Latvia’s Political Flux Caused by Drones

Photo of a military drone

Latvia’s government is in flux following the firing of the defense minister, his party leaving the coalition, and the prime minister resigning. All of this was caused by some Ukrainian drones being electronically redirected by Russian countermeasures and striking Latvian infrastructure.

This specific event involving Latvia highlights just how quickly drone technology is evolving. The Ukraine War has been a testing ground for all of it, and several countries are now partnering with Ukraine to mass-produce Ukrainian drone technology. The U.S. is not on that list of countries and will likely fall behind the eight ball on the drone front.

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Transcript

Hey all, Peter Zeihan here, coming to you from Umbria in Italy. Olives. Because, you know, Italy today we’re talking about a little nonstandard thing about a government falling in Europe. Now, there’s 30 odd governments in Europe, and one of them is always in crisis. So I usually don’t follow the blow by blow. But this one’s really interesting, Prime Minister. 

Let’s see if I get this right. You silly. Is the Prime Minister was the Prime minister of Latvia, which is one of the three Baltic countries population of about 2.5 million. She resigned this past week over a defense crisis. The situation has to do with drone technology and the Ukraine war. So specifically the Ukrainians have been using drones more recently, new types of drones to attack various chunks of Russia’s energy sector and trying to destroy the logistics support that makes Russia’s participation in the Ukraine war possible. 

So they’ve been very active around places like Mariupol in going after logistics. They’ve been very active in places like the Black Sea and the Baltic Sea in going after energy assets. Now there are multiple types of drones, but let’s talk about two. So in the first one you’ve got something called an FPG first person visual. And that’s your typical drone that you might buy from a company like say DJI in in China you have a controller. 

Sometimes it’s on your phone, you require a digital tether to it and you send it off. And if something interrupts that tether, the drone just goes in a straight line or crashes or returns to you based on its programing. Option number two is something called a GPS drone, for lack of a better phrase. There’s lots of subtypes here, and it follows GPS coordinates that you kind of lay down like a breadcrumb. 

And it goes from point to point to point to point to point. And then when it gets to its end destination, it either crashes into the last point you gave it. It takes a quick glance around and makes a decision as to what to hit. Now, with this second type of drone, you don’t need a digital tether to it, but it does need to be able to receive a signal from a satellite or some other sort of signal that allows it to know where it is. 

So cell towers, for example, work. So if you can jam that signal, the drone then flies off into the night or crashes or return homes based on its programing, what it’s capable of doing. And it might have a little bit of buffer, so you might have to jam it for more than, say, 30 to 60s in order to make sure you really wreck it. 

But within this type of drones, that requires on external signals for guidance, not from the controller, from something else. With good enough electronic warfare, you can convince it that it’s somewhere else and flying somewhere else and basically give it new targeting instructions. And that appears to be what has happened in the Latvian situation. So last week, well, last month actually, what went down is the Ukrainians started doing more and more and more attacks that the Russians were starting to twist the instructions. 

And some of these drones were bent back into the Baltic states and at least on two occasions, were actually able to successfully target Latvian energy infrastructure, specifically fuel tanks. And so there was a spat among the coalition partners in the Latvian government. The prime minister is from one party, the defense minister is from another party. The defense minister was fired, the Defense Ministers Party pulled out of the coalition that kept the prime minister in office. 

It’s a whole to do in Latvia with, you know, 2.5 million people. Doesn’t take much people to have a whole to do. And now the government is in flux and were trying to figure it out. They need to have a new government or just have new elections. They were already scheduled for October. So from a big point of view, it’s not really there from a political issue, but from a military issue. 

It shows the ongoing evolution of drones, because if the Russians can somewhat reliably undermine this class of drones, then the Ukrainians have no choice but to stop using them. Now, I would argue that Ukrainians are well on their way to that point. Remember I mentioned that one of the subsets of these drones are ones that when they reach their final target coordinates, they can look around and make a decision that is already a significant step up from what the Russians can do. 

And if you just up the amount of memory you have in the drone that’s capable of doing that just a little bit, then all of a sudden it doesn’t need that external signal. It can follow geographic landmarks like mountains or buildings or roads, and then it doesn’t have to have a signal. And so there’s nothing to jam. And we’ve already seen the Ukrainians start to introduce drones like that, just not across the board. 

So as with everything with Ukraine war, there is an ongoing tug and war between attack and defense and attack and defense and attack and defense. It’s way too early to know how it’s going to turn out. But what I can tell you two things. Number one, in the last two and a half months, the Ukrainians have introduced more models of drones with more active internal decision making capacity than the Russians have in the entirety of the war. 

To this point. They’re also have launched more drones day on day for the last two months than the Russians have, even though the Russians have bottomless supplies of Chinese parts. So we really have turned the corner where the Ukrainian pre-war defense base, which is where the Soviet Union got its rocketry and its aerospace stuff, has really come into its own and now surpassed what the Russians can do. 

Number two, the Ukrainians are no longer alone because the Trump administration is looking for fresh ways to shit the bed. With all of the allies in Europe and the Middle East, we now have a dozen countries, ranging from Poland and Sweden and Germany, the United Emirates and Qatar and Saudi Arabia, who are actively building out physical infrastructure in partnership with Ukrainians to mass produce Ukrainian drones for their own use and for Ukraine as well. 

So if you fast forward this to the end of the summer, the volume of drones at the Ukrainians are likely to be able to bring to bear is just going to dwarf what the Russians can do, and they will be more technologically advanced. Now, under normal circumstances, I would say that’s going to change the nature of the war. 

Of course, it’s going to change the nature of the war, but it would probably turn the tide. But keep in mind that this is a fresh technological revolution. I didn’t see this coming three months ago to project three months for and say, this is how it’s going to go. It would be really stupid of me. All I can tell you is that the pace of this is overwhelming. 

What we understand aerospace, what we understand, automation, what we understand war to be. And we’re about to have some crazy stuff happen in calendar year 2026, as all of this comes to a head in multiple theaters. Because keep in mind, just because the Ukrainians are succeeding at this doesn’t mean the Russians can’t try. And we’ve already seen some kernels of this sort of technology in play in Iran recently. 

This technology will go global, and at the moment, the country that’s at the back of the line to kind of play with the technologies, the United States, because the Trump administration doesn’t like the president of Ukraine.

Cuba Faces a Humanitarian Crisis

Flag of Cuba above a building

Collapsing fuel supplies have left Cuba with a severe energy and humanitarian crisis. While a single Russian fuel shipment bought them some time, with the lack of Venezuelan oil imports and the U.S. Navy restricting access, things aren’t looking good.

Cuba is now facing severe blackouts, which could spiral into even bigger issues. If nothing changes, food production and basic services could collapse as well. Once those things fall, the whole island goes.

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Transcript

Hey, all Peter Zeihan here, coming to you from Umbria in Italy. And that’s the Trevi over there, I think. Anyway, today we’re talking about Cuba. You may recall that a lot has gone down in the American Cuban relationship, especially since the Americans went in and nabbed Nicolas Maduro from Venezuela next door a few months ago. Well, we’re again at a crisis point for the Cubans. 

Domestic energy production is very, very, very low. They have a very, very small amount of electricity they can get from alternatives like solar, really only like a megawatt or two, and they need 100 times that. But most importantly, they run on fuel oil. That fuel oil used to come from Venezuela. That has gone to zero. And we now have a functional blockade in place by the US Navy against the island. 

For the first time, really since the 60s. And it’s only allowed one vessel to come in in April, a Russian ship to unload fuel that bottom about three weeks. And now they are out. The energy minister has said that we’re completely dry. 

They’re now limited to the energy they can boost themselves, which only covers about 10% their needs on a good day. And so we’re seeing rolling blackouts throughout the country that oftentimes last more than 20 hours a day, even in Havana, which is the least bad. They’ve had several days already this month where they’ve had a 22 hour blackouts. And with us starting to move into summer and electricity demand is going through the roof. We are looking at a potential civilizational event in Cuba, and because there’s no fuel, the normal release valve of crossing into Florida is somewhat limited. 

You’d have to do it on raft. So we’re going to see two things here. Number one, when the energy goes, everything else goes with it, especially things like food production. So we are nearing a humanitarian catastrophe in Cuba. The hope of the American administration is that will trigger mass protests that will tear down the Cuban government. I don’t want to say that that can’t happen. 

But number one, people have to be really desperate to go against a government that will shoot them. And there is not a lot of outside support from the United States coming to help them. And if you are in the leadership of the Cuban government right now, it really is all or nothing for you. There is really no alternative for leaving. 

Second problem. Let’s assume that this works and that the Cuban government is overthrown or withdraws. When you break a society by turning off the energy, you can’t just turn back on the energy. You’re talking about a ground up reconstruction of the entire system that will be required because agriculture has failed, an industry has failed, and the United States is setting up itself up for a multiyear, multibillion dollar reconstruction program. Or you simply get a failed state near Florida that just sends spasms of migrants every once in a while as things get really, really, really, really bad 

In a pre industrialized Cuba that is optimized for agriculture. You can probably support two, maybe 3 million people. That’s not where they are right now. They’re an industrialized system that is designed to produce a lot of sugar for export. And then they import things like wheat and corn and rice on the rest. And they have a population of 10 million. 

So you’re talking about a massive overpopulation. If the lights stay off for any appreciable amount of time, regardless of what happens to the government. Which brings us to the final issue is negotiations with the American government. Trump administration very clearly wants the Cuban government gone, but it really, like everything else that has been doing recently, hasn’t thought about what happens the next day. 

And so the tool that they’re using may well break the government, but it’ll break society as well, and not necessarily leave anyone that is willing to have a conversation with the United States, who can also then impose some sort of new order on the country. It’s rapidly setting the system up to be a protectorate. That would require a military intervention to install some sort of replacement system, and then rebuild the country from the ground up. 

That best case scenario is a 20 year program. And while you can make the argument that for American security and in the long term, American economic strength, having a partnership with a friendly Cuba is a great idea. Getting from here to there, especially with this intermediate step of smashing the place first, is definitely the harder, more expensive way to do it.

Is Now a Good Time for China to Invade Taiwan?

Taiwan flag is shown in an open matchbox, which is filled with matches and lies on a large flag | Licensed by Envato Elements

With the U.S. distracted (and depleted) by the Iran War, should China seize this opportunity to invade Taiwan?

While it appears the stars are aligning for China to make its move on Taiwan, there’s one big issue: energy. Sure, the U.S. military is stretched thin, munitions stocks are running low, and power projection in Asia is weakened, but China still needs the oil to make it all happen. Since China imports most of its oil, primarily from the Gulf, the U.S. could cut off energy imports at any time.

While China may have a short-term military advantage, the strategic vulnerability and risk of losing imported energy just isn’t worth it.

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado, where the snow is back. Today we’re taking a question from the Patreon crowd specifically. Do I think now would be a great time for China to attack Taiwan? What would the United States distracted in Iran? On the surface, it sounds like it would be a great time, doesn’t it? The United States is basically completely all in in the Iran war and is not doing well. 

The strait has been closed for weeks, and we’re now starting to see these cavitation and cumulative failures in global energy markets, which as we get into June and especially July, are just going to be catastrophic for any number of countries. And at some level, the United States is going to have to address that without solving the military question in the Persian Gulf. 

In addition, the United States, for safety reasons, chose to fight this war not in the Persian Gulf. most of the sea craft that were involved were either over in the Red sea or deep in the Arabian, firing things that are on from beyond any theoretical retaliation. And in doing so, the United States used up half roughly of its deployable long range munitions. 

It’s going to take 5 to 10 years reset those stocks, even assuming we don’t launch any attacks during the entire time. So the United States is really out of the game when it comes to the type of long range strike capability that would be necessary to deal with China in a way that wouldn’t have horrendous casualties in a lot of ship failures. 

So on the surface, seems like, yeah, now’s the time. But the United States has the greatest concentration of naval forces. It has had in Middle Eastern region right now, just off the Persian Gulf, and with a few ships now going in and out as part of convoy efforts, which aren’t working very well, but that’s a different topic. 

In addition, the United States has kind of riled up and has more ships coming to and from the region. And guess where China gets most of its crude oil? China imports about 80% of the crude that it uses, and about 75% of that comes from the Persian Gulf. And now the US Navy is right there. So if we got into a scenario where the Chinese decided to make a move on Taiwan, maybe from a tactical local military point of view, the Chinese would find it a lot easier to do. 

The US is out of position, and a lot of the preferred weapons that we have designed specifically for that scenario just aren’t available in the numbers they would need to be, then the United States would shut off energy flows to China, and within a year, China would fall into a post-apocalyptic wasteland, complete with famine that kills half of their population. So on the surface, short term, yeah. Now’s a good time. But none of this has changed anything about China’s overall vulnerabilities. And actually, the United States is standing on the energy flow right now in a way that would guarantee the end of the People’s Republic, should there be a war. 

The only scenario where it might work is if the United States decides, you know what, we didn’t really need Taiwan anyway and decides to not get involved at all. That would be strategically idiotic for the United States, but it wouldn’t be the first time this year that we’ve done something like that, so I can’t rule it out.

Using U.S. Energy as Leverage

Two LNG tankers at port

Trade relations between the U.S. and Europe are on the fritz. The latest in all the noise is the suggestion that the U.S. could restrict LNG exports to the EU if trade negotiations break down.

This is a low blow, as Europe imports most of its gas. And if you haven’t noticed…the world is in a bit of a shortage at the moment. Cutting off exports would be legally and practically difficult, but a distressing notion nonetheless.

While the idea of using U.S. energy dominance as a negotiating tool isn’t surprising, I had originally pictured this strategy as being reserved for rivals, not allies. But there’s the Trump administration for you.

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Transcript

Hey, all. Peter Zeihan here. Coming to you from Pozza Della Cava caves in Ovierto, Italy. Today we’re looking at some of the strange things that are happening in US European relations. As you may or may not remember, the Trump administration is carrying out 200 simultaneous trade talks and none of them are really going anywhere, which means it’s really up to secondary officials that normally wouldn’t have much power in negotiations to kind of set terms. 

And one of them, Andrew Pozner, the US ambassador to Europe, has said that if talks between the Trump administration in Europe don’t go well on things like, well, this is neat on things like auto tariff levels that the United States is going to stop sending liquefied natural gas to the continent. Now, that’s it’s a total dick move, but that doesn’t mean it won’t work. 

Two things. Number one, Europe imports nearly 90% of their natural gas. And before the Ukraine war, it was more or less an even split between stuff from North Africa liquefied natural gas. It was imported from multiple countries, stuff from the former Soviet Union and then Norway. What’s happened now is that two of those got away because of the Ukraine war. The flows from Russia have stopped and because of the Iran worshiping strait, a former flows from Qatar, which is the largest LNG supplier to Europe pre-war, have also stopped. That means US natural gas is one of the few sources of energy that the Europeans can still access, and if that is to go away for any reason, then the Europeans are kind of screwed. 

So that’s kind of piece one. Piece two is how this would happen. It’s kind of difficult to imagine. That doesn’t mean it can’t happen, though. The issue is private enterprise. The United States doesn’t have a state or company. It just has private companies that are buying natural gas on the American market, cooling other facilities, typically on the Texas or Louisiana coast, and then shipping it out. So if the United States was going to bar those companies from selling to Europe as part of negotiations, there were definitely a bevy of lawsuits. But if there’s one thing about this administration that we really do understand is it’s deeply disinterested in general business conditions or the role the government plays in business, and it’s really not constrained by legal norms at all. 

So while from a clear, clean legal point of view, I don’t see how this would happen, I don’t think that would really dissuade the federal government under this administration at all. So will this work? This is one of the things that in my projects, in my books in the past, pre Trump, I said we should probably expect that the United States will try to leverage its energy, security and economic strength in order to get whatever it wants out of anyone. It’s just a little frustrating from my point of view, to see this used against allies as opposed to potential foes, but, you know, bygones.

Impacts on the U.S. Power Grid from the Iran War

Satellite view of north american lights and energy

The U.S. is relatively insulated from the conflict in Iran and the closure of the Strait of Hormuz, since it’s a net exporter of nearly every major energy source. Most other countries aren’t so lucky…

However, there are plenty of indirect risks for the U.S. Global energy shortages could spike commodity prices (like coal) and disrupt supply chains; this would affect key U.S. imports like aluminum, copper, and transformers.

So, the U.S. power grid is likely safe in the near-term, but secondary effects on infrastructure and manufacturing could complicate things down the line.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. Today, we’re taking a question from the Patreon page. Specifically, it’s whether or not I think that there are any parts of the US power grid that are particularly vulnerable to what’s going on in Iran right now, because of the closure of the Strait of Hormuz, for example, 20% of global liquefied natural gas is locked in. 

And if you happen to be an importer of that, that’s a bit of a problem in any number of ways, because you can’t keep the lights on. Nothing else really matters. This is something where I’ve got some good Not only is the United States insulated because it’s in a different hemisphere, but the United States is a net exporter of every type of energy, whether that is raw electricity that’s already been generated, natural gas or jet fuel, naphtha, coal, all of it. 

Which means that unless there is a direct price link back to the United States through something that is used to make electricity, you’re kind of in the clear. The only fuel out there that really has that sort of link is liquefied natural gas. And the United States is the world’s largest exporter of that now. So there’s at the moment, no direct link. 

Now there’s plenty of indirect links. So for example, if you use coal in the United States and the United States is a coal exporter and the price of coal goes up on a global basis because of energy shortages related to other countries having power problems, and you might feel indirectly, or if you want to take a longer step in something, we’re all going to feel probably by the end of the year, the sort of rolling energy crisis that we’re starting to see in East Asia and to a lesser degree in is absolutely going to hit manufacturers markets. 

And the United States imports. A lot of the things that we use to stabilize our own power grid, whether that’s aluminum cabling for things like power lines, copper for anything that goes into electronics, and more advanced pieces of equipment like transformers, which take over a year to build. Because of the complexity, we will be feeling that in our power grid, but that is very indirect. 

That is not this month. That is a problem for probably the fourth quarter of this year. So for what it’s worth. I do have a little bit of good news from time to time.

Iran Diplomacy Has Yet to Begin

Two diplomats shaking hands in front of flags. Licensed by Envato Elements

The administration’s centralized and personalized approach to foreign relations has collapsed U.S. diplomacy across multiple fronts, including stalled Iran talks, poor relations with allies, and uncertainty ahead of future negotiations with China.

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Transcript

Hey all. Peter Zeihan here, coming to you from Colorado. Today we’re taking a whole batch of questions from the Patreon page and kind of lumping them together. And the general topic is diplomacy in the Iran war. Now, a lot of folks have been wanting me to comment on every ebb and flow in every Trump administration initiative or Truth Social post. And, you know, number one, that would be exhausting. 

Number two, to the bigger point, most of these things don’t matter. The way diplomacy normally works is you have a cadre of people in the State Department and the CIA and the Defense Department in the national security apparatus, whatever it happens to be. And they all have their own contacts that they maintain on behalf of the government on the other side. 

And you have back and forth communications that all of these people at lower levels, medium levels, higher levels, and those people are used to shape the conversation so that when the president comes in, all the groundwork has done been done already. The issue we have with the Trump administration is most of those people have been fired, and the ones that haven’t have basically been barred from carrying out any sort of diplomacy because Trump sees this as his personal purview. 

So, for example, when you look at the Chinese summit that’s supposedly is about to happen, it wasn’t until last Friday and Thursday and Friday when, for the first time, major CEOs were starting to get approached about whether they could join the president’s delegation. All of the groundwork that is normally done to make sure that the president isn’t wasting his time, none of it is being done. 

And so the president will go. It will either be a completely pointless summit, or chairman G will probably be able to convince Donald Trump to do things that the United States really, really, really, really would not want him to do. Basically, Trump has become the biggest dove in the administration in relationships with almost every country, because he sees himself as the only one who can make a decision, which is true. 

But he also sees himself as the only one who’s even worthy to talking him to, which is not. So you play this toward the Iran war, when the State Department is out of it, when the national security is out of it and the Defense Department is out of it. You basically have what’s left is just the president and whatever individuals who chooses to appoint. 

What we’ve seen so far are three people that have been appointed JD Vance, the vice president, who was sent once and it was such a disaster, he was removed from the team completely. We have Steve Wycoff, who is in competition for being the dumbest man in America and has never come back to the white House with anything that is useful except for the propaganda of the other side. 

And so relations, when Whitcomb is involved, are generally stalled with everybody. And then Jared Kushner, who is the son in law of the president, who is not an idiot but always is coming at things from the point of view of I want to walk away from this with a real deal. And so you get these New York Jewish real estate folks who are going to places like negotiations with Iran. 

And shockingly, not a lot of us happened. So what happened at the end of last week is probably the best example I can give you. There was a one page, one page memorandum that the United States sent the Iranians, which wasn’t rejected out of hand, but is already being stretched onto a two week process to evaluate one page, because that’s about all the attention span Donald Trump has. 

Like you could resolve everything in Israeli-Arab-Persian relations in one page. So while that was going on, Donald Trump also pushed forward this other idea called Project Freedom, where the US Navy would start escorting vessels in and out of the Persian Gulf. Now, there’s a lot of tactical reasons that won’t work. 

I think I’ve dealt with that already, but let’s talk about the diplomatic reasons why it didn’t work with the whole Iran war. Donald Trump refused to consult with any of the allies in Europe, in Asia, in the Middle East, with the exception of Israel. Of course, that was party to the war, which means that when the war did not resolve in the way Donald Trump wanted to, none of these countries felt that they could or should get involved, because they had no say in how it was carried out in the first place. 

That also carried forward with Project Freedom. After one day, the Saudis said, you can’t use our airbases for this anymore because you’re not taking negotiations seriously. So unless and until you cancel Project Freedom and start talking to the Pakistanis, who are the interlocutors again, you can’t use Saudi air bases to enforce Project freedom. So the thing was canceled after two days after a grand total of two ships were escorted. 

Unless and until Donald Trump realizes that the US doesn’t have the military force to break open the Persian Gulf until he realizes that only a political deal with Iran is going to end the situation. We’re just in this holding pattern with the entire region is offline. Now, I would argue that Trump aside, a lot of the stuff is never coming back anyway. 

But as long as Donald Trump is the president, until he changes his negotiating tactics. We haven’t even begun meaningful negotiations at any level on this topic, because he doesn’t allow the lower level people to do their jobs. He thinks it has to be him. And so he’s established himself as a single point of failure throughout the entire bureaucracy of diplomacy that we have with absolutely everyone on every topic. 

And lo and behold, we don’t have a meaningful trade deal with anyone. After a year and a half, Iran talks are stalled and relations with all of the allies are at the worst that they have been in decades. It’s going to be really interesting to see how this China summit goes, because the same lack of preparation and consultation that has happened with everything else, with the administration, applies to the second most powerful country in the world as well. 

So it’s going to be some good watching. But don’t expect anything to be a meaningful deal in the way that most people mean the term.

So You Want to Break Iran…

Satellite view of the Strait of Hormuz

The blockade of the Strait of Hormuz has forced Iran to get creative with its oil storage.

Iran hasn’t been able to get its oil out of the Gulf, so they’ve started using available shadow fleet tankers as floating storage near Kharg Island. But as the other tankers begin to return from their delivery routes from before the blockade, dozens could get stuck waiting to get home.

Now, I’m not one to give targeting advice, but if the U.S. needed to do something that would force Iran to the negotiating table…I can think of a couple of really appealing targets.

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Transcript

Hey, all. Peter Zeihan here. Coming to you from Utah today. Today we’re going to talk about an aspect of the energy crisis is going on in the Middle East and a possible partial solution. I don’t want to oversell. It has to do with what you go after. Now, I don’t provide military targeting data. Oh my God, no. But if I were to, this is where I would nudge things. 

It has to do with tankers. We know that with the double blockade in place, the Iranians are losing access to places to put crude. Normally they export about 2 million barrels a day, mostly on shadow tankers, mostly in violation of sanctions. That goes out of the Strait of Hormuz to India, around India, around the Strait of Malacca and up into Northeast Asia, primarily China, but also a little bit to Taiwan, Korean time and Japan. 

Anyway, that is currently blocked for them. So they’re pulling tankers out of mothballs, parking them near Kharg Island, which is their primary export point in the northern extremes of the Persian Gulf, and loading them up to use as floating storage. They can do this until they run out of tankers. Here’s part two. The type of tankers that the Iranians use are very large. 

You either have the literally VCs, very large crude tankers that can carry up to 2 million barrels, or even a few ultra large crude carriers. It can carry up to 4 million barrels. Now, when those things take this trip, they can’t go through Malacca, especially the ulcers, because the strait isn’t deep enough. And the draft of these ships, when fully loaded, makes them detour further east around a place called Lombok. 

Well, getting from Cargo Island out of the strait around the subcontinent, through Lombok and up to Northeast Asia, that takes about 28 to 30 days and then about five days for them to kind of turn around and queue into port, unload everything, and then come back, usually come back through Malacca because they’re not as heavy then. You do that time frame and you look at the point where the US really started the, blockade, and next week is when the last of those tankers comes back. 

So what we’re seeing is the development of a tanker parking lot off the coast of Iranian parts in the Indian Ocean, which means there’s already about 20 there. We’ll probably have another ten there next week, and then that’ll be all of them. Well, these are all Iranian government owned. These are all shadow tankers. And if something were to happen to them, then the Iranians, even if the sanctions were lessened, couldn’t export without using unsanctioned tankers. 

So if you’re looking for a way to force the Iranians to accept a deal that also closes down the shadow fleet, this is probably the way to go. And since these tankers are being held out in the Indian Ocean well away from population centers in Iran, you also wouldn’t face the same degree of damage or threat from Iranian military capabilities if they were to all be seized and relocated. 

So again, I don’t provide targeting information, but if you’re looking for an economic way to force Iran to the table in a more serious way, going after the royal production is probably not the right way. But if you take away their transport options, then they really don’t have another choice.

Will the Swiss Cap Their Population?

A swiss flag over the water with a city in the background

On June 14, Switzerland will vote on a referendum to cap its population at 10 million. Current projections don’t put the Swiss population crossing that number until 2035 or 2040.

This proposal would sharply restrict immigration once the population hits 9.5 million, followed by automatically withdrawing from EU freedom-of-movement agreements at 10 million. This represents the rural-urban divide in Switzerland; the more rural areas remain skeptical about immigration due to fear of cultural and demographic change, and the urban areas rely on immigrants for high-skilled labor.

The Swiss confederal system enables votes like this to happen. While this proposal may have meaningful support, Switzerland’s economy would be severely damaged in the process.

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Transcript

Hey, all. Peter Zeihan here. Coming to you from Colorado. Today we’re talking about Switzerland. We have a referendum that is coming up on June 14th, where the Swiss will vote to limit their population of the country to about 10 million. Right now, the population is just a hair over 9 million. And at current rates of population growth and immigration, they anticipate they’ll probably hit that 10 million number between 2035 and 2040. 

The issue is twofold. Number one, the Swiss very, very, very jealously guard the right to have citizenship, and are notoriously, strict about it. So if you are from elsewhere and you want to become Swiss, it’s a very long, long, long process. There’s really only two routes these days. Option number one is family reunification. 

For someone who happens to work in Switzerland and has achieved, citizenship. So somebody who’s gone it the hard way can then bring in their family. And then second, of course, is immigration via asylum claims. This is going to sound a little blanket, but as a rule, when you’re talking about Germans, they’re really, really not into outsiders. And when you talk about rural people, they’re really, really not into outsiders. And the population demographic overlaid with geography in, Switzerland means that the Germans, have a lot of rural territories in the north of the country, whereas the French, who live in a single corridor, it’s mostly urbanized. And the Italians who live up in the mountains, don’t really have much of a rural section at all. 

So the cities think this is a horrible idea, because the Swiss economy basically is a services economy that deals with some of the most skilled labor in the world, and a population of 9 million is really can’t support that. So they really are dependent on high tech, high skilled labor coming in. And family reunification is a piece of that. 

The rural regions see it more as a population swamping issue, because they’re not the ones who decide what happens day to day. Also keep in mind that this is not unique to Switzerland. This is a real issue across the entire world, especially in Europe. Despite what you might hear in the United States from the far right. 

The Europeans are deeply, culturally wed to their, superiority. Which is a nice way of, say, kind of racist. 

What is different about Switzerland versus the rest of Europe? Is most of the countries in Europe have what we would call a unitary government, where all the decisions are made in the national capital and that capital can impose their views upon the entire country. And so it tends to be more urban, tends to be more evenhanded. And from the point of view, if you happen to be on the hard right, tends to be a little bit more liberal. 

You do have some countries that are federal, like, say, Germany. The U.S. system, by the way, is federal, where you’ve got a balance of regional and national powers, where you can have a more patchwork. But that’s not Switzerland. Switzerland is Confederal, and that means that the regions and sometimes even the individual cities actually have more power in many cases than the national government. 

And this is why the Swiss are always, always, always, always having plebiscites like this. Because it’s really easy to get on the ballot and the federal government can’t do much to stop it. You also have to have a degree of unanimity among the cantons whenever something is up for debate. And in this case, that means the plebiscite really has an uphill path ahead of it. 

But it only takes one canton to really make something a national issue. And that’s exactly what we’re seeing here. Support for this, plebiscite is reasonably strong. It has a decent chance of passing. That doesn’t mean it would be a good idea for Switzerland from an economic or political point of view. Part of it is the lack of details in the text of the plebiscite itself. 

It says that when the country hits 9.5 million, the, government needs to simply remove, asylum as an option for even coming into the country. Now, that doesn’t have necessarily a national disaster in it. That’s more of a political issue. But if the country hits 10 million people, then Switzerland is supposed to automatically withdraw from all freedom of movement treaties it has with the European Union, which means overnight, the entire Swiss advance industry, banking system, research system, medical system would basically crawl to a halt because they wouldn’t be able to get the stuff that’s necessary to maintain the economy in its current form. 

Also, this is a plebiscite. So it’s not like a 14,000 word document. It all fits into a couple of paragraphs. And that has the problem of basically throwing the ruling council of Switzerland to into a bit of a tizzy, because if this passes, they then need to come up with legislation that would pass them all the current ones. 

So, its opponents have called it the plebiscite of chaos because it would basically absorb all political bandwidth of the country between now and when they hit 10 million. And there’s really no clear way to have their cake and eat it, too. If this was pass, it is the end of Switzerland as an advanced economy over the long run. 

Now, over the long run doesn’t start until they actually hit that number. That number will probably not be met until after 2035. So it isn’t flipping a switch. But this is a great example of how populist pushes, especially on things like migration, don’t necessarily match very well with a policy that can allow the economy to continue at the growth rates and the wealth levels that they’ve enjoyed for the last century. 

So I’m going to be watching this very, very closely. It’s a fascinating example of how political structures deal differently, based on how the constitutional order functions. 

Yeah. June 14th, big day.

This Ain’t Your Father’s Tanker War

Navy warship with guns facing forward

No, the U.S. can’t escort tankers in the Persian Gulf today as it did during the 1980s Tanker War.

Back in the 80s, the U.S. swooped into a regional conflict where attacks on shipping were limited, and the Strait remained open. Neither of those is the case with the Iran War. The U.S. Navy has fewer ships today than it did back then, so widespread protection is a much different conversation (especially with thousands of commercial ships trapped). And of course, modern warfare has evolved. We’re dealing with drones and missiles that leave the U.S. Navy much more vulnerable.

You add all that up, and we’re looking at a very different Tanker War than the one your daddy saw in the 80s. So, the only path forward is likely a political one.

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Transcript

Morning everybody, from a foggy Colorado. Today we’re taking a question from the Patreon crowd specifically why the US can’t escort tankers and civilian ships like them to and from the Persian Gulf like we did back in the 1980s during the Tanker war? Well, three big differences. Number one, first, the nature of the conflict. 

The last time around in the tanker war, the United States was a late comer. It was originally a conflict that was a subset of the Iran-Iraq War of 1980 to 1988, and by the time we got to the town of that conflict, both sides were trying to destroy the other’s economic opportunities. And since they lacked the military capability to make a meaningful pushes towards oil production, they went after concentrations like the tankers. 

And so you had Iraqi aircraft that were Iranian tankers, and the Iranians would use a combination of surface ships, speedboats and missiles like the Chinese Silkworm to go after Iraqi and everyone else in the street was just kind of caught in the crossfire. 

Most of the damage done, most of the attacks were in the northern part of the Gulf, where most of the was originally exported. And so the United States came in with an aircraft carrier battle group, put it in the Gulf along with multiple task forces. And at any time involving 40 to 80 ships and some ships like Kuwaiti tankers would be reflagged and others would just be escorted in. Each cluster typically had five destroyers and a number of Coast Guard cutters assigned to it, and they would go in big convoys. 

That’s all different this time. This time it’s a direct conflict between the United States and Iran. And Iran has chosen shutting down the strait as a direct means of attack in the United States has chosen shutting down Iranian shipments as a direct means of attack. So unlike last time when the strait itself was open and the Iranians and the Iraqis were selective in their targets, now are on is willing to attack, pretty much anything in the United States is blocking all shipments from all Iranian ports. 

So that’s the first big difference. The nature of the conflict is very, very, very different. Second, the the nature of the US Navy is very, very different. Back then the United States had a 500 plus ship Navy. Today we’re under 300. And while today ships are faster and tougher and far more lethal, they are fewer in number. And so putting as many vessels into the Persian Gulf is just not an option. 

Also, something that was present back then was the Coast Guard. But the Coast Guard has been steadily whittled down over the course of the last 40 years and doesn’t have enough ships to spare. In addition, the US ships that are involved are tend to be larger and tougher, and if they’re going to slow down in order to convoy, that’s a bit of a problem. 

So remember, there were like 60 ships at any given time that were part of the escort effort last time. Today we only have 60 destroyers, and half of those at any given time are designed to protect the carriers and United States under Donald Trump, I think, wisely, has chosen to not put a carrier in the Gulf. Yes, you would be able to use closer munitions that are cheaper and easier to replace, and that’s our very real consideration. 

But it also means that a carrier could be attacked by the third difference, which is a new generation of warfare. Back then, Iran was only emerging. I was on the tail end of a really long, grueling war with Iraq. Its weapons choices were somewhat limited. You had the Chinese silkworms that had a range of about 50 miles and 1,000 pound warhead, and the Persian Gulf isn’t 50 miles wide. So it was pretty easy for something like a carrier to be over the horizon, be basically immune to anything that the Iranians can do. That’s not where we are anymore. Today’s drones might need GPS targeting, but we now have a series of things called super heads, which don’t, which means that they can choose their own target when they get close. 

And if there was a carrier in the Gulf, I can guarantee you that the United States would be under constant missile bombardment. And as we’ve seen with the Arabian side of the Persian Gulf, the U.S. is basically run out of interceptors, and the ability to protect its own ships would be limited. Over the weekend, when we saw the first effort by the United States to escort vessels, that was really the first time we’d seen major surface combatants from the United States in the Gulf at all. 

In this conflict, we’ve been doing everything at arm’s length. That means we’re running out of long range munitions, which is a problem. But it also underscores the degree to which that this is contested space now. And the United States can’t just sail in and break it open. In addition, when we did this in the 1980s, you were talking about typically 11 ships at a time as part of the convoy group. 

There’s 2000 ships trapped in the Gulf right now. So we’ve got different ships. It’s a different kind of conflict. We don’t have the numbers, and the numbers that need to be moved are just massive. The only way to open the Gulf is with a political solution with Tehran. And again, talks have yet to begin on that topic. 

About the only good news I can give you is that we’re now seeing early signs that the Iranians are starting to shut in oil production because they don’t have anywhere to put it. Just keep in mind that the Iranians do consume a couple million barrels a day themselves, and that will never get shut in. So they can be selective about what they’re shutting in. 

It’s not like you just flip a switch tomorrow and all of a sudden they’re out of money. But for the first time in the conflict, we are now seeing economic pressure on the elements of the regime that are making the security decisions. That is encouraging conversation. Those conversations just haven’t really started yet. The biggest takeaway is that the United States is the world’s most powerful navy, with the best projection power in human history, and we now know for the mix of geographic reasons and economic reasons and technical reasons, that the US Navy no longer has the ability to impose a strategic reality on a local basis against a to be perfectly blunt, fourth rate security power. This is a big change in how the world works. It is very, very, very easy to deny civilian access now. And it is very, very difficult to restore it. And you can play this specific scenario out on almost any place in the Eastern hemisphere. And it’s difficult to see the US Navy doing any better. So if we do get into a fight with a real country in the future, we should count on those waterways being closed for at least the duration of the fighting.

Welcome to Captain Phillips’ Nightmare

A jolly Roger Flag on a ship

Captain Phillips is shaking in his boots because piracy is returning to the high seas, specifically in the Red Sea and off the Horn of Africa. Somali pirates have already attacked multiple ships.

With a large share of the global oil supply offline, the U.S. preoccupied with the Iran war, and nobody else able to step in, I would expect things to worsen quickly. The Red Sea will quickly become a no-go zone.

This would disrupt a major global shipping route and force vessels to reroute (which isn’t an option for everyone). So, the already strained global system will face even more shortages and disruptions.

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Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. Today we’re going to talk about piracy because it is back in the off the horn of Africa and the Red sea. We have seen Somali pirates active again with at least three ships being attacked. This is a direct outcome of the Iran war, and we should expect a lot more in the days and weeks to come. 

So very, very short version. In case you haven’t been paying attention, the Strait of Hormuz. is offline. And that means roughly three quarters of a billion barrels of crude haven’t made it to the market. That’s roughly equivalent of 10 to 15% of global supply is just gone. Probably not coming back. And the United States has this largest concentration of naval forces in the area, really in the history of the region. 

So those two things, make it almost impossible for people to patrol countries that might be a little hostile to the United States, say, China. They’re not going to put any of their naval vessels in the In an area with so much American military ordnance running around. And number two. The oil shortages means that more conventional navies, because most navies in the world are not nuclear powered, can’t actually get the fuel to keep their economies running. 

So the idea of doing a long range projection force into a war zone to fight pirates? No. So what we basically have is the United States concentrated on Iran the Strait of Hormuz It no longer has the bandwidth to patrol the Red sea and the coalition of forces from ten, 15 years ago that did it can’t function in this environment. 

What it basically means is, as this ramps up, not only is the Strait of Hormuz a no go zone, the Red sea will once again become a no go zone that will also hit energy prices, because a lot of stuff is currently being exported through the Red sea and then up through Suez. That’s going to not work anymore. 

You’re going to have to go all the way around Africa. And for shuttle tankers that are coming in from, say, the Russian space and the Baltic or the black, they originally would go through Suez and the Red sea. Now, if they can’t arrange some sort of ransom system or a prepayment system to Somali pirates, which don’t exactly have crypto accounts like the Yemenis or the Iranians do, those ships simply can’t sail the distances necessary to get them all the way around to. So this is going from bad to worse in a very short period of time. Everybody enjoy your 2026.