*This video was recorded before Peter left on his New Zealand trip*
Western sanctions against Russia aim to restrict revenue flows by barring access to Western shipping, banking and insurance…but there’s one more step that could be taken to put the final sanction nail in the Russian coffin.
Russia has been operating in the shadows, using old, unsafe ships and creating state-owned insurance to bypass these sanctions. If Western forces began targeting the “Shadow Fleet” and cutting off access to the Black Sea and Baltic Sea, Russian exports would fall by two-thirds. Should the West choose to do that, we’d be looking at a slew of new issues that would pop up: the global market for oil, wheat, fertilizer, and more would all be disrupted. And then there’s the issue of how ships are registered, which no one is quite prepared to take on.
So, while there could be some more measures taken to ensure the sanctions against the Russians are being optimized, there would be some significant fallout to deal with.
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Hey everybody. Peter Zeihan here coming to you from Chihuahua City in Chihuahua, Mexico. Today we’re gonna take another entry from the Ask Computer forum on the Patreon page. And that specifically, if I was to redesign Russian sanctions, would you need to do in order to make them hit harder? And the answer to that is very simple.
You go after the Shadow Fleet. The Western sanctions against Russia are designed, or at least the intent is to limit, the Russian ability to generate income from their sales of natural gas and oil and fertilizer and everything else, but without actually impinging on supply. And that’s the problem. If you really want to hurt the Russians, you have to actually go after the supply itself.
Now the western areas are trying to have their cake and eat it too. By saying that you can’t use Western ships, you can’t use western banks, you can’t use Western insurance. And so what the Russians have done is to build up an alternative supply system and an alternative transport system using ships that were about to be decommissioned or already had been, as well as generating their own state owned insurance.
So the ships tend to be old, they tend to be leaky. And we’re just kind of lucky that there hasn’t been some sort of catastrophic accident thus far.
But if you were to, say, use Western naval assets to say, limit the ability of the Russians to leave the Black Sea or the Baltic Sea, then all of a sudden, roughly two thirds of what the, Russians send out would be shut off within a day.
Now, that has consequences. Obviously, you can’t just remove a few million barrels per day of crude from the market, can’t remove one of the largest supplies of wheat from the market, largest splitter, fertilizer and bauxite and all the other things from the market without massive outcomes. And that is the reason why the Europeans have chosen to not take that step.
Also, it is if you were going to go that route, you’re going to change the way the ship registries work in the world right now, there is absolutely no link between what is the owner of the vessel, what is the cargo of the vessel, what is the origin or the destination of the vessel and how it’s registered?
And so as a result, most ships are registered in places like Panama, Guinea-Bissau or something like that. Because it’s cheaper if you’re going to start going after shipping for whatever reason, you need to start linking where the ships are registered. The countries have actually have naval forces so that they can actually protect those ships.
And at this point in time in the world, there is no country, even the United States, that has the naval firepower and reach that is necessary to protect a substantial percentage of the world’s shipping. The world’s shipping has evolved over the last 80 years from the concept that the seas are free and anyone can use them at any time, for any reason.
If you start to impinge upon that, we go back to a system that predates World War Two, where all of a sudden military force is necessary to keep the your sea lanes open. And since the United States has a super carrier heavy fleet, we don’t have enough to protect the tens of thousands of ships that ply the world’s waters every day, or even the proportion that is going to or from American shores.
So if you pull the trigger on this, we are on a new world overnight, and most countries are not ready for that.
