I was rummaging through my bookshelves the other day, when I noticed a book I had bought a few years ago from a New Orleans antiquarian. Titled 12 Secrets of the Caucasus, it was originally published in 1930 in Berlin, with the American edition issued by Viking in 1931. It was written by Essad-Bey, a native of the then Soviet oil town of Baku, today Azerbaijan.

This was a fascinating read. Not only did Essad-Bey's first-hand accounts of life and war in the Caucasus mountains confirm some of the claims the American traveler Richard Halliburton made in 1939. But I found it necessary to pinch myself on several occasions: The stories of murder, mayhem, and military campaigns involving Russians and Caucasian clansmen read just like any report you might find about Russia's military debacle in Chechnya today!

Western news media have been cautiously reporting on Chechnya. And just as cautious and circumspect, Western statesmen have been avoiding voicing any opinion on Russia's heavy-handed attempts at subduing Chechen resistance.

I think with good reason. Because events in the Caucasus historically had a tendency to have ripple effects throughout Europe. Take the pre-WWI sack of the "European" (i.e., Russian) town of Kislar in Daghestan at the hands of the hillmen... who tricked the Russian garrison into leaving, and then literally stripped the city of anything of remote value (including the inhabitants' clothes!)

A little-known gem about this epic raid is that 50% of the loot ended up in the hands of the "Caucasian Communist Activist Terrorist Group, Mountain District," and was passed on to a still famous Russian expat in Zurich, whose code name was "The Rock." The local operative orchestrating the raid, a Georgian ex-priest, today is better known by his own code name, which roughly translates into "The Man of Steel." The money was used profitably to launch a series of terrorist bombings throughout Russia — a prelude to the 1917 Bolshevik revolution.

(You may know "The Rock" by his Russian name Lenin... and "The Man of Steel" is still a household name as Joe Stalin...)

One widely underreported aspect of both Russia's Chechen campaign and the gruesome ethnic wars in Kosovo is that both theaters are increasingly crystallizing as religious conflicts. The Kosovo Liberation Army was and still is heavily supported by fundamentalist Islamic forces. Auxiliaries sent to support the Islamic Kosovar resistance hail from a half dozen Islamic countries. (The Serbs, on the other hand, have enlisted hundreds of Russian free-lancers.)

For Russia, Chechnya is the touchstone for the continued coherence of the Great Russian Empire: If Chechnya manages to secede, so will every other Islamic member of the Federation. Russia has no choice but to continue its campaign with utmost brutality... opening itself up to gruesome terrorist backlash against Russians in the very heart of the Motherland, as the December bombings of several Moscow apartment buildings have illustrated.

At Taipan, we believe the next years will show a bloody revival of the jihad, the Islamic Holy War. Targets will increasingly be the densely populated areas of Western cities... apartment buildings, business towers, and public transportation. But unlike previous incarnations of the jihad, terrorists will increasingly be recruited from the formerly Soviet Central Asian republics.

That's bad news for anyone living in a Western metropolis whose national government is even remotely involved in any operations in these areas of conflict. (And that includes NATO peacekeepers...) It is also going to further erode individual privacy as governments use the new terrorist threat to implement even tighter "security" measures.

But it will most definitely be good news for companies in the high-tech security field... primarily U.S. and Israeli technology firms.

At Taipan, we've made it our mission to profit from crisis. And we've proven it time and time again. And we'll be keeping you up-to-date on whatever profit opportunity arises, both in our monthly issues and in the near-daily updates on our website.

Cordially yours,

J. Christoph Amberger
Publisher, Taipan

>P.S.: James Passin just called me to let me know that his Global Technology Portfolio is up 58% since January 1, and that his U.S. Small-Cap Tech Portfolio is up 100% in the same period. Not a bad start for the New Millennium!

P.P.S.: I've said it before and I'll say it again: Make sure that you have Internet access to fully take advantage of the Taipan website! Last month, for example, the snowstorms that paralyzed the East Coast for three days running also knocked our mailing house out of commission for a day. As a result, our highly leveraged shipping schedule went to pieces and many of you may have received the February issue late. However, the issue goes up online as scheduled come heck and high water. So please make it a habit to read your issue on-line!