The Industrial Spy Game: FSB as Russian Economic Developer

Since the fall of the Soviet Union, the Russian Federation (RF) has sought to reclaim its former glory and regain recognition as a great power.

Throughout this progression the national science base to the RF’s economic development is of high importance. This has been demonstrated through policy documents like the RF’s National Security Strategy from 2009. The focus of this analysis is to examine the role of RF intelligence-gathering activities for the purpose of domestic modernization.

The National Security Strategy of the Russian Federation up to 2020 identified five key high-technology sectors: energy, information technology (IT), telecommunications, biomedicine and nuclear technology (RF, 2009). Nanotechnology was also highlighted as an important investment and growth area. In 2010, the RF announced plans that scientific and technological centers would focus on the development and domestic commercialization of modern technologies, motivated in part by the success of America’s Silicon Valley (Medvedev, 2010). There are many ways a nation can bolster a science and technology (S&T) foundation, not just through domestic industry, and each nation tends to use multiple options. A critical way that is not often discussed in mainstream media sources is to procure foreign knowledge and equipment through espionage activities. Russia engages this path aggressively with the likes of the Federal Security Service (FSB).

There is little doubt that the FSB has been active in S&T intelligence collection, concentrating on foreign nations for domestic modernization and improving Russia’s competitiveness in the global economy. The modern era of intelligence-collection capabilities sees the American intelligence community as dominant. Before the modern era (pre-2001), the RF operated one of the world’s largest S&T information-gathering apparatus, which worked almost as a substitute for legitimate industrial domestic research & development (Almquist, 1990). For the RF, intelligence support to the scientific community and its own domestic industrial complex was the standard, not the exception, and in 2010 Russia confirmed that it made no secret of its motivations to gather S&T intelligence for the benefit of its national security interests defined broadly.

The RF intelligence complex, including the FSB, has been obliged by federal law “to assist the country’s economic development and its scientific and technical progress and to ensure the military-technical security of the Russian Federation.” This activity is in line with Article 8 of the Federal Law on the FSB. The collection of S&T intelligence and “industrial espionage practices established a template for Soviet and later Russian [FSB] intelligence gathering that remains in use to this day; as long as U.S. technology maintains its preeminent global position, such espionage will likely continue” (Sibley, 2004). This was validated in 2010 by the American ODNI (Office of the Director of National Intelligence), which stated that the RF “continues to strengthen its intelligence capabilities and directs them against US interests worldwide. Moscow’s intelligence effort includes espionage, technology acquisition and covert action efforts.” (Blair, 2010) Jonathan Evans, the head of the domestic British Security Service (MI5), noted in 2007 that “the scope of the Russian intelligence gathering was equal to the Soviet effort during the Cold War… [and] that Russian intelligence services were particularly interested in British science and technology. (Brogan, 2007)

The RF, and specifically the FSB, has extensively leveraged operational cover from diplomatic missions abroad and the posting of illegal agents in their target countries to approach foreign researchers and entrepreneurs. They would often establish a career in one or several third countries, allowing agents to use academic research institutions or commercial companies as platforms for espionage activities (Kouzminov, 2006). But it has also been observed that the triumphs of human intelligence (HUMINT) operations during the former Soviet era are unlikely to be achieved in the present day RF. In the modern era the primary method for collecting S&T intelligence is through cyber espionage. In 2008, the US noted that more than 1 trillion USD worth of data was lost to cyber espionage (Ackerman, 2009). This fact is further confirmed with the knowledge that the RF is developing advanced offensive cyber capabilities (McAfee, 2009). In addition to cyber espionage, scientific and technological intelligence can be exploited through signals intelligence. This is another area where the RF intelligence services have leveraged the previous Soviet foundation with modern advancements in current technologies.

In conclusion, while the FSB has advanced significantly in S&T intelligence collection since the former Soviet period, “the FSB’s increased influence may prove to be counter-productive in terms of economic modernization and industrial restructuring. Despite its self-confidence, the FSB is scarcely prepared to manage all the industrial complexes with international standing.” (Gomart, 2008) This last point is crucial, as it implies that the gains made covertly through the intelligence community could in fact have an unintended detrimental effect on economic progress and industrial modernization happening more organically with native companies across Russia. This is not the desire effect, of course, but a consequence of the classical dilemma in modern market economies that try to figure out how much governmental intervention is positive before it hits a tipping point and becomes a net negative impact on development. This is not even considering the likely more severe stress this reliance on covert activity has on the entrepreneurial spirit and risk taking that is crucial for any developing economy in the 21st century. The Russian Federation operates no differently than the US intelligence community agencies in that it pursues its own national security interests and aims to improve its domestic standing on the global stage. The issue it should consider, however, is whether or not some old school spy thinking might be a less effective long-term strategy, even if it does produce more immediate results.



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