StrategEast President Anatoly Motkin: we create a new social class in Eurasia via transition to the knowledge driven economy

Anatoly Motkin is founder and president of StrategEast, a Washington based strategic center whose goal is to assist the Eurasian countries to transform their economies from a natural resources oriented model to a knowledge driven economy.

Mr. Motkin has devoted much of his career to assisting the processes of Westernization in Eurasian states through the launching of a variety of media, political and business initiatives aimed to drive social awareness and connect communities. He has successfully invested in multiple technology startups.

For the first time we’ve heard about StrategEast about two years ago right after StrategEast Westernization Index has been released. Is it the key product of your center?

Not quite. The Westernization Index is rather an indicator helping us evaluate our own performance.

We define “Westernization” for ourselves as modernization based on such Western (or, if you like, universal) values as rule of law and private property protection.

StrategEast’s key mission is to promote transformation of economy in the countries which restored or declared independence after the breakup of the Soviet Union (excluding Russia) from a traditional, resource-oriented model to the knowledge driven economy.

This transformation, based on the aforementioned values, would allow to better integrate the economy of this region into global economic system, inevitably increasing capitalization of each of these countries by several orders of magnitude.

Yet Russia is out of your activity space?

Unfortunately, time is a finite resource, and that includes our time, too. Therefore, we prefer to work in the countries where our efforts can bring about a positive transformation in the foreseeable future.

The nature of today’s relations between Russia and the West is such that any attempt by a Western nonprofit organization to work in Russia is perceived with suspicion, and as a matter of fact, any project, even of purely economic nature, is met with resistance from the system.

In terms of population, the region we work with is even larger than Russia, yet few in the West perceive it as a separate territorial unit united by decades of Soviet occupation and deserving a separate approach not stemming from Russia-West relations. That’s the gap we decided to fill.

But this region is quite heterogeneous. It contains EU and NATO member states, as well as totally closed countries

StrategEast Westernization Index 2018, which was developed by a large group of independent regional experts, de-facto divided the countries of this region into four groups:

- Genuine pro-Westerners (Estonia, Lithuania, Latvia). These are the countries that have adopted a Western political model.

- Pro-Western façade (Ukraine, Georgia, Moldova). These countries declare themselves to have a Western political model while in fact they pursue an "a la carte" approach to adopting reforms needed to meet Western democratic standards.

- Balancing pragmatists (Armenia, Belarus, Kazakhstan, Azerbaijan, Kyrgyzstan, Uzbekistan). This group is represented by states that tend to balance their relations between the West and Russia in order to maximize political or economic benefits.

- "Fortress" states (Turkmenistan, Tajikistan). These "fortress" countries are largely closed to the outside world and do not pursue sincere Western modernization.

Therefore, we understand that each of these groups is different from any other and that even countries within the same group may be absolutely unlike each other, so we keep that in mind. In particular, we use the experience of Baltic States as the examples of “best practice” when working with other countries.

It is important to stress that we never interfere with internal political affairs of these countries, communicating on all our programs with local regulatory authorities and the executive branch.

The success of our programs is always based on mutually beneficial cooperation, when on the one hand, the government receives an additional income, and on the other hand, it increases the share of institutionality and transparency of the national economy and the country in general.

Will your Westernization Index become a regular product?

Yes, it’s planned to be published every two years, and the next release is scheduled to January 2020. This year we have published a Westernization Report where our experts highlighted the most important events which took place in their countries last year and which might significantly affect the country’s indicators in the next year’s Index.

What are the priority areas on which your efforts are focused?

We are convinced that the key to Westernization, to cooperation with the Western world, to the adoption by countries of this region of such fundamental Western values as rule of law and private property protection lies in the transition from the resource-oriented economy to the knowledge economy.

The concept of this approach is described in the report we have published, Changing Economy. Changing Society., dedicated to the development of the IT industry in the countries we are discussing: from the Baltic States to Central Asia. We have highlighted the IT industry as the fastest growing sector fueling significant economic upturn and creating many new jobs in the industry itself and around it. But for us, the IT industry is more than just an economic phenomenon. It is a social phenomenon.

In the countries of former Soviet Union, the role model for success is undergoing a profound change. In the 1990s, the model was to take control of state assets (often using criminal means); in the early 2000s, the model to become involved in the production and trade of oil, gas and other natural resources. But the success model of the 2010s is increasingly to become a software engineer or an IT-entrepreneur.

In addition, due to the work ethic that IT professionals in region acquire, they have contributed to global economic growth. Effective cross-cultural communication with foreign colleagues has enabled them to absorb best practices of Western corporate culture.

For the Baltic States not rich in natural resources, the IT industry is indeed becoming an important factor of economic growth. In neighboring Belarus, they have created some incredible conditions for IT industry development.

That’s right! The success story of the High Technology Park in Belarus is what we demonstrate the most often when explaining in US, Brussels or London our idea of reforming Eurasian states via large-scale IT development.

Seeing that the “old economy” is unable to generate sufficient revenues for the Belarusian state, and therefore, is no longer able to underpin the country’s economic independence, President Lukashenko has signed a number of decrees which created an ideal environment for IT development in the country.

In terms of some indicators, Belarus is ranked among the top ten countries with the most progressive IT legislation in the world today. And the results weren’t slow in coming. Today, 50,000 Belarusian software engineers generate 2 billion dollars’ worth of exports for their country, and this figure is growing by 20 percent every year.

This is a self-reproducing and self-regulating system: the industry itself attracts foreign investments (what in other sectors of the Belarusian economy is still the government’s task) and itself creates new jobs, and it is currently working on establishing an own education system.

But most importantly, these 50 thousand people (and with their family members, we’re talking about, say, 150 thousand) have de-facto created a new social class. These people were the first in Belarus who owe their economic prosperity not to the government but to their own skills and abilities.

With the average monthly salary in Belarus of less than 500 dollars, workers of the IT industry earn more than 2,000 dollars. They are integrated into the global economy, constantly travel on business to the West and communicate with their Western colleagues. And although continuing to live in Belarus, they actually exist in a reality where Western values are decisive.

So the Global Minds Initiative is supposed to replicate Belarusian experience to the rest of Eurasian countries?

StrategEast’s Global Minds Initiative is broader than that. In collaboration with leading global engineering companies we have created a systematic approach to the IT industry development in Eurasian countries. We have already presented this initiative to key stakeholders: World Bank, USAID, EBRD and many others, and at this stage we are considering and discussing various formats of collaboration.

In early November, we will hold the first StrategEast State and IT Eurasion Forum in Kyiv. There, we will gather together, for the first time, those on whom IT development at institutional level depends: representatives of the governments and regulatory authorities of Eurasian states, international financial institutions, US and EU, leaders of the IT industry, investment funds.

In particular, representatives of the Baltic States will share their successful experience in IT development with ministers and representatives of IT clusters from Central Asia, the Caucasus and Eastern Europe.

This forum should produce recommendations for the governments of Eurasian states, international institutions and representatives of the global IT industry. The forum will become an annual event held every year in a different Eurasian capital.

How is your Global Minds Initiative going to be implemented?

Presently, we are launching a large educational project jointly with EPAM, one of the largest software engineering companies in the world. This is a U.S. company with capitalization of over 10 billion dollars, employing close to 40 thousand engineers. They have created almost 20,000 jobs in Belarus and Ukraine alone.

Today, EPAM is unquestionably defining what the region’s IT industry will look like in the nearest future, and the efforts this company invests in educational programs and formation of an innovative ecosystem prove how responsibly they pursue their mission.

Together, we developed the IT HUB format where young graduates of technical universities and students will undergo training under a program specifically developed for that purpose by EPAM. And most importantly, they will get their first job in the IT industry – some in a few months, others after a year of training.

We want to open these hubs across the entire Eurasia – in Georgia, Azerbaijan, Uzbekistan, Ukraine’s regional centers and other cities and countries where finding a highly-skilled and high-paying job for young people is hard today.

Our goal is to stop the flight of advanced youths from these countries. We will give them a chance to become part of the global IT industry without leaving their country and their region, and therefore, to become ambassadors of the knowledge economy in their country and their native city.