Why Did Russia Choose Invasion Over Nukes? || Ask Peter

For years I’ve warned that a war between Russia and Ukraine was inevitable, but why didn’t Putin just play the nuke card? As an add-on, we’ll also be touching on some new Russian alliances that could rub the US the wrong way.

The Russians are no strangers to wars and territorial expansions, so despite having nukes, they still prefer their tried and true method of occupation. This may seem foolish given their nuclear capabilities, but the Russian goal is to establish a buffer they control easily, not a zone they have to patrol wearing hazmat gear.

The Ukraine War has also brought up conversations of Russian alliances with some unsavory characters, i.e. North Korea, Iran, and China. I’m really not too worried about these alliances either. The logistics alone make them all dealbreakers.

The conversation about the American-led global order being disrupted is less about Russia’s moves and more about how the Americans decide to proceed with their global strategies.

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.

Transcript

You’re someone who has famously for a long time predicted and tried to warn people that, not only is Russia’s war with Ukraine inevitable, but Russian national security, national strategy, doctrine dictates that the Russians are likely to expand their war westward from Ukraine. But given this framing of this conflict or this aggression as being from a national security standpoint, why does Russia need to do this if they have such a large nuclear, arsenal? 

And I guess part of it, maybe a tagalong would be, why is Russia enduring what it is in Ukraine if it has nukes, is that sort of a faster way for giving things? The, the non-UK approach has been the Russian strategy for a lot longer than we’ve had. So there’s always that little inertia thing in terms of people’s minds. 

But one of the things that the Russians have discovered since 1990 is they thought they thought that they could do this on the cheap, that they could infiltrate societies, use disinformation, use plants, bribe people, and basically break the democratic processes and the strategic commitments of countries from Estonia to Bulgaria, to Azerbaijan to to take a stand. And what they’ve discovered is they’ve just pissed everyone off. 

The idea was that they could get all the strategic goodies that they thought they needed without actually having to occupy the places, and that has fallen apart everywhere except for Belarus. And so the question then is, can we threaten people to not take strategic decisions that we don’t like? So the United States, we’re going to nuke you unless you give us an aircraft carrier that doesn’t fucking fly. 

And that’s basically the strategy that you’re recommending here, is that we, as they threaten countries between them and the Western world in order for them to do exactly what Moscow wants. the Russians have discovered very, very clearly that the only way to make someone do what you want is to occupy yourself. And while we in the West might not see our way of life as threatening the existence of the Russian state, they obviously have a different opinion on that. 

the only time the Russians have ever, ever felt secure is after World War Two, when Stalin succeeded in conquering all the buffer states and concrete, all of the access points into the Russian heartlands, and that held until 1992. And the Russians are desperate to have that back. Unfortunately for them, the only way they can have that back is to by occupying countries with a combined population of more than their own population, that’s not going to fly in those countries. 

It’s not going to fly in the West. It’s not going to fly in the United States. And so we have a war. Russia’s invasion of Ukraine has pushed Moscow to seek some nontraditional, material supply, alliances or partnerships with some of the countries most antagonistic to American leadership. The role and think about North Korea. It’s, you know, in a tighter economic embrace with China. 

It’s getting drones from Iran. Do we see the potential for the emergence of a Moscow led kind of NATO? And I think, you know, we’ve seen this once before. It was the, the US saw it, but, the North Korea, China, Russia, Iran, lesser Cuba into the mix, too. it’s Friday. Do we need, these I hesitate to call them powers, but there’s this assembly of, foreign. 

America’s like the bad guys together, present a considerable credible, worrisome threat to, the American that global order. No. Well, I mean, I don’t think the American led world order is doing that great or is going to last that much longer. But no, I don’t think this is what’s going to tear it down. keep in mind that even at the height of the Cold War, the only Soviet ally that ever deployed troops out side of its own country was Cuba. 

And that was to Angola. You never had Polish troops in Romania, Romania, troops in eastern Germany. and so even at the height of Soviet dominance, they were never able to pull this off. From a purely logistical point of view, forget political or economic. So you might have places like North Korea and China and Russia and Iran and Cuba not liking how things are going if you’re there on the world, but them deploying is a completely different situation. 

In addition, keep in mind that while Russia has figured out how to deploy a small number of troops and things like Wagner, China has only ever had one deployment outside of its home country that’s in Djibouti. That barely counts. North Korea’s never done it, ever. Cuba is not nearly as powerful now as they were 30 years ago. 

So the capacity just isn’t there. Much less coordination, much less the deployment capacity. Now, the dangerous the American let order are primarily in the United States from interest. And I still still still see the biggest danger to that order will be when the United States wakes up one day and realizes that the countries that are benefiting most from its presence are the countries that it is most opposed to, because without America providing global naval coverage for civilian shipping, there is no Russian energy industry. 

There is no Chinese manufacturing sector, there is no Iranian trade. There’s not even anything for Cuba. And if the U.S. starts to use its navy to interfere with those flows, instead of protecting those flows, we’re in a very different world the next day. And the countries if the United States thinks of as the problems are gone the day after. 

Thank you very much for your time, Peter. I enjoyed the conversation and thank you for all our subscribers and followers for your questions. please continue to send them in and I’ll look forward to having conversation like this with you again. Thank you. Take care. 

Talks of the Trade: A Continued Conversation on Globalization with James Fraser & J.P. Morgan

Our June MedShare Donation Match of $50,000

I’m pleased to announce our donation matching drive for the month of June. We will be matching up to $50,000 in donations this month to our chosen charity partner, MedShare International.

Please click the link below to donate, and all of us at Zeihan on Geopolitics, thank you for your generosity.

A few months ago I sat down with J.P. Morgan Payments’ Global Head of Trade and Working Capital, James Fraser, for episode 2 of “Talks of the Trade.” They’ve recently released an extended cut of that episode that I’d like to share with you.

In this new episode, we discussed a host of topics including generative AI, globalization, national security, technology and international tensions.

Click the link below to watch other episodes or to learn more about Trade and Working Capital at J.P. Morgan Payments…

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.

Major European Powers Lean Right in Recent Elections

The recent European elections yielded some significant gains for hard-right parties in a number of countries. Today, we’ll be focusing on Germany, Italy, and France, and whether these shifts are game-changers or more political minutia.

The weak coalition government under Chancellor Scholz has greatly diminished Germany’s role leadership role in Europe. The Italian right wing leader, Giorgia Meloni, solidified her position at the table in the recent elections. France is the one we all need to pay attention to.

President Macron’s party underperformed at the polls, which led him to call snap elections. Macron is gambling that the far-right movement will fall flat on its face when a bit of pressure is applied…but if he’s wrong and the snap elections go the other way, France might be getting some updates to their government.

So keep an eye on the French, but let’s not get too worried just yet. There’s a slew of levels to this and altering the power dynamics of Europe will take more than French snap elections.

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.

Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Florida. sorry. No beach scene today. I’m kind of in a bit of a hurry, but a lot of people have written in expressing an interest in what’s going on in European elections and since that happened. So I figured I would cover a little bit of that today. the short version is that we’ve got this thing called the European Parliament, which technically is the legislative arm of the European Union, and they have elections every few years.

They just completed them and in Italy, Germany and France, the hard right, racked up significant gains, significantly higher in France, in Germany than the ruling party did. and so the question, of course, is this, a game changer? Let’s start with the Germans. the German government under Schultz is a three party coalition that is very weak because the three parties agree on very little.

So whenever something happens in Europe, the three parties have to get together and have a coalition meeting to hammer out a common position before they start bringing in discussions with other countries. So it’s a long, laborious process. It’s really tedious. And because the coalition is so weak and because the chancellor of Germany, Olaf Schultz, is a weak leader, Germany has basically vanished from being a significant player in most European affairs.

or at least not not very much of a leader like it used to be. in the case of Italy, you’ve got a government, led by, Meloni, who actually is of the hard right. If you want to use a term that some people find is a little bit weird. and so when her party did, well, everyone’s like, oh, she’s the up and coming leader, and there’s might be something to that.

And then third, you’ve got France, which as always is a special case. in France again, the leaving party under President Macron, excuse me, did very poorly. And it was the National Front, which is kind of a traditional rightist party that did very well. Macron took this as kind of a personal insult to his view of everything and called snap elections in France.

So France will now have full parliamentary elections, in order to figure out, who’s been around the country. now, there’s a lot of if ends and buts that go with this, this. But basically France is going to have elections less than two weeks after the European parliamentary elections results, which is not a lot of time to get them to be shaped up.

the criticism that a lot of folks have is that Macron is, a little arrogant, like he’s a French president. Of course he’s a little arrogant. That’s not a reasonable criticism. Certainly it’s nothing new. and so what is in play here? Well, we’ve got, kind of two things you need to keep in mind. First of all, the European Parliament is not all that.

It, basically is only responsible for one thing. And that is saying whether or not the European Commission, which is the kind of the executive arm of the EU, is allowed to stand, they can, vote it down if a new one is formed. Like we will be seen here in a few months. they can say no, we reject the slate of commissioners, and that’s really all the power they’ve got.

So don’t read this for more than it is, because it’s not a huge deal in that respect. The European Parliament is not what makes the decisions in Europe. That is the Council of Ministers, which is the group of prime ministers and presidents that all countries directly, basically they work by either unanimity or something called qualified majority voting from time to time in order to decide what happens at the European level.

So what you normally happens is you have a European Union election, the EPP European Parliament that goes one way and then everyone takes a breather and then we get back to politics as normal, where the far right doesn’t do nearly as well. Now, what Macron is doing is betting that that is still the case, and he can take the political wind out of the sails of what was basically a protest vote in a very short period of time.

not in the least like nine things behind anyway. So he’s betting that history is on his side on this one. And, you know, we’re going to find out real soon in just a few days. Okay. Second, Macron’s personal leadership is not on the docket here. It’s not on the chopping block. It’s not at risk in any way, because the political system of France is significantly different from the one in Germany or in the United States.

So here you vote for the president in Germany, you vote for party here. The president controls foreign economic policy in Germany, you vote for the party. You get coalitions within their parliament, the Bundestag, and that coalition decides who the prime minister is. So you have a singular leader in both places who makes most of the decisions for Cabinet Office.

Not how it works in France and France, it’s split. So the Parliament selects the Prime minister and they are responsible for domestic affairs. But there’s a separate set of elections for the presidency. And that’s when Macron has been elected independently. So let’s assume for the moment the Macron was right. Well then the far right will be shown to be a flash in the pan and they go back to old politics.

Let’s assume for the moment that Macron is wrong. And these snap elections that he’s called go the other way. Well then the government falls. We get a new prime minister. But Macron is still president. And in that scenario, we’ve got something called cohabitation, which basically means that not everybody agrees in France, you know, whoop de. So I don’t want to make this up for more than it is.

And even in the worst case scenario for the Macron government, you basically would have a split prerogative. The real issue where this may matter is going to be a national election, possibly in Germany later, but that’s going to be three years away. Unless, of course, the government falls. And then we have a different problem.

The Impending Collapse of Venezuela

After years of mismanagement and corruption, Venezuela may have finally reached its tipping point.

A country that once boasted high education levels, cultural achievements and a thriving oil industry, has managed to turn a winning hand into a losing one. Leaders like Hugo Chávez and Nicolás Maduro helped lead the country down the path of collapse.

At this point, the only thing keeping the country afloat is the partial lifting of sanctions by the Biden administration; however, the continued neglect is leading Venezuela’s oil industry towards failure. Without skilled labor or a major company to step in, we could see Venezuela become a net oil importer within a year.

Once the oil goes, so does everything else. We’re talking economic woes, societal dislocations and famine.

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.

Transcript

Hey everybody. Peter Zeihan here, coming to you from the south of France. Here in Cassis. today we’re going to talk about dream, specifically the Birkin dream that is Venezuela. under 20 years of ridiculous mismanagement and theft by the governments of Hugo Chavez and now Nicolas Maduro. the state’s broken, basically, we’ve had two decades of the governing authorities literally stealing everything that wasn’t stripped down and then getting the wrench and getting a lot of the stuff that was stripped down. 

to the point that they simply didn’t just confiscate materials, they stripped it of equipment, and melted the down or up for parts, and there’s really nothing left. So the country that used to have the highest educational levels in Latin America, the country that used to have the highest standard of living in the most cultural achievement, is now, teetering on the verge of being a broken state, a failed state. 

And I don’t think there’s anything we can be done to stop it at this point. So the roughly one third of the population that is out migrated since, the last, six, seven years, is just the beginning of the end of the dissolution of the state proper. what’s going on right now is that in calendar year 2022 and calendar year 2023, the Biden administration did a partial lifting of sanctions on the regime. 

basically saying that if you start working in the direction of free and fair elections, we will allow investment to come in to stabilize the energy sector and get some more oil out of the ground. we’re going to trust your word for it. And, and then we will reassess when we get close to elections in 2024. 

Well, that happened. And US super major Chevron moved in and oil production did tick up. this is a country that used used to produce like 4 million barrels a day. they had fallen under 800,000 as of 2021. they are now back up technically to something closer to a million. But in the last several weeks, it’s been clear that, the government of Maduro has no intention of having real elections. 

And so the sanctions are steadily snapping back into place, and Chevron is basically throwing in the towel and packing up. And we’ve already seen output drop by about a quarter in just the last couple of months. Now there’s a separate conversation we had here about the Biden administration’s energy policy towards everything. it the short, short, short, version is that when it comes to fossil fuel production, the Biden administration wants to stabilize and even increase volumes outside of North America in order to keep American inflation under control, but does not want to expand. 

And we actually would rather restrict fossil fuel production within the United States in order to achieve the green transition. Now, there’s a lot of things about that that are inconsistent. We’re going to pick that apart at another time. anyway, for Venezuela, that does mean for the last two years that Washington has turned a blind eye to abuses in order to keep the oil flowing. 

Well, now that it is very clear that the country is not going to have elections, all of that is falling apart, and we’re probably down to under three quarters of a million barrels of oil flowing out of Venezuela right now. Their domestic consumption is probably about 300,000 barrels per day. But all of those numbers are squishy. this isn’t like a traditional oil field where you drill past the cap rock, you release the pressure and you get a gusher, or where you pump water into the formation to generate pressure, and then the water laced with oil comes up and you separate the two. 

It’s not to be like shale where you go down and you frack a solid rock in order to free tiny little pockets of petroleum. This stuff is sludge at room temperature, even in the tropics. it is solid. And you have to mix it with a lighter distillate if you are going to put into a pipeline. Traditionally, until several years ago, they would bring in naphtha from the United States for that. 

More recently, because that hasn’t been available. They’ve been bringing in kerosene from Iran. And so these imports of hydrocarbons oftentimes get mixed up with production and export numbers. So the 700,000 production, the 300,000 consumption, those are probably actually inflated. The numbers are probably 100,000 to 200,000 lower. Now what this means is without Chevron this thing is all going to go to hell. 

most of the skilled labor that made up PDVSA, that’s the state oil company in Venezuela, fled. In fact, there was an attempted coup against Chavez back in the early 2000. And so the really high end stuff, the stuff that was part of the out of Venezuela being such a successful state left a long time ago and in bits and pieces ever since, the middle management and the secondary skill set is left, and now there’s really nothing left, especially after the famine of 4 or 5 years ago. 

So the ability of Adivasis to maintain any oil output is negligible. And without Chevron or someone like it, it’s all going to fall apart. People like to talk about the Chinese, the Russians, Iranians coming in, but they don’t have any experience in this sort of oil patch. So we are probably going to see a collapse of what’s left of the output this year and early in the next year. 

And almost certainly barring a significant change in policy with the United States, we’re going to see Venezuela fall into the errors of being the oil importer within a year, maybe a year and a half. it sounds bad. It is bad, but actually already is bad because one of the many, many, many, many, many mistakes that Chavez Maduro made is they hated the United States so much, and their spending was so crazy that they started pre-selling their oil specifically to China and to a lesser degree, to Russia. 

  

So, you know, we’ll take X number of billions of dollars from you now, and we will pay you back with raw crude in the years to come. Well, what that means is the Venezuelans are already not getting money from the oil that they produce. it all just goes to pay off their bills. and so the effort on the part of the Maduro government is simply to keep the crude flowing is nonexistent. 

And so we are going to see this collapse. And as that happens, the ability of getting even a modicum of foreign currency to pay for the 80% of the food that they now import, because they destroyed the agricultural sector is on deck. So the famines of the past, the dislocations of the past, the migrations of the past, these have all just been the appetizer, of course. 

And over the next very few years, we’re going to see the full collapse of Venezuelan society. 

Why Austria, Slovakia and (Especially) Hungary Are Ignoring Ukraine?

During my European travels, I’ve received a handful of questions regarding the lack of support for Ukraine coming from Austria, Slovakia, and Hungary. So, let’s address why these countries are holding out amid the Russian invasion.

These three countries happen to be heavily dependent upon a natural gas pipeline from Russia, so policies tend to avoid interfering with that. Although, with Ukraine abandoning the pipeline lease, the dependence on Russian energy will be ending soon.

There’s some historical factors at play here as well. Austria, Hungary, and Slovakia were once part of the Austro-Hungarian Empire, which held significant power in Europe…and regaining some of their former influence might be in the back of their minds. Hungary takes the title of most controversial, as there are rumors of a secret deal with Russia to help Hungary regain some territory in Ukraine.

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.

Transcript

Hey everybody. Peter Zeihan here coming to you from the south of France. So we’re going to take a question from the Ask Peter files, specifically questions that I have been asked directly by people since arriving here in Europe last week. same question was asked to me by a number of people in Poland and France. the poles ask it in a kind of a direct way. 

the French exit with a little bit more of, and it’s, why why, why, why, why, why, with everything that’s going in Ukraine, everything that’s so important to the future of Europe, everything’s going on with the Russians. Why are the Austrians and to a greater degree, the Slovaks, and especially the Hungarians, being such pains in the asses? 

the three countries are either laggards on sanctions or opposing military and economic assistance to Ukraine or both of these. The Austrians have been the most circumspect. The Slovaks are new to the party. it’s only in the last few weeks we’ve had a new government there that is considerably more Ukraine skeptic than the one that came before. 

But the Hungarians have been actually vetoing, European Union policy and assistance packages, to Ukraine ever since the war began. So, you know, what’s up with these three? Well, we got two things in play. first of all, there are any number of infrastructure links between the Russian space and the European space, but most of those have steadily been whittled down. 

All of them. The one that is most significant and the one that is operating closest to full capacity, is a natural gas line that goes into Slovakia and then has branches that go to Austria and Hungary. And so these three states, in terms of energy dependance, are the ones that are most in the Russian camp, by proximity to these pipeline systems. 

Now, that won’t last too much longer. This pipeline also transits through Ukraine, and the Ukrainians are not renewing the lease on it after this year. So that link is going to go away, which is probably going to force a change of policy in all three states. but for the moment, these are the three that in order to keep the lights on, have to do something that’s at least moderately pro-Russian. 

But the bigger the much bigger issue is historical. Europe, as its detractors will not hesitate to tell you, is not one place. It’s 30 odd countries. And among those 30 odd countries, there are a number of major powers that have risen and fallen, risen and fallen over the years. To date, and most of them have had a geography that allows them to be significant players within the European sphere and sometimes even beyond. 

Now, everyone in the United States, of course, knows the big players. United Kingdom matters because it’s an island. France matters because it’s the western end of the northern European plain, and so doesn’t really have to worry about security too much unless we’re really horribly, Germany’s in the heart of the northern European plain, and so is the biggest country in terms of population and economic structure. 

Spain is out at the end of Iberia. And so when it figured out a technology, deepwater navigation, it was a global power. And at the far side of Europe, you’ve got, say, the Turks, who control the territory around the Sea of Marmara, which gives them both access and control of trade pathways and a lot of insulation for security purposes. 

And so all of these powers have struggled or allied or fought with each other for the better part of the last millennium and a half. but there is one more that most of us in the rest of the world and even within Europe, have kind of written off and forgotten about. And that is the pannone in plain, there is a chunk of flat land that is midway up the Danube valley that is home to brought to Slava and Budapest and Vienna. 

these are the three cities that kind of are at the cluster of what used to be the old Austria-Hungary and Empire. And so whether you are Hungarian or Slovakia, Austrian, you’ve always believed that there’s a special place for you in Europe, in history, politics, whatever it happens to be. And if you look back on the long reach of European history, you’ve got a case to make for that argument. 

the problem for, the Slovaks, the Hungarians and the Austrians, of course, is they lost, Austria-Hungary fell at the end of World War one and was shattered and is now a lots of little states. And Austria-Hungary used to include all of Austria, all of Slovakia, all of the Czech Republic, all of Hungary, most of Romania, a lot of the Western Balkans. 

You know, that used to be a really big thing. Now it’s this fracture zone of a of a dozen different states. So believing that in your interests, from a macro point of view, from an almost imperial point of view, matter just as much as Germany or France or Britain or the rest, you know, that resonates with the people in these countries and of them. 

The faction where it resonates the most is Hungary, because they control the largest part of what used to be the core of that old system. And so there is this kind of semi-open secret cum conspiracy theory based on who you believe, that there is a handshake deal between the Russians and the current Hungarian government that once Ukraine falls, Hungary will get a few chunks of its territory back that used to be part of the old Austro-Hungarian empire, that are now under Ukrainian control. 

And if that sounds too conspiratorial for you, keep in mind that the current Hungarian government has basically pursued some version of that policy less irredentist, more about culture and economics and security issues, with most of its neighbors, with definitely Romania being the country that’s in the spotlight the most, we’ve all heard of Transylvania, right? Well, the people who live in Transylvania are Romanian citizens, but they’re Hungarian ethnic nationals. 

And so it’s, it’s a touch and go issue all around. So basically, we’ve got this dead imperial core where there’s at least some people or a yearning for the Golden age, which is now, well, in the past. All right, that’s it for me. Take care. 

Lessons on Elections and Faith from Unexpected Places

We’ve got a few more elections to talk about today, and who knows, maybe the US might even learn something from South Africa and India.

Over in India, Prime Minister Modi’s BJP party didn’t quite get the majority vote they expected, so that necessitates a coalition government. Many are even citing this as a good thing for India, as to limit Modi’s increasingly authoritarian rule. The crazy thing is that this election was clean, well-run, and everyone has accepted the results.

In South Africa, the party who has been ruling since the anti-apartheid era – the ANC – also fell short at the polls. So, they’ll also need to form a coalition, although the other parties rounding out the coalition aren’t exactly first round draft picks. Despite the ANC’s corruption, the election was still accepted as free and fair.

Here are my takeaways from today. #1 – India and South Africa will be forming coalition governments. #2 – the people of India and South Africa have more faith in their electoral processes than Americans do in theirs…yikes.

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.

Transcript

Hey, everybody. Peter Zeihan here, coming to you from Birmingham, Alabama today. We’re in town about a couple of the major elections that have happened recently. I mean, we’ve already covered Mexico, but I want to do South Africa and India now, the conventional wisdom in most places is actually correct on this one. In India, the government of the BJP, which is Prime Minister Modi, suffered a significant setback, polling as recently as a week ago or a week before the elections indicated that they were on track to get a two thirds majority, which would have allowed the Modi government to amend the constitution without restriction. 

and instead they came at it under 50%. And so they actually have to form a coalition government. So they’re still in charge. Modi still the prime minister, but it has been a significant hit to his prestige. and lots of people are talking about how this is a savior, Indians seizing control of their own democracy and preventing an autocracy from happening because Modi has become more and more authoritarian as he’s been prime minister. 

All of that is correct. I would argue that Modi’s reputation for being an economic whiz has proven wrong, and he has mismanaged a lot of the government finances and a lot of economic policies, turning towards populism. And that was rejected to a certain degree. but rather than poopoo Modi or the BJP in general, I think it’s something that is far more important is what’s happening under the hood. 

this is a country that has lots of issues and infrastructure and education and equality, but they just ran an election where a billion people voted and the government didn’t win in the way it had hoped. And it’s okay. the trust in the political system is high. The Indians may have their faults, but wow, do they know how to count votes? 

They ran a clean election. The government has accepted it. Modi has accepted it. That’s something that we could probably learn a little bit from. the other country, of course, is South Africa. There you’ve got the ANC, which fought against the apartheid system back in the 70s and 80s. that has basically run the government ever since, usually with a supermajority. 

And they too have now gotten the smallest share of their vote in a very long time, if not ever, and again below 50%. They also will have to form a coalition. Here are the problems a little bit more intractable, because there aren’t a lot of people to draw from. you’ve got a group called the Democratic Alliance that is basically, like a pro-business libertarian group that is primarily ethnically white. 

You’ve got the Economic Freedom Fighters who would fight Latin American socialists to be two conservatives. And then you have a new group that has formed by the former, president of the country, Jacob Zuma, basically around his cult of personality. I mean, Zuma is arguably one of the most corrupt people in human history. who’s trying to make a comeback. 

so whoever the ANC has to form a coalition with, it’s going to be awkward. but again, here, the ANC, which is known for corruption, has just run an election in which they lost and no one has an issue with it because it was free and fair. One of the things we forget about in the United States is we actually do run the most free, most fair elections in the world. 

Don’t believe me? Believe a guy by the name of Chris Coons, who was Donald Trump appointed election integrity advisor, who said the day of the election four years ago that it was the cleanest election in American history. Now, Coons was, of course, fired within an hour for making that statement, but he hasn’t recounted. And of all of the challenges we have seen to the American electoral system in the last three years, of all the court cases, not one shred of evidence has yet to be produced indicating that anything had gone wrong. 

The day of running elections isn’t hard. Believing in them. That’s a little bit more difficult. 

The Rise of the European Far-Right

Our June MedShare Donation Match of $50,000

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Please click the link below to donate, and all of us at Zeihan on Geopolitics, thank you for your generosity.

I know there’s plenty of issues with the American political system, but let’s take a break from all that and talk about European politics for the day. Given the ongoing European Parliament elections, let’s look at the far-right’s footholds in Europe.

The Europeans designed their electoral system following World War II to provide inclusivity, but that opened the door for multiple parties (not just 2 big ones) to gain power. Combine that with aging populations and not enough young people to balance power in the political sphere, and the far-right has been able to gain influence throughout Europe.

When older generations rule, conservative and reactionary politics follow. Much of Europe is seeing this unfold and will have to work through these ever-increasing challenges brought on by demographic shifts.

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.

Transcript

Hey everybody. Peter Zeihan here. Coming to you from Italy on the Via della Costa. Excuse me. The old Roman road that went all the way to Spain. since I’m leaving the country tomorrow. Today we’re going to talk about European politics. you guys may have noticed that we have far right parties which, based on which country or you know what your politics are either anywhere from conservative to moderate to Nazi, you know, taking power or at least doing very well in any number of electoral competitions in the European Space. 

in some cases seizing outright power. here, among others, in Italy. there are a couple of reasons for this. The first one is almost boring and statistical. It’s because there’s a different electoral system, a different approach in Europe. when the United States recovered from the Civil War and when the US was created in the first place, there is this idea that how you force modernity or how you force moderation is by forcing political groups to appeal to the largest number of individuals possible. 

So the United States has something called a first past the post electoral system with single member districts, which is a fancy way of saying that you vote for a specific person who’s going to represent a specific group of people. that’s not how it works in Europe. In Europe, most of the electoral systems were designed in the aftermath of the World wars, in the aftermath of a series of revolutions and conflicts that killed millions of people. 

And so it was perceived as far more important to, instead of catering to the, the vast majority, to have a society that was more inclusive of everybody. So instead of voting for a person, you vote for a party. And if that party gets 20% of the votes, they get 20% of the seats in parliament. And whoever has the most seats in Parliament then goes on to form the government. 

and in doing this, you allow groups that are maybe not in the center, but can still get a lot of votes to be part of the governing system. And so most countries in Europe don’t have two parties. They’ve got four or 5 or 6 or 8 or 12 or whatever. It happens to be. And so you get a lot more diversity in the decision making system. 

A lot more diversity in the politics of the parties that make up the system. And that means you need people from the extremes as well, anywhere from socialists and communists on the left to reactionaries and maybe even few neo Nazis on the right. That’s by design. It’s not by accident. And so you’re always going to have this element of the election system, of the electoral system, of the voters who are willing to support candidates that other people might find a little distasteful. 

And sometimes they form a government because they’ve got enough support. Now, have the this one piece two shocker is more demographic. when you industrialize and urbanize, you start moving from the farm and into the city, and then the farm kids are free labor in the city. Kids are an expense. And so as time goes on, you have fewer of them. 

Well, a good portion of Europe didn’t get serious about the business of urbanization and industrialization until after World War two. So whereas the Germans and the Brits kind of led the way in that process, and the birth rate has been dropping fairly slowly for a long period of time in places like Spain and Italy. The process really didn’t start into the latter half of last century, and has proceeded and a much, much, much, much faster rate. 

Well, if you’ve got a birth rate that is less than two children per women for a decade or two, it’s not a big deal. But if you do that for, say, 7 or 8 decades, all of a sudden you’ve got a problem. And the issue we have in a lot of Europe is that they drop below replacement as far back as the 50s and the 60s, and they drop past 1.5 children per woman as far back as the 70s, in the 80s. 

And you play that for another 50 years. And it’s not so much that, population reconstitution is impossible. It’s been impossible for decades. But now, at the point that the last people who were born in normal times are now turning 60 and 70. And nowhere is that more advanced than here in Italy. So it’s not that demographics, when they turn, generate a more conservative population. 

It’s that when people retire, they get a little crotchety. And we’re now seeing people across Europe in vast numbers age past that point, and they didn’t have enough children to generate a more economically pragmatic population. And since those people don’t exist, there was not another generation born below to be more liberal. So if you remove the liberality of the youth and the moderation of the middle age folks and all, you’re left with crotchety crunchiness, you get more reactionary politics, electoral systems and ultimately governments. 

It’s furthest along here in Italy. Coming up a close second is Germany, and I’m sure there’s no one worried about that. And after that, you’ve got places like Portugal, Austria, the Netherlands and Poland which are adding to this and a similar rate, but from a slightly younger base. So we are going to see more and more conservative politics, more and more socially conservative politics, more and more populist politics. 

Moving on. Because if you are, turning 70 this year, you’re really not concerned of how things like social rights or economic development, you want your train ticket to be a half a euro and no more. Oh, yeah, that reminds me. Having something like the common currency requires a more balanced economic system. And if you look back demographically at the period we’ve been in the post-Cold War period, we’ve gone through a couple interesting phases because from roughly 1990 until roughly 2015, we saw these people aging, but no one had really hit retirement yet, which meant they hadn’t become interested in no change yet. 

In fact, if you’ve got people who are age 50 to 65 and who don’t have kids, their income is huge. You’re saving loads of money for retirement, the tax base is massive, and the financial wiggle room in that sort of system is absolutely huge. And that’s the same era when the Europeans decided that, hey, let’s do the common currency. 

And if you think back at how insane that sounded at the time, you have industrialized Germany, you’ve got technocratic Luxembourg, you’ve got post industrial Portugal. It’s based entirely on tourism. Who would ever think in a normal system that all of those systems could be under the same currency union? But when there is a huge amount of, financial are just floating around because of all these middle age, not yet retired people, you could try a lot of things. 

And they did. One outcome was the common currency. But now a lot of the people who were generating all that capital to give them wiggle room have moved into mass retirement. And with them, the hopes for the currency go as well. and for those of you who are finance nerds out there, you think the Germans were obsessed with inflation before most of their working age population retired? 

 Just wait till they’re all retirees, because that is something that happens within the next ten years. When that goes down, there isn’t much hope for the euro. So, you know, this is why you can make the most of it. And I’ll see you on the other side of the pond. Take care. 

Announcing Our June MedShare Donation Match of $50,000

I’m pleased to announce our donation matching drive for the month of June. We will be matching up to $50,000 in donations this month to our chosen charity partner, MedShare International.

From the ongoing medical crisis in Ukraine, to life-saving maternal and child health programs in developing countries and support for vital safety-net health facilities in vulnerable communities in the U.S. and around the world, our donations serve as a force multiplier for MedShare.

Please click the link below to donate, and all of us at Zeihan on Geopolitics, thank you for your generosity.

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.

Is Mexico’s New President Just a Puppet for AMLO?

THE WEBINAR IS TODAY!

Peter Zeihan’s Risk List: What Keeps a Geopolitical Strategist Up at Night

Join Peter Zeihan for a webinar TODAY at 12:00 PM EST on a topic that is near and dear to the hearts of the Zeihan on Geopolitics team: geopolitical risk. This webinar will feature Peter’s reasonable-fear list, focused on issues that in his opinion have the most potential to impact market outcomes.

The most recent Mexican elections have resulted in the victory of Mexico’s first female -and- Jewish leader, Claudia Sheinbaum. She will be succeeding current populist President AMLO, but how much change will this actually bring?

President López Obrador has a bit of a Robin Hood complex, spreading wealth to the poor and neglecting security concerns. These financial transfers gained him favor with the people, but he did this with no regard for sustainability. In addition, while he was spending all his time people pleasing, the cartels were able to seize control of large parts of Mexico.

But won’t all this change when Claudia Sheinbaum steps into office? Well, AMLO and Sheinbaum are close allies, and it would appear that AMLO will be sitting behind the scenes playing puppet-master. So, her ability to address these concerns will all depend on how much string AMLO gives her…

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.

Transcript

Hey, everyone. Peter Zeihan here. Coming to you from Vegas, where I had to get up early because it’s going to be 180 billion degrees today. Anyway, we’re going to talk about the Mexican elections. We’ve had a sweep by, the ruling Morena party. Claudia Sheinbaum, who is a woman and who is Jewish, will be the first woman of the first Jew to rule Mexico. 

There’s a long lame duck period. So it’s gonna be a few months before she’s officially in charge. But I think it’s best for us to get ahead of this. You have an idea of what is coming? she’s taken over from a guy by the name of Amlo who is a populist. He likes to call himself a leftist. 

He’s really not. He’s really just kind of, Well, a really arrogant thug. Think of him as kind of combining the worst attributes of Justin Trudeau and Donald Trump. there are two sides to animal, one of which which is broadly positive but is broadly negative. First, the positive, the way that Mexico has developed, a lot of people have been left behind has a very high rate of poverty. 

It’s one of the most unequal economically countries in the world. And he wrote, the poor people to electoral victory with his election machine, and he’s ruled with them in mind. It’s basically that huge amounts of financial transfers from the state to the poor, purchasing loyalty. Certainly. but he hasn’t done it in a way that makes it self-sustainable. 

He’s been spending more and more and more money and has not really built out the development possibilities for the places of the country that are poor. So if the money were to stop for any reason, we basically go back to where we were pre Amlo so, you know, maybe an A for effort or at least an A for intentions, but it hasn’t really worked out very well. 

the other part, which is negative, it has been a disaster. That’s been his complete ignoring of any sort of security issues as being security issues, just denying that they exist. And this has allowed the cartels to seize huge swaths of Mexican system. in essence, there’s four Mexicos in the north. The northern states have integrated with Texas, primarily in the United States, were less agree as part of NAFTA, and have done very well economically and have solved a lot of the societal issues that have plagued the rest of Mexico for the entirety of the history of the Republic. 

Then in the center, you’ve got the area around Mexico City, which is about half the population, which is this kind of sprawling megalopolis, which has all the pros and all of the cons of such a region. down in the South, you’ve got the poorer areas that are not linked into either the industrial heartland of the South or the American like section of the North. 

and then you’ve got the countryside, which is not like me. You would think of the countryside in the United States. Mexico in the south is jungle, Mexico in the north is, desert. All of it is pretty mountainous. So you don’t have a really dense population in the hinterlands, just a speckling of small communities. Well, aimless choice to ignore the cartels. 

And indoor. The security situation has allowed the cartels to largely take over in the South, where the state was weakest. And in the countryside, where the state was already nonexistent. So you’re talking upwards of a quarter of the territory of Mexico is now not ruled by Mexico. It’s ruled by the cartels. they levy taxes in the form of extortion payments. 

They provide protection rackets. They’ve branched out of the drug industry and gotten into agriculture and tourism and property, taking over local government. in this most recent batch of elections. And dozens of political candidates were shot while they were running for office because the cartel thought that they couldn’t control them. they basically have set up a parallel governing system that the Mexican government has not challenged. 

And in the best of circumstances. And these are not those rooting up that sort of alternate system is going to be very difficult, very violent, very time consuming, and very expensive. Which brings us to the new leader, Sheinbaum. she has a better record than Amlo with admitting that security issues are security issues, and she’s actually been reasonably competent in running Mexico City, where she was mayor, in terms of beefing up security. 

the problem is, she’s not just part of the band. She’s a cult leader. when it comes to Amlo, she she really is a believer in his cause. And Amlo has made it very clear that he has no intention of stepping back from power. He intends to rule indirectly through her, something that she seems to be broadly okay with. 

So continuing the transfers of funds to the poor and makes a certain amount of sense, especially if you can bring her more scientific acumen into the process in order to actually build out long term potential for these people to earn money for themselves. but on the security issue, it’s a question of how forceful will Amlo be in making what he wants to happen happen? 

Will he be a quiet ruler behind the scenes? Or he’s going to just treat her like a puppet? We’re not going to know that for the better part of a year. but the danger is very, very clear. Amlo is one of those leaders who has definitely left the country in a worse position than when he took it over, and he is now seeking to use unofficial means to continue his rule. 

That’s not great. 

Danger in the Red Sea: Who Shall the Houthis Let Pass?

THE WEBINAR IS TOMORROW!

Peter Zeihan’s Risk List: What Keeps a Geopolitical Strategist Up at Night

Please join Peter Zeihan for a webinar on June 5th at 12:00 PM EST on a topic that is near and dear to the hearts of the Zeihan on Geopolitics team: geopolitical risk. This webinar will feature Peter’s reasonable-fear list, focused on issues that in his opinion have the most potential to impact market outcomes.

It’s time for an update on the situation in the Red Sea and what the Houthis have been up to as of late. Spoiler alert: most of the ships are taking the longer route around Africa, but there’s a handful still navigating this region.

When people start attacking ships and demanding extortion money, the smart thing to do is avoid that area. However, there are a few exceptions. Oil tankers – mostly originating from Arab countries – have been largely left alone by the Houthis to avoid global backlash. Russian cargo ships coming from the Black Sea have also been given the green light by the Houthis thanks to relations with end destination countries like Iran.

Finally, we have the Chinese container ships. The Chinese have opted to pay the protection money (after being targeted the first few times) and are granted passage as part of a protection racket. So, if you don’t fall into one of these boats, you’ll likely be heading around Africa for the foreseeable 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.

Transcript

Hey everybody. Peter Zeihan here, coming to you from just outside of Cassis, France. I am going to do a quick update on what’s going on in the Red sea with the Houthis right now. as you guys all remember, the Houthis were the group in Yemen who decided to show solidarity with the Palestinians. They decided to, start shooting everyone who happened to sail by and demanding extortion money, because that that’s what it means to be supportive, I guess. 

Anyway, it’s kind of fallen off the radar in the last month. I want to give you an update of what’s going on. it’s still in play. The ships are still being attacked. The reason that you’re not hearing as much about it is most ships are simply avoiding the area now and doing the very, very long sail around Africa. 

Now, of the vessels that are getting through, they fall into three general categories. Number one, oil tankers, for the most part, are not being affected. Why? Well, most of the oil tankers are sailing from Arab countries, and the Houthis ultimately have to get their support from somewhere. And yes, yes, yes, Iran is their primary backer, but they know that if they start going after oil shipments, the whole world brings a bag of hammers down on them. 

And so they’re just avoiding that overall completely. the second category are cream ships and Bofors in general coming from the Black Sea. Now the vast majority of those are going to be Russian ships and the vast majority of those are going to either Iran or India. So the Houthis, who take many of their marching orders from the Iranians, are not going after the, cargo of their patrons. 

And then the third category is container ships that are specifically Chinese flagged. all other container ships, which are the more valuable ships on the seas are avoiding the area completely. And if you think back, the world’s container ships are typically either operated, by the United Arab Emirates, by the Danes, or by the Chinese. Well, the Danes and the United Arab Emirates have basically pulled their ships out of the area. 

That leaves the Chinese. And of several weeks ago, with the Houthis very specifically target a series of Chinese vessels all in one day. And the Chinese agreed to pay them protection money. So this is definitely evolved away from anything strategic or anything political into a pure protection racket. And that is where we stand right now. All right, everyone, take care.