You Can Never Trust a Bear — A New Type of Supply Risk Emerges

While watching a Russian gymnastics routine set to old Soviet music during the Olympics, I could not help but think that how much things change, they always remain the same. Russia's recent invasion of Georgia -- not to mention the current showdown in Poland over a new US anti-missile shield that will be based in the region -- shows that old bears will always come back to the camp fire to dance, even after years in hibernation. But this recent escalation of tensions is serious from a supply risk perspective. In addition to the potential for driving higher energy and natural gas prices given the concentration of supply and pipelines in the region, it could also mean potential disruptions and price increases for finished and semi-finished products in the metals industry coming from the former Soviet Bloc should Russia continue to flex its military muscle in the region (or start once again to ramp up military spending). If you're not thinking about supply risk in Central and Eastern Europe -- and the countries surrounding Borat's home stomping ground -- you should be.

- Jason Busch

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