Why I Don’t Worry About Cyberattacks (for the most part)

A hacker a a computer terminal

Following the cyberattacks in Minnesota, many have reached out regarding cyber threats from a national security perspective.

Most successful cyberattacks don’t target critical national infrastructure; they go after individual organizations. Thanks to the decentralized cybersecurity model adopted by the U.S., there is no single system an attacker can compromise to cripple the entire country.

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Transcript

Hey, everybody. Peter Zeihan here come to you from the east, east, west, west side of Bison Peak. On my way down, I got buzzed while I was up here that there’s been a cyber attack in Minnesota effecting at least 30 different municipal districts. The information I have to work with is very limited. I have no bars up here. 

Got garments to me. Anyway, I thought this would be a good time to talk about cyber because we’ve got the the background and we’ve got the teaser. So short version. This is not something I worry about in the traditional sense, not from a nation state point of view. It’s serious issue. Cyber has been becoming more and more of an issue because the tools that are necessary to do cyber attacks have proliferated massively. 

And you can pick up basically a starter toolkit on the dark web for just a couple hundred dollars, and for a few thousand, you can get some really interesting tools. And people have been using those to hack whatever databases they can get into, whatever systems they can, and hold whatever hostage they can. Common attacks are ransomware, where basically you lock up somebody’s database and say, if you don’t pay me X by Y date, I’m just going to delete the whole thing. 

And a lot of folks don’t have sufficient backups, so they really don’t have much of a choice to pay. And you can always tell if you’ve got somebody who’s dedicated to cyber defenses by who pays. Of course, anyone who pays has a vested interest in not telling anyone that they’ve paid, because that’ll tank their stock value or confidence in their institution or whatever it happens to be. 

From what I understand, with Minnesota, that’s not in play. It doesn’t look like any services were interrupted. People are pointing their fingers at Iran because that’s the flavor of the month at the time. I have no way to say that it’s Iran or something else, but I do want to underline when it comes to national security issues, this is something that, while not minor, is not something that I kind of put in my top tier of concerns. 

The reason is the combination of disassociation and concentration when it comes to cyber defense versus cyber offense. Back when computers became a thing back in the 1980s, we had Ronald Reagan and nobody knew what was going to happen with all of this. So there was no institution that kind of take responsibility. So Reagan’s decision was to make the National Security Agency, the NSA, responsible for cyber offense, and their job was to hack everybody all the time, put in backdoors, put in worms, whatever. 

Working from the theory that if we ever get involved in a hot war, or if the other side does cyber against us in a way that kills people, we will have the option to go scorched earth. The idea being that the NSA’s would have access to as much as possible, and they could basically implode opposing systems from the inside so they would never carry data again. 

Not just a hack, but a physical destruction of the hardware down at the node. But defense wasn’t touched because if you wanted to throw a cyber defense umbrella over the entire country, you would need a massive institution. And how would you determine where the line is? Is it the fortune ten companies? 

The fortune 100, the fortune 500? The fortune 5000? Is it everything going down to the mom and pops? And remember mom and pop companies that have employees of 50 or less or half of the employment base? Do you deal with individuals in this way? Do you deal with universities? And rather than try to come up with a solution to that problem, Reagan just everyone else, you’re on your own. 

So every government institution at the local, the state and the federal level, and every company, regardless of size and every individual, regardless of wealth, is responsible for their own cyber defense. You fast forward that to the 2020s, and what it means is the same ease in which people can get hacking tools is also available for people to get defense, and especially encryption tools, and off the shelf encryption tools that just cost like 2030 bucks can’t be hacked by anything shy of a semiconductor taking a couple of years, it doesn’t mean that you’re perfectly safe. 

Human error is undoubtedly the way the most hackers get into systems, but it does mean at this moment, as long as you have a degree of awareness and put a little modicum of effort into it, the advantage really is for the defender. Will that always be the case? I have no idea that the semiconductor industry and software is evolving in very strange positions, and I can’t underline enough that most successful hacks get in because somebody has been sloppy or hasn’t changed their password, or lets them in because of a fishing attack. 

These are all very real concerns, but what it means is, from my point of view, it is impossible for cyber attacks to take down the country because there’s no single defense. There’s no node that an enemy can hack into and take down the whole country, or take down all the power grids. We’ve got thousands of power grids and thousands of water districts across the country. 

You have to hack each of them individually and then everyone around them. When they realize there’s a hack, they usually cut their connections. Part of the reason for that was because of, if you remember back to 2001, 2002, right after nine over 11, we had a power outage in the northeast and in eastern Canada because we had interconnections among our power grids. 

Well, after that event, everybody basically built firewalls, and that worked not just to prevent cascading power failures, but it also worked to prevent cascading hack access. So anyone who wants to take down the United States has to hack literally tens of thousands, if not tens of millions of things to in order to do it. And even the Chinese, at their height before their demographic bomb went off, never had enough people to do that. 

There’s an open question whether AI, as it evolves is going to be more effective as an offensive or a defensive capability. That is part of the handwringing around something called mythos, which is a new clod product that’s anthropic. It’s the company that generates clod because basically mythos is doesn’t have barriers and it hacks things, but it also figures out where the vulnerabilities are so that you can reverse patch everything to. 

Bottom line is this is all evolving, but the physical structure that the United States has set into place often operations concentrated, defensive operations dispersed makes it very easy for individuals or individual companies to get hacked, but functionally impossible to do meaningful damage to the US structures even in a time of war. For what it’s worth, in the world these days, that passes as good news.

The Limits of China’s Military Reach

Chinese soldiers in camouflage fatigues

Despite China’s growing military, it remains constrained by geography and dependent upon U.S. secured trade routes.

Even if China manages to expand its Navy to the point where it can break through the First Island Chain, it still needs to find a way to replace the U.S.-maintained international system. And that’s no easy feat. The Chinese proved they could adapt and buy themselves some time during the Iran War, but it could not avoid the pitfalls associated with being the world’s largest oil importer.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Yosemite National Park. This is Royal Arch Lake. This is the very first place I ever went camping when I came to Yosemite years ago. So it’s kind of cool to be back almost by accident. Anyway, taking a question from the Patreon page today specifically, why don’t I see the Chinese going all bonsai in their neighborhood? 

Why are they not being more militaristic? I would argue that until eight years ago, when chairman G. Jinping got rid of his last real advisors, he had a very accurate understanding of the world about how China was arguably the country in world history, most dependent upon international trade, and how China utterly lacked the military means in order to protect that trade, even within sight of its own shore. 

Trying to basically faces three layers of problems. Number one, their chief sources of demand, primarily the United States, but to a slightly lesser degree, the European Union are on the other side of continents from them, and they’re broadly hostile. That means unless they can find a consumption source to absorb their goods, their current economic model won’t work at all. 

And since their own demographics are so totally horrid, they know that that consumption boost can’t happen at home and the developing world, writ large, has less than half the consumption power of the United States, and much less the US and the EU put together. So there is no option for China except to maintain some version of the current system. 

And the United States is the one that has a global Navy. That’s problem one. Problem two even if the Chinese could float a navy that was equal to the United States, and right now we outgunned them roughly 15 to 1, they still need to get through the first island chain that is Japan, Taiwan, the Philippines, Indonesia, Malaysia and Singapore. 

It’s not so much that those countries are de facto US allies. In most cases, it’s that if the Chinese are going to project power to the wider world, they have to get past these islands regardless of who controls them. And it’s much, much, much, much, much easier to sink ships, especially commercial ships in a straight than it is to dominate an archipelago. 

You’re talking about a combined population in the zone. That is, Indonesia has 250 million people by itself, so well over half a billion. I don’t think I’ve ever done that math before. Taiwan has about 30. Philippines I think is 70 these days. Lots of people. Well, well, well beyond the capacity of the People’s Liberation Army Navy. That’s what they actually call their navy, as well as the People’s Liberation Army. 

The Chinese Army is not designed to project power and hold territory. It’s mostly for domestic control, which is something that does pretty well. Anyway, so that’s problem two. Problem three. Let’s assume that they can outrun the US Navy and dominate the first island chain. And those are some wishful thinking there that doesn’t solve their problem. 

They still have to get to North America to dominate that commercial base. So have to get to Europe to dominate the commercial base. They still have to get to the Middle East to have energy. The Chinese system, from a strategic point of view, has always been in a bind. And so I’ve always found it hilarious that the official stance of CCP is that the United States. 

Should patrol the world and secure the ceilings on behalf of China. Their official plan is that we can’t do it, so you should do it for us. So no no no no, not a lot has changed. We have had a little bit of color that has come in because of the Iran war, in that the United States bungled everything. 

And the Chinese, I don’t want to say that they bungled or that they had a a home run. It was somewhere in between. It exposed just how vulnerable they were to energy disruptions. And they did showcase through switching for petrochemical inputs and for using EVs, that they could reduce their demands by about 2 million barrels per day, maybe not even quite that much. 

But, you know, that’s a significant volume to reduce your crude by. That’s like, geez. United Kingdom uses about that much, but that’s it. So even after all the fuel switching, even after going over to electric vehicles, even after shutting down some of their refineries, they were still far and away the world’s largest oil importer from all the same places as before. 

Nothing really changed. If I was going to highlight one thing that may be pointed the other way, it’s not so much that the Chinese have more flexibility, it’s that we found out just how dependent other countries were on them. Now, we understand in the United States how much were dependent on the Chinese for manufactured goods. But over the course of this conflict, Korea, Taiwan, Vietnam, Australia, the Philippines all discovered how much they were dependent upon Chinese refined product. 

So, yes, the math really hasn’t changed for China in terms of any sort of major conflict. But we now know that if they do go down, they’re going to be taking the fuel systems of a half a dozen countries that the United States cares a fair amount as a side effect. And the only way to fix that is for these countries to secure their own energy and specifically to develop their own refining base, which for some of these countries is something they gave up on decades ago. 

So it’s not so much that we know that China is in a stronger place. They’re not. So they may have just tethered themselves to a few countries in the meantime.

Leaving the World Behind: Obama vs. Trump

Portraits of Trump and Obama

The Obama and Trump administrations have both made deals with Iran. There are some glaring differences between the two, so let’s see which deal came out on top.

Obama’s Joint Comprehensive Plan of Action (JCPOA) failed to address Iran’s missile program or its support for regional proxy groups, but limited Iran’s access to frozen assets, maintained broader sanctions, required inspections of nuclear facilities by the International Atomic Energy Agency, and sought to create a regional balance of power. Trump’s deal is substantially weaker, as it allows Iran to sell oil freely and access the U.S. financial system with limited oversight, lacks long-term safeguards on Iran’s nuclear program, and leaves Iran without a proper framework to engage with the region.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. Due to popular demand. I’m going to do today. Compare and contrast of an agreement called the JCPoA, which I don’t remember what it stands for now, but it was the Obama era deal with Iran versus what the Trump administration has just done. Let’s start with the review of JCPoA. 

It is held up as kind of the landmark example of how to not negotiate with a difficult country like Iran. There were insufficient safeguards. Most of the issues that really mattered to the United States were not addressed. It was considered kind of the first stage of a series of negotiations to try to normalize relations with the Iranians. And as such, it was ultimately abandoned. 

And most independent observers looking back on it now, ten years on, would give it a degrade in terms of its overall quality. So why is that? There are a number of things in the bilateral relationship that matter. Obviously, there’s a lot of things we disagree about, but near the top of the list are sectarian groups that are on sponsors to foment chaos throughout the region and its missile program, which is designed to not simply threaten Israel but ultimately broader American interests. 

And in time, maybe even the United States and JCPoA addressed neither of those at all. But neither did the Trump administration. There’s not a single word about any of that in the very short napkin deal that Donald Trump put his name on so famously in Versailles. That’s piece one. Piece two is finance. The United States controls the global financial system, and almost all commodities are almost exclusively settled in US dollars. 

That means the United States has eyes on any transaction that uses any dollars. And honestly, on almost all trade period. Because if you’ve got two countries that don’t have a lot in common executing a trade deal like say, I don’t know, Oman selling crude oil to Korea, the Omanis don’t have anyone and they don’t want anyone, and the Koreans don’t have any Omani dinars and they don’t want any. 

And so what they do is they take their dinars. I think it’s called a really not sure offhand. Maybe I should have picked Mexico anyway. Exchange them for U.S. dollars on the international exchange, and then it goes back to one when it hits Korea. And in doing it that way, the United States actually gets two points of view on every individual transaction. 

Anyway, Iran had been under a degree of sanctions for decades. And so the Obama team offered up progressive relief from sanctions in exchange for cooperation on the other big deal nuclear issues. And so to that end, the first stage was unlocking some of the cash as an act of goodwill that Iran and had frozen all these years came out to something like, I don’t remember the name or number off the top of my head. 

No WiFi here about, let’s call it $20 billion. I think that’s about what it was anyway. 20 to 30. Anyway, that was loaded up into pallets and flown to Tehran, which is something that Obama’s critics screamed bloody murder. You’re flying cash pallets of cash. And the response, which was accurate, was that access to the financial system, which would have allowed Iran to sell its crude on the open market and get all the cash direct and use it for whatever it wants? 

That would have required loosening up the sanctions in a way that the Obama team didn’t want to grant right off. That was probably for phase two or phase three or phase four. So the only option was to fly some of Iran’s cash. That was Iran’s. Anyway. 

Anyway, it was an awkward deal that really had bad optics, but it was probably the best. Could it be done at the time? In contrast, the Trump deal just gives a very similar amount of cash in the 20 to $30 billion that is frozen directly to Iran in US dollars and grants them full access to the US financial system and allows Iran to sell whatever it wants to on the international market and earn US dollars that are not under US jurisdiction or monitoring or in any sort of temporary account, so we can watch where it’s spent. 

It’s basically gave her on everything that’s been demanding since 1979. Which brings us to the nuclear question. That was the big achievement of the Obama deal. Is it committed Iran to IAEA inspections? IAEA is the UN bureau that monitors everybody’s nuclear power plants and makes sure that you’re not taking some of the fuel and turn it into what would go into a bomb. 

The Trump deal does mention nukes, but it says it’s all subject to a 60 day deal, and there’s no restrictions on them at the moment. In addition, the Iranians felt that they wouldn’t be attacked because they had a nuclear program. Now they know they need to have a nuclear bomb to have a deterrent. So we’ve basically incentivized them to build a nuke. 

Well, whereas the Obama deal, while there were multiple rounds and we were only in the first round, was definitely weak and insufficient and a bad deal. It’s nothing compared to the strategic abdication that the Trump administration has just done on financial and nuclear issues. 

The core logic for the Obama deal, and you can you can argue with it, is that if you’re going to withdraw yourself from a broader region that you have been managing for decades. Unless you just want to let the chips fall where they may, you need to do one of two things. Number one, you have to appoint a deputy or a new regional hegemon to take your place, a country that you trust enough and that has enough capacity to hopefully do things more or less in the way that you would. 

And There was no one. There is no one in the region that checks those boxes for the United States. Israel isn’t trusted, and besides, its power projection is limited in a sustained way. Sure, it can bomb someone, but it can’t hold territory except in Lebanon, Saudi Arabia. The military is a joke. Turkey is on the wrong side of Iraq. 

There’s just no one. Which leaves us with option two. You have to set up a regional balance of power that self regulates so that the region’s problems stay the region’s problems. And that was the approach the Obama team seized upon. And that required a degree of normalization of Iran so it could act as a normal power. The Trump administration’s deal is basically a wash your hands and walk away and what happens, happens. 

And so things like the war in Lebanon, things like the human rights disasters that are Saudi Arabia are the sponsors of terror, that are the Guthrie, Qatari, whatever. And everything Iran does in his infamous for just like it’s left. 

So yeah, the Obama deal will go down as the quintessential example of a grade D statecraft, a horrible deal that didn’t take all that many American interests into account. But we’ve all been through school, and we all know there’s a grade below D, and that’s where we are now.

Why Bypassing Hormuz is a Pipe Dream

Satellite image of the Strait of Hormuz

So, you want to bypass the Strait of Hormuz, huh? Good luck finding a replacement route or pipeline that matches the 20 to 22 million barrels of oil that used to transit daily.

The UAE and Saudi Arabia have pipelines capable of transporting roughly 1.6 and 7 million barrels per day, respectively. Despite being the best alternatives, they come with long expansion timelines or vulnerability to strikes. There are a few other routes that pass through Syria and Turkey, but those are either too risky or too small.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Colorado. And today we’re going to talk about the bypass options for the Strait of Hormuz. Started. Hormuz, of course, is one of the world’s most important waterways. It is the gateway that tankers use to enter and exit the Persian Gulf. The Persian Gulf produces for export roughly 20 to 22 million barrels per day of oil and products, and under normal circumstances, almost all of that flows through the Strait of Hormuz aren’t really great options. 

Otherwise, Iran is all mountainous. You’re not going to go that way. Iraq is a sectarian disaster and it has no other waterway access. It would have to go north through Turkey, which is mountainous. Saudi Arabia is a desert kingdom which is huge, and so crossing its distances are problematic. The Kuwaitis and the Qatari have no options at all. 

And that just leaves the United Arab Emirates, which at least does border the other side of the Strait of Hormuz. But it has to go up and over some complicated geography. Anyway, there are four options that people are talking about, three of which exist in some way. So number one, you’ve got the pipeline that starts in the United Arab Emirates on the Persian Gulf and goes up and over some of that complex geography down to the port of Fujairah, carries about 1.6 million barrels per day. 

The Emirates have fast tracked expansions. They hope to have another 300,000 of capacity sometime later this year, and then maybe they even will double it over time by laying a parallel track. It’s expensive, especially building it fast, but that doesn’t mean it can’t happen. And the Emirati certainly realized that unless they get another option, they’re kind of hostage. 

Anything that happens between or among Israel, the United States and Iran. Number two, the big one, the Petro line. This is a line that starts in the eastern provinces of Saudi Arabia and their major oil producing region, and just shoots west, straight across the desert until it hits the Red sea at a place called Yanbu. they started construction on this during the Reagan administration. 

Everyone in this area has been worried about the Strait of Hormuz for a very long time, and it’s operational has been for a couple of decades. In fact, over the last ten years, the Saudis have incrementally increased its capacity from 4 million barrels a day to 7 And they had never really tested it. So until this conflict, we were still thinking it was at four. 

They have proven that with 30 to 45 days notice, they can ramp it up to seven, which from an engineering point of view is pretty impressive. There’s now talk of laying another parallel pipe and maybe increasing this by another two or even 3 million barrels per day over the next few years. There’s two problems with that. Number one, of course, is this is a big project over a large period of distance. 

And then second, just getting to Yanbu is only half the problem. The Saudis have built a number of refineries up and down the Red sea coast that are not connected by pipeline. And so the old strategy was to take tankers from the Persian Gulf, Salem, all the way around the Arabian Peninsula, going through Hormuz, through Bob Deb off the coast of Yemen, and then supplying these refineries by sea, which I always thought was remarkably stupid. 

Anyway, at the moment, the plans aren’t for these pipelines to support these other refineries, just to get it to the coast to open up some maritime options. Option three is for Iraq. Iraq has two different while producing zones. It’s got one in the which is the big one in the Shia Arab zone. And it’s got one in the north in the Kurdish Right now, all of the crew that comes out of the southern fields is exported by water through a couple of offshore loading platforms. They have. And all of that has basically been reduced to zero by the conflict. So the idea is you have a Western line that goes out to a city called Banias in Syria. 

This pipeline technically exists, but it was shut down in the 1950s and has never been turned back on. And so if this route is going to be explored, all of that equipment has to be 100% replaced. And you’re talking about a project conservatively is going to run $8 billion. 20 might be a better guess. And it’s not clear that the Iraqis have the financial wherewithal or the engineering skill to do this themselves. 

So you’re talking about bringing in companies from the outside and having to pay them, and that means it’s not going to happen this year or next year or this decade, and maybe not next decade. This would be a big project. In addition to the fact that about 40% of the route is going to be going through Syria, which until recently has been in a brutal, decade long civil war, and we’re just kind of counting the moments until the second phase of that civil war starts up. 

Not to mention that Banias on the coast is a different sectarian group than the majority of Syria. So it’s going to go through the Kurdish zone, and then it’s going to go through the Arab zone, and then it’s going to go through the Alawite zone. I wouldn’t invest in that if it were up to me personally. Final option also kind of exists. 

It’s the northern route that goes from Kirkuk, which is the oil capital. The Kurdish zone north into Turkey takes a dog leg going straight west to the Mediterranean port of Chian. And Chian is kind of in that elbow of the Mediterranean, where Turkey almost meets Syria. That pipeline has been operating for the last ten years at about half a million barrels per day. 

It was built to spec back in the 80s at 1.6 million barrels per day. But disputes between the Turks and the Kurds, much less the Turks and the Arabs in Baghdad, have meant that it’s always operating at a lower capacity. It’s not clear if it can handle that 1.6 anymore. Anyway, there’s problems with all of these pipelines. It takes a while to build them. 

They’re expensive. The Emiratis are showing that they can be fast tracked, but the Emirati one is probably the simplest over all. But the bigger problem is it doesn’t really solve the issue. I mean, yes, you can bypass Hormuz. And yes, that is important. But keep in mind the weapons systems we’ve seen deployed around the world in just the last six months. 

In the case of the Ukrainians, they’re now regularly striking industrial targets across Russia that are a thousand miles and more from Ukrainian territory. The Iranian weapon systems are not nearly as complicated, but they’re still striking things that are 500 miles away without a problem. And most of the infrastructure that we’re talking about here is within that 500 mile range. 

And so the Iranians can just program in what they want to strike, whether it’s a pumping station, part of the pipe itself, the loading facility, the tankers, a cluster of the loading facilities and go to town. Specifically, they’ve already hit Fujairah, the Emirati option, and Yanbu the Saudi option. And to think that they can’t hit any of these spots with today’s technology, much less the technology they will command when this construction is finished is just silly. 

Really. The only option for a bypass pipeline that might, might, might be resistant or immune to what the Iranians can do today, much less tomorrow, is the Turkish option, because the Iranians do not want to pick a fight with a superior local military power like Turkey. So that is really the only thing that works. But that one of the three that are operational is by far the smallest of the three. 

The petrol line is not a solution, the pipeline is not a solution. And honestly, anything that’s going to depend upon Syria instability is probably not an option. That just leaves the Chian pipe, which at the moment is maxed out theoretically at 1.6 million barrels per day. Operationally probably half that. And if the decision was made to double, triple or more of that, you’re talking about a project that’s in the tens of billions of dollars because eastern Turkey is not flat. 

So none of these really work. They’re going to generate a lot of talk. The Trump administration already has their fingerprints all over them. Like this is going to be a quick and easy fix. It is not you can take that to the bank.

The U.S. Can’t Break the (Arctic) Ice

Ice floating in the Arctic Circle

Despite the growing importance of the Arctic, the U.S. continues to move further away from a sustainable operating plan.

The USCGC Healy broke down during sea trials, and the Polar Star is undergoing its own refit, which leaves the U.S. with one operational icebreaker. Clearly there is a hole in U.S. Arctic strategy, and attempting to plug it with the goodwill of Canada and Finland (given strained relations) might leave the U.S without a long-term solution.

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Transcript

Hey, everybody. Good morning from Colorado. This is Peter Zeihan. Today we’re going to talk about how the American Arctic strategy collapsed over the weekend. The United States only has a small Icebreaker fleet. And the biggest of them, the Healy, was undergoing high speed trials after a repair cycle, and the engines crapped out. The crankshaft broke. 

There was a bit of a fire and it basically stalled out and had to be towed back to port. We don’t know how long it’s going to take to get it back into operation, but it will be at least the remainder of this year. And this is after a series of other mishaps that involved an engine room fire and a transformer fire. 

The ship has not been doing well since it came on line 20 years ago. Second, you got the Polar Star, which is over 50 years old, and its only job is to run supply runs to Antarctica to supply Fort McMurdo, McMurdo base, if you prefer. That’s it’s only job and it is now completed that most recent cycle and has begun its own refit. 

That just leaves a ship called The Stories. Now, Coast Guard vessels are in that gray area there. It’s a middle branch of the military, but the ships are kind of a civilian military hybrid, oftentimes not for the stores. The stores is a flat out civilian vessel in construction. It’s an oil tug that’s been converted. And it is now the only ship the United States has. It’s an icebreaker. Whether you’re looking at global warming and new routes, whether you’re looking at competition with the Russians or the Chinese, this is basically bad because the United States no longer even has a ship in the game. And the backup plan, while wise under normal circumstances, probably isn’t going to work out. You see, under the Biden and later Trump administration’s Trump to the United States basically signed a series of agreements with the Canadians of the Finns to build icebreakers for. 

You see, we don’t even have a shipyard that can build them anymore. And that would be great, especially now that Finland and NATO. But the two countries that the Trump administration has threatened most directly and most repeatedly are Canada. Canada is not going to help us build an icebreaker fleet that could then circumvent Canadian power in the Arctic. 

And then there’s Denmark. You know, the whole Greenland thing. Finland is a very tight ally of Denmark. And if the United States seizes Greenland, we can basically kiss the entire Scandinavian block a goodbye. So basically, we are looking at a period for at least the next 30 years. We, the United States, does not have a military presence on the waters in the Arctic. 

Whenever there’s ice, we can still sail up there. In the summer, we can still use air power, which is of limited use on the water. But other than that, we’re looking at the United States not even having a tool in the box. And at a time where the world is in churn, to not even be able to play is a real problem. 

And this is something that will resonate well, well throughout the remainder of this century. So, you know. UGG.

South Africa’s Immigration Problem

Flag of South Africa behind a jungle landscape

While the U.S. and South Africa similarly attract migrants from poorer neighboring countries because they are the strongest economies on their respective continents, that’s where the similarities stop.

South Africa’s post-apartheid arrangement means that illegal immigration affects groups very differently. Migrants taking low-skill jobs disproportionately impact black South Africans trying to escape the townships and move up the economic ladder, because they compete directly for these opportunities.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from southern Yosemite. I am just to the north of Red Devil Lake. And below me is the Red Peak Fork of the Merced River. And in the background there you can see the start of Merced Canyon. That is the canyon that ultimately leads to Yosemite Valley, Half Dome and El Capitan. And over this way we have Red peak and the High Range. 

Anyway, today we’re taking a question from the Patreon page about South Africa. It seems like they’re having a little bit of illegal immigrant snafu that is reminiscent of politics in the United States. Let’s talk about where it’s similar and where it’s not. Let’s start with where it is similar. Proof. There are not a lot of South Africans that want to do certain jobs, and it is the bright spot economically on its continent. 

And there are a whole lot of countries in sub-Saharan Africa that are not doing very well and haven’t been doing very well for more than 50 years, so it’s natural that there is a pull pulling, especially unskilled labor to south into South Africa and all of the politics and the populism of the conservative or liberal trade unions versus people who don’t want outsiders in their neighborhoods. 

All of that stands to a degree. It’s all very similar, but where it’s not, we are now nearly 30 years, 1992. Yeah, we’re pushing 35 years since apartheid ended. When it did, the white leaders of South Africa had some sit down, serious conversations with the black leaders of South Africa and decided how post-apartheid South Africa was going to work. 

In the past, all the blacks and the coloured, as the term that they use, lived in something called townships, which were basically fenced off. They had a centralized water system, but no real sanitation system. So they’re kind of ringed by porta potties, and then they’re barbed wired off from the white communities that basically live in something that looks a lot like an American suburban environment. 

So when you have three quarters, 80% of the population that basically lives in isolation, what happens when you suddenly give them the right to, for example, vote? They’re going to want different things in whatever they’ve had. And all of the wealth in South Africa was controlled by the whites. So what happens there? We’ve had political evolution since, where populist groups among the blacks have risen. 

A group called the Economic Freedom Fighters basically wants to nationalize almost everything because from their point of view, the whites very small minority hold all the money. And if we give to the state and then redistribute it, that would be more fair. Anyway, regardless of what you think about that, the decision that was made back in the early 90s was very simple. 

The whites could keep everything that they had, and in exchange the blacks would have free housing and electricity and water forever. What that has economically done is locked the most of the black population into the townships. There is more education, there are more opportunities. There are possibilities for the blacks to leave the townships and earn a normal living and then go on and move up the economic ladder. 

But when your basics are almost free, it is a huge disincentive and people stay where they are. So as a result, based on who’s numbers you’re using, South Africa today has an unemployment rate somewhere between 35% and 55%. And it’s been like that since the 90s. They also have some of the highest crime rates in the world, because people will steal to buy the basic necessities they need and then go back to their free housing, which is honestly not a whole lot more than a shack. 

Introduce illegal migration into this environment. There are a lot of jobs in South Africa that really do need to be done. The whites are too skilled for most of them and a lot of the blacks are. I don’t want to use the word complacent. That’s not quite right, but they feel stuck with where they are right now. So bringing in illegal migrants to do the work doesn’t bother either of those groups who it bothers the blacks who are trying to leave the township and make a career of themselves and get a house that has internal plumbing and move up the ladder, because those are the people who are being undermined by the illegal migrants. 

Now, how South Africa deals with this. We’ve basically had a series of majority governments by one of the most corrupt groups in modern history, the African National Congress, and more recently in coalition with the White Party, Who which is basically based out of Cape Town, which is a more white heavy city, as opposed to Johannesburg, which is more black heavy. 

None of this is a clean mix. None of it perfectly aligns to anyone else’s political milieu, because it is such a unique situation from so many different points of view. Anyway, it is a real issue. But before you layer that onto anyone else’s political agenda, just keep in mind it is very, very, very specific to South Africa. 

There is no other country on the planet has anything like this or has in the modern era. Okay, that was a lot to say at high elevation. That’s it for me today by.