Semiconductors: China’s the Odd Man Out

Photo of a semiconductor

An American, a Dutch, and a Japanese guy all walk into a bar…sounds like the beginning of a bad joke, right? Unfortunately for the Chinese, their semiconductors are on the shit end of this joke.

As the Japanese and Dutch join the US sanctions against Chinese Semiconductors, we find ourselves at a precarious crossroads. The semiconductor industry has long been the personification of globalization, with dozens of products crossing countless borders and supply chains longer than the DMV line. But what happens now?

China’s demography is collapsing, and its semiconductor industry isn’t far behind. So someone else will have to step up and start producing these semiconductors; all eyes are on the US, the Netherlands, and Japan. Although, we may have to put up with middle-of-the-road semiconductors for a while.

Prefer to read the transcript of the video? Click here

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.

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TRANSCIPT

Hey everyone. Peter Zeihan coming to you for a very, very chilly Colorado. It’s a balmy negative seven degrees Fahrenheit right now. It’s the 30th of January and the big news internationally is that the Dutch and the Japanese have decided to join the American sanctions package against China for high end semiconductors. Now, there has been a lot of talk about how when the United States goes alone, it’s a problem with semiconductors, it just encourages other people to build alternatives and use alternatives.

That is hideously wrong for two reasons. First of all, the nature of the semiconductor industry is more of an ecosystem. There’s very few places that, without significant industrial buildout, could even pretend to do more than two or three steps of it, much less the dozen or so steps that are necessary to make sorry it is really cold. Are going to go down another layer here.

For example, the lithography, the wafer, manufacturing, the design, these are all done in different places and the hardware is built in different places and it all has to be brought together. Semiconductors are globalization given physical form. The idea that you can shuttle multiple products among multiple borders at any time and have long involved technical supply chains operating without interruption, and that’s computing in general. But for semiconductors specifically, all of the hardware needs to get to the same location and order than build the semiconductors. So you need lithography machines, which are fancy lasers that come from the Netherlands. You need lenses from Germany, you need optics from California, need designs from Silicon Valley and Salt Lake City. And you need wafer systems that come from Japan and so on.

So you remove one country from this ecosystem and the whole thing falls apart. So that means that the United States, should it choose to go it alone, really can stick to the Chinese or anyone for that matter. But so can the Dutch. And so can the Japanese. And so can the Koreans. And so can the Taiwanese. It takes the family. So that’s kinda piece one. Piece Two, is there was really never any doubt that the Japanese and especially the Dutch were going to join in the sanctions. And I know, I know, I know people are like, oh, their bottom line comes from China and corporations are not the same as governments. Well, I’m sorry, but it’s just not that clean.

The issue is you have to look at the locations of these countries and what they need to be independent, much less to thrive. In the case of the Netherlands, they’re the runt in the neighborhood. They may be a powerful economy. They may be very high valuated and technologically advanced, but they’re sandwiched between the Germans, the French and the Brits. And while the Dutch have a reputation for being brusque and abrupt, everyone in Europe would rather deal with them than the Germans or the French or the Brits. And so they become the middlemen of the European system. That is a very awkward place to be from a security point of view, because you never know when someone’s going to throw a war and you might get inadvertently invited.

So the Dutch have always tried to find a friend who’s not on the continent in the short term. That has always been the Brits, but they prefer a bigger friend who is even further afield, who cares less about the minutia of European affairs and just tries to keep the war from happening in the first place. That since World War Two has always been the United States.

And you can argue that. I could argue I do argue, that the Dutch are among the top five most loyal nations to American security interests because the Dutch know they’re going to need the help back home. So as soon as the Biden administration announced their semiconductor sanctions back in October, talks started with not just the Dutch government, but ASML, which is the company that does the lithography. And they were cordial and they were cooperative. And we now have an agreement that very soon the Dutch will formally be joining the sanctions system against the Chinese.

Now, the Japanese are a slightly different story because Japan used to be a great power not all that long ago. If you remember World War Two. But as their demographics have decayed, more and more industry from Japan has offshored to other places, most notably the United States. They want to have the production in a place with a strong enough demography to actually consume the stuff that they build. That’s changed the nature of the relationship. It’s far more co-mingled now than we have ever had with the Japanese and the Japanese have ever had with anyone. And so under a previous government, the Shinzo Abe government, a trade negotiators were dispatched to Washington to basically seek a deal with the Trump administration.

And the deal they ended up getting was humiliating. But they realized that was the price of a strategic partnership that could stick. And then when Biden became president, all other trade deals that were struck by the Trump team, other countries tried to back out, most notably Canada. Mexico tried out to get away from some of the terms of NAFTA to the Japanese, made it very clear to the Biden administration that they were not going to be on that list. They were happy with the deal as it was. And the Japanese are now the only country that has been able to strike deals on trade and on security with both the Trump and the Biden administration’s. Same terms, which means that Japan’s already made its bed. It has already decided that it has to be part of the American network. And so when the sanctions came up against semiconductors to China in October, honestly, it didn’t take much arm twisting at all.

So the Chinese, when it comes to the mid to high end chips, are just out of the game now. They can’t make any of this work. They’re going to be buying as many chips as they can for as long as they can, but they’re just not going to be able to advance past where they are right now.

The only country that’s kind of on the outs that has not agreed to join the sanctions in any meaningful way at this point is Korea. And it’s easy to see why they’re in a tough spot. They’ve got Japan on one side, which has colonized them many times. They’ve got the Chinese on the other side, which is a huge neighbor. And their relationships are, in a word, complicated. And, of course, there’s the North Korean question. In many ways, South Korea today is a bit like the Europeans of the last 30 years, desperate for security issues, to not figure into trade relations because they know they’re in a tough neighborhood. And when things crack, it all goes to hell very quickly.

So now the United States really only has one country to focus on. And so all its diplomatic heft is going to be going and looking at the Koreans to try to get them on board as well. And they’re the last ones I would expect for them to join the system later this year as well. 

Now, the nature of making semiconductors, so there’s dozens of different types, but you can kind of put them to three big buckets. Your top tier, the best ones. These are ten nanometer and smaller. This is typically what’s in your cell phone or in your high end computers and servers. Those about 80% of them are actually fabricated in Taiwan, with another 20% in South Korea. But again, you need the whole ecosystem to make it work or move one country. The whole thing falls apart. In the middle, you’ve got everything that goes from climate control systems to automotive to aerospace to machinery. Those are made in a host of places the United States, Taiwan, Korea, Japan, China, the Netherlands, a little bit in Britain and Germany as well. This still requires the ecosystem, but you could probably lose one player, probably not more than one player. And then you get your low end, your 90 nano meters and up. These are chips that are basically analog processors. They can do one little yes no equation, not much more than that. This is the Internet of Things. And this, for the most part, is centered in the Chinese system. Now, the Chinese are the only country that makes the 90 nanometer chips. And this is a low tech enough chip that the Chinese don’t need substantial help from the rest of the world in order to do it.

So we’re going into a really interesting phase here. I would argue that for reasons of energy and agriculture and security and trade and personality and politics, that the Chinese system is in its final years. It’s going to collapse this decade. And I would argue that the globalized system that allows the great good chips, the ten nanometer and better to exist, that perfect situation of trade with no friction that that’s going away.

What’s in the middle that is a little bit more forgiving in terms of supply chain. That’s what’s probably going to last. So we’re going to lose the really good chips and the really bad chips. And what’s in the middle is just what we’re going to have to make do with until we can have a significant industrial buildout in the countries that already have most of the remaining steps. And the Japanese, the Americans and the Dutch are going to be the center of all of that effort.

Alright. That’s it for me. I’m going to go warm up. Take care.

Is the AI Revolution Here?

Today we answer the question that’s been in the back of everyone’s mind since The Terminator came out – is Skynet taking over? The short answer is no, but let me explain…

The AI capable of decision-making and judgment (i.e., Skynet) is nowhere near being ready to go, and won’t be for at least another 30+ years. On the other hand, applied AI (i.e., mission-specific and code-driven) is great at completing tasks as long as it’s written into its program.

So AI that’s used as a copywriter or chatbot is already up and running, but the omnipotent robots that hunt us down and try to take over the world…ya, not happening anytime soon.

The biggest takeaway is that change is coming, but not in the scary revolution type of way that we’ve been hearing about for years.

Prefer to read the transcript of the video? Click here

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

TRANSCIPT

Hey Everybody. Peter Zeihan here. We’ve had a lot of questions come in about AI and what that means for the workforce moving forward. What sort of activity should we expect to be replaced? What does this mean for economics and labor and politics and are there any obvious winners either in terms of geography or sectors? What popular when it comes in is whether or not this is going to hit red states or blue states more. For example, the cop out answer is we don’t really know yet because we’re dealing with technologies that have yet to be invented. But there are a few general guidelines we have.

First of all, it’s not so much that jobs get created or destroyed, it’s that they change. And it’s pretty common when you’re dealing with an environment that has evolved because of technology. You know, jobs evolve, too. We’ve been talking about technology overwhelming the workforce really since the onset of the Industrial Revolution, and it obviously generates changes. We don’t all live on subsistence farms anymore. The trick is whether or not the technology evolves faster than our political ability to adapt to the changing workforce conditions. And I would argue that at least at the moment, we’re nowhere near that.

I mean, yes, we’re dealing with the information revolution. And, yes, there is the possibility that’s going to replace a lot of jobs, increase productivity. The point that a lot of people just don’t have anything to do. But that’s all theoretical. Our experience in the last five years is, if anything, it’s going to be the opposite. You see the sort of things that IT revolutions do is they make it, it’s in the name information, information tech. It manipulates information at a faster rate, but that is not where the uneducated people in our society are. Most of the uneducated society, people in our society are in lower class, blue collar jobs. That is not something that AI can help with at all. That’s something that the advances we’ve seen in productivity are almost irrelevant. AI instead is taking away those low to mid skilled white collar jobs, which is not normally what we think of when we think about the sort of jobs that can be destroyed.

So we’ve actually, in the last three years since the greatest increase in take home pay for low skilled blue collar workers in over a century. And that has actually helped in the case of United States, narrow economic inequality to a degree that we have not seen since before the World Wars. So if anything, the theory is proving itself wrong rather than right.

However, if you’re, say, a copy editor or a secretary, well, you might have some really big problems because I already has been able to deal with those jobs in a more efficient manner. You just don’t need as many people. In fact, the blockchain, which is one of the things that undergirds crypto. Crypto is something that could be very transformative in things like health care. If you think about any doctor’s office you’ve been in, there’s that huge forest of staff in the back who are basically on the phone with the insurance agents every day, all day. Well, the whole idea of blockchain is that anyone who controls half of the pieces can grant others access. Well, in your health care records, that would be you. And if everything from that can be digitized, then that entire flood of low skilled white collar workers in the back of every doctor’s office and hospital simply goes away. So it’s probably not going to hit where we think it is. And it’s probably not a red versus blue thing, and it’s probably not a coastal versus interior thing. It’s a mid-levels of education versus the edges.

If you’re highly educated or low educated, you look fine from this. Second, there’s the issue of time. Now, obviously, these technologies continue moving, but there’s two reasons to expect that we’re going to have a lot more time to make this adaptation that I think a lot of people give it credit for. Number one is, as the baby boomers are retiring, which is happening right now, they are liquidating all of their investments and going into really boring stuff like T-bills and cash.

That’s not what funds I.T. startups. That’s not even what funds the big IT companies in Silicon Valley. For that, you need venture capital. You need a high velocity of money. Retirees are no good for that. And the whole world is aging very rapidly. And baby boomers are not a phenomenon limited to the United States. So we’re going to see the amount of capital just kind of seize up in the entire space.

At the same time, most of the world is running out of the 20 and the 30 somethings that are necessary to do the research and develop these technologies in the first place. So overall, we should expect the pace of technological evolution in the world to slow quite a bit in the two decades to come, compared to the two decades we’ve just completed.

Second, we’re not close to a general, a breakthrough. Let me explain what I mean by that. Artificial intelligence kind of falls into two general buckets. General A.I. is, you know, Skynet. The idea that the machine can actually look at a situation thing, come up with a potential solution and act on it, or nowhere close to that. I don’t know anyone, even Elon Musk, who thinks we’re going to be there before 2050. And this is before you consider that the amount of capital and workers that are available to develop these sort of things is in the process of drying up. So probably we’re looking at 2060, 2070 or beyond. We’re just we’re not even close.

The other type of AI is applied A.I. or mission specific A.I. and it’s not so much artificial intelligence in the way that we kind of have it on our heads. But it is machine learning, but it’s really more like machine programing. So you put in dozens, hundreds of thousands of if then statements into a program for it to execute. And as long as the conditions that are presented to the machine fall within the rubric of what you programed, you’re okay. But if you see something even a little out of context, the whole thing tends to fall apart.

So an example, let’s say you’re developing an A.I. driving program and you tell it what a stop sign looks like. What if the stop sign has a bumper sticker on it or graffiti, or if it’s on the side of a building as part of an ad. Applied to a I can’t recognize those other conditions. And if you kind of widen your parameters to make it a rounding error, then it’s going to make a very real mistakes in the very real world that any four year old could hit.

So if you need A.I. to do calculus, yes, they’re light years ahead of what we as humans can do right now. If you need it to make a decision based on a judgment call, they are still completely and utterly incompetent.

Alright. But let’s assume that some of this happens anyway. And so we’re going to have to deal with an A.I. system that is making decisions. What does that mean for the job industry?

So historically speaking, this is not the first time we’ve dealt with this issue. In fact, for those of you who remember your 1800s of political economic theory, good old Karl Marx, his whole idea was that the future of the proletariat was to take over from the capitalists, that once the industrial plant was built, then you could get rid of the bourgeoisie and the proletariat could live and do very, very well for itself because the machines and the industrial plant would be there to provide for everyone.

Well, folks, he was wrong then. He’s still wrong. Now, universal basic income is the idea that we live in such a world of plenty that we don’t need to work. But as we have seen in the last three or five years, if anything, the opposite is true. The productivity has stalled in part because of tech, but moreover, because we’ve discovered that as populations evolve in industrialization, we live longer, we have fewer kids. And that means after we urbanize five, six, seven, eight decades after, we’re actually running out of young people to do a lot of the lower skilled work. So if anything, Marx was completely wrong because the part of the population that he thought that would benefit the most from industrialization is at the current moment, actually not doing all that well.

The middle class, it’s the lower classes that are cleaning up right now. There are very, very few places in the United States at this point where if you were earning $15 an hour before COVID, you’re still in that bracket today. You’ve been able to leverage the fact that there’s a sharp labor shortage to move up, and that means you have a vested interest in the system.

And it means if you decide not work, there is no one who is willing to pay you to not work because there are jobs, jobs, jobs everywhere. So in conclusion, is  AI real yes, but we’ve been thinking about it completely wrong. And most of the assessments that I have seen from almost everywhere are drawing the wrong conclusions when it comes to sociological outcomes.

It’s going to be important. It’s going to change who we are. It’s going to change how we live and how we work. But the word here is change. It’s not a revolution. All right. That’s it for me. I want to go get a snow shovel. Take care.

Life After Trump

Disclaimer: The following newsletters were originally published in early 2021. As the newsletter continues to grow, I will occasionally re-share some of my older releases for the newer members of the audience.

The years of Donald Trump’s presidency are known far and wide. And the impact those 4 years had was…not small. The Trump-era of American politics has left the world with a number of questions, perhaps the most important being…what does life after Trump look like? Not just for Americans, but for everyone. This question is something still being discussed on the daily, and as the 2024 elections close in, we’ll continue to see the name Trump in the headlines for years to come.

I’m not sure precisely what I’m expecting to achieve with this series. Perhaps we’ll figure that out together.

Read the installments in this series:
 
Life after Trump, Part I: Living in the Lightning
Life after Trump, Part II: Searching for Truth in a Flood of Freedom
Life After Trump, Part III: The End of the Republican Alliance
Life After Trump, Part IV: Building a Better Democrat…Maybe
Life After Trump, Part V: The Opening Roster
Life After Trump, Part VI: The Crisis List—Russia
Life After Trump, Part VII: The Crisis List—The Middle East
Life After Trump, Part VIII: The Crisis List—China

Life after Trump, Part I: Living in the Lightning

Let me start of by saying that in an advanced democracy like the United States, political violence must never be tolerated. We have institutions and courts and elections expressly to manage our differences and debates. That isn’t simply how things are, that is how things should be. The ban on political violence is entrenched in both our norms and our laws and is the foundation of not simply our Constitution or our civilization, but of civilization itself. Anyone who encourages otherwise should rot.
 
Many have compared the events of the January 6 Capitol riots with the violence which occurred concurrently with the Black Lives Matter movement of 2020. The idea cannot simply be dismissed out of hand. But not being correct isn’t the same as being right. During the 2020 protests, some figures in national leadership encouraged people to do more than simply march, and cheerfully paid their bail after their arrests. AOC comes to mind. That is indeed crassly irresponsible. Damaging. Stupid.
 
But we expect different things from different people. We hold four-year-olds to different standards than college students, much less parents of four. That’s life.
 
So, while I am the polar opposite of impressed when folks like AOC engage in dubious political acts and grandstanding, I can’t say that I’m shocked or offended or mourning for the future of my country. I expect that sort of crap from young, first term Congresspeople and I weigh it against some of the less-than-wise things I did in my 20s. Yes, from time to time they besmirch their office and their place in history, but they are rabble-rousers. It’s their schtick. It isn’t like they are leaders.
 
In contrast, Trump is the president. He is the leader of the free world. The presidential standard is higher than the standard for a 31-year-old-until-recently-bartender-now-first-term-Congresswomen.
 
Even if the standard were the same, Trump has surrounded himself with people seeped in law & order conservatism and respect for American institutions like Reince Priebus, Sarah Huckabee Sanders, Rex Tillerson, James Mattis, John Kelly, Nikki Haley, and HR McMaster. Even folks on TeamTrump that I might personally disagree with more often – such as John Bolton, Jeff Sessions and Gary Cohn – are hardly what I would call fascists or anarchists. Even if you hate any or all these men and women on ideological grounds, you must admit that they are adults and that they realize spending a month of your time encouraging the most violent portions of American society to descend on the capital to lay siege to the Capital complex isn’t a good call. I have zero doubt that all of them warned Trump against similar actions on multiple occasions.
 
I have zero doubt such warnings were the proximate reasons all no longer serve in the White House.

Continue reading

Demographics Part 6: The Orthodox Predicament

It’s time we talk about a region that has long held the title of “worst demographics”…The Orthodox Christian countries.

The big dog of the region – Russia – has entered a point of no return for its demographic situation. Ukrainians are even worse off. Regardless of the outcome of this war – they’ll end up with a s*** stew of demographics. 

Other countries like Bulgaria and Romania aren’t any better off. They’ve basically sent out all of their youth to other countries for economic opportunities…and even if they do return, they’re not adding to the population once they reach their 40s and 50s.

Serbia had the opportunity to flourish into the most rapidly growing economy in the region. Still, they’ve made every wrong policy decision in the book…so no dice for them either.

Each of these countries will likely come face-to-face with its inevitable demise within the next 20 years, and there’s not much they can do about it. 

Prefer to read the transcript of the video? Click here

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

TRANSCIPT

Hey Everyone, Peter Zeihan here coming to you from snowy Colorado, where, as promised, we’re going to be talking about the next chunk of our demographic series, specifically talking about the Orthodox Christian world, which is a huge swath of territory stretching from Russia to Belarus and Ukraine and Moldova, Bulgaria, Romania and Serbia. Now, these countries have three characteristics in common that have really shaped their demographic destinies, and none of them have been great.

The first is broad scale economic dislocation. These were the parts of the former communist world that didn’t do well, even at the height of communism. They weren’t very advanced. And especially when the post-Cold War system erupted, they didn’t have anything really to contribute aside from raw commodities. Their industry was outdated. They weren’t producing steel like the Czech Republic or I.T., stuff like the Latvians. They were only doing grains and raw materials and energy. And you can get growth from that. You can get wealth from that, you can get infrastructure and development from that. But unless it is really, really well-managed, the population just doesn’t see a whole lot of it. So these countries were in and out of horrible recessions for really 30 years.

It’s less bad in places like Romania and Bulgaria because they did ultimately get into the EU in the late 2000s, but they were the last ones in line. Serbia took a kind of a double hit because they don’t have a lot of raw materials that they can export to the world. And in the aftermath of the NATO bombings in the Yugoslav wars in the early 1990s, Serbia never moved on. So even with the Russians under Putin going from win to win, in terms of global policy and generating a lot of income from oil in Serbia, there was a whole lot of nothing. And politics basically became locked down in the aftermath of the Yugoslav wars, and the country really was never able to advance to whatever is next. And that holds true even today.

Okay. What’s second because of the economic dislocation, because so many people didn’t see a lot of opportunity. You had huge immigration from all of these states, mostly to Western Europe, some to the United States and Canada in the cases of Romania and Bulgaria once they got into the EU. If anything, the outmigration accelerated because there were then fewer restrictions.

The Russians easily lost 10 million people in the 1990 and early 2000s to the wider world. And in the case of Moldova, perhaps as much as one quarter of the female population under age 50 left never to return, some of them going, a lot of them going into the sex trade because there really wasn’t a lot of an option because education in Moldova during the Soviet periods was even very low.

Serbia is probably the country that has suffered the most from this outmigration because again, the government just has never moved on and there’s never been a plan economically for what’s next. 

The third one kind of flies under the radar and is probably going to piss a few people off. But here we are. Birth control in this region. The primary method is abortion.

So on average, more than seven out of ten pregnancies across this space are terminated. And if you have one abortion, I know I’m a dude. I really have no right to say this, but, you know, I’m going to go out on a limb and guess that it’s not critical to your health. But if you have ten, you’re probably endangering your future fertility.

So between a very low death rate, a very high abortion rate and very high infertility rates because of the weird intersection of health care and birth control and economic collapse, it’s arguable that a lot of these countries, probably Russia, right at the very top of that list, simply could not repopulate, even if the economic conditions were to turn around. So this is the part of the world that is duking it out with Northeast Asia for the lowest birth rates and the fastest national mortality, if that’s the right term in the world. So that’s kind of the overview.

Those are the three big issues that shape the region as a whole. But we do need to give additional attention to the Russians and the Ukrainians.

Now, the Russians have had a series of stacked geopolitical disasters World War One, World War Two, Stalin’s famines, Brezhnev’s mismanagement, Khrushchev’s mismanagement, and then the post-Cold War collapse. All these kind of stacked on each other. And so that the current generation that is now in their twenties is the smallest one they’ve ever had.

The Russians say they’ve got a metric ton of teenagers and that the demographic turn has been made and they’re going to be fine if they are telling the truth about that. That would be the only of their data that they’re telling the truth. More likely that we actually have fewer teenagers than 20 somethings. And you’ll see that in the demographic graphic that we’ve patched into the show.

More likely, their data is more similar to the situation in Ukraine. One more thing about the Russian demographics. They’re not equal. Just as in the United States, where places like Utah, Texas have higher birth rates in places like New York or Connecticut because they’re less urbanized or have different cultural norms. The same is true in Russia. Russia is not just Russian. The Russian state was originally founded in the area in Moscow, and they discovered that they really had no borders that were secure. So the way they decided to deal with that was to expand, conquer all their neighbors, consolidate and expand again, conquer all of those neighbors and so on and so on and so on until they get to the Russia that we more or less know today and during the Soviet period.

That means that there are dozens of conquered peoples living within the Russian system. Some of them have demographic stats that are just as bad as the Russians, but not all of them. A lot of the Turkic minorities, most notably the Chechens, the Dagestanis, the Basqueirs, and the Tatars actually have very robust demographic structures and are doing very well from a health and a growth point of view.

Well, the last decent number that we’ve got from the Russians was done by the 1989 Soviet Census. And at that point, the best guess – Soviet numbers, after all, was that 20% of the Russian population within the Russian Federation was non Russian. So 80% Russian, 20% non-Russian. Well folks, that was over 30 years ago. It’s probably closer to 25 to 30% today.

That’s non Russian. And if you fast forward another 20 years, you’re talking about probably 30 to 35%. Now these are all guesstimates upon guesstimates because this is Russia and getting good data is next to impossible even before there was a war. But we do know for sure that even if you include all of the minorities, the Russians, only have 8 million men aged 20 to 36 months from now.

At least a million of those are going to be committed to the war in Ukraine. We already have over 100,000 dead. We already have about a million who have fled the country. So one way or another, the Ukraine war is the last conventional war that the Russians are ever going to be able to fight because they simply won’t have enough people.

Now, the Ukrainians have no reason to lie about their demographic data, aside from the fact that it’s absolutely atrocious. And if you look at it and you look at just the collapse from the fifties to the forties to the thirties to the twenties, to the teens to kids, you’ll notice that this isn’t just a demographically spent country. This is a demographically dissolving country.

So unfortunately, even if the Ukrainians achieve runaway success in this war this year, it’s already too late. Even before the Russians started kidnaping children in the thousand, perhaps hundreds of thousands from Ukraine, this was a country that simply didn’t have enough people under age 40 to even theoretically repopulate themselves. So within 20 or 30 years, we are looking at the Ukrainian ethnicity vanishing from this world and probably the Russian ethnicity, no more than 20 or 30 years behind that.

Like I said, they are duking it out with Northeast Asia to see who vanishes faster, which means we have to turn to Northeast Asia next, because that is going to be the part of the world where from an economic point of view, these demographic turnings have the greatest impact. Okay, take care. Until next time.

Germany Green-Lights the Tanks

After months of discussion, the Germans have opted to allow the Leopard Tanks to be sent into Ukraine…and while it may seem like this resolution took far too long, anyone that has read a history book can at least understand the reason for the delay.

There are two main factors to understand in this situation. First, the Leopards within the countries near Ukraine can get there and into the fight for the spring offensive. That’s huge. Second, the Germans put a clause into their policy that states the Americans must also provide some of their tanks – the Abrams. That one’s a bit more problematic.

The Abrams is less tank and more “armored weapons system” – and some of those systems are still classified. On top of that, just imagine all the heavy lifting required to create Abrams-specific logistics and service infrastructure stretching from the USA to Ukraine…it’ll be a while before those Abrams hit Ukrainian soil in any useful manner.

Prefer to read the transcript of the video? Click here

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

TRANSCIPT

Hey everybody Peter Zeihan here coming to you from a hotel room where I am in a hurry to get ready for a presentation. I have to be mic’d up in 20 minutes, so we’re just going to do this as we go. The big news on the 24th of January is that we seem to have a deal between the Germans and everybody else in the Western Alliance about the Germans providing leopard tanks to Ukraine.

Now, this is a main battle tank. It is the primary battle tank for most members of the NATO Alliance. It is obviously German made and there are export clauses that you can’t share your tanks, your leopards, with anyone unless the Germans give it the official approval that has been withheld until this moment. The Germans have been saying that they don’t want to be the ones taking the lead on this and they will only provide leopard 2s in the instances where the Americans provide the Abrams battle tanks, which are the American primary system.

It appears that there has been a compromise between the Scholz government of Germany and the Biden government of the United States to do some version of that. Now, there’s a few things here. First of all, why the Germans have been so hesitant. I don’t know if you know your history, but the last couple of hundred years of history has not been well, based on your point of view, it doesn’t necessarily put the Germans in the best light.

And so the idea that the Germans would ever, in a peaceful environment, decide that they should take a leadership position on military affairs is something that is antithetical, not just to the German population in general, but the government of Scholz specifically. His party is the Social Democrats and they have basically made their bones in geopolitics about making sure that Germany is never an offensive power at all.

Now the Ukraine war is forcing everyone to reassess what ideology shapes strategy and vice versa. But the idea I got to say, the idea that the Germans are beyond hesitant to be a leader in military and affairs in Europe and in the former Soviet Union. This is a really smart move. If the Germans just started providing weapons to one side or another in any war, regardless of what you think of the belligerence, I think we should all get a little bit nervous.

So while the Ukrainians are the ones who are paying the price for this reticence and I can understand why they’ve been upset to this point, you’ve got to admit, if you take an honest look at history, this is an a-okay situation. The second issue has to do with the Americans, specifically the Abrams tanks themselves. Now the leopard’s – they’re good hardware.

I’m not going to tell anyone that German engineering, especially when it comes to weapons systems, isn’t top notch. The Abrams should be more accurately thought of as the pinnacle of armored equipment development. This is a system that is not merely a tank. It’s a weapons system that has several integrated programs within it, some of which the Americans still consider top secret.

So anything that the United States sends from its arsenal is going to honestly have to be dumbed down a significant amount, and that is going to, at a minimum, take time. There’s also a question whether or not these weapons are going to be getting to the Ukrainians in any sort of reasonable time. Now, in the case of the leopards, there are over a dozen countries in Europe that use them. And everyone except for the Germans has been arguing for sending these things for weeks now. So the leopards can actually be on the front lines in Ukraine probably within two or three or four months, which means that can actually make a difference in the coming spring offensive, which will happen in May and June. And so from the Ukrainian point of view, that is absolutely essential.

Now, from the American point of view, that is equally essential and is part of the reason why the Biden administration to this point has not provided the Abrams, because it is not battle ready in that way. Even if the Biden administration could just turn them over tomorrow, which it honestly can’t. No one in Europe at the moment operates Abrams at all.

And because so many systems on the Abrams are cutting edge and have not been replicated anywhere else in any country, the maintenance and supply, the logistical tail that’s necessary to operate. Abrams doesn’t exist anywhere in the world except for in the United States itself. So the United States does have to build facilities in Europe, probably some in Germany, certainly some in Poland, which is in the process of purchasing some Abrams, but that is going to have to stretch all the way to Ukraine. And if you want to talk about something that might cross a red line or two with the Russians, a NATO logistical tail going all the way back to the continental United States for everything from arming to repairs, we’re going to do a lot of gray areas there.

But most importantly, the infrastructure does not yet exist. But for the leopards, it’s right there. Not only is Germany the manufacturer, it’s operated by Finland, and the Balts and Poland. All countries that border the conflict zone. So you can get leopards on the field of battle very, very quickly. ABRAMS Even if the training requirements were identical, which they are not.

You’re talking a minimum of a year, probably closer to three, to build out the physical support and infrastructure to get an appreciable number. Abrams In play now, there’s some people who are saying, you know, you know, by getting an Abrams into Ukraine, that is a vote of confidence in the Ukrainians. Absolutely. That is a signal that the United States is not going to quit.

Absolutely. Those are relevant conversation points. But an Abrams in theater without that support infrastructure is a target that the Russians will try to take out. You do not use an Abrams battle tank for a photo op. You use it to ruin someone else’s photo op. So do we have a political deal now to get Abrams into Ukraine? Sounds like it. That doesn’t mean they’re going to be on the battlefield anytime soon. And that’s okay.

Alright. That’s it for me. Got to go. Bye.

The 2nd Holodomor

In the 1930s, the Soviet Union attempted to crush the Ukrainians in a genocide known to history as the Holodomor. 

Key to the strategy was deliberate efforts to destroy agricultural production to ensure famine. In all, 4 million Ukrainians perished. Today’s Russia is about to switch gears in the ongoing military conflict and attempt a second Holodomor. 

Here’s how we should expect the next chapter to begin…

Prefer to read the transcript of the video? Click here

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

TRANSCIPT

Hey, everyone. Peter Zeihan here. Coming to you from Calgary on the Bow River, just outside of downtown. Today, I wanted to talk very briefly about what’s going on with Ukraine and the path of the war, not necessarily from a military point of view, but from an economic and strategic point of view. 

One of the key things to remember about the war right now is that the Ukrainians are wildly outmanned. The Russians have a population of roughly 140 million, and it has no problem throwing bodies and nearly limitless numbers into the war effort. Right now, we have had a first stage mobilization of about 300,000. There’s another stage of at least 500,000 coming probably within a few days, which means that by the time we get to May and June, the Russians will have a minimum of another half a million men in the field. And it’s not clear that the Ukrainians have enough bullets to take them all out. In this sort of conflict where the Ukrainians simply can’t trade a body for a body. It’s more than training, it’s more than morale, it’s more than equipment. It’s about speed, it’s about mobility. So as important as rockets and missiles and jets and tanks are and they are all critical to Ukrainian survival here, ultimately what the Ukrainians really need is the ability to move when the Russians can’t.

Now, in this, they’ve won at least half the battle. Russian forces historically and currently can really only resupply by rail. That is how the Russian system has always worked. They don’t have a Russian road network, so they have to move things by train. And when the Kerch Bridge was taken out last year, the Russians lost their primary method of supplying to the southern front. They’ve had to make do with trucks. But the Ukrainians have been attacking the truck fleet, the tactical support truck fleet of the military ever since the very beginning of the conflict. The Russians began the war with 3000 military support trucks. They’re probably down to only about 500 now. And so they’ve been going back to Russia and confiscating things like vans and city buses in order to ferry troops and even artillery shells around the front. And I got to say, when a city bus loaded with artillery shells hits a bump, things get a little exciting. But that’s not enough for the Ukrainians. They have to inflict casualties on the Russians in excess, minimum excess of 5 to 1. And we’re just not there yet. If the pace continues, if this 3 to 1, 4 to 1 ratio, that we’re seeing of Ukrainian fatalities versus Russian fatalities continues. The Ukrainians will lose in time. They have to turn this into a war of movement. And in that, the weather has really not been very cooperative. You can split the seasons in Ukraine to basically four chunks. You got your summer when the ground is hard and dry, you’ve got the winter when it’s hard and frozen. And then in the spring and the autumn, you have what are called mud seasons where it’s just not cold enough to freeze the ground, but it’s wet enough that everybody gets stuck. So if you’re on foot, you get stuck in mud. If you’re in a vehicle, all that mud turns your treads into just mush. And that is exactly the scenario the Russians found themselves in in the first part of the war. This is the primary reason that the assault on Kyiv failed and the primary reason that the Russians ended up abandoning their entire position in the northern part of the country. Their troops, their army, their tanks were limited to just being on the road. And that made it very easy for infantry to pick them out with things like javelins.

In this sort of situation, what do you do? Well, you wait for it to be winter and then you attack when the ground is hard and you use your superior air mobility to cut Russian logistic lines. I’ve been expecting to push south, not necessarily to reach the sea, but simply to get all of the roads within artillery range so that the Ukrainians can cut the supply line once and for all. That has not happened because it has been freakishly warm in Ukraine for several weeks now. Now here in Calgary, it has not been above freezing for over a month and so the river is frozen for the most part.

But in Kyiv, it hasn’t gotten below freezing during the day for over a month. And in that sort of situation, they’re experiencing a wildly, unexpectedly, unprecedentedly extended mud season. Now, this could change in ten days, although the extended forecast doesn’t suggest it. And we could get a hard freeze before the end of January, in which case February, which is normally part of the frozen season, could still see a lot of dynamism out of the Ukrainians. But that is not in the cards at the moment. 

And that means it’s time to start thinking about what the next stage of the Russian assault happens to look like. At the moment, the Russians are waiting for spring so they can throw those extra half a million men and just come at the Ukrainians from multiple angles. And if they do enough with enough, then it really doesn’t matter if the Ukrainians are mobile, they’ll be overwhelmed and that could be the end of the war right there. So right now, the Russians are just biding their time. They know they lack the logistical support to do any sort of broad scale, multifaceted, complicated assault right now. So they’re just throwing some bodies at a few places. If you’ve seen Bakhmut in the news, that’s exactly what’s happening there. But mostly the Russians are kind of sitting on their hands and waiting, but they are doing what they can to destroy morale and destroy the Ukrainian economy and kill as many Ukrainian civilians as possible. They’re using drones. They’re using fighter launched missiles. They’re using cruise missiles. And they’ve started to use ballistic missiles to target specifically Ukrainian physical infrastructure, most notably electricity generating plants.

They’re thinking is if they knock the electricity off in the depths of winter, you will, number one, kill a lot of civilians. Number two, you will demoralize the soldiers because if they see that their families back home are losing power, they’ve got to wonder why they’re on the front line if the front lines aren’t very dynamic. It’s an utterly despicable and inhumane strategy, but that doesn’t mean it’s stupid. And right now, the Ukrainians are suffering over and over and over again from these assaults. But once we get to spring, the Russians are going to change targets, not strategies, but targets. In addition to pushing for a broad based assault on multiple axes. They will then shift their targeting from electricity infrastructure to something else, because in the summer, taking out the power doesn’t have the same impact that you do it on the winter. Ukraine is just not that hot, that it needs mass electricity, electricity for air conditioning. I mean, this isn’t Alabama or Texas. In the winter, you have to have it for heating. But in the summer, it’s not so important.

So at that point, expect the Russians to change their targeting from electricity infrastructure to something a lot more insidious. Agricultural infrastructure targeting the factories that make the parts that repair the tractors, targeting the tractors themselves, targeting cold chain systems, targeting grain silos, targeting ports.

Right now, the Ukrainians have a series of deals that have been brokered by the U.N. with the Russians for getting grain out of their ports. It’s mostly been corn because it’s denser, both in terms of weight and in terms of economics than wheat. Wheat exports have fallen to almost nothing. But if the Russians start targeting their ability to produce and transport grain at all over the summer, then any country that is dependent on what has historically been the world’s fourth largest corn exporter and fifth largest wheat exporter is going to have a really, really tough year.

We should probably expect to see targets shifting in May and into June, and there’ll be obvious the impact that this is having by the time we get to September and October. And then the countries that would normally import from Ukraine come October, November, December are going to realize it’s just not there. Most of those countries are in Africa, some are in South Asia, and the one I am by far the most worried about is Egypt.

Egypt is poor. They import over half the grains they need to survive, mostly wheat. The wheat is already offline. And so we should expect to see significant upheaval, economic, humanitarian, political, across the Arab world and into South Asia and in sub-Saharan Africa, all later, in the second half of 2023. And at this point, there’s just not a lot that anyone can do about it.

Fertilizer supplies are already constrained, and the Black Sea is probably going to become a no go zone once the Russians start targeting the ports altogether. I don’t have a cheery note to end this one on. This is just pretty dark. I’ll see you guys later.

WEBINAR—Global Outlook: One Year Into the Ukraine War

One of the most commonly asked questions I get is “How can I attend one of your speaking engagements?” So here’s your chance. On February 17th at 2:00 pm CST, I’ll be hosting a Webinar to discuss the Global Outlook One Year into the Ukraine War. We’ll dive into the global impacts the war has had on supply chains, agriculture, and much more. After my presentation we’ll have a Q&A portion to answer all those burning questions.

Those who attend the webinar will have *exclusive access* to a recording of the event, as well as all of my slides, charts and graphs used throughout the presentation.

Can’t make it to the live presentation? No problem! All paid registrants will receive access to the recorded webinar and presentation materials to review at their own convenience.

How Not To Handle COVID: Chinese Edition

With any infectious disease, there are two main factors to consider: the average number of people an infected person will infect and lethality. Even with accurate data and reporting, these take time to figure out. But if a country (ahem, China) decides to just STOP collecting the data…well then…oh boy.

Until now, the Chinese have been <<ok-ish>> at collecting COVID data but horrible at reporting it. Throw in nearly a billion people who have been exposed, and China’s new COVID policy is to simply stop collecting the data. Brilliant.

Now, this could have devastating impacts not only on the Chinese but on the rest of the world. OR it could be nothing…I guess we’ll have to wait and see.

Prefer to read the transcript of the video? Click here

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

TRANSCIPT

Hello from Sunny Calgary. I just wanted to take the opportunity today to a quick update on what’s going on with COVID in China. I think the biggest thing to underline is we really don’t know what’s going on. China has always been an information control space, but they have always been pretty good at collecting data, just not necessarily reporting it.

Yes, there have been problems with the data collection, but what they share with the world just doesn’t match what they see internally. And that’s one of the reasons why a lot of folks like me just don’t trust the data at all. But what they’ve done with this opening due to COVID, this is change the policy completely. Instead of collecting data and lying about it, they’re just not collecting it.

So, you know, supposedly only a few dozen people have died in total from COVID the last couple of years. They were reporting officially back in December that they had a few thousand new cases. But we know now that the new case tally is in excess of a couple of million a day. Some independent estimates say it’s in over 20 or 30 million.

We also don’t know much about the virus and this is where things get a little scary. COVID, it changes relatively rapidly. We’ve been seeing new variants every few months. But in China, now that we have over a billion people who have been exposed all at once, it’s a different sort of scenario. So you can certainly argue that very few countries in the world got it right when it comes to managing COVID. I mean, we’ve all kind of been making this up as we go along because the goalposts keep moving. And whether you believe in natural immunity or vaccinated immunity, most people who are willing to, you know, not be morons about it will admit that people on the other side have a point that is worth considering. This hasn’t been in play in China.

The Chinese vaccines have been proven over and over and over again by almost every country that has tried to use them to be broadly ineffective at preventing COVID. And so most countries that originally started using the Chinese formulas have switched to other formulas that come from different countries. India does their own. Obviously, the Western countries have their own, the Russians have their own. And, you know, some of these are better than others, but the Chinese are definitely at the bottom of the barrel. And so they’ve pretty much vanished from global use. The Chinese also aren’t going to have an mrna formula for at least a couple of years, or at least not one that’s probably ready for primetime. So that’s an issue for another day rather than the outbreaks that we’re seeing in China right now, which means what’s going on in China is something that’s very difficult to predict.

There are two factors when it comes to cover to really any pathogen. First of all, you need to know it’s R0 and that’s the number of people on average that each infected person will then contaminate. And then the second thing, of course, is lethality. What’s your chance of actually dying from this thing? Now, it takes time to figure that out because you first have to wait for the virus to mutate and then you have to wait for it to get into a general population.

And then you have to collect the data and then you have to wait to see if people are going to die. You collect that data, too. So on average, from the point that a new variant emerges to the point that we have a decent grip on how communicable and how lethal it is, it’s usually around six months. And that’s one of the reasons why policy across the world has been so schizophrenic.

Because policymakers are attempting to figure out what to do for health policy before they have the data. And if you wait until after you have the data, you know, you may have lost a few hundred thousand people already. And we’ve seen that time and time again around the world. Now, the Chinese are struggling with this at the moment, just like everybody else, just on a much grander scale, because so few people in the country have any sort of real resistance.

Until recently, no one’s had COVID. And then, of course, the vaccines are not all that great. But for the rest of us, China choosing to not share data, but China choosing to not even collect data means that we can have literally millions of deaths in China and the rest of the world doesn’t know what to get ready for.

We can’t even begin the process of understanding what the new variants that are circulating in China are going to mean for the rest of us. So we know there are at least seven different variants. We knew that back in December. We also knew that at least two of those variants didn’t exist 2 to 3 months previous. So the only data that has existed was back in December, before this all blew up, when the Chinese were still lying about everything.

Now they’re not even collecting the data, so we are not going to have a good idea of what we’re going to be struggling with until six months after this virus breaks out of the Chinese population and into the global commons. 

So it could be nothing. Maybe this is the most mild variant yet. Could be horrible. This could be the most lethal variant yet. We just don’t know. And we won’t know for months. Blehhh.

Keeping Nukes on the Table

Picture one of those old westerns where the outlaw and sheriff are about to have a standoff outside the saloon. The bad guy (who has never lost a duel) sweeps back his coat and reveals his shiny-six-shooter. The sheriff (who isn’t a great shot) then sweeps back his coat and brandishes a nuke…perhaps not the most realistic scenario, but it helps me get my point across. If your country can’t win a traditional fight, throw a couple nukes into the mix and hopefully no one is dumb enough to poke that bear.

With the South Koreans “keeping nukes on the table,” the conversation has now turned into what other countries should build out nuclear options. There are two boxes a country should be able to check before going nuclear: do they have the technical capacity to do so and is there a strong enough strategic reason to have them?

Just as the sheriff in our scenario knew he couldn’t win in a traditional gunfight, there is a long list of countries that would fall very quickly in a conventional war. Throw nukes into the mix and everything changes. Unfortunately, that list of countries is longer than any of us should be comfortable with.

Prefer to read the transcript of the video? Click here

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

TRANSCIPT

Hey Everybody. Peter Zeihan coming to you from an exciting hotel room back on January 12th. So Wednesday of the last week might be two weeks. By the time you finally see this, who knows? The *South Korean* president said that they were keeping nuclear weapons as a possibility on the table for future strategic development. Now, this is a big no no in international affairs, just kind of publicly flirting with the idea, like, yeah, we might go nuclear, especially if that word Korea is involved.

But you have to look at it from their point of view. The United States has changed the way its military works. Back during the Cold War, when there really wasn’t any other naval power out there, the United States maintained a relatively large destroyer fleet. And in doing so, we were able to patrol the global oceans for everyone. With the Cold War ending in 89 and the Soviet system collapsing in 1992.

The world went different ways and we saw a number of secondary powers start to rise, you know, your Chinese, your Brazils, your Indias and so on. And the United States kind of declared that history was over. And it thought that the only strategic policy that we would need is to have a hammer to take out any country that might challenge what the post World War Two post-Cold War order might be.

So, you know, your odd Yugoslavia is or maybe your North Koreas. And in that sort of scenario, we changed the way our military worked. So we started having fewer destroyers and more aircraft carrier battle groups. So it was less about preserving the peace that we now thought had been achieved and instead about making sure we had the military capacity to challenge anyone who would try to stick a knife in the eye of the system.

At the same time, all these secondary powers started to have their own security policies independent of Cold War norms, and a number of countries started to build their navies, with China being at the very top of that list. So even if the United States could stomach the political cost of being involved in the world and being the global policeman, I would argue that the United States is no longer in a position where the balance of forces allow it to create an environment that’s safe for global commerce, U.S. naval power, stronger than it’s ever been, but it’s also more concentrated than it’s ever been. And ultimately, if you want the tens of thousands of tankers and container ships and Bulker ships that ply the oceans every day to be able to pick up and drop off cargo wherever they need to. The 80 destroyers that the United States has now, just don’t cut it. They probably wouldn’t have even cut it during the Cold War.

And so instead, countries are starting to look at their own security environment and making decisions about whether they need to take independent action because they don’t find that the United States security guarantees are worth what they used to be. And that’s before you consider that they probably aren’t worth what they used to be because the United States is moving on.

So South Korea is a country that clearly has a security need. It’s sandwiched between North Korea, Japan and China, all countries that it considers rivals to a certain degree. And it is the weakest military power of the four. Having nukes would be the great equalizer. And the Koreans have had nuclear civilian power for decades. They’re certainly technologically competent. And I have no doubt that it would only take a few days, to weeks for the South Koreans to build a crude nuclear device if they wanted to, and a deliverable weapons system in under a year. Well, within their capacity. And this is hardly a conversation that should be limited to South Korea if you’re going to consider the cost economically, strategically, diplomatically of going nuclear, you have to have two things. Number one, the technical capacity to build it out yourself. And number two, a strong strategic, overriding reason to take the risk in the first place. Korea checks both columns very, very firmly, but so does Japan, and so especially does Taiwan. And there’s no surprise here. This is shaped of strategic realities for the Chinese when it comes to Taiwan.

The unofficial battle plan for the Chinese, if they ever do decide they want to pull the trigger on Taiwan, is not to do a slow build up over weeks like the Russians did when they were getting ready to attack Ukraine last February. No, the Taiwanese would see that and they would use that time to build a few deliverable nuclear systems. And so the only way that Taiwan could theoretically fall is if it came at the loss of several Chinese cities. So the unofficial plan in Beijing is to basically text all their soldiers, tell them to run to the closest port, hijack a fishing vessel and just set sail. You know, you’ll have a million casualties simply crossing the Taiwan Strait. But at least you don’t lose a city that way. 

Outside of East Asia, there’s plenty of other powers who kind of fall into these same two categories. If you’re looking at anyone on the Russian periphery. Obviously, Ukraine wishes they had nukes at the moment. But if the West proves to be insufficiently united in dealing with it, whatever comes next in the Ukraine war, I can absolutely see in an environment where Finland and Sweden and Poland all go nuclear.

They all have the technology. They certainly all have the need. You could even toss Romania into that group. But the big one, the one that will really change everyone’s strategic calculus is Germany, because any post Ukraine world where the Russians look strong is one where the Germans know that in the end they’re going to be fighting the Russians on the plains of Poland.

And since the Germans have spent the last 60 years disarming, they absolutely do not have the military industrial plant in a short period of time in order to face down the Russians in number. The only way that they can buy time is by going nuclear. One final country to kind of toss into this mix, and that’s Saudi Arabia.

It’s not that the Saudis have the technical capacity to go nuclear. I mean, what are they going to do, rub two molecules of oil together to get fission? No, but they do have really deep pockets and I can totally see them walking into Islamabad, Pakistan, and writing a check and walking out with a few nuclear weapons. We are nearing a point again, with the United States no longer being involved in the region, we’ve withdrawn from the Middle East pretty much completely.

We’re nearing a point where the Saudis and the Iranians are going to be having a direct confrontation in the not too distant future. And when that happens, the Saudis can either take their fat, lazy population with absolutely no military skills and line them up in the desert and hope that is enough. Or they can use their Air Force, which is okay, and hope that bombing the advancing Iranian forces is enough or they can brandish a nuke.

So bottom line, the countries that are most likely to go nuclear in the next several years are not the normal candidates. But the rationale stays the same. You go for nukes if you don’t think you can win a conventional conflict. And the list of countries who can’t win a conventional conflict but have the capacity of going nuclear is a lot longer than everyone should honestly be comfortable with.

Alright. That’s it for me. Until next time.

Demographics Part 5: The Chinese Collapse

The latest batch of Chinese demographic data has set off ALL the alarm bells, and for good reason. With official figures putting the average birth rate at slightly over one birth per woman and the population peaking last year, the alarm bells should have been sounded years ago.

You haven’t even heard the worst part yet…all of that data is wrong…and the reality is far worse.

To put it nicely, China is screwed. The only thing that could save a country in this situation would be massive political or economic change…and not the kind of change that China has in store.

We apologize for the sound quality. A replacement microphone has already been ordered, and it has even arrived at Peter’s home…but Peter won’t be back to pick it up until Friday. So thanks for bearing with us until then!

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.
 
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