A Technological Alliance: New Ways to Respond to Strategic Challenges

8 april 2015

Andrei Ionin is Chief Analyst of the GLONASS Union. He holds a Doctorate in Technology.

Resume: The combined BRICS market is enough to develop any defense or civilian technology and keep it competitive. The BRICS’ Technological Alliance can ensure the “scale effect” – the main condition for developing technologies.

In the past year, Russia was faced with very serious external challenges: Western countries, led by the United States, imposed a wide range of political, economic, financial, and technological sanctions against Russia. Now, a year on, it has become obvious that the sanctions were not a tactic to force Russia into making decisions needed by the West, for example on Ukraine, but a long-term strategy. Its goal was to make Russia less competitive and deny it opportunities, both inside and outside the country, for  conducting policies in its national interest.

What strategy will be the most effective under these conditions? Does Russia have strategic partners, or will it have to act all alone? What mechanisms of development should it create in the first place?

Several scenarios have been discussed over the past year. One provides for self-reliance, maximum import substitution, and movement towards self-sufficiency. In another scenario, Russia would enter into a “strategic alliance with China.” And the third scenario requires that Russia “surrender to the superior consolidated forces of the West.” Each of the three scenarios is hard to implement and each poses an overt (or still covert) threat to the country’s development. Does it mean that Russia has no other choice but to choose between a bad and a very bad future?

This article offers a new strategic alternative for Russia (and other countries). The proposed “Technological Alliance” scenario will require huge and long-term efforts, but the opportunities it may open are truly boundless.

THE SCALE EFFECT

The logic of reasoning in support of the “Technological Alliance” concept is as follows: paraphrasing Lenin’s maxim, “Sovereignty is national interests plus technologies.” In the era of high technology and global markets, possession of advanced technologies and access to products and services based on them largely determines the power of a state and becomes critical for effective state governance, competitiveness of the economy and high-quality social services. Importantly, it is not only defense technologies but also dual-use and civilian technologies that are crucial for ensuring sovereignty.

The list of technologies to which a sovereign country should have guaranteed access (in order to ensure its sovereignty) has always been long enough and now it is growing to incorporate  ever new spheres. Today they include information security, space, biotechnology, aviation, social media networks, microelectronics, power engineering, navigation, medicine, finance, robots, payment systems, etc.

The creation of any technology requires resources (including financial ones) and personnel with appropriate knowledge, skills and experience. Obviously, every country has limited resources (the size of the national budget) and a limited number of talented people (gifted hands and brains). Therefore, every country (even the United States) has either to focus on technologies, choosing from the long and constantly growing list, or look for other ways (the U.S., for example, has created a unique system which, like a vacuum cleaner, draws in talents from around the world).

It is not enough to create innovative technology; one must maintain its competitiveness throughout its life cycle. Apart from resources and human capital, this also requires markets which ensure the inflow of resources (investment) for technological improvement.

Thus, any technology remains competitive only when it relies on a market close in size to the markets controlled by competitors. You may be Sergei Korolev or Steve Jobs rolled into one, yet you won’t be able to keep your technology competitive for long if you control a market much smaller than that of your competitors. High-tech markets exist by the same laws as all other markets do: in the strategic perspective, the “scale effect” is the main competitive advantage, a trump card that can beat any of the competitors’ cards.

The situation is accentuated by the fact that today actually all high-tech markets are global, including markets of defense and dual-use technologies. This means that if your technological competitors operate globally, you must have a market of a scale similar to theirs.

But the Russian market is a priori insufficient for maintaining long-term competitiveness of technology on any mass market: the Russian economy accounts for only 3 percent of the world economy, and Russia’s population is a mere 2 percent of the world population. If Russia remains within its internal market, its natural market limit will be the same 2 to 3 percent, even if the government adopts tough protectionist measures; or a maximum of 5 percent, if it exerts itself; and even then the effect will not last long. For comparison, the domestic (and largely guaranteed) technological market in the U.S. accounts for more than 20 percent of the world economy, and the European Union accounts for 25 percent. They have a bigger  population, and it is richer on the average.

Hence a simple conclusion concerning a strategic scenario for a self-sufficient economy: no “natural technological economy” in Russia, no matter what technology it is based on, will enable the country to withstand competition with companies that control the markets of America and/or Europe, or have leading positions on the global market. There cannot be a competitive “purely Russian” microelectronics industry, or “purely Russian” cosmonautics. This holds true for all technologies in the aforementioned list. A “natural technological economy” is doomed to failure and, therefore, simply cannot ensure Russia’s sovereignty.

In the long term, it is the Western technological sanctions, which restrict access for Russian organizations, companies and citizens to high-tech products and services, that have hit Russia the hardest. Whereas previously Russia was denied participation in the development of cutting-edge technologies and the purchase of Western high-tech companies, now it is already denied (or is threatened to be denied, which often has a similar effect) products and services based on high technologies. The spheres that the West is planning to block or has already blocked for Russia include the SWIFT banking system, engineering software, mass payment systems, drilling technologies, space microelectronics, etc.

Does this mean that there is no way out for Russia and there is no real alternative to the alarmist scenario of surrender? It certainly does not.

TECHNOLOGICAL DECOLONIZATION

Light has appeared at the end of the tunnel as the Western technological sanctions against Russia have clearly shown to all countries in the world how they  will be dealt with (by force and coercion) if they prove disloyal to the West which possesses the bulk of the existing high technologies. Above all, this was a signal to major developing countries that claim to be sovereign and therefore want to define their national interests independently (without U.S. help) and to defend them. The West made it clear to these countries that it would punish them without resorting to military force or even denying them loans (as mother countries did with regard to their colonies until the middle of the twentieth century) but in a new way – by denying these countries,  their companies and population access to advanced technologies. So he who is forewarned is forearmed.

We are witnessing a new form of colonialism – “technological colonialism” where the very “access to technologies” serves as a weapon of mass (economic and social) destruction. This is a weapon that does not infringe on “Western moral values:” it is non-lethal, it is politically correct, and it does not kill anyone. But it is highly effective, especially against developing countries which are forced to use technologies they do not control.

And then it becomes obvious that the list of major countries living under the sword of Damocles of technological sanctions is long. It includes China, India, Brazil, Iran, Indonesia, Argentina, Vietnam, and many others. What should these countries do when they see and analyze the anti-Russian sanctions? How can they defend themselves against the West’s “technological weapon,” considering that their national resources, competencies and domestic markets are always limited? It seems that each country will have to try to develop national analogues of the ever-growing range of Western technologies on its own: national software for a variety of applications, national microelectronics, national astronautics, and so on.

Countries willing to “pay” for their sovereignty should go beyond their national boundaries to fight technological colonialism in order to find strategic technology partners and pool efforts around a common development task. They should establish a Technological Alliance.

A Technological Alliance would be a union of countries seeking to guarantee their sovereignty, national resources, competencies (“gifted hands and brains”) and domestic markets to jointly develop, use and possess the entire range of civil, dual-use  and defense technologies.

What countries can be members of a Technological Alliance? The answer is very simple. If the main criterion for membership is sovereignty, the first candidates are the BRICS countries – Brazil, Russia, India, China, and South Africa. True, the original acronym BRIC was coined by a Wall Street analyst in 2001 to describe a haven for financial speculators, but in the 2010s it expanded into BRICS, changed its content and became a full-fledged independent association. Now it unites sovereign countries which have national interests and the will to defend them. Importantly, the combined BRICS market (the Technological Alliance market) is almost 3.5 billion people, or half of mankind, and more than 30 percent of the world economy. Its size is enough to develop any defense or civilian technology and keep it competitive. So a BRICS Technological Alliance can ensure the “scale effect” – the main condition for developing technologies.

It is also important that the establishment of a Technological Alliance will serve the interests of national development and sovereignty of all member countries. Mutual benefit (a positive-sum game for all) is the main force that will create and cement the alliance.

Confronted with technological sanctions or threats to use them, many Russian R&D specialists and shareholders of innovative companies are facing a difficult choice: homeland or the business of their life? Should one be a patriot and continue one’s business in Russia, which will significantly reduce chances to build a large, global business? Or should one  preserve access to large Western markets and venture capital investments, but continue his business in the West rather than in Russia, which means that he will have to emigrate? Some have already done so over the past year. I don’t want to judge anyone, I will only say that a Technological Alliance offers a new choice for creative and enterprising people and an enormous potential for growth in a market of 3.5 billion consumers.

Without going into detail, I will mention some other important features of a Technological Alliance which make it more attractive and feasible:

  • this association is meant to be “not against” (for example, “hegemony”) but “for” – in our case for technological development of its member countries. This suggests new positive goals and defuses inevitable criticism from the West;
  • an association of countries that are geographically distant from each other could be created only after the advent of the Internet and information technologies (which have considerably reduced transaction costs of information exchange), and it is effective only for the development of high technologies (the main sphere of information interaction). At the same time, the integration of countries located far from each other (having no common borders) may prove to be easy since these countries and their nations have a much less negative history of mutual relations;
  • this association will not impose direct restrictions on foreign and domestic policies of its member countries, which sometimes becomes a stumbling block (the European Union can serve as an example);
  • this association will be open to new members;
  • paradoxically, within a Technological Alliance, national and cultural differences of its members will be a competitive advantage for creating new products and services (some innovative companies, such as Google, prefer to have employees of different nationalities in their project teams). Thus, civilizational identities will not be erased for the sake of globalization (as happens in Western culture, evoking legitimate resistance from other civilizations), but on the contrary, they will be supported in every way and by all;
  • potential member countries of a Technological Alliance are located on different continents, so we can say that “the sun will never set over the Technological Alliance.” This will allow its companies to operate 24/365.

Importantly, for Russia (and other countries) such an Alliance is not a follow-up but an alternative to the idea of “strategic partnership with China.” Multilateral cooperation not only creates multiple opportunities for development but also reduces the risk of domination by one state and therefore the emergence of new restrictions (in place of old ones) for realizing national interests and national development programs.

Obviously, even a mutually advantageous Technological Alliance cannot be created by one interstate agreement; this is a process that requires, above all, confidence among the participants. Joint projects are the best way to build confidence. The development of technologies within the BRICS can be started in various sectors. I will only mention (without discussing) ??non-military projects in the field of space exploration which is close to me. Their implementation would be mutually beneficial and can be started promptly. These projects may include a BRICS space station (Russia has announced its withdrawal from the International Space Station program in 2020), a BRICS personal satellite communication system (as a national alternative to the U.S. Iridium system), and the coordination of GLONASS (Russia) and BeiDou (China) navigation system development programs.

So a Technological Alliance essentially offers new and real opportunities for the development of Russia and other major emerging states. It best meets the interests of Russia and is most effective as a national development strategy.

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