Economic reform in Russia will flounder unless its educational system is fundamentally restructured, a confidential report by the World Bank warns.

The report, Russia: Education in Transition, is one of the final drafts of a comprehensive survey of the education available - from pre-school to university - to the 33 million young people studying in the country.

Written by a team of World Bank staff and consultants, in co-operation with the federal and regional educational authorities, the report, understood to be nearly finished, describes a system on the brink of collapse.

The challenge is to restructure an increasingly fragmented, under-funded and unresponsive system to meet the new demands of an open society and free market, the report says.

It recommends investment - from both internal and external sources - improved curriculum direction and managerial structures; a focus on citizenship to support social cohesion; and more logical divisions of responsibility between federal and regional authorities.

Evgeny Tkachenko, Russia’s education minister for the past three years, told The TES: “Russian education needs Russian solutions. It’s not just a question of money. It does not matter how hard it gets here, economic questions will not be the first thing for teachers and educationists - freedom and opportunities are the real thing.

“In considering the problems of Russian education it takes the correct approach, but I would dispute its solutions.”

The suggestion that the least efficient and redundant schools and vocational institutions could be closed and the balance of power between the federal government and regions shifted, deeply worry Mr Tkachenko.

School closures could swell the ranks of the criminal gangs already causing problems for the police in urban areas and increasing education’s share of cash-strapped budgets was a major political challenge, he said.

The education system built under the Soviet Union transformed an agrarian society of peasants into an industrial superpower in barely a generation. Science and maths skills are still higher than most leading western nations. But chronic underfunding in the past 20 years reflects a system in crisis. The proportion of gross domestic product (GDP) spent on education has plummeted from 7 per cent in 1970 to 3.4 per cent in 1992, with spending per student in compulsory education down nearly a third in just the past four years.

Buildings are crumbling, libraries are antiquated, laboratory equipment out-dated. Bright teachers with skills in demand, for example, languages and economics, are leaving the profession for the private sector and young people are leaving school earlier and eschewing higher education with applications down 11 per cent in the past two years.