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Thu 10 Apr 2008 |
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Investing in Russia: Russia's Secret Weapon in the New Cold War (Hint: It's Not Oil) |
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By Andrew Mickey, BreakAway Investor
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It's clear to see who's the new ruling force in Russia. Months ago
we knew Vladimir Putin was going to be installed as the prime minister
of Russia when his presidency officially ends. The whole time though,
Putin promised not to change the balance of power between president and
prime minister.
We just received news, however, that Putin will
also be the head of the United Russia party, and we finally see how he
is securing his political powerbase. The United Russia party is the
political party of the oligarchs and controls a dominant 315 of 450
seats in the lower house.
With his power now completely secure,
it's time for Putin to get back to expanding Russia's international
political clout. To do that, he is taking the steps to create another
weapon in the country's resource arsenal. Russia has already
established itself as a significant player in oil and natural gas, and
that it won't shy away from using its natural resources to get what it
wants. Now, Russia is making its move in agriculture.
Last week, Deere (DE:NYSE) announced it will be investing $80 million into a new production, distribution and training facility in Russia.
Also,
last week concluded the privatization of Russia's vast potash
resources. The value of potash, a critical element of fertilizer for
crops, has more than tripled in recent years.
As one of his
last acts as president, Putin is allowing Russia to capitalize on its
vast potash resources. During an auction in which the country sold
development rights to three potash projects, each contract went to
Kremlin-friendly Russian companies for about $1 billion apiece.
That's
not all. Putin has already given the go-ahead for hundreds of millions
of dollars of foreign investment to be applied toward the country's
extremely underdeveloped agriculture lands in the south.
Before
he steps down officially, Putin has laid the base for his country to
capitalize on the world's worsening agriculture and food shortage. In
the process, Russia has now become a net exporter of wheat after
decades of being a net importer.
It has now added another arrow
(one more important than oil or natural gas) in its quiver of natural
resources, and Russia is working its way to becoming the new
breadbasket of the world.
But don't worry. You can buy into
Russia's booming agriculture sector, which is still in its relative
infancy. I've put together a Special Report on this opportunity. You can download that report here to learn how you can get in very early on this quickly unfolding story.
Good investing,
Andrew Mickey
Editor in chief, BreakAway Investor
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