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Newsletter:  Dec 2001/ Issue 1
Promoting Economic Transition in Russia’s Nuclear Cities

The International Development Center (IDC) Project recently completed its second year of successful operations. The IDC project was launched in 1999, when the Department of Energy (DOE) tasked the Pacific Northwest National Laboratory, in partnership with the Foundation for Russian American Economic Cooperation (FRAEC), to establish IDCs in three selected Russian closed nuclear cities.

There are currently two IDCs; the original center is in Zheleznogorsk, and the second, established last year, is in Snezhinsk. The mission of the centers is to improve business infrastructure and promote diverse, local economic growth. While the mission of the IDCs is unique, the basic challenges they face are similar to those faced throughout Russia: to adapt to a fundamentally changed economy, and attract business investment and capital. The approach of the IDCs has been to take the time necessary to lay the groundwork for long-term economic diversification and to promote the types of partnerships needed for sustainable economic progress.

The IDCs are an essential part of the National Nuclear Security Administration’s (NNSA) Nuclear Cities Initiative (NCI), a program that helps nuclear cities of the Former Soviet Union move into the commercial sector and away from weapons production. The IDCs communicate daily with PNNL and FRAEC, the founders of the Centers, and serve as clearinghouses of information on economic development projects. They also bring together all NCI constituents on a US-Russian board to plan the future course of the IDCs. IDCs provide valuable training, consulting, and computer and internet access, and are focal points of their communities, bringing together key decision makers, and helping to build needed infrastructure, and create jobs and investment for continued economic growth. They also serve to keep the NNSA abreast of economic developments and challenges, and facilitate direct investment in the cities they represent.

The Russian reception to the centers in Zheleznogorsk and Snezhinsk has been enthusiastic. The use of services and facilities has been extensive, and their provision is viewed as proof of the NNSA’s commitment to fostering economic success in Russia.

“We believe that the IDC-Zheleznogorsk is opening broad possibilities for the development of business and the creation of new industries in our city and that is the first step on the path towards establishing joint Russian-American projects in Zheleznogorsk,” said the Mayor of Zheleznogorsk in a letter to Russia’s Deputy Minister of Atomic Energy.

In its second year of operations, the IDC of Zheleznogorsk has provided over 80 organizations with consulting services, trained 2,400 individuals in business planning and management, and created 150 jobs. Zheleznogorsk received $17 million for investment from the Russian government in 2000, attracted $1.5 million in investment and loans, and created $346,000 in revenues. The Center is currently taking the lead in the development of a technopark, working with a Russian software company to create a software development center, and aiding a local wood processing plant in its efforts to expand into foreign markets.

The Snezhinsk center has served 1,200 clients, provided consulting services for 232 individuals and business training for 70, supported seven Snezhinsk technology firms in their participation in the International Forum on High Technologies of the Defense Industry, resulting in the sale of one million natural gas leakage detectors and 200 boilers, and provided important assistance to other NCI projects and US national laboratories.

“The International Development Centers by all accounts have been successful,” says PNNL program manager, Ron Nesse. “They have not only provided significant investment and jobs for the closed cities, but are the nexus of activity in the cities, and help the City Administrations and Minatom to agree on a vision and future strategy for the cities.”

PNNL and FRAEC are in the initial phases of planning a strategy that removes IDC reliance on NNSA funding, ensuring the Centers’ sustainability.