Can Iran Control Internet Cables in the Gulf?

AI generated undersea internet cables

We’ve previously discussed the vulnerabilities of global internet infrastructure, but today we’ll focus on subsea data cables in the Persian Gulf.

Global data traffic depends on undersea cables that carry massive amounts of information between continents. Iran has now decided it wants the ability to control and charge for data traffic moving through the region (mirroring its stance on shipping through the Strait). Many Gulf countries built separate subsea infrastructure, so all of them are exposed to disruption.

These vulnerabilities will likely push more communications toward satellite systems like Starlink, but that opens a whole new set of challenges. Another reminder of the fragility of globalization.

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Transcript

Hey all, Peter Zeihan here, coming to you from the winery of Tenuta Oderisio in, where am I? Abruzzo in Italy. Today we’re going to talk about a little thing in the Persian Gulf called data cables. Now, for those of you who have ever sent an email, there’s got to be a way for you to access the internet, for the information packets to get from X to Y to Z, and eventually to where you need them to go. 

Now, there’s a number of ways you can do this. You can piggyback on the telephonic network. That’s a relatively new method using, say, 5G or 4G signals. Older school. For those of you who are Gen X or boomers, you remember, of course, modems where it went over the telephone lines that were physical at the time rather than wired. 

But if you want to go across the planet, there’s this little problem called the ocean, and there is no cell signal that is strong enough to get across. So you have to do one of two things. Number one, you bounce up to a satellite with something called Starlink, which is really the only model that does it right now, which has a cost and a hardware issue. 

Or you send it into the telephone network, and eventually it gets to a launching point on the coast and loads into a data cable that crosses the ocean to a spot on the other side. I think it’s loaded into their telephonic network, these data cables, there’s literally thousands of them, and the big trunk ones just carry a huge amount of data. 

Typically, one of them that crosses the ocean carries more data or has more capacity carry data than all of the telephonic systems just 25 years ago. Now, what is going on in the Persian Gulf is that the Iranians, who are trying to assert control and sovereignty over the Strait of Hormuz in order to get control of the oil trade, are not limiting their ambitions to that. 

They’re going after container ships, they’re going after Bulgars, they’re going after food carriers, and they’re going after the internet cables. And they’re now saying that they think they should be able to charge a transit feed for any data flowing in and out of the Persian Gulf. Now you look at a map of the Persian Gulf, and you’ve got a lot of Arab countries on the western side Kuwait, Bahrain, Saudi Arabia, gutter, the United Arab Emirates and Oman. 

But something that everybody forgets is all of these countries really don’t like one another, and some of them would just flat out hate one another. So they, whenever possible, try not to make their national infrastructure dependent upon what happens in the next country. Over. So the United Arab Emirates, for example, doesn’t have a data cable that crosses Saudi Arabia and goes up to Jordan and into Israel and then on to Europe. 

And no, no, no, their only access is out into the Persian Gulf through the Strait of Hormuz on a subsea cable. The same for Kuwait, the same for gutter, the same for Bahrain. Which means that if you take a country like the UAE, which is actually reasonably well run and not nearly as medieval and thudded like, say, Saudi Arabia, they’re completely vulnerable to this sort of blackmail. 

And if you play this forward into a world, you have to realize that data cables can’t be defended and they can’t dodge. So anyone who decides they want to go after them can really sever them in a day if they want to. So the transmission system that we have become used to, that we don’t think of as a globalized thing, is actually one of the most hyper globalized aspects of physical infrastructure that exists on the planet today. 

And in the Strait of Hormuz right now, we are getting a glimpse of what to come when data connections that are allowed upon physical connections simply aren’t going to be viable long term. And that only leaves satellites. And that starts a different conversation about sovereignty and space and the ability to defend that sort of network. Because Starlink is already in the thousands of satellites, that already makes it more populous and orbit in terms of number of satellites than everything else put together, that is also not sustainable, but we’ll deal with that on a different day.

Civita di Bagnoregio: A Microcosm of Italy

Photo of the city of Civita di Bagnoregio, Italy with mountains in the background

Civita is living proof that places facing decline can adapt and overcome by drawing on their unique identity. This hilltop town-turned-tourist destination is a microcosm of Italy itself.

Faced with demographic challenges, Civita was forced to get creative to save its way of life. By charging a visitor tax, Civita was able to fund restoration projects and preserve this beautiful place.

Italy’s demographic crisis is only worsening, but success stories like Civita are a glimmer of hope.

Maurizio says ciao!

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Transcript

Hey everybody, Peter Zeihan here, coming to you from Civita, Italy. And today we’re going to talk about Vita. And Italy is kind of Italy in microcosm. It was founded by the Etruscans, 2500 years as a hilltop town for defense. And because they could watch trade routes in the time since, it’s of course, changed hands, it does bene times as Italy has changed systems, and in the modern day it’s kind of actually facing a rough patch. 

As you’ll see in some of these pictures, it’s perched on the side of cliffs that are slowly eroding, and the country’s moniker these days is come see it before it’s gone. 

So many people have now visited that them simply tracking dirt out of the city has dropped the level of the main square by about a foot in the last six years. 

In addition, demographically, the city looks a lot like Italy. Italy has the lowest reproduction rate in Europe, with less than 1.15 children per woman. And here in Cheviot, there’s really only about a dozen permanent residents left, and some years up to a million tourists come through again. Italy is number two destination for tourism Europe after France itself. 

that’s really what’s been keeping the system alive. In fact, if you go through Italy as a whole, whether it’s Rome and Vatican City or Venice, these are countries that have been tourist destinations now for the better part of eight centuries. And it looks on the surface like there’s really not much hope there. The buildings date back, in some cases 2000 years. 

There was an earthquake in the 1600s that the city really had never recovered from, But that doesn’t mean they’re gone. And it doesn’t mean they’re going to be gone soon. In the case of Covid, they instituted a €5 ahead tax a few years ago, and that has made this the only tax free municipality in the entirety of Italy. 

And they’ve used that income to do things like do Geological survey’s and reforest the hillsides around them to slow the rate of decline to almost nothing. 

Yes, they’re thronged by tourists. But as you can see behind me, on the one street there really is, everybody lives on the up and the out. So in the day to day operations at home, they don’t really suffer at all. 

It’s an interesting study about how resilience is really just an exercise and reimagining what it is to be stubborn. And in the case of both Italy and Vita, we have an area that realizes by the norms of the age things don’t look very good. And so 

They’re finding ways to turn their challenges into things that allow them to survive in the way of life that they want. Which, of course brings us to the bridge. The bridge was simply an issue of stubbornness, where they decided to make the investment that was necessary to protect themselves. When geography that self tried to cut them off the bridge brought revenue, revenue bought time, time brought a strategy, and the whole place is now holding together, and everyone is fighting to maintain the way of life that they’ve all wanted all along. 

It’s a nice story, and if you ever happen to be in the area, come visit Vita. And best of all, you should really look up my buddy Marisa. He maintains a restaurant with one table, and every second you’re in there, it’s glorious.

The U.S. Gets a Taste of Corruption

Photo of a bronze trump doll on stacks of 0 bills

Trump is no stranger to helping out his cronies, but this new settlement that creates a $1.8 billion fund to compensate conservatives allegedly targeted by past Justice Department actions is a bit on the nose, even for him.

This slush fund is a reminder of the legal and regulatory erosion that the Trump administration is responsible for. The rule-of-law system that has supported the U.S. economy and government is now on some very shaky ground.

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Transcript

Hey all, Peter Zeihan here. Coming to you from Vasto, Italy. Today is the 18th of May. You’ll see this later in the week. Short version is. We’ve probably had the single biggest step backward in rule of law in the United States of the second Trump term, which is, you know, saying it’s saying something in of itself. And the fact that I’m telling you this from Italy is a little concerning. 

The short version is today, the Trump administration settled a lawsuit that had brought against the US government while Trump was president. So basically Trump suing Trump and then settling with Trump to establish a slush fund of about 1.8 billion USD. Technically, it’s $1,000,000,776 million to compensate conservatives who have been prosecuted by the Justice Department in the past. Everyone who has been shortlisted to get a payout, as somebody who is one of Trump’s close political allies and in essence, this is a slush fund. 

This is the sort of operation that people in Italy have been telling you, like even the most crooked of our politicians would have never dreamed of doing something so obvious and brazen. This has a lot more in common with how Nigerian governments in recent decades have handled slush funds, basically suing yourself, controlling both sides of the negotiation, and then handing out the money to whoever you wanted to in the first place. 

Although even Nigeria has moved away from that model in the last 20 years, the most recent governments to do things like this were Nicolas Maduro of Venezuela and Hugo Chavez. This is hardly the first time the Trump administration in round two has done this. I really doubt it’ll be the last. The judge that oversaw the settlement basically said in legal terms, what the actual fuck? 

But here we are. This is what happens when you have an executive who sees the rule of law as part of the problem, rather than part of the solution. We should expect significantly more things like this. And this kind of dovetails with what has functionally happened with the tariff situation. Whereas the tariffs policies have changed so often that the only way that you can stay ahead of them is to have a really good relationship with the regulator, which is another way to say bribery. 

What was the other comparison I wanted to make? Give me a minute. It’ll come to me. Oh yeah. On the regulatory question, the Trump administration has gutted several of the regulatory bodies so that enforcement of the regulations that are on the books, even some of them from Trump, one can’t really be done in a timely manner, but they’re not bothering to staff these agencies with people who could strip out regulations from, say, the Obama or the Biden years. 

They’re just telling companies to not abide by them and put themselves in deep legal jeopardy that that a future administration might come after the before. But the Trump administration is saying, you know, all you have to do is not follow the law in its current form, and we’re not going to prosecute you. So it’s breaking down the rule of law that allows us business to be the most dynamic in the world. 

And basically following a model that the Russians had during the 1990s and the 2000, where you deliberately have conflicting guidance from the Kremlin and from law and from regulation, and the only way to stay on the positive side of that is to bribe everyone in sight. So mazel tov from Italy, a country that used to be run this way but found a different way.

Taking Naval Options Away from China

A Chinese Naval chip in harbor

There were some recent tests in the Philippines involving the Japanese Type-88 anti-ship missile system and the U.S. Typhon launcher. These truck-mounted systems can move throughout the islands, rather than relying on fixed bases.

Deploying these systems across the first island chain would limit China’s naval access to the wider Pacific. We’re also seeing Japan step into a new era of defense policy, reflected by a broader regional effort to contain Chinese naval power.

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Transcript

Hey all. Peter Zeihan here, coming to you from Queta in Umbria in Italy today. We’re talking about a couple of events that happened in the Asian rim in the Philippines specifically last week. We had two test fires of weapon systems. First, the Japanese launch something called a type 88 anti-ship missile. And the United States launched something from what’s called a typhoon. 

Excuse me, typhoon launcher, which is basically a tomahawk, those long range cruise missiles the US is famous or infamous for, based on whether you’re target or not. Both of them launched from the Philippines. Both of these are truck mounted systems. The Chinese threw a bit of a shit fit, but there’s really not a lot they can do about them. 

The issue is two things. Number one, the first island chain, which is the line of islands including Japan, the Philippines, Taiwan, Malaysia and Indonesia, they’re all at least nominal US allies. But more to the point, they block the Chinese from accessing the wider world unless these nations allow it. What are the things that has held up during the Cold War? 

The post-Cold War era is that the United States has not reinforced the first island chain, because during the Cold War, China was an ally against the Soviet Union. And it’s only in the last couple of decades that that has really changed in the last few years, where they’ve become outright hostile, which means that we are now in the early stages of fortifying the island chain, not just the United States, but the countries in question. 

Because if you can install weapons systems that can hit ships, then the Chinese are permanently locked into the lake that is the west side of the the island chain. And now that is happening. Second, like I say, we have three things. Second, the weapon systems involved are truck launched. So you don’t even need a fixed installation. The Typhon Tomahawk launcher, you know, has the range of a normal tomahawk, which can be pushing 1500 miles. 

And the type 88 is shorter. It’s actually an older system that only has a rate of about 100 miles. But they have newer systems that they haven’t just put into place in the area right now. But you take the Philippines, which is one of the most erratic, probably the best word countries in the region with the lowest military capability. 

You have a bunch of trucks running around, some driven by the Japanese, some driven by US Marines, and all of a sudden everything within several hundred miles of the archipelago is completely no go for Chinese vessels. And that’s before you consider more capable states such as, say, Taiwan. So these two weapon systems are basically enough to completely castrate the entire Chinese military position. 

So of course the Chinese are kind of losing their minds. Third thing, this is the first time that Japan has tested an offensive weapon system outside of home islands since World War two. 

Japanese were forced by the United States in the aftermath of the war to have permanent neutrality, and that is now rapidly eroding away. And if you take a country that has the second most capable navy in the planet, you allow them to start stationing military assets outside of their country. And it doesn’t matter, really, what the relationship with the United States happens to be. The Chinese aren’t going anywhere. So we’ve now had a very, very clear example of what can happen with these new systems or even old systems. 

Something to keep in mind. There are a number of countries in the world that, operating all by themselves, that have the ability to completely destroy the Chinese economy because they can interfere with any sort of corporate shipping. China is the most dependent country in the world on globalization because they import a lot of their food, they import the inputs they need to grow their own food. 

They import the raw materials they need to make their manufactured goods, and then they have to export the manufactured goods to pay for it all. You interrupt the sea lanes and it all falls apart. So Japan and the United States obviously have the direct naval power to do that whenever they want to. Singapore, Malaysia, Indonesia do, because they control the straits that allow the Chinese access Middle Eastern crude and European end markets. 

The Australians have weapon systems that can reach that entire zone as well. And now the freaking Philippines has a bunch of dudes running around on trucks that are getting weapons systems so that they can do it to the degree to which the Chinese are in a box here is immense. So it really doesn’t matter from my point of view, what happens with demographics or relations with the United States or globalization in general? 

Every time you look at this from a fresh angle, the Chinese are screwed and the state media really realizes that, which is why they’re having such an outrage rejection of what’s going on right now. And the Japanese side, this is barely even talked about. They’re just kind of sneaking in the background. Anyway, that’s it for me for today. Until next time.

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.