Communist Tax Lawyer

Even as the Russia military is flexing its growing muscles, the economy continues to shrink. It what may seem like a return to the heydays of the Soviet Union, the Russian economy contracted in the last quarter as rising unemployment sapped consumer demand, bank lending stalled and the government was slow to respond with support measures.

Bloomberg reported that gross domestic product contracted an annual 10.9 percent in the second quarter, the Federal Statistics Service said in an e- mailed statement today, citing preliminary data. The median estimate in a Bloomberg survey of seven economists was for output to shrink 10.2 percent. GDP expanded 7.5 percent from the previous quarter. The service’s data go as far back as 1995.

China, India  and Russia are increasingly calling for a rethink of how global currency reserves are composed and managed, underlining a power shift to emerging markets from the developed nations that spawned the financial crisis.

“There should be a system to maintain the stability of the major reserve currencies,” Bloomberg reported former Chinese Vice Premier Zeng Peiyan as saying in a speech in Beijing.

Leaders from China and India are preparing to join their counterparts from the Group of Eight industrialized nations – the United States, Japan, Germany, Britain, France, Italy, Canada and Russia – at a summit in Italy next week. In addition to China and India, Brazil will also send representatives to the summit.

Emerging markets continue to remain dependent on the U.S. dollar, thanks in part to the United States’ status as the world’s largest economy and a US$2.5 trillion export market. Shares of dollars in global foreign- exchange reserves increased to 65 percent in the first three months of this year, the highest since 2007 according to the IMF.

China and Russia are stepping up communication as relations between the two neighboring countries continues to improve.

Chinese Foreign Ministry spokesman Qin Gang Thursday praised his country’s relations with its giant neighbor, Russia. China is willing to “join hands” with Russia Qin said, especially against the backdrop of what he describes as the “complicated international situation.” Read the rest of this entry »

In a statement that sounds good but never has a real chance of happening, former president and current Russian Prime Minister Vladimir Putin said that his nation would give up nuclear weapons if everybody else who had them did the same.

“If those who made the atomic bomb and used it are ready to abandon it, along with – I hope – other nuclear powers that officially or unofficially possess it, we will of course welcome and facilitate this process in every possible way,” Putin said.

Russian and American officials are currently negotiating a successor to the 1991 Start Treaty which banned its signatories from deploying more than 6,000 nuclear warheads atop a total of 1,600 ICBMs, submarine-launched ballistic missiles, and bombers. Read the rest of this entry »

U.S. retail giant Wal-Mart siad on thursday that they are “confident and hopeful” about entering the Russian market.

According to MarketWatch, the company set up an office in that country a year ago to study the market and explore opportunities.

Wal-Mart’s international unit covers 15 markets, from Brazil and Mexico to China and Japan in addition to Puerto Rico, generates a quarter of the company’s sales (about US$100 billion), and has been the fastest growing division of the company. In the past five years, the international unit has seen an annual sales growth rate of 17 percent.

NASA announced this week that it extended its contract with the Russian Federal Space Agency Roscosmos. With the space shuttle scheduled to retire from service next year, NASA is in need of the crew and heavy lifting capabilities that the Russian’s can provide to support the International Space Station.

According to NASA’s website, the new deal includes “comprehensive Soyuz support, including all necessary training and preparation for launch, crew rescue, and landing of a long-duration mission for six individual station crew members.” The US$306 million deal will involve four launches by the Roscosmos Soyuz program.

NASA and Russia previously agreed to a US$719 million deal in 2007 that included 15 seats and 5.6 tons of cargo to be transported on Soyuz flights to the orbital site Russian news agency RIA Novosti reports.

India is about to make a break from Russia over the provision of mid-air refuellers, citing a lack of safety and technical standards to keep its fighter aircraft airborne. This breaks Russia’s 50 year monopoly over providing the Indian air force with aircraft. India’s Air Force has stated that the Russian Ilyushin-78 refuellers do not meet the required tender objectives and that it prefers the Airbus A330 MRTT a military derivative of the Airbus A330 airliner.

Vietnam has recently completed a US$1.8 billion deal with Russia that will send six Kilo-class attack submarines to the Southeast Asian nation.

This move by Vietnam may be in response to China’s military buildup in the region and its growing economic influence in Southeast Asia.

Vietnam has been troubled by civilian unrest recently in protest of a growing Chinese presence in the country and the prospect of “Sinification.”

The Shanghai Cooperation Organization (SCO) met last week in Moscow to discuss the possibility of increasing the coalition’s collaboration on military training to combat terrorism, extremism, and separatism.

Although the organization – made up of Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan – has maintained that it is not a political/military alliance, it seems that they have been moving towards that direction since Russia took the SCO presidency in August 2008.

As part of the SCO’s “Peace Mission 2010,” military exercises will be conducted in Kazakhstan with the bulk of the armed forces participating in the drills hailing from Russia and China.

“Specific anti-terrorism activities will be practiced at drills in Kazakhstan. All previous and upcoming military exercises involving SCO countries are of a counter-terrorist nature,” said Russia’s Defense Minister Anatoliy Serdyukov.

In an effort to maintain a smaller yet more effective fighting force, Moscow announced that it will release approximately 36,000 officers this year.

“We believe that in the final account, no more than 36,000 or 37,000 servicemen will be fired (in 2009), maybe more, maybe less,” said Russia’s Deputy Defense Minister Nikolai Pankov to local reporters on Tuesday.

This will be followed up next year when Russia plans to reduce their military forces from 1.13 to 1 million troops and cut its officers by nearly half, down to 150,000.

Mr. Pankov has confirmed that this is still the agenda despite these lay-offs coming at a time when Russia is experiencing unemployment around 10 percent.