2015 period. While tise to implement and use EHRs, appear as major barriers the decentralized nature of the healthcare practice makes it to EHR adoption in Russia. Others brought up when Russia challenging to evaluate the proportion of patients who ben- was a part of the Soviet Union tend not to trust diagnostics efit from an EHR, as of 2016, 96% of hospitals in the Unit- and treatments unless they are printed out on paper — per- ed States adopted a federally tested and certified EHR pro- haps attributable to a generational divide —, which poses a gram — a ninefold increase since 2008 (Reisman 2017). The cultural obstacle to widespread patient engagement with adoption of EHRs incentivizes the substitution of electronic their electronic patient information. Similar to the situation for paper-based records, enhances patient documentation, described in the US, the high costs of EHR installation pose a optimizes billing practices, and generates a data repository major barrier to Russian medical practices. (Boonstra and Broekhuis 2010). Although problems remain to be tackled, the prevalence The growing adoption of EHR systems has been accom- of EHR use in Russia continues to grow steadily (Moore 2011). panied by a heightened recognition of the issues related to Russia declared its intent last year to expand EHR use in its using EHR systems. Some EHR users lament that health IT healthcare sector, and the US’ relevant experiences should appears designed for clinical transactions, instead of for be valuable for Russia to avoid similar mistakes. clinical care. In addition, many EHR systems require ex- Common Puzzling Issues with the Adoption of EHRs tensive training, while the lack of a standard user interface The US and Russia each aim to leverage new technology and means clinicians who work in multiple care settings with improve healthcare provisions, and each country recognizes disparate technologies may struggle with the differences the importance of EHRs. However, their efforts are associat- in interface design and have an adverse impact on patient ed with numerous challenges. Despite historical, economic, safety (Middleton et al. 2013; Babbott et al. 2014). Amidst political, and cultural differences, there are common issues legislative attempts to prompt the widespread adoption of between both countries regarding the adoption of EHRs. So EHR systems, the US continues to face barriers to meaning- far both systems implement the use of EHR reactively — for ful use: non-communicability between platforms from dif- the sick — instead of proactively, for prevention and well- ferent companies, the privacy of shared information, and ness. Both systems are also challenged by fragmentation the cost of financial implementation. Despite clear progress and inefficiencies that increase the cost burden on their in the adoption of EHRs in the US, the nation still faces many IV. Healthcare ∙ Cheng, Kalinin & Pokrovskaya | 33 respective economies and create disparities in access to sonable to account for physicians’ workload and varying quality care. And both must educate their populations and cognitive abilities while implementing EHRs (Babbott et al. incentivize physicians and hospitals to focus on prevention 2014). and wellness. Russia’s Private Healthcare Sector is a Growing Market The disparity in published research highlights the poten- Open to New EHR Opportunities tial for bilateral collaboration and mutual growth. The US’ The Russian healthcare market — particularly in the areas history of EHR adoption and technical knowledge can help of prescription drugs and medical devices — skyrocketed in to aid Russia’s adoption. On the other hand, Russian officials recent years, reaching over $30 billion USD (Twigg 2014). The are considering the use of novel technological solutions, “IT in Healthcare 2016” report by the Russian information such as blockchain integration, to facilitate effective EHR agency CNews indicated that the overall profit by the private use; the new experiences of Russia will be useful to solve health IT providers was 2.2 billion rubles in 2015, which is persistent issues with EHR systems in the US. In order to ad- nine percent more than in 2014 (Rudicheva 2016). dress these issues, we propose strengthened international By the end of 2018, 40 percent of the population of the collaboration and experience exchange on the subject, to Russian Federation will hold EHRs, as was announced by the benefit of both parties. Prime Minister Dmitry Medvedev and Minister of Health Ve- COLLABORATIVE LEADERSHIP WILL EXPEDITE THE BILAT- ronika Skvortsova (Bugrim 2017). With regard to personal ERAL ADOPTION OF EHRS AND ENHANCE THEIR EFFICACY data protection, however, EHRs pose certain threat, as far as Roskomnadzor, the Federal Service for the Supervision US-Russia Collaboration in Healthcare has Historically of Communications, is concerned (Islamova n.d.) As for the Proven to be Successful Tyumen region, EHRs were allegedly implemented in all hos- During, and in the years following, the Cold War, healthcare pitals in 2017 (Federation Council 2017). Dmitry Medvedev has been a fruitful area of collaboration between United also approved 5.62 billion rubles to improve medical care States and Russia. Smallpox eradication and the widespread using technological tools through 2025 (Pakhomov n.d.) use of the Sabin polio vaccine are two key examples of this This characterizes the Russian EHR market as growing and productive relationship (Rojansky and Tabarovsky 2013). changing rapidly, which indicates possible opportunities for Throughout the late 20th century, joint US–Soviet or US– adopting new approaches and best practices from estab- Russian health activities continued, with a major focus on lished markets. HIV/AIDS prevention, as well as the prevention of other sexu- Employees of the Regional Hospital #1 in Tyumen, Russia ally transmitted diseases and tuberculosis (TB) (Hotez 2017). claim that there are many legislative barriers to fully imple- Today, issues varying from fighting pandemic threats to menting EHRs (Personal Communication 2017). Obstacles overcoming many other problems related to healthcare re- still exist in the form of signatures and formal agreements quire access to substantial patient data pools. These exam- for treatments, required in hard copy. In addition, medical ples illustrate that the US and Russia have aligned interests staff must be trained to utilize EHRs. Moreover, the local in healthcare and that these countries have the capacity to government has employed private contractors to build out work together in addressing healthcare challenges. Hostili- IT infrastructure, essential for diverging to EHRs. For exam- ties between the United States and Russia may be nowhere ple, the blood test laboratory is connected to other hospitals near confrontations during the 1960s and 1970s, but extraor- in Tyumen region and allows for the storage and electron- dinary opportunities remain to meld our scientific activities ic transfer of patient data. Experts from Tyumen point out to eliminate the world’s major neglected and emerging the fact that there is no interregional compatible framework diseases, thereby overcoming geopolitical tensions (Hotez that would allow for having access to patient records from 2017). We seek to explore and analyze best historical prac- outside of Tyumen region (Personal Communication 2017). tices of bilateral collaboration and how they can be applied Several start-ups exist that look for technical solutions in for EHR adoption in the present. this field that can be potentially supported by the local ad- The United States is More Experienced with EHR Adop- ministration. It is important to note that Tyumen is a par- tion ticularly wealthy and technologically-advanced oblast, and the investment and educational opportunities available in The United States is a leader in the healthcare industry, as Tyumen are not necessarily representative of the country, as well as in various other innovative sectors. Indeed, the US a whole. healthcare market accounts for one-sixth of global healthcare spending (Carroll and Frakt 2017). Nevertheless, in a Public-Private Partnership is Still Growing in Russian survey reported by Babbot et al., physicians report stress, Healthcare dissatisfaction, burnout, and extensive time pressure during Despite unfavorable economic conditions, private-public visits (2014). In their survey responses, these problems ap- partnerships (PPP) are expected to expand in Russia. Pri- peared across the urban-rural divide, from physicians in vate investment aimed at PPP in healthcare sector current- inner-city clinics in New York and Chicago, managed care ly comprises ten percent of total spending in this sector. clinics in mid-sized cities like Milwaukee and Madison, Wis- For instance, at the Sochi-2017 Russian Investment Forum, consin, and small rural clinics in central Wisconsin (Babbot agreement has been reached with regard to constructing the et al. 2014). To mitigate these negative effects, it seems rea- Leningrad Regional Centre for Medical Rehabilitation in the 34 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

Gatchina region. Long-term benefits, like those posed by the technology. Authentic collaborative leadership would spark new institution, are essential for PPP investment projects to meaningful healthcare progress for the people of both na- be appealing for investors (Samsonova 2017). If we can ex- tions, while also providing models for a successful EHR roll- pect low inflation, we find potential for PPP investments in out in other health systems around the globe. The US placed Russian healthcare, in general, and in development of EHRs, full government support behind EHR expansion in 2009 and in particular. thus has greater technical experience with EHR implementa- Executive Summary of Suggested Mechanisms for Po- tion than Russia does. However, the current state of EHR in tential Solutions the US leaves much to be desired, with problems stemming from lack of interoperability, non-adoption, and regional Although historical, economic, social, financial, and cultur- disparities. Russia can serve as a locale for a novel approach, al differences on the healthcare business markets between one that can potentially turn around and improve EHR usage the two countries present many obstacles, they also provide in the US. opportunities to leverage two histories so that each country Considering current tensions in bilateral relations, any can learn from the experiences of the other. For example, the chance for sustainable co-leadership requires that the US US-established business models in healthcare may serve as take care to avoid any ‘white-knight’ overtures. This means tested examples of public-private cooperation, while Rus- that the US cannot view collaboration as a donor-recipi- sia’s private healthcare sector can model a dynamic and ent relationship and must equally value opportunities to adaptive market that is successful with less competition, learn from Russia’s EHR experience. Russia has increasingly fewer regulations, and a faster translation of ideas to pa- pushed to re-brand itself as a global hegemon, and its chal- tient delivery. In this respect, the US experienced quite a few lenges to Western countries’ soft power has further strained obstacles in EHR implementation related to over-reaching US-Russia relations. However, successful collaboration on governmental control. Therefore, a business environment EHR development could ‘reset’ relations, simultaneously im- should be taken into consideration when developing EHRs proving diplomatic relations and healthcare outcomes. Pro- in Russia. ductive relations may even lead to larger US-Russia partner To accelerate adoption of state-of-the-art EHR practices initiatives to address other global issues, whether through and ensure quality of implementation, the government must bilateral engagement or multilateral initiatives. stimulate the involvement of entrepreneurs and established businesses, balance regulation and stimulation in its private sector partnerships, and encourage close international cooperation between the US and Russia in knowledge transfer. We suggest two ways to drive the effective partnership: (1) the equitable valuation for, and open sharing of, best practices in public-private relationship management, including resource allocation, method regulation, and the financial support of businesses; (2) a science and technology transfer that can foster the adoption of EHRs, which can directly help patients as system benefactors. Such mutual learning between the US and Russia will accelerate development and the adoption of best practices in healthcare IT. Sharing best public-private partnerships practices will enable the involvement of entrepreneurs in still-developing markets, supporting the growth of the healthcare sectors. With a population of over 450 million people living in the two countries combined, collaboration promises an enormous potential to affect lives. From a broader perspective, severing contact on such an obvious shared interest as healthcare, where professionals share common interests and motivations beyond political habits of cooperation, could prove highly desirable for the re-establishment of positive bilateral ties between the two nations (Twigg 2014). We further determine that collaboration on EHRs will lead to substantial improvements in the healthcare business markets of both countries, which in the end will benefit governments, physicians, and, most importantly, patients. CONCLUSIONS Russia’s healthcare reforms and efforts to penetrate the EHR space present an opportunity for the US to partner with Russia and to raise the standard of healthcare information IV. Healthcare ∙ Cheng, Kalinin & Pokrovskaya | 35

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5 Nation-State Adoption of Distributed Ledger Technology: How Blockchain Will Remake Traditional Nation-State Relationships V. Fintech Working Group Jules Hirschkorn, Alexei Levanov, Anton Titov, and Ryan Williams

Abstract Since its first emergence in the late 2000s as the engine behind the then-unknown digital experiment known as Bitcoin, distributed ledger technologies have been repurposed, reimagined, and re-engineered into a diverse array of applications. While its use in powering digital currencies is its most widely known and understood application, its potential use to centralized governments and authorities at the nation-state level remains puzzling. Ultimately, blockchain technology represents a massive technological disruption that will have far-reaching effects from the individual to the nation-state. Drawing from the case of Russia in its recent efforts to offer Blockchain-based government services, including the so-called ‘Cryptoruble’, we address the geopolitical challenges that might arise as states move toward blockchain adoption at different rates and with different, often conflicting, objectives.

INTRODUCTION cations, and they are stable and resistant to tampering because they are managed collectively. By large, the character- lockchain – or distributed ledger technology (DLT), as it istics of distributed ledgers deem the platform well-suited to is generically known – has attracted a new generation solving coordination problems among individuals, corpora- of entrepreneurs and theorists, focused on building in- B tions, and potentially even nation-states. novative ways for people and organizations to collaborate Many theorists and industry professionals see block- without the need for centralized platforms. At its most ba- chain as a revolutionary technology that will change the way sic, blockchain is a cryptographically indelible distributed that groups interact and transact with each other at every ledger that is managed by a host of participating compu- level of society. In this paper, we explore the implications of tational devices, incentivized economically to support and the adoption of blockchain technologies at the nation-state maintain the ledger. The intrinsic capabilities of blockchain level. In particular, we ask how states might implement such technology spark considerable discussion regarding not technology and how these new technological capabilities only the future of the global financial industry, but also the will affect existing global power dynamics. We use computer future of financial and societal collaboration. Indeed, block- simulation to model the effects of DLT adoption in the inter- chain-based systems may soon be capable of providing national system. many of the services traditionally supplied by governments and private corporations. After all, distributed ledger tech- BLOCKCHAIN TECHNOLOGY AND CAPABILITIES nologies offer certain benefits: they enable varying degrees Public knowledge and adoption of DLTs is growing quickly of decentralization and autonomy for myriad digital appli- and commercial enterprises are well on their way to inte- Jules Hirschkorn, Stanford University, Center For Russian, East grating the technology into their existing systems. How- European, Eurasian Studies ever, there is a relatively shallow understanding of how Alexei Levanov, Chief Engineer at Sberbank Technology and PhD nation-states have, or may, adopt DLT, as well as the impli- student in MSTU n.a. Bauman cations of how this technology can affect relations between states (Weiss 2005). Literature that does address the impact Anton Titov, Sberbank, Technology Development Strategy Team of blockchain on international relations consists, typically, Ryan Williams, University of Texas, LBJ School of Public Affairs of structured expert panel surveys and technical extrapola- 38 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX tion on one end of the spectrum, and normative theories on to financial capital for nation-state and non-nation-state the other end (White 2017). Even when research focuses on actors alike, enabling nations and entities to operate with technical questions, there is a notable preoccupation with autonomy and discretion in direct bilateral or multilater- bitcoin itself – which is only one specific, and very narrow, al economic and financial arrangements. This will, in turn, application of a blockchain – while relatively little work is equilibrate, to some degree, global power asymmetries by done on potential second-order-use cases such as supply giving all participants equal and unfettered access to cus- chain management, financial asset-tracking, or peer-to- tomized financial networks that are capable of existing and peer autonomous organizational management to name a operating outside of the influence of non-participants by cre- few (Yli-Huumo et al. 2016). In the article “Blockchain Tech- ating completely new eco-systems. That is to say, the ability nology as a Regulatory Technology,” Primavera De Fillipi and of nations to exert an outsized influence on one another, or Samer Hassan detail a possible future where, facilitated by to intervene in the financial and economic activities of other smart contracts and decentralized identity management nations without the explicit consent of all parties involved, systems, “the blockchain progressively acquires the status will be greatly diminished. Further, states will be forced to of a ‘regulatory technology’ — a technology that can be used adopt and incorporate distributed ledger technologies in an both to define and incorporate legal or contractual provi- attempt to preserve their existing positions and to keep pace sions into code, and to enforce them regardless of whether with the technological revolution taking place around them. or not there subsists an underlying legal rule” (Filippi and Ultimately, the emergence of these new technologies may Hassan 2016, 10). Some researchers even suggested that the erode the international power dynamics of the last century implications of blockchain technology are so profound that as individuals and states can now equip themselves with the they will give rise to autonomous algorithmic entities, capa- tools to control trans-border economic interactions without ble of participating independently in markets and finding reliance on centralized systems. Cross-jurisdictional finan- jurisdictions suited to their purposes (Lopucki 2017). How- cial services that were once functionally impossible are now ever, this same brand of systemic thinking has not yet been feasible using distributed ledger technologies. Furthermore, applied to blockchain’s consequences for state power in the depending on how these DLT systems are designed, states international system. will likely have limited ability to regulate or interfere with the Interestingly, some of the best articulated and theoret- activities of these services. ically compelling treatments of the governance and policy THE BLOCKCHAIN ECOSYSTEM implications of blockchain can be found in investment bank research reports and in advisory materials prepared by con- The arrival of blockchain marked the beginning of a renais- sultancies. For instance, in a 2016 report “Bitcoin, Block- sance in networked data structures and the platforms that chain and Distributed Ledgers,” Deloitte researchers suggest innovators build on top of them. Blockchain has produced a framework for evaluating the advisability of adopting dis- a means of collaboration based upon an entirely novel tributed ledger technology and demonstrate how it could way of categorizing data structures. Within this new frame- be applied by states (Evans-Greenwood et al. 2017). In their work, data structures can be located along a spectrum from formulation, actors should consider moving to blockchain completely open, decentralized, and public, to completely when any of the following objectives exist within an organiza- closed, centralized, and exclusive. When states, companies, tion: disintermediation (removal of process intermediaries), and individuals are forced to choose a model for sharing cross-jurisdictional flows (ie across political of organization- data, they must weigh the advantages and limitations of al lines), or compliance verification. While this demonstrates each technology along this spectrum. For instance, when that some researchers are attempting to formalize when and banks decide that they want to move a financial process ‘to why actors should adopt blockchain, these efforts also fail the blockchain,’ in reality they are often speaking of a more to address the consequences of such adoption on existing general process involving a fundamental re-evaluation of power structures at the global level. Furthermore, literature the stakeholders, risks, and transaction volumes that the discussing the technical nuances of blockchain technology new design must accommodate. is of relatively little direct application beyond developing Many sources (Tapscott and Tapscott 2017) relate block- an understanding of how the processes function and their chain to the democratization of services and organizations technical capabilities and limitations. Susan Strange, author by increasing the transparency and legitimacy of under- of Structural Power, proposes a useful concept for thinking lying data and its resistance to unauthorized entries and about how states leverage their respective structural advan- tampering. There are several factors that contribute to this. tages (1989). Her ideas however, have yet to be incorporated First, all participating computational nodes must agree on into a modern world that capitalizes on blockchain technol- transaction validity, as they all share the same ledger copy. ogy. Robert Keohane and Joseph Nye on the other hand, Second, node operators are independent parties with their with their influential Complex Interdependence Theory, al- own interests. Third, except in certain unique circumstanc- low for more opportunities for blockchain to have a greater es, verified transactions cannot be canceled or deleted once impact on things like the distribution of global power within assembled in a block. The latter two factors are applicable the international system (Keohane and Nye 1977). only in the case of public blockchain systems, which utilize As distributed ledger technology changes the structure individual computational power to sustain transaction veri- of the global financial system, it will democratize access fication processes. Public blockchains are open for anyone V. Fintech∙Hirschkorn, Levanov, Titov, & Williams | 39 to join and to observe. disruptive potential. Private, or permissioned, blockchain is often deprived THE STATE-BLOCKCHAIN NEXUS of these latter two factors, but still has the requirement of consensus among participating nodes. However, in private Before turning to blockchain’s implications for nation-states, blockchain there is no guarantee that all node operators will it will be informative to consider a historical example of how have the common interests and incentives necessary to drive another hierarchy-flattening technology affected and can -af the collective prevention of transaction manipulation. Thus, fect traditional power structures. The advent of the internet it is crucial to distinguish public from private blockchains. changed the dynamics of nation-state and individual power They are different not only in terms of technical implemen- by enabling the free flow of information. Before the internet, tation, but also in developmental incentives. Traditional en- traditional information flow was largely controlled by large terprises that rely upon centralized, asymmetric relations, media networks (Westcott 2008). That is, where govern- such as banks for example, focus mainly on piloting private ments or organizations once enjoyed the ability to meter the rather than public blockchains (Scott 2016). In these cases information that individuals consumed, the internet—partic- of private use, there is a risk that blockchain applications ularly with the introduction of social media—democratized will be managed by only a few actors, in essence, giving rise access to information across the world, thereby significant- to a “blockchain technological elite” (Adams et al 2017). By ly reducing the power of centralized media organizations. monopolizing the technology and rejecting its principles of Indeed, much information now flows from peer-to-peer, as decentralization and disintermediation, centralized institu- individuals communicate directly with other individuals, in- tions risk engendering public distrust, which might cause stitutions, and even governments. This shift has empowered the rise of alternative organizations. These organizations, individuals with the means to find and share information, re- also called Distributed Autonomous Organizations (DAO), gardless of the support of legacy institutions. As an extreme would be governed autonomously without requiring a cen- example, during its 2011 military campaign against Gaddafi tralized authority. and his forces in Libya, NATO intelligence personnel routine- DAOs are largely theoretical organizations ‘hosted’ on ly utilized information from Twitter users in order to build distributed ledgers that use smart contracts to adminis- a real-time picture of events on the ground (Norton-Taylor ter the operations of an organization or firm. The block- and Hopkins 2011). In this example, it is relatively easy to see chain ecosystem has taken its first steps toward this vision how individual rebels were able to leverage and support the of autonomous organization, in the form of decentralized military power of a sympathetic nation-state actor against applications that execute smart contract code and use their own, domestic leadership — all through the use of an app-specific tokens to minimize the application’s reliance ordinary smartphone and an internet connection. on human management. In practice, human management Schematically, the internet reconfigured how informa- may resemble the following scenario: several groups are cur- tion flowed between states, between people, and across rently working on decentralized applications meant to rival borders. Whereas traditional information flow relied largely transportation services Uber and Lyft (Raval 2016). In such on a centralized authority with a high degree of control over apps, drivers would earn app-specific tokens for successfully information, the internet eroded that centralized control completing drives which they could either use themselves or while simultaneously increasing the informational power of sell to passengers wishing to use the service. DAOs, in con- individuals. In the same way that the internet reconfigured trast, are even more autonomous and could be configured the global communications architecture, as well as associ- to become facets of the internet. Such organizations would ated power dynamics at both the state and individual levels, be largely agnostic toward discriminators such as a partici- distributed ledger technologies are reconfiguring the glob- pant’s citizenship or physical location. If DAOs become wide- al coordination architecture for individual, corporate, and spread, nation-states could even face situations where large state participants (Westcott 2008). That is, where centralized numbers of their citizens are involved in complex financial power and authority has always resided within large finan- and organizational structures, governed by autonomous cial and governmental institutions, the next generation of code executed independently on the blockchain. financial architecture will see that power greatly diminished Another example is an organisation called “Bitnation,” as more and more entities opt to utilize emerging blockchain which has the vision of fully hosting alternative state institu- technologies (Westcott 2008). tions on a blockchain. The primary goal of this DAO is to of- Beyond individual banking institutions, however, the po- fer more convenient, secure, and cost-efficient government tential impacts of distributed ledger technology on global services than does the current administration (Prisco 2015). power dynamics is likely to be significant. Within this tech- Blockchain’s original vision focused on replacing institution- nology exists the potential for nation-states to reclaim fi- ally-mediated trust systems with technological infrastruc- nancial autonomy outside of the traditional financial system ture, or a “politics-free” infrastructure” (Scott et al 2017). without sacrificing legitimacy, security, or convenience. An In recent years, the blockchain ecosystem has witnessed example of such an increase in autonomy could be found in an explosive infusion of investment and research into firms proposals to replace the cash transfer service SWIFT with a pursuing this vision. Although industry experts are skeptical blockchain-based alternative. Russian Deputy Prime Minis- of fully autonomous organization and their near-term real- ter Arkady Dvorkovich recently suggested that Russian banks ization (Yanovich 2017), it remains a concept with extreme are readying to “turn off” the SWIFT cash transfer service (RT 40 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

2018). Blockchain’s affordances align with state actors inter- fluence of traditional power structures. ested in revising the global financial status quo. It is therefore One of the most striking implications of blockchain is the critical for current global powers to analyze and understand multiplication of transaction opportunities. In a world of dis- the implications of this technology and work to reinforce ex- tributed ledgers, assets and organizations become more pro- isting diplomatic channels or to develop alternate means of grammable. Blockchain enables new, complex derivatives international cooperation and dispute resolution. and transactions involving large numbers of counterparties. Recently, Venezuela’s President Nicolas Maduro an- As Keohane and Nye point out, however, “interdependent nounced that his country will soon create its own cryptocur- relations involve costs, since interdependence restricts au- rency. Maduro claims that his new currency, which is to be tonomy” (Keohane and Nye 1977). States who move first to supported in some manner by Venezuela’s oil reserves, has set the terms of blockchain’s integration into the global finan- the ability to help Venezuela “defeat the financial blockade cial system will be advantaged with structural power created and move toward new forms of international financing for the by this technological shift. In the same way that the United economic and social development of the country” (Chappell States gained advantage by the globalization and expansion 2017). That is, recent activity in Venezuela highlights both the of financial markets, some states will seize the opportunities rapidity with which technological understanding and adop- in blockchain’s disruption of the status quo. These opportuni- tion of DLT is progressing, as well as the potential use cases ties will not come without associated costs, however, and in that are soon to be put to the test. If Venezuela is indeed suc- this case will most likely include a deteriorated ability to inter- cessful in using its own cryptocurrency to circumvent eco- vene in domestic markets. nomic blockades, the implications of this on international re- There is certainly no shortage of interest in blockchain lations are difficult to understate. What is more, as blockchain from regulators, bureaucrats, managers, and strategists in has the ability to create new methods of cooperation that are many states around the world. Beyond Venezuela’s claims immutable, verifiable, and transparent, it opens even more regarding its own cryptocurrency, both the Russian and possibilities within the realm of treaties in areas such as trade, United States governments have expressed interest in using finance, and perhaps even defense cooperation. Blockchain’s blockchain technologies to provide services and to enhance impact on global power dynamics and the strategic logic fac- recordkeeping (Brainard 2016). Our research indicates that ing states that are considering the state-sanction adoption of the Russian government has been more ambitious than the blockchain, such as Venezuela and Russia, are highly interre- United States in developing a cohesive, whole-of-government lated. If incorporating distributed ledgers into a state’s opera- blockchain strategy. The United States has made consumer tions confers it an advantage in the international system, this protection and marketplace development its primary objec- will necessarily become a consideration when it comes time tives, while Russian strategy reflects a greater concern for op- for the state to make decisions about blockchain. portunities to actually use DLT in government operations, it Embracing a new regulatory technology is a complex and remains to be seen precisely what kind of DLT models the Rus- multidimensional problem, often decided by the consensus sian authorities will implement. If the projects turn out to be of multiple stakeholders across multiple government agen- based on more traditional ledger designs, they may forfeit first cies. In an overview of the ways structural power has been strike advantage but, potentially, exert more influence over conceptualized by international political economists, Mar- domestic markets than ever before. The Association of Finan- tijn Konings writes that “structural power need not be coer- cial Technologies, a consortium consisting of the Central Bank cive in any overt manner, although it may be a precondition of the Russian Federation, private entities, and Russian gov- for certain types of coercive action” (Konings 2008). He goes ernment officials, recently shared a white paper outlining the on to explore how the rise of new financial institutions and principles of a proposed “Masterchain” (Arkhipov et al. 2017). technologies transformed, but ultimately re-entrenched, the Masterchain would reduce the regulatory uncertainties for en- structural power of the United States. Konings claims that tities that wish to build services on top of distributed ledgers “the globalization and expansion of financial markets did not by producing an approved, Ethereum-based protocol. Mas- render the US vulnerable to the same disciplinary pressures terchain also serves as the foundation of several private and as other countries but largely freed it from the balance of pay- state-run blockchain initiatives, such as a proposed electronic ments constraint and increased its policy leverage” (Konings mortgage recordkeeping system. Based on conversations we 2008). Researchers must try to anticipate how changes in the had with policymakers while visiting Russia, we believe Mas- financial system will transform how structural power is con- terchain will also enable the much rumored CryptoRouble structed and wielded. — although the exact details of this apparently remain a well Blockchain can be seen as a protocol for flattening hierar- guarded secret as it escaped all of our efforts to uncover more chies and democratizing access to financial markets — among substantial information. Although the white paper does not other things. Alternatively, such technology can generate ab- describe how, exactly, Masterchain will differ from the Ethe- solute barriers to entry for firms outside of the trust network. reum specification, it does claim that Masterchain will be a States that reject the new DLT model might find their ability distributed ledger protocol with controlled access and so will to determine their own financial destinies deteriorated, while probably most closely resemble a permissioned blockchain states that embrace novel, more technologically-progressive controlled by some facet of the government. models based on DLT would be in control of entirely new le- Blockchain’s general influence on traditional levers of pow- vers of economic power — or, alternatively, free from the in- er in the international system is also directly relevant to the V. Fintech∙Hirschkorn, Levanov, Titov, & Williams | 41 specific case of US-Russia relations since states will inevitably in this specific case, monetary transactions. In the first variant be forced to develop new means of influence and methods of of the experiment, the transfer of this data will be conducted cooperation. An additional dimension in which blockchain through specific nodal points — agents in the network. As data might influence international relations is the decentraliza- is transmitted through nodal agents, probabilistically-deter- tion of decision-making processes among community partic- mined changes in transmission patterns and data integrity ipants aside from those directly involved in governance. That can be programmed into the simulation. These changes can is, despite official policies, members of a blockchain-based include anything from how, and with whom, the network par- community might determine their own rules regulating the ticipants can communicate, how they access informational ways that they collaborate with each other (Rea, Fischer, and flows, and how much decision-making authority they have. duRose 2017). The technology creates an alternative jurisdic- These simulations should then allow us to see the devel- tion with its own binding rules, where the external politics of opmental trends of the society for different options based on any country are not able to affect the interrelations of specific how they utilize distributed ledger technologies. Furthermore, stakeholders, such as the residents of these countries. In this the data obtained can help in the theoretical forecasting of the case, we observe self-managed communities, in other words consequences of using blockchain in the field of finance on a decentralized autonomous societies (DAS), which ultimately global scale. Implementation of such a function is possible in have the potential to alter global rules and norms (Garrod almost any object-oriented language. The most popular for 2016). these types of tasks are MatLab and Python. Our implementation can be performed in the objective-c language in order to DELIVERABLE DISCUSSION run on a mobile device that will display the simulation. Our proposed deliverable will utilize a computer simulation CONCLUSION to attempt to model changes in entity behavior according to changes in the nature of their associated relationships. The There are many parallels between the current state of block- objective of the computer simulation is to model a process chain technology and the early days of the internet, circa with sufficient accuracy to draw reasonable conclusions. 1995. At the time, it was understood in many circles that inter- Computer simulations are particularly useful if, for some rea- net technology was going to fundamentally change how peo- son, the actual process is difficult or impossible to directly ob- ple lived and worked, but the nuances of how that actually serve or measure. In our study, we want to understand how manifested 10 or 15 years later were nearly impossible to see the introduction of blockchain technology will affect the rela- or understand. Further, even the most committed visionar- tionships between nation-state actors and the potential im- ies could not have imagined the rise of such phenomena as plications for global economic power dynamics. To start, our Facebook and Twitter; nor could they have envisioned those hypothesis is that the use of technologies related to decen- platforms being used to organize dissent and topple state tralized processing and data transfer, specifically within the dictatorships as we saw in Egypt. These platforms leveraged global financial ecosystem, will affect many aspects of soci- much of the original structure of the internet; in essence, they ety. For example, it has the potential to increase the trend to- mirror the same technology that emerged in the late 90’s and ward decentralization, speed up data handling, and increase early 2000’s. the security and autonomy of data transmission. Distributed ledger technologies represent a similar para- To test this hypothesis, we would need to either wait for digm shift in how people use data and connectivity to orga- a lengthy period of time (years) in order to observe the ac- nize and operate. Further, this shift extends to the interactions tual changes to the system, or collect a sufficiently large set within and between nation-states themselves, both in how of statistics of similar process transformations. Although the states choose to use and implement the technology, as well first option is reliable, it is also not practical. The second op- as how states are forced to adapt and change due to the adoption uses assumptions and predictive modeling and therefore tion of DLT by other states around them. DLT has the ability to sacrifices accuracy. In the context of this hypothesis, it is pos- enable states to streamline and economize many bureaucrat- sible to use computer simulations to enhance the reliability ic processes while simultaneously making them more secure and utility of the second method. By expertly selecting the and robust. It also has the ability to empower smaller, less ca- initial parameters that are relevant to the factors in question, pable states with a level of economic and financial autonomy the simulation can be constructed. Such modeling will allow previously unobtainable — despite the desires and influences us to consider changes in inter-community dynamics across of larger states. There is no doubt that DLT represents a pro- numerous aspects of virtual communities. found technological innovation with massive implications at Communities in the experiment can be represented by all levels. In fact, the implications of this technology may be multi-agent systems. These agents in turn exchange data so profound that it is likely to change the basic landscape of among themselves and constitute a special entity in the theo- how people, and states, interact and connect — it may even ry of multi-agent systems, as they are able to make decisions begin to challenge how we define some of these basic terms and achieve objectives. The model is constructed in such a in the first place. way as to maintain the ability to grow and multiply (critical in the simulation of human society or dynamic entities). Agents are then able to transfer data packets between one another. These data packets characterize the flow of information and, 42 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

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6 PROMOTING BUSINESS ATTRACTIVENESS FOR THE TECH SECTOR IN RUSSIA: LESSONS FROM THE UNITED STATES AND CHINA VI. Trade and Business Development Working Group Tatiana Aleksandrina, Colton Cox, Kirill Protasov, and Boguang Yang

Abstract Currently, the Russian economy faces stalled GDP growth, along with decreases in both investments and oil prices. To compete in a vibrant knowledge economy and retain companies within its borders, Russia should attempt large-scale optimization of its domestic business climate for high-tech companies. We focus on three Russian regions: Moscow, the Republic of Tatarstan, and Tyumen Oblast, analyzing the investment climate and the development of the digital sector in each region. Stating the most crucial needs for technology companies to stay successful and competitive in each stage, we identify the most common roadblocks and the necessary steps for key actors that want to create a supportive ecosystem. For broad, comparative, empirical lessons, we utilize the case studies of Silicon Valley (US) and Shenzhen (China). To conclude, we build a threefold policy framework that examines the impact of innovation and partnered learning at the state, federal, and transnational level.

INTRODUCTION business climate for the new cadre of technology-focused companies. In the absence of a supportive domestic envi- urrently, Russia is in a challenging economic situation: ronment, Russian tech companies often move abroad in its GDP growth rate is stalled, international sanctions search of more dependable business climates (Sukharevska- have led to a decline in investments, and the price of C ya 2017). oil, a key economic driver, has decreased significantly. How- According to the 2017 KPMG “Global Technology Inno- ever, optimistic forecasts predict that the slowing of infla- vation” Report, though other countries have made signifi- tion and resultant decrease in the cost of capital will open up cant strides in innovation development, the United States new opportunities for companies operating in Russia. Yet, and China continue to present the most promising markets the Russian economy must diversify in order to stay compet- for technology breakthroughs with global impact. In order itive in the global market. As innovation — or the develop- not to fall behind in the global knowledge economy, Russia ment of creative, technological solutions in fields as varied should aim to bring about the large-scale optimization of its as healthcare, finance, and social engagement — plays an domestic business climate for foreign high-tech companies increasingly important role worldwide, companies continue that will likely usher in advanced techniques, critical les- to grow their investments in cutting-edge technologies and sons, and new markets. As a result, this process would also entrepreneurial endeavors. It is thus no surprise to say that open up new opportunities for economic transformation “yesterday’s technology investments are today’s building and diversification, particularly in regions that are heavily blocks” (PWC 2017). In order to stay competitive globally, reliant on a single sector. For example, Vadim Shumkov, the Russia must foster a forward-thinking and well-supported Regional Vice Governor of Russia’s Tyumen region, is eager to promote business development and to use trade, regional Tatiana Aleksandrina, Graduate School of Management, Corporate tax, and financing policies, as ways to expand local startups Finance (Shumkov 2017). Tyumen Governor Vladimir Yakushev also Colton Cox, Rice University, Sociology and International Policy Studies notes the region’s challenges in developing new markets Kirill Protasov, Georgia State University, Andrew Young School of Policy and broadening commodity distribution channels (Yaku- Studies shev 2017). We use this paper to demonstrate how a more Boguang Yang, University of Rochester, Department of Political Science, technology-driven economy ultimately promotes aggregate Department of Economics productivity and innovation, which has broad implications 46 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX not only in improving national economies but also in the OVERVIEW OF THE CURRENT STATE OF THE BUSINESS context of transnational cooperation and trade. Ultimately, CLIMATE FOR TECHNOLOGICAL DEVELOPMENT IN PRES- we hypothesize that case studies from the US and China re- ENT-DAY RUSSIA veal important mechanisms for the promotion of a robust More and more citizens and companies in Russia acknowl- business climate and attractive investment opportunities edge the importance of digital skills and technological re- for technology companies in Russia. sources in the modern world. However, the rate of personal OVERVIEW OF TECHNOLOGY STARTUPS, INNOVATION computers and internet usage in Russia is still lower than it RATES, TECH-SECTOR PRODUCTIVITY, AND DEVELOP- is in Western Europe, and there remains a dearth of tech- MENT PROJECTIONS AROUND THE GLOBE nologically-skilled workers. In 2016, the share of Russian people using broadband wireless internet was 18.77 per- Since the information revolution, the technology sector has cent, and the average web speed reached 12.2 megabits per been grown exponentially. By one measure, worldwide rev- second (World Bank 2015). Based on this measure, Russia’s enues for information technology (IT) products and services web usage is on the same level as France, Italy, and Greece are forecasted to reach nearly $2.4 trillion USD in 2017, an (World Bank 2015). By 2017, the market for commercial data increase of 3.5 percent from 2016 (International Data Corpo- centers and warehouses increased 11 percent from the pre- ration 2017). The IT sector across different Russian regions, vious year (EWDN 2017). Moreover, we can now see stable however, still has large unexploited potential in develop- growth in the market for cloud technologies – at 40 percent ment; in these areas, a major concern arises from how to annually (5 Hot News 2016). The potential for companies to build a desirable and sustainable investment environment thrive in this environment is exemplified in the examples of that could attract more leading foreign tech companies. innovation zones like Skolkovo in Moscow, Innopolis City in Russian President Dmitry Medvedev made clear in his 2010 Tatarstan, and the industrial parks in Tyumen. visit to the United States that visiting California’s Silicon Val- Despite said growth, there is still a large gap between ley and learning about the conditions that produced such a Russia and other developed countries. Recently, the World vibrant technology ecosystem were of key priority, subse- Economic Forum assessed the readiness of countries to quently expressing his desire to create an analogous envi- achieve digital transformation (WEF 2016), with Russia rank- ronment in Russia (O’Mara 2011). ing only at number 41, falling behind leading developed Regarding cross-national rankings and comparisons of countries like the US, Finland, Singapore, and Great Britain. technological ecosystems, renowned economic theorist and The report identified Russia’s weak policy framework, poor management professor, Richard Florida, ranked Russia 22nd market conditions, and sub-optimal business climate as rea- in the world for research and development investment in sons for such a ranking (WEF 2016). A recent World Economic 2011. However, Florida ranked Russia’s potential higher, at Forum Global Competitiveness Report ranked a country’s number 12 per its high per capita science and engineering business environment, assessed on a composite of skills, in- researchers, only five spots behind the US (Florida 2011). frastructure, and investment (WEF 2016-2017). Ranked 43rd, These data reveal that while Russia trails behind nations Russia once again fell behind developed countries such as such as the US, Canada, Israel, and a wide range of West the United States, Switzerland, Netherlands, and Germany. European nations, in terms of technological productivity These numbers emphasize that reforms and other changes indicators, Russia has nonetheless outpaced other large na- to Russia’s business climate are crucial for the nation to stay tions such as China and Brazil (Florida 2011), suggesting that competitive. Russia maintains an inherent potential for growth within its Despite Russia’s relatively lackluster international rank- technological sector. ings, the digitalization of the Russian economy is projected According to a thematic think piece from the United Na- to be a top driver of its long-run economic growth (McKinsey tions on technological change in developing countries, “the 2017). Currently, the share of digital industries in Russia’s ability of local firms and enterprises to access technological GDP is 3.9 percent, while the corresponding share is 10.9 know-how is fundamental to shaping their ability to provide percent in the United States, and 10.0 percent in China (McK- products and services” (United Nations 2015). The agenda insey 2017). By these numbers, Russia has the potential to lists political stability, an educated workforce, enterprises harness digitalization and increase its GDP by 4.1-8.9 trillion committed to research and development, and a balanced in- rubles by 2025 (McKinsey 2017). In large part, this impact tellectual property rights-framework as key issues to address should derive primarily from production and logistics opti- in order to increase technological investments. Keeping in mization and from an increase in labor efficiency. mind this array of governmental, legal, and private sector It is important to consider that the level of digitalization factors which catalyze the growth of technological business differs in Russia from region to region. Nonetheless, lagging ecosystems in developing nations, our research centers on regions are developing quickly and, in 2016, the so-called ‘young’ tech companies within Russia, specifically referring ‘technology gap’ between Moscow and other Russian re- to those spanning the start-up phase to approximately two gions decreased to a measure of 1.35, in comparison to 2.6 in to three years after their formation. Furthermore, we define 2011 (Volkova 2016). Moreover, the frequency of ‘e-shopping’ the appropriate metrics for assessing a nation’s rate of inno- is nearly the same across the federation, while in Moscow vation and the productivity of a nation’s tech sector. the average bill is 25 percent higher (BCG 2016). The Boston Consulting Group (BCG) assessed the digital economy in VI. Trade ∙ Aleksandrina, Cox, Protasov, & Yang | 47

Russia and placed the country at number 39 in global ratings dix). (2016). On the question of logistical infrastructure for tech- The regions differ significantly in terms of risks and po- nology firms, projections demonstrate that if more Russian tential combinations of such risks. Tatarstan has the lowest governmental funds would be directed toward constructing overall risk, while Moscow has the highest economic, crimi- the necessary facilities for the technology industry, the con- nal, and managerial risks among the three regions. Tyumen tribution of the digital economy could reach 3 percent of the region specifically demonstrates the highest ecological and GDP by 2021 (Volkova 2016). When designing future initia- social risks. In terms of potential, Moscow is ranked as the tives it is important to consider and mitigate cross-regional strongest region in almost all categories except natural re- disparities. sources and tourism potential. Tatarstan is also ranked The Russian government has taken some steps to help among the top ten regions with the most potential in almost industries within the country achieve digital transformation. all categories except infrastructure and natural resources. For example, in July 2017 the state announced a federal pro- In contrast, Tyumen is ranked 34th among all 85 Russian gram, titled “Digital Economy in the Russian Federation.” regions in the category of potential. Thus, all three regions The goal of this program is to create an ecosystem for the share essentially the same risks (minimum to moderate, digital economy, to construct necessary institutional and with a difference of seven positions) while differing signifi- infrastructure facilities for technology companies, and to in- cantly in potential (lower to high, with a difference of 33 po- crease competitiveness in the global market. The program sitions). outlines goals, milestones, and a roadmap for 2024 in five According to another rating compiled by the Agency for key areas: policy, human resources and education, research Strategic Initiatives, Moscow, Tatarstan and Tyumen region and technology, IT-infrastructure, and information security. are included among the top ten Russian regions in a ranking of investment climates in 2017. Tatarstan ranked first (as THE THREE RUSSIAN REGIONS IN OUR COMPARATIVE in 2016), Moscow third (tenth in 2016), while Tyumen region CASE STUDY: was sixth (fifth in 2016). The rating includes 45 indicators Moscow, Tatarstan, and Tyumen from the following arenas: 1) regulation; 2) institutional setting; 3) infrastructure; and 4) support of Small-to-Medium Moscow, Tatarstan, and Tyumen are economically strong Enterprises (SMEs). regions, each with a high gross regional product (GRP) per In the latest rating of innovation development, com- capita. Though our research draws on interviews conduct- piled by the National Research University Higher School of ed within the city of Tyumen proper, our mention of Tyumen Economics, Tatarstan is ranked first and Moscow is second, in this research refers specifically to Tyumen Oblast, also while Tyumen takes only 21st place (see Table 5 in the ap- denoted “Tyumen region,” unless otherwise mentioned. pendix). Nonetheless, all three regions are classified as hav- Moscow has the highest GRP per capita, which is 2.4 times ing a high regional innovative index. This particular rating higher than in Tatarstan, and 1.8 times higher than in Tyu- assesses Russian regions in the following four categories: 1) men region. The regions differ in terms of the structure of socioeconomic conditions for innovation; 2) scientific and their economies. In Moscow, almost 70 percent of the GRP technical potential; 3) innovation activity; and 4) the quality consists of manufacturing, wholesale and retail trade, and of an innovation policy. Thus, all three regions seem to cre- real estate. Interestingly, the share of wholesale and retail ate appropriate conditions for technological transformation trade (35.4 percent) in Moscow is almost two times higher and innovative development. than the mean share for Russia (19.0 percent), while there is a zero percent share in mining. In Tatarstan, 63 percent of FACTOR ANALYSIS FOR INVESTMENT IN TECH COMPANIES the GRP derives from a combination of mining, manufactur- AND REQUISITE STEPS REQUIRED FROM THE THREE ing, wholesale and retail trade and real estate and leasing. RUSSIAN REGIONS The same industries make up 58 percent of the GRP in Tyu- men region. Other industries that are important for regional Companies economies are construction, transportation, and communi- The typical life cycle of young technology companies can cation. Thus, Moscow is more specialized in trade and real be described in four main phases: 1) research and develop- estate, while Tyumen and Tatarstan are more mining-orient- ment; 2) concept development and building the minimum ed and industrial regions. valuable product (MVP); 3) product development and first The structure of a regional economy depends on, and shipment; and 4) scaling. In order to succeed in each of the simultaneously affects, the investment attractiveness of a phases, however, technology companies must gain specific region. In the most recent Rating of Investment Attractive- resources and obtain the requisite level of investments. In ness of Russian Regions prepared by RAEX (Expert RA) rating a generalized sense, key resources which young technology agency, the Republic of Tatarstan is included in the second companies need in each of the stages can be grouped into group of Russian regions, specifically encompassing regions three main areas: network, assets (finance, human capital, with a minimum risk and a medium potential. Moscow is in infrastructure, institutional settings), and culture. the group of regions with a high potential and a moderate According to a recent McKinsey report (2017) there are risk while Tyumen region has the lowest rank and is clas- two main roadblocks which disable further development of sified in the group of Russian regions with a lower poten- the technology ecosystem and venture industry in Russia: tial and a moderate risk (see Tables 3 and 4 in the appen- sector specifics and a lack of financing. Moreover, there is a 48 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX dearth of required competencies, both from entrepreneurs tors, and corporations. Despite the substantial number of as well as from investors and mentors. Each phase of de- possible sources of financing, the level of investment in Rus- velopment for young technology companies requires sub- sia is still very low. The key shortfalls are lack of incentivized stantial investment. The report concludes that the biggest investors, innovations not being the highest priority and the problem for technology companies in Russia lies in the as- low level of investments due to the lack of possible exit op- sets component, specifically on the finance side (McKinsey portunities from the project. 2017). Nevertheless, the scaling phase is the last in this lifecy- In the research and development stage, substantial in- cle. At this stage, all of the resources and effort should be vestment is crucial in order to proceed with product devel- maximized in order to create sustainable, successful, and opment. Human capital also plays an essential role, with long-lasting companies. In the scaling phase, investment universities and research institutions incorporating research sources mainly come from commercial banks and state and and design (R&D) activities as regular components of their private investment funds. From commercial banks the main everyday processes. The key finance contributors are grant insufficiency in Russia derives from the absence of ‘long’ funds and R&D budgets of corporations. For the grant funds, low-cost investments and the lack of readiness to take ven- the main insufficiency in Russia is a lack of focus on commer- ture risks. We now turn to an examination of the three afore- cially successful projects, while for corporations the main mentioned regions in terms of the current level of business insufficiency is a significant gap in the level of financing in climate for young technology companies, employing this comparison to international companies (McKinsey 2017). threefold perspective of networks, assets, and culture. In the phase of concept development and building a min- Regions imum viable product (MVP), it is important to have platforms Every region has a set of assets, networks, and an underlying which enable MVP building and concept creation, such as IT- business culture that determines its success in supporting parks, accelerators, and incubators. Elsewhere, the essential high-tech firms. According to the Asset Mapping Roadmap work derives from the experts in the particular field and their (see Figure 1), these elements form the regional innovation accumulated knowledge base. Culture is also an important environment that impacts the ultimate prosperity of the re- resource, as the percentage of successful projects is very gion (Council on Competitiveness 2007). The region’s suc- modest and a cultivated entrepreneurial culture could be cess in developing a successful high-tech sector depends on an important motivator. The key contributors in terms of the linkages between these elements and their integration finance are business angels and state funds. Currently, the into the regional policy. level of investments at this stage is not adequate for building As shown in Figure 1, the assets, networks, and culture a robust digital economy in Russia (McKinsey 2017). combine to form a regional innovation environment, de- In the phase of product development and first shipment, fined as “an ecosystem in which human creativity, business a range of resources are equally important for the compa- acumen, scientific discovery, investment capital, and other ny. However, networks play an important role in the first elements come together in a special recipe that nurtures shipment, as distribution channels are not always easily budding ideas so they can grow into flourishing and sustain- reachable and entry barriers still exist in many industries. able enterprises” (Hwang 2012). In the following paragraphs, The main contributors in the finance side are venture funds, we outline the assets, networks, and culture available in the state and private funds, development banks, strategic inves-

Figure 1. Regional Innovation Environment Inputs and Outputs (Council on Competitiveness 2007) VI. Trade ∙ Aleksandrina, Cox, Protasov, & Yang | 49 innovation ecosystems of Moscow, Tatarstan, and Tyumen. intelligence, the Internet of Things, virtual reality, and big Assets data analytics. To fund these projects, 1.5 billion rubles will come from state budget and the other half will come from Assets include the human, financial, physical, and institu- private co-investors. The RVC operates 26 venture funds and tional capital in a region. The asset base is an underlying is planning to create an additional 10 venture funds by 2020 factor for corporate location decisions. Intellectual resourc- (Stulov 2017). Moreover, RVC is managing a federal acceler- es can be assessed through examining higher education ator of technology startups known by the moniker ‘Genera- statistics in each region. The population of Moscow region is tion S’ and plans to further improve its activities helping to 12,380,664, Tatarstan is 3,885,253, and the Tyumen region is attract money for companies and to develop the innovation 1,477,903 (Rosstat 2017). According to the 2010 Russian Cen- ecosystem in Russia. sus, the share of people with higher education in Moscow is The development of venture funds and business angels 35.23 percent, in Tatarstan it is 18.48 percent, and in Tyumen in Russia is lower than overseas. Moreover, most of the funds region it is 18.2 percent. To compare, 18.8 percent of the en- belong to Russian residents and only a few of them are in- tire population holds a bachelor’s degree, a master’s degree, ternational. In comparison to 2016, in 2017 the number of or a specialist’s degree in Russia (Russian Census 2010). In annual venture deals did not change and stayed at a level the last Rating of Russian Regions on the Quality of Life com- of approximately 400. In 2017 there were only 49 actively piled by RIA Rating, in terms of the share of people with high investing Russian funds (Plenin 2017). However, in 2017, 11 education these regions were ranked 1st (Moscow), 14th (Ta- new funds conducted investments, while in 2016, only four tarstan), and 34th (Tyumen) (RIA Rating 2017). Nonetheless, new funds did so (Plenin 2017).[1] there are huge discrepancies between demand from tech Moscow, as the capital, arguably has the most plentiful companies and supply on the labor market. First, the high- finance opportunities. The headquarters of most corpora- tech sector needs a different knowledge base and set of skills tions and banks are in Moscow and many funds and acceler- than most students gain during their studies. Most universi- ators are also from Moscow. For instance, one of the biggest ty programs focus on fundamental knowledge ignoring the startup funds, the Fund for Development of Internet Initia- importance of personal (leadership, creativity, independent tives operates in Moscow and its offline educational and net- thinking) and professional skills (programming, research working programs operate mainly in Moscow. The Skolkovo and managerial skills). Second, most students are willing to center and business school are also based in Moscow. Fi- work for large corporations and the public sector rather than nally, other venture funds, business angels, and indepen- start their own businesses, indicating a relatively low level of dent investors work out of Moscow, or plan their meetings entrepreneurial culture. Third, engineering majors and hard and roadshows in the capital. Each of these factors open a sciences are just recovering after a deep crisis resulting from window for startup financing in Moscow, thereby creating a a lack of interest from future students, and deteriorating re- high level of competition for investor resources. In order to search facilities. It should be noted that individual Russian be competitive and attract investment, startups and tech- regions are limited in their ability to influence universities nology companies in Moscow should aim to have a coherent and educational policies as the higher education system is strategy and reliable business plan with a clear roadmap. primarily regulated by the federal Ministry of Education and Tatarstan is one of the few regions in Russia which is vig- Science. orously promoting and investing in technology and startups. In terms of financial capital, technology companies re- The region is building technoparks, accelerators, and special quire investment in each phase to cover capital and opera- economic zones such as Innopolis. Investment and venture tional expenses. In most of the cases, technology companies funds in Tatarstan play an important role and support high- apply for financial assistance from various sources. As afore- tech industries, as they are used to organize events, compe- mentioned, the key contributors are: grant funds, R&D bud- titions, and other investor roadshows in an effort to attract gets of corporations, state funds, business angels, venture money into the industry. Technoparks, such as the IT-park funds, other commercial funds, development banks, com- in Kazan also attract new technology companies and help mercial banks and strategic corporate investors (McKinsey them to gain initial investment. The business incubator at 2017). While analyzing the current state of development on Kazan IT-park has already attracted more that 60 projects the financial side, it is important to consider these players with more than 650 million rubles in investment. and their role and presence in a particular region. Currently, While Tyumen is moving toward a more complete inno- in Russia, state federal funds and state grants play a large vation and technology ecosystem, the level of technology role in financing new venture opportunities. The following development is still low and thus the ease of access to finan- large funds bear mentioning: Russian Venture Fund (RVC), cial resources is also low (Yakushev 2017). There are a num- Innovation Promotion Fund, Fund for Infrastructure and Ed- ber of industrial parks developing in the region, which could ucational Programs under Rosnano. bring investors to technology startups. For example, busi- The Russian Venture Fund (RVC) is a state-owned fund ness incubators at the Tyumen Technopark provide com- and development institute. The main investment activities panies with the resources necessary to start initial work (for of this fund are to attract Private Russian and international example, discounts on rent and other operational expenses, investors in innovation segments using the Public-Private the possibility of meeting investors, and so on). Moreover, Partnership model. Recently RVC announced a venture fund the region is investing money to hold startup competitions of 3 billion rubles for investment in fields such as artificial 50 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX like Innoweek-2017, which will conclude with a startup com- • A responsive workforce development program that petition where entrepreneurs from five industries compete includes skill-building initiatives; for investments of up to 10 million rubles (Expert Ural 2017). • Active youth engagement; and However, the Tyumen region stands out in terms of the • University-industry linkages (Hwang 2012). quality of regional infrastructure, as it is ranked first for Culture roads and quality of life metrics (Government of Tyumen A supportive business culture will help regions to leverage Region 2015). Moscow and Tatarstan are also considered re- assets and build networks successfully. One indicator of the gions with high quality infrastructure and rich physical cap- entrepreneurial culture is the number of entrepreneurs per ital. Growing populations and increasing demands placed 1,000 working-age people. The Tyumen region had 0.0740 on infrastructure will require new models of designing, constructing, and operating infrastructure objects. Public-Private Partner- ships (PPPs) presents one potential solution, though Tyumen region lags behind Moscow and Tatarstan in this regard; in the national PPP rankings, the top PPP project in Tyumen was ranked only 19th, in contrast to Moscow and Tatarstan, which were in first and eighth places, accordingly (3P Rating 2017). Meanwhile, Tyumen region and Tatarstan focus more than Moscow on strengthening regional industrial complexes. For example, Tyumen region developed the “Borovsky,” “Bogandinsky,” and the agro-focused “Ishimsky” industrial parks. Likewise, Tatarstan creat- Figure 2. The Concept of The Innovation Ecosystem (Hwang 2012) ed the special economic zone “Alabu- ga,” and industrial parks “Chistopol,” “Master,” and “M7.” Last, each region has created special in- entrepreneurs per 1,000 working-age people in 2010 when stitutions, such as the Investment Agency of the Tyumen Re- the last census was carried out, Moscow had 0.0182 entre- gion, the Infrastructure Development Agency of the Tyumen preneurs per working-age people, and Tatarstan had 0.0494 Region and the Tatarstan Investment Development Agency, entrepreneurs per working-age people (Rosstat 2010). In whose primary focus is to attract capital and coordinate co- 2014, the number of small enterprises per 1,000 people was operation with local entrepreneurs. These institutions help equal to 201 in Moscow, 127 in Tatarstan, and 193 in Tyumen companies to find appropriate office and industrial space, region (Rosstat 2017). manage their infrastructure, and identify sources of finan- These numbers indicate that the entrepreneurial culture cial support. in these regions is inadequate. However, each of the regions Network considered in our study is undergoing efforts to promote en- The links between different kinds of assets, key actors, and trepreneurship and support new firms and entrepreneurs. entities are as important as their presence in a region. Nu- For example, the Tyumen region started a project among merous regional assets should be linked to support the tech- schoolchildren aimed at enhancing entrepreneurial skills nological transformation of Russian regions. And the success and culture. In Tatarstan, the Entrepreneurship Factory, a of innovation requires the convergence of many disciplines kind of school where young entrepreneurs are studying un- and a particular kind of interaction among individuals. As we der the guidance of experienced mentors, has graduated show in Figure 2, many actors and components in a success- more than 1,000 entrepreneurs. Nonetheless, these regions ful innovation environment are connected to a number of both suffer from weak economic networks and partnerships other actors and components, thereby creating a networked among entrepreneurs and firms. system that leads to greater accountability, incentive to in- METHODOLOGY: WHAT CAN RUSSIA LEARN FROM CASE vest, and workshopping of ideas. The most successful inno- STUDIES IN DIFFERENT NATIONAL CONTEXTS? vation ecosystems create and foster networks by focusing on the following elements: Silicon Valley (USA) • A supportive infrastructure for tech-companies; Silicon Valley, in the state of California, is often regarded • Strong intellectual property frameworks; as the “ideal-typical innovative region” (Kenney and Pat- • A robust capital “food chain”; ton 2005). The history of this regional technology hub has • Entrepreneurial support of tech start-ups; multifaceted origins involving government financing, ven- • Proactive innovation leadership development; VI. Trade ∙ Aleksandrina, Cox, Protasov, & Yang | 51 ture capital, and intellectual capital deriving from univer- a unique center of technological innovation. sities (Kenney and Patton 2005). Vitaly Golomb, Founder Indeed, Russian regions can learn a great deal from the and CEO of Keen Systems, remarks that the United States’ growth factors behind Silicon Valley, particularly from the federal initiatives, such as the Small Business Administra- vibrant private sector involvement and the access to intel- tion’s fund-matching program of the late 1950s and federal lectual and legal organizations who cannot merely help to initiatives to slash capital gains taxes, proved indispensable drive innovation, but also to make innovative products more in stimulating the venture capital sector that supported the marketable and appealing to consumers. Critics of Russia’s early growth of Silicon Valley (Golomb 2014). Other scholars Skolkovo project in the Moscow region have alleged that the point to the amplification of boutique investment banks in development has relied too greatly on government fund- the San Francisco Bay Area and “entrepreneurial support ing and would not be able to flourish through private capi- networks,” referring to integrated networks of patent attor- tal in the manner that Silicon Valley has. Moreover, certain neys and managers not involved in venture capital, as key members of the international venture capital community factors that bolstered the entrepreneurial potential of Sili- have observed that while Russia has abundant intellectual con Valley. Such integrated legal, financial, and manage- capital and possesses the innate ability to create disruptive ment networks, they argue, led to the formation of “clusters” technologies, Russian scientists and entrepreneurs often of tech enterprises in Silicon Valley, which, in turn, led to a have difficulty in turning their innovations into marketable “spillover” effect wherein innovation was further diffused products. Additionally, even in the Tyumen region which is geographically (Kenney and Patton 2005). beginning to host more innovation centers such as the Tyu- Moreover, other scholars point to the importance of a men TechnoPark, the Tyumen Deputy Governor stated that university located within such technology clusters. Leslie it is a priority of his government to both increase the number and Kargon note that while northern New Jersey in the mid- of IT graduates in the region and to facilitate a hiring process 1960s was a vibrant research hub that generated a signifi- in the tech sector by establishing greater channels of com- cantly higher amount of research and development funding munication between the industry and students (Tyumen internally than did northern California, this northern region Deputy Governor 2017). With this consideration in mind, the was later overtaken by Silicon Valley because it did not boast Tyumen region could learn much from the synergy that de- a local STEM-focused university such as Stanford from which veloped in Silicon Valley between universities – namely, but to draw employees and expertise (1996). Partnerships be- not only, Stanford University and the University of California, tween Stanford faculty and local industries led to a unique Berkeley – companies, and startups in the region who thrive synergy that allowed Silicon Valley to become the nation’s off channeling graduates from these top-ranked institutions. preeminent technological research and development hub, Given these mechanisms which allowed this regional tech- underscoring the importance of having a multi-purposed nology hub in the United States to flourish, we now turn to university in technological ecosystems that provides both an examination of how China’s analogous hub of Shenzhen academic knowledge and industrial best-practices consult- came to be, with an eye to similarities and divergences from ing (Leslie and Kargon 1996). Ultimately, one can discern the US and Russian case studies. from these facts that the development of Silicon Valley is Shenzhen (China) unique, involving federal financing initiatives and academ- In this section, we study the case of Shenzhen, the heartland ic-industry cooperation, all undergirded by an interconnect- and frontier of technology innovation in today’s China, to ed network of experts from legal, venture capital, and other show how China applied advanced lessons from the United financial sectors. States and succeeded in creating a desirable environment Today, Silicon Valley retains its prestige as a catalyst for for the growth of technology companies, both domestic and economic growth within the tech sector, in large part due foreign. Shenzhen was a small fishing village in 1980. Under to the vibrant financial institutions concentrated near tech China’s “Open Door Policy,” Shenzhen, as one of the Special company headquarters. In the year 2000, total venture cap- Economic Zones (SEZ) initially set up in 1980, attracted mas- ital fundraising in the US reached a peak of 24.3 billion USD, sive foreign direct investment. Shenzhen was the first SEZ and has increased significantly in recent years (Cao 2004). established and showed rapid growth, averaging at 40 per- Total venture capital fundraising in the US increased to 42 bil- cent per year between 1981 and 1993, compared to the av- lion USD in 2016, from a 2015 total of 35.2 billion USD (KPMG erage national Chinese GDP growth of 9.8 percent (Ge 1999). 2017). In addition to these enduring alternative investment A number of foreign enterprises set up manufacturing facili- resources, recent national legislation has proven conducive ties for export trade and later served the domestic markets, to the growth of new technological startups in the region. as well. Shenzhen largely reformed the existing regulations Financial observers have noted that the bipartisan-passed and provided huge incentives for Chinese-foreign joint ven- JOBS Act of 2013 eased legal restrictions on crowdfunding; a tures. Utilizing its geographical advantages as a port city provision which allows tech startups to rely on a wider range and a neighbor of Hong Kong, products made in Shenzhen of investors and which could increase the marketing po- rapidly seized markets at home and abroad due to its price tential of nascent ventures in the valley (Needleman 2012). competitiveness. Given Shenzhen’s outstanding record in Thus, plentiful access to private capital and federal regula- sustaining a manufacturing and tech-driven economy, what tions, which protect intellectual property and engender rig- lessons can other countries such as Russia learn? orous investment standards, continue to make Silicon Valley First, the city largely invested in building a multifaceted 52 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX and comprehensive educational and research environment Figure 3). The growth rate is expected to exceed 10 percent that could provide sustained intellectual and academic sup- annually to ensure long-run development. Facilitated by les- port for innovation. Chen and Kenney (2007) stress the im- sons from advanced foreign companies, the policy support portance of interaction with academia: in the 1990s, Shen- from both national and regional levels sparked off the rapid zhen convinced Tsinghua University to establish Shenzhen development of a wide range of local firms that, today, have Tsinghua Research Institute, and PKU, CAS, and Hong Kong become world leaders in different sectors, such as Huawei, University of Science & Technology also had research bases ZTE, and Tencent. Today, Chinese firms from Shenzhen are established in Shenzhen. Today, the city incentivizes tech largely exporting their technologies abroad, as American start-ups by allowing tech experts to buy shares with their companies did in Shenzhen two decades earlier. patents and technologies. Advanced degree holders with On the other hand, Shenzhen has faced significant issues expertise in particular fields are granted permanent -resi related to inadequate intellectual property protections, dence and housing benefits. According to Murphy (2017), which has affected the reputation of local products world- Shenzhen’s entrepreneurial prosperity largely results from wide. The regulation loopholes regarding intellectual prop- the success in attracting ‘returnees’ from abroad – groups of erty infringement led to heated competition between firms, Chinese citizens who witnessed the power of advanced tech- as well as to the emergence of pirates and fake product man- nologies in places such as the United States and Canada. ufacturers. Over time, firms found that they needed to spend Second, the city promoted vigorously the flow and clus- large sums of money to settle related legal battles. tering of knowledge, ideas, and cooperation by setting up in- In geographically vast countries, such as Russia and Chi- dustrial parks and innovation centers. Citing the example of na, development across regions has become of particular Shenzhen High-Tech Industrial Park, the first national-level interest to federal authorities. In China, the cities of Kash- park in China, Cheng et al. (2014) show empirically that the gar and Khorgos in Xinjiang Province were established in presence of science parks significantly increases the prob- recent years as the 5th and 6th SEZs in China. Under direct ability of attracting more small- and medium-sized enter- policy guidance and financial support from Shenzhen, the prises (SMEs). Take Huaqiangbei (HQB) electronics market two regions are now catching up rapidly, bringing spillover area of Shenzhen as a prevailing example: at HQB, any small effects to other industrial sectors and to the local econo- business-owner can find all of the raw materials needed for my as a whole. The two regions adapted the California and production within a one-kilometer radius. Given these cir- Shenzhen lessons to their localities and avoided blind du- cumstances, the business-owner is capable of completing plication. At the request of the central government, Shen- R&D, developing the first MVP, and achieving small-scale zhen and Kashgar coordinated their policies on growing production a shorter amount of time. The joint advantages expertise, protecting key technologies, perfecting industrial from having a strong manufacturing capacity, increasing in- chains, and optimizing the distribution channels for final stitutional support, and maintaining a complete industrial products. Furthermore, successful tech firms from Shen- chain opened new possibilities for innovation and entrepre- zhen were incentivized to expand their businesses into Xin- neurship in Shenzhen. In the latest development agenda, the jiang by cooperating and financing with local, small- and city announces its plan to grow the R&D spending percent- medium-sized enterprises. The success stories in connecting ages up to 4.25 percent (of GDP) by 2020, which highlights its two geographically remote regions, Shenzhen and Xinjiang, capability to be the leading innovative city worldwide (see shows how a geographically extensive country such as Rus- sia can narrow its intra-country disparities in terms of business attractiveness for technology firms. CONCLUSION: THE ‘SO WHAT’ QUESTION AND OTHER POLICY FRAMEWORKS Technology development and innovation has become a major battleground for global competition. Despite the challenges faced in its regions, Russia will enjoy more significant potential in economic growth and entrepreneurial transformation by promoting a more robust business climate and offering more attractive investment opportunities. Given the lessons from the United States and China outlined in this paper, we propose the following guidelines for the development of an innovative ecosystem in Rus- sia’s regions: Figure 3. R&D Investment in Shenzhen VI. Trade ∙ Aleksandrina, Cox, Protasov, & Yang | 53

1. Regional authorities should invest vigorously in policies and projects that promote the clustering of firms. Unlike firms in agricultural or manufacturing sectors, those in the tech sector learn comprehensively from their competitors when placed closely together, and local-level entrepreneurship benefits from convenient access to all levels of inputs and ideas. 2. Local governments in Russia’s regions should strengthen their cooperation with academia in order to bring ideas into reality, as was done in Shenzhen and Silicon Valley. The state should strive to assist firms in clearing legislative hurdles regarding business set-up, and aim to enhance legal protections for intellectual property to ensure an efficient and friendly business atmosphere. 3. Local governments should increase aggregate expendi- ture as a percentage of GDP on research and development. In regions with less financial autonomy, the central government should provide greater financial support for frontier sciences, such as opening new research labs, awarding advanced innovative ideas, and subsidizing the implementation of said ideas. In sum, when individual Russian regions craft a better business climate, they will establish a more robust and technology-driven local economy, with spillover effects in trade and transnational economic cooperation. Trade not only provides broader access to overseas markets with new sources of demand, but also facilitates the exchange of new technologies and resources that expedite the process of digitization. We suggest further study on this topic to assess the short and long-term impacts of digitization on trade and regional economic integration. 54 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

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7 PERMAFROST DEGRADATION AND COASTAL EROSION IN THE US AND RUSSIA: OPPORTUNITIES FOR COLLABORATION IN ADDRESSING SHARED CLIMATE CHANGE IMPACTS VII. Climate and Environment Working Group Chelsea L. Cervantes de Blois, Ilya Stepanov, Kirill Vlasov, and Ellen Marguerite Ward

Abstract The United States (US) and Russia are among the main contributors to Climate Change (as the 2nd and 4th largest emitters of greenhouse gases worldwide, accordingly), and have vast territories impacted environmentally and economically by this scientific and social phenomenon. The northern territories of both countries are especially vulnerable. In this article, we focus on coastal erosion and permafrost degradation, two Climate Change indicators that impact both Rus- sia and the US, and for which the consequences will be disastrous without sufficient adaptation measures. We highlight the importance of cooperation across borders at the inter-regional level, considering the ambiguity of both American and Russian federal climate policies. The paper is divided as follows: (1) background on the science of Climate Change, permafrost thaw, coastal erosion, and the community impacts of permafrost degradation and coastal erosion in Alaska and Russia; (2) an overview of existing relocation and adaptation efforts for relevant communities and infrastructure in both countries; (3) a proposal of subnational cooperation between the US and Russia as a promising avenue for bilateral cooperation on these shared challenges, with a focus on the potential for cooperation between the regions of Tyumen, Alaska, and California.

INTRODUCTION house gases in the world, accordingly), and have vast territories impacted environmentally and economically by this he Arctic has emerged as the barometer of global Cli- scientific and social phenomenon. The northern territories mate Change. This northern region’s surface tempera- of both countries are especially vulnerable. In this article, tures are increasing faster than anywhere in the world, T we focus on coastal erosion and permafrost degradation, with a 3-4° Celsius temperature increase compared to the two Climate Change indicators that impact both Russia and pre-industrial period while the average Earth temperature the US, and for which the consequences will be disastrous increase is 0.8°C (AMAP 2011). Indeed, Climate Change un- without sufficient adaptation measures. It highlights the im- derlies a wide spectrum of new challenges for the Arctic’s portance of cooperation across borders at the inter-regional ecosystems and its four million multinational, human in- level especially taking into account the ambiguity of both habitants. the US and Russian federal climate policies. The US and Russia are among the main contributors to The paper is divided as follows: section one provides Climate Change (as the 2nd and 4th largest emitters of green- background on the science of Climate Change, permafrost thaw, coastal erosion, and the infrastructural impacts of Chelsea L. Cervantes de Blois, University of Minnesota, Twin-Cities, permafrost degradation and coastal erosion in Alaska and Department of Geography, Environment, & Society Russia; section two provides an overview of existing reloca- Ilya Stepanov, National Research University Higher School of tion and adaptation efforts for these communities and infra- Economics, Department of World Economy structure in both countries; and section three proposes sub- Kirill Vlasov, Lomonosov Moscow State University, Geology national cooperation as a promising avenue for US-Russia Ellen Marguerite Ward, Stanford University, Earth System Science cooperation on these shared challenges, with a focus on the 58 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX potential for cooperation between the regions of Tyumen, ture increases (AMAP 2011). The thawing of permafrost ar- Alaska, and California. eas is going to affect not only human activity in this region, but environmental conditions as well. First, permafrost is BACKGROUND: CLIMATE CHANGE AND THE SCIENCE OF the main storage compartment for water for most parts of PERMAFROST THAW AND COASTAL EROSION the northern regions of the Arctic, which are otherwise arid The Establishment of the Intergovernmental Panel on regions with only around 200-400 millimeters of annual pre- Climate Change (IPCC) cipitation (Serreze and Hurst 2000). Second, permafrost con- tains an incredible amount of methane, one of the strongest Since the 1980s, the climate science community’s discussion greenhouse gases. As the permafrost degrades, increasing of Climate Change has arrived at consensus on the reality amounts of methane are released into the atmosphere, cre- of anthropogenic global warming. In 1988, the United Na- ating a positive feedback effect on planetary warming. Not tions Environment Programme and the World Meteorolog- to mention that much of the current infrastructure in Arctic ical Organization established the Intergovernmental Panel towns and settlements was designed on the assumption on Climate Change (IPCC) to provide clear scientific views that the earth will remain frozen. If permafrost degrades, on Climate Change and its global impacts. Since then, IPCC the potential for infrastructure like oil pipelines, roads, and Assessment Reports (ARs) have provided comprehensive in- buildings to be negatively impacted may increase signifi- formation on the science of Climate Change and its impacts cantly in the short-term (Larsen et al. 2014). worldwide. Permafrost temperatures have increased in most Arctic According to the United States’ National Oceanic and At- regions since the 1980s, leading to permafrost thaw and deg- mospheric Administration’s (NOAA) mean annual tempera- radation (IPCC 2015). For many regions, the change in the ture observations, 2016 was the warmest year in the last depth of seasonally-frozen ground was observed in recent 137-year sequence of recorded observations (NOAA 2016). decades — in some non-permafrost parts of the Eurasian The average global annual temperature was 0.94° Celsius continent by more than 30 centimeters from 1930 to 2000 above the 20th century average (NOAA 2016). This is the fifth (IPCC 2015). Though the rate of change varies — the rate of time that a temperature record was set in the 21st century change is higher for colder permafrost than it is for warmer (NOAA 2016). The most recent data for 2017 shows a global permafrost –, it has already led to a significant permafrost mean with annual temperatures in the top three warmest degradation in the Russian European North. The southern years since the beginning of observations, with an average limit of discontinuous permafrost (isolated islands of frozen temperature about 0.84° Celsius higher than the 20th cen- soil) moved 80 kilometers northward, while the boundary of tury average. continuous permafrost (the permafrost area per traditional The impacts of this warming are keenly felt in the Arctic, understanding) moved to higher latitudes, up to 50 kilome- where the consequences of warming are amplified. The in- ters since 1975 (IPCC 2015). These results demonstrate that crease in annual average temperature since 1980 has been the infrastructure within approximately a 100 kilometer twice as high over the Arctic as it has been over the rest of zone has been affected variably. Satellite data and in situ the world. Surface air temperatures in the Arctic since 2005 measurements display surface subsidence associated with have been higher than for any five-year period of previous the degradation of ice-rich permafrost, which has occurred observations (AMAP 2011). at many locations in this zone (IPCC 2015). These results are The Arctic’s rapidly rising temperatures are due, in part, from the last 20-30 years; approximately one human gener- to the loss of its summer sea ice, and a corresponding loss of ation. albedo, defined as a fraction of incoming solar radiation that For coastal communities, permafrost degradation is only is reflected rather than absorbed at the earth’s surface. The one of two major threats that they face — the other being Arctic cryosphere — the frozen part of the Earth’s surface — is rising sea levels, and its impacts. Sea level rise is a major transforming rapidly. Scholars used to think of the Arctic as contributor to coastal erosion, or the progressive destruc- a world of eternal winter, with perennially frozen soil, short tion of coastal areas by waves. As the sea level increases, the summers, unique wildlife, and fragile but established eco- shoreline begins to move inland. The speed of this process systems. All of this is changing and will continue to change increases during high storm surges, as coastal sands move in the near future if global warming continues unabated. In offshore. Combined with increased wave height, this makes Arctic regions, the consequences of Climate Change are visi- the destruction of dunes and sand bars more prevalent and ble not only with remote sensing data on vast territories, but rapid. Thus, if storms become more severe — which is one with the naked eye on small scales. Furthermore, the pessi- of the predicted effects of Climate Change — the impact will mistic predictions of the past have turned into a reality: the also escalate (Wong et al. 2014). Arctic is warming and changing, and it is happening faster Due to the destruction of the shoreline, many settlements than previously thought (AMAP 2011). around the world are under threat, with coastal areas experi- An excellent example of the impact of Climate Change in encing the full impact of this hazard (IPCC 2015). In general, the Arctic is the thawing of its permafrost — a layer of mate- coastal erosion is influenced by many factors, not only sea rial that remains at temperatures below 0° Celsius for more level rise. Erosion is also caused by currents, winds, waves than two consecutive years (Brady and Weil 2002) — and a (especially during storms), and coast mechanical proper- core element underlying the stability of Arctic ecosystems. ties. Moreover, current understanding of the interconnec- Permafrost is known to be extremely sensitive to tempera- VII. Climate & Environment ∙ Cervantes de Blois, Stepanov, Vlasov, & Ward | 59 tions between the geomorphological and ecological parts of to accommodate for deterioration due to permafrost condi- coastal ecosystems is weak, complicating the establishment tions or federal and state initiatives to rebuild existing road- of adaptation and mitigation policies. As the global mean ways atop an extra four inches of insulation. sea level has risen by 0.19±0.2 meters over the century from Impacts in Russia 1901 to 2010, the rate of erosion has also increased (IPCC Permafrost degradation is one of the most serious impacts 2015). Some findings show that this is an ongoing process, of Climate Change in Russia, a country with more than 60 originating from the mid-19th century, progressing steadi- percent of its territory covered by permafrost (Pavlova 2011). ly up to the early 20th century, and drastically increasing One major impact of permafrost degradation is a reduction by the end of this century (Stocker 2013). Since there is no in the stability and reliability of buildings and engineering widely accepted standard for assessing shoreline changes, it structures, including the major oil and gas pipelines that can be difficult to compare erosion rates generated from dif- bring electricity and heat to millions of inhabitants through- ferent studies; we do know that the northern Alaskan coast out the region (Katsov and Parfiriev 2012). The level of phys- has among the highest shoreline-erosion rates in the US, at ical infrastructure damage ranges by village, but is dramatic more than one meter per year for much of the coast that has in each case: 60 percent in the towns of Igarka, Dixon, and been studied (USGS 2015; 2018). Rates of coastal erosion in Khatanga, 55 percent in Dudinka, 22 percent in Tixi, 50 per- Russia have been cited in the range of l-10 meters per year cent in Pevek and Amder, and 100 percent in the villages of (Nikiforov et al. 2010). This leads to the conclusion that the the Taymir Peninsula (Roshydromet 2014). Some estimates hazard of flooding and coastal erosion will increase for com- indicate that maintenance and repair costs for all perma- munities residing on the Arctic shoreline (Wang et al. 2014). frost-related damages in Russia are as high as 55 billion ru- COMMUNITY IMPACTS OF PERMAFROST DEGRADATION bles (0.93 billion USD) every year. In the Norilsk industrial re- AND COASTAL EROSION IN ALASKA AND RUSSIA gion, around 300 sites have undergone substantial damage due to permafrost degradation and over 100 infrastructural Impacts in Alaska objects are in emergency condition (Roshydromet 2014). Climate Change affects Indigenous peoples’ traditional Annually, in Western Siberia, several thousand accidents practices. The people of Shishmaref on the Seward Penin- associated with oil-and-gas pipelines take place, with one sula in Alaska face serious threats from sea level rise and fifth of them caused by mechanical influences and structural coastal erosion (Marino and Schweitzer 2009). The result of deformations. In these instances, uneven sediment due to decreasing sea ice affects the economic prosperity and live- thawing permafrost leads to a weakening of foundations lihoods of Native Alaskan populations, including the Alaskan (Makarov and Stepanov 2015). villages of Shishmaref, Tuvalu, Kivalina, Newtok, Koyukuk, Coastal erosion is also a serious challenge for Russian and Shaktoolik, which are all experiencing the impacts of coastal communities and communication infrastructure, drastic climate and environmental shifts, resulting in imme- including both telecommunication lines and the means of diate displacement and resettlement challenges (Bronen navigational support for sea transport (Roshydromet 2014). 2009). According to the United States’ Environmental Pro- The most vulnerable locations are small towns and several tection Agency (EPA), melting permafrost will have a lasting hundred villages, 80 percent of which are located in coastal negative effect on transportation, forests, ecosystems, and areas. Nevertheless, the full scope of the problem lacks con- the economy for Alaska Natives who practice subsistence sensus due to empirical variation. hunting, fishing, and trapping, and will be forced to relocate RELOCATION AND ADAPTATION POLICY AND EFFORTS IN due to increased erosion and flooding along Alaska’s north- ALASKA western coast. Permafrost degradation also affects Alaska’s infrastruc- Despite the emergency status of numerous coastal Alaskan ture. Estimated impacts to Alaska’s public infrastructure communities, relocation financing has made little progress. — including road flooding, transportation damage, and In the case of Newtok, Alaska, the town’s application to the pipeline destruction — are projected to cost 4.2 billion USD US Federal Emergency Management Agency (FEMA) for a (RCP4.5) to 5.5 billion USD (RCP8.5) from 2015 to 2099, with declaration of disaster status and subsequent application potential savings from proactive adaptation of up to 2.9 bil- for FEMA funding by the State’s Division of Homeland Securi- lion USD in the RCP8.5 scenario (Melvin et al. 2017). Accord- ty and Emergency Management were both denied — a result ing to the US Global Change Research Program (USGCRP)’s that the town calls “bureaucratic subversion,” and which the Third National Climate Assessment, 85 percent of Alaska lies State says is the result of following overly bureaucratic fed- within a permafrost zone. Scientists predict that, by 2030, eral rules that deny funding arbitrarily (Waldholz 2017). permafrost will increase the costs of maintaining existing Elsewhere in the US, however, governments have fi- infrastructure in the region by 3.6 billion USD to 6.1 billion nanced relocation and adaptation initiatives. In 2016, the USD, and, by 2080, economists predict an increase of 5.6 US Department of Housing and Urban Development (HUD) billion USD to 7.6 billion USD (US Global Change Research awarded a total of 1 billion USD to thirteen states for “resil- Program and US Census Bureau 2010; Jorgenson et al. 2001; ient housing and infrastructure projects for states and com- Osterkamp et al. 1998). To mitigate these costs, adaptation munities that were impacted by major disasters between efforts are in place, such as the EPA’s recommendation to 2011 and 2013” (HUD 2016). Neither the State of Alaska, nor design cold-climate homes with adjustable foundation piers one of its individual communities faced with imminent in- 60 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX undation and erosion, were selected for funding, though the that mirror a federal framework, while also accounting for State was selected as a top 40 finalist (Alaska 2017). Alterna- regional needs. Such a diversified approach is especial- tively, New York City was awarded the most funding of any ly relevant for Russia with its vast number of regions that applicant at the City, County, or State Level, at 176 million vary drastically with respect to climate and socio-economic USD (HUD 2016). Louisiana was also awarded HUD funds to conditions. So far, regional governments do not show an ex- finance the relocation the Biloxi-Chitimacha-Choctaw tribal plicit intent to establish a national climate strategy. At the community, whose island home of Isle de Jean Charles is es- same time, efficient adaptation policies, both at the local timated to disappear completely (State 2017). and international level, can not only help subnational governments deal with socio-economic obstacles and mitigate RUSSIAN CLIMATE CHANGE ADAPTATION POLICY climate risks, but can also show leadership and subnational Russian Climate Change policy stems from its Climate Doc- integration with the international community by cooperat- trine, issued in 2008 (Climate Doctrine 2008). Though rather ing with local governments in other countries. general in nature, the doctrine establishes a policy frame- SUBNATIONAL AVENUES OF US-RUSSIA CLIMATE COOP- work which incorporates both mitigation (reducing and ERATION: A CASE STUDY OF ALASKA-TYUMEN COOPER- restricting emissions growth) and adaptation (adapting to ATION ON PERMAFROST DEGRADATION AND COASTAL Climate Change impacts) dimensions for any further legal EROSION Climate Change initiatives. The latter is especially relevant in Russia for two reasons. First, Russia possesses immense The Russian region of Tyumen and the US State of Alaska are adaptation potential due to the size of its territory and cli- two regions that may potentially benefit from international mate conditions both in terms of reducing existing damage cooperation in the domain of Climate Change adaptation. and proactively confronting future weather patterns (Analyt- For the Tyumen region, an adaptation policy may serve as ical Center for Government of the Russian Federation 2017). a useful tool to tackle local socio-economic problems. At In particular, Russia’s vast Arctic territories face dramatic the same time the region will further integrate into the in- climate risks and therefore could benefit significantly from ternational agenda through scientific collaboration and the emerging opportunities. Second, Russia is highly dependent exchange of best management practices and technological on fossil fuels (a main cause of the greenhouse gas effect) and, therefore, any restrictive measures in consumption or production of fossil fuel-based energy may contradict the goals of economic development and, thereby, be less polit- ically feasible. Until recently, adaptation strategy has not driven any nation-wide policies in Russia. So far, all short-term or mid- term development programs (either at the sectoral or regional level) in Russia fail to embrace any adaptation initiatives or to generate funds officially dedicated to adapt to a changing environment (Analytical Center for Government of the Russian Federation 2017). Triggered by the Paris Accord on Climate Change, Russia is taking its first steps in developing a national Climate Change adaptation strategy. The pre- liminary estimates show that climate related costs can go up to 1-2 percent of GDP per annum. For the most affected areas, including the Arctic, Siberia, and the Far East, the share could reach up to 5 percent of the regional GDP (Ministry for Natural Resources and Environment 2015). By mid-2018, three Russian ministries – the Ministry of Construction, the Ministry of the Economy, and the Ministry of Energy — are expected to develop the methodology for Climate Change risk and impact assessment, working closely with regional governments. The national adaptation plan will establish a set of measures for different scenarios that include a variation of potential threats to buildings, transportation systems, infrastructure (due to permafrost and ice sheets thawing), an increasing volume of precipitation, and the overall number floods and hurricanes (Arctic-info 2017). Both the Climate Doctrine and the Paris Accord distin- Figure 1. The current extent of continuous and discontinu- guish between the local, subnational, and regional dimen- ous permafrost in the Tyumen region, Western Siberia (Yer- sion of Climate Change adaptation policy. The national ad- shov 1996). aptation strategy should consist of a set of regional plans VII. Climate & Environment ∙ Cervantes de Blois, Stepanov, Vlasov, & Ward | 61

fruitful avenue for such a dialogue. The US and Russia have a strong record of cooperation, both formal and informal, in the Arctic as members of the Arctic Council. Both countries are signatories to the Agreement on Cooperation on Aeronautical and Maritime Search and Rescue in the Arctic (2011), the Agreement on Cooperation on Marine Oil Pollution Preparedness and Re- sponse in the Arctic (2013), and the Agreement on Enhanc- ing International Arctic Scientific Cooperation (2017) (Arctic Council 2017). These Arctic Council agreements set a strong precedent and illustrate that US-Russia cooperation on environmental and human issues in the Arctic is possible. At the same time, these agreements are the product of international cooperation at the ministerial, or national, level. Apart from its Indigenous participants, the Arctic Council lacks channels for communication and legal cooperation between subnational entities (Vladimir Barbin 2017). The case Figure 2. The current extent of continuous and discontinu- of an Alaska-Tyumen dialogue in the northern latitudes, in ous permafrost in the state of Alaska (USGS 2017). cooperation with Arctic Council Working Groups, may be used to further institutionalize interregional cooperation solutions with Alaska, a region that faces similar problems. across Arctic nations. The regions can demonstrate strong For Alaska, such cooperation may not only be beneficial leadership in light of the ambiguity in both Russian and US in terms of exchange of scientific and technological exper- federal climate policies. tise, but will also be useful with regard to building trust at the state level. Taking into account the decision of President CONCLUSION Donald Trump’s administration to withdraw from the Paris Climate Change is transforming the high latitudes of the US Accord, states and regional governments in the US are left to and Russia. Permafrost degradation and coastal erosion, initiate and to carry out Climate Change-related initiatives. two consequences of global warming, have multi-billion dol- Furthermore, US states will need to take responsibility in lar implications for government and industry in both coun- transitioning to low-carbon development. tries. These issues also project high social costs, where com- Tyumen faces unique challenges and opportunities in munities face degrading infrastructure and the potential terms of addressing the impacts of Climate Change. The wholescale loss of villages. Considering the current impasse Tyumen region, with its largest district, the Yamalo-Nenets of the US-Russia relationship at the federal level, and the Autonomous District, lying entirely within the low Arctic tun- lack of US federal leadership on the issue of Climate Change dra and continuous permafrost zone, is exposed to severe under the Trump administration, the possibility for coopera- Climate Change risks (Figure One). That makes residential tion between subnational units on these shared challenges and business infrastructure (including buildings and the may be more fruitful. wide network of pipelines) extremely vulnerable to perma- In this paper, we argue that coastal erosion and permafrost thaw. However, the region’s economy is also the big- frost degradation are shared issues that can serve as a fruit- gest Russian hydrocarbon storehouse and industrial center ful avenue for dialogue between the US and Russia. We pro- (Neftyaniki 2017). New energy and adjacent infrastructure pose that Alaska and Tyumen region develop subnational projects are expected to be launched in the foreseeable fu- dialogue on the shared issues of Climate Change adaptation ture (Government of the Russian Federation 2017). There- practices. Considering the already successful relationship fore, adaptation policy may serve as an effective platform between Tyumen region and the State of California, we sug- for expanding resilient socio-economic development policy gest that a Memorandum of Understanding or similar policy capable of embracing changes in the region’s climate and tool be used as a first step to formalize subnational coopera- benefit from emerging opportunities. tion. Such an agreement may be further utilized to establish The Tyumen region has proven its’ interest in interna- a precedent of subnational unit cooperation of Arctic Coun- tional environmental cooperation with individual US States. cil member states. The initiative can serve not only as an im- In the fall of 2017, Jerry Brown, the Governor of California, portant means of technology and the exchange of best prac- and Vladimir Yakushev, the Governor of Tyumen region, tices, but also as an effective way for the Alaska and Tyumen committed to work on the development of an environmental governments to show leadership in the domain of Climate protection agreement, with a focus on the regions’ ecology Change policy with broad socio-economic implications. (Governor Yaskushev, 2017). In the case of Tyumen-Alaska, a Memorandum of Understanding in the domain of Climate Change adaptation can serve as a first step toward cooperative actions, while the regions’ shared issues regarding coastal erosion and permafrost degradation represent a 62 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

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LESSONS LEARNED FROM THE ISS: ENABLING FUTURE SPACEFLIGHT COLLABORATION FOR THE US AND RUSSIA VIII. Science at Technology Working Group Louise Fleischer, Carolina Moreno Aguirre, and Johannes Norheim

Abstract The International Space Station (ISS) has seen Russians and Americans work hand in hand over the past decade. Scheduled to deorbit in 2024, the future of US-Russia spaceflight collaboration after the ISS’ end remains uncertain. This paper inspects the lessons learned from the joint ISS program, applied to both the engineering and legal partnerships of future space station programs. A review of bilateral dynamics in the space sector suggests further improving the current model by establishing US-Russia collaboration in the public-private domain, and jointly opening a path toward a new key collaborator: China. Although the ideas discussed could apply to any future space station architecture, this paper focuses on the case study of the proposed Deep Space Gateway. Moving beyond the proximity of the Earth, where the ISS currently operates, and doing so together, would set the example on the achievements possible through collaboration, while setting a precursor for further exploration of Deep Space.

“Let both sides seek to invoke the wonders of science instead of its terrors. Together let us explore the stars.”

- US President John F. Kennedy in his 1961 Inaugural Address

INTRODUCTION as diverse as the Canadian Space Agency, the Japanese Aerospace Exploration Agency, the United States’ National lthough the United States (US) and Russia achieved Aeronautics and Space Administration (NASA), the Europe- some of the world’s greatest technological advance- an Space Agency, and Russia’s Roscosmos State Corporation ments during the so-called ‘Space Race’ of the 1960s A for Space Activities (Roscosmos), the ISS has hosted astro- and 1970s, political motivation to fund national projects of nauts from around the world since 1998. Through the many the same magnitude has since faded. Instead, states turn experiments executed there by visiting astronauts, the sta- to international arenas, as joint collaboration helps to rein- tion has expanded scholarly understanding in a variety of force the durability of a project beyond presidential cycles. domains from medicine to the material sciences. It has also This long-term vision helps to secure programs that might provided extensive insight into the effects of the space envi- otherwise get cancelled at a national level, recently exem- ronment on the human body, which is key for deeper space plified in the 2010 cancellation of the American Lunar “Con- exploration. With the ISS reaching the end of its lifetime in stellation” program. 2024 (NASA 2017), the future of collaborative space explora- One of the greatest examples of large scale collaboration stands threatened. tion is the International Space Station (ISS). With partners However, new opportunities are being born and a new chapter is about to be written. Following the Global Explo- Louise Fleischer, Stanford University, Aeronautics and Astronautics ration Roadmap drafted by the International Space Explora- Carolina Moreno Aguirre, Skoltech Institute of Science and tion Coordination Group (ISECG), agencies from around the Technology, Center for Space Research world are looking toward deep space exploration, including Johannes Norheim, Massachusetts Institute of Technology, manned missions to asteroids, to the Moon, and to Mars (IS- Aeronautical and Astronautical Engineering ECG 2013). For example, after cancelled efforts of the Aster- oid Redirect Mission (ARM), the United States is resetting its 66 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX goals toward the Moon, following a space directive signed by PRIORITIES FOR THE FUTURE OF SPACE EXPLORATION President Donald Trump in December 2017. Considering this potential for new endeavors, we ask the following questions: Individual Plans for Each Country How can knowledge from joint flight heritage be leveraged Both the US and Russia are looking into expanding their to build better designed stations? The present research fo- individual capabilities. NASA is currently focused on the cuses on leveraging the successes of current human space goal of sending humans to Mars by the 2030s (NASA 2009). flight cooperation to deepen the economic and diplomatic Their projected strategy comprises three phases: ‘Phase I — impact of this international collaboration. Earth Reliant’ that focuses on research aboard the ISS and the development of commercial crew and cargo access to BACKGROUND Low Earth Orbit (LEO); ‘Phase II — Proving Ground’ with a Previous Collaborative Efforts series of missions in cislunar space, a space lying between the Earth and the Moon, or in orbit around the Moon, us- In the early days of the Space Race, Soviets took the lead by ing their Space Launch System heavy-lift rocket and Orion placing the first artificial satellite in orbit in 1957, the first spacecraft systems (House Hearing 2014); and ‘Phase III — human, Yuri Gagarin, in orbit in 1961, and the first astronaut, Earth Independent’ which aims to test entry, descent, and Alexey Leonov, to spacewalk in 1965. Despite the Space Race landing techniques and in-situ resource utilization capabil- in the headlines, some collaboration took place between the ities (NASA 2015). Each phase is more challenging than the US and Russia. Through back channels enabled by the sci- previous, while signifying a milestone for critical capabilities entific community, agreements were settled in three neutral for space exploration. areas: (1) the exchange of weather data from satellites and On the other hand, Roscosmos has announced its plan the eventual coordinated launching of meteorological satel- to establish a LEO National Space Station, and the Orbital lites; (2) a joint effort to map the geomagnetic field of Earth; Piloted Assembly and Experiment Complex (OPSEK), which and (3) cooperation in the experimental relay of communi- will potentially use elements of the current Russian Orbital cations (Sagdeev 2008). Segment of the ISS (Roscosmos 2009). The agency is fur- This link became an enabler for future US/USSR collabo- ther interested in establishing a presence in lunar space, for ration. By 1975, the establishment of the Apollo-Soyuz pro- which it is currently developing the spacecraft Federatsiya gram, motivated by the idea that the US and Russia were (Roscosmos 2016). Other Russian plans include Robotic Ex- the only spacefaring nations and, in a possible contingency, ploration of Lunar and Martian Surfaces. would be the only parties able to rescue one another (Maudit 2017). It led to the construction of a common docking inter- The Deep Space Gateway, a Future International Space face between Apollo and Soyuz, and the famous handshake Station? when both spacecraft docked. After this chapter, which was While both agencies have their own goals, the commitment “heralded as a breakthrough in Cold-War diplomacy” (Ga- to a joint effort has not faded. In 2015, NASA awarded a se- ran 2015), relations cooled. Two decades later, they were ries of contracts for conceptual and risk reduction studies revived with the fall of the Soviet Union, when costs for do- for future human spaceflight plans, under the Next Space mestic projects — the Russian space station Mir-2 and the Technologies for Exploration Partnerships (NextSTEP) (NASA US space shuttle — turned out to be much higher than ex- 2014). The awards are broken into three chapters: Habitat pected. Working together, the US could learn from Russia’s Systems, Multi-Material InSpace Manufacturing, and Pro- extensive experience in space ahead of the construction of pulsion Systems. These contracts led to the development of a new station, while Russia could leverage the idea of a new a cislunar orbit space station concept, the Deep Space Gate- station to replace their aging Mir station. This gave birth first way, advertised as a stepping stone to deeper space and to the Shuttle-Mir program. By 1992, Russian cosmonauts easier lunar access. flew aboard the shuttle mission STS-60 while American as- On September 27th, 2017, from the 68th International tronauts stepped aboard Mir. Astronautical Congress in Adelaide, Australia, Roscosmos A secondary consequence of this effort was the construc- and NASA issued a joint statement regarding collaboration tion of the International Space Station (NASA 2015), which is on the Deep Space Gateway (Roscosmos 2017). Thus intro- an important symbol of science, technology, and engineer- duced the possibility of making the Deep Space Gateway ing collaboration on space, with Russia and the US as key into a new international space station with other current ISS partners. As stated by Congress, “the ISS is a unique testbed partners: the European Space Agency (ESA), the Japan Aero- for future space exploration systems development, including space Exploration Agency (JAXA), and the Canadian Space long-duration space travel” (NASA 2017). The space station Agency (CSA). The project would take over the International provides an important opportunity to study the conditions Space Station mission of advancing and facilitating human that would enable long-term stay in a non-Earth environ- space flight research, while investigating the challenges of ment. After 15 years of permanent human presence in space deep space. aboard the ISS, it might soon be decommissioned due to ag- Nevertheless, this concept does not address the question ing systems, components, and reaching the limits of the de- of which collaboration model will be used: would the mod- sign lifetime; debates have started on the next steps to take. el be similar to that of today’s ISS or might it differ? While the current ISS collaboration model is considered a great success, the partnership came with its own engineering and VIII. Space ∙ Fleischer, Moreno Aguirre, & Norheim | 67 legislative challenges. Addressing these challenges could sary as [the] historical and cultural specificity of each part- provide the key to an improved cooperation model. ner will remain individual,” while, on the other hand, it tells us that the “standardization and unification of appropriate LESSONS LEARNED FROM THE CURRENT COLLABORA- interfaces in basic spheres of interaction (system integra- TIVE MODEL tion, power, transportation, management, etc.) are critical” This paper next outlines some of the challenges and ques- (NASA 2014). Perhaps, too, these variations are the result of tions that future collaboration will raise, starting with the path dependence in established norms and infrastructure, engineering challenges, and scaling up to the legal frame- combined with a lack of oversight, both at the onset as well work, both which are believed to give rise to a new collabo- as over time. Regardless of why these variations exist, it is ration opportunity. The most notable problem regards logis- important that they are not repeated in future projects. Car- tics: there has been no clear initiative to leverage acquired rying out these changes will require strong leadership and knowledge from the joint operation. Developing modules in- the right legal framework, which we will discuss in the next dependently is expensive and, if history is any predictor, will section. lead to certain interface challenges. Furthermore, without Updating the Legal Framework for Human Spaceflight an adequate debrief of the ISS, NASA and Roscosmos lack Collaboration a normative guideline for future projects and interactions. Alongside the physical plan for the International Space Sta- Leveraging 15 Years of Collaboration to Improve the tion, the partners also proposed a legislative agreement for Engineering Design transnational collaboration, called the Intergovernmen- In the current model, both the American and Russian ISS tal Agreement (IGA). The IGA was first signed by NASA, the segments have robust survival interfaces, which allow for CSA, the ESA, and, in 1989, JAXA. After the USSR fell in the more technologically-advanced propulsion, orientation, 1990s, NASA issued a formal Memorandum of Understand- and communication (NASA 2014). Nevertheless, other inter- ing (MOU) to the Russian Space Agency, which was signed faces could be improved, and are discussed in this section. in 1996 (NASA 1998). This document “resolved many out- One such example has been brought to us by ESA astronauts standing technical and managerial issues, such as sharing Thomas Pesquet and Jean-François Clervoy. Aboard the ISS, common operation costs, utilization rights on board the ISS, the power system on the American and Russian sides do not crew make-up, and provisions relating to logistics and other operate at the same voltage; the American side uses 120V, services” (Moenter 1998). With this new partner, the fifteen while the Russian side operates on 28V (Gietl et al. 2000). member nations cooperating on the ISS updated and signed Therefore, any equipment powered on both sides would a new version of the IGA in early 1998. require bulky adapters or costly, replicated machinery. This It is important to note that the ISS was born of American makes interoperability of equipment across both sides a initiative, and therefore the US is responsible for the overall challenge, while increasing complexity and mass. management of the station (Article 7.2 of the IGA 1998). This Another example regards different module diameter includes “overall system engineering and integration, [the] sizes, which is why the Russian and American parts of the establishment of overall safety requirements and plans, and station are currently interfaced with a Pressurized Mating overall planning for and coordination of the execution of the Adapter (PMA). The PMA also serves as an airlock across overall integrated operation of the Space Station” (NASA both sides, as each has different environmental control and 1998). In addition, all partners except Roscosmos are desig- life support systems. One could argue that the lack of com- nated as part of the American Segment of the station. This monality in life support systems is an advantage, as it can re- stems from the fact that all MOUs were signed bilaterally duce redundancy. However, it creates day-to-day problems with only the US, and not with other actors. as, for example, the opening of the airlocks cannot accom- To conclude, the management of the International Space modate the space suit of the other nation. This could create Station is very much centered around the decisions of NASA. a blockage in the case of a contingency where one airlock The MOU between NASA and the Russian Space Agency broke down, and the second were unavailable as a back-up. (RSA), the precursor to Roscosmos, stipulated the existence In addition, despite an agreement to use the metric sys- of a Joint Management Plan and a NASA-RSA Program Coor- tem, the United States ended up using a mix of the imperial dination Committee. However, these entities have not been and metric systems, thereby rendering tools incompatible. revealed during this research. The absence of a coordination This increases the amount of tools and overall mass that committee highlights one such avenue for improvement in need to be brought up to the space station. Still other exam- drafting a less centralized Deep Space Gateway. ples of this incongruity are berthing systems that only allow Furthermore, policies regarding space are scarce, often certain ships to dock; astronauts and cosmonauts that re- outdated, and out of phase with the current state of the vert to their native tongue despite mandates to speak both industry. In the example of international space legislation, languages; and an incompatible sanitizing agent for drink- the Outer Space Treaty Act was signed by 104 parties, but in ing water between the two segments (chlorine on one side 1967. Article VI of that treaty stipulates that states are obli- and silver ions on the other). gated to authorize and continuously supervise their national It appears that these divergences arise largely from un- space programs (Sharpe and Tronchetti 2015). This means clear textual specifications; on one hand, ISS policy seems that the vast majority of space activities fall under the leg- to follow the guidelines that: “full commonality is not neces- islation of independent states and it is up to each country 68 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX to decide what their space legislation looks like. Without an If we do not cooperate, how can we expect cooperation in updated international treaty, individual states interested in other areas?” However, the US Congress banned NASA from moving forward with new innovative ideas — like deep space engaging in bilateral agreements with China, in the hope of mining startups out of the US — may inadvertently breach preventing espionage (112th Congress 2012), leading the the Outer Space Treaty Act as they pursue their own national Chinese to look for alliances elsewhere. For example, Chi- interests. na and Europe are set to collaborate on the development Two international bodies could help in this area: the of a Moon base, as confirmed by representatives of the two United Nations Office for Outer Space Affairs (UNOOSA) and agencies (Griffin 2017). Future plans also include a ESA as- the International Space Exploration Coordination Group (IS- tronaut aboard the Chinese Station and conducting mission ECG). UNOOSA is a body of the United Nations that works to analysis on samples brought back by China’s unmanned lu- promote international cooperation in the peaceful use and nar exploration mission Chang’e 5. exploration of outer space. ISECG is a coordination forum Russia has also openly expressed its interest in working of 15 space agencies that seek to exchange information re- with China. In 2015, Roscosmos administrator, Igor Komarov, garding interests, plans, and activities. Both organizations said that “the ISS should be an open structure and if coun- help to establish international frameworks to govern space tries follow the rules and requirements, they should have activities and could set up the baseline rules for every space the opportunity to join the partnership” (Morring Jr 2015). actor — whether old or new players —, thus facilitating inter- Earlier in November, the two countries established a series actions between nations. By homogenizing the legal frame- of space treaties, including joint spacecraft development, lu- work, some of the barriers to entry in the industry would be nar and deep space exploration, earth remote sensing, and lowered, hence enabling smaller players to take on econom- space debris monitoring (GBTIMES 2017). ical roles within the partnership, while also introducing new The desire of the United States to include China into states, like India or China, into the discussion. the ISS partnership or into any upcoming missions remains uncertain. As mentioned by Harvard Professor of National GETTING MORE ACTORS INVOLVED IN SPACE COLLABO- Security Affairs, Joan Johnson-Freese, “the United States RATION has unnecessarily created the perception of a space race This section discusses two mechanisms that could impact between the US and China, and the US is losing, by its un- human spaceflight the most: the increase of private compa- willingness to be inclusive in ISS space partnerships” (David nies in in the space sector, and the arrival of new key players, 2015). As a consequence, the Chinese are building their own such as China. space station, which may become the de facto international Promoting Public-Private Partnerships Across Borders space station once the ISS deorbits. If China is set to become a major player in the aerospace The drive to explore space has inspired several new com- arena, the state should be seen as a potential collaborator panies that seek to disrupt the industry’s modus operandi. on international endeavors, and with the US, in particular. Seeing an opportunity to innovate without bureaucratic re- We believe that cooperation at the level of astronaut train- strictions, NASA cooperates with the private sector. This has ing is a good place to start, as in the successful collabora- led to effective competitive domestic development and in- tion model for the US and Russia. The ESA and the Chinese novation-driven entrepreneurship within the United States. National Space Administration have already invited each Russia has yet to establish this kind of partnership with its other’s astronauts to participate in isolation trainings, with emerging private sector. According to a Roscosmos repre- the goal of fostering stronger relationships between the two sentative, a joint movement is needed between state en- agencies while avoiding the pitfalls of technology exchang- terprises and private, Russian business. In order to achieve es. this kind of partnership, the state must identify acceptable regulation in the private sector, and private businesses must CONCLUSION prove that they have high-competence with low-risk. Human spaceflight collaboration is an opportunistic arena While financial, social, and cultural differences between for the US and Russia. The ties between NASA and Roscos- both space markets present many challenges, they also mos have held firm, despite political fluctuations, and such provide the opportunity to establish strong bilateral ties by relationships can be trusted when confidence wavers else- learning from one another. Russians may use the American where. We believe that it is critical to continue deepening Private-Public model as foundation for developing such the ties between the US and Russia in the space sector. a sector, while Americans could benefit from observing a We conclude that there are three axes on which improve- young and evolving market with less established legislations ment can be made: and competition, and use this knowledge to re-evaluate their own business models. 1. The standardization of subsystems and components for better technological interaction; Including China, a Fast-Growing, Space-Faring Nation 2. The update of international space legislation using In October 2017, the head of the ESA, Jan Woerner, said that UNOOSA and ISECG for allowing a fair economic environ- international space endeavors should allow for the partici- ment; and pation of India and China. In allusion to current geopolitical tensions, Woerner said, “space is above all Earthly borders. 3. The integration of private ventures and new interna- VIII. Space ∙ Fleischer, Moreno Aguirre, & Norheim | 69 tional players into future space station consortia. In the end, political will is a critical factor for the implementation of these action items. The US Congress’ 2019 budget allocation for human spaceflight will reveal how committed the United States is to new international collaboration. The building of a functional cislunar international station would set an example on the achievements possible through collaboration and allow the United States and the Russian Federation to keep communication channels open, despite a relationship at a historic low. 70 | The SURF Research Journal ∙ April 2018 ∙ Vol. IX

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APPENDIX

APPENDIX A ARTICLE 6: TRADE AND BUSINESS DEVELOPMENT

Source: Rosstat 2017.

Source: Rosstat 2017. 74 | The SURF Research Journal ∙ APPENDIX

Source: Rosstat 2017.

Source: Expert RA 2017.

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