Peter Zeihan, Author at Zeihan on Geopolitics

Trump 2.0 – Reindustrialization

Another layer of the challenges facing the Trump administration is the fallout from a Chinese collapse and what it will mean for US reindustrialization.

China is the world’s manufacturer, but just about everything is going wrong for them. Between demographic and economic decline, trade blockades, and a collapsing workforce, China won’t be around for much longer. So, everyone else will have to find another way to get their stuff.

That means reindustrialization and the US is nowhere near being ready to take on that load. We’ll need to rebuild industrial capacity, expand the electrical grid, and address labor shortages. If Trump fails to do that before China goes off the deep end, we’re going to experience product shortages and record inflation, cementing Trump’s legacy as the man who made American something less than…great. Or maybe, just maaaaaybe, the old/new president can address these issues and shepherd the United States into a new golden age. fingers crossed

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, everybody. Peter Zeihan here. Coming to you from the top of French Ridge in the Motoki Tuki Valley of New Zealand. This is the first place I ever went backpacking in the country. And I haven’t been back in 27 years. So just as hard as I remember it when I was 23. Okay. We are going to continue on with the Trump 2.0 series today, specifically the sort of domestic issues that are going to be waiting for the president.

Really, this is a China, China, China situation. But from an economic point of view, rather than a geopolitical one. Let’s review, China’s dying, birthrate has dropped by over half in the last six years. They now have more people over age 50 than under. And their workforce is in the early stages of collapse. Their population has been in a state of collapse for over 20 years.

But, when you run out of people aged 0 to 20, you really don’t feel it in your consumption or your investment or your tax base. You’re just paying for less education. Well, that has now been going on for 45 years, and they’re running out of new people to bring into the system. At the same time, they print currency like mad.

Like, you know what the gold bugs say that the US Federal Reserve does, China actually does. But like times five, they expand their money supply by about 500% more than the United States has on a monthly basis. And so that drives up asset prices, which makes it for more difficult for the young people to do anything because, think about if everyone in the United States was over 40, was buying a vacation home, how hard it would be to start out if you were in your 20s.

Now, I’ll apply that to China. So you’ve got all this massive real estate build and absolutely no chance that someone young can get in on it. So we are looking at a national collapse here and a population collapse and probably a civilizational collapse. The only question is time frame. If I was to, put a date on that and yes, yes, yes, putting dates on things like that is hard.

And that is, the most difficult part of what I do. I would expect a complete economic breakdown within a decade and then probably a national breakdown. What’s the ten years after that, anyway? One way or the other, the Han ethnicity is not going to survive in this century under Donald Trump. Donald Trump absolutely is. Rare.

And to pick a fight with the Chinese on trade issues, he’s been talking about massive tariffs to stack on top. He and Biden actually are pretty close together on these issues.

Trump enacted a lot of Selective tariffs on specific items as well as blanket tariffs. Biden didn’t peel any of those back.

Biden went in and did tech tariffs to prevent technology transfer. And now that Trump is back, I find it very unlikely that he’s going to peel back anything that, Biden did. If anything, he’s going to double down on it. So the way that China has traditionally dealt with its demographic collapse and making sure that the economy can go is again printing lots of currency, building lots of industrial plant and then exporting it.

Well, under Trump, that worked. But it’s no longer working under Biden because Biden has basically marshaled the entire Western alliance to act against things like tech transfer and most notably, electric vehicles and automotives. And so the Chinese don’t have any place to dump it. It’s gotten so bad that even the Russians and the Brazilians and the Turks are basically blocking Chinese imports.

So we have all this new productive capacity coming online in China, nowhere to send it. We’re getting an inflationary and a deflationary pulse in China at the same time, which is like the worst kind of bad. Anyway. Bottom line is that Trump is very clearly wanting to pick a trade fight, but it doesn’t appear that his incoming administration has given any thought to what happens should he win.

China is the workshop of the world, and while there are certainly sectors that Americans would like to keep the Chinese out of, they are the single largest presence in almost every industrial sector and their sudden disappearance. And it probably will be sudden because it will be, involving a degree of government and economic collapse. Then what?

Because we still need the stuff. And if the Chinese are incapable of building it, suddenly we are in a very, very new sort of economic cycle. So, you would fix this by massively expanding the industrial plant and the manufacturing base in the United States. But you don’t do that quickly. You don’t do it overnight, and you don’t do it cheaply.

So the smart play, if you’re looking for recommendations here, is to take whatever income comes in from tariffs, regardless of how they’re sourced, and actually use them to underwrite the construction of an industrial plant, starting in industrial processing, things like turning, bauxite into aluminum, things like steel, and then moving into, more and more sophisticated manufacturing.

That requires a degree of organizational build out that the United States doesn’t have. The United States hasn’t had an industrial policy like that since World War Two. Luckily, Joe Biden and Donald Trump are the only two Americans left alive who remember any of that day. Yes, yes, yes, they’re about the same age. So hopefully, somebody on Team Trump will know what to do with that.

But we’re starting from almost scratch. Everything that the Biden administration did along those that path was dealing with environmental issues in some way EVs, solar panels, that sort of thing. And I’m not saying that that was bad, but that’s just a one very, very narrow niche for what is necessary to be done. We need a multitrillion dollar build out as quickly as possible.

Second, powering it. It’s not that the United States needs oil or natural gas. We are awash in that. And energy policy under Trump suggests that he wants to build up that advantage even more. The problem is electricity. It takes a lot of power to stamp and mold and move things that you don’t need when you’re basically doing digital work.

So we need to expand the grid on a nationwide basis by at least half, and places that are likely to see the biggest industrial build out, places like the Rocky Mountains, the classic South, and Texas, they probably need to double the grid within five years, which is just a massive task. But I haven’t seen anyone from Team Trump even breathe the word electricity when discussing the energy situation.

It’s all about oil. It’s all about natural gas. It’s even about taking things like windmills out of the equation, which I think would be unwise since, you know, Texas gets 15% of their electricity from now. The easiest way. There’s nothing easy about it, but the easiest way to do that is to make it much, much easier for electrical cooperatives and electric companies to import and export power across jurisdictional boundaries, whether that is across the, the seams that separate the three big grids in the United States, whether it’s among states, whether it’s within states that cross from, say, a co-op to a city’s, power system, we need everyone who has a competitive advantage, whether it’s in capital, in labor, in sourcing because of green tech, in sourcing, because of natural gas, to be able to put up a power plant and send that power to where it is needed. Doing that, of course, requires significant reform of the electrical grid in its current form and a whole lot of build out. And Donald Trump is famous for many things, but managing what is functionally a new department, creating it from scratch is not something he seems to have considered at all.

Third is labor. If we’re going to expand the industrial plant by half, that’s a whole lot of workers that the United States doesn’t have right now. In fact, the United States, since, Covid is facing a worker bust for two reasons. Number one, we have started this re industrialization. We are seeing expanding, labor in all of us.

Sorry. We are seeing an expanding labor demand in all of these sectors. But too far more importantly, the baby boomers are leaving us two thirds of them have already retired. The oldest ones are starting to die. They’re leaving the labor force in numbers, like when they entered the labor force back in the 1960s. And we have to basically do almost all of this work with just a fading remnant of labor from the boomers.

There is no indication from Team Trump that, workforce training for blue collar workers is something that’s particularly high on the list. And if anything, all this talk of mass deportations of, illegal workers from the United States is going to actually tighten the labor supply. So basically, we’ve got two scenarios here, and it’s going to be up to Donald Trump and his team to decide which one to go.

Number one, you smash China while they’re down. You kick them in the face, you break them, but you fail to build up the industrial capacity. You fail to build up the electrical capacity, and you’ve got the labor force at the same time that will generate a shortage in every possible consumer and industrial good at the same time, while also generating the fastest inflation that the United States has ever experienced.

And Donald Trump will go down in history as the president who broke it all, or you build up the electrical grid, you find a way to square the circle with illegal migrants, you expand workforce training, and you repurpose the capital that was coming in from tariffs to actually build up the industrial plant faster. And Donald Trump goes down in history as both the president who broke China and set the stage for a new fundamental age of American economics.

I know which one I’d rather see.

Trump 2.0 – Iran

Next in our Trump 2.0 list, we have Iran. This is one of those countries that is quite isolated from the US, so Trump can have a bit more fun with his policies.

Places like Russia and China are complex and require jumping through hoops to have anything stick. Naturally, Trump’s big-talk-no-walk strategy didn’t work so well against these powers, but Iran is different. The country is isolated from the US and the risk of blowback from actions against them is limited.

So, in his first term, Trump put the pressure on Iran by cutting off oil exports. However, they quickly developed a “shadow fleet” to circumvent that. Trump’s next step would be to impose secondary sanctions to disrupt the “shadow fleet”. There’s the option to involve the military with blockades, but that risks destabilizing the global maritime system.

Until Trump and his administration show the capacity to come up with policies that manage the fallout of any new actions against Iran, let’s hope that Trump doesn’t start swinging his sledgehammer too hard.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hi everyone. Peter Zeihan here coming to you from Blenheim, New Zealand. And today we’re going to do the third in our open ended series of the challenges awaiting the incoming administration of president elect Trump. We’ve already dealt China, Russia. Today we’re going to tackle Iran. And unlike China and Russia, who had a great record of manipulating the former and future presidents in their first term, which really set back American strategic policy in both regions quite a bit.

Iran is on the opposite side. And the reason is pretty straightforward. If you want to reign in Russia, it requires a coalition of powers to cut off technology and transfer and energy purchases. It was integrated into the system and the sort of coalition building that is required to contain or beat back a country like Russia is extreme.

And Trump isn’t a builder. He can’t manage his own government. He can’t, direct things. He’s not a guy who has a command of the details, or allows the people who have the command of the details to influence policy. It’s a one man show with Trump and the details that are required. The breadth of expertise that is required just isn’t allowed to function in his administration in China.

Same general topic. But instead of allies, although you do need allies to contain China, the technical expertise that is required is is extreme. The American Chinese relationship is one of the deepest economically in human history. And the idea that one person, no matter how intelligent, could see the INS and the outs and the consequences and even perceive the tools is kind of silly.

So Trump would go for a big deal and then he’d walk away. The Chinese would never implement the deal. And there we were. So even at the height of Covid, when we realized that something like half of the medications that Americans use every day, especially the cheaper ones, were being made in China, even when there was bipartisan support to do something about it.

He could not lead in order to bring that stuff back. Same with protective gear. Anyway, it made policy on China very difficult. Policy on Russia. Very difficult because there was never any consistency. There was never any follow through. None of that really applies to Iran, because ever since 1979, when the Iranian revolution occurred and the mullahs came to power, ever since then, the United States has basically separated Iran from everything that it cares apart bit by bit over the last eight presidents.

So by the time you got to the Trump’s first term, there was no fear of a blowback to the American economy if you were just to crush Iran completely. And so we got what we called a maximum pressure campaign, which was nothing of the sort. But it did succeed in driving almost all of Iran’s oil exports out of the normal financial system, meaning that the Iranians could still export, but they had to use alternative means.

They had to build a shadow fleet.

And it’s not somewhere between 10 and $30 a barrel off of their margins for all the crude that they did export. So a lot of it did go underground.

It didn’t go away. But the profits that the Iranians were able to reap from it dropped precipitously. And all the while in the background, the American Revolution was churning the pace, displacing some of those barrels on the international market and certainly dropping the price of global oil prices to hit the Iranians with a double blow. Now, since then, the Iranians have taken a lot of hits.

Hezbollah and Hamas are in a box. Basically, Syria is gone. These are all proxies and allies of the Iranian system, the most capable militant force that is allied with Iran right now outside of Iran’s own borders or the Houthis, which I would argue are some of the most incompetent militants in the world. If it wasn’t for the equipment that was coming in from Iran, we wouldn’t care about them at all.

And so taking Donald Trump’s sledgehammer approach to, to, diplomacy and strategy probably doesn’t work very well in places like Russia and China. But in Iran, it really could. Because if you were to somehow remove Iran’s crude from the market, which, based on the data, is somewhere between a half 1,000,001.5 million barrels of exports, there would be a ripple through global energy markets.

Yes. But this isn’t the 1980s when 4 million barrels suddenly disappeared. And this isn’t China, where it’s the largest trading partner of a number of countries in the world, including, most of our allies, in Asia. So you smash China, everyone feels it for years, especially if they’ve been prepared.

If you smash Iran, the global outcome is relatively limited, and it’s concentrated on countries like China that import the bulk of the crude that the Iranians send out. So you’ve got this weird situation where it’s an atypical power that is not heavily internationally invested. The United States is not involved with it in economic matters. And the tools that Trump would bring to bear.

While they seem simplistic and in many ways, they are would actually work. So there’s two things that you should expect to see. Number one, you should expect to see the Trump administration come up with a series of secondary sanctions to target Iranian oil on a broader scale. Now, it used to be that the biggest hole in all of this was the Europeans.

So the United States was established sanctions and maybe even a degree of secondary sanctions. But then the Germans, the French, would basically ignore them and claim that the Americans were exercising extra territoriality with which they were, and find ways to deal with Iran independently. But ever since things, that have boiled up in the Middle East with Hezbollah and Syria, the Europeans are taking a very different stance, taking a much stronger stance against Iran, are more likely to cooperate this time around.

That just leaves countries like India and China, especially on the other side of this, which is something that the Trump administration isn’t going to care about all that much. But if you basically get the entire Western world, participating in the financial section’s sanctions and then start playing secondary sanctions to China, we’re in a situation where you can actually move the ball down the field quite a bit.

The second thing, the more important thing is to go after the oil itself. Now, if you remember the term shadow fleet, these are older tankers primarily, that operate without transponders, that don’t use the US dollar system, that are basically operating under the radar of global finance. Oftentimes they deal with physical transfer of gold and or cash, typically US dollars or euros, to send money directly from the, country that is doing the buy in to the countries is doing the selling.

So normally when you are buying or selling crude, the country that is doing the buying does basically fancy wire transfer. I’m oversimplifying here, but it’s basically goes through the financial system so it can be regulated. Most of that has been shut off. So now you either have them using the yuan as an intermediary or them literally physically transporting cash from point A to point B.

Most of the countries that are participating in sales, with the shadow fleets, want the physical currency because it is more, exchangeable for everything else that they would need. You can only do so much with. You want to anyway. This means that the only way to really disrupt the Shadow fleet is go after the fleet itself.

Now, in the case of, say, the Russian shadow fleet that’s going through the Baltic, the Scandinavians can always make up an environmental reason to grab a ship and dock it. But that means eventually they have to let it go. If you want to go after runs, you have to go after the ships themselves and not let them go.

Now, from a tactical point of view, an operational point of view, this is very, very easy. The Iranians don’t have a navy that is more than speedboats. And the Indian Ocean basin is a pretty big place. So if the United States decided it wanted to blockade Iranian crude coming out of the Strait of Hormuz, it would really be child’s play from an operational point of view.

The question is, what then happens to the broader maritime experience? Because if you get the global naval superpower, the one that’s several times as powerful as everyone else’s navies combined, even before you consider that the second and the third most powerful navy in the world are tight American allies in Japan, in the United Kingdom. If you get the U.S. Navy involved in taking civilian ships out of the system, we’re entering a new world.

And while the Trump administration certainly could do that, it would then have to come up with a replacement system, because once the ocean blue is no longer safe, the way we handled shirts changes and the way we handle patrols changed because other countries will start doing it, too, when we very rapidly get a breakdown in global agriculture, energy and manufacturing.

I’m not saying this won’t happen. I’m saying that I don’t think the Trump administration or the Trump administration has thought through what the next step is. So I did a piece a few days ago talking about how events with the shadow fleet in Russia, events in Scandinavia, events in the Middle East were all pushing us towards this world where the maritime system simply shatters, and most of the ships that sail the ocean blue, especially long haul ships, simply won’t be able to function.

If you really want to go after Iran’s shadow fleet, if you really want to do a true maximum pressure campaign, that also means breaking the system. The question is whether or not the Trump administration come up with some way to soften the blow, so it doesn’t automatically wreck everything else. I’m not sure that’s a circle that can be squared.

But if there is a way to do it, it will require some significant policy creativity, which, Trump team has never really shown. And it’ll show the ability to adapt to changing circumstances, which the Trump team has never really shown. And it will require coming up with an alternate system in which all of the major powers of the world naval powers of the world are in broad agreement as to what this should be, and diplomatically, that requires action that the Trump administration previously has not shown.

And I don’t mean this so much as a condemnation of the Trump team specifically. I don’t think Team Biden could have figured out. I don’t think Team Obama had certainly no Team Obama couldn’t figure it out. The last president might have had the gravitas and kind of the command of the details to it was George Herbert Walker Bush.

He obviously wanted to go a different direction that we didn’t follow. So we’ve always known that globalization was going to break sooner or later. This is one of those things that could do it. In the meantime, if you’re Iran, things are about to get rough because there are very few reasons for the Trump administration not to swing the sledgehammer.

This isn’t Russia where there’s some strategic implications that involve nukes. This isn’t China where you’ve got a very deep interlaced economic relationship. This is a country that the Trump team knows from previous experience that it can really hurt. And now they’re looking for ways to hurt it more. The question is whether or not it gets to the point that has broader implications.

And that will only be determined by the steps that the Trump team takes in its opening weeks. What I can tell you for sure, though, is that unlike China, unlike Russia, which are thorny issues and require a degree of collaboration, Iran doesn’t and team Trump knows that, and they are looking forward to this with giddy anticipation.

Trump 2.0 – China

Great Hall of the People, Rendahuitang West Road, 前门 Xicheng District, China

In this video, Peter mentioned a total fertility rate (TFR) of 0.5. While this may be the case for certain urban cores, China’s national TFR is closer to 1.0. Still abysmal, though slightly less catastrophic. —ZoG

Everyone knows where I stand on China, but how will Trump’s second term play into that?

Let’s run through China’s situation. The Chinese economic model is dependent upon continuous capital flows. Should that be interrupted, China’s industrial economy could collapse. The demographic picture is bleak too, as birth rates continue to decline and the population ages. And Xi Jinping’s master plan to fix all this is to push workers harder, tighten state controls and micromanage reproduction.

Trump is fixated on reducing trade deficits, but China has been able to sidestep previous deals due to lack of enforcement. Trump needs to work with our other Asian allies to counter China’s influence, and some more faith in defense institutions wouldn’t hurt either.

Overall, the Chinese view Trump as a disruptor and relatively easy to manipulate. While there is some historical truth to that, Trump has shifted US sentiment to be broadly anti-China, so tariffs and supply chain diversification get bipartisan support. The question remains, what will Trump actually accomplish? Tariffs are one thing but planning and developing an alliance network and alternative industrial capacity are a completely different beast.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, everybody. Peter Zeihan here. Coming to you from Blenheim, New Zealand, where I am walking through a vineyard, because that’s just what I like to do. Anyway, today we’re gonna do the second part of our open edit series on the issues that’s going to be facing President-Elect Trump on his first day of office, not the ones that he wants to face, the ones that are going to face him.

And today we’re going to talk about China. First things first, let’s review what it is that the Chinese are dealing with. Before we talk about how Trump plugs into that, China has an economic model that is based on central state control, and that means the state controls the financial system and uses the financial system to shove money into whatever economic sector they feel that they need to.

Now, they use this to achieve technological control of certain areas where they feel they can master the tech. They use it to subsidize development of technologies that they don’t master in the hopes that they will be able to. And they do it to build out the supply chains locally so they can drive competitors internationally out of business. But all of that pales to the primary goal, which is to make sure that everybody has a job so that nobody goes out in protest and gets together in a large group and goes on a long walk together, because that’s how the government got its job in the first place, and they don’t want that to happen to them.

So you get this system that is over capitalized or capital is remarkably cheap. And as long as the capital keeps flowing, everything’s happy and for those of you who have ever been part of an economic sector that has busted, whether it’s, say, energy during a bust period or a boom bust period, or Enron or real estate back in the 2007, the 2009 crisis, you know this very well.

As long as the capital keeps flowing, as long as the capital is cheap, then the system keeps running. But if for whatever reason, capital access dries up, then this artificially inflated sector basically withers away to nothing in a very short period of time. And the Chinese have been doing it. So long in so many subsectors that if that capital stopped flowing at any time, you’d basically see the end of China’s industrialized state at this point.

That’s problem one. Problem two demographics. When you tell everyone that what you’re supposed to do as a Chinese is just work 12 hours a day, six days a week, well, there’s not a lot of room for anything else. When you pull people off of the farm and put them into the city so they can work 12 hours a day, there’s not a lot of time in their lives or physically in their apartment for kids.

And so the birth rate drops and drops and drops and drops. And according to the most recent data, from December of 2024, the average woman in China is now having less than a half a child. So in most of China, we have a repopulation rate that is one quarter what is necessary just to sustain the population? We probably almost certainly have a lot more people in China over age 50 than under.

And the place is looking at demographic collapse. And if you remember back to my earlier demographic work, most of the consumption that is done in the society is done by people who are under age 45, who are raising their kids and building homes. And that population is basically becoming an endangered species in China. And now that birth rate has been so low for so long, it’s been lower than the United States since the 1990s that we are looking at the dissolution of the heart of city around the end of the century.

And there’s no way that the Chinese state will last very long. I’d say a decade or less at this point. So that’s their starting point. In order to make their system last as long as possible. Sherman Ji believes three things. Number one, everyone just has to work harder, which is only compounding the demographic situation because no one really sees a hope that this is going to change.

Number two, he believes that the Chinese Communist Party, which let’s be specific here, it’s not the parties interested, it’s him, should face no challenge to its authority, and it should be able to micromanage every aspect of everyone’s lives. In fact, we now have the agency that used to enforce the one child policy making unannounced house calls to see if couples are having sex without contraception to make sure the birthrate goes back up, because that’s what the state wants now.

You can imagine how well that goes over. And third, he has to keep export markets open because all of this production, all of this forced production, all of this over subsidized production can’t be consumed by the population because most of them are now over 45, which means it has to be exported. So they have to be able to shove the products they produce down everyone else’s throats just to keep their country alive.

Enter Donald Trump. Donald Trump is singularly obsessed with the trade deficit, which is probably not the best way to look at the issue. But that’s how he sees it. So it doesn’t matter what I think. And as a result, he likes to think that he can make deals that will force things in the United States, his direction.

For the most part, the Chinese, especially at the top, are not worried about this because they’ve dealt with him before. They see him as an eminently lateral person. And so they basically give way in negotiations, knowing that the day after the negotiations close, that there will be no enforcement and they never have to worry about him again.

Why do they feel this way? They’ve already done it before. The phase one trade deal that was negotiated by the Trump team back in. Who was it seven, six years ago, committed the Chinese to buying X number of dollars of various products and by the end of the Trump term, he hadn’t met any of the criteria at all.

In fact, they never intended to. All they did was make sure that whenever there was a product like what they needed available anywhere else in the country, they went to that first. So actually, we saw the trade deficit in a structural sense, go up because of trade talks with the Trump administration. The other reason that the Chinese are really not concerned about Trump is that they don’t take him seriously as a strategic thinker.

The Chinese understand, as everyone in Asia understands, that if you want to him in China, you can’t do it alone. It can’t be just a trade. You can’t just be a strategic issue. It has to be holistic. You have to bring in all the other countries, from Indonesia to Malaysia to Singapore to the Philippines, to Taiwan, to Korea, to Japan.

And if you don’t do that, the Chinese will easily find a weak link in the chain and be able to push out. And they see Donald Trump as being more danger to the alliance than they are now, whether or not that is accurate enough of that. That’s how they see things. And again, they’ve done this before with Trump the first time around.

They don’t see anything different in round two except the Donald Trump is trying to wreck, law enforcement and the Defense Department and, the intelligence agencies with his appointees, which are the things that generally keep China in check as well as, if you’re going to have any sort of meaningful policy against China that deals with security and culture and technology and theft and trade, you need everyone working together.

And they see Donald Trump as the best possible candidate for wrecking that capacity within the American system. So they’re actually broadly looking forward to Trump two, because they think they’re going to be able to get even more out of the United States than they did under Trump. One, much like the Russians are feeling and like the Russians, I think they’re miscalculating.

This is not 2017. We are in a very different world now. And the single biggest difference on the Chinese front is that Donald Trump did succeed in changing the conversation in the United States, and there is now a competition among all factions in Congress about who can be the most anti-Chinese. Now, translating that sentiment and policy, that’s a lot easier said than done.

But there’s no longer this core disagreement within the parties because the business community has been ejected from the Republican coalition. So the faction that used to be the most organized and calling the shots in the Republican Party on economic policy is no longer even part of the conversation, which leaves everybody else to fill the gap. And no one else is as concerned with economic stability as the business community was.

So we’ve already seen in the last five years a significant outflow of investment from China, foreign firms and even of Chinese firms as everyone tries to get away from this country. That is facing economic implosion because of its demographic issues. And while Donald Trump certainly isn’t the guy to build a broad coalition within his own government, much less across multiple governments, to have any sort of coherent policy towards China, dude knows how to do tariffs.

And that is certainly something that’s going to hit the Chinese on the headline. Now, as a rule, I would say tariffs are a really bad tool for shaping policy. So for example, the terror that Trump has threatened, not that I think are going to happen, against China and Mexico would be the fastest way to trigger an inflation induced recession in the United States, because most of the trade among the NAFTA partners goes back and forth across the border every time.

And if you do a flat tariff, because doing anything about a flat tariff would require administration, Trump is not very good at that. You’re going to basically tax every product multiple times and drive each industry out of business and allow Chinese products to fill the gap. That’s not how things work in China. China, they have as much of the supply chain system in one country as possible.

So if you do a big flat tariff on it, it actually does hurt the question is whether Trump can realize that if the goal is to actually break the trade relationship with China, you have to do more than tariff them. You have to actually take that income and build alternate industrial plant within North America. So there’s actually another option.

Otherwise you get an inflation pulse, you get a consumer crisis, and you don’t actually change anything on the back end. You just make everything more expensive. Now, whether or not his ultimate appointees are people who can convince him of that. I don’t know. But what I do know for sure is that if we do get into a situation where Trump basically waltzes into East Asia with a sledgehammer, yes, the U.S. is going to take a lot of hits.

Yes, it’s going to hurt. Yes, he will go down in history as triggering the highest inflation the United States has ever had. Yes, it will be ugly, but there won’t be a China on the other side of that. There are easy ways to do this. There are smart ways to do this. But that doesn’t mean that there are only 1 or 2 ways to do this.

If the goal is simply to smash China and move on, I have no doubt that Trump can do that. If the goal is to smash China, move on, and have America in a much better place domestically. That requires a skill set that I have not seen Donald Trump wield just yet. All right, I’m done. See you tomorrow.

China Has No Chance

The Chinese are stockpiling resources – food, fuel, and materials – to help it endure a protracted conflict with the US. Is this something to be concerned about?

If China wants 120 days of stockpile, good for them, but it’s not going to help. China is completely import dependent; they rely on imports for energy, food, and raw materials and their economy is tied to the global supply chain. As soon as war breaks out, all that is going away.

Even if China has a 120-day stockpile, it’s not going to be very secure. Oil will be vulnerable to attacks. Food will be subjected to poor storage infrastructure and will likely spoil. So, that 120-day stockpile isn’t looking so strong anymore.

And if you start to factor in naval blockades, no access to US markets, and the power projection of the US, this stockpile quickly turns into the same smoke and mirrors that the Chinese are so great at.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, everybody. Peter Zeihan here. Coming to you from a toilet in New Zealand. I just had to do a video here for The View, which I will share with you now.

So you’re not going to have my ugly mug on this one. But just keep in mind the theme of where I am and what I’m doing. Anyway, the question from the Patreon page is pretty straightforward. China is stockpiling all kinds of things foods, fuels, materials, in order to survive a protracted conflict with the United States.

Is that something that will work and the short version is no. China is the world’s largest importer of energy, food stuffs. The materials they need to grow food, as well as every mineral in the world. There really isn’t a lot of raw material that is produced within China. It’s brought in, it’s processed, it’s turned into value added goods, mostly manufacturing, and then export it.

So China is vulnerable to cut offs at all stages of production chain of every industry in the world. Now they are. Yes, storing lots of stuff. But let’s assume for the moment they get to the goal of having 120 days of import cover for oil. Well, number one, so that would last them 120 days. Number two, they don’t have the salt domes at the United States has.

So storing has to be largely done above ground, which means it’s something you can hit with a missile, which means that in a hot war, it’s all going to be gone within the first couple of days anyway. And keep in mind, the Chinese are vulnerable to the United States sea power, not just on the Chinese coast, but anywhere that can interdict anything, with the Strait of Malacca arguably being the most sensitive spot, because that’s where about 80% of their oil imports come from.

Same basically goes for food. Storing food requires storage facilities. So a while ago, the Chinese built a massive corn storage facility, but all it was was giant piles of corn piled up along the side of the road. And they all rotted within a year, and it all went to nothing. Some version of that will happen for everything.

And even if I’m wrong about energy and food and all the material inputs, they still have to export stuff. And their number one customer is the United States. So the Chinese battle plan literally is for the United States Navy to all sail within sight of the shore so that the Chinese can hit them with their air force. And then for the United States to continue to patrol the global ocean.

So they can still import all the food and energy that they want, and that the United States will still keep its market open so that the Chinese can pay for everything. It’s a stupid, stupid, stupid plan. And so if there ever is a real fight between the Americans and the Chinese, not saying there will be, I honestly don’t think there will be.

But if there ever is. Then the Chinese will be in the same situation. I am in the shitter. Although the view won’t be nearly as good.

Can Venezuela Help Out with a Middle East Oil Shortage?

With the increasing possibility of disruptions to the Middle East oil supply, I was asked an ~interesting~ question on how to solve it. Could foreign intervention in Venezuela open its oil supply as an alternative to Middle Eastern oil.

Before we look at Venezuela, we need to know who might be interested first. The US has its oil needs figured out, so it’s really only the Europeans that would consider this. There’s plenty of crude in Venezuela, but years of mismanagement have left infrastructure and fields in poor condition. Couple that with a host of security issues, political instability, and a heavily armed civilian population…and it’s definitely not a cakewalk.

Even if the Europeans were willing to make the massive investment to revamp the oil industry in Venezuela and put forth a substantial military presence to establish the order needed to make this possible, they would still need the sign off from the US…and that’s probably not going to happen without some major incentives.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody, Peter Zeihan here coming to you from the Golden Horn above Denver and it’s probably my last snow free day of the season. Anyway, We are. Oh.

Oh, deer.

Today we’re taking a question from the Patreon crowd. Specifically with everything in the Middle East starting to look very Middle Eastern again, would it be worth considering some sort of operation in operation?

To remove the government of Nicolas Maduro of Venezuela so that the world has another source of crude available for when the Persian Gulf becomes a place you really don’t want to be? Might sound a little neo imperialist, but that’s a pretty good question. You got 20 million barrels a day of crude that comes out of the, the Persian Gulf states.

And any meaningful conflict that involves Iran or Saudi Arabia, clearly is going to take a substantial percentage of that off line. And even if the oil fields in the United Arab Emirates and Saudi Arabia take no damage, and even if those two countries stand, and even if the bypass pipelines that get around Hormuz or go to the Red sea, operate at full capacity, you’re still talking about roughly how 12, 12 to 13 million barrels per day that’s under severe threat.

So the idea of being able to get some more crude out of Venezuela is a solid idea from a supply point of view. In addition, if you look back at history, the original oil embargoes that OPEC did, were Arab. They were not they didn’t involve all oil producers. And back in the day, Venezuela was not a participant in them.

So we saw more production out of Venezuela, which didn’t simply, cushion the blow.

But I would argue that over the period of several weeks to months, it actually broke the back of the embargo. So having Venezuela in play is obviously great. That said, the country that would do something like that is 100% not the United States.

While the United States does prefer heavy crude, Venezuela has been such an a sneaky producer for so many years, more than a decade now that, with the exception of a few incidental cargoes, U.S. refiners just don’t even want to take delivery of the stuff because they can’t plan on it. You tool your refineries step by day, week by week, by month, by month, year by year, based on what you anticipate, the blend of crudes coming in going to be.

And so if you can’t rely on a particular supplier, it’s better for you simply not to use it at all. And ever since the early days of Hugo Chavez, maybe going back to 2007, there have been very, very few refineries in the United States who have chosen to use Venezuelan crude. I know that doesn’t match the rhetoric.

It’s always about, oh, we’re not going to ship to the Americans anymore. Well, the Americans weren’t buying anymore. So if Venezuela were somehow magically to come back into the mix, its specific grade, a very heavy, very sour crude would have a hard time finding a local buyer. That’s problem one. Problem two. The middle row government is well, it’s like Zimbabwe levels of incompetent, Zimbabwe being a country that was one of the world’s great breadbasket until the government of Mugabe and his successor just drove it into the ground and made it a food importer, under first Hugo Chavez.

No, Nicolas Maduro, we’ve basically seen the, cronies of the government literally rip up everything, even if it was nailed down, and sell it oftentimes for scrap. So the country now imports 80% of its food. It used to be a food exporter. And, its total oil output is kind of bouncing back and forth between 500,000 million barrels per day based on what happens with, Chevron, the American company, which is really the only one that’s still operating there.

Most of the reservoirs have suffered extreme damage. The infrastructure hasn’t been maintained. And don’t get me started on the refineries. Oh, there’s like chunks in their gasoline now. But just for the record, chunks of gasoline is a bad thing. So, if you could wave a magic wand and change the government and change the investment strategy and, make them not klepto those.

Oh, yeah. Important detail. The Venezuelan government is not socialist. It is not communist. It’s a kleptocracy. And of course, we should be scared of that anyway,

If everything was perfect, it would still take probably an investment of 40 to $50 billion upfront just to get back to where they were five years ago when they were exporting, like, a million barrels a day, maybe producing something close to a million and a half.

Keep in mind that the fields that Venezuela has are old, they’re technically challenging, and they produce a very sludgy type of crude. So you really to know what you’re doing. And today, there’s only a handful of companies that have any experience working with that. One of the Chevron, the other ones, Conoco. And then there are some companies that say in Canada that work with the oil sands, which is probably the closest analog, but it’s even not a very good one.

And as a rule, the Canadian oil sands operators don’t operate anywhere except for the oil sands. So simply building up the skill set that would be necessary to attempt this would be huge. Third, most of the oil is in one of two places in the western part of the country. You’ve got a region called Maracaibo, which is about as anti Maduro and anti-trade as you can get, but the government’s efforts to basically destroy their own state have had a big impact there.

And Maracaibo itself is lawless, complete with pirates operating offshore. And in Maracaibo a lot of the crude is produced from offshore wells, most of which are in the process of going down to zero. So you have a split politically in the country that you’d have to deal with. The second part of the crude comes from the southern belt, the Orinoco Belt, which is super heavy, far more technically challenging, and a lot of that is just vanished from the market completely.

So if you want to bring either of these in, you don’t simply need to change the government. You need to restore basic security to the country. And then you’re talking minimum, bare minimum. Something like 50,000 troops. Remember, one of the things that Hugo Chavez did is he paid people to be on his side. And he didn’t just pay them with food and with fuel and with cash.

He paid them with AK 47. So arguably, of the countries in the world that are not actual war zones, the densest footprint of assault rifles in the population is in Venezuela now. So anyone who’s going to come in for any reason, even if the locals in general are welcoming the stability and they be able to get food, they’re going to be dealing with the significant population that is armed to the teeth and not with little pop guns.

Okay, you put all that together and the US is like, no, sir. The United States is now not just a net exporter of crude oil, but by the end of this calendar year, probably is going to be exporting 5 million barrels of refined product. That’s a greater volume of refined product exports than all but three countries in human history have ever produced as raw, crude.

So the idea that the United States is going to launch a war for oil is just silly. It’s going to happen. It’s going to be because countries in Europe realize that the Russians aren’t coming back to the table, not in the way that matters in the Middle East is as unstable as ever. Ergo, this conversation that means that we are left with the Europeans basically thinking, well, where else can we go?

And one of the very few options that is not West Africa or North Africa is going to be Venezuela. So they’re going to have a choice. Do they go into Libya, which is basically a stateless zone now on its own. Can’t even call it a civil war. Civil war requires a state. You can go into Nigeria where with over 100 million people, the chances of imposing a security environment on Nigeria that the Nigerians don’t want is silly.

So we’d have to be even done with partnership with them. So even with a lot of cash, you’re going to be dealing with a very corrupt system and slow growth of output, or you’re talking about a military occupation and enforceable reconstruction of Venezuela. Leaving aside the little issue that the Europeans are a little bit out of practice at that, they would have to get American permission as well.

Monroe Doctrine and all that. And for the United States to give the Italians, the Brits and the French and the Germans approval to invade, basically a country in the Western Hemisphere, let’s just say that whatever was being offered in exchange would have to be really nice. And I’m not sure there’s anything in Europe that we want that badly at the moment.

So interesting idea. The crude is there, but the country that would have the capacity to do something but the United States really doesn’t care. And the countries that do really care would have to build up a whole fresh set of tools and then bribe Washington in order to make it happen. So it’s an interesting exercise, but nothing that I think is going to go down this decade, next decade though, everything’s game.

Trump 2.0 – NATO

Next on our list of things Trump 2.0 will have to deal with is NATO. Trump’s second term could reshape NATO dynamics, with a significant focus on defense spending, China, and European alliances.

Trump will try to push NATO members to significantly increase defense spending, up to 4-5% of GDP. Trump will also attempt to align NATO against Chinese trade practices. These efforts will be occurring as European dynamics undergo a shift of their own.

European security concerns are on the rise due to the Ukraine war. Eastern Europe is being led by Poland with strong defense spending and alignment with the US. In Scandinavia, these countries exhibit stable demographics and effective militaries, which make them reliable US allies. France and Germany will struggle with Trump 2.0’s demands for increased spending, since they are facing industrial shifts, energy crises, and demographic decline. An ally closer to home who might get some heat from Trump is Canada, who has been relying on US trade and spending very little on defense.

As geopolitical shifts take place across the globe, Trump 2.0 will be looking to squeeze NATO members for a bit more. This will likely strengthen ties with some countries, and strain it with others…

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody. Peter Zeihan here. Coming to you from New Zealand, specifically the Queen Charlotte walkway in marble Sounds. Today we’re going to do the next step of our Open-Ended series on Trump 2.0. The things that are waiting for him or that he’s going to choose to tackle in the early days of his administration. Today we’re gonna talk about the NATO alliance.

Now, with the Europeans, there’s any number of things going on with trade, with demographics, with energy, with Russia, with Ukraine, with China. It’s a long list, but Trump only cares about two things on it. Number one, will they assist the United States in cracking down on Chinese trade on a global basis? And number two, will they up their defense spending to whatever target the Donald Trump administration establishes?

Now, if this sounds kind of reminiscent of Trump one, it is. And the difference this time around is that there’s been a change of mindset in Europe itself. The Ukraine war has really sharpened a lot of minds and made people think differently about security. And so most of the European countries that were dragging their feet when it came to meeting defense expenditures and the Trump one term have done so voluntarily during the Biden administration because of the Ukraine war, that’s going to make hitting 2.0% very, very simple.

That’s supposedly what everyone’s supposed to be doing anyway. But the world has changed. The situation is different, and Donald Trump is almost certainly going to insist on a 3%, maybe even a 4%, with some countries even openly talking about 5% when I say some countries, some countries in NATO. The bottom line is, is if Ukraine falls, then this war comes to Europe’s doorstep and there is no way that the Europeans can launch a meaningful defense without a significant build out of their defense capacity.

And so say what you will about Donald Trump. He got the ball rolling on this conversation even before the Ukraine war started. The second thing to keep in mind, of course, is the China angle. The Europeans have always been more circumspect when it comes to putting tech restrictions or trade restrictions on the Chinese than the Americans have.

But again, the situation has changed now that the Chinese are basically bankrolling and equipping the Russian military in Ukraine. Most of the Central Europeans have flipped completely. And now that the Chinese have gotten to a level of technological acumen that they don’t need nearly as much German equipment. The Germans are starting to look at this from a different angle as well.

The French, for their part, were always for it. In fact, the biggest free trader in Europe, Britain, left with Brexit. So that quite a voice in the back that was whispering in America’s ears to dial it back. That’s gone. So we actually have a situation where the Europeans might, might, might, might, might be a little bit more willing to consider things.

There’s also been a change of diplomatic positions. The Europeans always had this view that they were friends and allies and family of the United States. And you don’t lie to your friends and your family and your allies. Well, Donald Trump really doesn’t care what you say as long as it makes him look good. The Russians figured that out.

The Chinese figured that out, but the Europeans tried to be good actors. Not this time around. It’s going to be a very different situation with the Europeans blowing a lot of smoke to cover their asses and whatever the topic happens to be. But at the end of the day, cooperation is going to be a lot more doable because the situation has changed.

Now, of course, you look at this country by country, you get a very different view.

So let’s break this into three groups. At the top of the list, the countries they’re going to be doing really well. Either they get along with Trump or they’re going to have a problem meeting those thresholds. Or they’re nervous about the Chinese already. Poland at the very top of that list. Poland actually takes over the European Union’s executive arm.

Robert chairs the meetings. I overstated that, this January, and will hold it for the six first six months of the year. So coinciding with the honeymoon period for Donald Trump. The poles are on the front line with the Russians. They are already well over the 2% threshold. They have plans to reach 4% within a few years.

And, on everything from trade to illegal immigration, the poles are actually on a similar page with most of the things that Trump believes in. Also, we have this weird thing going on where Polish politics are starting to mirror US politics as they used to be. So the two main forces in Poland are, Civic Platform, which is a centrist group, kind of leans right on economic issues.

Which currently runs the government and a group called Law and Justice, which is far more populist, right. More populist, in conservative than Donald Trump. And the two of them disagree on everything, American style. But on the big stuff, most notably Russia and relations with the United States, they’re almost in lockstep. So you get this scream fest and Polish politics.

But when it comes to the big stuff, it means very, very little. Sound familiar? Anyway, a good time to be Polish. Scandinavia is going to do pretty well, too. Here you’ve got countries that are more demographically stable, have very capable expedition based militaries. They work together extraordinarily well, and they share the poles general view of all things Russian and all things American.

So, Trump will, of course, try to with the fact that he’s got a Swedish descent and the Swedes will not and smile and try to push their agenda through, for all of these countries, the key issue is that we are cooperating. We’re doing everything that you say we should do on defense. And, China, let’s talk Russia and make sure we’re on the same page on Ukraine.

That will be their goal. And of course, they have to make it look like it was Trump’s idea. Second group of countries, France and Germany, the old core, both of them are utterly screwed at the moment.

The German problem is not simply political. It’s also demographic and economic. The economic system is in the early stages of demographic collapse. As they simply run out of workforce. They’ll basically be a nonfunctional economic system within a decade. And so increasing defense spending at a time when they have to rapidly adapt their entire society heavy carry, second, their industrial base is linked in with a lot of countries in central Europe who are a little bit behind them in terms of the demographic decay, but it is very real.

I got a friend here and try to keep up with, and the energy situation is a disaster because I used to get a lot of cheap energy from the Russians. And now that’s gone, and the Chinese are now starting to compete them in some of the sectors that they consider themselves good at it. Increasing defense spending in that environment is really, really tough.

But if they don’t do it, and the Americans do lose interest in Europe, then they’re gonna have to increase defense spending by a lot more just to keep the country coherent. So there’s a lot of ways that that can go wrong. But, as bad as it is, for the Germans, it’s a known problem. The new problem, the worst problem is actually going to be, by a non-European country that is in NATO.

Keep in mind that the United States is not the only North American country in the NATO alliance. The other one is Canada. And under Justin Trudeau, the Canadian government has basically slimmed defense spending to almost a rounding error to zero.

Let me give you the Canadian point of view than everybody else’s.

So, the Kenyan point of view is, they’ve got more at the coast, a Pacific coast, an Arctic coast, one ninth, the population of the United States, but actually more frontage. So if Canada was to try to build a military, those right size so it can project power, it would break the country. And so they don’t try they’ve basically focused on a couple things like Special forces and everything else is kind of wasted.

That doesn’t fly for the rest of the Alliance. The Canadians have been freeloading, on the global order, ever since the wall came down and the joke in diplomatic services is after the Cold War ended, Canada basically became an NGO and was more part of the problem. And part of the solution might be a little bit cruel, but not by a whole lot, because if Canada were to expand its defense spending and try to excel in 3 or 4 things and then plug those into the NATO alliance, it would basically be under the command of the United States in all meaningful ways.

And it would lose its sovereignty even as meaning what Donald Trump says he wants them to do. That is a really ugly political career in Canada. And so they’ve just kind of looked forward. And while we or are likely to have, elections this year, and that way we will have elections this year, we will probably have a change in government that doesn’t change the underlying structure.

If the Canadians just spend money to spend money that really doesn’t do anything for anyone, including Canada. And so Donald Trump is going to be angry no matter what. And unlike Germany or France, there’s a lot that the Trump administration can do to Canada if it wants to because of the trade relationship. Canada is utterly dependent on the United States for its trade, well-being and trade.

Trump loves to use trade as a cudgel. So it’s difficult for me to see a way that this can be managed, under the current government of Justin Trudeau. Trump broadly likes Justin Trudeau because Justin Trudeau is the only world leader the global media is ever considered to be dumber than Donald Trump.

And that, you know, rings a couple of bells here and there. The new guy, if it is one, is unexperienced in the United States on this scale. We just don’t know. So, one way or another, we’re looking at Scandinavian Polish relations with the Americans, probably improving significantly. Germany in a pickle where there’s no easy fix and maybe not even a fix at all.

And Canada, basically desperate to change the topic whenever the Americans are in the room. What the Canadians are gonna discover real soon is that, during the cold War, and they were, like, the 45th most important country on America’s list. That was a comfortable place to be. And now, because trade is becoming more regionalized and because defense is a little bit higher up the agenda for this incoming administration, Canada’s like third or fourth on the list.

And whenever the Americans are paying attention to you, it gets uncomfortable both real fast.

Trump 2.0 – Russia

Photo of St Basil cathedral in Red Square, Russia

As Trump enters his second term, there are going to be numerous challenges facing his administration. So, we’re launching a series touching on several of these issues and what to expect from President Trump. Our first video in the series covers Ukraine and Russia.

The Russians are running out of people (and time) to reach out and secure defensible boundaries, so the Ukraine War always had to happen now. How does President Trump factor into all of this?

Trump has suggested freezing the conflict along current lines and delaying Ukraine’s NATO membership for 20 years. Spoiler alert: that’s not going to work for the Russians. While the Russians knew how to manipulate Trump during his first term, it seems they’ve forgotten that winning strategy. On the other hand, the Ukrainians (and plenty of other countries) have already begun with the flattery and brown-nosing to get on Trump’s good side.

Regardless of who is in the US office, this war is just a step in Russia’s broader strategy to regain former Soviet territories. It’s likely that Trump’s proposals will fail since they go against Russian objectives.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody. Peter Zeihan here comes to you from Cora Glen, New Zealand, about to relocate. We’re going to launch off a bit of an open ended series today, talking about the challenges that are going to be facing the incoming administration of president elect Trump. He’s actually President Trump, president elect. He’s both. Anyway, specifically today, we’re going to talk about what’s going on in Ukraine and Russia.

And before we go into the impact that Trump can or cannot have, I think it’s best to, revisit why the Russians are doing what they’re doing. They don’t feel they have a choice in this war. I would argue that they’re broadly correct with that, which doesn’t mean that there is a solution where everyone can just get along.

It’s part of the problem. You see the the core territories that the Russians are from Moscow and the territories to the north, south and southwest are open and they’re vulnerable, and there’s no natural barriers that prevent invasion. And so what the Russians have always done since the time of the early is ours, is to expand as much as they can, absorb culture after culture, people after people, conquer nation after nation, until they reach a series of geographical barriers that do block tanks and troops.

And those barriers are the Arctic Ocean, the Baltic Sea, the Carpathian Mountains, the Caucasus and the deserts and high mountains of Central Asia. Anyway, under the time of Stalin and during most of the Cold War, the Russians controlled all of these territories, and they were the most secure they’ve ever felt.

That is one of the many reasons why, during the Cold War, the primary concern was about a nuclear catastrophe rather than a conventional invasion. We are now in a different system. However, though, post-Soviet Russia lost control over almost all of those access points. And in the time since, the wall fell in 1989, the Russians have launched or participated in nine different military operations, of which the Ukraine war is only the most recent.

So if there’s anything that we know about the Russians, it’s that this war was always going to happen and it was never going to be the last one. And any sort of peace deal or armistice simply buys the Russians time to recoup so that they can then go for the next thing. And if they do succeed in absorbing all of Ukraine, as soon as they are capable, they’ll go after the next line of countries in the west, which are Estonia, Latvia, Lithuania, Poland, Romania and Moldova, all of which Moldova are members of NATO.

So, we are not at the end of the story here. We’re in the middle of the story. That’s the why, the why now is even more simple. It’s demographics. The bottom fell out of the Russian birthrate back in the 1980s. We had something called a Death cross in the 1990s where the birthrate fell below the death rate at one point, twice as many people were dying every day in Russia as were being born.

There since been a bit of a recovery, but it’s since turned again. And that’s before you consider the war. So this was always going to be the final decade that the Russians could attempt to use their superior numbers to force a military solution to their what they see as their frontier problem. And if they had waited until 2030, there simply wouldn’t be enough men in their teens and 20s to even make a meaningful attempt.

So it was always going to happen, and it was always going to happen about right now and what happens in the rest of the world, from the Russian point of view, is a rounding error in considering how they prosecute conflict. And to Trump, Trump says he can stop the war in 24 hours. Trump says a lot of things that a lot of people don’t take seriously.

But let’s assume for the moment that there was a deal to be had. What has been floated from the Trump camp is an armistice along the current division line, with European troops coming in to monitor the cease fire and the, Ukrainians facing a 20 year pause before they can even consider applying for NATO membership. Now, from the Ukrainian point of view, this is obviously not a deal because it takes roughly a quarter of their population, excuse me, a quarter of their territory, and locks it more or less permanently under Russian control.

But moreover, this is a deal that the Russians would never accept because they don’t have 20 years and they don’t need just get Ukraine, they need to get the rest of the entire Western periphery. They need to get Georgia and Azerbaijan and Armenia and the bulk of Central Asia. If they wait 20 years, the demographic bomb will fully gone off.

And so the Russians have rejected this proposal posthaste. Now, let’s talk about a couple of the minor things going on. There are a lot of conspiracy theories going around right now. Oh, my God, there’s so many conspiracy theories going on right now. But let’s deal with the one that deals with the Ukraine war that the Russians only attack because they thought the Biden administration was weak.

Anything? No. The specific timing for the launching of Ukraine war was very straightforward.

Trump made it very clear four years ago that if he was reelected, he was going to withdraw from NATO fairly early in his second term.

This was something that was communicated to Putin. And so Putin was very clear that should that happen, Ukraine would basically be handed to him on a plate. And when that’s not how things unfolded, he felt that the only way to get what he needed was to launch a military attack, which was correct. So there is nothing there that is Trump related that caused or deferred the war in any meaningful sense.

Like I said, this was always going to happen. Now, that doesn’t mean that the Russians don’t have some opinions on Donald Trump. They find him to be an eminently, manipulable person. They were able to hire him off from all of his security personnel, including the Secret Service, in the first term, and to get him into a room alone with Putin and Putin’s senior staff.

That’s never happened throughout American history, at any summit anywhere, and where you’d have a president completely separated from anything. And what the Russians found out was that, Donald Trump really didn’t know a whole lot about what was going on. Unlike most presidents who rely on their cabinet members to keep them informed,

Donald Trump relies on his cabinet ministers, to keep him feeling good about himself. And so whenever somebody would tell him something that he didn’t know and make it very clear that he wasn’t the smartest person in the room and each and every topic, he generally fired them. And so the Putin government really liked the first Trump term, because nothing could really get done on the American side.

That wasn’t being done on Twitter. And they have high hopes for the second term, because a number of the people that are being appointed to, cabinet level positions, for example, the Trudeau defense secretary, has limited military experience. He’s a culture warrior. And it’s very clear that doesn’t actually have any plans in mind for the military aside from Woking.

It, as he says, and from the Russian point of view, this is brilliant, because if you can hobble the ability of the American military to function, the American intelligence community function because the coordinator of that is basically somebody who’s been working for the Russians for years. Then all of a sudden you have a free hand, or at least that’s what they think.

I think, as is typical with the Russians, they may have overthought this out and come to the wrong conclusion. If you go back through modern American Russian history, the Russians do this from time to time. They think they have an upper hand. They think they can play the American president, whether it’s in jet, whether it’s JFK, or Bill Clinton or someone else, and then they discover, no, that’s not really how it works.

This is still the most powerful country in the world. And regardless of what you think of the individual leader, there’s a lot of institutional heft there. Even if the individual leader has a problem with the institutions. In this specific case, though, it’s much more personal. They have already told Donald Trump flatly, no. And if you are a world leader in the current age and you want something out of the United States, we all learned in Trump term one that the way to do it is to flatter Donald Trump.

And for whatever reason, the Russians have forgotten that. And so,while Zelensky of Ukraine has already been on the phone with Donald Trump to talk, while the Canadian prime minister has already flown down to Mar and Allegro, while Sheinbaum of Mexico has already been on the phone, while several European leaders have already arranged for talks basically to kiss up to get what they want, the Russians seem to have forgotten that and they just said no.

And so if you take Donald Trump’s temperament and apply it to the situation, I think it’s pretty safe to say that the Russians are not going to get what they’re hoping to get. At the same time that Donald Trump has come up with this brilliant, the best, the awesome plan, of freezing the conflict for 20 years, which was something would be, anathema to Russian strategic plans in the short, medium and long term.

So regardless of what Trump said during the campaign, regardless of what JD Vance, who is a Russian apologist, said during the campaign, he really comes down to the emotions of one person right now on this issue. And the Russians have really gotten off to the wrong foot and put that foot directly in their mouths.

My Dream Alliance for the US – Part 2

Today, we’re looking at the countries that didn’t quite make the first team, but still have something to offer as a strategic partner to the US. Let’s break these places down.

In the Western Hemisphere, Argentina and Chile come to mind. They are resource-rich nations, have minimal strategic complications and offer a low-risk, high-reward partnership. In Southeast Asia, there are several countries that are in the conversation: Singapore, Malaysia, Myanmar, and Indonesia. These are rising economic powers with strong demographics that will likely benefit from the collapse of the Chinese system. Thailand might not have the demographics of these other countries, but it will continue to be a big player in the region (if they can sort that people problem out within three decades). In the Middle East, Oman represents a trusted mediator in the region that would help maintain influence and access to the Persian Gulf.

There are some real outliers on this list too; countries that have critical resources, but also bring a lot of baggage to the table. We’re talking about Saudi Arabia and Congo (Kinshasa). Each of these has materials critical to maintaining global supply chains, but governance and stability issues keep these places shrouded in complications.

While some of these options might seem dubious, they’re better than depending on somewhere like Russia. Obviously, we should prioritize countries with minimal security concerns, strong economic potential, or essential resources, but think of these “second round picks” as diversification to our alliance portfolio.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody. Peter Zeihan here coming to you from New Zealand, the Brit track. We’re doing the second part of the Dream Alliance of the future. Last time we talked about the countries, you kind of have to have, countries where the lift is low, the payout is high, and the cultural connections are strong. So France, Japan, Mexico, Canada, Australia, New Zealand, in the United Kingdom, today we’re going to talk about the ones are a little bit more of an effort or a little bit more of a reach.

Let’s start in the Western Hemisphere. It’s two countries that are border one another, Argentina and Chile. Both of them have a lot of resources, are going to be in scarce supply in the world to come, especially food out of Argentina. But neither of them really have significant strategic complications. So these are kind of like friends. Plus, if you will.

Let’s see next, let’s move over to Southeast Asia. Those are the countries that are going to be like the really economic powerhouses in the future. Vietnam kind of made the first list, but the rest of Southeast Asia, most notably Singapore, Malaysia, Myanmar and Indonesia are definitely, high up on the country. You’re going to want to be with all of them a pretty good demographics, all of them have an existing industrial plant.

None of them have a recent history of going to war with one another. And as the Chinese system falls apart, this is the part of the world that is probably going to be most likely to pick up a lot of those pieces, so they won’t have an economic miracle in the way that China did. It won’t be that unhealthy, but it’ll last longer.

It will be more durable to be higher value added and unlike China, these are consumption led economies. All, the only complication in there is Thailand. Thailand is already significantly aging demographically, so probably only has about 30 years left before it’s in a German style demographic decline. Now, a lot can happen in 30 years, so I don’t want to write them off yet.

But if things don’t change, they will definitely be eclipsed by countries like Vietnam. But these countries, low security heartburn, high economic payout, beyond that, a couple that are really problematic. The first is Oman in the Middle East. And really, that is the only country in the Middle East that I think is really worth having a long term relationship with.

It’s not nearly as crazy, crazy places like Saudi Arabia. And it commands the opening to the Persian Gulf. So no matter what American foreign policy ends up being or not being in the Persian Gulf, having the ability to project power into it from the outside through Oman is brilliant. Also, if there’s one thing that everyone in the Persian Gulf agrees on, whether it’s Kuwait, Saudi Arabia or Iran, it said the Omanis are okay.

They are a great interlocutor. They’re a great mediator for anything that’s happening in the region, no matter how blam it gets. So it’d be lovely to have them in the outer circle of allies. And then the final one, it’s one I almost didn’t consider. But in the world are moving to a lot of the places where raw materials come from are going to be really unstable.

And there are a few places in the world that are just have so much of it in incredible concentration that we’re going to need them one way or the other. And the two countries in question are Saudi Arabia and the Congo. These are countries that are massive producers of raw materials that do very little with refining, very little with value out of their basically mines with people.

And we’re going to have to figure out some way to continue to access the copper, the cobalt, the platinum, the palladium, the diamonds and all that other good stuff that these two countries just have in spades. Because if we can’t figure that out, the only other real player in the world that is going to be able to produce the volumes of material we need now, it’s Russia.

And the whole point of going away from globalization is that you lose those strategic complications. So Congo, South Africa, despite all of their problems, and there’s a list so much better than dealing with Moscow.

Trump Goes A-Conquerin’

Trump just kicked around invading and coercing some allies. Oh boy….

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

My Dream Alliance for the US – Part 1

When I picture my ideal US alliance system, I focus on stable, secure, and economically complementary countries. Part one of this two-part series focuses on the “safe” bets.

The inner circle will consist of Canada, the UK, Australia, and New Zealand. Sure, we’re all English-speaking and naval-oriented, but we’ve also got a long history of cooperation. And each of these places is economically resilient, consumption-driven, and relatively insulated from global demographic challenges.

Next on the list, we have Mexico and Vietnam. Mexico is our largest trading partner and developing a more holistic relationship with them would serve the US well. Vietnam is a rapidly growing trading partner that has secured its position in the global economy and maintains natural geographic defenses, making them a good friend to have in the region.

Focusing on this list of countries should be the main priority for the US, but there are plenty of other options out there. So, tomorrow we’ll discuss the countries that are sitting in the minor leagues waiting for the call up.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, everyone. Peter Zeihan here coming to you from the Brett’s track in New Zealand. Almost done like 4k left. Anyway, question from the Patreon crowd. If you were to craft the perfect U.S. alliance system for the future, what would it be? Well, I would always start with the family. So what I like to call the Grand Hongqi Alliance, all the all the Anglo states.

So that’s the United States, Canada, the United Kingdom, Australia and New Zealand. These are countries that share more than the common bond of English culture and history. They’re all naval powers, what they can do, which is kind of regard, and so they have the ability to defend themselves in a degree that’s much simpler than it is for a land power.

So security complications are quite limited. The economic growth is largely consumption driven. So it’s going to be something that’s really interesting and positive to have in a globalizing world where populations are aging out everywhere. It’s less true for those countries. And we have a long track record with the Anglos, called the Five Eyes Alliance, which is basically intelligence sharing.

Throughout history, whatever we find that isn’t a complete individual national state secret is shared among the five, that makes the most powerful, strategic decision making apparatus that you can possibly have. So start there. Number two, you look for countries that are up and comers, that have the potential to do very well in the world to come at the very top of that list, are two countries, Mexico and Vietnam.

These are states that are already in the United States as top seven trading partners. Mexico is number one. Vietnam’s number seven. And they have the demographic to, continue doing this for a very, very, very long time. The security issues, in the classical sense, worrying about other countries are quite limited. Vietnam is backed up by mountains and jungles on all sides.

And Vietnam’s, most insecure border is one the heads of the United States. So if I was to give any advice to presidents now or in the future, let’s find a way to make relations with Mexico as wholesome and as well-rounded as possible. If you’re only talking trade, if you’re only talking drugs, you’re only talking immigration. You’re not really doing anyone a favor.

This needs to be a broad border conversation that involves not just security. And, in the way that we’ve defined it on the border, but in the broader sense, it needs to involve culture and finance and transport and logistics and infrastructure and everything, that is benefiting, what has been the strongest bilateral economic relationship in human history already?

Can you imagine if we actually put some effort into that? Okay. Next, countries where the security issues are relatively limited and they could bring a lot to the table? France and Japan are at the very top of that list. Japan, obviously, an archipelago has two, super carriers, which are the only two outside of the five ice agreement.

The others that are not American or British. Second strongest navy in human history. The Brits are third, and an economy that has already relatively globalized proofed it. It’s still a massive importer of energy and raw materials. But this is not the Japan of the 1980s that was completely dependent on trade, only trades for GDP, about 15% of the total, which is very similar to the American number.

And so this is a country that while its demographics are bad, it is developing a series of technologies to cope with it, which is something that we will learn in yourselves in the future. France on the far western side of Europe, there’s sometimes our, our estranged sibling, but that simply underlines that they are family.

The French and the Americans have always gotten along when it really matters. Although we’d like to do things our own way, they also have a positive demographic future. They have a huge fleet of atomic power stations, so they’re not nearly as dependent on petroleum or natural gas imports as anyone else in Europe. And they have a military that’s roughly right sized to their needs.

So you kind of group those together and you kind of get the dream team. Once you have that in place, I would look around for the low hanging fruit places where there’s technologies that are kind of concentrated, think Taiwan, that would be very useful, or places that don’t have security concerns because they’re isolated from everybody else. Spain and Portugal might fall into that category.

But overall, this is the cluster. These are the countries and do really well in the future. And then once you’ve got that, you can start thinking things that a little bit more ambitious based on whatever your goals are, however, you define them. I’m a little hesitant to put my stamp on anything beyond that list, because the technologies in 1015 years may look significantly different.

And the, the goal posts will shift with that. But for now, these are the countries that I see as being relatively stable, relatively wealthy, with a good growth trajectory, and very little chance of anything knocking them off.

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

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