Ukraine Hits the Caspian and Europe Goes Nuclear

Aerial photo of the Caspian Sea

We’ve got two major developments in Eurasia. We’re talking about Ukraine disabling two ships in the Caspian Sea and Poland getting EU approval to build a nuclear power plant.

Since the Caspian is landlocked, it’s difficult for Russia to reinforce. So, Ukraine could disrupt Russia-bound Iranian weapons flows with limited strikes. With two ships already disabled, the Caspian could be a success story for Ukraine.

Let’s jump over to Poland. With approval for a nuclear power plant, they will now have access to fissile material. Which means nuclear weapons could be developed at the drop of a hat (and even shared with some close friends).

As the security landscape in Europe changes, we’ll likely see the emergence of multiple new nuclear-capable countries in the coming years.

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Transcript

Hey, all. Peter Zeihan here. Coming from Arizona. Today we’re talking about a couple things that have gone down in the former Soviet Union in the last couple of days. Two events. Number one, the first one is in the Caspian Sea. A couple of ships have been, disabled, blown up. Short version is that Ukraine has said that their special forces have operated in the area and disabled two vessels that were carrying military cargo from Iran to Russia. 

Now, why does this matter? 

Caspian is landlocked sea, and Ukraine is not one of the littoral states. You know, you’re not going to hit it with a naval drone. But, this is well outside of the normal range of operations for anything that we’ve seen the Ukrainians do so far. Now, the Ukrainians say they did this in League with local resistance forces, completely unconfirmed. 

So I don’t know if there’s anything to that, but there’s five former Soviet. I’m sorry, there’s four former Soviet states plus Iran that border the Caspian, Russia in the north, Kazakhstan and Turkmenistan in the east, Azerbaijan in the west, and Iran in the south. Like I said, it’s a landlocked body of water. So the military presence there is pretty limited because you can’t bring in ships from other places particularly easy. 

You have to bring them into pieces and assemble them for use, which means it’s a largely demilitarized body of water. 

There’s not a lot of cargo that gets shipped around except oil from the Kazakh portion of the northeastern part of the sea, and military and agricultural goods going back and forth between Russia and Iran. And even if the Ukrainians have no more ability than to hit the odd ship every once in a while, the Russians having to relocate military forces to something like this would be a really huge diversion, because supplying them is so difficult. 

The only way that the Russians could really do it is to have a naval presence on the sea, and a naval presence on the sea to protect against the odd special forces group would just be not a very good use of the defensive capacity. So for the Ukrainians to find someplace that’s sensitive, that they can strike where the Russians can’t really compensate very easily. 

You know, this is a good play. Also, Iran is where most of the Shaheen technology comes from. So anything that interrupts that flow is something that Ukraine will really feel on the battlefront. That’s peace. One peace to happen on the other side of the equation over in Poland. The polls got approval from the European Commission to use state subsidies to build their first ever nuclear power plant. 

Construction is supposed to start in two years. They’re expecting, 5 to 7 years construction time. But that will probably be accelerated quickly, because in the world we’re going to where international shipping becomes more and more constrained. Nuclear power is one of those things that’ll probably continue to be a good idea, because it’s easier to fly in some nuclear fuel, once every few years, compared to the alternative of bringing in oil or natural gas by Piper by ship every single day. 

So, not only is this an energy issue, it’s a military issue. You see, we’re in the process now of the United States backing away from its commitments to Europe. So the Europeans are being forced to take security matters into their own hands. And while you can, over the course of five, ten, 15, 20 years, build up fighter jets and bombers and tanks and artillery and all the rest, if you have the nuclear fuel, you can make a crude nuclear weapon in a matter of days, two weeks, or if you’ve never done it before, months. 

So Poland now already has all the other pieces in place. They already have the artillery. They already have the fighter jets. They already have, basic ballistic missiles. And now they’re going to have all the inputs that they need if they want to build a nuke. Poland is one of a half a dozen countries in Europe that is considering going nuclear right now. 

And the last piece they needed was the fissile material. one of the waste products from a normally operating nuclear power plant is plutonium. And the, a plant of the size that they’re going to have will generate enough waste plutonium for at least a half a dozen bombs a year. 

So, over the course of the next few years, we’re going to have at least four, probably closer to eight new nuclear powers in Europe. In order to compensate from the Americans basically staying on their side of the ocean. So a lot going on in Europe and in the former Soviet Union right now. This is really just the beginning. The Americans, with the new national security strategy, basically dared the Europeans to look after their own security. And this is part of what that looks like.

Mexico Horses Around with Tariffs

Mexico's flag

Mexico is hoofing a 50% tariff onto imports from countries without a free-trade agreement, giving the US a strong leg up out of the gate while competitors like China and Korea get left circling the track.

Because the US and Mexico are built like steady workhorses rather than fragile export show ponies, keeping their industrial supply chains bridled together lets them keep pace as demographic headwinds start to throw export-heavy models off their stride.

With NAFTA renegotiations cantering up in 2026, this move shows Mexico isn’t about to buck the system — it’s staying in the same stable, tightening the reins, and betting North America can outrun the field for the long haul.

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Transcript

Hey all, Peter Zeihan here. Coming to you from Arizona. This is, Well, this is biscuit. He likes to eat phone, so I’m on my back up now. Today we’re to talk about something that went down in Mexico yesterday. Yesterday was the 11th of two. And that is my hand. Likes to eat hands, too. It was the 11th of December. 

And the Mexican Congress is in the process of passing a tariff bill, which, you know, from those of us on the north side of the border. It sounds pretty common. Anyway, the idea is that, Mexico will now have 50% tariff on, all products or almost all products that are coming from any country that it does not have a free trade agreement with. 

Now, Mexico has gone out over the last 25 years and built free trade agreements with a lot of countries that are not the United States, but the United States is still responsible for over 80% of their exports. And the United States and Mexico are now one another’s largest trading partners. And that is a position that is likely going to persist for at least the rest of my life, and probably for the rest of the century. 

Anyway. Why does this matter? Number one, Mexico is one of only a handful of countries in the world that still has a consumption led economy. He really wants my phone. Which means that in the world to come, where demographics are turning on a global basis, there just isn’t enough consumption capacity to drive what we consider to be a normal economic model for any appreciable amount of time. 

Countries as diverse as Korea and Japan and Germany and China and Italy, are all basically aging out, running out of people who are under age 50, which means that any sort of consumption led system is almost impossible. And you can’t have an export LED system if you can’t export to someone. So countries that still have consumption led economies like Mexico and the United States, are ones that can actually have an industrial base that is matched to what they actually produce. 

And if you can get those countries into a trading bloc, which honestly is some version of NAFTA, that’s basically the systems that are going to work. Everyone else is basically going to face some degree of do you industrialization and economic breakdown simply because the numbers don’t match up. So getting Mexico to put tariffs on countries, getting Mexico to put tariffs on countries that doesn’t have a free trade agreement with, means that the United States gets privileged access to the Mexican system. 

And countries like China, most notably, but also including Korea. Yes. Yes, I’m still here. All of a sudden have some pretty big restrictions and the way that the law is being phrase is it focuses specifically on sectors that Mexico is pretty good at, or the United States is good at, or more likely, ones that we’re good at as a pair. 

So what this is, is a big win, for the Trump administration in terms of shifting Mexico’s industrial policies to match American industrial policies and keeping Mexico and the United States locked together into an economic union. Now we have started the renegotiations of NAFTA now, and they’re probably going to be kind of brutal. But honestly, I don’t expect a whole lot to change. 

Number one, Mexico, is our largest trading partner. And the degree to which things would have to alter, in order for anything else to happen are pretty extreme from the American point of view, because we do need their industrial output, and we do need their super market. Second. 

The Trump administration still hasn’t staffed up the departments in the US government that would do negotiations in any sort of meaningful trade deals. I know that sounds crazy, considering that there’s like 200 under negotiation, but they’re really just about whether or not the United States can throw a tariff on without retribution. 

And we’ve discovered that the answer is not really. So when you got a country like Mexico, where the hard work has already been done in NAFTA, one and NAFTA two, and after two was negotiated by the first Trump administration, I really don’t expect a lot of major changes to happen in this re renegotiation. Anyway. That’ll happen in calendar year 2026 regardless. 

Bottom line, Mexico is showing itself to be very willing to be America’s long term partner, regardless of what the atmospherics of the politics happened to be. So with this new now, he’s after my shoes with this new structure in place. It pretty much guarantees for at least the next 20 years that the United States and the Mexicans will be working hand in glove on whatever the next phase of internationalism happens to look like. 

And that is really good news, really, regardless of what your politics happen to be.

The Death of the US Tech Sector: Part 2

processor and computer parts

Continuing our discussion on the US tech sector, let’s break down how demographics and rising capital costs are stifling innovation.

The tech boom relied upon a few things: a young, highly-skilled workforce concentrated in hubs like Silicon Valley and cheap and abundant capital. I don’t know if you’ve noticed, but the US doesn’t have the young workers or the capital environment to fund long-term tech development.

Combine that with what we discussed yesterday, and you get a tech sector that is going to struggle in the years and decades to come.

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Transcript

All right, Peter Zeihan here. Still in the hoover. Still talking about tech. We’re talking about the second problem now, and that’s on the front end. The tech sector isn’t just about manufacturing. It’s about imagining new products, imagining the future that is primarily done not exclusively, but primarily done in the United States and California. This is a Silicon Valley gig. 

Keep in mind that Silicon Valley does not do it alone. There are other places in the United States that are big on it. Austin, of course, is a big one. The Silicon Hills, Washington, D.C. is another. There’s three others. I can’t remember them off hand. I want to say Boston, but I can’t fact check myself right now. Anyway, what you do when you’re developing the tech sector is two things. 

Number one, you’re designing future products or you’re designing and implementing building software. Both of them basically follow the same process. You get together a bunch of relatively social techno nerds, put them together, network them together wherever they happen to be, preferably in the same room, and tell them to make shit up. And they hypothesize, and then they operationalize, and then they send it off somewhere else to be turned into a manufactured product or coded software. 

As a rule. The US tech age has boomed at the same time that this cadre of people, social tech minded individuals, the millennials, as we like to call them, have been, in their pre childbearing years, if that’s the right way to phrase this. And because the millennials started having kids on average 6 to 7 years after every generation before them, it gave a nice good run from roughly the year, 2005 until very recently. 

The second piece that you need in order to make this all work is just, gods and gods and drops of money. From the point that you rub two millennials together to see if you can get a spark, that doesn’t generate any money. And then they come up with the idea and that doesn’t generate any money, and then they build an operational plan and that doesn’t generate any money. 

Then they design the product, and that too doesn’t generate any money. Then you’re talking about either doing the coding still doesn’t generate money, or designing the products and figuring out how to build it. Still no money. All of those steps cost money. However, millennials don’t come cheap, especially with the skill sets that required for tech development. So you need the cost of capital to be relatively low, and the supply of capital to be as high as you can possibly imagine. 

And again, from roughly the year 2005 until very recently, that describes the United States to a T, the baby boomers were approaching retirement, but had not yet retired, and so they were shoving all the money that they could into the retirement accounts. And that money was being mobilized by whoever wanted to borrow. This is one of the reasons why we had 0% car loans for so long. 

It’s one of the reasons why subprime got so bad. The capital is so cheap, and it’s one of the reasons why the tech sector enjoyed its explosive boom. Everything from meta to AI. Well, folks, those days are over. At this point, over two thirds of the boomers retired. They’ve turned the bulk of their savings from relatively high velocity and applicable products, like stocks and bonds that could be used to lubricate the tech sector into things that are a lot less exciting, like T-bills, because if there is a market crash, they lose and they’re no longer earning income. 

So they don’t have much of a choice. Those that have decided to stay active in the market, well, they’re just stupid because the next time there’s a market crash and there will always be another market crash, they’re going to be broken. They don’t have to move in with their kids. The millennials imagine how that’s going to go anyhow. 

What this means for every industry is that the availability of capital has gone down. The cost of that capital has gone up. We’ve seen it in every industry. We’re roughly 4 to 5 times the cost of capital today that we were five years ago. You should expect that number to rise because remember, a third of the boomers largest generation ever, still haven’t retired. 

And the next generation down my generation, Gen X simply isn’t big enough to fill the coffers. So we’re facing a government fiduciary crisis as the volume of capital goes down, the cost of it goes up. That means debt servicing, for example. But it also means more expensive mortgages, as we’ve already seen, and less ability of the tech sector to tap capital markets on whatever terms they want. 

They’ll still be able to issue stock, raise money that way, general capitalization. But there are fewer players in the market now, so the demand for those stocks overall has to go down So the two big things that have made the tech boom happen are over. The millennials have to, abuse the term grown up a little bit and are more likely to have families now. 

And that means different sorts of jobs, different sorts of interactions. Also, they’re no longer in their 20s. The oldest millennials are now well into their 40s. Different sort of mindset. You want the Young bucks to be the one that are doing the software work, not some old codger. Yes, millennials, I just called some of you old codgers. We’re not going to think about what that means for me anyway. 

Combine that with more expensive money, and it’s difficult to imagine simply being able to build the workforce, much less pay for it over the time horizon that is required to develop these sorts of products. So in summation, the future of tech don’t look great. We’re not going to have nearly as many breakthroughs. They’re not going to come as fast. 

They’re not going to become as gigantic and on the back end. Even if we do get some. 

It’s going to be hard to manufacture them. We are losing the manufacturing capacity here in the United States. That would be part of that process. More of it is now going to Asia because of government policy. 

And when China cracks and it will, we basically lose access to a lot of the East Asian system. And if you think I’m putting this on China, it’s not just China. 

There’s a demographic bomb going off all over East Asia, most notably in North East Asia. The Koreans. 

Are not all that far behind. Neither the Japanese, but the Chinese are the core of it for this decade.

The Death of the US Tech Sector: Part 1

Photo of wires and tech

We’re doing a two-part series on the tech sector. Today, we’ll be looking at the disruption caused by deglobalization and Trump’s policies.

The gadgets and gizmos that fill our homes rely on highly complex supply chains, with most of that work happening in Asian countries. Any disruption to these interconnected networks could send devastating ripple effects down the line. US Tariffs on Asian imports discourage US participation in supply chains and incentivize companies to move production entirely outside of the US.

As tech manufacturing floods out of the US and we continue down this path of deglobalization, the future of American tech production looks worse and worse. Tomorrow, we’ll tack on the issues of demographics and rising capital costs.

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Transcript

Hey, all. Peter Zeihan here. I am in the Hoover Wilderness, which is one of my favorite spots on the planet. Lots of rock and water. Anyway, today we’re taking another question from the Patreon crowd. And specifically, what’s the future of the tech sector as everything Trump and everything de globalization kicks in? Well, the summation is it’s not pretty. 

There’s a lot going on. So we’re going to break this video into two parts. First we’re going to talk about classic manufacturing. Lots of folks think that all of our tech products and electronics in general come from China, but that’s a bit of a misnomer. China is a place where some of the parts are built. 

Certainly, and where a lot of the final stuff is assembled, but it’s not typically where it’s manufactured. And when you’re talking about tech products, you’re talking about not dozens, but hundreds and maybe even thousands of supply chain steps. For example, your typical laptop or smartphone has somewhere between 1 and 2000 pieces in it, and each of those pieces have their own supply chain. 

What happens in this weird world we live in of globalization is that the parts are made incrementally by different labor forces with different industrial plants, typically in different countries, and then those various components are brought together at a location and assembled into a sub piece. And that sub piece is then shipped off somewhere else, where it’s put into another piece, and on and on and on until you get your finished product. 

So when you’re talking about something like a smartphone, it probably touches 5 to 11 countries. On its way before it even gets to you. Much less before it crosses the Pacific. So East Asia, because of its widely differentiated supply chains and widely differentiated labor structures, is where most of this is done, because the high end is done in places like Korea or Japan. 

So we’re going to pause until the appeal is done. 

All right. Where was I? So the high end stuff. Taiwan, Korea, like Dram chips come from Korea. The GPUs that everyone obsesses about come from Taiwan. But the photo masks that make it possible to make these things. That all comes from Japan. The purified materials might come from the United States. The lasers from California, the etching machines from the Netherlands. 

Injection molding might be done in China. Wiring might be done in Vietnam. You get the idea. It’s a really big network. Any part of the globalization that hits any part of the world is going to break up those chains. And since roughly, 80, 85% of tech manufacturing is Asia centric, we’re looking at basically cascading failures. 

Because, remember, if you have a phone that has a thousand parts and you’re missing one part, you just have a really expensive paperweight. Anyhow, in this way, what’s going on with U.S. trade policy is, borderline suicidal because what it has done is put a tariff barrier between all the Asian countries and the United States, which actively, aggressively disincentivize this American participation in those supply chains. 

Because if you were once reliant on a part from, say, California, and now, shipping the inputs in from Asia to do the value add, has this onerous tariff cost upon it, you’re going to look to move that thing out of California to someplace like Korea or Japan. And so what we’re starting to see in the manufacturing space for tech is a de Americanization. 

Not that we were doing a whole lot of it either. Any way we were doing certain pieces, but there’s now no incentive for those pieces to stay here. So if you look down the road when globalization gets worse and say, when China goes away, we’re going to have very, very little to work from. We’re just not going to have tech products. 

Obviously, I would like to thank everyone sees that as a bit of a problem. If you want to move that stuff here, tariffs are absolutely not the right tool for the job. They do the opposite. That’s problem one. Next time we’ll talk it up. Problem two.

North Carolina’s Silicon Mines: Leverage for the US?

Mining operations with trucks

With how important semiconductors are for the future, can the US use the high-purity silicon quartz mine in North Carolina as leverage for negotiations?

While the quartz from this mine can be used to make semiconductor-grade silicon and the ultra-pure crucibles needed to grow silicon crystals, this isn’t the kind of leverage that’s going to have everyone else bending the knee. The US is already a leader in this space, but given the complexity of semiconductor supply chains, no single country controls a majority.

The US and allies dominate the high-end stuff, but none of this works without all 30,000 inputs and 100,000 steps. So, does it give the US some leverage? Sure. But that doesn’t change the fact that we still depend on a fragile, global supply chain for semiconductors. We’d need about $20 trillion and 40 years if we wanted to do it on our own…

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Transcript

Well, it’s definitely officially winter here in Colorado. Peter Zeihan here. Today we’re taking a question from the Patreon page, specifically about semiconductors. This person says that he recently learned about a mine in North Carolina that produces high end silicon quartz. 

And it’s essential in semiconductor fabrication. So could the US use this in trade negotiations in order to cut a deal with countries around the world? Certainly. Quartz is used for two things. Number one, it is the source of the silicon dioxide that eventually goes into the crystals that are grown in a vats to the size of cars, to be sliced into the wafers that are the core of every semiconductor. 

And so product from this mine can be used for that. But what this mine is really good for is the ultra, ultra, ultra pure silicon dioxide, which you use not for the semiconductors themselves, but you use to make crucibles that are used to melt and purify other silicon dioxide. So you need really pure stuff in order to make the crystals, and you need super duper pure stuff in order to make the crucibles and the US is a world provider of both. 

So yes, U.S could absolutely use this as leverage. But that implies that the United States is looking for leverage, that we need leverage that we don’t have leverage. And that’s just not true. You see, one of the things that people forget is that there are so many pieces of the semiconductor supply chain, 30,000 independent inputs, 100,000 supply chain steps, and no country controls a majority of any of them. 

The United States does things that no one else can do. And when it comes to the material side of the equation, we have a lot more going on than one silicon dioxide mine. You see, what happens is you need things like indium and gallium and copper and arsenic and bismuth and all these other things. And yes, the Chinese dominate the processing. 

All of those materials, but only up to the point because the Chinese tech base is, well, it’s still a developing country by most measures. And so they can’t get to the purity that’s required to make mid-grade semiconductors much less high end. So what happens typically is, say, copper. The raw copper ore comes from Chile. It’s partially processed in something called red copper. 

Where all but 2% of the sulfur has been cooked off. Then it gets sent to China, where they cook off the rest and purified as much as they can. And that’s good enough for, say, you know, the wires in most electronics, but it’s not good enough. So for semiconductors. So the copper then comes to another country, typically the United States or Germany, Japan and Korea, where it’s turned into something called eight and copper or nine and ten and 11 and, and that’s the number of nines of purity. 

So an eight and copper is 99.999999% pure. 11 would be three more nines. Parts per billion in terms of contaminants can sometimes be too much. And the Chinese can’t do any of that. So yes, they dominate the low end processing. They do the grunt, they do the dirty work, but they can’t do the high end. So all of these materials round trip multiple times from the country where the ore comes to China to do the primary processing somewhere else to the finish processing, and then the Chinese re-import the ultra purified components that are the basis of their semiconductor industry. 

So yes, silicon dioxide out of North Carolina is a major geopolitical pressure point. It is something that gives a lot of leverage, but it implies it’s the only thing. And there are dozens of points on just the material side of the equation, where the United States or its allies have a de facto monopoly and the Chinese have nothing. 

That’s before you consider the real high end work that deals with design, or the mid work that deals with packaging. 

The Chinese are doing their best to catch up, but they literally have to catch up in over 2000 subfields and they’re not closed in very many of, them at all. The most advanced one, of course, are the etching machines themselves, the extreme ultraviolet machines that come out of the Dutch from ASML. 

But ASML itself has over several thousand suppliers around the world, the single largest component of which are in the United States. So anyone who tells you that the Chinese can overtake us in this industry is ridiculous. But also anyone who tells you that we could do it ourselves is ridiculous. This is the most sophisticated supply chain system that humanity has ever created, and if we decided we want to do every part of it in the United States, that is easily a $20 trillion project that will take 40 years to complete. 

Don’t let anyone tell you otherwise. 

The Russian Breakdown

Russian soldiers in formation

Should the war in Ukraine result in a Russian loss, what will the future hold for Russia?

Well, we know the road ahead for the Russians is going to be a rough one, but that doesn’t mean the country will collapse from within immediately. The military and internal security services hold too much power, and since the heavily propagandized, aging, ethnic Russians account for 70% of the population, an internal uprising isn’t of concern.

The real threat to Russia comes from the outside. Neighboring countries or those with an interest in seeing Russia remain destabilized could take advantage of its weaker borders and limited economic and strategic capacity.

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Transcript

Peter Zeihan here coming to you from Colorado. And today we’re going to take a question from the Patreon page, a bit of a what if, if the Russians lose the war in Ukraine or what does that mean for national stability within Russia proper? Are we looking at an immediate disintegration or what? Great question. 

Now, there are a lot of examples in Russian history of where the center has broken. And a loss in Ukraine doesn’t necessarily mean that the Kremlin loses power, but there’s really two big pillars of power in Russia. One is the military and the other one is the internal security services. And the important thing to remember about Russia is, unlike a country like Iran, where the country is actually half non Persian, and so the military is primarily responsible for occupying itself in order to keep all the minorities, under control in Russia. 

That’s not the case in Russia, even if, the Russian census data is completely fabricated, which it probably is, we probably have at least 70% of the Russian population actually being ethnic Russian. So among those populations with the possibility of Saint Petersburg, where there might be an economic push for independence, most of the Russians are going to stay put. They’ve been conditioned. They’ve eaten nothing but propaganda for quite some time. And most importantly, most of the young people are gone. Not only is the birthrate in Russia been dropping since before World War two, it plummeted under Khrushchev. Fell even more to Gorbachev and particularly nosedived in the 1990s. You add in a million casualties in the Ukraine war, in another million people under age 30 fleeing. And there really isn’t that youth generation that generally generates, revolutionary activity. And the Russian population will be concerned about losing what little they have left. So the chances of them being really rebellious are pretty low. The other 30%, of course, is a different question. You’ve got a number of minorities, mostly Turkic, of some flavor or Bashkors, Tatars, Chechens, English. This is where things would get really interesting. So, the military’s primary goal is to be on the borders in the Russian sphere and prevent any sort of invasion. And in a post Ukraine scenario where the Russians lost their borders are very, very, very long. And so they really won’t be available for any sort of domestic suppression of rebellion that will fall to the intelligence services, which are just as strong now as they were three years ago. 

So you can have an open rebellion in places like Tatarstan or Bashkortostan and the Russian government remains relatively capable of dealing with those. Now, they can’t deal with it everywhere, as we saw in the Soviet system, when the internal services were much stronger than they are today. If you’ve got two dozen places going into some degree of rebellion at the same time, then you’re kind of screwed. 

But when those two dozen places went into rebellion at the same time last time around, they were Kazakhs and Uzbek and Georgians and Latvians and Estonians and Armenians, and as a Rajani, none of them were ethnic Russians. And when the Soviet system fell, 14 of the 15 constituent republics of the Soviet Union were not majority Russian, and they are now independent states. 

What was left with rump Russia is much smaller, much more difficult to defend, but is actually more ethnically homogenous. So the Russian state, the Kremlin, would have a much better chance of suppressing internal dissent. 

Now, this is all pretty much a starvation diet because they post Ukraine. Russia loses a lot of its income. Its security situation is much worse. 

Its financial position is considerably worse, and there would probably be pressure on it from the entire western and southwestern periphery, because once Ukraine wins, you’re going to have any number of European countries that include, but are not limited to two Finland, the Baltics, Poland and Romania, who are going to be pushing at the Russians to try to make sure they stay off balance. 

The Turks will probably get on that to the EU’s backs down south will probably get into that. And based on the circumstances in East Asia, Japan or China could get in that as well. So I wouldn’t say that a post Ukraine. Russia is long for this world, but it’s not probably going to fall from within without a lot of help. Russia is in a relatively slow motion decline. It’ll probably still be there regardless of what happens in the Ukraine war by 2040. But once you fast forward past 2050, that’s when the demographic shift really starts to shift. And most of those Turkic minorities have strong birthrates. You combine that with what happened in the war, in gutting the younger generation and very, very, very low birth rates and high death rates among the Russian population. 

By the time you get to 2060, you’re in a very different environment and then you can start thinking about an internal disintegration, but it’s going to be from the outside first. And, the end of all of this really does depend on what happens to Ukraine. Because if Ukraine falls, then the Russians have a more secure external border. 

It’ll buy them 20, 30 years. That’s not a rounding error. That’s why they’re doing it in the first place. But we are still looking at the end of the Federation before the end of the century. That’s pretty much just a question, whether it’s front loaded or not. 

Who Needs National Security Guidance Anyways

The pentagon in Washington DC. | Photo by envato elements: https://app.envato.com/photos/982e8cf6-356f-43cd-88b2-6fac5fb7d312

The newly released national security document from the White House is more of a culture-war manifesto than a strategic guide for US foreign policy.

The document makes a series of troubling claims and, despite lacking any coherent guidance, signals two major shifts: an institutional breakdown at home and a strategic pullback from the Eastern Hemisphere.

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Transcript

Hey all, Peter Zeihan here coming to you from Colorado. And today we’re gonna talk about the new national security document that was put out by the white House. Now, the whole idea of the document comes out every year, and it’s supposed to be the white House guidance to the rest of the U.S. government. What our goals are and what we’re worried about on an international stage. 

So it’s supposed to be tactical advice for generals and admirals and diplomats and all the rest. That’s not what we got this time. What we got this time was the American culture war in international form. It’s basically a campaign document. And whereas all the national security documents in the past have been designed about around guidance, this is really just a lot of really assertive claims. 

And while in the past it’s all been about the United States, this is one is very much about Donald J. Trump. His name came up almost 30 times in the document. If as far as I am aware, in the decades of the white House has been putting this document together, never once has a sitting president’s name arrived at all. 

Because it’s not about one guy. It’s about the country. That is not the case. And again, this is basically a culture war document taking American domestic political considerations and projecting that onto the international system, something that won’t work very well because in the United States, if you want to run for president of a political faction, you have to rally that faction. 

That’s how Trump became president. So he got the Republican nomination. That’s how he took over the party. Yes, yes, yes. But that doesn’t work on the international stage because there is no vote. This is a document that is basically designed to be red meat for MAGA and provides absolutely nothing for guidance for policymakers. It also does a couple of things that are grossly against American national interests. 

For example, it almost expressly ascribes a specific sphere of influence that no one else should have power. And for both China and Russia, and in conflict with several things that have actually come out of this administration, has actually said that the Chinese should have a right to basically control everything in their neighborhood. Russia barely comes up at all, despite the fact that the Russians have killed more Americans over the last 30 years than any other country, far more than anyone involved in the war on terror. 

Obviously not a lot comes up about Ukraine. No real shock there. But what is perhaps most concerning from an international point of view, if you’re not an American, is the attitude towards Europe. Basically, the Trump administration is now saying it’s an American national interests for the politics of Europe to revert to back to where it was in the 1930s. 

And I’m like, it’s like, just remember what happened in Europe in the 1930s. It was not a pretty place. It says national interests of the United States, involve include the ethnic breakdown of individual European states, which is, I mean, fascist and racist are the two words you would probably want to use. And the Europeans are… 

Let me put it this way. If this really is what the United States wants, then we are basically asking the Europeans to go back to the darkest page of their history and basically kill anyone that doesn’t look like them. And to rearm as part of that process and have an independent foreign and security policy. Every time that that has happened in the past, Europe has gotten really fucking crazy in a very short period of time. 

Most recently, we called it World War Two, and before that, World War one, and then the half dozen major wars we had in the 19th century as well. But let’s put that to the side. Does this mean that this thing doesn’t matter because there’s no real guidance? It’s really just a political stake in the ground, not what I’m saying. 

It matters very much for two big reasons. Number one, this administration, is really bad at building institutions. And to implement the things that are in this document requires a fundamental rethinking of American governance, and especially the American military. For example, one of the things it says it wants to do is use the military to secure the southern border. 

If that is what we want to do, that means no more F-35s, no more Abrams, no more special forces. That means retraining the military to patrol an area that’s 2000 miles from end to end to an indeterminate amount of thickness in order to catch illegal migrants. That is a very different sort of force. And the force we have now is vastly over trained for that. 

And we’d be basically taking people that we’ve invested somewhere like 100 to $400,000 per person based on the job, to basically make them all cops, massive waste of material, massive weights of skill sets, and the time that it would take to build up an institution that was capable of doing that. It’s not something that you measure in months or even years. 

A great example is what the Trump administration is trying to do with Immigration and Customs Enforcement. They’re trying to double the number of agents and for their domestic policy concerns. That makes a lot of sense. But what they’re discovering is when you take the rhetoric of the white House and combine it with the reality of the immigration, pool in the United States, you get a very different situation. 

According to the rhetoric, they’re going after the drug dealers and the rapists. According to the data, most of the people that have been arrested have no record whatsoever or very, very minor infringements. And so when you’re recruiting people for that specific task and the people who start to look at the jobs realize that the drapes don’t match the carpet, you get a very different sort of applicant. 

And so, the Immigration and Customs Enforcement Bureau has had to basically dumbed down their training regimen. They’ve gone from a 16 week course to a six week course. They’ve removed Spanish proficiency, and they’ve basically started to actively recruit from, like, white power gangs because they’re having a hard time getting people who have a sense of what law enforcement is about, who really want to uphold the rule of law, to go into downtown Chicago and get people who are trying to, you know, do yard work. 

I actually have a client who told me a couple of weeks ago that She got hit by a little tear gas when she was out for a walk with her dog, because ice was reading a house where a guy was finishing a bathroom because, you know, the Sinaloa cartel of bathroom finishers. That’s the real threat. 

When the rhetoric is done for ideological purposes, eventually it crashes into reality. And that happens here. And it’s making very hard for this administration to build an institution. They’re pretty good at tearing them down. Which brings us to the next piece. Something that can be done out of this document is a whole scale re shifting of American military power from the Eastern Hemisphere to the Western Hemisphere. 

Very, very clear that that is something that this administration wants to do that can be done. You can shut down the bases in the Eastern Hemisphere. You can reposition your military in this hemisphere and carry out different sorts of activities here. Now, according to the document, they want to do that with allies. 

The problem is, is that the three countries in the Western Hemisphere, that the United States has the strongest links with to battle human migration and to battle illegal narcotics, are the three countries that this administration has gone out of their way to antagonize Canada, Mexico and Colombia. Meaningful trade talks with Canadians are at a standstill at the moment. 

The Mexicans are basically dodging every bullet that the Trump administration can fire their way. And now President Trump himself is down on record calling the president of Colombia a drug dealer. So this is stuff we’re going to have to do ourselves if we are serious about it. One of the advantages of the old system, where the United States controlled the global order and led this vast alliance network, is when the rubber hit the road. 

If shooting never actually happened, the US took control of almost the entirety of the alliances, armies and navies and air forces. Massive force multiplier before you even consider things like basing rights. If we’re going to do this in the Western Hemisphere, if we’re going to do this ourselves. You’re talking about a military budget that’s going to have to at least double, and a massive retraining of everything that we have had the military do over the last 60 years. 

That is a lot of wasted investment in order to do things that would be much easier to do hand in glove with some allies. So overall, what do I think about this document? Well, I don’t think you’re going to find a lot of people with any intelligence or security experience, much less economic experience, who think there’s a lot here that is worth salvaging. But this is only year one of a four year term for Trump round two, and there is a lot of time between now and the next presidential election where things like this can actually dig in 

Until this administration can prove that it can build something as opposed to just tear it down, we’re simply looking at a reduction in the ability of the United States to affect the world around it, and that is something that will reverberate throughout the world for decades to come. 

What Would a Conflict in Taiwan Look Like?

Taiwan flag is shown in an open matchbox, which is filled with matches and lies on a large flag | Licensed by Envato Elements

Let’s discuss what China’s potential invasion of Taiwan would look like.

Should China attack, both Biden and Trump have been explicit that the US would intervene economically and militarily. Beijing doesn’t believe that, though. Despite the echo chamber Xi Jinping has created, deep down, he knows that this invasion doesn’t bode well for them.

China lacks the logistical capabilities to move a large enough force effectively and efficiently across the Taiwan Strait, so Taiwan would have time to prepare, and it would become a shooting gallery. If they somehow managed to capture Taiwan, that would only be the beginning of China’s problems. China couldn’t operate the semiconductor fabs, supply chains would begin to collapse, energy and agriculture imports would falter…

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Transcript

Hey all, Peter Zeihan here come to you from Snowmageddon 2025. We’ve gotten about ten inches, so far. We’re expecting another three before the stops. And if you this is my last video, you’ll know what happened. Today we’re taking a question from the Patreon page. A lot of people have been doing war games recently of the Chinese attack on Taiwan, simulating a combined naval and cyber attack. 

And what do I think of their prospects for Taiwanese success? And how do I think the United States, and especially Japan would respond? 

Under the Biden administration and now under the Trump administration, the American policy on Taiwan has actually been shockingly clear. It used to be we had something called basically deniability, where the United States deliberately said that it could neither confirm or deny any particular action. 

We called Taiwan a significant entity and a friendly entity, but not a country that has pretty much gone by the wayside. Now, while there’s not a firm bilateral defense treaty between Taiwan and the United States, both Biden and Trump have said very similar things that if there was an attack, the U.S. would intervene militarily and economically. Now, that is not believed in China. 

In China, the belief is at most they’d have to face some mid-level sanctions, kind of like what the Russians are dealing with with the Ukraine war. But let’s review a few basic facts. Number one, if you think the Trump administration is echo chamber, it is nothing compared to what’s going on in the People’s Republic. Chairman XI purged his last real advisors eight years ago. 

And so anyone who’s repeating the party line is doing just that, repeating the party line. And if you want to get in, good. Well, if you want to get in dead with Chairman XI, the best thing to say. So yeah, Taiwan is a real place. We shouldn’t invade that. That’ll end your career and several other things related to your life very, very quickly. 

Second, it’s a bit of a hop across the Taiwan Straits, over 100 miles. And, the seas are often relatively stormy. So if the Chinese were to pull this off, they would have to build a really large amphibious force. And they are working on that. But the time it would take to merge forces into the zone across from the Taiwan Strait and meet them up with their equipment and then sail them to the few points in Taiwan that you can actually land safely. 

That’s a whole other question. It would take weeks, if not months for the Chinese to arrange. And in that time, anyone else in the world could choose to do something. Most notably, the Taiwanese and Taiwan has had a nuclear power reactor for as long as I’ve been alive. 

So if the Taiwanese decided that they needed to build a few crude nuclear weapons to dissuade the Chinese, that is something that is well within their technical skill set. Third, let’s assume that none of this is relevant, and that the Chinese and the Americans do not intervene militarily at all, even though it would be an absolute shooting gallery taking out all of these troop transports, which are most of which are just civilian vessels that would be attempting to cross the Chinese strategy is literally to shove a million people in the boats and just kind of sail that way. 

It’s not a good plan, but let’s assume that it works. Then what, the Chinese can’t operate their own semiconductor fab facilities. There’s no way they can operate the Taiwanese ones, nor would they even get the plants, because those come from Japan or the United States. So the question then would be, what happens on the next day? 

Remember that the Chinese navy lacks reach. It is designed around the goal of capturing Taiwan, and it would probably be a real sight. But it’s not designed to project power, much less control ceilings. They just don’t have the range. They have a lot of ships, but they’re small and their legs are short. So you put a few ships in the Indian Ocean, maybe in the general vicinity of Malacca, and you cut off the energy artery. 

That’s where two thirds of their energy comes from. You do a few targeted strikes on things like pipelines, and all of a sudden you’ve got a country that imports 80% of its energy, having very little, if any. And that assumes the United States doesn’t do a cyberwar back. So, Chairman Ji, a decade ago knew full well that any meaningful attack on Taiwan is not just the beginning of the end of China’s of strategic power. 

It’s the end of China as an entity. It’s the end of the Hun ethnicity because of energy shortages and famine, because this is a country that imports three quarters of the stuff that they need to grow their own food. And so the decision was made to proceed because for nationalist reasons, they can’t do otherwise. But I really don’t see the strategic math of changing very much. 

All that’s changed is that China today is more dependent on international trade than it was 15 years ago, because 15 years ago, they at least had some people who were, you know, age 40 and under. Now they really don’t have many at all. We’re in the final decade, and if the Chinese are going to try something, they’re probably going to do it in the next decade. 

But if they do, they will be accelerating their utter end and removal from history, because they’re just won’t be enough energy and food to keep what’s left of the population alive. Do I worry about Taiwan? Not really. Does that mean I think semiconductors are safe? Absolutely not. The semiconductor supply chain is the most diverse and fragile thing in the world, and we only have lose one country of significance to globalization or depopulation. 

And the whole thing falls apart. I normally point at Germany is the country I’m most worried about, but as long as we’re talking about China and Taiwan, let me point at China, because they do the processing for a lot of the materials that go into everything. This industry really does take every one, and there’s no version of globalization that can take place over the next 15 years, where we don’t lose the ability to make those high end chips at all.

Uh Oh for Space

NASA photo of the ISS

The Russians had an oopsie with the launch pad at their main heavy-lift launch site following the launch of their Soyuz MS-28 spacecraft heading for the ISS. The unintended destruction of this launch pad cripples Russia’s space capabilities.

However, it’s not just Russia that will feel the heat from this. With the ISS slated for retirement within five years, the lack of Russian participation puts the future of the ISS…up in the air (excuse the pun). NASA isn’t ready to step in, and private sector plans for independent stations all require the ISS functional and in place.

With the Russians unable to maintain a modern satellite network, coupled with their international isolation on the ground, what’s stopping them from sabotaging low-Earth orbit? It wouldn’t take much for them to trigger a Kessler Syndrome event. Not a great look for the future of space.

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Transcript

Hello from chilly Colorado. It’s like four degrees here today. Peter Zeihan here, today. Well, last week during Thanksgiving, something blew up in the former Soviet Union. And it wasn’t in Ukraine. And it wasn’t in Russia. It was in Kazakhstan. Kazakhstan is the second largest of the former Soviet republics, kind of nestled under south central Russia. 

What blew up was at the cosmodrome, which is where the Russians centered their space program during the Cold War, because you want your launch spot as close to the equator as possible. So the spin of the Earth helps you launch things. Anyway, the Kazakh Cosmodrome has been where everything has been happening, for the i.s.s., that really matters. 

Most of the heavy lift is there. The U.S. does launch things first with a shuttle and now with, SpaceX’s Dragon capsules. But it’s the Soyuz that come out of Russia that really have the really heavy lift. Anyway, when they did a launch, the launch pad blew up and repairs are going to take a minimum of months, maybe years. 

And this may be the beginning of the end of the ISS. That’s the International Space Station. Now, the ES was put up there as part of an American, Russian, post-Cold War, hey, we’re all friends now program back in the 1990s and has been the core of manned exploration ever since. However, it’s getting old and it was going to be retired within five years. 

But now, without the heavy launch capacity, at least in the short term, probably longer. It’s unclear whether the Russians are going to continue to participate in the program at all. 

It’s not the 1980s anymore. With Ukraine war three years ago, the Russians have become persona non grata in pretty much every aspect of international cooperation, even Eurovision, with the exception of the space program, because from the American point of view, without the Russians involved, it’s a question whether there would be a space program if all the certainly the ES itself is now in jeopardy, which means we have two problems. 

First of all, without heavy lift capacity, it is questionable whether the ES can persist and there isn’t a replacement program in place right now. NASA has no no plans to put up a replacement system. And there’s a lot of science and a lot of work being done at the ES that really can’t be done anywhere else. 

The plan is for private companies to go up and have their own satellite systems. It is unclear if anyone is ready for that, and everyone’s plans revolve around starting attached to the I.s.s. and then when the ISS is commissioned, moving off on their own, that plan may no longer be viable. And if we’re entering a period where there is no manned operations in space and things like satellite repair become really difficult, especially for the bigger ones, that’s problem. 

One problem, too, is the Russians. The Russians of late have had a very. If I can’t have it, no one can have it, approach to really everything. Because the Soviet Union used to be a superpower. Until the Ukraine invasion, Russia was a major power. And now Japan, Korea, Taiwan, the United States and all the Europeans have basically shut the Russians out of everything they can. 

They just don’t matter in international forums to the degree that they used to. And they certainly don’t have the cash to splash around to buy friends like they used to. So where does that leave them? Well, if the ISS fails and they can no longer have heavy space launch, then all of a sudden the Russians don’t have much need for satellites. 

We did a video, a couple weeks back. We’ll share that on this one, where we talked about something called a Kessler syndrome. Basically, there are thousands, soon to be tens of thousands of satellites in low Earth orbit, and very few of them are Russian. The Russians can’t maintain what they have. So you got some old Cold War relics up. 

There are a few things that have been launched since then, but for the most part, this is Starlink and to a lesser degree, American telecommunications. it doesn’t take a lot of imagination to think of how the Russians could disrupt that, because though they don’t have heavy space lift, anymore, they do still have space left. 

They have their own cosmodrome in Russia proper, can’t get the huge volumes and the weights up, but it can certainly say go up and blow up a few satellites. And if you do that and you cause the, the shotgun effect of high velocity debris, Mach 25 it doesn’t require taking out too many satellites to cut a cascade reaction that basically makes low Earth orbit unusable for several years. 

And the Russians are now in a position we’re considering that doing it on purpose, is probably crossing their radar now, because if they can’t use space in a meaningful way anymore and everyone else has taken their toys and go on home, then the Russians really don’t see the negative of making space unusable. 

Israel Is Defending…Germany?!?

Israeli button on top of a German flag

2025 has been full of surprises. And honestly, given today’s headline, I wouldn’t be surprised if pigs started flying next. We now have Israel defending Germany.

The Germans have acquired and activated the Israeli-made Arrow missile-defense system. Effectively, we have Israel protecting Germany. All of you have seen my bingo card, and this was most definitely not on it.

With the threat of a Russian invasion still looming, and the pesky little exclave of Kaliningrad, the Germans have been forced to rearm and prepare to intercept Russian missiles. So, we’ve got non-NATO tech coming into NATO’s defense architecture, and the least likely of partners are the ones responsible.

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Transcript

Hey, all. Peter Zeihan here. Coming to you from Colorado, where it’s cold. The news today is that we’ve got a change in defense parameters in Europe. Not because of anything the Americans or the Russians have done. Or not directly anyway. But because of the Germans. Recently the Germans have turned on, what’s called an arrow defense system. 

It’s an anti-missile anti-air system. They spend about 4 billion U.S., 4.2 billion US on it. And it doesn’t come from the United States, and it doesn’t come from Europe, comes from Israel. So we now have this oil situation where the Jews are protecting Germany. A quick backdrop. So the Holocaust was a thing. If you say otherwise, just turn this video off now and never watch my stuff again, because we’re never going to get along. 

And Israel was founded as part of the whole Western guilt for allowing it to happen. As a result, German post-World War Two German Israeli relations have always been tense, but paternal, if that makes sense. Postwar Germany, once the Nazis were gone, has always looked back on that chapter of their history as something that they’re ashamed of and would like to make up for. 

And so even when the Israelis are doing things that most Germans really, really hate, like carrying out some version of a genocide in Gaza, for example, the Germans have always stood by to a degree, out of historical guilt. This is the first time it’s gone back the other direction. Germany in the post-Cold War environment became convinced that history was over and trade was the future, and no one needed a military anymore. 

And they basically demolished their own. And it got down to the point that I would say that an even fight the Netherlands could probably could have invaded Germany five years ago. That’s not the case anymore. The Germans are going through a really big rearmament, and they’re facing down the Russians, which they know are coming. with the Ukraine war, the Germans have finally admitted that history is not over. 

And if you look at a map where Ukraine ends, Poland begins on the Polish plain. And every single war that has been fought between the Russians and the Germans in the past, and there have been a lot have always involved troops going through that corridor. So the Germans have to be a land power, but they also have to worry about missiles. 

the tool that the Russians have used in the post-Cold War environment is when they are annoyed with the Europeans or the United States, they for position their missile batteries, specifically a system called the Iskander. And they don’t just put it in western Russia, they put it in a little enclave called Kaliningrad. And Kaliningrad is this little spot of territory on the southeastern shore of the Baltic Sea, sandwiched between Lithuania and Poland. 

So it is surrounded by NATO countries because now Finland and Sweden are also in NATO and of course, Germany, Poland and, Denmark as well. So if you take this little exclave and you put missiles in it, all of a sudden you can reach all of Germany with relatively short range missiles. Now the Germans have a multi-layered missile defense system, or at least one that they are attempting to build with some degree of success. 

The issue is a combination of technical barriers. You see, you’ve got your boost phase when the missile launches, you get your mid phase when it might be out of the atmosphere. If it’s a long range one, and then you’ve got your terminal phase and you need different weapons systems to intercept different types of missile systems at different parts of the arc. 

So the most efficient would be to take it out in the boost phase. When it’s launching, it’s going slow. But to do that, you have to be almost on top of the missile, which means you’re already in the country that’s launching the missiles. There’s a reason why that doesn’t work. In the mid phase, you’re talking things like Star Wars hitting a bullet with a bullet. Especially if you’re talking about ICBMs that are going around the world. no one really has a great mid-face system. All the U.S is working on it. And then you’ve got terminal phase where things are screaming back into the atmosphere. And that’s going to be things like your Patriot systems. 

But what works for one missile system doesn’t necessarily work for another one. So the missile system that the Germans are concerned about, the Iskander only has a range of 515 hundred kilometers. And if it’s coming from Kaliningrad, then what they really need is a mid phase interceptor before it gets into the range of the Patriots. There’s something called the third that the United States uses, but it’s usually for longer range systems. 

But the arrow system out of Israel is perfect because it was designed for things coming from Iran and its record is very, very good. It just hasn’t been tested against modern Russian weapons. So having, for lack of a better phrase, Jewish missiles in Germany to defend against Russian missiles, I mean, my mind kind of spins at using all of those words in the same sentence is really interesting. 

Development. In addition to the oddity of the pairing, in addition to the Germans waking up, both of which are very strategic scenic situations, what I find really interesting here is we now have non NATO weapons in NATO, starting to integrate with NATO defenses to defend NATO against the Russians. So we’re taking an entirely new technical and military tradition. 

That’s the Israelis. And putting it into a NATO system. Arrow is a system that was partially funded by the United States specifically, so the Israelis wouldn’t go on the war path. And for the most part, it has worked to what Washington wanted. But now incorporating that into NATO and, of course, American, defense systems over the long run is going to be really interesting because this is a really robust technical test bed. And the Israelis have a great reputation for taking this system from the drawing board to operationalization in a very short period of time. And now that’s going to be implanted into Germany, where the Germans are. How should we say a little bit more, process minded? So, lots of things that are going to come out of this in the days and months ahead, because the Germans really do need to have something fully up and running, not by 2030, but by the end of next year. 

Because they know in their bones that if the Ukraine war breaks because the Americans backing away, that, Poland is next, and then the Germans are going to be in the thick of the fight, and they have to be ready.