Fledgling Democracies

Russia celebrated Victory Day yesterday with a military parade through Red Square, and the NY Times coverage of the event focuses on the wonderful paradoxes the spectacle provided, as Soviet-era symbolism was trotted out to march for a Russia determined to modernize.

The reporter does a great job setting the scene, and also provides useful background info, but the last several paragraphs absolutely make the story. Warning: gentle mockery of the physical condition of Russian soldiers (and their equipment) follows.

But the parade, broadcast on television here as a national triumph, also offered sights of the mixed condition of the once vaunted armed forces under Kremlin command. Several of the infantry units, including marine and airborne units, were staffed with lean and fit young men who marched with bearing and precision. Others included troops who appeared to be in only fair condition, and several of the officers leading formations past the two Russian leaders were visibly overweight.

The United States expressed no alarm over the parade. Russia has become a leading global arms exporter again, but its wares are almost all items designed decades ago. A Pentagon spokesman, echoing a view common among military analysts, had characterized the planned military review as a hollow show of dated gear bearing fresh coats of paint.

‘If they wish to take out their old equipment and take it for a spin and check it out,’ said the spokesman, Geoff Morrell, ‘they’re more than welcome to do so.’

The Christian Science Monitor has a story about the exorbitant interest rates banks charge borrowers looking to start small businesses in the tiny former Soviet republic of Kyrgyzstan. Rates typically come in around 20 to 25 percent, with microfinance loans sometimes reaching an exorbitant 48 percent.

High demand/short supply for capital coupled with the country’s instability are to blame for the situation, the article says. Interestingly, though, Kyrgyzstan ranks higher than Russia (among 178 countries) in a 2008 study of business climates done by the World Bank: the logistics of entrepreneurship in the country are quite manageable, but the challenge of finding capital leads to some creative financing.

This 3,800+ word microfinance story focuses primarily on Mongolia, not a country this blog is primarily concerned with but a place where microfinance is experiencing what the piece calls ‘growing pains.’

The writer mentions early NGO microfinance initiatives such as the Golden Fund for Development, a UN program started in 1998, and offers up some relevant stats on microfinance for Eastern Europe and Central Asia: the total number of borrowers served has grown from 1.5 million in 2000 to 5.1 million in 2006, with the total loan portfolio of all MFIs reaching $12.5 billion.

The 11th annual Microfinance Centre Conference will be held in Ulaanbaatar, capital of Mongolia, May 20-30, and is expected to address competition and attempt to make some sense of the complicated landscape now inhabited by private investors who came on the scene as the market expanded. 

Anyone still wondering if Russia really matters again yet should consider the case closed: Wal-Mart is interested in expanding to the Russian market.

The mega-chain has hired a German retailing veteran, Stephan Fanderl, to “explore retail business opportunities in Russia and neighboring markets.” The company CEO says a timeline has not been established, but experts suspect it will take about two years.

Wal-Mart’s international sales grew 17 percent last year, compared to 6 percent in the U.S., so the foreign focus is not altogether surprising.