Telegram and the Limits of Freedom of Speech on Social Media (Part II)

Today we’re looking at the importance of Telegram. No, we’re not talking about the thing a telegraph sends. We’re talking about the messaging platform created by Pavel Durov that’s causing quite the stir as of late.

Telegram has become the platform of choice for many of the world’s most unsavory characters – think the Russian military and ISIS. Telegram and its founder opted to not cooperate with Western governments and resisted any form of data sharing with authorities. This was the case, until founder Pavel Durov was recently arrested and promptly released in France.

Now, if I was someone who knew I was wanted in a number of countries, I would probably avoid visiting said countries. I would imagine Durov would do the same. So, I suspect that this was all part of some elaborate deal that Durov and the French authorities cut. If that’s the case, there could be some major implications.

Remember how I mentioned that Telegram was the choice platform for unsavory characters. Well, if Western governments can get their hands on these messages, logs and information, that would be a huge intelligence breakthrough that the Russians would love to avoid…

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here. It’s tomorrow. I promised that we would talk about telegram and social media regulation in the European space. Well, okay. First, what is telegram? Telegram is basically the Russian equivalent of something like Twitter or Facebook manager. The idea is that you can have a part of your account that is, encrypted due to agree to send messages back and forth that no one else can follow. 

Now, when you have a system like this and you get extremist groups that start posting messages, whether that is a right wing group in the United States or, say, ISIS in the Middle East, governments often lean on institutions like Facebook, like WeChat, and the rest to basically give it up. It’s like, you know, this is an issue of public safety. 

You need to cooperate and share your information with us so we can do normal law enforcement things and prevent terror attacks. Now, all of the platforms in the world cooperate with U.S. authorities on that topic except telegram. Telegram does not participate in any assistance with any Western government whatsoever. And so you can imagine the quality of people who tend to use telegram. 

They’re not the sort of people you’re going to invite to a bar mitzvah. They do, of course, cooperate with Russians, Russian governments in order to keep domestic political opposition in Russia under control. But it was a Russian founded institutions. No big surprise there. Now, the guy who founded this thing, Pavel Durov, left Russia a few years ago because the Russian government was, again, a little bit too hot and heavy with leaning on him personally. 

So he’s operated the place primarily from Dubai, but he also had citizenship in France. Well, the French have been after Dubai for quite some time because remember the type of people who use telegram often are not very savory. So you get a lot of drug runners who use this to send money back and forth. You get a lot of child molesters who use it for child porn. 

So the French have had an open warrant for Pavel Durov for quite some time. And he showed up in France. He’s flew on his personal jet, surrendered to authorities, was arrested on the spot. Now, if you are wanted by someone for trafficking in kiddy porn, you are usually aware that the government is after you. And if you’re someone as wealthy as Durov is billionaire, you’re not going to just accidentally land your plane somewhere where you think you’re going to get arrested. 

So he clearly knew what he was doing going in, and he was released in less than 24 hours on bail. Can’t leave the country. But that suggests to me that a deal was cut between the French and Durov, probably even before he left. And now they’re just working out the fine print of the degree of cooperation. 

Now, a few things to keep in mind about telegram from a technological point of view, it’s nothing special. Facebook and WeChat have significantly better encryption than anything that they have. And so, for example, while telegram has not cooperated with Western institutions, most notably the NSA here in the United States had a field day cracking their encryption to go after ISIS. 

And that’s one of the reasons why, over the last several years, ISIS has done so badly that they thought their encryption, was fool proof. And really, most of their mail is being read. And so if you’re a subversive element anywhere in the United States, Dell mass just keep in mind that the FBI’s probably reading absolutely everything that you put out there. 

Now, back to the telegram. So the question now is, what is the deal? TBD, to be perfectly honest. And I’ve kind of put off doing this video because I, we really wanted to have an answer to that question. But I think the biggest thing to keep in mind is not so much drug runners or child molesters, but it’s the Russian military. 

Because while telegram is hardly a very good platform for security, its lack of difficulty in use has meant that it has become the preferred method of communication for the Russian military within itself. You see, Russian private encryption may not be nearly as well as Western private encryption, but it’s loads better and much more user friendly than Russian government military encryption. 

So the Russians have had a problem in the Ukraine war that when they are doing some spotting for artillery, whoever’s doing the spotting basically has to go into this ancient archaic system to send time into task targets and coordinates and everything. And by the time that information is encrypted, uploaded, del loaded, delivered and then d encrypted, it’s irrelevant. 

And so they’ve just been using telegram to basically text directly to the artillery teams. Well, all that data is on telegram. All of the data for their ship to shore communications, even some air power issues are oh, oh my God, it’s so stupid. Anyway, so if giraffe is really deciding to cut a deal with the French intelligence ministries, well, this isn’t potentially just a breakthrough for enforcement in terms of law enforcement. 

This is potentially an intelligence breakthrough for strategic issues because the Russian military has been using it for almost everything. So we have been seeing Russian military bloggers in a not so small number of Russian government personnel in the foreign and defense ministries, basically losing their crap over the last couple of weeks as they’re trying to figure out what it is the Durov is going to give up publicly. 

Nothing has been said publicly. Telegram is saying this is a free speech issue. We have the right to kitty porn. You can imagine how that well, it’s going over in France. Anyway, we will know before long just how this is going to go because like I said, Taraf is already in France and France. France isn’t like the United States when the French government and especially French Intel personnel want something, they have two ways to do things where they have very little pushback from the civilian authorities. 

Number one, little things like torture in France, if you’re a foreign national, they’re a little bit less chatty about the details. Second, if you’ve ever been to the south of France, it’s beautiful. And there’s lots of villas there that could use an extra Russian billionaire. So whether it Durov is induced to cooperate or is chosen to cooperate, there is a tough road and there is an easy road in front of him. 

And the fact that he went to France willingly suggests that it’s going to be the easy road, and someone is going to be having a great time around me in the not too distant future. And the Russian military is going to lose its primary method of communication, and it’s going to lose all of its archives to French intelligence. 

And the French are very good at using stuff like that. 

Should Freedom of Speech Extend to Social Media? (Part I)

Should people be able to say whatever they hell they want on social media? Brazil doesn’t think so, at least when it comes to public misinformation. While most social media platforms have bent the knee, Musk and Twitter (now X) have held out.

Unlike the US, the Brazilian govenrment enforces laws over public misinformation, which ultimatley led the courts to shut down Twitter within the country. Most social media platforms have complied with these laws, addressing any calls for violence and falsehoods within their feeds.

This is just one example of the differing global approaches in regulating freedom of speech online. Much of Europe is keeping a close eye on Brazil right now to see how this all shakes out, since they have their own issues stacking up…including that pesky app Telegram that the Russians love so much.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everybody, Peter Zeihan here, coming to you from Colorado. Today, we’re going to talk about social media, truth, government, Elon Musk, the right to lie, and all that good stuff. The issue of the moment is happening in Brazil, where Elon Musk and Twitter (or X, if you prefer) are in a spat with the legal system, including the government and the Supreme Court in Brazil, over social media postings. The very, very, very short version is that Brazil has laws on the books that prevent you from lying in the public sphere, unlike the United States.

They are trying to enforce those laws against Twitter. Twitter refused, at Musk’s direction, to play ball, so the Brazilian courts shut Twitter down. Elon Musk, being Elon Musk, said, “Well, I’ll just transmit it via Starlink.” So the Brazilian government started the process of shutting Starlink down. Needless to say, once his bluff was called, Musk backed down. The court cases are continuing. Musk has called his friends at the FCC (the Federal Communications Commission here in the United States) to work that angle against the Brazilian government, and that is in play as well. It’s a lot of back and forth, but let’s start with the basics.

This isn’t unique to Twitter. There are numerous social media platforms operating in Brazil. The issues the Brazilian government is concerned with involve calls for the overthrow of the government, outright lies, and calls for violence in schools. Every other media institution in Brazil complied with the government’s orders to take this stuff down.

What Elon Musk is really talking about when he mentions extreme rights to free speech is the ability to say whatever you want, whenever you want, regardless of the consequences. Social media is new, and so is its regulation. Every time the United States has gotten new technology for information transfer, we’ve had to build a legal structure to manage and regulate it.

If you go back to the 1800s, every political party in the United States had its own newspaper. If you think MSNBC and Fox are bad now, it’s nothing compared to what we used to put into print, with everyone just making things up about everybody else. Eventually, that got tamped down, and you had to, you know, tell the truth to some degree.

Then we got the telegraph. Suddenly, you didn’t have to wait for the morning edition—people could just type things out and send them across the country. Once again, lies, lies, lies. We got something called “yellow journalism,” which was partly why the United States got involved in the Spanish-American War.

To move from a wild west of information sharing and fabrication to something more civilized, you need some level of agreement among various factions of society. During Reconstruction and the Roaring ’20s, the United States didn’t have that. But with World War II and the dawn of the Cold War in the 1950s, we got a series of Supreme Court cases and Congressional laws that built the structure of libel and fraud laws we know today.

What we’re struggling with now in the United States is that we have those fraud and libel laws that regulate television, newspapers, and magazines, but they don’t regulate social media. Social media comes under the 1996 Telecommunications Act, which says if you’re a technology platform provider, you’re not legally liable for what anyone posts on it.

We don’t have laws regulating what people post, so anyone can say whatever they want, and it can stay up for as long as they want. If someone regulates it, they’re doing it out of goodwill or because the government said, “Hey, this could kill people.”

The quintessential topic of the day is Donald Trump insisting that the 2020 election was stolen from him. After four years, Donald Trump and the Republican National Committee have yet to produce any evidence that the election was stolen. It’s not that evidence has been presented and found faulty; nothing has been produced at all. If you don’t believe me, go to Chris Krebs. He was in charge of maintaining election integrity under the Trump administration, and he said the 2020 elections were the cleanest in American history. Trump fired him.

Saying the election was stolen is still illegal in the United States. Repeating it as news is still legal because we haven’t built the legal structure to regulate it. At this moment in our country’s history, we’re debating a few things, so the consensus needed for new speech regulations probably won’t happen soon. That moment, however, has come and gone in Brazil.

Brazil had a military dictatorship in the latter half of the last century. Once civilian rule was reestablished, they got a new constitution, a new currency, and peaceful transfers of government. They concluded that outright lies in political discourse were bad for their society, so they regulate them.

The danger, of course, when regulating free speech is that someone must act as the arbiter of truth. Someone has to determine, on a case-by-case basis, what is factually correct and what is a flat-out lie. In Brazil’s case, since the recent issues involve calls for sedition, coups, and murder in schools, it hasn’t been hard for Brazilians to get behind this. These aren’t gray areas in the free speech debate, but you still need an arbiter of truth.

The judge involved in this case has been on the job since the “carwash scandal” years ago, where multiple Brazilian governments have tried to clean up public affairs. While it may be too strong to call this a bipartisan or multiparty effort, it does enjoy support across Brazilian society. Musk maligned this judge personally, but the ruling was appealed, the Supreme Court got involved, and it was a unanimous decision. The executive branch of the Brazilian government supports it too.

It’s hard to see the Brazilians backing down on this. Brazil is an important country in South America. What matters here is that many other countries are struggling with this topic for the same reasons. The European Union is paying close attention to what happens in Brazil because they’ve already built a digital directive. This directive gives the European Commission (their executive branch) the legal authority to create an arbiter of truth, manage social media, punish bad actors, and handle content moderation. They haven’t built that arbiter yet, but they’re watching Brazil to see what works.

It’s probably not going to be Musk and Twitter that decide this case. The first case for whatever this new authority will be is likely to involve a different platform—something called Telegram, which originates from Russia. And we’ll talk about that tomorrow.

The Geopolitics of Wine

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Today’s video is fueled by Scott Base Vineyard in Cromwell, New Zealand. After all of the time I’ve spent in New Zealand, this is far and away my favorite winery.

Wine is a top 20 internationally traded commodity by value, so it definitely has some geopolitical backbone to dissect.

The main distinctions in the world of wine come from vineyards being irrigated vs. not. Irrigated growth is relatively new in the world of wine, so Old World vineyards have to compete in new ways, mainly by moving up the value chain in the cellaring process.

Aging demographics are also disrupting the wine industry since capital becomes more expensive as older populations begin sucking money from the system. Wine is highly capital-intensive, especially when a decent yield takes several years after putting vines in the ground.

So countries with access to capital and/or young demographics have a leg up on the world of wine. The Kiwis and Aussies will be all right. Argentina is probably going to hurt. And most of Europe’s wine complex will struggle here soon…except the big dog, France.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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China Will Soon Lose the Title of “World’s Manufacturer”

Globalization led to the rise of China as a manufacturing powerhouse, since finding the lowest cost producer was the priority. However, deglobalization, coupled with China’s demographic decline and aging workforce, has both eroded that competitive advantage and changed everyone’s priorities about cost. So, what happens next?

With China fading from the spotlight, Western countries will become more protectionist, which means manufacturing will be coming back home to places like the US and Europe. But that’s going to bring a while slew of problems with it.

While this transition will create significant job growth and increase the political power of labor, it will also bring high inflation and inefficiencies. This will force highly skilled workers to take on tasks that were historically outsourced to cheaper labor markets. So, if you thought inflation was bad now, just wait…

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everyone. Peter Zeihan here coming to you from Yosemite. This is an unnamed lake behind me, so I’m going to claim it. This is Peter Lake and there’s Peter Island right in the middle of it. Great for laps. I built a summer home here. Any who? I wanted to talk a little bit today about the global structure of employment.

Looking forward and back, if you could sum up the concept of globalization into a single phrase, it would be lowest cost producer. The idea is, whoever can produce the product or the step in the supply chain at the lowest cost in a reliable manner pretty much gets the business. And when the Chinese built it up to the bar in the 1980s, they brought a billion industrial workers with them.

And that’s before you consider the fact that it’s a single legal structure, such as it is, or that they subsidize the bejesus out of everything to drive any competition out of business. Basically, they took all the assembly and the low-end stuff from the rest of the developing world, where no region was probably suffering more than Latin America.

Where the geography is much more difficult for infrastructure. And so the Chinese could outcompete them there as well. For the first world countries, and most notably, the United States, we got out of that sort of business because if you pay an American $50,000 a year to assemble a car, it’s going to be a really expensive car.

And so we doubled, tripled, quadrupled down on design work. And there are few industries where this shows up more than technology. The Chinese may make some low-end semiconductors and do a lot of assembly, but it’s the Americans who design most of the chips and make a lot of the high-end chemicals that are necessary for Chinese fabrication facilities to work.

So when someone tells you that the Taiwanese or the Chinese or the Koreans or the Japanese stole our industry in semiconductors, you know, no, we still do the high-value added stuff. The Chinese do the low-value added stuff. Anyway, this has been the state of affairs in increasing intensity for the last 30 to 40 years.

And now we’re entering a new world where the Chinese are aging out. And so they’re losing their economic competitiveness, even at the low end. And their workforce is collapsing because their population is in demographic decline, actually, demographic decline is too kind—demographic collapse. They now have more people aged 60 to 75 than 0 to 25, if I remember my math correctly. Anyway, it’s close.

Sorry, I can’t fact-check out here anyway. Lots of old people, very, very few young people, and even fewer people coming into the workforce in the future.

Okay, so what happens now? Well, the Chinese are no longer competitive. It’s only because of the sunk cost of the industrial plant that we still think of China as an industrial power.

And, you know, 30-odd trillion dollars in sunk cost in industrial plant. That’s not nothing, but it’s not enough without a workforce.

That’s before you consider the trade wars that are intensifying, regardless of who wins the American presidential election, regardless of who wins in various European elections. Both the American and the European blocs have turned very sharply protectionist, specifically versus China, and so we’re probably going to see significant crunches in the trade portfolio of products coming from China very, very soon.

What we’ve seen with the electric vehicles is really only the beginning. What that means is if the Europeans, and especially the Americans, still want stuff, they’re going to have to make it their damn selves. And there is the problem, because the United States has geared its educational system, its infrastructure, and its capital structure over the last 30 years to do more and more higher and higher value-added work, not a lot of assembly.

And so we’re going to have to take highly paid, highly skilled American workers and put them to work doing things that, under normal circumstances, they’d have people in another country do. Now, this will generate a lot of employment. This will generate a lot of political power for labor, organized or otherwise. But it comes at a cost, because if you’re going to pick one word to sum up globalization, it was efficiency.

And there is nothing about having people do jobs that they weren’t trained for, or that they’re overqualified for, that’s efficient. So yes, we will get huge growth, and yes, we will get huge inflation to go along with it. The 2, 3, 4, 5, 6, 7% that people have been bitching about these last 3 or 4 years, that’s just the start.

Deglobalization’s Impact on Global Food Exports

Image depicting global grain and coffee sacks for export

Globalization has allowed us (meaning humans as a species) to make some of the worst lands farmable, inhabitable, and even prosperous. But what happens to global food exports when globalization ends?

There are five requirements to sustain successful agricultural exports in a deglobalized world: productive arable land, petroleum for fuel, and three essential fertilizers (potash, phosphate, and nitrogen). If a country doesn’t have access to one these, they might be SOL.

North America is the big winner here, specifically the US and Canada which have almost everything right at hand. Other regions that top the list are Argentina, New Zealand, Australia and South Africa, although these countries may struggle with fuel supplies. Brazilian agriculture will suffer due to poor land quality and heavy reliance on fertilizers coming from China and the former Soviet Union (which are likely to destabilize). Any of those specialty crop producers, especially those in the California’s Central Valley, will likely have to pivot business models due to shrinking markets, high costs, and dependency on Chinese markets.

Deglobalization could cause a potential drop in calorie production by a third and the fallout would be devastating. We’re talking widespread food shortages and catastrophic levels of starvation.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everybody, Peter Zeihan here, coming to you from central Yosemite. I’m standing by another mountain lake, which, being unnamed, is now officially called Peter’s Other Lake! And it even has a beach—pretty cool, right?

Anyway, today we’re diving into another question from the Ask Peter forum: what’s going to happen to global agricultural exports in a post-globalized world? Short answer—nothing good.

To sustain agricultural exports, you need five key things:

  1. Arable Land: You’ve got to have a lot of productive land.

  2. Petroleum: Agriculture on a large scale relies heavily on internal combustion engines. There’s talk of electric tractors, but the technology isn’t there yet. Their charge doesn’t last long enough, and they don’t have the power to do meaningful work. So, unless you’re talking about a small electric cart for something like apple picking, we won’t see electric solutions this decade, probably not even next.

  3. Fertilizer: Fertilizer comes in three parts—potash (potassium), phosphate, and nitrogen (usually derived from natural gas). These are sourced from different parts of the world. For instance, about half of the world’s phosphate exports come from China, and that’s already problematic since China might face disintegration. Worse yet, those phosphate deposits are in interior regions prone to secession. So, say goodbye to that supply. Potash is mostly found in Belarus and Russia, but thank goodness for Saskatchewan in Canada. As for nitrogen, which is made from natural gas, it’s more widespread, with the U.S. being the top producer.

Without access to all these elements, growing food at scale becomes much harder. In a post-globalized world, the number of places that can sustain agricultural exports shrinks significantly.

At the top of that list is North America, particularly the U.S. and Canada. Saskatchewan has potash covered, the U.S. has plenty of nitrogen, and both countries boast some of the best farmland in the world. For phosphate, once you move away from China, you’ve got options like Morocco, Israel, Saudi Arabia, and even Florida.

Other regions in decent shape include Argentina, which has highly productive land, and South Africa, New Zealand, and Australia. While these countries, with the exception of Argentina, can’t produce their own fuel, they are outside major conflict zones. So, if there’s fuel and fertilizer available for trade, these are likely destinations, as they can pay in hard currency.

Brazil, however, is in trouble. It has some of the worst land quality globally and is the largest importer of fertilizer, relying heavily on China and the former Soviet Union. Brazil’s status as an agricultural powerhouse isn’t over yet, but you can see the sunset from here. Parts of southern Brazil near Argentina may fare better, but the explosive growth we’ve seen in soy production is temporary.

In the Old World, France stands out. Like Argentina, France has excellent farmland. It’s also far enough from conflict zones to remain relatively safe and close enough to the North Sea for natural gas. If there’s any international trade left, France is one of the few nations with a capable navy to secure its sea lanes.

But that’s still not enough. We’re looking at global calorie production potentially dropping by a third. And that means a lot of starvation.

Now, beyond staple crops like wheat, rice, corn, and soy, there’s also a thriving trade in specialty crops—cherries, apples, alfalfa, and more. In a post-globalized world, many countries will lose the ability to pay for these. If China is your primary customer, it’s time to look for a new market. The country that should be most concerned about this is the U.S., particularly California’s Central Valley. This area has extremely high production costs due to strict regulations and its desert-like conditions, which make input costs (water, for example) sky-high. It’s not naturally fertile land.

As long as inputs are cheap and China is willing to pay top dollar because they’re price-insensitive, this business model works. But that’s not going to be the reality much longer. So, check your specialty crops, see where they’re being sold, and figure out if those markets will hold up as globalization breaks down. If not, you’ll need to either switch markets or find a new crop.

Alright, that’s it for me. See you next time!

Will Climate Change Be the Death of Wheat?

A photo of a wheat in the winter

Although climate change models are still evolving, historical climate data shows a clear warming trend. So, let’s discuss the impacts of climate change, specifically who will be affected the most and who might even benefit from it.

When you think of climate change, think of it as an amplification of current conditions. So, hot and dry areas will likely become hotter and drier. Hot and humid regions are likely to get even wetter and face severe health risks. Agricultural zones in marginal climates will suffer the most, especially those dependent on wheat.

Speaking of wheat – humanity’s primary calorie source – you might want to enjoy that cinnamon roll and pasta while you have the chance…Okay, maybe that’s a bit dramatic, but you can expect production to decline and prices to soar. This will especially impact places like the American Great Plains, central Argentina, the Russian wheat belt, and northern China.

However, regions with dual wind streams are poised to do pretty well amidst the warming climate. Think of zones like the American South and Midwest, parts of Argentina, Uruguay, northwestern Europe, and New Zealand. Unfortunately for the Chinese, their agricultural regions are particularly vulnerable, which will lead to severe food shortages and famine.

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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey everybody, Peter Zeihan here, coming to you from Blue Lake at the border between Yosemite National Park and the Ansel Adams Wilderness. That’s the Pinnacles behind me, and let me tell you, the hike up here was quite the challenge! Today, we’re tackling a question from the Ask Peter forum: with climate change, where are we going to feel it first? Who’s going to be hit the hardest, and is there anyone who might actually benefit?

First off, let’s remember that our understanding of climate change is still developing. Yes, there are plenty of smart people studying it, but when it comes to understanding how the atmosphere works on a global scale, we’re learning as we go. I find it most reliable to look at the past rather than just the projections. We have over a century of climate data from most locations, tracking temperature, wind, and precipitation. If you look at what’s happened over the last 140 years or so since industrialization began, there’s been a clear uptick in temperatures.

By the time my fourth book, The End of the World Is Just the Beginning, was published, that temperature increase was 1.1°C over the entire period. In the last few years, it’s ticked up to 1.2°C. This doesn’t just mean that the world is getting warmer; it’s getting warmer in different areas at different rates. One key thing to remember about precipitation is that while warmer air can hold more moisture, it also requires more moisture before precipitation occurs. So, hot and dry areas are getting drier, and wet and hot areas are getting wetter.

As long as you have electricity, a degree Celsius isn’t a big deal. Take the United States, for example—back in the 1930s and 40s, Florida and Iowa had similar populations. Now, Florida’s population is about eight times that of Iowa, thanks to air conditioning and reliable electricity. But I’m more concerned about two specific regions.

First, the developing world areas that are already hot and humid, like Brazil, the northern coast of South America, sub-Saharan Africa, Southeast Asia, and the Indian subcontinent. These regions are already very wet, humid, and hot, and adding even a little more heat could be a serious health risk.

The second area of concern is agricultural zones that are already hot and dry. Agriculture tends to be concentrated in regions where specific crops grow best—avocados in California, wine in southern France, and so on. Wheat is the exception because it’s essentially a weed and will grow almost anywhere. As the world has diversified its agricultural production and globalization has spread crops globally, wheat has steadily been pushed to the margins, except in places like northern France, Quebec, and parts of Pakistan and India where it’s tied to cultural or food security.

Wheat is now grown in cold and dry or hot and dry regions like the American Great Plains, central Argentina, the Russian wheat belt, and northern China. This means that when climate change starts reducing moisture in these areas, wheat production will collapse, and prices will skyrocket. And since wheat has been humanity’s number one calorie source for millennia, this is a big deal.

But it’s not all doom and gloom—some places might actually benefit. Regions that receive moisture from two different wind streams, like the Gulf Stream and the monsoons, are less likely to suffer catastrophic crop failures because both wind systems are unlikely to fail in the same year. This is good news for the American South, the American Midwest, northern Argentina, Uruguay, northwestern Europe (especially the UK and France), and New Zealand.

However, most of the world relies on a single wind current, so even minor climate changes could have outsized impacts on agriculture, especially wheat.

Now, on my way down from the hike, it hit me that there’s a country out there with both monsoonal and jetstream moisture, and that’s not necessarily a good thing. In the American Midwest, both hit the same region, but in China, the monsoon affects the southern rice belt, while the west-east jetstream waters the northern wheat zone. This is bad news for China. Everything I said about wheat applies, but it gets worse because rice requires meticulous water management—flooding and draining the fields multiple times. If rain comes at the wrong time, the entire crop can be lost. So, no matter how climate change unfolds in the next few decades, we can be sure that hundreds of millions of Chinese people will be at risk of starvation.

Alright, now I’m really done. See you next time!

Why Should Red States Get Greentech Investments?

If the green transition is ever going to work, it needs to happen everywhere. So, don’t get your drawers in a bunch when you see green energy funds from the Inflation Reduction Act being invested in Red States.

While there may be more support for the green energy transition in blue states, the reality is that red states may offer a more viable path to ACTUALLY getting it done. Between business-friendly policies, more rural land suitable for energy projects, and a number of geographical advantages, red states will be critical to the green buildout.

While these red states might not be known for their environmental activism, their geographies make them prime locations for green investments…try not to think so much about ideology on this one, just focus on places that give us the best shot at making the green transition work, wherever that might be.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey, everybody. Hello from Square Top Peak, with Argentine Peak in the background, and further back, you can catch a glimpse of a pair of Colorado’s famous fourteeners. Today, I want to talk about green energy and red states. There’s been some hand-wringing in the environmental community because about 75 to 80% of the investment from the Inflation Reduction Act has gone into red states—not purple states, but solid red states.

First off, let’s all calm down. If the goal is truly to achieve a green transition, it has to include everyone, so this is actually good news. But I think it’s important to explain why this shift in mindset has happened on places like Capitol Hill when it comes to green tech investments.

The first reason has more to do with the business climate than the subsidies themselves. As a rule, red states tend to have a more business-friendly, low-regulation approach to things. Whether it involves providing a bit of money or just having lower legal costs for operating in the first place, it’s easier to get projects off the ground in a place like Nebraska than in a place like Oregon.

The second reason is related to the rural-urban divide. To oversimplify, red states are generally more rural and have a lot more land that can be dedicated to energy projects. For example, if you’re in New York City, you probably have a coal or natural gas power plant nearby, and the power is wired into the city. But if you want wind or solar energy, the closest place with significant solar or wind density is North Carolina, which has arguably benefited the most from green tech investments in the Northeast because it’s the nearest viable location for power generation.

In the U.S., we have what can be called a Sun Belt and a Wind Belt. The Wind Belt runs mostly through the Great Plains, from North Dakota straight down through South Dakota, Nebraska, Kansas, Oklahoma, and Texas. Colorado and Iowa also have significant wind resources. But generally, the further west you go, the better the wind conditions get. The same pattern holds for solar power. As you’d expect, the further south you go, the greater the solar intensity. Ideally, you also want a bit of altitude and low humidity because those conditions are more conducive to efficient solar power generation. So the primary solar zone stretches from east of Los Angeles in Kern County, California, through Arizona, New Mexico, Oklahoma, and especially Texas.

These two belts—the Wind Belt and the Solar Belt—are getting an outsized portion of green energy investments, along with North Carolina because of its proximity to major population centers that can’t generate their own green energy. The issue of population density is really significant. You’re not going to install solar panels in a forest or on the slope of a mountain unless it’s an absolutely perfect spot. You want large expanses of flat land where no one lives, and if that land doesn’t have much agricultural value, it’s even better. So places like West Texas, eastern Colorado, and North Dakota are ideal. These areas aren’t exactly known for being strongholds of environmental activism, but they happen to be some of the best locations in the country—and indeed, on the planet—for green energy installations. And that’s exactly where these investments are heading.

A New Player in Global Oil Markets: Guyana

*This video was recorded prior to Peter departing on his backpacking trip in July.

Guyana is a country we don’t hear about too often, but its rise as an oil producer has earned it some air time. In particular, we’ll be looking at the implications this carries for global oil markets.

Guyana discovered oil in the late 2010s and aims to produce 1.4 million barrels per day within the next five years. ExxonMobil is the big dog leading this operation. So, who will this bump in the oil markets impact the most?

Countries in the Eastern hemisphere will gain some added stability to the oil supply mix. As Russian oil loses its legs in Europe, any outside sources will be welcomed with open arms. For the Americans, the emergence of Guyana on the oil markets isn’t great news, as the medium sweet crude coming from Guyana works well with European refineries. So, mark this one down as a nice win for the Europeans and a small loss for the Americans.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey, everybody. Peter Zeihan here, coming to you from Colorado. Today, we’re going to talk about something in the Western Hemisphere that isn’t related to the American political system. We’re focusing on Guyana, of all places. Guyana is a small statelet on the northern coast of South America, which historically hasn’t mattered much at all.

It’s located in the middle of the tropics and is bordered by the Amazon, so there hasn’t been much going on there until someone discovered oil in the late 2010s. Back in 2018, this place produced nothing, but today, it’s producing about 600,000 to 650,000 barrels of oil a day. ExxonMobil is the primary operator for nearly the entire operation. Just this week, they started their seventh expansion, with the goal of reaching 1.4 million barrels per day within five years.

From the perspective of big producers like Russia, the U.S., or Saudi Arabia, this isn’t a huge amount of oil. However, to give you some context, this production level is more than Iran is exporting right now and puts Guyana above countries like Qatar or Libya.

Let’s talk about the pros and cons. If you’re in the Eastern Hemisphere and concerned about oil security, which you should be, this is, of course, a great sign. One of the issues we’re seeing with the Ukraine war is that Western countries have gradually ratcheted down on tech transfers to Russia, particularly in oil extraction technology. The goal here was to strangle the Russian economy so that it couldn’t afford the war. Initially, efforts started with things like price caps, then targeting shipping insurance, and now focusing on the shadow fleet of tankers trying to circumvent the sanctions. And while all of this is working, they haven’t yet taken steps to actually destroy Russia’s ability to produce oil in the first place.

At the margins, the technology required for offshore production has been denied to the Russians, but offshore production wasn’t a significant part of their operations. The real driver of Russia’s oil production is labor and tech transfer. Over the last 25 years, Russia has transitioned from a Soviet-style system, which sloppily produced a lot of crude at relatively easy fields, to a more focused system that uses more technology to efficiently produce crude at more advanced sites. Today, I’d argue that probably two-thirds of Russia’s oil production comes from that latter system, which relies on foreign technology and expertise.

When the Ukraine war began, most major service companies, like Halliburton, cut their contracts and withdrew from Russia. However, they did two things: first, they sold their local subsidiaries to their employees, who were Russian nationals, thereby maintaining an under-the-table connection. Second, they pre-sold a couple of years’ worth of equipment to allow these new subsidiaries to continue operating. As a result, Russian oil output has remained steady throughout the conflict.

Now, a few things are happening. First, the Europeans have largely separated themselves from the Russian energy complex. Yes, crude is still flowing to third countries, where it is refined and sent back to Europe, but the exposure is much less than it was two years ago. Second, the last of the pipelines across Ukraine are starting to fluctuate due to legal and operational reasons. The Ukrainians have always stated that when the contracts with Russian oil and natural gas companies expire, they will turn off those pipelines. And yes, despite two years of war marked by sexual assault, genocide, and kidnapping, the Europeans have pressured Ukraine to keep oil and natural gas flowing across Ukraine into Europe. However, this arrangement will end by the end of this year. In fact, earlier this month, we saw cutoffs in the lines going to Slovakia, the Czech Republic, and Hungary.

A little side note here: the Czech Republic and Slovakia managed to get exemptions to the sanctions imposed two years ago, but they’ve been working hard to find alternative supplies and build replacement infrastructure. Hungary, on the other hand, has not, and now they find themselves without oil and natural gas. There’s a story within a story here for the Europeans, but that’s a topic for another day.

The bottom line is that, with the exception of Hungary, most European countries have pretty much weaned themselves off Russian energy. Now, the Europeans are discussing how to actually kill the Russian energy sector, and they’re focusing on stopping tech transfers. Currently, it’s legal for third parties, most notably China, to buy this equipment and send it to Russia. The Europeans are now discussing how to expand the sanctions regime to prevent this from happening. Considering that the Europeans are already in the early stages of a pretty intense trade war with China, this is a powerful lever they can use in various ways. Essentially, if the Europeans can force China to cut off support to Russia, China might maintain some market access to Europe, which is crucial for avoiding its own economic breakdown. So, this is real, and it’s probably going to happen in the next few months. When it does, we’ll likely see more problems in the Russian energy complex as they struggle to get their oil to market.

If you’re in the Eastern Hemisphere, and the 5 to 7 million barrels per day of crude and related products that Russia produces start to wobble, having an extra million to a million and a half barrels of medium-sweet crude coming out of Guyana suddenly becomes very attractive. And if you’re European, this is a great match because the crude from Russia is a medium-sour blend, while the crude from Guyana is a medium-sweet blend. It’s not too far off from what European refineries were designed to process. So, if you’re European, you now have a backup plan.

The downside is for American producers. The U.S. shale sector is significantly different by several metrics from global oil norms. Most of the world’s crude is relatively heavy and sour, meaning it’s thick, viscous, and contains a lot of contaminants, most notably sulfur. U.S. light-sweet shale is different because it didn’t migrate through rock formations, so it didn’t pick up contaminants. Also, because it was trapped in rock strata almost at the moment of formation, it never had a chance to mix with anything and get thick and gooey. So, it’s light, sweet, and basically the consistency of nail polish remover.

This was great at first, but once you start producing 8 million barrels a day of it, which has all hit the market in the last 15 to 20 years, you basically saturate the market for that kind of demand. The Guyana crude, while definitely heavier and more sour than U.S. light-sweet, isn’t so far removed that it competes in a fundamentally different product bracket.

So, if you’re an American shale producer, you’re basically selling into a super-saturated market in the U.S. right now and trying to export this crude to the wider world for a better price. But now, you have roughly a million to a million and a half barrels of competition coming from Guyana. Ironically, Exxon’s new project has made the economics of shale just a little bit worse.

I don’t think anyone is going to be broken over this, and it has made the security of Europe quite a bit better. Whether or not that’s a win for you depends on which side of the pond you happen to call home.

What Is the United States’ Role in the (New) Global Order?

*This video was recorded in May of 2024.

If you’ve read my book “The End of the World Is Just the Beginning” then you’re well aware of the US stepping away from the Global Order. But what does life look for other countries once that happens?

Places like New Zealand might need to take a page out of Japan’s playbook, forming strategic partnerships with the US by offering trade concessions, security cooperation, or any other ways that help them stay relevant to the US. (I’ll take a vacation home near Milford Sound if the Kiwis are offering).

Some larger powers are going to be stepping up as the US pulls back, think France, Sweden and Turkey. Each of these countries will have to navigate this new reality and find their footholds as regional powers. The dynamics between these big three will shape the future of NATO, the EU and Europe as a whole.

As for places like the Middle East, the US is very, very reluctant to re-engage too deeply. This marks a shift in the broader US strategy of disengagement and signals a move towards acting more independently on the global stage.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Something we discuss amongst ourselves, Peter, is the shifting, changing global order. What happens to small countries around the world, like New Zealand, as the U.S. strategic relationship with this post-Cold War global order starts to change and the global environment shifts? I don’t think New Zealand is the country to look to. I think Japan is the country to look to because Japan so far is the only country that’s figured it out.

A few governments ago, the Japanese realized that the Americans were losing interest in everything. Japan, like a lot of countries, is dependent on international trade for its economic health, especially for its energy imports. They realized that unless they could get into the American inner circle, give the Americans something that they want, there wasn’t much of a future.

For smaller countries that are less capable than Japan, this is triply true. What Japan did is seek out a deal with the United States on America’s terms. During the Cold War, when we needed everybody to be on our side to face down the Soviets, it was the United States that provided the economic and strategic concessions in order to build the alliance.

That’s not the world we’re in anymore. Now, if you have a more disassociated America, you have to bring the case to them. You have to offer them something in order to keep them involved. In Japan, it was trade concessions and a security partnership. For smaller countries, you have to be a lot more aggressive and a lot more giving in order to keep the Americans interested.

New Zealand, being off the edge of the earth, basically doesn’t face the security concerns that a lot of other people do. For them, their interest is going to be primarily economic because they produce a lot of agricultural products that the rest of the world really needs. That is an easier carry before you even consider the cultural connections between America and New Zealand.

But for most of the rest of the world, that’s a much taller order. The things that you have to offer the United States in order to keep them engaged—there aren’t a lot of things that the U.S. is really interested in, and you’re going to have to get really creative and dig really deep.

With the U.S. reevaluating its position globally and with the emergence of the largest land conflict in Europe since World War II, with the Ukraine-Russia war in place, we’ve seen some regional powers shift how they behave within broader Europe. I’m thinking about France, Sweden, and Turkey. What do we see between these three regional leaders/powers?

When it comes to their political, economic, and military mindset, how they interact with each other, and what that means for the future of the EU, Europe, and NATO overall, you’ve just put your finger on the three countries that are going to matter—not just now, but ten years from now, twenty years from now, and thirty years from now.

But for the remainder of the century, for demographic reasons, we’re going to lose, at some point, Spain, Germany, Italy, and eventually Poland. But these countries have very healthy democracies and a geography that allows them a degree of freedom to act outside of the confines of just Europe. How they get along or don’t is going to determine what is possible for NATO, the EU, and a post-unified Europe.

At the moment, the French are increasingly taking their talking points from the Swedish government. The Swedes have always been very big on energy security, manufacturing self-sufficiency, and partnership with countries immediately around them in opposition to Russia. Now that they’re no longer neutral, the French are sounding a lot like the Swedes. So the room for partnership there is very robust.

So long as ego doesn’t get in the way—I wouldn’t even mention that if it wasn’t for the fact that France is one of the two powers we’re talking about here—it’s going to be very interesting, from my point of view, to see how the two powers coordinate or step on each other’s toes in Ukraine, because that is going to set a really strong pattern for their bilateral relationship moving forward.

At the moment, it looks pretty positive. No, they’re not talking past each other at the moment. Turkey, of course, is from a radically different culture. Turkey has a very different economic structure, even if it’s still very healthy from my point of view, and they’ve got a foot in the Middle East as well, which complicates things. But again, we’re seeing a degree of cooperation that didn’t exist ten, twenty, or thirty years ago.

So I’m pretty hopeful there. But I don’t think that’s going to last for the long term. Turkey is too big of a power, too dominating in its own neighborhood, and if Russia loses the Ukraine war, Turkey is one of the powers that has the opportunity to do a massive geopolitical expansion. That is something that is undoubtedly going to make other powers in the neighborhood a little uneasy, even if the Turks aren’t taking any hostile actions against them.

So we’ve got here a Swedish-German-French axis, with the Germans being the junior partner in the city partner, and Turkey trying to figure out just how much it can grab. This, to me, is starting to sound a lot like the 1500s. You’ve written about and spoken quite a bit about the changing global order and the U.S. sort of stepping back from its near-century of keeping the world safe, managing global shipping, and maintaining this global order.

When we look at the Red Sea and U.S. Navy actions against the Houthi rockets, is there a risk of the U.S. being pulled back into the Middle East from its current actions? Is the U.S.’s attempt to help secure global shipping through the Red Sea—a region in which the U.S. is not a major participant—a sign of the U.S. stepping back into its previous role?

It feels a lot like a placeholder to me. It’s become a testing ground, in an unfortunate manner, for American missile interdiction. We’re discovering that as easy as it is to shoot down an individual shaky drone or a missile, preventing a hostile group from launching any number of weapons systems any number of times is very difficult.

We’re talking about patrolling an area roughly the size of half of Texas, and it’s stretching American naval interdiction capacities to the breaking point because the Navy wasn’t designed for this. It was designed to interdict things shot at the Navy, not going off or through a wide swath of territory. And if a real country—not Yemen, but a real country—were to do this on a broader scale, it’s pretty clear to U.S. naval commanders now that there’s not a lot we can do about it. So, if someone else joined in, we’d have a real problem, and this belief that the United States is still patrolling the global oceans—even if we wanted to—would be pretty clear that we couldn’t, against some of the technologies that have evolved over the last 75 years.

In terms of the idea of the United States getting sucked back into the Middle East, I really don’t think that’s on deck. In fact, if anything, I think the Gaza conflict has underlined to the United States how little we want to do with the region. We’re having a fun little conversation with the Israelis that feels a lot like the conversations we were having with the French and the Germans a few years ago.

We tried to convince them back in the 2010s that, you know, the Russians are going to keep pushing. Look, they just invaded Georgia. They just invaded the Donbas in Ukraine. They just took Crimea. Of course, they’re going to do more. They’re going to push and push and push until they can’t. The Germans and the French were like, “It’s a brave new world.”

In fact, Germany was going to put into place a defense minister whose job was to wind down the entirety of the German military because they didn’t need it anymore, because we’ve entered a new era of peace. Then the Ukraine war happened, and all of a sudden, the French, the Germans, and a lot of other allies in Europe are singing a very different tune.

In the case of the Middle East, we have been saying publicly to everyone who will listen, at home and abroad, that we want out of the Middle East already. The Israelis assumed that what we meant was we wanted to double down on the alliance with Israel and turn against the Middle East. No, no, no—we want out.

So the Gaza war happens, and while we feel badly for what happened, what the Israelis have done in the months since, we also don’t feel all that hot about it, and the idea that the United States would get sucked into another long-range conflict in the Middle East so that Gaza can go exactly the way the Israeli government wants it to—that’s a dumb play.

What Gaza has done is kind of underline to the United States just how distasteful we find the whole thing. The discussions we’re seeing recently between the Israeli government and the American government on arms transfers are really bringing home to Israel that they are not the golden child. They are not the special exception that is going to keep the United States in the region, and that is forcing some soul-searching.

Finally, in Europe, it took a Russian invasion to change minds. Here, it’s taken a one-day-old arms embargo. But there’s a dawning revelation, one country at a time, one day at a time, that the United States is not the same place it was 20 years ago. That eventually is going to seep through many layers of incomprehension in many places. If you’re an American strategist looking at this, you know it’s kind of a little bit like the Nixon strategy of being unpredictable. But it’s not that there’s a master plan backing it all up—it’s just that the United States is looking to get out, become a free agent again. It’s a different world.

Libyan Oil Gets Shut Down Over Government Duel

An oil refinery positioned in the desert

As a result of the power struggle between the two governments in Libya, roughly 70% oil production in the country has been shut down. This could significantly impact global oil supplies and is a glimpse at the instability within Libya.

The Libyan National Oil Company halted production at the major fields, which takes ~700,000 barrels of oil offline every day. The western government in Tripoli and eastern government in Benghazi are both vying for control of the country’s oil revenues, but no one is getting much of anything right now.

This shutdown could carry implications for European countries like Italy, which refine much of Libya’s crude. It could also ramp up demand for US crude, which the Americans won’t be mad about. The fallout of all this shouldn’t be too large, but could spell trouble for the future of Libya and its energy sector.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know 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. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides 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. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts

Transcript

Hey, everybody. Peter Zeihan here, coming to you from a bright Colorado day. Today, we’re going to talk about a country that I haven’t brought up in over a year—Libya. Basically, the Libyan National Oil Company announced that it’s shutting down production at a couple of major fields. Collectively, Libya produces about a million barrels a day.

The announcements were going to affect over 70% of that. Whether or not there’s going to be more, we don’t know. This is a crazy story. If you remember back to the 2000s, in the early days after the Iraq war, a number of governments were led by tinpot dictators who were so arrogant that they were convinced that the Iraq war was actually about them. It was a warning for them, and so they rushed to cut deals with various powers to make sure that they weren’t the target of the already planned invasion. In the case of Turkmenistan, you had a guy basically rush into the Russians’ arms. In the case of Libya, you had Gaddafi appealing to the United States and voluntarily turning over his proto-WMD program to try to make sure that he wouldn’t be knocked off like Saddam was.

Well, that was the beginning of a series of processes that led to a little bit of a political opening in Libya, which ultimately culminated in a bit of a civil war with NATO special forces. After six months of just waiting for somebody to take off, Gaddafi basically led these militant forces to the presidential palace, and the government collapsed.

Since then, a new government has been put in place, internationally recognized and based in Tripoli. But they were supposed to have elections over ten years ago, and they never did, so they lack legitimacy. That’s in the western part of the country, where most of the people are. In the eastern part of the country, you’ve got another government based in Benghazi, which is a mix of Russian-backed groups, mercenaries, Islamists, and a guy named Haftar, who’s a real asshat.

What has been going on in the last 12 years is that all of the oil—most of which is produced by the eastern government—is processed through the central bank, which is the only institution in the country that has access to foreign currency and can do forex transactions. It is headquartered in the western part of the country, where the legitimate government is.

Both sides have been mucking with the equivalent of the Federal Reserve in this country in order to get a bigger cut of the money for themselves and to deny any money to the other side. The most recent development is that the Tripoli government in the West has kidnapped a couple of senior staffers and tried to push out the chairman of the central bank to get their way.

So the folks on the Benghazi side, where the oil is, have said, “You know, screw you guys. We control most of the oil, so we’re just not going to produce it. No money comes in anyway.” As a result, we have 700,000 barrels a day that are going offline. It might actually increase in the days and weeks to come.

It could be offline longer than just this political dispute because Libyan oil, especially the stuff in the eastern part of the country, is very waxy. If it’s not kept warm, it basically turns everything into a soft candle, including the pipelines, which will take a lot of maintenance to clear out. This has a lot of implications for a lot of people.

The Russians are going to be pissed off because they have managed to get themselves a cut of the energy revenues. The Italians are both on the pro and the con side of this—pro in that they are the ones that end up taking and refining most of the crude that comes out of Libya just because of proximity.

But they also have refining capacity that can handle over twice what the country actually uses. They are a refining hub for southern Europe. So you’d actually have more pain in places like Spain and France and throughout southeastern Europe in the Balkans because they’re going to make money regardless. Part of the problem here is that with Russian crude no longer part of the European diet, Libyan crude was one of the substitutes.

Another big winner is going to be the United States because while the Libyan crude is waxy, it’s also pretty light and sweet and has a fairly similar chemical makeup, minus the wax, to U.S. shale crude. The U.S. exports 3 to 4 million barrels of that a day, and having another half a million to a million barrels of demand out of southern Europe is something that would make American producers quite happy.

This is just what Libya is going to look like until one side or the other wins, or the two sides come together and form a unity government, which is definitely not going to happen. The only other reason that there might be any hope is that there might be someone in Europe—France or Italy most notably—who decides to go in, knock heads together, and basically just take over the fields and run the country themselves as a colony.

We’re not there yet. We don’t have energy shortages in Europe at the moment, and they’ve managed to find a lot of ways to adapt to Russian stuff going offline. Libya’s million barrels a day is not insignificant, but it’s not enough of a shock to cause a political or military reaction out of the European countries. But it is a little bit more pressure.

So if something were to happen to, say, the Persian Gulf—which, thank God, has been one of the most stable parts of the world these last couple of years—then we’re in a different world. So it’s another thing to keep an eye on. It’s more amusing than problematic at the moment, which I can’t believe I’m saying about the loss of nearly a million barrels of crude.

But this is the world we live in today. Watch the European PMs; they’re the ones that have the agency to do something about this if stuff gets real.