June 13, 2016
Oil and natural gas prices are low. Western sanctions over Crimea continue to bite. Declining revenues have led the Russian government to demand another double-digit cut in state investment programs and administrative costs, with social spending likely also to take a hit. What Russia needs most is smart, technologically driven investment to shed its dependence on commodity exports and focus on diversified sources of growth. What it’s getting instead are regret-laced waves goodbye from many of its top thinkers and creators. Those most likely to propel the country forward are instead charting their paths elsewhere.
Russian government statistics show a sharp upturn in emigration over the last four years. Almost 123,000 officially departed in 2012, rising to 186,000 in 2013, and accelerating to almost 309,000 in 2014 after the annexation of Crimea and even more in 2015. These statistics probably underestimate actual flows, however, as many people no longer notify the government that they’re leaving. During previous emigration waves, permanent exit involved annulment of residence registration and surrender of Russian documents. Now, it is much more common to remain connected to Russia through business and/or apartment ownership, or by working for a Russian company through the internet, while obtaining long-stay visas and effectively moving abroad.
It’s also hard to know the exact numbers because people are increasingly careful to keep their plans quiet. Many immigration/resettlement professionals in the West observe that Russian clients remain reluctant to discuss their plans over open channels. When they call or Skype from inside Russia, they claim to be asking for a friend, or out of mere curiosity—but in person, they admit that they are seriously contemplating permanent departure.
Anecdotally, however, the movement is significant with little sign of abating. Apoll conducted last month by a Russian human-resources firm found 42 percent of senior managers working in local or international companies wanting to leave, with about one-sixth holding concrete plans to do so. Even genealogists are getting on board: Vladimir Paley, a Moscow-based family historian, had to hire an assistant in early 2014 to keep up with the surge of Russians trying to make a case for foreign citizenship due to family ties. Paley charges 1,000 euros, mostly to professionals who prospered under Putin’s first two terms—and therefore have pockets sufficiently deep to pay his fee—but who now seek a different environment. One Russian who moved to Paris reports that so many people back home have asked his advice on emigration that he’s made a small business of it, charging 700 euros for his services. He helps them decide where to move: Poland, Israel or Bulgaria if they can trace ancestry there; if not, then to Latvia, the Czech Republic, Cyprus or Bulgaria, where relatively small investments can buy citizenship. From his experience, “it’s more about where they’re leaving from than where they’re headed.”
To get at actual magnitudes, a look at immigration statistics in destination countries is required. Central Asia and other CIS countries remain the primary landing spots, and movement to China has been on the rise. But the West is increasingly attractive. Russian applications for the United States green-card lottery have soared in recent years, reaching an all-time high of 265,086 in 2015, almost one hundred thousand more than in 2012. Data for the United Kingdom reveal a similar pattern, with the number of immigrant visas actually issued to Russians up well over 50 percent from 2010 to 2013. About 75,300 Russians got residence permits for the European Union and Switzerland in 2014, up 25 percent over 2010. Israel reports that citizenship applications from Russians are up 30 percent over that time frame.
Even more important than the absolute numbers is the type of people who are leaving: the younger, more urban and better educated. Levada Center head Lev Gudkov assesses the current flow as “more liberally oriented, more intelligent, better educated,” leaving Russia with only “a rather inert, passive mass with opportunistic attitudes.” Overwhelmingly, Russia’s recent upturn in emigration is driven by relatively skilled urban liberals fleeing due to politics rather than economics. These are the heart of the “creative class,” the scientists, educators, artists and knowledge-based workers who drive much of current economic growth worldwide. People in this category are disturbed by the political environment under Putin and are anxious to leave before it gets worse. They crave respite from a climate so pervaded with enmity toward the West, wanting a more predictably just, fair environment not only for themselves, but for their children. As one young Russian businessman put it, “I used to think it was possible to build a better society in Russia, but I’ve basically lost all hope now. It’s time to leave.”
Economic motives, however, still play a role. Even wealthy Russians who enjoyed relatively privileged positions now perceive those advantages as temporary and seek a way out. They view the United States and Western Europe as safe places “to park their money, maybe park their spouses and children,” and also as business homes free of the corruption, red tape and unpredictable court system that characterize their homeland. Pavel Durov (founder of the Russian Facebook analog VKontakte) left in part because of government demands that he turn over personal data on his Ukrainian users. Legislation passed in 2014 calls for all Russian internet user data to be housed on servers located on Russian territory, and bloggers with more than three thousand daily visitors have to register with the government’s media regulator. Major online platforms—including video hosting site Vimeo and, crucially, GitHub, by far the number one resource for anyone writing code—have been blocked in Russia. These moves are major disincentives for high-tech professionals, who as a rule value freedom and sanctity of information very highly, to remain in the country. As the government becomes more and more intrusive, Russian start-ups shy away from the risk that the fruits of their hard work will be co-opted or taken away. Other skilled professionals, in fields as varied as academia, high tech, banking and law, simply want a more stable business environment in which they can make more money as Russia’s economy stagnates. For those closer to the middle class, ruble salaries can’t remain attractive if there is an alternative.
From this perspective, Russians appears to be looking less at specific destination countries, and more at general conditions that suit their needs: economic opportunity, personal safety, decent education and health care. Small businessmen often seek Russian-speaking diaspora communities where they can easily find markets. Katya Zenkovich, head of the Russia desk at an upscale London property company, reports an uptick since mid-2014 of Russian entrepreneurs looking for retail space in London or modest-sized offices suitable for small businesses. Some, she says, fit the well-known profile of the fabulously wealthy Russian moving or investing abroad, but more frequently she now sees upper-middle-class businesspeople looking to invest as little as $230,000–300,000 for a one-year lease on a central London storefront. Online enquiries to her firm from inside Russia for offices anywhere in Europe (including the UK) were up 75 percent in 2014 from the year before. Gary Hersham, co-owner of a London real estate firm, concurs: “We’re seeing quite a few new inquiries into retail units, art galleries, restaurants, office space. . . . People want to come to a place where they consider their lives, their future, their prosperity and their income to be safe.” If indicative of something more widespread, this anecdotal information portends a drain not of billionaires, but of the type of small-business-owning millionaires who should be key to diversification of Russia’s economy.
Many in power are delighted to say goodbye to potential protesters. Russian journalist Leonid Bershidsky, who left for Germany in mid-2014, said, “the Kremlin doesn’t care because it doesn’t consider the likes of me Russia’s best and brightest. To them, we’re the traitors, the fifth column.” Vitaly Milonov, a member of the St. Petersburg Legislative Assembly, put it more colorfully: “Russia won’t lose anything if the entire so-called creative class leaves. What’s the creative class anyway? For me, a woman who gets up at 5 a.m. to milk a cow is creative because she produces something. Not some guy with a stupid haircut who sits in a café all day long writing in his blog.”
What’s left of the middle class are mostly public sector bureaucrats and others with connections to state-operated enterprises—in other words, a Putin-friendly support base kept compliant, for the time being, by modest salary increases and ample opportunities take further financial advantage of their government positions. Or, as put more colorfully by the Institute of Modern Russia’s Ksenia Semenova, “by allowing emigration to facilitate a ‘release of steam,’ it not only prevents an intellectual revolt but also ‘purges’ its audience of undesirables, leaving behind those who are more likely to be successfully brainwashed and whose critical faculty atrophies a bit more every time they watch Russian state TV. Controlling such a mass is an easy job.”
The most obvious impact lies in science and technology. Emigration has already hollowed out and aged Russia’s scientific community, and the situation seems likely to get worse. Currently in Russia, there are 26,800 holders of Doctor of Sciences degrees. In the United States alone, there are sixteen thousand holders of these degrees originating in the former Soviet Union. Fewer than one-third of the researchers still in Russia fall within the most productive age group (thirty to fifty), while a quarter are over seventy. Independent funding for scientific research and development is now almost nonexistent, and international scientific collaboration has become increasingly restricted. The Dynasty Foundation, a nonprofit launched in 2002 to support Russian scientific research and education, was declared a foreign agent in May of 2015; its founder, Dmitry Zimin, left the country a month later, and the foundation shut its doors (and bank accounts) in October.
Overall, the most alarming recent trend is the emigration of students and recent graduates, driven by low salaries for young researchers, housing issues, substandard research facilities, an inadequate overall scientific environment, low social prestige for scientists and lack of effective government measures to improve the situation. The problem then compounds: the emigration of Russian scientists leads to declining production of PhDs in the next generation, as measured by admissions and graduates. The resulting shortage of mentors encourages the next generation to follow and pursue doctoral studies abroad.
Skolkovo, a Kremlin-created Silicon Valley imitator just outside Moscow, was supposed to plug the leak, but several Russian observers now call Skolkovo an “incubator of emigrants.” More and more, investment in Skolkovo and its resident firms is coming from Russian state-controlled entities rather than from abroad. Financing for high-tech start-ups has always been scarce in Russia, and the local market for products limited, but the situation has been exacerbated by the ruble’s plunge and Western sanctions freezing Russia out of capital markets. Home-grown Russian venture-capital funds now invest almost entirely in Russia, unwilling to support start-up founders looking to build internationally oriented businesses. It’s no surprise that Russian social media is full of groups with names like “Time to Go?”, offering commiseration and advice for Russian professionals, especially those in high tech, contemplating a move.
With an eye to implications for economic development, some recent government actions appear designed to keep Russian talent at home. In October 2014, the government cancelled the Future Leaders Exchange (FLEX), a twenty-three-year-old high-school program that had supported twenty-three thousand Russian students to study in the United States. Putin has complained about foreign organizations “working like a vacuum cleaner” to lure the most talented Russians abroad. A spring 2015 survey of Russian students found 39 percent either considering or definitely planning to live and work abroad after graduation. A government scheme to offer full scholarships for 1,500 students to study in top universities around the world—in exchange for an ironclad commitment to return home—has been undersubscribed, the return-home clause a deal breaker. The government has recently doubled the stipend in hopes of filling the slots; the jury is still out on whether that will be enough. In the meantime, many Russian firms are reportedly disinterested in the program’s graduates, who will return from abroad full of “foreign ideas.”
Russian science and engineering, if not the entire “creative class,” including small- to medium-sized business owners, is increasingly relocating abroad, prompted by shifts in the country’s political environment over Putin’s third term. Not all the smart, young entrepreneurs are walking out the door, of course, but the exodus appears perilously close to a threshold that could matter. Combined with underlying demographic processes simultaneously hollowing out the working-age population, the implications for Russia’s economic and social development are stark. The only saving grace may be the continued ties—apartments, bank accounts and remittance flows, family—loosely binding those who have left to a country that, at core, they still love. But until and unless the current occupant of the Kremlin is gone, and although his regime may be pleased in the short term with the more compliant human capital that’s left behind, the long-term price appears quite high. Russia’s chief sustainable comparative advantage—its brainpower—is drifting away.
Judy Twigg is Professor of Political Science at Virginia Commonwealth University.
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