Oh, those pesky Russians, you won't believe what they're up to this time.
I don't want to sound like one of those crazy "Reds behind every curtain" types... but you know how I told you about Russia's oil and energy grab in Crimea and Ukraine? Well, it turns out that prime real estate isn't enough for Vladimir Putin. Now, he wants the top of the world. Now, he wants the biggest energy bonanza of the 21st century.
In Russia's latest move, the Kremlin sent troops out to plant a flag on a tiny island, a mere 600 square yards in size, that was just discovered earlier this year after a glacial melt in the Laptev Sea, north of the Arctic.
The island is called Yaya. I'll forgive you if you can't find it on a map. Here's some help.
There is literally nothing there on Yaya Island. Larger neighboring islands harbor some of the world's best-preserved frozen mammoths, simply because there was never anyone around to dig them up.
So why does Vlad want this piece of land so much?
Because this gives Russia one more claim on a very energy-rich part of the world.
This is not Russia's first land grab in the Arctic. Back in 2007, it sent a robot submarine to plant a Russian flag (in a titanium capsule) 2.6 miles below the North Pole.
Why would the Russians plant a flag miles under the North Pole? Simple: The Arctic contains an estimated 17% to 30% of the world's total oil and gas reserves. Some experts are calling the Arctic "the second Middle East." And the Russians are staking their claim to it.
So why plant a flag on this particular island? Well, it's near Franz Josef Land. And that is land uncomfortably near Russia that was once claimed by Norway. Franz Josef Land is currently Russian territory because Russia has a much bigger military.
And it's not just Norway. If Denmark had rushed to put its troops on Yaya, it could have proclaimed that the little island was an extension of the submarine geologic structure that also forms Greenland, which is an autonomous country within the Kingdom of Denmark.
Would the Danes have done that? Probably not. But to control a big chunk of potentially a third of the world's oil... well, crazier things have happened.
Other players in the region are Canada, Denmark and, especially, the United States.
Canada Stakes Its Claim And here's where the plot thickens. The Canadian government announced in September that, after a long search, it had found the remains of the HMS Erberus, one of two ships (the other was the HMS Terror) whose entire crew died on an Arctic expedition led by Sir John Franklin in 1845 to 1846.
Canadian Prime Minister Stephen Harper, so notoriously parsimonious that the loonies in his pocket whimper from being squeezed mercilessly, spared no expense in the search for the Erberus.
Why is this ship so important? Well, the Canadians think the Erberus gives them a claim to a vast swath of disputed Arctic territory.
Don't take my word for it, just ask Harper. He crowed after the discovery: "Franklin's ships are an important part of Canadian history given that his expeditions, which took place nearly 200 years ago,
laid the foundations of Canada's Arctic sovereignty" (emphasis added).
It's not just oil that is at stake. There is also the Northeast Passage. This is a sea lane between Asia and the U.S. that is blocked by ice now. But it is slowly opening up as the Arctic ice melts. Who is going to control this new alternative to the Suez Canal?
I'd say Mr. Putin is banging the desk loudly with his shoe and saying that the new sea lane belongs to him.
Brinksmanship at the Top of the World Here's where it gets tricky. All this flag-planting in the Arctic is not just about oil and travel routes.
See, Mr. Putin seems to be getting awfully nostalgic for the Cold War. It helps to distract Russia's citizens from the fact that he's running their economy into the ground while enriching himself and his cronies. It unites the Russian people behind Putin as he protects them from an enemy who is trying to take over "our" Arctic.
So the rest of the nations who claimed Artic territory are watching with concern as Russia reactivates Cold War-era bases and deploys 6,000 military personnel along the length of its Arctic frontier. That deployment includes state-of-the-art MiG-31 interceptors, upgraded Pantsir-S air defense systems and Iskander-M mobile ballistic missiles.
Russia recently carried out full-scale military exercises in the Arctic. These were the biggest combat exercises in that part of the world since the fall of the Soviet Union.
The big worry is that the Russians may station ballistic missiles in those reopened bases. Missiles in that location would be able to strike much more rapidly and have much deeper range into the heart of the Americas.
So yeah, it's about staking claim to what may be the biggest energy bonanza of the 21st century. But it's also about security.
What You Can Do Maybe we should start looking at investing in defense contractors. If Putin really does want to jump-start a slumbering Cold War, you know the puddin' heads in Washington will oblige him.
The
iShares U.S. Aerospace & Defense (NYSE: ITA) has been range-bound all year after a rip-roaring 2013. If it's consolidating those gains, the next move could be up. Way up. Ballistic missile up.
And it might get a big boost from Uncle Vlad.
All the best,
Sean Brodrick
for Free Market Café
For the past year, the Money Map Press team has been working with one of the world's most successful money managers on perfecting a way you can make thousands of extra dollars each month. This is CASH straight from the market (it has nothing to do with options, dividends, annuities, bonds, or futures).
No comments:
Post a Comment
Keep a civil tongue.