Russia: Prepping for the Next War

Russian President Vladimir Putin has given another of his…heavy-on-the-revisionist-history speeches. This time, he categorized the Great Northern War–the 18th century conflict that saw the Tsardom of Russia successfully challenge Sweden for Baltic superiority–as one where Russia “reclaimed” such territories as Estonia and Latvia. As with Moscow’s claims that places like Ukraine have always been a part of Russia, this is just simply not true.

But reality isn’t the point. Or rather, the Russian president is delivering a Russian “reality” to the bulk of the Russian people. This is primarily an insular conversation, where a strongman is trying to justify a war of expansion. But it also sends a warning to a Sweden and Finland that have already moved ahead to join NATO: we have beaten you in the past, we consider much of your neighborhood as properly our own, and don’t sleep too comfortably in your beds at night. 

The latter might be a projection of Putin’s, or Russia’s, strategic anxieties but that doesn’t mean we should dismiss them out of hand. As seen in the graphic from my first book below, the Russia of today is not what we’d consider geographically secure. It is not an island power detached from mainland squabbles like Japan or the United Kingdom. Nor is it a mountain fortress like Iran. Russia is a vast territory–difficult and expensive to secure–and its more densely populated western core features multiple invasion routes for those who would be so inclined.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

No Deal with the Devils Just Yet

In light of recent moves by the US to lift some targeted energy sanctions on Venezuela to help bolster energy sanctions against Russia, we are sharing an earlier video on the difficulty the Biden administration would face in trying to rely on “partners” like Venezuela, Iran and Saudi Arabia to limit the pain of sanctioning a major global oil and gas supplier. The challenges facing the global energy market are also a central theme in my upcoming book, The End of the World is just the Beginning, out June 14. Pre-order info here.

In an effort to ease Europe’s transition from Russian energy, the Biden administration has given the green light to two European oil companies—Italy’s Eni and Spain’s Repsol—to ship Venezuelan oil to Europe (and nowhere else) to cover debts.

This resumes a practice that was halted in 2019 by US-imposed sanctions. While this move will not drastically improve Europe’s situation, or affect global oil prices at all, it will boost Venezuelan President Nicolás Maduro’s image in his country. For several years, the US has recognized Juan Guaidó as Venezuela’s “Interim President,” despite his inability to oust President Maduro, even with ample US support.

Now the US is in the awkward position of returning to the negotiation table with Mr. Maduro, officially not the president of Venezuela, and relying on his government to ease global energy shortages. Interestingly, the Biden administration also granted permission to Chevron to partially resume operations in Venezuela, meaning the US supermajor can perform basic upkeep of its wells that it operates jointly with state-run oil giant PDVSA. Perhaps this is a hint at more to come, but at the moment Venezuelan crude will not be making its way to the US–nor will the Russian supplies of heavy crude Washington had been buying to replace it.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

The End of the (Developing) World?

In case you haven’t heard, my upcoming book The End of the World is Just the Beginning gets released this Tuesday, June 14. You can pre-order it here.

A lot of my work, and my books up to this point, have been about the rise of powerful nations and the global framework that got them there. This new book is a bit of a different creature. 

This book is about the end of that system–namely, globalization–and what that means for our collective future. Whether its agriculture or manufacturing or finance or energy, there’s a chapter for everyone on how the pillars of the developed economy will look on the backend of one of the largest upheavals of the global economy since the end of World War II.

Here’s a video paraphrasing several of the book’s themes, applying them to the raft countries that we today collectively know as “the developing world.”

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Immigration at the End of the World

My fourth book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization is scheduled for release NEXT WEEK (!) on June 14. Immigrants and in-migration are always touchy topics. Allow me to present an excerpt from my upcoming book that is certain to make all Americans – and Mexicans – wince at least once.

In-migration to the United States hit a relative historical low in the 1970s—the decade in which America’s Boomers came of age. For Boomers—an overwhelmingly white demographic—their primary experience with interracial politics was the civil rights movement, a movement that involved people who were already here at a time when the Boomers were young and politically liberal.

In-migration then rose steadily until reaching a near-historical high (again, in relative terms) in the 2010s, at which point the Boomers were nearing retirement and in doing so becoming politically . . . stodgy. In each and every decade as the Boomers aged, the largest single immigrant group was always Mexican. In the minds of many Boomers, Mexicans have long been not simply the “other,” but the “other” that has arrived in ever-larger numbers. A big reason why so many Boomers have been so supportive of nativist politicians such as Donald Trump is that their feelings of shock at the pace of change in American society is not a collective hallucination. It is firmly backed up by reality. This is one piece of the kaleidoscope of why American politics has turned so sharply insular in the 2010s and early 2020s.

But regardless of what you think about Boomers or Mexicans or race or trade or assimilation or borders, there are a couple of thoughts to keep in mind:

First, Mexicans are already in the United States. Whether you’re concerned with what American culture feels like or what the labor market looks like, the great Mexican wave has not only come, it is over. Net migration of Mexicans to the United States peaked in the early 2000s and it has been negative for twelve of the thirteen years since 2008. Just as industrialization and urbanization pushed down birth rates in the developed world, the same process has begun in Mexico, just a few decades later. Today’s Mexican demographic structure suggests it will never again be a net large-scale contributor to American migration. Most of the big migrant flows into the United States since 2014 have instead been from the near-failed Central American states of Honduras, El Salvador, and Guatemala.

Second, even among the most nativist strains of American political thinking, room has been found for Mexicans. In just two years, none other than Donald Trump went from openly condemning Mexican migrants as rapists and “bad hombres” to embracing Mexico in trade and security deals that took bilateral relations to their friendliest and most productive in the history of both republics. Part and parcel of Trump’s renegotiation of the NAFTA accords were clauses that expressly aim to bring manufacturing back to North America. Not to the United States specifically, but to any signatory of the accords. Team Trump added those clauses with Mexico expressly in mind.

On the other side of the equation, Mexican-Americans are turning nativist. The demographic in the United States that consistently polls the most anti-migration is not white Americans, but instead (non-first-generation) Mexican-Americans. They want family reunification, but only for their own families. Never forget that anti-migrant, build-the-wall Donald Trump carried nearly every county on the southern border when running for reelection in 2020.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Inflation and Global Food Prices

Americans are currently struggling with inflation and certain categories, like fuel prices, get an outsized amount of attention. It makes sense. There are few products people buy as frequently that have as volatile a pricing scheme. It’s also universal. In a car-driven society, the pain at the pump is a metric most people are aware of.

But inflation certainly doesn’t stop there. Everything gets more expensive. But for many items, like cars and kitchen cabinets, purchases are typically few and far between. In terms of social and political stability globally, food prices are something that I find much more concerning.

The United Nation’s Food and Agriculture Organization does amazing work tracking global food prices and agricultural trends. They do work on par with the USDA, and I consider both to be preeminent sources of information in their field on the topic of American/global agriculture. And they publish their information for free. 

The FAO publishes monthly updates to global food prices. The picture is…not good. We’ve seen global food inflation drop a couple ticks in April and May of 2022 due to some softening in global oilseed markets (Indonesia has relaxed their palm oil export ban a bit, and we’ve seen some declining demand for oil seeds due to price) but the overall picture is still one of a stark increase in food costs. It’s a product of both an overall global inflationary environment, and a series of shortages due to conflict and poor weather (like the challenges facing Ukraine’s grain exports).

Let’s look at a couple of charts pulled from the latest FAO report (seen here):

2021, shown as the orange line, saw a pretty steady and straightforward increase in food prices between January and December, well over 2020 (in pink). 2022 is the aggressive, near-vertical line in red. The flattening out we see is again in large part due to some relaxation in food oil prices, but the news is certainly not good for global consumers. (And all of us in that bucket!)

If you want to break costs down into primary commodity groups, the FAO has you covered there as well. Peek at the second chart. Vegetable oils, the top line in green, is showing the greatest year-on-year increase. But prices have risen steadily across all globally traded commodity groups like cereals (including wheat) and dairy. We’ll have to see how the sugar harvest plays out in Brazil this year, but meat prices are also slowly but steadily inching upwards–as much a product of rising feed import costs as it is growing demand for poultry and fears over a widening avian flu epidemic.

If you prefer numbers, we can see that we’re already at or near historic high prices for almost all major commodity groups going back close to 20 years:

All of which represent a more expensive global food price environment. Large importers of food like Egypt are already scrambling and, according to some, purchasing Russian cargoes of stolen Ukrainian wheat. This is an issue that the US is starting to take seriously. And for countries dependent on food aid, like Syria and Yemen? Challenges abound, to say the least. While this is only one part of the global inflation story, it is one that most people globally will feel most acutely.

We invite those of you who are interested to join us today, June 8th, for our webinar, Inflation: Navigating the New Normal. More information at the sign up link below. Unable to attend the webinar live? No problem. All paid registrants and attendees will be able to access a recording of the presentation as well as a PDF of presentation materials.

Can’t register for the live event? Not to worry. We’ll be sharing how you can still buy access to the recording and presentation materials in the future.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Birthrates and the End of the World

My fourth book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization is scheduled for release on June 14. In coming weeks we will be sharing graphics and excerpts, along with info on how to preorder.

Demography forms one of the cornerstones of how we look at the world. Geopolitics means a lot of things depending on who you ask, but for myself and my team geopolitics at its core is the synthesis of the study of geography, demographics, and economy. That’s not to say things like military prowess, agricultural capability, and more aren’t important. But they’re secondary, in that they are shaped by factors like the quality of arable land and the amount of people you can put into factories or militaries or sell goods to. 

Enter this graphic from my upcoming book, The End of the World is Just the Beginning. We have a visual comparison of various historic birth rates for the last 170 years or so. Rises in birthrates, like for the US and Australia through in the 50s and early 60s correspond with the post-war Baby Boom. This is the last peak for most developed countries, who all saw a decline in the number of children born per woman as their respective industrial revolutions took hold and a rural-to-urban societal shift took place.

There are a couple broad trends to note: birthrates across the world–regardless of culture, religion, per capita GDP–have experienced a precipitous decline in recent decades. Egypt is an outlier, as are countries who have accepted significant numbers of immigrants/refugees relative to their population like Germany, Turkey, and Iran.

But the starkest decline is the thick, unbroken line in black. That’s China, and it’s bad. 

We’ve had indications for a while now that China was already one of the fastest-aging populations in the world. But with recent revisions of their population data coming to light last year we know that not only are they perhaps the fastest aging population in the world, their birthrate is one of the lowest. Only Spain’s and South Korea’s are lower–and just barely. 

When we talk about themes like The End of More in the book, we discuss how the Bretton Woods system allowed countries without the demographic wealth of pre-industrial China to use CCP-subsidized labor as part of globe-spanning supply chains. Chinese labor costs have increased handily in the last decade or two, but there’s more to the Chinese ticking demographic bomb than rising labor costs. China’s population is aging, and elderly people need more capital and labor for their care than young people. They consume less. They produce less. China is going to need more money to care for a growing segment of its population that is increasingly dependent on the state, with less young people to produce and consume the goods manufacturing that is the bedrock of the Chinese economy. Failing to do so would be untenable in any Confucian society that reveres its elders. For a China whose ruling Communist Party’s legitimacy is anchored to upholding a social welfare contract, failure is suicidal. 

Which still says nothing about a global manufacturing economy that since the end of the Cold War has had one foot planted firmly in China.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

A Mea Culpa, and a Correction

Nobody’s perfect. 

And in this industry, I feel strongly that it’s as important to own up to your mistakes as to highlight your successful forecasts and analyses. In a previous mail out this week, we included a graphic that included a significant bungling of numbers. (The corrected text is highlighted below.)

I would like to thank the readers and followers kind enough to point out the error. The how and why of it aren’t that important, but if you’re curious: as some of you pointed out–and as it stated on the original graphic–the data we used was annualized, and in a rush to publication we misplaced a decimal. Approximately $1.3 trillion/year became $13 trillion. Perhaps this is too much pressure to place upon the narrow shoulders of a humble decimal point. Perhaps I should have better understood the risks in letting an English major do the math while my primary researcher was in Ireland. But here we are, and due to your close readership we’ve been able to amend the graphic. 

Jokes aside, a strong sense of honesty and integrity is vital to our work. We strive to deliver our clients and readers as honest, direct and non-partisan a viewpoint as possible. I am thankful for the continued trust, and the attention you all pay to help keep us honest and accurate.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

Pipeline Politics, Maritime Insurance, and Russia’s War in Ukraine

I’m re-sharing a couple of videos from early May to highlight a couple key trends coming to a head: the EU ban on Russian oil imports, and a continuing challenge of indemnification for ships carrying cargoes of Russian goods–oil, stolen Ukrainian grain, etc. 

On the first, it’s taken Europeans months to hammer out an agreement and a timeline–with plenty of caveats–but replacing your largest oil supplier overnight is a considerable feat. But EU leaders came out over the weekend announcing that a general framework had been reached, seeing most of the EU taper off of Russian oil by year’s end. One of the biggest exemptions is Russian crude delivered by pipeline, a necessary boon for landlocked importers like Hungary, and how Russia delivers a third of its oil to Europe.

While it’s easy to be cynical, we should not gloss over the fact that over the next several months the world’s largest economic bloc will be scaling down nearly 70% of its primary fuel source. Moscow is already adding European nations to its “do not sell list,” with the Netherlands joining Finland, Bulgaria and Poland in having to seek workarounds in accessing piped Russian natural gas deliveries. The Dutch have one of Europe’s largest LNG import terminals, and there is a lot of interconnected gas infrastructure to keep supplies moving around in the meantime, but the writing is on the wall. 

For now. 

The EU’s largest customers of Russian energy, Germany and Turkey, will the be ones to watch here. German corporations and labor unions remain opposed to a full German embargo of Russian natural gas and the Turks… well, when it comes to NATO and EU directives and sanctions packages, the Turks are going to do what’s best for Turkey.

Which makes the increasingly difficult time Russian cargoes are having all the more interesting. Private insurance companies, crews, captains, and port workers are simply refusing to cover, load, unload, and give harbor to Russian ships and Russian goods. While the EU is putting together another (the sixth!) sanctions package that will touch on some of these issues, the global shipping industry has shown a remarkable willingness to self-police and oppose Russian participation in regional and global shipping markets. China and India may continue to buy Russian crude (for now), but they’re doing so with state-owned ships and with state-backed insurers underwriting everything. Both economies are far too large to handle all of their goods trade in such a matter, however, and it will be interesting to see if their purchases of heavily-discounted Russian crude oil will be met with any market-driven consequences from the shipping industry. 

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY