Is Russia Wal-Mart's Answer?

Now that it is clear that Wal-Mart's (NYSE:WMT) international operations are growing much faster than its US division, the company is searching for new frontiers. Revenue overseas is growing at a rate better than 20% Wal-Mart has had trouble in some countries. Its operation in Japan continues to loss money and it has pulled out of Korea and Germany.

Now, the world's largest retailer is looking to Russia and eastern Europe for more growth. According to the FT, Wal-Mart "firmly signaled its intention to expand into Russia and eastern Europe, announcing that it had recruited Stephan Fanderl, a German retail executive, to explore opportunities in the region."

It will be at least a couple of years before the market can gauge whether Wal-Mart can have success in the region. It has to compete with other companies like big European retail chain Tesco. The Wal-Mart model clearly does not work in all cultures.

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If Wal-Mart takes on Russia as a new frontier, it could be economically profitable for the country. Wal-Mart operations provide the opportunity for jobs and economic growth. A large company coming to the country can signal positive ideas that Russia is a good place to go. This could lead to even more growth and power in the world community.

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More Economic Freedom

The lower house of Russia's parliament, the Duma, passed legislation Friday limiting the ability of foreigners to invest in industrial sectors considered as strategic. Colin McCullough reports for VOA from Moscow this came shortly after the Russian government announced the arrest of two Russian-Americans on charges of industrial espionage.

The Duma passed a bill restricting foreign investment in 42 sectors labeled strategic, including the manufacture and sale of military hardware, the nuclear industry, the extraction of mineral resources and mass media.

The bill says that any foreign private investor wanting to buy more than a 50 percent share of a company in any of the designated sectors will need approval from a commission composed of economic and security officials.

Foreign state-controlled companies will have to go through the same procedure if they want to acquire more than a 25-percent stake in a Russian company on the list.

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The law passed to "protect" the Russian economy looks as if it will continue to limit it. The economy already scored low in The Heritage Foundation's ratings posted earlier, and these numbers may continue to go down now that this law is going into effect. By limiting foreign investments into its economy Russia may very well be hindering its growth.

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Russia Upgrades fighter Jets

Russia has made yet another accomplishment for its defense industry as it won a billion-dollar contract from India to upgrade about 70 MiG fighter jets.

An official spokesman for Russia’s MiG design bureau said that the five-year contract stipulates Russia’s participation in the installment of new radars, weapons control systems and the improvement of engines for MiG-29 fighters. Some of the planes to be upgraded date back to the 1980s.

India has long been a leading customer of Russia’s defense industry, but its relationship with Russia soured recently amid a dispute over the refurbishment of a Soviet-built aircraft carrier. A Russian shipyard had fallen far behind schedule and demanded a higher price for its work, prompting protests from the Indians.

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India has recently wanted countries to sign major arms deals with them. Countries such as Russia, Sweden, and other European countries have been offered the arms deals. Russia has taken the most recent one. They will refurbish around 30 fighter jets and sell more than 150 new ones to them. However India may be asking Russia to take some of the planes back because of quality concerns. Either way this is a major step for Russia, it will allow their economy to boom and will help recover the relationship between India and Russia.

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And the debt continues...

MOSCOW (Thomson Financial) - Russian gas monopoly Gazprom and Ukraine have failed to reach a deal on resolving a dispute over debts owed by Kiev for Russian natural gas, but talks will continue, news agencies reported.

'The meeting is finished. Talks will continue,' Gapzrom spokesman Sergei Kupriyanov was quoted as saying by Interfax and RIA Novosti news agencies after talks between Ukrainian Prime Minister Yulia Tymoshenko and Gazprom chief Alexei Miller.

On February 12, President Vladimir Putin and his Ukrainian counterpart Viktor Yushchenko announced a deal in principle to avert a threatened gas cut-off over Kiev's debts, but the agreement has yet to be finalised.


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The attempt to resolve the Ukrainian debt has failed. Yet again Russia is having to deal with money that is in debt to them. Here in the US we are generally the ones in debt, but apparently everyone owes Russia money. Russia must be at least fairly stable economically if they don't have to resolve these debts immediately. Whether or not these debts will be resolved in the near future has yet to be seen, but as of current Ukraine still owes money to Russia.

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Russia's got the money!

MOSCOW — Iraq’s foreign minister won a long-sought agreement on Monday to write off most of Iraq’s $12.9 billion in debt to Russia, much of it dating to before the first gulf war when Saddam Hussein government purchased Soviet weapons.


Russia had, in principle, agreed to write off the debt as far back as 2004 but had been dragging its feet hoping for assurances that the United States-backed government in Baghdad would honor a large Russian oil claim, also dating to the Hussein era.


On Monday, Iraq’s foreign minister, Hoshyar Zebari, offered no public guarantees. Russian officials said they had won an assurance of favorable treatment, at least. In exchange, Russia will write off all but $900 million of the debt. Separately, Russia agreed to invest $4 billion in Iraq, including the Iraqi oil industry.

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I don't know if it's just me, but 12.9 billion dollars seems like a lot. I know that some of this money is from questionable weapon purchases from sometime ago, but it does say something about Russia and their progression to forgive Iraq of these debts. Some might see Russia in a more positive light now that they know that they are willing to forgive a struggling country of large debts. Although it put them in a positive light this act could possibly hurt their economy. A substantial loss is not good for anyone's economy, and who knows how this will affect Russia.

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