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Are You a Budding Tech Innovator? Head to Repressive Belarus

The former Soviet republic has an abysmal human rights record and an autocratic president, but that's not keeping its tech sector from booming.

by John Dyer
Apr 6 2016, 9:24am

Minsk, the capital of Belarus. Photo by Vadim Sazanovich

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Belarus has a Soviet-style, state-controlled economy, an abysmal human rights record, and a president, Alexander Lukashenko, who shows no intention of giving up the power he's held since 1994.

The two seem diametrically incompatible — so it might come as a surprise that the Belarusian tech sector is actually growing quite nicely.

In a country that desperately needs foreign cash, software and other tech firms in Minsk's High Tech Park employ 24,000 workers and generate more than $2.5 billion annually, or 1.5 percent of Belarus' gross domestic product, including $700 million in exports, Reuters reported recently.

What's more, the nation's tech sector is forecast to grow by 20 percent this year — a repeat of 2015 — after the rest of the economy shrank by 4 percent last year as a consequence of a regional economic downturn led by Russia.

Wargaming, a studio that was founded by the Belarusian developer Victor Kislyi in Minsk, created World of Tanks — one of the highest-grossing computer games today — and the country's engineers were central to the development of other popular products like the voice over internet protocol tool Viber and a selfie app called MSQRD that Facebook recently acquired.

This has happened in the context of human rights violations that are out of place in Europe. Miklós Haraszti, the United Nations special rapporteur on human rights in Belarus, issued a warning in February about Belarusian officials harassing opposition leaders, human rights activists, journalists, and others since October, when Lukashenko won a fifth term in office.

"During the last four months, no changes have been initiated in Belarus to alter the oppressive laws and practices, while numerous cases of new violations of basic rights have emerged," said Haraszti.

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Lukashenko permitted the High Tech Park to open in 2005, giving tax breaks to companies there. He's also recently made it easier to launch startups legally. But the government still owns around 80 percent of Belarusian industry, according to the CIA World Factbook.

"There isn't really very much economic freedom in Belarus," said Margarita Balmaceda, a Wilson Center fellow and professor of international relations at Seton Hall University who has written about the Belarusian economy.

But it appears freedom is not essential to a dynamic economy.

"We have other countries where there is an uneven record of human rights, which has not prevented innovation to take place," Balmaceda noted. "Many people would agree that the human rights situation has not stopped China from growing."

In fact, Belarus may counter-intuitively have the best basic ingredients for growth in the knowledge economy. The country produces around 4,000 software engineers annually, according to Reuters — an impressive number for a nation with a population of roughly 9.6 million — and they don't face much overhead.

"It's no surprise that in a country where you're training a lot of great engineers and the cost of living is very cheap, you are going to have innovation," said Evan Engstrom, the executive director of a San Francisco-based tech advocacy group called Engine.

Representatives from Wargaming echoed Engstrom, noting that Belarus has "deep roots in sciences and programming." The company declined to discuss politics in Belarus.

Engstrom noted that tech geeks aren't typically preoccupied with politics, at least not when they're starting out. Tech titans like Apple and Google started lobbying politicians in the halls of power relatively recently, largely because they've grown so big they can't avoid it. In those companies' early days, their utopian goal was to bypass Washington.

"Silicon Valley was very much not concerned with the goings on in government," Engstrom said. "It was the attitude of, 'We will solve a problem and not worry about what was happen in the political machinery.' The technology solves the problem."

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But if government repression in Belarus hasn't exactly hampered the country's budding tech sector, the state has nevertheless clashed with it.

In a rare instance of successful political activism in Belarus, activists in 2011 used social media to convince their president to roll back gasoline price hikes — though Balmaceda noted that this was a bread-and-butter issue, not a challenge to the authority of Lukashenko's regime.

Lukashenko isn't afraid to play hardball, either.

Last year, Belarusian authorities arrested IT businessman and investment fund manager Viktar Prakapenia and charged him with tax evasion and earning $650,000 in illegal profits. At the time, Belarusian tech circles feared the arrest might put off investors, but that evidently didn't happen.

Prakapenia recently returned to work after spending almost nine months in jail, according to Belarusian pro-democracy news website Charter 97. The conditions of his release reportedly included keeping his business in Belarus rather than moving it to Poland.

If Prakapenia had relocated his business abroad, he wouldn't have been the first.

A few years ago, Kislyi, the billionaire creator of World of Tanks, moved his operations to Cyprus, a well-known tax shelter for the citizens of former Soviet republics seeking to stow their money out of the reach of politicians back home.

Now a dual Belarusian-Cypriot citizen, Kislyi is a mover and shaker on the island. Bloomberg reported that he attended a screening of Fury, Brad Pitt's 2014 World War II tank movie, with Cyprus' finance minister.

It's not clear if Prakapenia wanted to go to Poland to similarly spread his wings without Lukashenko looking over his shoulder. But it seems unlikely that the riches of Belrusian entrepreneurs will ever give them the same influence in Minsk that Silicon Valley executives wield in Washington, DC.

"My feeling is that those individuals are not eager to participate in politics because the only way to keep your piece of the pie is to keep away from politics or support one person — the president," Balmaceda said.

Follow John Dyer on Twitter: @johnjdyerjr
Photo via Wikimedia Commons