25 March 2025
Ildar Daminov: The prospects for developing Belarus’s mechanical engineering cluster and unlocking its untapped potential are important topics. However, when it comes to cutting-edge technologies, the microelectronics industry plays the most significant role in global digital transformation. From what I know, Belarus once held the greatest potential in this field among all the former Soviet republics.
Valery Tsepkalo: Microelectronics truly forms the backbone of the information technology industry. Countries that prioritize this sector gain a strategic advantage, resulting in software industries that are more resilient to market fluctuations.
Take India, for example. It’s a global leader in outsourced software development. But the absence of a domestic microelectronics industry significantly limits its capabilities in high-tech sectors like instrumentation and precision engineering. As a result, India's economy is heavily skewed toward custom software development. This imbalance also impacts salary distribution — wages in the IT sector are significantly higher than in other industries.
In contrast, Taiwan, South Korea, and more recently, China, invested heavily in developing their microelectronics industries and integrating them with software solutions. This strategy allowed them to become global leaders in a wide range of sectors — from automotive manufacturing and consumer electronics to artificial intelligence and cloud technologies.
As a result, income distribution among professionals in these countries is much more balanced. Engineers in fields like mechanical engineering, microelectronics, instrumentation, as well as professionals in medicine, construction, and education, earn salaries comparable to those in IT. This creates a more stable and sustainable economy, encourages innovation — which often emerges at the intersection of different fields — and reduces social inequality across professions.
You’re absolutely right that Belarus inherited a powerful microelectronics legacy — arguably the strongest not only among former Soviet republics but across all of Eastern Europe. The country was once home to major enterprises focused on the development and production of semiconductor devices. Notable examples include the Computer Research Institute (NIIVM), the Ordzhonikidze Plant, Planar, Agat, Horizon, Integral, and many others.
I was deeply motivated to connect Belarusian state-owned enterprises with potential American partners and investment funds. To achieve this, I organized a series of events at Riggs Bank — a boutique bank located in the heart of Washington, D.C. The bank wasn’t just conveniently located; it also carried symbolic weight. At various points in history, its clients included Abraham Lincoln, Dwight Eisenhower, Richard Nixon, and other notable figures.
After securing support from Riggs Bank’s leadership, I hosted a seminar there for executives of Belarusian state-owned companies who were seeking investment, business connections with American partners, and entry into the U.S. market.
Many leaders of major Belarusian enterprises took part, all of whom I reached out to personally. Among the participants were directors of Grodno’s “Azot”, Belshina, Vladimir Volkov (MZKT — later honored by naming a heavy-duty tractor unit after him: Volat, short for Volkov Automotive Tractor 😊, which, interestingly, could have become the main vehicle for oil extraction in Alaska — but that’s a separate story), Mikhail Lavrinovich (MAZ), and several others.
On the American side, top executives from Navistar and Detroit Diesel participated and expressed interest in collaborating with Belarusian automotive manufacturers. Also present were representatives from Ford (which, it’s worth noting, had already opened an assembly plant in Belarus) and Goodyear, the world’s largest tire manufacturer.
Goodyear eventually began purchasing Belarusian tire cord from BMZ and also played a key role in the anti-dumping investigation concerning Belarusian steel products — a case in which I was actively involved and strategically engaged Goodyear’s support. In total, representatives from about a dozen American companies attended the event.
During one of these sessions, I met Viktor Yemelyanov, head of the Integral plant. Later, he and I traveled to Chicago, where his company was supplying microchips to an American firm owned by a businessman of Indian origin. That company operated a small microchip production facility in Illinois, but at the time, Integral far exceeded it in both capability and technological advancement.
Not long after, I visited Motorola’s microelectronics division in Phoenix, Arizona, together with the director of Integral and Mikhail Marynich, who was then serving as Belarus’s Minister of Foreign Economic Relations. At the time, Motorola was undergoing a major restructuring process, separating its semiconductor manufacturing operations from its mobile phone division.
This same corporate strategy — splitting chip production from other divisions — would later be adopted by South Korean companies Samsung and Hyundai. They consolidated their semiconductor businesses and formed SK Hynix, a company I eventually brought on board as a resident of the High-Tech Park (HTP). This approach allowed them to supply microchips to a broader range of external clients rather than just fulfilling in-house demand.
Despite the generally negative perception of Belarus in international business circles, we managed to convince Motorola’s leadership to invest in Integral. The proposed deal involved Motorola acquiring a 51% stake in one of Integral’s production modules, specifically the one specializing in microchip manufacturing. The planned investment totaled $64 million USD — which would be roughly equivalent to $140 million in today’s terms. Notably, Motorola was only interested in purchasing shares of a single production unit, rather than the entire enterprise.
Let me briefly step aside from the main topic to share a lighthearted episode that captures the spirit of that time.
In Belarus, the word “privatization” had become almost a curse word — arguably worse than actual profanity. Swear words, after all, could still be heard in everyday life. But uttering “privatization” in official circles was practically taboo. It was perceived as something close to a criminal act, equated with the looting of the people's national wealth.
In September 2001, Belarusian Prime Minister Gennady Novitsky visited New York to attend the UN General Assembly. These events are typically more symbolic than functional, especially for smaller countries. Delegation leaders usually attend only the speeches that immediately precede and follow their own. The exceptions are the speeches of major world powers or charismatic, controversial figures — people like Fidel Castro or Hugo Chávez, who once famously referred to then-U.S. President George W. Bush as “the devil” from the UN podium.
Novitsky’s speech, however, wasn’t exactly one for the history books. It was unlikely to spark any headlines or meaningful public debate. But I didn’t want his visit to be a mere formality. I wanted it to have some practical value.
At that time, I had already worked on several investment projects, though their budgets were relatively modest — none exceeding $10 million, and most of them were “from scratch” initiatives. Unfortunately, such projects held little appeal for large investment funds.
During a conversation about one of these ventures with Pietro Sollecito — an American investment banker of Italian descent, and head of the London office of the Japanese investment firm Nomura (a great example of modern globalization!) — he pointed out a key challenge. Large funds, he explained, are generally not interested in projects under $100 million. Nomura today manages projects totaling over $500 billion, so their threshold is understandable.
The reason is simple: evaluating a small project takes almost as much time, analysis, and human resources as a significantly larger one. Therefore, smaller deals tend to offer lower returns on effort — and are often passed over.
Pietro and I also discussed the idea of establishing a technical super-university in Belarus, modeled after Stanford. The vision was that it could one day become the centerpiece of a future Hi-Tech Park ecosystem — something we’ll revisit later when discussing the development of the HTP.
To give Prime Minister Novitsky’s visit more substance, I decided to organize a meeting for him with representatives of a major investment fund. For this, I turned to Ian Bremmer, with whom I was in regular contact at the time.
Ian is a person of exceptional intellect, unconventional thinking, and tireless work ethic. We had many deep and thought-provoking conversations over the years after had moved from Stanford to NYC. After I published an essay in Foreign Affairs about the risks of geopolitical conflict across Eurasia due to globalization, Ian even invited me to co-partner with him in risk analysis business. It was an incredibly flattering offer — which I, unfortunately, had to decline.
Ian Bremmer and Valery Tsepkalo
First of all, a diplomat — especially an ambassador — cannot legally involved in commercial enterprises. Secondly, I didn’t believe it was truly possible to make money in foreign policy through honest commercial activity based on analysis and forecasting. That space was already crowded with reputable think tanks, NGOs, and international organizations dedicated to researching global risks.
To be clear, I’m not referring to professional “grant-eaters” — those who subsist for years on Western funding while pretending to fight for democracy. In reality, they are deeply invested in the survival of dictatorships, because such regimes enable them to live comfortably in the West, without facing any personal risk.
That said, Ian Bremmer succeeded in building a real business in this field. If I’m not mistaken, he raised around $2.5 million from Lehman Brothers (whose European and Asian operations, incidentally, were later acquired by Nomura). With those funds, he developed and launched a methodology for assessing investment risks — initially focused on the post-Soviet space, and later expanded to include the Middle East and Asia.
Over time, Eurasia Group evolved into one of the world’s leading analytical firms in the field of political risk, offering its clients detailed forecasts, strategic insights, and high-quality analysis.
I won’t go into the specifics of Ian’s business model here, but I will say this: at my request, he arranged a meeting between Gennady Novitsky and a Managing Director at Lehman Brothers — one of the "Big Four" investment banks at the time.
What made the meeting even more remarkable was the identity of Novitsky’s counterpart: Theodore Roosevelt IV — the great-grandson of the 26th President of the United States. His name alone spoke volumes about the financial credibility and stature of the institution he represented.
Gennady Novitski was a sincere, democratic-minded, and personable man. At my suggestion, he even got excited about a proposal — though it was never implemented — to build high-quality roads and sidewalks in Belarus, meeting modern infrastructure standards. The plan included reliable drainage systems and concrete sub-layers beneath the asphalt to eliminate potholes not only on highways but in residential courtyards as well.
What I truly wanted was for our people — just like those in the U.S., the U.K., or Sweden, which has relatively the same climate as Belarus — to be able to walk down clean, dry streets, regardless of the weather. I wanted every rainfall or wet snow to wash dirt away into storm drains, not turn roads into mud — leaving the streets clean, safe, and well-maintained.
Minsk Streets near Cheluskins Central Park
By that time, Belarus was already governed by a generation of ministers and prime ministers who lived in fear. Unlike Mikhail Chigir, who had no qualms about openly discussing reforms, these newer officials were terrified to even utter the word “privatization.” I didn’t yet fully grasp just how deep that fear ran.
Ian Bremmer and I were both present at the meeting. One of Ian’s colleagues from Eurasia Group, who accompanied him, served as the interpreter.
After a brief exchange of pleasantries between Theodore Roosevelt IV and Gennady Novitsky, the president of the investment company didn’t waste any time. Skipping the usual diplomatic formalities, he cut straight to the point.
“I’d like to know which enterprises you are ready to offer for privatization,” he said, directly and without preamble.
It’s important to clarify here: for any Westerner, “investment” and “privatization” are essentially synonyms. Investment typically means exchanging financial capital for equity in a company. Without privatization, there’s no way to bring in strategic investors. Unlike a bank loan — which comes with interest and leaves the risk on the borrower — an investor puts money into the growth of a business and shares in both its risks and rewards. It's a long-term partnership, where the investor is actively interested in the company's success, not just in getting their money back with interest.
The Belarusian prime minister’s reaction to the question — posed by the president of one of the largest U.S. investment funds — was as if someone had uttered heresy in front of a devout Catholic.
Had it been a private, one-on-one conversation, perhaps it could’ve passed unnoticed. But this was said in front of witnesses.
He blushed deeply and began looking around nervously, as if searching for some higher power to confirm his ideological innocence. “You must have been misinformed,” he replied, visibly flustered. “I’m here so that you can tell us how you can help us.”
At that point, it was a turn of Theodore Roosevelt IV to become stunned. For him, the concepts of “doing business together” and “helping” belonged to entirely different worlds. Help meant humanitarian aid, emergency relief, or charity — things like sending a shipment of canned beef, grain, clothing, or medicine to Belarus. That’s what relief organizations are for.
But Lehman Brothers was not the Red Cross. It didn’t send winter coats to children in war zones. Its mission was to find business partners, invest capital, scale businesses, and generate profits.
I could see that Ian was uncomfortable as well. He understood that this meeting hadn’t just taken up the time of a major fund president — it had inconvenienced his business partner in the field of political and commercial risk assessment.
As for me, I felt ashamed. The meeting had been organized at my initiative, and I had expected a constructive discussion about potential investments. What I hadn’t anticipated — not for a moment — was that the Belarusian prime minister would be unauthorized to even speak about investment opportunities.
Now, looking back after all these years, I think that meeting may have actually done Ian some good. It likely only reinforced Roosevelt IV’s belief that investment analytics and political risk assessment tools are absolutely essential when dealing with countries like Belarus — at least if an investor doesn’t want to end up empty-handed.
It’s a bit like interacting with an exotic animal: you need a special approach, a different way of communicating. Otherwise, you might suddenly find yourself handed something like a “golden share”, and your entire financial model — your carefully built investment strategy — can collapse like a soap bubble overnight.
In the Belarusian system, the "golden share" is a legal instrument that allows the regime to retain full control over a company — even if it has already been formally privatized and a majority stake is held by an outside investor. In practice, it means that state representatives can override the decisions of actual shareholders. They can change company leadership at will, fire managers they dislike, install politically loyal personnel, and completely disregard the strategic vision or interests of the real owners. In essence, the golden share makes ownership symbolic, while control remains in the hands of the state.
Meetings like this only underscore the critical importance of independent risk assessment agencies like Eurasia Group. Without deep contextual understanding and a grasp of how political mechanisms function in opaque systems, even seasoned investors can find themselves in unpredictable — and costly — situations.
That meeting may have been the first time Roosevelt IV truly encountered a reality where the fundamental logic of economics no longer applied. A parallel universe, in a sense, where investment — rather than being a driver of growth, jobs, and quality of life — is seen as a potential threat, a tool that might destabilize the regime’s grip on power or limit its control over the population.
Just fifteen minutes of what felt like a dialogue between the blind and the deaf, and it became clear that continuing the conversation was pointless.
Still, before we left, we decided to go up to the rooftop of the 3 World Financial Center, the building where the investment fund was headquartered. From that height, Wall Street stretched out before us — a powerful symbol of what humanity can achieve when given economic freedom.
And then we quietly took our leave — as Andrei Makarevich once sang: “Each went their own way, and the train went its own.”
A modern-day view of Manhattan from the rooftop of 3 World Financial Center — the very building where our meeting with Lehman Brothers took place.
Despite such discouraging prospects, I understood one thing very clearly: without privatization and investment, there could be no real development. No matter how fervently state-owned enterprises were defended by ideologues, they remained a byword for inefficiency. These companies had no incentive to grow, because their leadership was not evaluated on performance, but on political reliability.
Even if an enterprise was operating at a loss, it could still count on state subsidies — naturally, at the expense of more efficient and successful businesses. A striking example of this is the so-called “rescue” of the Minsk Motorcycle and Bicycle Plant. Pouring public funds into a long-defunct production line didn’t revive it — it only delayed the inevitable collapse. This kind of artificial life support didn’t make the factory more competitive; it merely prolonged its agony — a cost ultimately borne by those who actually knew how to work efficiently.
In Belarus’s state sector, salaries are determined not by performance or profit, but by bureaucratic decree. Productivity, management effectiveness, market realities — none of it matters. Wages are set administratively, regardless of a company’s actual output or financial health.
Working conditions at state-run factories are often marked by crumbling workshops, obsolete machinery, and low pay. But when private investment enters the picture, everything changes. The enterprise begins to improve productivity, explore new markets, implement modern technologies — and as a result, it can afford to pay more. Salaries in the private sector grow because companies must compete for qualified professionals. If they don’t, they lose talent — and with it, their market position.
Had the strategy I proposed been realized, it could have become one of the most remarkable economic success stories in the entire post-Soviet space — perhaps even more impressive than my earlier idea of merging MTZ with John Deere.
Belarus would have been the only country in Central and Eastern Europe — and the CIS — with a modern microelectronics manufacturing sector, fully integrated into the global supply chain. We could have reached the top of the production hierarchy, occupying a niche alongside the U.S., Taiwan, and South Korea.
But as you might have guessed, Lukashenko refused to approve the corporatization of Integral. Instead of attracting a major strategic investor, he simply ordered that the plant be given $30 million in state funding — money that could have been used to build roads or invest in education.
This delayed the company’s decline temporarily, but it couldn’t prevent the inevitable. In the end, the result was the same — a slow unraveling, just like the rest of Belarus’s industrial sector.
Today, Integral is struggling to survive. Its buildings are deteriorating, its equipment is outdated, and its qualified employees are leaving.
The main entrance of the Ordzhonikidze Plant — once another “flagship” of Belarusian industry — as seen from Kulman Street in Minsk.
At the same time, Motorola, the company we had been trying to partner with, went through several rounds of restructuring. Had the deal gone through, Integral would most likely be part of ON Semiconductor Corporation today — a holding company specializing in semiconductor production for industrial sectors such as aviation, mechanical engineering, and machine tool manufacturing.
Production facilities of ON Semiconductor.
And while the company hasn’t reached the scale of TSMC or NVIDIA, its market capitalization today stands at $32 billion. Even if salaries at Integral were half of what they are in the U.S. — which would be perfectly reasonable for Belarus — workers could be earning $3,000 a month, and engineers around $5,000.
The construction standards of ON Semiconductor’s production facilities offer a glimpse into what Integral could have looked like today.
But the real issue wasn’t just about higher salaries at Integral. The real game-changer would have been the broader impact on the entire Belarusian economy. As soon as the average engineer’s salary approached $5,000 a month, it would have triggered a chain reaction — a powerful signal that microelectronics could be not only viable in Belarus, but transformative.
Belarusian youth would have gravitated toward the industry in large numbers. The Belarusian State University of Informatics and Radioelectronics (BSUIR) would have been completely reshaped. Imagine world-class laboratories on campus, training students in chip design and embedded systems programming — preparing a new generation of specialists ready to compete globally. And with a strong pipeline of talent in place, the global tech players would have started to take notice.
I had already managed to bring in HTC — at the time, the third-largest smartphone maker in the world — as a resident of the Hi-Tech Park, alongside SK Hynix from South Korea, one of the giants in the microelectronics space. And that was without Belarus having any real domestic chip manufacturing — just the promise of local R&D capabilities.
If Motorola had entered the market back then, it could have been the first domino — the spark that launched a fully integrated microelectronics ecosystem. Others would have inevitably followed. Companies like TSMC, the world’s largest chip manufacturer with a market capitalization of over $600 billion, could have set up operations in Belarus. NVIDIA, now valued at more than $2 trillion thanks to its leadership in AI and GPU technology, could have opened research labs. Intel, currently investing $20 billion into a new factory in neighboring Poland, might have seen Belarus as part of its regional supply chain. Even Samsung, which received direct appeals from U.S. presidents to invest in America, could have become a strategic partner.
Had that happened, the value of Belarus’s IT and microelectronics sector today would be measured not in millions — but in hundreds of billions of dollars. The industry would not be employing a few thousand people, as it does now, but hundreds of thousands. And the average salary wouldn’t be $500 — it would be $5,000, like the wages SK Hynix was already paying to Belarusian chip designers at the Hi-Tech Park.
So what is the root of the Belarusian tragedy?
Was it that the country’s leadership was catastrophically incompetent — unable to recognize the unique opportunities that could have propelled Belarus to the forefront of global microelectronics and engineering?
Or was it a conscious choice — a deliberate rejection of modernization, breakthrough technologies, and successful development, all for the sake of holding onto power at any cost?
A choice where the fear of losing personal control outweighed any desire to see the country flourish.
Because modernization would have meant economic independence for the people — and with that, political agency. People who earn a decent living begin to see themselves as citizens. They begin to demand a voice, a say in how the country is run, and mechanisms to hold power accountable.
And so a different strategy was deliberately chosen: one designed to keep people in poverty. Only those who were entirely dependent on the state would be allowed to earn. Enterprise leaders were appointed not for their competence, but for their personal loyalty. Workers and engineers were never allowed to accumulate savings or have long-term prospects. They had to remain hostages of the system, where the mere threat of losing a job sounded like a sentence:
“Step out of line — and you’ll be unemployed, with no way to feed your children.”
At this point, it hardly matters whether this national catastrophe was caused by incompetence or by a calculated policy of suppression. The result is clear: the degradation of once-advanced industries, widespread poverty, the exodus of the country’s best minds, and ultimately, the existential threat to Belarus as an independent player on the international stage.
After many failed attempts to reform Belarus’s industrial sector, I came to a sobering conclusion: the system could not be reformed. It was becoming increasingly rigid, and its approach to economic management more outdated with each passing year.
Once I understood that, I decided to shift focus — not toward fixing the old, but toward building something entirely new. That’s how the Belarus Hi-Tech Park was born: a new industry, created from the ground up.
To be continued.
