Minsk’s Teetering Tech Scene

Nearly every weekend for the past nine weeks, cops in black riot gear move in phalanxes through the streets, swinging batons to clear thousands of chanting protesters, cracking heads, and throwing people to the ground. An often tone-deaf president jails people on political grounds and refuses to leave office in the wake of a disputed election.

It's a scene from Belarus, a landlocked former Soviet republic where, for the past couple of months, public outcry and the state's authoritarian response have kept the nation on a razor's edge.

Also hanging in the balance is the robust Belarusian digital scene, which has flourished over recent years, accounts for perhaps five to six percent of the nation's economy, and has provided a steady engine for growth. This, in a place which may be better known for mining potash.

Belarus is led by President Alexander Lukashenko, who came to power in 1994. On 9 August, Lukashenko stood for his sixth term in office: This time, as the announced results in his favor topped 80 percent, the vote was widely seen as fixed and people took to the streets of Minsk by the thousands to call for new elections. They met harsh police response.

In the weeks since, the capital's coders came under increasing pressure then dialed up pressure of their own. State authorities arrested four employees at sales-process software developer PandaDoc, including the Minsk office director, who after more than a month in jail was released on Oct. 11. Belarusian mass protesters organized their response using digital tools. Open letters calling for new elections and the release of political prisoners circulated among tech industry executives, with one gaining 2,500 signatures. That missive came with a warning that conditions could get to where the industry would no longer function.

That would be a huge loss. More than 54,000 IT specialists and 1,500 tech companies called Belarus home as of 2019. Product companies span a broad swath of programming: natural language processing and computational linguistics; augmented reality; mobile technologies and consumer apps; and gaming. A Medellin, Colombia-based news service that covers startups even did a roundup of the machine learning and artificial intelligence development going on in Minsk. According to the report, this activity is worth some $3 billion a year in sales and revenue, with Minsk-built mobile apps drawing in more than a billion users.

Belarus's tech trade has become vital to the structure of the local economy and its future. The sector showed double-digit growth over the past 10 years, says Dimitar Bogov, regional economist for the European Bank for Reconstruction and Development. After manufacturing and agriculture, ICT is the biggest sector," he says. It is the most important. It is the source of growth during the last several years."

Though it may seem surprising that the marshy Slavic plains of Belarus would bear digital fruit, it makes sense that computing found roots here. During the mid-1950s, the Soviet Union's council of ministers wanted to ramp up computer production in the country, with Minsk selected as one of the hubs. It would produce as much as 70 percent of all computers built in the Soviet Union.

Lukashenko's government itself had a hand in spurring digital growth in recent years by opening a High Tech Park-both a large incubator building in Minsk and a federal legal framework in the country-fertilized by tax breaks and a reduction in red tape. The scene hummed along from just after the turn of the century through the aughts: By 2012, IHS Markit, a business intelligence company that uses in-house digital development as part of its secret sauce, could snap up semantic search engine developers working in a Minsk coding factory by the dozen.

Eight years later, that team is still working in Belarus, but no longer in a brick warehouse adorned by a Lenin mural. They are in a glass office pod complex, neighbors to home furnishing corporates and the national franchise operations for McDonald's. And despite the global economic downturn wrought by COVID-19, the tech sector in Belarus is even showing growth in 2020, Bogov says. It grew by more than eight percent. This is less than in previous years, but it is still impressive to show growth during the pandemic."

But a shadow hangs over all that now. Reports by media outlets including the Wall Street Journal, BBC, and Bloomberg have cited the PandaDoc chief executive and other tech sources as saying the whole sector could shut down.

Though-so far-there is no evidence of a mass exodus, there are reports of some techies leaving Belarus. There are protests every week, but people also go back to work, in a tense and somewhat murky standoff.

I talk a lot to people in Belarusian IT. It looks like everyone is outraged," says Sergei Guriev, a political economist at Paris's Sciences Po Institute. Even people who do not speak out support the opposition quietly with resources and technology." Yuri Gurski, chief executive of the co-founding firm Palta and VC investor Haxus, announced he would help employees of the companies Haxus invests in-including the makers of image editors Fabby and Fabby Look, and the ovulation tracker app Flo-to temporarily relocate outside of Belarus if they fear for life and health.

But Youheni Preiherman, a Minsk-based analyst and director of the Minsk Dialogue Council on International Relations, hears a lot of uncertainty. Some people ask their managers to let them go for the time being until the situation calms down a bit," he says. Some companies, on the contrary, are now saying no, we want to make sure we stay-we feel some change is in the air and we want to be here."

Meanwhile, the Digital Transformation Ministry in Ukraine is already looking to snap up talent sitting on the fence. Former Bloomberg Moscow bureau chief James Brook reported on his Ukraine Business News site that In September, Ukraine retained the Belarusian lawyer who developed the Minsk Hi-Tech Park concept to do the same there. The Ukrainians are sweetening the pot by opening a Web portal to help Belarusian IT specialists wanting to make the move.

The standoff in Belarus could move into a deliberative state with brokered talks over a new constitution and eventual exit for Lukashenko, but analysts say it could also be prone to fast and unexpected moves-for good or for ill. The future direction for Belarus is being written by the week. But with AI engineers and augmented reality developers who had been content in Minsk no longer sure whether to stay or go, the outcome will be about more than just who runs the government. And the results will resound for years to come.