Peter Zeihan, Author at Zeihan on Geopolitics

Is Federal Regulation Coming to the Texas Power Grid?

That innate sense of independence that every Texan comes out of the womb with has also made its way into the energy sector. With an isolated grid managed by ERCOT, Texas has found itself in an energy pickle of its own.

Since the Texas grid stands alone and the capacity market disincentivizes peaker plants from being built, it’s more vulnerable to certain things like natural disasters that cause prolonged outages or fluctuating weather patterns and high temps which intensify energy demands.

The big concern is that energy demands in Texas are expanding…rapidly. To sustain the industrial expansion and population growth, the Texans might have to do something that goes against every fiber in their being: accepting federal regulation to help connect their grid to neighboring states’ grids.

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

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

Hey everybody. Peter Zeihan here. Coming to you from the Austin airport. Yesterday we talked about how California has found the new in a unique way to increase their energy insecurity, along with increasing prices. And today, it’s time to talk about the same topic in Texas. We’re going to go with an electricity story today. There are three kind of mega grids in the United States.

One that kind of roughly, cuts down in front of the rocky line separating east from west. And then something called Ercot, which is Texas’s electricity reliability, group, which is basically just Texas. And Texas has its own grid because it has a different, philosophy when it comes to regulation from most others, which is a fancy way of saying they like as little as possible.

But that doesn’t necessarily mean that they have no regulation, and that doesn’t necessarily mean their approach is working. One of the big things we’ve seen in Texas in recent months and years was there’s not a lot of depth or durability to the system, because unless there’s a very clear economic rationale for doing something on a day by day basis, it typically isn’t done because there aren’t going to be regulations about how long power can be off line for maintenance or redundancy in case of a storm.

And Texas is a Gulf Coast country. And so when a hurricane comes through like one did earlier this year and hit Houston, power is out for 2 to 3 weeks over much of the city. They have a much bigger problem coming up just around the corner now. There’s something called a capacity market in Texas and regulations have been around for a while.

Basically dissuade people from adding power to the grid unless that power is going to be used all the time. So there’s a little bit of an ideological slant here. The idea being that solar never works at night. So if you can’t pass on the cost to the end user because it can only be used half the time, can only pass on part of the cost, then maybe won’t.

We won’t get as much solar. Solar is doing just fine in Texas, especially out west where it’s just a brilliant economic model. But this capacity market restriction has also restricted the Texans from building what are called peaker plants. Every day there’s a certain pattern where power is in higher or lower demand. And the smart people in the electricity market have figured out a way to ramp up production for those times.

As a rule. And it’s going to vary location by location, season to season. Peak demand tends to be between 6 and 9 p.m. at night, when people are coming home and getting dinner and watching TV, and then it tends to drop off a cliff around 10:00 am and doesn’t pick back up until people are waking up around 6 a.m. the next day.

Well, in Texas, because of this capacity market thing, they don’t get a lot of plants to generate power specifically for those windows. And I don’t know if you’ve been to Texas, but it’s a hot place. And so when you have peak demand from 6 to 9 p.m., everyone’s running their AC full bore and the peak is much stronger.

You add in the erratic nature of weather in Texas, whether it’s the great Plains or the Gulf Coast or the interaction in between, and they have the most extreme variations between low and high. So if anyone needs a lot of speakers, it’s going to be Texas. But the capacity market actually dissuades people from building those. So we are now in a situation where Texas has had 35 years of incredible industrial and population growth, and considering what needs to be done over the next few years, the industrial growth really needs to continue.

But there’s not enough electricity to power it, and the capacity market is now getting in the way. So we’re probably going to get a Texas two step of outcomes here. Number one, the Texans are going to have a series of rolling brown and blackouts as the power system fails. It’s just not stable. And then second, the Texans will probably be asking the federal government to dissolve the seam that separates Ercot from the rest of the country in order to import huge amounts of power from neighboring states.

And in doing so, they’re going to have to subject themselves to at least some degree of regulation from the federal government. The alternative is rolling brown and blackouts and the failure of the Texas industrial expansion model. So basically, the Texans are going to do something they really don’t want to do. They’re going to have to ask for help from… Oklahoma.

Why Is Gas So Expensive in California?

Picture this: you’re driving down the PCH in a sports car with the top down, hair is blowing in the wind, and then the gas light comes on. You pull into the first gas station you see and a gallon of gas costs $14.99. Okay, maybe I’m exaggerating a little, but California is heading towards a massive energy crisis.

California has been living in its own energy world for quite a while. As if its distinct gas formulation designed to reduce air pollution, high gas taxes, and dependency on foreign oil weren’t enough, the state now requires refiners to keep reserve supplies (raising costs further and creating more logistical issues).

Since California isn’t a beneficiary of the shale revolution, they still import crude from the Persian Gulf and use outdated methods of collection. This makes them vulnerable to global energy shocks and could lead to extreme gas prices throughout CA. So, if you were planning to head to the west coast, let your hair down, and take a cruise along CA State Route 1, you may want to grab a few extra gas cans before you cross the state line.

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

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

Hey, everybody. Peter Zeihan here. Coming to you from Huntington Beach, California. Behind me is the old Huntington Beach refinery. This used to be a major oil producing zone. In fact, there’s still a handful of producing wells across the L.A. area, with one of the most prolific ones being inside of a mall in Wilshire Boulevard. Never say that the Californians aren’t capable of a bit of, double dealing.

Anyway, the reason I wanted to talk about this, and this is what, you know, made me think of it, is we’ve got a bit of a crisis going on in California. I’m going to rotate around a little, not only is the view better, but you can even see some of the old, oil platforms out in the ocean.

Hey. They’re okay. Anyway, short version is that California has a very high tax regime for, a lot of things, but none more so than gasoline, where it has the highest gasoline taxes in the country. And as a result, gasoline in California is ridiculously expensive, often goes over $5 a gallon. I think it’s where it is right now, actually.

Anyway, there’s some other reasons for this, but, we’ll get to those in time. Bottom line is the Californians have become a nerd, but angered by very, very high gasoline prices and very, very volatile gasoline prices and more so than everyone else, you know, everyone else is, you know, used to the up and down of crude prices of how that affects things.

There’s more going on in California for you that was worth exploring. The governor of California, Gavin Newsom, has recently signed into law a project that will force refiners to maintain storage of gasoline grades for the California market as a cost of doing business in the state. The intent is so that when maintenance happens, especially unscheduled maintenance, that there’s always a reserve that the state can fall back on to keep energy prices out of control.

Unfortunately, it’s going to do the absolute opposite. And the cost of, complying with this new regulation combined with all the other regulations in California and at the energy sector, which are already, the stiffest in the country, means that a lot of refineries are evaluating whether they even want to stay. And, shortly after the new law was signed, Phillips 66, which maintains a refinery near here in Los Angeles, announced that, next year will be the final year that there are refineries operating and they plan to shut down and redirect their efforts to other places, most notably other states.

A couple things here. Let’s talk about the technical of why what Newsom and the Democrats here are doing is just purple idea. First and foremost, California, in order to control air pollution, has a different formulation from the rest of the country. So any refinery that is producing, gasoline or unleaded or whatever else for the California market has to produce a very specific type of fuel that doesn’t have a demand anywhere else in the world.

And so no refineries outside of the state produce for the state because there’s no margin added for them. So it’s just the locals. Second, not every urban center in California has the same regulations. And in the summer, a lot of them had different regulations. So not only do you have to produce a strain that is different for the state as a whole, but when you get to the summer months, you have to produce several different ones.

And all of this drives up costs because it reduces scale. The idea of the regulation that you have to have storage makes sense. But gasoline, once it’s refined into a fuel, if it’s stored for any appreciable amount of time, you know, more than days to a few weeks starts to degrade. So the cost of keeping this up is really high, and the waste that comes out of it is not minor.

And so from a carbon point of view, this isn’t a great idea anyway. There’s any number of reasons why this isn’t a great plan, but the Californians are doing it anyway. And that means that California is setting itself up for a bit of a problem down the road, more than just high prices. You see, California is the only one of the lower 48 that is not participating in the shale revolution in some way.

They have a significant oil field here in the Monterey Shale that’s out in Kern County in in the valley. But the techniques that are used for fracking have specifically been banned. But oil production has not. So, the locals are using technologies that are older and arguably dirtier than shale tech in order to produce crude for this local market.

This new regulation further separates California from the rest of the country. Also, keep in mind that the United States is now far and away the world’s largest exporter of refined oil products. By the end of this calendar year, we’re looking about 5 million barrels a day of exports of things like gasoline and jet fuel. Obviously, none of that’s coming from California.

But for the rest of the country, we’re awash in an embarrassment of energy production and fuel production, whereas California is in huge deficit. And now California is the state that is most dependent, not just on energy imports, but energy imports from another hemisphere. Yes, all the refineries in Louisiana and Texas like to use imported crude. They mostly use, Venezuelan, Mexican and Canadian and to a lesser degree, crude grades from the Eastern Hemisphere.

But everything, almost everything that California gets comes from the Eastern Hemisphere. And almost all of that comes from the Persian Gulf. So the next time we have an energy shock, for example, because I don’t know, Israel bombs Iranian oil production and export facilities and that Iran returns the favor by hitting Saudi Arabia. We get to know what are you prices?

Most of the United States is like, whatever. But here in California, they have made themselves uniquely exposed to international shocks while also being uniquely exposed to their own. So one way or the other, we are looking at a significantly darker chapter in California economic history. Just around the corner. And that’s before you consider things going on in Silicon Valley or the capital market or the general aging of the millennials, all of which are already hitting California pretty hard.

So stay tuned. When it gets bad, I’ll be back because it’ll be cheap.

A New American Imperialism?

American imperialism is not the same as European imperialism. The Europeans wanted power, prestige and economic gain, while the US was in it for security. So, what will this look like for the Americans moving forward?

With current strategic holdings in places like Guam, the Northern Mariana Islands, and American Samoa, further expansion in Asia is more of a nice-to-have, than a need-to-do. Should the US want to make some moves, here are some of the places and considerations that would be involved.

Places like Sao Tomé and Principe, the Azores, and Canaries have some nice positioning for Africa, and Socotra could be valuable for Middle Eastern operations. Then there are some places that bring in another layer of risk, but offer some big incentives – Panama for the canal, Greenland for strategic positioning, or Iceland for importance in the North Atlantic. Cuba and Singapore are interesting, but more complicated. There’s some obvious history with Cuba that makes involvement spooky, but having a foothold would make national defense downright breezy. Tampering with the very solid security partnership with Singapore seems too risky, but having a firmer foot in Southeast Asia could be important in a deglobalizing world.

Yet to existing cooperative security arrangements, the US already enjoys the benefits of influence in almost all of these places without the need for boots on the ground, much less the grinding migraines that come from actual occupations. Expanding into new territories would require managing populations and infrastructure, which could weaken US strategic stability and risk turning allies hostile. What I’m getting at here is if it ain’t broke, don’t fix it.

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

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

Hey everyone, Peter Zeihan coming to you from the Bay of Islands and everyone is talking about conquering countries all of a sudden. So I figured it’d be a good point to review American imperialism. And if there were to be a new chapter of the United States going at and grabbing territories, what sort of territories would we be interested in?

Key thing to keep in mind. Imperialism. American style is not like imperialism. European style. The Europeans are relatively small countries compared to the United States, whereas the United States has a continental landmass that has some of the best lands in the world. So for the Brits and the French and the Germans and everybody else going out to grab a chunk of territory in order to Improve their own economic prospects. That makes a certain amount of logical sense. For the United States, it never really has. When we were going through reconstruction industrialization, we were still processing the best parts of one of the largest continents in the world. And now that we have a heavily driven services economy that is the most productive on the planet, it’s really hard to imagine the United States going out and occupying a piece of land in order to get X, resource or a trade route.

Instead, when the United States thinks about imperialism, it’s about not about the money. It’s about security. So we’re not French. We’re not after just to get a big chunk of land that looks good on the globe map. And we are not British, where we’re looking to go out and grab economic nodes that we can then profit from.

We’re looking for small chunks of very easily defendable land with low populations that don’t generate security heartburn, but instead provide strategic opportunities or limit the strategic opportunities of our foes. And that is a very short list of countries, especially when you consider places that the U.S. already controls. So, for example, if you’re in the Pacific, you look at places like the Northern Mariana Islands, which are not too far from Japan or Guam, which is not too far from the first island chain or American Samoa in the South Pacific.

These are chunks of territory that the United States gained from the last round of expansion in World War Two, and before that, in the age of imperialism, the 1800s. And there’s really nothing else in that area that we need. We already have what we need. If you’re going to look at, further west, there are a few chunks of territory that I would find strategically interesting.

The most complicated of them would be a place called Sao Tomé and Principe, which is a small African island nation in the Gulf of Guinea off the south. You know. Well, you know, you know, how Africa just kind of does that thing. It’s it’s in that part in the middle or that’s West or Southwest. I don’t know.

Anyway, you’re talking about a country with a population of 200,000 or, you know, if you go for, just for principle, a country with just a population of about 10,000, that is something that kind of fits the bill, would allow you to project power in the entire belt of territory from South Africa to Nigeria, to Senegal, with having a very small defense platform.

Even better would be territories like the Canaries or the Azores, which allow the United States to block potential foes from coming in from the eastern hemisphere of the Western Hemisphere and project power to Europe as well. Now, if those last to the Azores and the Canary sound familiar, it’s because we’ve already seized us at one point during World War Two, and we gave them back because the countries who control those are Portugal and Spain, who are NATO allies.

One of the things that the United States, excels at is convincing someone that we’re an ally and we take care of all the naval power issues, so you don’t have to worry about it because it’s expensive. If in exchange, you give us security, supremacy and specific footprints of land, that is absolutely our deal with the British when it comes to Diego Garcia, which is our preferred platform in the western Indian Ocean.

So American imperialism isn’t like classic imperialism in many ways. We don’t even change the nameplate on the chunk of territory, so long as we can have physical access to it. So these are all the things that the United States, for the most part, already has, whatever access it needs. And so there’s no need to go out and physically grab the territory.

The exception would be Sao Tome and Principe. Only reason you would do that is if you decide you really want to be a major power in Africa on a day in, day out basis. No American administration has made that decision yet. So, you know, we haven’t really gone for it. Let’s say you wanted to step it up and loosen your definition of what’s a good idea, and go after territory that, still has good security parameters for projection, but it’s going to be a lot heavier.

Carry, in terms of running it, because it either has a larger population or it has land borders. You’ll notice that everything that I’ve laid out so far is an island. And you’re really willing to put your back into a security based empire in a semi-classical sense. This is where Donald Trump has plucked Panama and Greenland.

Panama has a country, has a population of over 4 million. And one of the biggest drug problems and human smuggling problems in the world. So if we were to go into Panama just for the canal, we would very rapidly get caught up administrating a place. It’s kind of a basket case. And you would only do that if you felt that the canal was that important.

Keep in mind, the United States already has unrestricted access to canal, and while we do have to pay for transit because we are not paying for upkeep, that also means that whenever the US military wants to go through, everyone else gets shoved to the back of the line. I’d argue got a pretty good deal there already.

Second one, Greenland is, of course, all in the news these days. Trump is wanting to buy Greenland for quite some time. And yes, while you can project power from Greenland, no argument there. And we use it for space tracking. And yes, it has a population under 100,000 people.

It’s a huge chunk of territory, and the people who live there are extremely poor. And if the United States were to take it over, we would then be responsible for the entire territory. One of the beautiful things we have about the make up right now is that Denmark is one of our fastest allies when it comes to doing things in Greenland, they have never once said no. And when it comes to doing things in the Baltic Sea, in the North Sea, which are an order of magnitude more important, they have never said no.

So if we were to go in and snag Greenland, obviously we could do it if we wanted to. It might cost us, one of our strongest and most loyal allies in one of the most sensitive parts in the world. Moving forward. I would say that that’s not the best plan. Iceland kind of falls into the same category.

Population of under million dominates the North Atlantic. It’s an independent country. But if you wanted to project power into the Russian sphere, it is a fantastic platform, especially in collaboration with the United Kingdom. But we already do that. And the Icelanders take care of their own business, and they have decided publicly to never field a military.

They will just let the United States do it. But the cost for that is the United States is allowed to do whatever it wants, whenever it wants. So we get all the benefits of occupying the territory without actually having to pay for occupying the territory.

The final two that might meet this criteria are a pair of countries Singapore and Cuba. Singapore dominates the Strait of Malacca, and any American military presence there would allow us to empower or destroy any country, depending on that route for trade. And that could be Russia. That could be Iran, that could be Saudi Arabia, that could be China.

So, you know, that could be handy. And, Cuba, because it dominates the interest of the Gulf of Mexico, is a very, near and dear issue to American strategic thinkers because without it, it’s very difficult to do any sort of maritime shipping between the Gulf Coast and the East Coast. And as we found out during the Cuban Missile Crisis, if the Cubans were to host some, intermediate range weapons systems, that would be a real problem for us as well.

But but in both of these cases, you know, these are big countries. Cuba has this many people. Where Singapore is about 5 million. Singapore is one of the most advanced countries on the planet. And Singapore has kind of made a deal with us, very similar to, say, Denmark. So the United States actually has a dedicated aircraft carrier berth in Singapore that the Singaporeans built. And whenever we’ve had a security issue going back to the time of the Vietnam War. The Singaporeans have always been extraordinarily helpful.

So you get all the benefits of having the military footprint, but none of the costs of running or administering or occupying a country. Cuba. More problematic, of course, because of politics. If we were actually going to invade a country and occupy it with the intent of making it ours, I would say Cuba would be at the very top of that list.

But we’ve tried that before in the 60s. It wasn’t a lot of fun. We controlled this territory through most of the time between the Spanish-American War and then, we’re basically ran it as a colony, generated gobs of bad will. And we discovered it’s just easier to base things out of the continental, the United States or Puerto Rico, rather than deal with a population that is pathologically hostile to you.

So as long as in strategic issues, Cuba is neutered, we really don’t have a problem with it. And ever since, Castro died a few years ago, the Cuban government, while they’ve been prickly, has gone out of the way to make sure that we don’t think that they’re getting in bed with anyone we really don’t like in any ways we really don’t like.

So they don’t provoke an invasion. So where do we go? You know, I would argue that the United States right now, from a security point of view, has all the benefits of a globe spanning empire, but without actually having to pay for it. If we actually go and start taking over territories, that changes. You have to occupy populations.

You have to build infrastructure. The way we have it right now is most of these countries want to preserve their independence, and they feel that the best way to do that is to have a differential relationship with the United States security establishment going out there and taking the territory. Turns that on its head. You don’t just lose allies, the places that you are already projecting power from suddenly turn hostile on the inside.

And that is how empires ultimately fall apart.

Oh one more off Africa. And again, we would only do this if we felt that we really need to project power into Africa. There was an island called Socotra. It’s Yemenis. It’s off the Horn of Africa. A small little place. Easy enough to build the infrastructure if you wanted to project power into the Persian Gulf. As well as the Red sea in the entire east coast of the African continent.

Trump’s New Grand Strategy

President Trump suggested that Europe should buy US oil and gas to address trade deficits and strengthen alliances. I have a few qualms with this.

Trump talks a big game, but backing it up is a whole different story (meaning I wouldn’t recommend holding your breath while we wait and see if this comes to fruition). That’s not my only concern here though. Europe is facing a whole lot of issues, and prioritizing energy exports to a struggling region isn’t in the best interest of the US.

Instead, America’s energy resources should be allocated to emerging economies in regions that the US could use as strategic footholds and partners down the road. I’m talking Southeast Asia rather than Europe. Carefully selecting allies as the world deglobalizes is going to be very important…so, let’s hope Trump can do more than Tweet about all this.

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

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

Hey everybody. Peter Zeihan here coming to you from. Okay. Who are okay. Who are. Yeah, I think that’s it. On the Cape Brett track in Northland, New Zealand. Today we’re going to do a, something I’m not going to get in the habit of and commenting. And one of Trump’s threats, specifically says that the Europeans should purchase American oil and gas, in order to address their trade deficit, in order to cement the alliance.

Normally, I’m not going to do this because Trump says a lot of stuff, that usually just doesn’t survive the room. And he is packing his cabinet with functional incompetence. So the chances of any of his policies actually making it into, reality, whether it’s domestic, foreign, are pretty low. And this is no exception to that.

But, it’s an interesting hypothetical exercise to, think about because we are in a period where the world is reshaping and seemingly incoherent. Things like this actually could have an impact. So, the volume first, Europe. And I’m using Europe in the broadest sense. It includes the Balkans, includes Switzerland, includes the United Kingdom, as well as all of the European Union.

They use about 13 million barrels of crude a day. If you include refined product, as well as about 45,000,000,000 cubic feet of natural gas a day. And that’s roughly 50 to 60% of what the United States uses. They have more people than the United States has, significantly more. But their economy is smaller and it’s less energy intensive because they don’t have a lot of manufacturing.

And while the United States has been gone, going through this big Three industrialization boom, much of Europe is actually industrializing because they’re running out of energy because they’re under net of workers, because they’re running out of finance. It’s a demographic story as much as anything else. Anyway. If if, if the United States did decide that it wanted to fuel Europe, it would need to expand its oil production by like 2 or 3, 4 barrels a day, which is probably going to happen in the next five years anyway.

And for natural gas, we need to build out significant, LNG, liquefied natural gas export capacity. We have to double, almost triple what we have right now. And there are enough projects in the pipeline for that to happen over the next decade. So from a numbers point of view, it’s not a ridiculous idea. It would mean not sending product anywhere else.

And so problem number one with this plan is right now our number one energy destination for energy exports is Mexico. And without those exports, the lights go off. In Mexico, roughly half of Mexican electricity, for example, is generated by the use of American natural gas. And we send them over a million barrels a day of crude and refined product as well.

And that’s built into our manufacturing system. So if we were to send that somewhere else for, our number two destination is, Japan, which is a much tighter ally than many of the European countries. And in general, if you’re doing this to address a trade deficit, taking something we already sell and have no problem selling from one place and send it to another just generates a different numbers problem.

That’s part of the problem with Trump’s things is that, he assumes that every individual thing stands alone when it’s all usually interconnected anyway, let’s assume for the moment that Trump is serious that Trump’s team can make it happen, that the Europeans are amenable. The trade deficit isn’t the issue here. Never is. The issue is a strategic block.

We’re moving into a world where globalization is ending. And it’s not that I think the United States is going to have a problem finding takers for its commodity exports. Now, the issue is that not everyone will be able to afford or have the security situation. Well, that will allow them to access those materials. And if the United States were to make a strategic decision not based on the trade deficit, based on who we want to be our ally, who do we want to encourage to continue to exist in a globalizing world?

Europe is one of the places that should be considered, it keeps the Russians in a box. It gives you a foot in the Middle East without being in the Middle East. And there’s a lot of cultural history or baggage, if you prefer, with the European family, which is where the vast majority of Americans eventually trace the roots back to, there’s a very strong argument to be made that Europe is it. And that’s where we should play. And if the United States were to pour all of its energy exports because it would take all of it, then that is a viable bloc. And then you can talk about what comes from that agricultural fusion, manufacturing fusion, military fusion, and the idea that you have an American dominated system that includes the entire cultural West.

There’s an argument to be made that in a world that breaks into factions and regions, merging North America and Europe is arguably the most powerful option. Just keep in mind that if we do that, we no longer have the resources that are necessary to say, do the same thing with Korea and Japan, which are two advanced countries we currently have excellent relations with or with Southeast Asia, which is likely to be the most rapidly growing part of the world

Moving forward, the United States is going to have to do many of the things that other countries are going to have to do in a globalizing world. We’re going to have to make some choices. They’re going to be a little difficult. And choosing to pour all of our energy resources into Europe, which is a region that’s experience.

A demographic bomb might not be the biggest bang for the buck. Germany, for example. The industrial base is probably going to collapse within a decade because they won’t have a workforce in addition to their energy problems. A much better bet is probably Vietnam or Thailand or Myanmar or Indonesia. Malaysia, and I would expect that as the eurozone faces problems, because if you don’t have a consumption led economy, it’s really hard to have a currency as a eurozone prices problems.

The United States is going to be able to choose to work with individual European countries. France looks much more viable. The U.K. is much more viable. Spain is much more interesting. Central Europe will probably last longer than Germany, Italy in a worse demographic situation than Germany. But its geography is much more friendly for power projection. It’s easy to kind of break Italy off from the rest of Europe’s strategically.

So there’s a lot of ways you can cut this pie. And I applaud Trump for starting the conversation on what might be possible. But the specific idea that Europe buys American energy, the end. It doesn’t take us very far, but it does get us looking in the right direction.

Quick addendum from further down the trail. Because I know I’m gonna get some hate mail for that one. So let’s make sure that the hate mail is well informed. Hate mail. The reason I say that Polish is under Donald Trump just don’t tend to happen is, he tweets something out or whatever social media he’s using, and then he leaves the room, and usually that’s the end of it.

And that’s before you consider that he is appointing people to his cabinet who are functionally incompetent in their areas. It’s a little less true in foreign affairs. Some of the people look interesting. But the primary purpose of being on Donald Trump’s cabinet is to stroke his ego, to tell him he’s wonderful and to make him look good in public.

And the heartbeat that you step away from that, you lose your job. So in Trump’s first term, he went through more cabinet level secretaries, than any other three American presidents in history combined. There’s just not enough time for a meaningful policy to be discussed, formed, and put in practice before the person is kicked out. But even if that was not true, Trump is a horrible personnel manager.

One of the worst we’ve ever had. And the only other person in modern memory, who comes even close is Barack Obama, who was arguably the worst of the second worst. It’s just a difference of styles. Obama insisted on micromanaging every little thing, but then hated people and hated having conversations with them. So he never was available for anything to be managed.

So nothing happened. And so for eight years, we really only got one law consequence passed and we had no foreign policy whatsoever. Trump is of that caliber when it comes to outcomes. So you look at our last three presidents Trump, Biden, Obama. We’ve had 16 years where the world is falling apart, where globalization is ending. And decisions like this on regionalization really are important and do need to be made.

But we’ve had no one to lead the conversation or to carry it forward, or to turn it into policy. So kudos. Seriously, kudos to Trump for starting the conversation. And I will be pleasantly thrilled. Should the process proceed from here?

Jimmy Carter’s Consequential 4 Years

I typically avoid the analysis of late U.S. presidents, but Jimmy Carter is a special case. Arguably the most consequential U.S. president (in terms of global affairs) since WWII, Carter set in motion some of the most pivotal policy changes the U.S. has ever carried out. For those of you screaming at the screen about Clinton, Reagan and Eisenhower…just bear with me.

In his four years in office, Carter laid the foundation for arming the mujahideen, got the ball rolling on America’s first smart weapons, shifted the ideological approach to tax policy which led to the 90’s boom, and trust me, I could go on.

So, what made Carter so consequential? We can’t just look at his four years in office; we need to zoom out 40+ years to fully understand the lasting impact he has left on the world…and maybe this will help us realize that the policies and ideologies implemented by current presidents DO MATTER.

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

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

Playing Jenga with Maritime Shipping

In my books, I highlighted how even a minor, seemingly insignificant event could cripple global maritime shipping. Well, not only did one of those events just happen, three did. We’re talking about a Russian cargo ship sinking, Israel targeting the Houthis in Yemen, and Finland impounding a Russian ship.

A Russian cargo ship went down in the Mediterranean and some foul play could be involved. This ship was critical for Russia’s nuclear icebreaker fleet, as it carried equipment necessary for construction. This will delay (or even cancel) these construction timelines, which marks a significant blow to Russia’s merchant marine capabilities.

Israel expanded its operations against the Iranian-backed Houthis, with efforts to disrupt supply chains. This could even spill over into targeting ships transporting Iranian weapons.

Finland’s seizure of a Russian ship accused of severing subsea cables escalates tensions in the region. This ship was already under scrutiny for its unsafe condition, but its suspected involvement in sabotage activities was the final straw.

Global maritime shipping relies upon trust, insurance and the US securing the sea lanes. These three events that have unfolded in the past weeks are causing the pillars propping up maritime shipping to teeter. It’s only a matter of time before maritime shipping, and globalization along with it, come falling down.

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

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

Hey everybody. Peter Zeihan here. Coming to you from Wynona Bay. Just outside of Carmel Town in north east New Zealand. Doing a lot of little things have happened in the last 48 hours that are threatened to boil up into, something very significant. So let me go through the three items in our time together. First of all, the Russians had a cargo ship that sank in the Mediterranean.

There’s some question as to whether sabotage was involved. What’s unique about this ship is, you know, the Russians don’t have much of a merchant marine at all. And this one was a roll off, roll on vehicle that can just accept vehicles from pretty much any sort of facility. Doesn’t even have to be a proper loading port or anything.

There were also a couple construction cranes on board and a lot of specialty equipment for the Russian icebreaker fleet, most notably its nuclear fleet. Anyway, without this ship, the Russians are going to have a hard time moving things around the Mediterranean, where they’re in the process of evacuating their forces from Syria. And in the longer term, there, icebreaker, nuclear or icebreaker, which is under construction, which was supposed to be operational already has been pushed back to 2027 and 2030, probably will never be built because the Russians can’t build, the sort of specialty parts that were on board, one of which is something as simple as hatches.

So we’re looking at the beginning of the end of the Russian merchant marine because they now can’t move the pieces around. Sanctions prevent them from moving or buying everything else that they need. Second, Benjamin Netanyahu, the prime minister of Israel, has announced the beginning of a much broader assault against the Houthis of Yemen. Now, the Houthis are a militant group, Islamic, that are sponsored by the Iranians.

And the Iranians have basically been supplying them with weapons over the last 20 years.

Yeah, it’s probably too much. It’s got 15 years, in order to destabilize all kinds of things in the country, because they see the Houthis as an eminently disposable ally or proxy, whatever the right word is. Because basically they’re a bunch of desert fighters who have never been able to hold anything together, completely incompetent at administration, and not very good at attacks either.

But they know how to operate a chunk of equipment that flings a weapon. So they’ve been used to attack population centers and oil facilities in Saudi Arabia. They have been used to take out some things in Israel. They’ve engaged in some, like piracy, and they’re just generally a strategic nuisance. The countries in the neighborhood that have tried to quell them, most notably Saudi Arabia, have done bombing campaigns in the on again off against sponsorship of other sides in the ongoing Yemeni civil war.

And but the terrain is very difficult. The Houthis are, if anything, persistent. And it has basically been impossible for anyone to bring Yemen to heel. And that is not something that this is the last ten, 15 years. That goes back centuries. It’s an unruly place with a difficult geography, and no one has really had a lot of fun operating there.

I don’t think that, the Israelis will be successful in rooting out the who? These. Fabulous. Put that to the side right now. But, the Israelis have definitely demonstrated some interesting out-of-the-box thinking over the last few months, and in doing so, have participated in the destruction of Syria as a conventional power had destroyed Hezbollah in Lebanon.

And, well, their operations in Gaza against Hamas, are let’s just call that complicated. Hamas is definitely in a box and cannot strategically expand at all. So to say that, success against the Houthis is impossible is, of course, ignoring recent history. I’m more concerned with how they would interrupt the flow of the weapons systems that they have a problem with, because the Houthis have been doing long range drones and missiles and talking to Israel directly.

And to go after that sort of stuff, they would have to go after the ships that sail from Iran to supply the weapons systems. So that’s two third Finland just all over the place today. The Finns have, boarded and impounded the first ship of the Russian shadow fleet. One of the things we’ve been seeing over the last several months, really started about 18 months ago, but really accelerated recently is that the Russians have been either directly or through third parties, like the Chinese.

Getting ships operating in the Baltic Sea to drag their anchors to sever subsea physical infrastructure, within the northern Baltic, specifically places that transmit data or electricity among Sweden, Finland, Estonia, Latvia, Lithuania, and the ship that they have now impounded is accused of basically dragging its anchors and severing five different cables in a short period of time.

Now, in the past, what has happened is when the Russians have done this, they’ve done it to one at a time. They’ve done it through a third party vessel, most notably a Chinese vessel. And the ship has gone before anyone realized what was going on. But this time, two things have changed. Number one, the, all the Scandinavians, all the the Baltics, all the Nordics are more on to it.

And they’ve been watching a lot more closely. And the Russian vessel, did several in short order. And the vessel itself is part of the Shadow fleet, which means it’s old. It’s rusty. Probably couldn’t pass a safety inspection in Guatemala, much less in Finland. And so the Finns were already watching it. And so when these cables got snapped one after another in a short period of time, they really had no doubt as to what was in play.

Okay. That’s a lot. What’s going on here is we’re seeing a multi vector challenge to the naval order that allows international trade to happen. One of the things that we had in the world before World War two was unless you could provide naval security for your ships, you just didn’t sail somewhere. Or if you did, you did so without any insurance or confidence, that the ship could make it.

It was very, very risky business. One of the many, many things that globalization has been very successful about is about making it so that anyone can sail anywhere at any time and interface with any partner to access any commodity or any product. And that has engendered not just global trade as we know it now, but the expansion of various economic sectors in a way that just simply wasn’t possible before.

So, for example, today, over half of all internationally traded oil sales, long haul ships. And that means if you’re going from the Persian Gulf to the East Coast or Northeast Asia, wherever, you can do so without much fear that your cargo is going to be anything inopportune. And for that rare occurrence where something might go wrong, you can buy an insurance policy for your vessel and its cargo, which only costs about 1% of the cost of your ship every year.

Quite affordable. Same thing for food production. Roughly a third of all food production globally is shipped in a similar manner, with a similar insurance for fishermen. And the very existence of a manufacturing sector in the world is courtesy of this sort of security set up. Because if you’re looking at something like, say, a stereo, you know, there’s roughly 400 parts in that thing.

You’ve got 400 different producers for each part, some of which have their own supply chain stretching back several steps, and intermediate products are shuttled around. Well, especially in East Asia, almost all of that, well over 95% of that is done on the water. And none of this would be possible without a relatively peaceable international system. Well, now we’re seeing that system hit from a number of different angles.

You’ve got the Russians who are basically turned much of the Black Sea to no go zone. You’ve got the Ukrainians who have started to go after Russian shipping in that space. We now have the Baltic states and the Nordic states, Scandinavian states, sorry. Most notably Finland, that have just impounded one of the ships that is taking advantage of that order in order to evade sanctions.

And we now in the Middle East have a situation where the Israelis, on a little bit of a high after the fall of Hezbollah and the fall of Syria, are going after another strategic irritant, the Houthis, which means they have to go after the shipping in order to interrupt the weapons. All of this is happening at the same time.

And one of the things I hit very hard in my, my last book, The End of the world, is just the beginning. Talking about the end of globalization is that the maritime order is based on trust. The trust that your ship will get there, the trust that the Americans will enforce the sea lanes, the trust that no one will challenge that.

And all of that is now falling apart. And in the book, I mentioned that, you know, it doesn’t really matter, what it is that breaks the system of trust. I must admit, having Israel and the Houthis or the fins and the shadow fleet on the bingo card. Not specific things I predicted, but it doesn’t really matter what it is.

Because as soon as states, for whatever reasons, have a vested interest in going after the system, the trust is broken and the insurance system can’t handle it. And that’s when we get a rapid fire breakdown in all types of shipping, because it’s no longer profitable or safe manufacturing is definitely the sector where we will feel it. First, in the United States, for most of the rest of the world, it’s going to be a race between energy and agriculture.

So we are in the witching hour of this system right now. And based on how any of these issues unfold could get really rocky, really quick and never take your eyes off the Russians because they’ve just lost the ability to maintain their icebreaker fleet, which means the entire Arctic route is something that is no longer strategically viable for them.

And if that is the case, then the Russians have a vested interest or may perceive that they have a vested interest in challenging parts of the system itself. We’ve been in this weird little holding pattern globally for the last decade, roughly where it wasn’t apparent that the Americans had the will, the interest or the ability to maintain the global order.

And lots of countries that are American rivals started challenging the US and various points thinking that the future was the Americans will keep the world safe for everyone, but they can carve out whatever they want for themselves, and we’re about to see all of that blow up in everybody’s faces. The future on the other side of this, from my point of view, is pretty clear.

You basically have regional powers that can guarantee regional security for the waves. And so you can have regional trade systems or national trade systems, but the days of long haul multi continental shipping that have dominated manufacturing, agriculture,

And energy since 1950 were at the very end of that. And it’s going to be interesting to see whether it’s Finland or Israel or Russia that fires the shot that formally breaks the system.

But these are just three examples of how easy it would be for this whole thing to come unwound. And we may very well see this before I get back from New Zealand. Yikes.

Artificial Intelligence Isn’t Ready for Mass Application

Today’s AI technology, while promising, isn’t quite ready for widespread application. I’m not talking so much about AI’s capabilities, but rather the hardware limitations and supply chain challenges that are getting in the way.

For AI to manage vast amounts of data, it’s going to need specialized chips which are still in development. So, give R&D a couple years to figure that out, and then another decade+ for production and supply chains to get sorted out. Without these new chips, power demands are going to skyrocket (because the current, inefficient chips suck up power like nobody’s business). Until those new chips arrive, the US will have to decide which industries will be getting the limited chips that are available, like agriculture, defense, or finance.

While a delay might seem like a bad thing, especially for those who are ready to let AI do their job while they’re sipping Mai Tais on a beach somewhere…it gives us time to figure out how to address all the problems with AI and what its actual impact will look like.

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

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

Hey everybody. Peter Zeihan here. Coming to you from Revere Beach, just north of Boston. A lot of you have written in asking for my opinions on AI. So here we go. Pick it apart, however you will. It’s tantalizing. So GPT and the large language models are taking us forward. They’re nowhere near conscious thought. Oftentimes, they can’t even associate their own work from previously in a conversation, with itself.

It’s basically targeted randomness, if you will. That said, it is still providing insights and the ability to search vast databases in a much more organized and coherent matter than anything we have seen from, search engines before. So promising tech. We had a taste. It’s definitely not ready for what I would consider mass application, but, the possibilities are there, especially when it comes to data management, which, when it comes to things like research and genetics, is very important.

However, I think it’s important to understand what the physical limitations are of AI, and that is a manufacturing issue. So the high end chips that we’re using, the GPUs, graphics processing units, we’re not designed to run AI models. They were designed to run multiple things simultaneously for graphics, primarily for gaming consoles. And the gamers among us who have logged lots of time playing Doom and Fortnite and all the rest have been the primary economic engine for pushing these technologies forward until very recently.

It’s only with things like autonomous driving and electric vehicles that we’ve had a larger market for high end chips. But the GPUs, specifically because they run multiple scenarios and computations simultaneously, that is what makes a large language model work. Wow. Got windy all of a sudden. Let me make sure this works.

Okay. So, GPUs, they generate a lot of heat because they’re doing multiple things at the same time. And so normally you have a gaming console and you have a GPU at the heart of it, and multiple cooling systems typically fans blowing on them to keep laptop from catching on fire.

So if you take these and put 10 or 20,000 of them in the same room in the server farm, you have a massive heat problem. And that’s why most forecasts indicate that, the amount of electricity we’re using for data centers is going to double in the next few years, to compensate. That’s why they’re so power intensive.

Now, if you want to design a chip that is for large language models and AI systems as opposed to, that’s just being an incidental use. You can that those designs are being built now, and we’re hoping to have a functional prototype by the end of calendar year 2025. If that is successful, then you can have your first mass run of the chips enough to generate enough chips for a single server farm by the end of 2027.

And then you can talk about mass manufacture getting into the system by 2029, 2030. So, you know, even in the best case scenario, we’re not going to have custom designed chips for this anytime soon. Remember that a GPU is about the size of a postage stamp because it’s designed to be put in a laptop. Or if you’re going to design a chip specifically, to run AI, you’re talking about something that is bigger than a dinner plate because it’s going to have a cooling system built in.

Not to mention being able to run a lot more things in parallel. So even in the best case scenario, we’re looking at something that’s quite a ways out. So then you have to consider the supply chain just to make what we’re making. Now. The high end chip world, especially sub10 nanometer, and we’re talking here about things that are in the four nanometer and smaller range, closer to two, really, is the most sophisticated and complicated and, proprietary supply chain in human history.

There are over 9000 companies that are involved in making the stuff that goes into the stuff that goes into the stuff that ultimately allows TSMC to make these chips in Taiwan. And then, of course, 99% of these very high end chips are all made in one town in Taiwan that faces the People’s Republic of China. So it doesn’t take a particularly egregious scenario to remove some of those 9000 pieces from, the supply chain system.

And since roughly half of those supply chain steps are only made by small companies that produce one product for one end user and have no competition globally, you lose a handful of them, and you can’t do this at all until you rebuild the ecosystem based on what goes wrong. That rebuilding can take upwards of 10 to 15 years.

So in the best case scenario, we need new hardware that we’re not going to have for a half a decade and are more likely scenario. We’re not going to have the supply chain system in order to build the hardware, for a decade or more. However, we’ve already gotten that taste of what I might be able to do.

And since with the baby boomer retirement, we’re entering into a world of both labor and capital shortages. The idea of having AI or something like it to improve our efficiency is something we can’t ignore. The question is whether we’re going to have enough chips to do everything we want to do. And the answer is a hard no. So we’re going to have to choose do we want the AI chips running to say, crack the genome so that we can put out a new type of GMO in the world that’ll save a billion people from starving to death.

In a world where agricultural supply chains fail. Do we use it to improve worker productivity in a world in which there just aren’t enough workers? And in the case of the United States, we need to double the, industrial plant in order to compensate for a failing China? Or do we use it to stretch the investment dollar further now that the baby boomer money’s no longer available and allow our financial system to be more efficient?

Or do we use it for national defense and cryptography? You know, these these are top level issues, and we’re probably only going to have enough chips to do one of the four. So I would argue that the most consequential decision that the next American president is going to have to make is about where to focus, what few chips we can produce and where do you put them?

There’s no right answer. There’s no wrong answer. There’s just less than satisfactory answers. And that leaves us with the power question. Assuming that we could make GPUs at a scale that will allow mass adoption of AI, which we probably can’t anyway. You’re talking about doubling the power requirements, of what is used in the data space. Here’s the thing, though.

If we can’t make the GPUs and we’re not going to be able to make the more advanced chips anytime soon, we’re still going to want to get some of the benefits from AI. So we’re going to use older, dumber chips that generate a lot more heat per computation in order to compensate, which means we’re probably going to be seeing these estimates for power demand, not simply double, but triple or more.

At the same time, we get less computations, fewer computations, and generate an AI system that’s actually less effective because we’re not going to be able to make the chips at scale. So is it coming? Yeah. But in the short term, it’s not going to be nearly as fast. It’s going to cost a lot more. It’s going to require a lot more electricity.

And we’re probably going to have to wait until about 2040 before we can design and build in mass and apply the chips that we actually want to be able to do this for real. So, believe it or not, actually see this as a borderline good thing because it’s so rare in the United States that we discuss the outcome of a technological evolution before it’s completely overwhelmed us here.

I’d argue we’ve got another 15 years to figure out the fine print.

New Orleans Terror Attack

There was a terror attack in New Orleans today. An American citizen, who has pledged allegiance to the Islamic State (despite its largely defunct state), drove a truck into a crowd; killing at least ten and injuring several others.

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

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

Hey Peter Zeihan here coming to you from New Zealand. It’s New Year’s Day. Back in the States, there was just a terror attack in New Orleans where an American citizen driving a rented truck plowed into a crowd, killing at least ten, injuring a few dozen others. He pledge allegiance to Islamic State, which is, you know, largely defunct in Syria these days.

Just want to put this in context. You know what it is? What to expect. 15, almost 20 years ago, the folks that represented the Islamic State at the time called upon Muslims all over the world to rise up and butcher Christians, saying that, go get a gun, can’t get a gun, get a knife and you can’t get a knife, get a car and just do as much mayhem as you can.

Over a decade later in North America, it’s happened three times. Twice in the United States, once in Edmonton, Canada. Two things to keep in mind here. Number one, training operatives to actually do mass casualty events like, say, 911 takes time, takes resources. And when the people doing the training are in a different hemisphere and don’t control a state, it’s kind of a heavy carry.

And so it just hasn’t happened very often. And when it does happen, it happens closer to the zone in question, like in places like Paris. Second, and I know this is going to be really radical at their core. Most people are not murderous assholes. So if you have a group who claims to represent all Muslims, who says, everyone go out and do something and you know, there’s hundreds of millions of Muslims and it happens three times.

Math people. So is it horrible? Yep. Is it the start of something new? Absolutely not.

One Ship Inspection Could Unravel Global Maritime Shipping

Photo of a ship in a port in Helsinki, Finland

The Nordic nations are teasing a new initiative of inspecting ships leaving Russia’s St. Petersburg port for insurance and environmental compliance. This may seem insignificant, but it could disrupt shipping on a global scale.

Russia has relied on its shadow fleet (uninsured and aging tankers) to export oil after the sanctions began; this new initiative aims to curb Russian income and disrupt funds for the war in Ukraine. But what happens when one of these countries completes an inspection and decides to confiscate or detain one of these ships? We’re talking about uncharted maritime territory…and it could get messy very quickly as countries start to take maritime security and trade into their own hands.

A return to localized maritime security enforcement and controls won’t look the same everywhere. The Western Hemisphere and the Nordic countries will experience some shortages but be mostly fine. The Mediterranean’s future would rely on cooperation between Italy, France and Turkey. Places that are heavily reliant on energy and food imports (i.e. East Asia) could face economic collapse or famine.

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

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

Hey, everybody. Peter Zeihan here. Coming to you from the Tongariro Crossing in New Zealand. We finally got a break in the weather, just in time for the emerald pools, which are, you know, volcanic and super stinky. Anyway, on the 17th, 18th, of December, representatives from all the Nordic nations, plus Poland and Britain. So that’s, Norway, Sweden, Finland, Denmark, Estonia, Latvia, Lithuania, basically got together and said that they’re going to start checking ships that are coming out of Saint Petersburg port in the Baltic Sea, for things like insurance and compliance with environmental regulations.

In order to disrupt the shuttle fleet, the shuttle fleet is how the Russians are getting their cruise to market since they canceled by pipeline, and they can’t use Western maritime insurance or navigation aids. They basically, have to get insurance from the Russian government, the Chinese government or the Indian government. And there’s a suspicion that no one is actually issuing policies that pieces are just sailing.

They get out of the port, regardless of whether or not they have a policy. Not the Indians, the Chinese and the Russians have never actually paid out on one before. So if there was an accident, the idea is that there would be no one there to help pay for the cleanup. But more to point, the Shadow fleet is how the Russians get their money.

They basically have uninsured or under-insured old aging tankers, that evade everything that the Europeans are trying to do to shut Russian oil out of their systems, and especially to deny, income to the Russians as they’re launching a war in Ukraine. Will it work? It all depends upon how the Nordics and the poles and the Brits decide to handle enforcement.

So if a ship doesn’t have anything, what does that mean? You confiscate it, you take it into port. That would be getting into some very interesting territory, that it would be uncharted in the modern age. The whole idea of globalization as created by and then guaranteed by the United States since World War two, is that anyone can sail anywhere at any time.

And you don’t necessarily have to have insurance, although that’s a really good idea. And if the Russians don’t have it, it’s then up to the Nordics to decide what to do. And if the ships are confiscated, because they don’t have something that is not technically illegal, or they haven’t complied with something that just someone said that they needed to do.

We enter into a new phase of naval maritime transport. If if, if, if we go down that road that there’s no reason for any country really in the world to not take a ship that they like the look of or don’t like the look of unless they fear the consequences of whoever happens to own the ship or whoever happens to, have the ship registry.

The registry is a joke. Those are countries like Guinea Bissau and Panama, basically places where you can basically file a web address for free, and officially register your ship if you’re going to replace the system with something that actually means something that has to be a country that has a navy that can actually protect the shipping and are only a handful of countries in the world that can even pretend to do that in a regional basis.

And only one U.S. that could do it on a global basis. And since the United States does not dependent on international transport for most of its economic strength, it’s a stretch to think that the United States would do that unless it was paid a whole lot of money. And so if the Nordics do this, it is the end of the globalized system as we know it.

Now, keep in mind that I think we’re going here anyway. There is too much shipping. There are too many powers or too many people wanting revisions, and the US has lost too much interest. And we’re probably going to a naval freefall in the not too distant future. I’m not saying that this is the trigger, but I think it’s time to start talking about what the next system looks like and what the consequences are.

For the United States, if it happened today, it would hurt. Most of the naval shipments that come into the United States are large container ships carrying manufactured goods from Asia. So we’d have to get by without things like phones and computers and all that. The more valuable stuff eventually would be flown. But for all the bulk stuff, you know, your stereos, your cars, you’re going to be having some problems until that manufacturing capacity is rebuilt in North America, something we’re working on, something that is unlikely to be finished before the end of the decade.

So, you know, timing matters here, too. For other countries, this would be an absolute disaster. Most of the countries of the world, especially in East Asia, import the vast majority of their energy and material inputs. Some of them are even dependent upon significant food inputs, or at least the inputs they need to grow their own food.

So if this happened to China, for example, we would easily have a deindustrialization, or collapse, complete with famine in a very short period of time measured in months, not even years.

What takes its place is probably regional groupings, where either the seas are safe or everyone’s on the same side, and agrees with the rules of the games are, that looks really good for the Western Hemisphere.

That looks pretty good for the Scandinavian bucket. And in the Mediterranean might get a little dicey based on how relations between or among the Italians, the French and the Turks go. If they agree that they can, work together. That looks great. And if they can’t, You get two different mediterranean’s that shoot at one another, which, if you know your history has happened many, many, many, many, oh, so many times.

So, I can’t wait until the first time that Sweden or Finland or Poland decide that a ship that’s sailing by their coast isn’t doing something right. I want to see what they do. This is one of those many things that could all fall apart in a day. If the stars are aligned.

So stay tuned. This is probably not something you’re gonna have to wait for me to comment on, because if it does go down, a lot of things are going to break real soon.

The Russian Navy Leaves Syria for Benghazi…

Photo of Russian Naval Infantrymen on a boat

There are reports stating the Russian naval fleet might have found a new home (since their last one in Syria is no longer available). This new location is Benghazi, Libya and boy oh boy would I love to see that happen.

Russia has used Syrian ports for decades, but since the new Syrian government is not so friendly to the Russians…they must leave. The only viable option the Russians have is to move the fleet over to Benghazi.

Benghazi doesn’t offer much, other than a place to park. So, no repairs would be done, no significant naval operations could be carried out, and resupplying would be a joke. Oh, and relocating to Libya places the Russian fleet within range of NATO forces.

So, the Russians can hide out in Benghazi for a bit and avoid embarrassment in Syria, but they shouldn’t stick around for too long… or maybe they should.

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Hey Everybody Peter Zeihan, New Zealand, Tongariro Circuit, blah blah blah. This is a quick take. I just found out that, the scuttlebutt in the Middle East is that the Russians are going to relocate their fleet to Benghazi, Libya. Quick background. The Russians have been operating out of the ports of Banias and Tartus in, Syria for about a decade, and they’ve been using those as the primary supply points to participate in the Syrian civil War, where they are responsible for, among other things, carpet bombing civilians and probably killing, somewhere around 100,000 people in Aleppo specifically.

Anyway, the new government that is taking form is a group of militant groups that are opposed by the Russians. So the Russians are getting the hell out of Dodge because they’re not completely stupid. Anyway, I’m digging this Benghazi story. Let me explain. The fleet, the Russian fleet has to go somewhere. They can’t stay, in Syrian waters, for long.

And their options are limited. If they were to try to go through the Turkish straits to get to the black Sea, which would be for some of these ships, their home port, that is not allowed, because there is now a war on in the Black Sea. And under the treaty, of Montreal, that the Turks adjudicate and control.

No warships can come through without Turkish. Get go. And the Turks back. The militant groups that are kicking out the Syrian government and the Russians. So can’t go there. You can sail all the way around Europe, to where the Northern Fleet headquarters are in Murmansk and Archangel. But, the Russian ships don’t have much range, and it’s highly likely that most of the fleet wouldn’t be able to make it.

So they would have to dock to refuel and resupply and European ports, all of which are NATO and the, the likelihood of a NATO country just seizing the ships very high. So two humiliations that the Russians are trying to avoid. So that leaves Benghazi and Italy, where, again, the Russians are participating in the local civil war. Here’s the thing.

But Ghazi doesn’t have the necessary port facilities to do full resupply and certainly can’t do repairs. So the Russians would have to build that when they did it in Syria. It took several years and several billion dollars. So in the meantime, the Russian fleet would just sit in Libya, rusting while support facilities are built. And with the way things are going between NATO in Russia, the chances of there being a bit of a spark down the line pretty good, and the Russians will have repositioned their most capable naval assets within easy striking distance of the French Navy and the Italian Air Force.

So in order to avoid some significant embarrassment today, the Russians are arguably doing the most stupid thing that I could possibly come up with, and I really hope they do it.

Cover photo by Wikimedia Commons

The End of the World is Just The Beginning

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The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

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The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

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