The Future of Drone Tech: Russian Scale

Photo of a military drone

While Ukraine has dominated drone innovation, Russia’s been able to mass-produce proven drone systems at a scale that Ukraine cannot match. The Russians have also been incrementally improving their drone tech.

Russia has been replacing propellers with jet engines and equipping certain drones with air-to-air missiles. So, despite Ukraine’s advantage on the innovation side, the Russians aren’t getting left in the dust.

Up to this point, both sides of the conflict have been able to draw on their strengths to adapt to the new tactics and tech that hit the battlefield.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. Today, we’re doing another episode in our ongoing series on evolving drone technologies. And today we are specifically looking at the Russians. Most of the breakthroughs that we have seen that have reshaped the battlefield in the Ukraine war since March have been Ukrainian longer range, better targeting, faster assembly, mass manufacturing. Go go go go go go. 

But it’s not like the Russians have just been sitting there. Yes, yes, yes. Most of their parts are coming from the Chinese system and they’re just being assembled in Russia. But that doesn’t mean that the Russians don’t have a military industrial complex. In fact, still today, they easily have the third most powerful one in the world, legacy of the Soviet system, with a few things that have been added here and there. 

But when the Russians really shine, it’s when they take a proven technology and then apply it to a new platform and mass manufacture it. And we are now in the early stages of seeing that with what used to be called the shards. Those are the the dumb drones that they originally brought in from Iran. They now call them Garin if they’re made in Russia, Iran, and we’re now into the third and even the fourth generation. 

And the single biggest difference is that the Russians are taking the propeller off as method of propulsion and slapping on a jet engine. So the original shards travel at about 100 miles an hour, maybe 120 if they’re pretty zippy. The new ones coming out of Russia are traveling at pushing 400 miles an hour. So that’s problem number one, because there just aren’t very many interceptors that the Ukrainians have access to that can catch one of these drones. 

Usually what happens is you fire a bunch of interceptors and anything that doesn’t hit on the first pass as the penetrate turns around and chases it, that doesn’t work when your interceptor can’t catch up. And with the Garin four starting to come online now, we’re seeing more and more of these relatively cheap drones punching through air defenses because you only get one shot. 

That’s problem number one. Problem number two is as much advances as the Ukrainians have made in interception and long range strike. They still just don’t have control of their own airspace. Yes, they’ve got decent anti-aircraft capabilities. And yes, that has kept the Russians at arm’s length, where they launch glide bombs, then take 20 miles to glide down, hit their target. 

But the Ukrainians have lacked the ability so far to impose a degree of air superiority that would allow them to actually go after where the fighter jets are. So their solution has been longer range, bigger payloads go after the bases that these things launch from. That’s been working, but it’s not enough. 

And now the Russians are about to do something else. They have started putting something called an AR 60. That’s an infrared driven anti-aircraft missile on top of a Garand, and then sending that in so it doesn’t go as fast as, say, a MiG would go into a thousand miles an hour roughly. So the drones are going about half that speed, but then they launch an anti-air missile. 

So any F-16s or Griffins or Rafael’s or any other vessels, any other aircraft that the Ukrainians actually are able to get in the sky are going to start facing wave after wave of cheap, disposable drone firing a single missile. About the only good news news is that the missile itself weighs enough that that Garand cannot then also carry a warhead. 

So it’s just a one shot deal, not a two shot deal. But you throw a few dozen of those on the front every day, and it’s almost impossible for the Ukrainians to get anything up in the air, much less provide any sort of screen, much less project power into Russian territory to prevent those glide bombs from coming. 

So, yes, most of the breakthroughs, most of the changes, most of this really impressive stuff that we’ve seen in the last three months has been from Ukraine. It has been hurting Russia. It has been causing a lot of damage. But it doesn’t mean that the Russians are just lying there. They’ve basically taken steps to ensure that they can still hit nearly any target they want in Ukraine. 

They just have to send a few more of these jet powered drones after it. And there is no way that Ukrainians are anywhere close, getting any degree of control over their airspace. And as long as that happens, then if they do, the Ukrainians do manage to launch a ground assault, they’re going to be doing so under a hail of glide bombs, because they can’t really do much about it.

France and Germany’s Fighter Jet Program (FCAS) Is Dead

Artist's illustration of the FCAS aircraft in flight, after the project as of 2022 | Photo by Wikimeda Commons: https://en.wikipedia.org/wiki/Future_Combat_Air_System#/media/File:SCAF_NGF-523616-P-BEF36-987.jpg

The joint French and German Future Combat Air System (FCAS), a next-generation fighter jet project, has collapsed. Between conflicting national priorities and countless disagreements, the two countries opted to abandon the project.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. The news is that in early June, the Germans and the French abandoned their effort to build a joint new fighter program. Fifth generation. It’s called the FCS Future Combat Air System. They started working on this, I believe, nine years ago, and it hasn’t gone far. The very short version is that you’ve got a company or a country like France that is very into state control of certain specific types of economic activities and security activities. 

And the Germans, who are really good at producing things at scale. It was always going to lead to a bit of a friction. In fact, the Dassault CEO dissolved, being the French aerospace company said, you know, I don’t know why everyone thinks that we might need to work with the Germans, build a fighter jet. We already have the Rafael, which is one of the world’s best fourth generation fighter jets, which is true. 

Anyway, they couldn’t decide what to build, where and how to do it. There are some fun stories with Airbus about how they had to build specific kinds of barges to transport wings from one facility in Germany to another facility in Spain, to a third facility in England. It was stupid. 

Anyway, doing high and avionics is difficult and expensive and there’s a lot of pieces, but if you have it spread among multiple companies, it becomes a real disaster. 

Anyway, they ultimately decided to pull the plug on it last week. Two things that come from this. Number one, this really does put the Europeans behind when it comes to developing a fifth generation fighter jet. Right now, the only real option is the USSf 35, which is not a good match for a number of reasons, most notably range. 

And that’s before you consider that the American government, from the European point of view, has really gone off the reservation and has become, if anything, more of a security threat than a guarantor. Put that to the side for the moment. This suggests, with the possible exception of the next generation of Swedish Griffon or the next generation of French Rafael, there really isn’t going to be an indigenous European fifth generation jet. 

And that’s either good or bad based who you’re talking to. So much has changed in the world of defense technology with drones in just the last six months, that it’s unclear whether a fifth generation jet is really worth the cost anymore. So yes, this is bad for European integration. Yes, this is bad. If your goal is to have a fifth generation jet at all costs. 

But let’s consider the second issue here. If Germany is ever going to be an independent power, it has to have a completely indigenous defense industry. And if this latest operation with the French has now failed, that’s not going to happen soon. Or at least it’s not going to happen with the conventional technologies that we understand. And if the Germans can’t build their own fighter jet, even in partnership with the French, well, then anyone who has a strong air force can prevent the Germans from getting to uppity. 

Countries that fall into that category include, are not limited to France, Poland, Sweden, the United Kingdom and Italy. So one of my concerns as the globalization gives away, as populism rises and the supply chains breaks, is that the most powerful economic country in Europe? Germany will eventually become the most powerful military in Europe and start to act like a powerful country with a powerful military. 

And every time that’s happened in the past, things have kind of gotten spicy in Europe. Well, if they don’t have an air force that has functional independence, that can only go so far. So it doesn’t mean that Germany is immune to the political ebb and flow that we’re seeing all over the world as a result around economic nationalism, populism. 

They certainly still are vulnerable to that. And their political system at the moment is deeply fractured and has a lot of unsavory characters in it. But if they can’t act on it effectively, then all of a sudden I sleep a little bit better. Keep in mind that Germany is in the heart of Europe. 

There is no version of a strong Germany that insists in such a way that the neighbors it has are not concerned. But if we can have an economically viable Germany without power projection, that’s a very different discussion. And now, for once, it seems that we’re moving in that direction. 

So I applaud this decision, mostly because it helps me sleep a little bit better.

Will Ukraine Make a Play on Crimea?

A magnifying glass on a map of Crimea | Licensed by Envato Elements

Crimea has become one of the most important fronts in the war in Ukraine. Both the Russians and Ukrainians see Crimea as strategically essential, and neither side is willing to let it go.

Ukraine isn’t quite ready to reclaim Crimea yet, but they are making it as difficult as possible for the Russians to continue operations there. From continuous strikes targeting transportation checkpoints, Ukraine has forced Russian convoys onto predictable routes where drones and artillery can more easily attack.

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Transcript

Hey everybody. Peter Zeihan here. Coming to you from Colorado. Today is the 12th of June, and we’re going to take a look at what’s going on in the Ukraine war, specifically on the Crimean front. Now, the Crimean peninsula is a chunk of territory that juts out into the Black Sea, about midway down the Ukrainian coast. 

Historically speaking, it’s been a strong Russian outpost and one of the few places where the Russians have been able to project naval power. 

But during Soviet times, Khrushchev, who was Ukrainian, transferred the Crimea peninsula to the Ukrainian unit of the Soviet Union, which is something that pissed off all the Russians. And the Russians have been wanting it back ever since, especially in the post-Cold War environment. Well, in 2014, in the first phase of the Ukrainian war, the Russians did manage to capture it and have been using it as a military springboard to attack southern Ukraine ever since. 

The issue for the Ukrainians is that the very definition of Ukraine is the Dnieper River, which flows down through Kyiv and enters the Black Sea of the vicinity of the Crimean Peninsula. So if you control Crimea, you can threaten that opening as well as Odessa, which is, for all practical purposes, Ukraine’s second city in its window on the world. 

So there is no version of a Russia that fails to get Crimean, has any sort of naval strength or power in the Black Sea. And for Ukraine, there is no version of Ukraine in which it doesn’t control the Crimean peninsula, or can have any sort of economic integration with the rest of the world in a meaningful way. So it really is one or the other. 

Anyway, at the moment the Russians are controlling it, but at the moment the Ukrainians new drones, which have better range and better targeting, the ability to even themselves, have been pummeling all of the logistical lines that supply the Crimean peninsula. There’s really only two sorts of routes. In one is the Crimean bridge over the strait, which has been hit enough that it can’t handle large vehicles or trains, just light traffic. 

Or you can come on land through southern Ukraine in occupied territory, hugging the coast of the Black Sea, and then go into a series of bridges that cross into the peninsula. That way, at its narrowest point, the connection is only about nine kilometers wide. 

And so, while there are a number of routes through those nine kilometers, none of them are great. With all the new drones, though, Ukraine now has the range to hit all of those bridges, and in the last few days they’ve been hitting all of them almost at the same time. And so we’ve seen sustained pressure by the Ukrainians on the entire logistical system that allows Crimea to function. And remember that now, naval drones are a big thing in the Black Sea. 

So the Russians have evacuated most of their naval forces from Crimea and can no longer reliably supply the peninsula that I see. So everything has to come by truck or by train. And now that entire backup transport system has been put under huge threat. So what we’re seeing is fuel shortages, ammo shortages and manpower shortages in Crimea and large scale the end of Crimea as a military springboard to attack southern Ukraine, because they just can’t get the gear and the material that they need. 

Now, does this mean that a Ukrainian attack on crime is imminent? No. There’s still the very real issue of this transport problem working both ways. If the Ukrainians decided to surge across. They’d first have to cross the Dnieper, get into occupied southern Ukraine, and then go to Crimea. What the Ukrainians are doing is making it so that Crimea is a strategic loss for the Russians, and a drain on the resources, rather than anything that can gain that, that they can take over themselves. 

And that seems to be working very well. I just don’t want to oversell this. Yes, the Kerch Strait, for all practical purposes, is out of commission from a military point of view. Just can’t handle the cargo. But all of these bridges north south that go from Ukraine proper into Crimea, a little different. Most of them are not going over large bodies of water that are deep. 

Some of them are like rail bed and you can’t really blow up a rail bed. Others are crossing dikes that separate some of the marshes and the saltwater lakes that dot its area so they can attack the road bed, and in doing so, put in a crater that makes it so that has to be repaired. But those repairs can take just a week or two and a real problem. 

The real issue of what the Ukrainians are after here is to try to destroy as many of the crossing points that are close to Crimea, especially in the eastern part of the isthmus, as they can to force the Russians to go further north and route around the entire area and come into the peninsula from the west, where the infrastructure is more difficult to destroy, because if they can do that, then the Russians are bringing their forces far enough north that the Ukrainians can attack them with more conventional weapons like, say, artillery. 

And anything that slows down the trucks makes it that much easier for a drone to hit it. Keep in mind we now have memory drones hunting at volume in Russian occupied territories of Ukraine where Ukrainians can get a drone into the general area and then release it, and the drone will pick its own target and fly in and hit the target. 

And jamming no longer works. And so for the first time of the war, we’re seeing the Russians large scale about abandoning their attempts to resupply Crimea. But they have to run a gantlet every single time. And if the Ukrainians put up giant pothole in the middle of the bridge, all of a sudden the 50 odd trucks that were about to cross it have to stop. 

And if you’re a drone hunter, that’s exactly the sort of environment that you want. So we’re seeing a sort of highway of death situation. If you remember Desert Storm from 92 getting set up here, where it’s probably only a matter of time, where until the Ukrainians are able to basically bottle up a series of Russian convoys in areas where they can’t really maneuver and then just wipe out the whole thing. 

You do that a few times, and the entire Russian logistical effort for the southern front crumbles. Keep in mind that two years ago, the Russians had almost run out of military supply trucks, and if not for huge shipments from China, they would have. Now we’re in a situation where the Ukrainians have set up kill zones, where they’re probably going to be able to wipe out those supply trucks faster than the Chinese can make them. 

And that is a serious volume issue that the Russians are going to have a hard time dealing with.

We Have a Peace Deal! Sort of…

Flags of the United States and Iran blending. Licensed by Envato Elements

It looks like we finally have a peace deal between Iran and the U.S. (and maybe Israel). Neither side can agree on the terms, so it’s really more of a tentative agreement to stop shooting at each other…at least for now.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from the San Luis Valley in southern Colorado. I’m on my way to New Mexico, and I just heard on the radio that we have a peace deal between the United States and Iran. So I went till I get a blip of data and. Yeah, no we don’t. Okay, let me outline the five big things that supposedly there’s agreement not agreement on. 

Number one, the Strait of Hormuz itself, the idea both sides say that it’s going to be open. The Americans say there’s going to be no charge whatsoever for anyone passing through. Iran is confirmed that there will not be tolls. There will be a service fee that is higher than the tolls they’ve been charging. So air. Number two, Israel’s included, according to the Iranians, and not included according to the United States. 

In fact, in the time it took me to get my blip, the Israelis have carried out several strikes throughout the country. 

number three, the nuclear program. The United States has said that the Iranians will close the entire thing down, and that all the enriched uranium in the country will be removed and spun down to what you would use for power, fuel. 

The Iranians have said no, not even remotely. It’s never leaving the country. We might spin it down to 30% enrichment. By the way, you need 95% for a bomb and only 3.5% for nuclear power. But that’s it, then. Sanctions. Iran says that they’re all lifted immediately in the United States. This says they’ll be lifted in stages, with the first phase being lifted maybe in 60 days, assuming the Iranians behave. 

And then, number five, restitution. The Iranians say that the Americans have agreed to $300 billion of investment to compensate for launching the war. The Americans made no mention of that. The Iranians also said that $25 billion of frozen assets will be freed immediately. And the United States has said, you know, in bits and pieces over the next decade, maybe. 

Why so far apart? I mean, actually, these positions are further apart than we were back in February, the day before the war started. The key thing to remember about all of this is number one. The Iranians are always bastards when it comes to negotiating. Everyone has been trying to hold talks with them in some form for over 40 years. 

And so the idea that this time it was going to be quick, please. Second, there’s not a single American involved in these talks. It’s not just that we have a Pakistani field marshal doing the negotiating. It’s being moderated by Qatar and Saudis. However, the United States does not have an ambassador in Pakistan or Saudi Arabia or gutter or Kuwait for that matter. 

So everything is happening like a game of telephone, three steps removed from any American. And then the State Department isn’t involved because there are no ambassadors. So it’s not a surprise to me that this isn’t going anywhere. What’s the surprise to me is that anyone else thinks it might be going somewhere. Markets, of course, have exploded and all is down, but there’s no reason to think that this is going to be any different. 

If you just need something to underline that, the documents will be signed in Switzerland on Friday remotely, the Americans and the Iranians can’t be bothered to show up. So no, this is not the end. All they’ve agreed is they would prefer to stop shooting at one another. We’ll see how long that lasts.

DHS Gets Funding… A Lot of Funding

DHS building in Washington DC | Photo by Wikimedia COmmons: https://en.wikipedia.org/wiki/United_States_Department_of_Homeland_Security#/media/File:DHS_St_Elizabeth's_Building_1.jpg

ICE and DHS just got approved for a new funding package that expands resources for immigration enforcement and border security. My primary concern is the economic impact of this new funding, rather than the politics of it all.

The U.S. workforce is already under immense demographic pressure, and introducing stricter immigration policies will only worsen labor shortages (especially in sectors that are heavily reliant on immigrant workers). This means higher costs, reduced service levels, and baked-in inflation for the remainder of the decade.

The political side is concerning as well, but Trump’s attempts to limit congressional leverage are nothing new. Just another signal that U.S. power dynamics and party structures are in flux, as more decision-making power is falling into the hands of the executive branch.

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Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. Today is the 11th of June, and the news is that the US House of Representatives has given final approval to the new Department of Homeland Security budget. What can I say about this? It will go to the president’s desk. Now. He’s expected to sign it. It includes within it a rough quadrupling of funding for immigration, Customs Enforcement and border control. 

That’s on top of the $75 billion that was part of the big, beautiful bill from last year. And this is for an agency that normally has a total budget of about $10 billion. So over the four year term, this is about a quadrupling of the budget. Now, lots of people are going to say lots of things about immigration and human rights and thuggery in general. 

I’m going to leave those topics to them. Not that they’re pointless, but they’re just not mine. I want to hit this from the point of view where everyone is going to feel it. The United States now is seeing more of its population dying than being born, and the largest generation in American history. The baby boomers are mostly retired, and by the end of this decade, they will all be retired. 

Which means that if you want a growing labor market and the growing economy that goes with it, you need to get the people from somewhere other than natural birth. And the only option until we have cloning, like really good cloning, is immigration. And with this sort of system, at least for the rest of this decade, that’s functionally impossible. 

So that means that every pressure you’re feeling in the economy on the affordability question is about to get significantly worse, because there just isn’t going to be enough people to make everything function. Industries that’ll be hurt hardest. Our agriculture services and health care and construction. Those are the places where people who are not born in the United States tend to carry a disproportionate load. 

So for those of you who are older, look forward to spending lots of long hours and hospitals in a bedpan that hasn’t been changed. For those of you who like to move into new homes, get used to those being significantly more expensive because we won’t have the labor to build them. And for those of you who are used to going to things like restaurants, expect those tables to not turn around because there’s nobody cleaning the dishes. 

And in agriculture, we’ll still be able to do row crop pretty well. But as you get into, say, meats where people are, the animals have to be herded. That’s usually done by immigrant later. And when you’re dealing with fruits and vegetables, where that has to be handpicked immigrant labor as well. So everything gets more expensive on a secular basis now. 

And even if the day Donald Trump leaves office or this term ends and Ice is more reformed, if that’s the right term, and all of a sudden immigration picks back up to something that’s closer to the half century average, it will take another ten years for that to feed into the system. So we are guaranteed now to have significantly higher inflation than we needed to. 

That’s piece one. Piece two is that this is not an annual budget. This is a budget that is designed to fund these agencies through the remainder of Trump’s term, outside of the normal budgeting process. Now, under normal circumstances, Congress would never agree to this because that takes all of the power away from Congress. Congress has the power of the purse, the House specifically, and transfers it to the executive for the remainder of the term by the time Trump signs this, it’ll be codified into law. A couple things from that. Number one, the executive now has full authority to use this however he wants. Congressional check is gone. We’ve been talking on and off for the last few years about how the United States is going through a political transition, with both the Republican and the Democratic Party basically breaking down. 

This basically completes that process for the Republican Party. Trump has ejected a number of high ranking senators and House members via primaries. They’ll be gone in November, and the number that remain are going to be so isolated that they really can’t do anything. They’ve had this last stand, this last two weeks, where they’ve stood up to Trump on a number of issues, and now that is effectively over because they’ve lost their leverage. 

That means that the Republican Party is gone. It’s no longer the party of business or national security or rule of law, certainly not a fiscal conservatism. And this will accelerate what’s next, because we’re not going to have several years of the political right in the United States being completely nonfunctional outside of the person of Donald Trump personally, from a Democratic point of view, from an organizational point of view, this is generally pretty bad. 

It also means that whatever his whim is, is now state policy. And there are really no checks in the congressional branch of government. And so we’ve been seeing these cavalcade and compounding mistakes by Trump, whether it’s in negotiations with Iran or with Russia or domestic regulation or with the tariff policies. All of that is going to accelerate now, because the last of the folks who might have provided some ballast are gone now. 

And this law means that he doesn’t even have to consult anybody. Which means it really doesn’t matter to me what happens in the midterms. Because Trump has barely gone to Congress at all in his first year and a half in office. And now that he’s gutted what’s left of the Republican Party, and even if the Democrats managed to retake both houses of Congress, why would he go to Congress again when the priorities he has have already been funded for the rest of this term? The only way you could change that is if Congress decided to rescind this funding. But that would have to overcome a presidential veto, which requires a two thirds majority. 

So that’s just not going to happen. So all hail the King. He’s got what he needs to do, whatever he wants on the issues that he cares about as long as he’s alive or in office. And yes, there is some gray area between those two.

Screwworms Take a Bite Out of Texas’ Beef Industry

Cattle in Texas grazing

The return of the New World screwworm is threatening the U.S. cattle industry, especially in Texas. Typically, this would have been detected early on by agricultural monitoring and disease-detection programs, but those are now gone due to cuts made by the Trump Administration.

The screwworm is a parasitic blowfly whose larvae burrow into living animals. It can rapidly spread through livestock herds and requires a costly, large-scale treatment once detected in an area.

Livestock producers will incur higher costs and lose portions of their herds, meaning beef prices will continue to rise. If you’re looking for a silver lining, while this will be economically straining, it’s not inherently a food safety issue.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado today. We’re talking about an agricultural item that is hot screw worm. It is a blowfly that exists in tropic zones. It’s endemic in places in South America and the Caribbean. But from time to time, it manages to follow people and animals north. And we now have multiple cases reported in Texas. 

from the beef industry’s point of view, this is one of the worst things that could have happened at the worst possible time. So screw worm, it’s basically the the female lays eggs in a scratch or a cut on a calf, a cow, a sheep, goat, even a dog. And then when the eggs hatch, the maggots burrow into the flesh. a lot of blow flies. Like necrotic flesh. Dead animals. These guys, they want. They want them warm and wet. Anyway. Incredibly painful for the animal. And soon as the maggots turn into flies, they’ve got a wound right there. So they tend to stick around and the whole herd can get infected very quickly. 

And you can kill an animal in as little as 2 to 3 weeks. Treatment is external with a spray internal with some sort of anti bug thing. It involves information, if you remember that from the Covid days when we had so many, so many, so many, so many, so many very, very stupid people taking deworming agents because they thought it would help against the virus. 

Anyway, this is what it’s actually used for. And if you have a single case in an area, that means that the blowfly is already in the environment. And so you have to treat internally and externally every single sheep, goat and cow in the entire area. Otherwise you will have explosive growth. And that’s unfortunate. Probably what we’re going to be seen in the next couple of months is explosive growth throughout the Texas cattle herd. 

The only to fight it is to prevent it. So when you find an area where there are screw worms, you breed millions, billions, trillions of irradiated male screw worms or the flies and release them in the area. So when they meet with the females, the eggs can’t hatch, they’re sterile. And the last time the United States face a really, really big incidence of this, it was the 1960s. 

And in current dollars that cost about a half $1 billion to fix. We’re already seeing the Texas alone has spent more than that just to address the situation as it is today, attempting to get ahead of the preventative work. But it really they’ve they’ve failed and now it is local in multiple places across South Texas. And it’s going to be spreading like wildfire in the weeks and months to come. 

There’s really no good side of this, but that doesn’t mean that all effects are equal. So, for example, the Texas beef herd is primarily for consumption in the South, specifically in Texas. So while it’s really, really bad for Texas producers in Texas, consumers doesn’t really hit the export market. Most American beef exports originate in places like Nebraska or Oklahoma, where the population is lower. 

It really is, though, disrupting the North American beef trade because the United States is the world’s biggest producer of a number of agricultural products, most notably including things like feed corn. And so what happens is cattle from Canada and Mexico are shipped to the United States for finishing, fattening and slaughter. That has gone to zero. When this started to boil up in Mexico as a problem, the United States closed the border to all cattle. 

And now that the United States has cases itself, Canada has closed the border to all cattle transfers. So the feedlots that used to absorb all of that beef are no longer getting imports. And now because we have screw room locally, we’re going to see the beef industry producing less beef because of the cost required to treat everything. And then, of course, the preventative effort. 

You put all that together. And we already have ground beef in Texas of all places. That is over $8 a pound. That is an ugly situation for a lot of people for a lot of reasons. For most Americans, beef is their primary protein. Longer term, any effort to rebuild the herd is going to have to wait until the other side of this. 

That is not going to happen this year. If we are lucky, it will happen next year. And from the point that you start building out a herd now, it’s 36 months before you get an adult cow that can do adult cow things. So we’re looking at not until maybe the end of this decade, before the U.S. beef herd is back to where it might need to be, and even that requires a lot to go. 

Right? So how did we get in this situation? I mean, this is a disease or infestation that we beat back in the 60s. How to get back? Well, in a word, Doge, the first thing that Doge did when it came in as it went, looking around for things that they called a waste. And if you were monitoring infestation or disease that had been wiped out 50 years ago, they’re like, we don’t need that anymore. 

So in the US Department of Agriculture, all the labs who did things seasonally were cut because they could be cut and all the built in expertise on things like agricultural diseases and infestations that were not active were cut because they weren’t being used at the moment. And so our entire front line of detection for this entire topic went to zero. 

And Secretary Rollins, Secretary of Agriculture, isn’t stupid, but she doesn’t have a background in the nuts and bolts of agriculture. No one on her team does, because everyone on her team is somebody who has to be politically palatable to the white House. And so there’s no skill set in USDA to deal with this. They are consulting with private sector in order to build up that capacity. 

But everyone in the United States who dealt with this at volume is, you know, in their 80s. Now, there aren’t a lot of people left, and that means you have to go abroad and all of those connections reduce to zero as well. So in the best case scenario, the United States now has two of those facilities that deal with screw rooms. 

One is a small one in Panama, which is a legacy from the last big infestation, and one is a new one that just came online in South Texas that can make like a million of these things a week. That needs to get up to a billion of these things per week to really have any hope of driving this back. 

And so, best case scenario, this is going to spread very, very aggressively in Texas and beyond for at least the remainder of this year and probably well into the next. And then if everything absolutely goes perfectly, we’ll have it under control at some point in 2028. That’s a lot of ifs. In the meantime, America’s favorite protein, Texas’s favorite protein is only getting more expensive as the cost of keeping this at bay when it’s now endemic in parts of Texas is only going to go up. 

This is going to be something that is going to be eating into literally the system for months and years to come. About the only bright spot is while these things can infect a cow, you can still eat the cow. So it’s not like it’s wiping out the herds directly. And while it can infect a person, when a maggot is chewing at your flesh, you notice. 

And so it’s not like this. You’re going to die from this. You just go to the doctor and get treated and not with information. Just to be clear. there’s no direct threat to human health because the stuff is not subtle. All right. That’s it bye.

China No Longer Controls North Korea

Monument of hammers raised in North Korea

To simply call North Korea a Chinese puppet state doesn’t capture the complexity of that relationship. To fully understand it, we must look back at three generations of the Kim dynasty, the current partnerships with other powers, and Kim Jong Un’s aspirations.

However, the biggest takeaway from Xi’s meeting in Pyongyang is that North Korea is becoming more of a geopolitical wild card. China and the rest of the region must now deal with greater uncertainty from a nuclear power right at the doorstep.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. Today is the 8th of June. And the big news is that chairman, XI Jinping of the People’s Republic of China is in the Democratic People’s Republic of North Korea. Who summits. Fun stuff. Anyway, I thought it might be useful to give you the rundown of what’s brought us to this point and what the status of Chinese North Korean relations are, because it’s not what most people think. 

If you go back in time to the early Cold War years, we had a guy by the name of Kim IL sung who was kind of the grandfather, well, literally the grandfather of the current Kim who’s in charge, and Pyongyang. Anyway, Kim IL Sung is the guy who founded North Korea as a state. He fought the Japanese during World War two, had lots of gravitas, good military leader. 

But then he ran this hermit kingdom, as people like to call it, with a ideology called, which basically translates into self-reliance. And so while the entire world advanced into the industrial age, North Korea just kind of stalled, really famously. Pyongyang is really the only city in the country until recently that has even had electricity. And if you were an affiliate of the Kim dynasty, you got food. 

And if you weren’t, life kind of sucked. That continued on until the Cold War ended and when the Soviet Union collapsed. Kim IL sung realized the writing was on the wall, and that the Jewish ideology just wasn’t going to work in a world that was globalizing. Without the ongoing payments that came in from the Soviets. So, according to the best collective guesses of the world’s intelligence agencies, and by that I mean American, Japanese, Chinese, South Korean, British, French and others. 

Kim IL sung had invited himself to Seoul to meet with the then South Korean leader, Another Kim, and to talk about reunification in a practical sense, as the story goes. Within a couple of days, the generals who had fought with Kim IL sung back during World War Two killed him. And because they knew that in any version of a reunified Korea, their jobs would be gone. 

Because if you’re not fighting the South and the Army doesn’t need to be as big, and if the South and north and integrate, you don’t need as many generals. And the southern generals certainly had more military expertise with better equipment. So they off the guy. And that left Kim IL Sung sun, Kim Jong IL. He’s the crazy one. 

The one always looks like this. Yeah. Left him in charge and Kim Jong IL was best way to phrase this. Well, he was batshit crazy. He had been educated in North Korea, grew up drinking the Kool-Aid in the ideology, and didn’t really understand how the rest of the world worked. So he’s most infamous for leading a series of agricultural reforms that ended up triggering mass famine and killing 2 million people and gutting what little hydropower of the country had. 

And as the story goes, the generals who had offed his dad were like, oh shit, that’s totally not what we meant to happen. We’ve got to make sure that the next generation isn’t like this. So they sent the third generation of kids who were only now teenagers, out into the wider world to learn how the world actually works. 

And Kim Jong UN, who is the current leader, the son of Kim Jong IL and the grandson of Kim IL sung, was actually in Switzerland in middle school and high school. 

Any who Kim Jong IL, the crazy one, deliberately got bad medical care on the orders of the military and eventually died relatively young, which meant that Kim Jong un, at the tender age of I think it was 23 or 26 at the time, got recalled from his studies to basically run the country. 

And that set up a really interesting power dynamic. On the one hand, you had these generals who knew that modernization was inevitable. Some degree of openness with the South was inevitable. They just didn’t want it to happen on their watch, because they didn’t want to lose their prospects and their wealth and their position. And then you had Kim Jong un, whose father had been killed by these guys and who’s or mistreated from his point of view, and whose grandfather had been killed by these guys. 

He was like, I really hate these guys. So you had this interesting situation where the crazies of the second generation were still around, and the iron clad dictators of the first generation were still around, and then you had this kid alone who suddenly was the nominal leader. And so what happened over the next decade is Kim Jong UN. 

He’s the chubby guy, learned how the system worked, and whenever he had an opportunity, he offed one of his father’s generation. So we had a guy in Singapore who got hit with some sort poisonous nerve agent. My personal favorite are the Minister of Railways, who got run over by a train, and a defense attache who accidentally got shot by an anti-aircraft gun. I mean, you just imagine the mechanics of that. Anyway, thinning out the crazy generation and waiting for the first generation to die. Well, folks, it’s been 80 years since World War two. Anyone who fought with Kim IL Sung in World War II is now long gone. And the generation that rose to power in the 50s, 60s and 70s are mostly gone as well. 

So it’s just Kim Jong UN now. Now, let’s bring that from ten years ago to roughly the present. Most people assume that North Korea is just the yippie and rabid Chihuahua on the end of a leash, controlled by Beijing and under Kim Jong IL, the crazy one. There was something to that, but that’s not the case anymore. North Korea has an independent streak and is looking for, and has been looking under Kim Jong UN for any sort of leverage, not just to strengthen his personal power and that of his family and entrench the regime in North Korea. 

But more importantly, to make sure that Beijing can’t just dictate 

So if you go back to 2017, 2018, 2019. That’s when Kim Jong UN started expressing a degree of independence that Beijing really didn’t like. There was a series of bilateral meetings between chairman G. And China and Kim Jong un. Most of these meetings happened in Beijing. 

And basically, to sum it up, it was chairman G who’s a short dude standing or sitting with a boost so he could lecture down to Kim Jong un and lecture the wayward province about how things were supposed to be. And the Chinese citizenship ate that up because it made China look important, but it just infuriated Kim Jong un. 

And after one of those summits, he’s basically on his train coming back. He doesn’t fly coming back to North Korea. And he directs his staff to call up Donald Trump, who had been using about maybe having a summit. And he basically said, Call Donald Trump, tell him the summits on. never going to talk to these fuckers again. 

And over the course of the next few months, we had two summits between the younger Kim and Donald Trump, one in Singapore and one in Vietnam. Now, that’s from the American point of view, where it ended. Trump didn’t really read the briefing materials, as we know now that the State Department and the CIA provided to him. And after the second meeting, which I believe was in 2019, he basically just moved on to other topics. 

And from the point of Kim Jong UN, who felt that he had really put his neck out, there, he was. He was pissed. And so not that American North Korean relations have ever been great, but if there was a chance for a break, that was the moment in the moment past, which meant Kim Jong UN in North Korea all of a sudden were kind of out of luck if the Americans were not paying enough attention to cut a deal, and he was still worried about whatever was going on in China and them dominating North Korea, there really wasn’t anybody else left because the Russians had fallen so far. 

Enter the Ukraine war, because all of a sudden in 2022, the Russians found themselves just as isolated from international markets as North Korea was. And all of a sudden, Kim Jong UN was like, hey, there’s an opportunity here for us. And if you fast forward another year, suddenly we’ve got over 10,000 North Koreans at a time, fighting in places like Kursk, in the Russian Ukrainian borderlands and ultimately in Ukraine itself. 

And we have decades of built up supply, stockpiles of North Korean artillery that is being sent by the trainload to the Russian front with Ukraine. And at one point it’s not that way anymore. But at one point, well over one third of the artillery shots that the Russians were using were sourced from North Korea. And that partnership has continued to a degree. 

There’s still North Korean troops. There’s still North Korean weapons. And then exchange. The North Koreans are getting Russian technology, most notably intercontinental ballistic missiles. Because remember, Russia, even in its weakened state, is still a space power. And so you could argue that while they haven’t tested it, the North Koreans could easily launch an ICBM and strike anywhere in the continental United States. 

Now, that’s all water under the bridge anyway. Bottom line is that Kim Jong UN and North Korea found their out in Moscow. And while being friends with Moscow these days doesn’t get you a whole lot. It certainly is an interesting piece of leverage to use against Beijing. Which brings us to today, chairman G is in Pyongyang meeting with the younger Kim for only the second time that he’s actually been to North Korea. 

And the entire topic of the talks is China’s effort to rake North Korea back into the Chinese sphere instead of being in the Russian sphere. The North Koreans, Kim Jong un, specifically, have long been just as allergenic about cutting deals with the Chinese as they have with the Americans and everyone else. So if G is going to actually get this, he’s going to have to offer quite a bit, especially when you consider that the normal goalposts for bilateral relations economic aid, technological aid, money, energy, the North Koreans are really getting everything they could need right now from the Russians. 

So for China to get back into the position where they’re the dominant external power in North Korea, it’s not just that that it would have to offer a lot more, but they’d have to offer it without strings. And from China’s point of view, that kind of defeats the point. Because China wants a regime, it can control that. All of that is kind of piece one. 

Piece two is that Kim Jong UN has done more to change the strategic position of North Korea just this year than any leader in North Korea has done since its formation at the end of the Korean War, beginning of the Korean War. He’s changed the Constitution so that North Korea now defines itself as an independent state that is not seeking reunification with the South. 

One of the polite fictions slash aspirational goals of both Pyongyang and Seoul has been that the division of the Korean peninsula was imposed by outsiders, namely the Soviet Union and the United States. And at some point, they would really like to be reunified into a single entity. Now there’s a billion details as to how that might happen, and nobody agrees on any of it, because you know who’s in charge, for example. 

I mean, the South Korean population is twice the size of the North, that it’s a first world technocracy. Much of North Korea is still pre-industrial. If it was a straight up merger, it’s obvious who would be in charge. And if there’s one thing that Kim Dynasty cares about, it’s regime preservation because that’s their power. Anyway, the official position of North Korea now has shifted that reunification is completely off the agenda. 

It’s an independent state. It does not seek union still hostile to the South, still hostile to Japan and the United States. But it’s no longer even rhetorically aiming for state merger, which means it really has come of age as a wild card in international affairs. It’s playing the Russians and getting a lot of really advanced tech from their point of view, that low cost of just a few thousand troops that just get massacred. 

The Chinese see it as an unknown that they can’t manage, which I personally find delightful. It’s got fairly reliable short and medium range ballistic missiles and a fairly advanced nuclear program for a state that has under 30 million people. And all of South Korea and all of Japan are in the easy hit zone. And now, courtesy of their alliance with the Russians, it probably could nuke the United States or at least send the missile whether we could intercept it or not as an open question. 

So it’s a different North Korea now than what we’ve been dealing with before. And the first world leader to go there and get a taste of it is Chairman Ji of China. And he’s there right now. And from what few communiques have been released so far, reading between the lines, it’s clear that she is not having a good time of it, which I also find delightful, but with the one caution that if an authoritarian madman like she doesn’t care for the new North Korea, imagine what everybody else is going to think. 

So this is a good for drama and good for shaking up the strategic map, but it is something that is gestating at the edge of Asia, in the heart of some of the most dynamic economies in the world, in a way that’s going to cause a lot of pain in the not too distant future.

The Future of Drone Tech: Hybrid Drones

A quadcopter drone with mountains in the background

A new drone has appeared on the scene in the Ukraine War. This hybrid drone blends the precision and control of FPV quadcopters with the range and payload of fixed-wing drones.

Almost every drone style has been battle-tested in Ukraine. We’ve seen FPV drones wreak havoc on the frontlines and fixed-wing drones strike deeper inside Russian territory. However, these new hybrid drones offer the best of both worlds.

Ukraine is already seeing early success with the hybrds, meaning these drones could be a game-changer when combined with other innovations we’ve seen. Russia will develop countermeasures eventually, but we’ll see if Ukraine can capitalize on the opportunity this summer.

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Transcript

Hey everybody. Hello from the Vegas airport at 0 dark 30. Today we’re going to pick up on the drone tech series and talk about different kinds of drones, specifically first person drones, which are typically quadcopters or hex copters. Verse is glide drones and flight drones, which are more fixed wing. Both of them have their own places. And one of the things we’re seeing in the Ukraine war today is that they’re starting to merge a little bit. 

So first quadcopters or hex copters, you’ve seen them. These are the hobbyist ones that have been pressed into military use, with new models coming out pretty much every week. The advantage of a quadcopter is control. They can hover. They can land to conserve fuel. You have direct control over them at all times, and that means you can do really crazy things like position them above a military asset, like a tank that has a hatch open and drop something on it, or even drop the helicopter right into it. 

You can fly into a hangar and look around and figure out what it is you want to go after the repair bay and aircraft, a fuel tank, whatever it happens to be. The degree of precision really is extreme, but the problem is, is these things have to have the rotors spinning all the time, so that really limits the range. 

At the beginning of the Ukraine war, these things really only had a range of 2 to 3km, which is about the same as a javelin missile by the way. So the way to extend range was to fly them towards an enemy position, land a lot of nearby and then send one ahead to Scout, and then the others would spin back up. It would buy you a little bit more control and flexibility, but ultimately range was the issue. But as the batteries have gotten better, specifically lithium phosphate batteries and they’ve improved aerodynamics, the range has gone from 2km to 5km to ten kilometers, 20km to 25km. 

And that has turned the entire front line into an area just littered with drones all the time. There’s also a lift issue, so their warheads generally are 10 pounds or less, with most of them being like 3 pounds or less. Fixed wing are different. They require some sort of launching system, which sometimes is no more complicated than kind of a large scale slingshot. They can carry more. They get a lot more lift because they have a wing system that gives them lifts. Quadcopters have no lift. You just have to have the rotors running. And this means that the fixed wing drones have significantly larger range, typically four and five times as long. If you’re spending the same amount of money and a significantly larger payload, because once they get up to a certain altitude, they can just kind of glide for a while and conserve fuel. 

And you can also build larger models. There’s definitely an upper limit when you come to a quadcopter. As they get bigger, you the lift to weight ratio changes against you, so you can only get so big, whereas a bigger and bigger and bigger airframe for fixed wing generates more and more lift proportionally. And so it’s the fixed wing ones that are carrying the bombs that are in excess of 100 pounds, who can fly 600 to 700 miles, really without any major problem. 

And those are the ones that are being used against most distant targets, and especially things like refineries and infrastructure. The advantages pretty extreme there. You can bring a lot of destructive power at significant range. The problem is control. With an FPV drone, you generally have either a digital tether from, say, satellite or cell phones or a fiber optic cable. 

But when you’re starting to talk about a fixed wing drone, the further away they get, the more the chances are that they can be disrupted by electronic warfare. You never have a line of sight to them anymore, and if they fly through an zone, you probably are going to lose the drone. Although there’s certain things you can do with buffering that allows them to kind of stay the course in the hopes that they’ll emerge on the other side of it. 

And you can pick up the signal again. But as a rule, the further away you go, the greater the chance you’re just going to lose control altogether. So these two broad classes have kind of defined everything with the war fees for close in and fixed wings for further destruction of infrastructure. But what we’ve seen in just the month of May is a new hybrid drone coming out that looks a little bit like a biplane, but the most of the rotors are horizontal as opposed to vertical, or the Ukrainians are starting to do is put detachable wings on the drones to get some of the best of both worlds, so you still use the horizontal rotors to achieve the thrust that’s necessary to leave the ground. But as they get going. The wing bevels into place and they can get lift from that as well. And in their first iteration of these things that have popped up in just the last few weeks, we’re already seeing the Ukrainians using these new hybrid drones to go 100km, which is double what we had before just in April. 

And it’s 20 times what these sorts of drones could do at the beginning of the war for years ago. And what that means is, in one stroke, these new drones are roughly doubling the strike range of Ukrainian closing drones, increasing their weight capacity a little bit, too, because of the extra lift. That is something that the Russians are wholly unprepared for. Basically, with each stage of this war as a new weapon has been developed. There’s a period where the attacker, whoever that is, achieves local supremacy and a significant tactical advantage. 

And then the other side developed countermeasures or copies of the technology, and the situation equalizes. But we’ve had so many Ukrainian innovations hit just since March that the Russians are reeling. So we now have memory drones that are hunting and self-selecting targets 50, 60, 100, 150km behind the front line, completely eviscerating the entire logistical system and now close in. 

Individual Ukrainian drone operators have doubled their hunt range. So any sort of movement within 50 to 60km of the front on the Russian side is becoming a no man’s land. Russian positions are becoming isolated and without the Ukrainian suffering any blowback whatsoever. It’s not that the Russians have had to abandon all offensive capability, but they can only focus in specific points. 

And that requires a degree of massing of forces. And those massing of forces usually happened more than 30km away, but less 100km away. All of a sudden, that is no longer viable. So we’re seeing a disintegration on the front right now. The question at this moment is whether or not the Ukrainians have enough offensive plunge and mine removal capacity to take advantage of that in any sort of sustained way, or we’re just waiting for the Russians to adapt these tactics adopt them to their own. 

It’s just too soon to know. But considering that this is happening in the first week of June, we have all of June, all of July, all of August, all of September in the first half of October, which is kind of the ground fighting season when the climate encourages offensive activity. And the Ukrainians have now spent the last 2 to 3 months preparing the battlefield in a way that has just completely decimated the entire Russian order of battle and pre-positioned logistical caches. 

At the same time, preventing troops on the front from being supplied with new men, new equipment, food, water, all the rest of the things. So I don’t want to overplay this because Russia’s defensive capabilities are immense. But it does look like this could be a summer where the Ukrainians break multiple parts of the front, and if they can get through those minefields, then we really are in a new game.

A Massive Energy Break Coming Soon

An Oil Tanker in the ocean

We’re slipping closer and closer to a major oil supply crunch. With the Persian Gulf still shut in, global inventories almost depleted, and threats to other oil supplies, the world doesn’t have enough oil to keep things running for much longer.

The Chinese have been able to substitute some of their oil demands with coal-based products, but this is just a band-aid. Eventually, oil prices will spike, and certain consumers will no longer be able to afford petroleum products, leading to demand destruction.

Northeast Asia will be hit hardest due to its heavy reliance on imported oil, but even Europe will have issues, despite having alternative supply sources.

Prefer to read the transcript? Click here

Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. I wanted to give everyone an idea of just when the oil crisis is going to hit, because we’re about their short version is that since the Iran war started, we’ve had somewhere between nine and more, currently about 13 million barrels per day of Persian Gulf crude that isn’t even getting produced, much less exported to the wider world. 

And we are well past the point where the last tankers of exports pre-war have reached their destination. So everyone’s just been burning through stocks and at some point in either June or early July, we’re going to reach basically minimum operating levels for inventories and half the world, if not more. 

We’re looking already about 1.25 billion barrels of crude that haven’t been delivered. With every day goes by. That’s 10 to 13 million barrels of crude that have to be pulled from inventories. And because prices haven’t dropped, which is kind of weird. Demand really hasn’t dropped all that much. We’ve seen a little bit movement in some subsectors, like say, jet fuel and diesel, but for the most part, people are continuing to consume crude like this isn’t a long term problem. 

Oh my god. Anyway, at some point in June or early July, we’re going to hit the wall. The primary reasons why it hasn’t happened already is we’ve got two little factors in play. The first are the strategic reserve releases that the IEA approved two months ago. Now, in the case of the United States, this has really helped out Europe because the United States is a net exporter of crude and refined product by a large margin. 

So we don’t need the crude that is being released. So roughly 2 to 2.5 barrels a day of crude from our strategic petroleum reserve are just crossing the Atlantic and helping out the Europeans. And since the Europeans are so much more efficient at energy use than we are, that has really helped them kind of square the circle in the mid-term. 

It won’t last much longer, but for now it’s holding on the Asian side. Something else has helped out. That’s a little odd. 

When you make petrochemicals, you usually use a mix of feedstocks. You turn oil into something called naphtha. That’s your primary feedstock, but you also use liquefied petroleum gas like ethane and propane and butane. Some of these have partial substitutes, specifically the naphtha. 

And what the Chinese are doing is trying to cut out as much naphtha from their system as they can, and instead substitute it with a kind of processed liquefied coal. Now, this is wildly inefficient and expensive and especially polluting. But when you’re in a throughput driven system like the Chinese, it’s not so big of a deal. So headline. 

The Chinese petrochemical sector uses about 4 million barrels a day of product, of which about half, maybe a little less, is naphtha. And they’ve been able to substitute coal for maybe a third to half of that which is bought Asia. A little bit of wiggle room and has prevented the Chinese from having runaway price increases. You combine that with their large scale application of very, very, very small electric vehicles and a grid that primarily runs on coal anyway, and they’ve bought some more buffer that way too. 

But all of this is going to evaporate over the course of the next 3 to 6 weeks. So we’re very close to the break assuming nothing else goes wrong. And as we have seen in the past, that if we do get into a hot war situation again, the Iranians have easily demonstrated that they can hit any part of the export infrastructure from the Persian Gulf that bypasses the Strait of Hormuz, specifically the bypass pipelines of the United Arab Emirates and the Saudis have so were, ironically, in probably the best that can be hoped for right now. 

No hostilities, but the Persian Gulf still closed. If the Persian Gulf were to reopen tomorrow, it would be months before any new crude would flow, because it just takes that long to turn these fields back on and in some cases, years. So the late June and into July deadline is probably going to happen regardless of what happens with the negotiations that are ebbing and flowing back and forth. So get ready for a fun summer. 

How this usually happens is when you’ve got this sort of disruption. Prices go through the roof because there just isn’t any throughput. It’s not that people have cut refinery runs for the most part. It’s just that we’re not going to have feedstock. And when that happens, you get this lovely thing called demand destruction, where prices rise to a point that some parts of the economy, some people in some parts of the world simply can’t afford the crude derived products at all. 

And when that happens, their demand is destroyed. Till such time as prices fall back into line. The last time the world experienced this scale of disruption, it wasn’t the oil crises in the 70s or the 80s. It was World War two when everything got sunk. So historically unprecedented is the term. And keep in mind that with the global happened, some version of this was going to happen in a large scale. 

Regardless, the parts of the world are going to be most affected. At the top of the list is Northeast Asia, because this is an area that imports well over 90% of their crude. And until recently, all of that crude has really come from the Persian Gulf. They do get a little bit of a kicker from the former Soviet Union now, a little bit from the Western Hemisphere, but not enough to make a material difference. 

And the second worst will be Europe, where they also import 90% of their crude. But they have the potential of tapping more regions, most notably North America and North Africa and West Africa. So here we go.

Armenian Election Signals It’s Done with Russia

Flag of Armenia in front of an apartment complex

Armenia has long depended on Russia for just about everything, from energy to security, and even broader economic integration. However, the weekend election results in Armenia reflect a rejection of pro-Russian politics and a desire to find a new path forward.

This was likely to happen anyway, as Moscow has its hands full with everything else going on, but the big question remains: who can fill Russia’s shoes? Not many Armenians will like the answer…

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Transcript

Hey everyone. Peter Zeihan here, coming to you from Colorado. Today we’re going to talk about Armenia. America is one of the former Soviet republics that is in the South Caucasus, in a little pocket between Azerbaijan and Turkey. East and west and north and south. Former Soviet Republic of Georgia. Not. Not Atlanta and Iran. It’s a difficult position to be in. 

There’s only 4 million people now, and a population has been hemorrhaging ever since the Cold War ended. It’s a little state that has been completely dependent on security guarantees granted by the Russians, and in fact, in a series of conflicts with John. If it wasn’t for those Russian security guarantees. It Armenia would have ceased to exist a long time ago. 

But as much as we talk about drones in the Ukraine context, what a lot of people forget is that the first real wave of these new generation of drones that are changing warfare were used between Armenia and Azerbaijan, with the Azerbaijani using a lot of Turkish weapons and basically completely obliterating the Armenian Air Force, its tank forces and its artillery in a one month war that happened all the way back into 2020. 

I believe since then, Armenia has panicked is probably the best word for it. They’re landlocked. They don’t have their own energy. Most of the electricity comes from a single nuclear power plant, the fuel provided by Russia, and most of the security comes from a Russian base as well. Well, with the Ukraine war and all these new drones Armenia’s position has gone from untenable to something flirting with state collapse. 

And so there is a recognition among the political elite of Armenia that something’s got to change and that Russia can’t be part of the solution, because if Russia was going to be part of the solution, they would be doing more. But they’re completely consumed with the Ukraine war and especially today, now that the Russians are basically watching their entire front line collapse in real time, there is not going to be any help for Armenia. 

So today is the 8th of June and we had elections over the weekend. The ruling party, Civic Armenia, ruled by a guy by the name of passion, got about 50% of the votes, swamped the other parties. The Russians have been using their old playbook that they have used in Ukraine and in Georgia, in the United States and in Germany. 

And the United came everywhere to try to discredit their foes and boost their chosen proxies. And it’s kind of funny, with the exception of the United States, it really hasn’t worked anywhere. But it’s generated so much backlash from the non-Russian forces that people really turned out in numbers anyway. The guy, the party who are trying to find a new path one decisively. 

They’ll have an absolute majority in the Parliament. And the question now is what’s next? There is no good path. Let’s start with that. The Armenian mindset globally is defined by the Turkish genocide during the end times of World War one, when hundreds of thousands, some people would say 1 million or 2 Armenians were killed in Turkish territory. And that singular memory is seared into the brains of all the survivors and their descendants. 

And so the idea of having any sort of long term deal with Turkey is something that is really just rejected. But now that the Russians are no longer part of any possibility, it’s something that they have to consider. You’ve got Azerbaijan on the east, which are allied with the Turks, get their weapons from the Turks, coordinate with the Turks. 

From the Armenian point of view, they’re just as bad to the south. You’ve ever run, which has always been a window on the world. But the recent degradation in relations between the United States and Iran means that Iran is no longer a viable option for goods coming in and out. And that just leaves Georgia to the north, which is in the process of sliding into authoritarianism. 

I guess that is another place where Russian misinformation has worked, and it’s not reliable either. So really the bottom line is either they cooperate with the Turks to a degree or they have nothing. So we do have real talks going on among Yerevan, Baku and Ankara about what is next. And this has to involve some sort of trade quarter. 

It has to involve some sort of Azerbaijan energy so the Armenians can keep the light on. The Trump administration has gotten involved with handshake deal. JD Vance was there a few months ago basically saying that we will provide nuclear fuel to your facility. It’s not clear if that is an above board or possible outcome, because this is a nuclear power plant that is ancient and decrepit, and it’s not clear that the Americans can even make fuel rods that will fit into it. 

But it’s at least the start of a place to talk. And now that we’ve had the vote, we’re going to see if this old new government can actually take concrete steps. But anything that does not involve a formal deal with Turkey is something that’s not going to go anywhere. So they’re going to have to take the hardest step first. 

And screaming in the background you have the Armenian diaspora, which has always been very, very gung ho when it’s Armenian lives in Armenia that are a threat as opposed to their own. And of course, the Russians looking to sabotage this at every opportunity. I don’t mean to suggest that the Russians haven’t taken a hit in global and regional affairs in the last couple of years. 

They obviously have, but I would not count them out when it comes to the ability to sabotage political deals. That is something they are very, very good at. So this election is really the start of a very difficult process, and we’re not going to see it wrapped up this year.