3 March 2025
Ildar Daminov: Before delving into the practical aspects of drafting legislation for the High Technology Park and developing the investment potential of the area, I would like to clarify something: at what point did you realize that modernizing Belarusian industry was impossible? Why did you choose to focus on the IT sector—an industry that at the time was far from being a public priority—instead of developing Belarus’s already well-established industrial sector and forming modern technological clusters based on it?
Valery Tsepkalo: To answer this question, let’s take a step back and briefly diverge from our main discussion—the creation of the Belarus' High Tech Park.
As the First Deputy Minister of Foreign Affairs of Belarus, I served as the co-chair of the Belarusian-American Commission overseeing the implementation of the Nunn–Lugar Program. Under this initiative, the United States provided Belarus with up to $250 million for the dismantling of infrastructure related to nuclear, chemical, and biological weapons. Adjusted for inflation, this amount would be approximately $510 million today. On the American side, the commission was chaired by U.S. Secretary of Defense William Perry.
Meeting of the Belarusian-American Commission on the Implementation of the Cooperative Threat Reduction Program
Having served in the Strategic Missile Forces, I understood that without proper maintenance, silo launchers and other elements of nuclear infrastructure would quickly become obsolete. The proposed method of controlled detonations was more of a political gesture than a practical necessity.
A missile silo became unusable even without detonation.
I successfully convinced the American side that after the dissolution of the Warsaw Pact and Poland’s move toward NATO membership, the deployment of strategic nuclear weapons in Belarus had lost its military significance. The nuclear warheads stationed in Belarus had become vulnerable—not only to high-precision short- and medium-range missiles but even to certain types of artillery.
Nuclear weapons in Belarus were initially protected by air defense systems in East Germany, Czechoslovakia, and Poland.
Given this reality, I proposed to William Perry that we expand the existing mandate, which restricted the use of allocated funds solely to the dismantling of weapons of mass destruction and related infrastructure. To advance this idea, I also met with Senator Richard Lugar, co-author of the legislation, and Senator Richard Shelby, chairman of the U.S. National Security Committee.
A meeting with Senator Shelby was arranged with the help of an American businessman of Bahraini origin, who had strong connections with the committee and was actively involved in fundraising events for the senator in Birmingham, Alabama, where their homes were practically next door to each other.
This businessman built his fortune through contracts with the Egyptian military, supplying military equipment from former Soviet states. After the Camp David Accords, Egypt moved out of the Soviet sphere of influence but retained a significant stockpile of Soviet military equipment, which it was not prepared to abandon. Naturally, this equipment required spare parts, maintenance, and repairs.
Looking to expand beyond intermediary activities, after the collapse of the USSR, he acquired a controlling stake in the St. Petersburg Electrovacuum Plant "Svetlana", whose products were used in radar systems, transmitters, and night vision devices.
To me, however, he claimed he was planning to enter the professional audio equipment market, where vacuum tubes were valued for their ability to produce a warmer, richer sound compared to transistor-based alternatives.
Naturally, such deals required political approval from both the Soviet Union (later Russia) and the United States. Only the Kremlin could authorize the continued servicing of Soviet military equipment and supply of spare parts after Egypt had distanced itself from the Soviet bloc and aligned more closely with the United States.
Approval was also needed from Washington, which, in turn, did not oppose ongoing "backchannel cooperation" between Cairo and Moscow, as long as it aligned with U.S. strategic interests.
After the collapse of the Soviet Union, continuing this business became much easier—relations between Russia and the United States were at their peak, and even among the American establishment, including so-called "hawks," there was a generally favorable stance toward such cooperation.
Zbigniew Brzezinski, for instance, known for his hardline stance against the Soviet Union, responded to my article in Foreign Affairs with no trace of schadenfreude. Instead, he tactfully inquired how my arguments about the corrupt nature of Russian privatization were received in the Kremlin (likely referring to the Russian embassy in Washington).
Redirecting Nunn–Lugar Funds to Industrial Modernization
Through negotiations, I was able to convince William Perry, Senators Lugar and Shelby that a portion of the funds allocated to Belarus under the Nunn–Lugar Program should be redirected—not toward the destruction of missile silos, but toward the civilian repurposing of military enterprises. This was similar to what the aforementioned businessman had planned or at least declared to do at "Svetlana", using military technologies to manufacture audio equipment.
As a result, Belarus became the only country to receive funding for industrial modernization under the Cooperative Threat Reduction Program. The total amount allocated to Belarusian enterprises was approximately $70 million (which, adjusted for today’s value, would be around $150 million), of which about $20 million (or $42 million in today’s prices) was directed to the BelOMO company.
During a period of severe foreign currency shortages, BelOMO used these funds to acquire modern optical-mechanical equipment, allowing it to launch production of optical instruments for Earth remote sensing satellites. The enterprise also collaborated with French partners to develop optical tank sights and night vision devices, and as a result, the renowned German optics company
Carl Zeiss entered the Belarusian market.
Had the Nunn–Lugar Program not been halted after the dissolution of the Belarusian Supreme Soviet in 1996, the total funding for Belarusian enterprises could have reached $150 million (or around $300 million in today’s prices).
These, I emphasize, were not loans but non-repayable funds, which could have provided Belarusian enterprises with modern equipment and technology, significantly increasing their market capitalization, facilitating successful privatization, and potentially attracting hundreds of billions of dollars in investment.
The Uranium Deal: Negotiating Economic Gains for Belarus
In the context of security discussions, I would like to recall the so-called "Uranium Deal" between Russia and the United States. I first learned about it from a member of the American delegation during informal discussions at a meeting of the Belarusian-American Joint Commission. Under this agreement, weapons-grade uranium extracted from Russian tactical nuclear weapons was supplied to the United States for processing and subsequent use in nuclear energy.
No one in Belarus knew for certain how much tactical nuclear weaponry was present in the country—or whether it had ever been there at all. Tactical nuclear munitions included artillery shells with a range of no more than 60 kilometers and short-range ballistic missiles with a strike radius of up to 300 kilometers. From a military standpoint, stationing such weapons in the Belarusian Military District made little sense, given that the distance from Belarus to the potential frontline—along the border between East and West Germany—was approximately 1,000 kilometers.
Even if tactical nuclear weapons had once been stationed in Belarus, by 1993, when the uranium deal between Russia and the U.S. was signed, they were no longer there. As a result, neither Belarus nor Ukraine was a party to the agreement.
Despite this, I decided to initiate negotiations with the Russian government to secure a share for Belarus in the Russian-American uranium deal. For six months, I traveled to Moscow almost weekly for negotiations with Evgeny Primakov – Minister of Foreign Affairs of Russia (later Prime Minister), Igor Ivanov – First Deputy Minister of Foreign Affairs (later Minister of Foreign Affairs and Secretary of the Russian Security Council), Igor Sergeyev – Commander-in-Chief of the Strategic Missile Forces (later Minister of Defense), Boris Pastukhov – Deputy Minister of Foreign Affairs, and other Russian officials.
As a result of these negotiations, I convinced the Russian side to allocate a conditional share of $420 million to Belarus within the Russian-American nuclear deal. This amount was used by Belarus to settle its outstanding debt to Russia for the supply of 25 million barrels of oil.
At the current commercial price of $72 per barrel, the deal effectively provided Belarus with a direct economic benefit equivalent to $1.8 billion. Ukraine, which theoretically could have claimed a significantly larger share than Belarus, did not receive monetary compensation as we did. Instead, Ukraine was compensated in the form of uranium for its nuclear power plants, valued at only $160 million.
A Conversation with William Perry: Economic Realities vs. Optimistic Projections
As I conclude this episode with William Perry, I would like to note that we met several more times after he became a professor at Stanford University and a senior fellow at the Hoover Institution. Despite his new academic role, he remained deeply engaged in issues of international security and nuclear disarmament.
During one of our discussions, we explored the future of the post-Soviet space. Perry, in my view, held an overly optimistic perspective—both on Russia’s economic transformation and on what he saw as its inevitable democratization.
From my vantage point, the reality was entirely different. I had witnessed the process from the inside. The Chubais-led privatization did not lay the groundwork for a broad class of private owners—and, consequently, a strong middle class. Instead, it had the opposite effect. Property was rapidly concentrated in the hands of a small elite with access to power, while the vast majority of Russians received nothing. They were completely excluded from their country’s vast natural wealth.
It is well known that poverty makes people susceptible to manipulation. Unlike a property owner, who possesses land, real estate, company shares, or a stake in natural resources (as seen in Norway, Chile, or the UAE) and assesses events with a long-term perspective, a person without assets is forced to think in short-term categories.
A property owner considers the future—how to preserve and grow wealth, how to ensure stability for themselves and their family. This makes them invested in predictability, the rule of law, and clear regulations. By contrast, a person struggling daily for survival makes decisions based on emotions. Their worldview is shaped by short-term impulses—fear, hope, disappointment, anger.
This is why it is easy to "switch" a poor person from one myth to another. One day, they are told that Ukrainians are “brothers by blood”, and they genuinely believe it. The next day, they are convinced that Ukraine is a breeding ground for Nazism and Russophobia, and they adopt this new narrative with the same enthusiasm.
Their perception of the West shifts just as easily. They do not register contradictions between yesterday’s and today’s official statements. Any agenda can be imposed on them—war, "spiritual values," the search for internal enemies. At the time of my conversation with William Perry, Americans were considered strategic partners, a source of investment and technological progress. Yet, by the next day, they could just as easily become "perfidious imperialists" seeking to undermine the country from within. And later, depending on political circumstances, they could once again be welcomed as valued guests.
Due to its corrupt nature, privatization in Russia led neither to the rise of free enterprise nor to the creation of an innovative economy. Instead, it concentrated enormous wealth in the hands of a select few. Their fortunes were not built on talent, hard work, or entrepreneurial creativity but solely on their proximity to power.
The experience of Latin America, where a similar situation arose before Russia, demonstrated that a small group of ultra-wealthy individuals dependent on the state remains vulnerable to political pressure and cannot drive economic prosperity or democratic development. Their assets, while formally private, can be redistributed at any moment to more loyal figures. Fearing such a prospect, they prefer to move their capital abroad rather than invest in their own country. As a result, the economy remains dependent on resource exports, while innovation and high-tech industries are pushed to the periphery.
This leads not to growth but to stagnation—a lack of investment in science and technology, the decline of entrepreneurship, and increasing dependence on foreign geopolitical forces. In Latin America, this dependence was on the United States. In Russia and Belarus, it took the form of growing reliance on China. In both cases, the country ceases to be a subject of global politics and instead becomes its object, losing the ability to independently shape and implement its economic strategy.
I tried to convey this idea to the former U.S. Secretary of Defense, albeit in a more condensed form. To illustrate my point, I asked him a simple question:
Can you name any successful Russian products or investment projects?
Perry could not name a single Russian product. However, as an example of a successful investment project, he cited the construction of an OTIS elevator factory in St. Petersburg.
Frankly, his response did not leave much of an impression. However, in the presence of others, I chose not to comment on it. After all, William Perry had once taken an unprecedented step for Belarus, accepting my arguments and securing substantial, non-repayable financial resources for the technological modernization of Belarusian enterprises.
Had it not been for the dissolution of the Supreme Soviet of Belarus in 1996, these funds would have been enough to modernize dozens, if not hundreds, of Belarusian enterprises, particularly in precision engineering and instrumentation.
The construction of assembly plants, such as OTIS, does not signify industrial transformation. Calling such ventures "investment projects" is, at best, a stretch. They do not create independent brands, produce high-value-added goods, or contribute to export potential. More importantly, they do not develop an industrial base, foster a national engineering school, or stimulate technological advancement.
OTIS’s decision had nothing to do with industrial development. Rather, it was a way for a foreign investor to minimize costs when entering the Russian market. Like many similar factories, it was built not to produce goods for export but to bypass import tariffs and administrative barriers associated with bringing finished products into Russia.
Such manufacturing plants merely plug into the local economy as auxiliary branches of international corporations, remaining fully dependent on external decisions. Setting up such assembly lines allowed them to avoid these restrictions while creating the illusion of "integration" into the Russian economy—a move driven more by politics than economics.
This model of investment reinforced Russia’s role as a consumer of foreign technology and manufacturing standards rather than a developer of its own.
Later, addressing this very problem would become a key challenge in shaping Belarus’s IT industry development strategy. But for now, let’s not get ahead of ourselves.
To be continued.
