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. Last Updated: 07/27/2016

Work Starts on First Business School

Itar-TassVardanyan showing Putin a model of the Skokovo business school as Mau, Mordashov and other guests applaud Thursday at the groundbreaking ceremony.
SKOLKOVO, Moscow Region -- President Vladimir Putin laid the foundation stone Thursday for a Moscow-area business school designed to churn out a new generation of pinstriped moguls to build on the nation's ongoing economic boom.

"The successful creation of business schools will be a positive contribution to the development of the entire Russian economy," Putin said at the ceremony in here Thursday evening on the grounds of the future school. "The rapid development of our economy dictates the need for high-quality managers."

Thursday's foundation ceremony followed years of lobbying by Troika Dialog president Ruben Vardanyan, who has said the country needs more qualified business managers.

The 38-year-old entrepreneur has been touting the Skolkovo - Moscow School of Management as Russia's answer to Harvard Business School and France's INSEAD.

Some of the country's best-known business leaders have agreed to help fund the $300 million project.

Fourteen business leaders and companies, including Vardanyan and the country's richest man, Roman Abramovich, have agreed to donate up to $5 million each to the school. Other backers include Severstal chief executive Alexei Mordashov; Rustam Tariko, the founder of Russky Standart Bank; and Alexander Abramov, the founder of steel giant Evraz.

Putin gave his blessing to the project in March, when he met the school's founders and made it part of his national education project. The school is expected to open by 2008.

Even as Russia has rapidly transformed into a market economy since the 1991 Soviet collapse, most entrepreneurs have had little access to Western-style business education. ExExecutives at the nation's rapidly growing companies complain of a lack of qualified managers. Many businessmen, including Vardanyan, have studied business abroad.

Tariko also studied business in a foreign country, Bloomberg reported Thursday. Abramovich, meanwhile, dropped out of university just before the communist collapse to become an oil trader. He later gained a law degree via a correspondence course, the agency quoted his spokesman, John Mann, as saying.

Construction of the school is expected to total $128 million, with another $100 million being plowed into an endowment. An additional $32 million will be spent on miscellaneous costs, while the government has agreed to set aside 1.5 billion rubles for the school from its national projects budget.

Most of the project's backers, including Mordashov, attended the ceremony Thursday. Also in attendance was First Deputy Prime Minister Dmitry Medvedev and economist Vladimir Mau.

Putin was given a tour of the school grounds by Vardanian.

A model of the futuristic school -- featuring a circular, glass building -- was also displayed.

At a small private dinner Thursday, Economic Development and Trade Minister German Gref said the school filled a crucial niche.

"I always felt this was a serious problem for Russia," Gref said. "We have a great country, wonderful people who are creative, smart and hardworking. But [the lack of business education] is a problem for Russia. If I were asked today which reform is most needed, I would say without question it is education."

Many of those attending the ceremony were of like mind. Robert Dudley, the American president of Russian-British oil major TNK-BP, said the lack of experienced managers was one of the biggest problems his company faced.

"Ruben has a serious vision for this school and we as a company have a real need for management talent at all levels," he said. Managers from TNK-BP, he said, would teach at the school on an ad hoc basis.

Some of the projects' backers are expected to teach at the school full time.

Students from other leading emerging markets such as India, China and Brazil will be encouraged to enroll, while the Russia-based students will take part in six-month exchange programs in these countries as part of the two-year MBA program.

Vardanian will be the school's president.

A key challenge for the school will be finding qualified professors. Vardanian told the Financial Times in an interview published earlier this week that the school would be run like a business, not like a school. Professors will be paid a salary and bonuses; they will not have tenure.

Vardanian, who at the age of 22 joined the country's first investment bank, Troika Dialog, has always been seen as being at the forefront of the country's corporate governance drives.

The first Soviet citizen to study at Harvard Business School lauded Vardanian's efforts Thursday.

"Finally, after 15 years, somebody has thought of it," said Vitaly Ozira, head of the management department at Moscow International University, who spent a year at Harvard Business School in 1965-66 as part of an exchange program for Soviet students. He never gained an MBA from Harvard, but he did attend some of the courses at the business school at the time.

"If we want to be a part of the contemporary world, we need to learn the rules of this world. We can talk as much as we want about Russia's special way, but it is impossible to determine the special way unless you know what are the rules others are playing by," he said.

Ozira said Russia had yet to catch up with developed capitalist countries. While terms like marketing and management have seeped into the national lingo, the meaning in Russia is not always the same as it is in other countries.

"It's like renovating one's apartment according to Western standards and design but failing to change anything in the rest of the building," Ozira said.

Staff Writer Valeria Korchagina contributed to this report.