The Russian economy offers lots of opportunities for investors to make and to lose money—and not just in Russia.
That became blazingly clear in the wake of the Sochi Olympics. Escalating political protests in Ukraine intensified after its president junked a European Union treaty in favor of closer ties with Russia. Then, after Ukraine’s president fled the country, it found itself the target of Russian intervention as troops sent by Moscow entered Crimea under the guise of military maneuvers, then declined to leave. Ukraine called it an invasion, and markets reacted violently.
President Putin’s $51 billion Sochi sports extravaganza, meant to highlight Russia’s 21st-century potential in a myriad of ways, had barely dropped the curtain on its closing ceremonies when the situation in Ukraine showed Putin for what he was: a throwback to the Cold War authoritarian regime that the rest of the world hoped was long over.
And even Sochi hadn’t been the opulent panoply of opportunity Putin had hoped for. The hacking and even expulsion of foreign journalists failed to quell criticism of everything from incomplete and inadequate hotels and venue facilities to Russia’s stifling of political protest; disregard for local residents’ well-being; human rights violations; LGBT discrimination; environmental damage; and even animal cruelty. Not exactly the best marketing opportunity for a country with one foot in the 21st century and the other firmly in the mid-20th—or possibly even the 19th.
But with Sochi’s events ended and the presence of Russian soldiers in Crimea promising at the very least a protracted diplomatic standoff, if not outright military action, Russia’s economic situation is far from stable,
While Russia does offer plenty of potential, it’s definitely not for the faint of heart. Reaching from Europe to the Pacific Ocean in breadth and from the Arctic Ocean south to China in length, in geographic area the country is 1.8 times the size of the U.S. That means it’s loaded with diverse populations, climates, natural resources and opportunities. Climate and terrain issues make it challenging for the country to take full advantage of those natural resources, however, so much of its natural wealth is unrealized.