Model for prosperity? Russian republic climbs out of backwater status.

Ethnically mixed Tatarstan once declared independence from Moscow. But it now receives billions in investment and will be a host city for 2018's FIFA Soccer World Cup.

The huge concrete-and-steel complex rises out of the empty steppe near the Volga River, propelled by billions of dollars of investment from Moscow.

It is tribute to an ambitious vision by local leaders to turn their rust-belt industrial, ethnically mixed central Russian republic of Tatarstan into a global leader in information technology within barely a decade.

When it's completed – critics say "if" – Innopolis will house a university, a sprawling free economic zone, and modern living conditions for 150,000 IT specialists and their families.

"This will be a live option for Russian IT specialists to stay in this country rather than leave it," says the future city's development director, Marat Bagautinov, pointing to Russia's growing brain drain problem. The university, an enormous, post-modern clamshell-shaped building, is already up and running.

"This is a model project that can [later] be rolled out in other Russian regions," he says.

The Innopolis project is just one indication of the stunning political transformation that's overtaken Tatarstan, which began the post-Soviet era as one of only two Russian ethnic republics – the other was Chechnya – to declare independence from Moscow, reject all Russian laws, and seek to join the world community as a sovereign state. 

Chechnya was virtually destroyed in two savage Kremlin-ordered wars, which killed at least 200,000 people and left the ruined republic in the hands of a pro-Moscow dictator. Tatarstan avoided that fate by eschewing armed resistance, and then quietly dropping all its claims to sovereignty once Vladimir Putin came to power declaring the full restoration of top-down authority in Russia.

The same ethnic elite still controls the government in the republic's Volga River capital of Kazan. But instead of the former nationalist rhetoric, visitors are greeted with a new mantra: Tatarstan is open for business! 

This vision, which stresses inclusion of minorities through broad-based economic development, may prove the only effective answer to the centrifugal forces that broke up the USSR, and still threaten the sprawling, multi-ethnic Russian Federation.

"We are part of Russia, that is a fact. We're subject to Russian laws and conditions. And the task we set for ourselves is to take all those things that don't seem to function very successfully in Russia and make them work in Tatarstan," says Taliya Minullina, the republic's youthful and dynamic minister of investment. 

While Russia's economy shrunk last year, Tatarstan's is modestly growing, she says. According to official statistics, Tatarstan is the leading destination for foreign direct investment in Russia; Moscow is No. 10.

"Russia is scary for investors, it has an unstable environment," says Ms. Minullina. "But Tatarstan is small, less than 4 million people, and we have a team here that's working together. We aren't interested in politics. Our leadership, our president, has a vision of economic development. That's our priority."

She outlines the ambitious IT strategy, approved by the republic's parliament. The goal is to wean Tatarstan from its former dependence on oil exports by developing cutting-edge petrochemical technologies and to modernize its Soviet-era automobile and aircraft industries – all by 2030.

"A lot of this is already happening. We have the plan, we have resources focused on it, and we have capable people whose goal is make Tatarstan a major economic driver in the 21st century," Minullina says.

First Kazan, then Moscow?

Tatarstan is the historic homeland of the descendants of Genghis Khan's Golden Horde, which conquered all of Russia 800 years ago. The Russians gradually rolled the Tatars back, and in the middle of the 16th century, Ivan IV "The Terrible" conquered Kazan and subjected the Muslim Tatars to Russian rule. Kazan's modern skyline is dominated by a charming mixture of towering mosque minarets and the bulbous onion domes of Orthodox churches that bespeaks almost 500 years of often-uneasy coexistence between the two communities. 

About 40 percent of the population are Russians, but the Tatar majority has had a lock on power since the 1990s. During those early post-Soviet years, they developed what political scientist Vladimir Belyayev calls the "Tatar model," whose main features are tough authoritarian governance, strict limits on dissent, a monopoly of power ensured by often wildly falsified elections, and tight control over economic development.

"We like to joke here that what happens in Kazan is later repeated in Moscow," says Mr. Belyayev, a professor at Kazan's prestigious Aviation Institute. "When Putin arrived, he implemented something like the Tatar Model for the whole country. Our local elite were deprived of their designs for national independence and became a branch of the federal elite."

But, he adds, they still sometimes play on Tatar nationalist themes both as a populist device for the consumption of their own local constituency, and a way of warning Moscow that stability in Tatarstan depends on keeping its ruling elite happy.

"Even when Tatarstan is disobedient, authorities in Moscow treat it with kid gloves," says Alexei Dyomin, deputy editor of Eurasia Daily, a Kazan-based alternative news service. For instance, when relations between Russia and Turkey soured last fall after the Turkish shoot-down of a Russian plane in Syria, the Tatar leadership failed to issue any statement of solidarity with Moscow. Turks are ethnic kin of Tatars, and Turkey has about $1.5 billion invested in the little republic. 

"There were no consequences at all for that, though the Kremlin takes political loyalty very seriously," says Mr. Dyomin. "Whenever I ask Moscow officials about this, they tell me their priority concern is that things should remain stable in Tatarstan."

'Doing very well as a Russian region'

Mikhail Scheglov, chair of the Russian Cultural Society, which claims to speak for the Russian community here, says there were some very tense moments between Russians and Tatars in the past – though no bloodshed – but nowadays the grievances of local Russians boil down to resentment over their children having to learn Tatar language at school and a feeling that too many mosques are being constructed at the expense of churches.

"The idea of having their own independent state was very attractive to Tatars, and even some Russians, after the Soviet Union collapsed," he says. "There's a lot of oil here, and there was talk of being like Saudi Arabia. But Tatarstan is now doing very well as a Russian region, and almost nobody is talking about separatism today. It could come back, I guess, if things changed. But right now it seems a completely exhausted idea."

The ironclad continuity in Tatarstan's leadership is almost unique in Russia. Mintimir Shamiyev, the republic's former Communist Party secretary who led Tatarstan's drive for independence in the 1990s, and then made amends with Moscow after Putin came to power, remains a key state adviser. His replacement was his own prime minister, Rustam Minnikhanov, who was elected last September with a comfortable 96 percent of the vote.

Tatarstan is a "net donor" to the federal budget – which means that it pays more in taxes to Moscow than it receives back in subsidies – but the republic's rulers have become adept at attracting Kremlin funding for big projects, like Innopolis, that serve as flagships for their grand economic vision and, even critics admit, drive construction of infrastructure and needed public amenities.

In 2005 Moscow was convinced to invest about $3 billion into financing a lavish celebration of Kazan's millennium, which went into renovating the city center, extending the metro, building roads and hotels, and a massive PR blitz describing Kazan as Russia's "third capital," after Moscow and St. Petersburg.

Olympics dress rehearsal

"Everybody joked that it was a 'historical-economic project,' since historians consider the anniversary pretty dubious, but it convinced Moscow to invest in a big way," says Dyomin.

Next up was the 2013 Summer Universiade Games, a kind of dress rehearsal for the Olympics, with nearly $5 billion invested into Kazan's infrastructure and sports facilities. Kazan will also be one of the host cities for 2018's FIFA Soccer World Cup, with more subsidies pouring in to build up the city's tourist amenities. Another big project, much discussed here, is the plan to build a Moscow-Kazan high speed rail link, which would cut travel time between the two cities from around 14 hours to just 3 hours. Negotiations are ongoing to extend that railway all the way to Beijing, with $6 billion in Chinese financing already reportedly committed, which would make Kazan a major Eurasian rail hub.

"It's hard to distinguish our authorities big visions from what is actually getting done, but there is no doubt that investment is coming in and things are being built here," says Khasbulat Shamsutdinov, editor of the popular Evening Kazan newspaper. "However, the most successful our authorities have done by far is their official PR campaign, which has clearly convinced Putin that Tatarstan is an economic pioneer region, and lifted Kazan in the minds of most Russians from a backwater Soviet provincial city to a major center of progress in Russia.

"Is it true? Let's wait a few years."