Just when it seemed Russia had found a shortcut into the nanotechnology arms race that has developed over the last decade and was sweeping up all the discarded nanotechnology companies that had run aground on the rocks of capitalism, Russian President Vladimir Putin last month looked to be sacrificing both Rusnano and another technology project Skolkovoan attempt to build a Silicon Valley outside of Moscowto solidify his political aims.

It appears that Putins hard-nosed attitude towards Rusnano was not entirely unwarranted. Russias Accounting Chamber, which has been bearing down hard on abuses, accused Rusnano in April of this year of taking the $5 billion it had been allocated back in 2007 when it was launched and transferring $40 million into shell companies. As bad as that is, the really high-price boondoggle appears to be the $450 million that was spent on a silicon factory that ended up being non-operational.

On top of nearly half-a-billion dollars spent on a whole lot of nothing, the Accounting Chamber reported that Rusnano had not only lost $80 million in 2012, but also all of its cash reserves used to protect against risky ventures, totaling $800 million. For those counting, thats $1.37 billion down the drain and thats not even counting other operational losses since its inception in 2007.

In the aftermath of these devastating and embarrassing revelations, Putin threw Anatoly Chubais, RusNano's chief, under the bus, accusing him not only of poor decisions but implying that CIA operatives had misguided him.

But Chubais appears to be bouncing back and with him Rusnano. In mid-June, Chubais made a public mea culpa conceding mistakes had been made, and laying out a new plan for Rusnano, including the establishment of a private equity fund that will gradually sell off its managing company to private investors by 2020.

Since the reboot of Rusnano 2.0, the organization has announced a memorandum of understanding with Alcoa to produce technologically advanced oil and gas aluminum drill pipe finished with a life-extending antiwear coating. Of course, MOUs extend about as far as the parties agreeing to send out a press release, but at least we know that the Rusnano saga will continue on for another day.

IEEE Spectrums nanotechnology blog, featuring news and analysis about the development, applications, and future of science and technology at the nanoscale.

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Is Putin Pulling the Plug on Russian Nanotechnology?