My name is David Baron* and I am Chairman of the Belarus-US Business Council. I am an American, a lawyer, and, for the last 10+ years, I have represented many of the largest Belarusian state-owned companies. Furthermore, I have assisted American and Western companies in doing business in and with Belarus.
It is with great pleasure that I welcome you to this inaugural edition of the US-Belarus Observer, and, as the name suggests, I would like to use this opportunity and these pages to share my observations on doing business with Belarus.
Belarus is a magnificent country with ever increasing opportunities for both its people and those interested in doing business with it. More than ten years ago, when I first started doing business with Belarus, very few people spoke English, and my American accented (and admittedly poor) Russian was something of a novelty. Many people had never met an American and frequently asked why an American would be interested in doing business in Belarus. Today, even though my Russian still needs work, my accent is no longer a novelty, and no one in Belarus asks why Americans want to do business with them. Instead, they now ask how they can do more business with Americans.
In the last 10 years, there have been dramatic increases in the likelihood of Americans successfully doing business with Belarus. In March of 2010, I led a delegation of American companies during meetings with the leadership of the Republic of Belarus. On the Belarusian side of the table was President Lukashenko and many of the members of the Council of Ministers, and, on the American side, we had high-level participation from major American companies such as Microsoft, CISCO, Navistar, Honeywell, and the International Trading Corporation. The delegation wasn’t just comprised of major computer, software and manufacturing companies, as service providers were also represented, with the inclusion of the venture capital firm Siguler Guff & Company and the international law firm of which I am a partner, Greenberg Traurig.
Those meetings occurred back in 2010 because conditions for doing business in Belarus were already improving. At those meetings, President Lukashenko asked us which conditions for investment needed improvement and vowed government support and assistance in order to improve conditions for American companies doing business in Belarus. We have since accepted that invitation on more than one occasion and worked with both the Belarusian government and our members, e.g., to improve intellectual property rights protection in Belarus and to work to simplify and streamline the tax system for foreign companies.
Our efforts and those of the Belarusian government have certainly paved the way for increased business between American companies and Belarus. Today, Americans have capital investments in more than 400 enterprises within Belarus, and the bilateral trade relationship between our two countries is about $1 billion dollars annually. Believe it or not, Americans buy more services from Belarus than they buy goods. In fact, since 2010 Belarus has become a global leader in providing off- shore computer programming for many of the world’s largest corporations – many of which are American.
If you visited Belarus today you could have breakfast in McDonalds, lunch at Burger King and dinner at TGI Fridays. You could visit a plant where Chevrolet Tahoes and Cadillac Escalades are manufactured and assembled. And both Coca Cola and Pepsi bottle soft drinks in Belarus as well. Of course if you want to drink something a little (or a lot) stronger, you can buy that in Belarus too – but you will be better off sticking to high-quality Belarusian spirits such as Minsk Krystal and Belalka!
In September 2014, we celebrated the first-ever Belarus International Investment Forum in New York City. This event was attended by the representatives of more than 100 U.S. companies and was the culmination of years of efforts to improve Belarus-US business relations, as well as the beginning of a new era in them. As former Belarusian Prime Minister Mikhail Myasnikovich indicated in his opening remarks, the Investment Forum was part of the beginning of a reset in the relationship between Belarus and the United States. The former Prime Minister was right. That reset has already begun, and the relation- ship between our two countries continues to improve.
Perhaps I have piqued your interest, or perhaps you were already potentially interested in Belarus – you have, after all, picked up and started reading this inaugural issue of the US-Belarus Observer. Often, at this point in the conversation, I am usually asked – okay, so maybe I am potentially interested in Belarus, and you are clearly a fan of Belarus, but why do you like it so much? Why should I invest my hard-earned dollars in Belarus as opposed to literally any other country in the world? What is so special about Belarus? Why Belarus?
Part of my answer to these questions is personal and part of it is strictly about business. First, the personal. My ancestry traces back to Belarus, as 3 of my great grandparents were from Belarus. Unlike the 1 in 3 Belarusian citizens who died during World War II, the families of many American Jews, such as myself, were fortunate enough to emigrate from Eastern Europe before World War II or to survive the Holocaust. This is highly personal, but I wanted to know where I came from and where my family came from. This was part of it.
The other part is strictly related to capitalism. As I explain to my Belarusian audiences when I give talks on doing business with Americans and the West – Americans are looking to invest in Belarus or to do business with Belarus because they want to make money, and there are plenty of opportunities. Let me explain.
Belarus is located in the heart of Europe between Russia and the European Union (Belarus’s Western neighbors, Poland and Lithuania, joined the European Union in 2004). Belarus is not a member of the European Union but is a member of the Eurasian Economic Union (EEU), along with Russia, Kazakhstan, Kyrgyzstan and Armenia. This means that if you build it in Belarus, you can sell it duty free within the entire EEU (with certain exceptions beyond the scope of this article). It also means that there are or shortly will be no internal customs and transport controls between Belarus and the rest of the EEU, and that there are common technical, sanitary and phytosanitary regulations among the EEU members. Think of it as making an investment in Canada during the early days of the North American Free Trade Agreement (NAFTA), but with Mexican labor costs.
Blessed with few natural resources, Belarus’s greatest resource, in addition to its location, is its people. Belarusians are highly educated, hardworking and ambitious. In poker, we say that all you need is a chip and a chair in order to have a chance of becoming a champion. In Belarus, all you need is a computer and a chair, and you have the possibility of becoming an outstanding computer programmer (if you are smart and work hard!). And thousands and thousands of young Belarusians have taken this path or are working on their own innovative ideas and the development of new business opportunities. Founded by Valery Tsepkalo, the Hi-Tech Park (HTP) in Belarus is a tax-advantaged location for the development of computer programming companies. Organized with the blessings of the Belarusian government, computer programming at the HTP is now a major driver of the Belarusian economy.
Obviously not every new business venture will succeed, and, of those that do, not all will achieve the remarkable success of the computer programming company EPAM. This company was founded in Belarus in 1993 and subsequently went public in the United States. EPAM is now worth approximately $3.9 billion in market capitalization.
It will be interesting and exciting to see which new companies (and how many companies) will take advantage of Belarus’s highly educated workforce and strategic location between the EU and the EEU. Companies such as General Motors and Culligan have recently built or are currently building new manufacturing facilities in order to serve these markets.
On behalf of the Belarus-US Business Council, I invite you to explore investment and business opportunities in Belarus. You will find a great country, wonderful people, and lots of business opportunities. If I can assist you, provide advice or make any appropriate introductions, please let me know.
I wish you much success as you explore existing or new opportunities to do business with Belarus!
*David Baron is an attorney at Greenberg Traurig and has represented many of Belarus’ largest state-owned enterprises. In addition to providing regulatory, corporate and litigation services to Belarusian entities and the companies doing business with them, David Baron and Greenberg Traurig are also registered agents under FARA for OJSC Belarusian Potash Company and OJSC Belaruskali, agencies or instrumentalities of the Government of Belarus. These materials may be viewed as being in the interest of that Government although they were independently prepared. Additional information is available at the Department of Justice, Washington, D.C.
Contact Information: David Baron, Esq. +202.331.3165 Barond@gtlaw.com
By David Baron, Chairman of the Belarus-US Business Council