The First Shale Revolution: Humble Beginnings

With ExxonMobil’s acquisition of Pioneer, it’s time to kiss the days of mom-and-pop shale operations goodbye. But before we look at what’s next, let’s look at the shale journey over the last two decades.

Thanks to high oil prices in the early aughts, small shale operations could innovate and develop new techniques for extracting that black gold. Once the US was close to achieving energy independence, super majors caught a whiff of the money and started buying up those smaller producers.

This recent acquisition signals the end of an era as the super majors now dominate shale production. So what does that mean for US shale? While there will be less innovation and slower production growth, ExxonMobil will provide more stability to the industry.

But that’s only the beginning of this story…we’ll be breaking down the second shale revolution tomorrow.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado, where the big news from last week, which was a believe the 10th of October, was that ExxonMobil, the energy supermajor, has bought up a company called Pioneer with an all stock by about $60 billion of stock. Pioneer is the single largest producer in the shale fields in the Permian Basin, which is the most productive energy basin in the world now.

So I thought it would be great to kind of take a walk down memory lane and then take us forward into what’s going on with the energy sector in the United States and the wider world starting Michele. So short version is that there have been multiple phases to the shale breakout. It all started back in the early 2000s when the United States found itself facing kind of a double bind.

We had had a coup in Venezuela, which had taken one of the major suppliers of crude for the Western Hemisphere off. And the Iraq war had started. So a major source in the Eastern Hemisphere was offline. And energy prices hit near record levels in a very short period of time. And there’s nothing like high prices to trigger the sort of activity that’s necessary to bring new supplies to the market.

And a lot of technologies that had been part of the energy matrix for decades, in some cases over a century. They started to play with them in new ways. So the two issues in question were something called fracking, which is basically injecting water into a well with a suspension of sand in order to crack the rock. And then you pull the water back out and the sand stays behind and props open the cracks.

We’ve been doing some version of this for over a century, but that was now being combined with something called horizontal drilling, where instead of just going down and punching through a cap rock to get to a reservoir, you go down and then you go laterally across a rock strata. Shale is different from normal crude. Normally, the crude migrates through the rock formation until it hits some sort of non-porous rock that it can’t pass through.

And then it builds up into kind of a pool with a lot of pressure. So when you punch through the tap rock with a drill bit, you get pressure that pushes the oil out. And then eventually you can pump water down into that formation in order to loosen up more of the oil and get even more out. Shale is different because the rock itself was never porous, and so the little bits of energy are trapped almost at the moment of formation within the rock strata.

And so you’ve got to break them out. It’s neither of these technologies were really new, but combining them was. And as is normal, when new technologies come to the fore, it’s not the big players who do it. It was the small players. So this is not ExxonMobil or Chevron or ConocoPhillips or Total or any of the rest. These are mom and pop operations who only own a few acres of mineral rights, who would drill everything that they had.

Now, the economics of that are maybe questionable, but remember, we’re in an environment of much higher oil prices. So you had small operations that were desperate to find a way to crack the code on new technologies in order to stay in business. And since we had high prices from roughly 23 until 2008, they had a long period of high prices that they were able to operate in.

And for small companies, that meant a lot of innovation. And so we developed dozens of new techniques, kind of clustered into these two general categories. And that brought a lot of natural gas, which was easier to produce into the market. And by the time we get to 2008, we’re starting to do the same thing for oil. And of course, we had the financial crisis, so everyone got hammered.

But then we had Wall Street, who was looking for new investments. And since these small mom and pops had done so well for the last few years, there was a lot of money that came in from the stock market or bonds or joint ventures, whatever it happened to be. Now, by the time we get to 2013, 2014, these technologies had matured quite a bit, and the United States was very, very close to achieving technical energy independence.

And that meant that the super majors started to come to play. Now, starting back in the 1970s, when U.S. energy production really started declining and force the super majors knowing that there wasn’t anything left in the United States with how they understood energy production, they went abroad and well, things got ugly. Most of the countries that they started producing energy and whether it was in the Middle East or off the coast of Africa or South America, didn’t have very strong rule of law.

The local energy partners were tended to be pretty corrupt and it was a crapshoot, especially since a lot of these projects were in areas with limited infrastructure. It could take ten years of investment before you saw any return, and then it might just be nationalized. So they kind of had a crap sandwich for 30 years. Well, then they look back home and they see this flotilla of small companies just making bank.

And so they started coming back to the United States and buying of the shale plays and buying up the engineers. And sometimes even these smaller companies in total in order to learn what had been developed back home. They saw a lot of familiarity because, you know, these two technologies were not breakthroughs. And of them themselves, the the the technique of combining them, that’s where the interest was.

And so year after year after year, the companies came back in greater and greater force. The company that was first for that was ChevronTexaco, because it had a lot of legacy production from the Permian Basin in West Texas, which had been part of previous oil booms. But it also had 20 layers of shale. So they were able to use their preexisting mineral rights and buy up some of the talent that was available and apply it to what they already had.

Exxon didn’t have that option. Exxon just had to come in and bye bye, bye, bye bye. And in the meantime, Pioneer, which is a company that dates back to the T Boone’s Pickens days, if you guys know that name was a legitimate producer in its own right, but it too was just basically was hoovering up all of these small companies for a decade.

You fast forward today, ExxonMobil is like, okay, okay, okay. The crap sandwich that is the international energy industry that’s not nearly as hopeful as we thought it was going to be. So we need to do something a little bit bigger. And so they found the single largest player in the Permian Pioneer. And just and when when Exxon does a merger, whoever is after the Exxon part is still, you know, technically it’s ExxonMobil, but Mobil’s long gone.

So basically, there’s been absorbed into the Borg behemoth that is ExxonMobil. Which brings us to today. This is probably the end of the first shale revolution because the character of it all, these small companies doing massive innovation that is now pretty much gone. And the majority of the shale production in the United States now is owned by the super majors again.

So we’re back to where we were in the seventies. That doesn’t mean that production growth is going to stop. That doesn’t mean that innovation is going to stop. But things are definitely going to slow down now. Exxon has a lot more market control. It has a lot more market discipline. And when you’ve got a small company that only owns a few acres, they will drill every theoretical spot that they think they can get oil out of.

But when a huge company owns hundreds of thousands of acres of mineral rights, they’re going to drill the best spots. And when those are tapped, they will then do a little bit more targeted innovation on the next best spots and so on, which means we should expect production growth to be less frenetic than we’ve seen in the past.

It doesn’t mean it’s going to stop. But, you know, in the last 15 years, the U.S. shale sector has set records for added production, I think, in nine of those years. Those days are probably behind us, will probably never add more than a million barrels a day a year again. But, you know, records exist to be broken. We’ll see now from the point of view of a normal person at the end of the first show, revolution isn’t going to seem very much different, but from within the industry, it’s going to be pretty significant.

Kind of the defining characteristic of ExxonMobil is it has all the stuff that it needs in-house. So it can’t just use these technologies or carry them forward. It can do so at scale and kind of turn it to an assembly line process. It’s much more reliable and gets more output for less input. Perhaps just as importantly, the defining characteristic of small companies is they don’t have a lot of cash, so they take it from wherever they can get.

Most of these aren’t publicly traded. So you’re talking about loans or bonds or joint production ventures or whatnot, whereas Exxon can fund whatever it wants. So in the old days now, 5 to 15 years ago, small companies were dependent upon getting capital either from regional governments or banks or Wall Street. Well, that pretty much ceases to be a concern with Exxon.

And they can do the investment day in, day out, based on their own short, mid and long term economic forecasts. And this should generate a lot more smoothness in terms of production output. But it also means that a lot of the financial ups and downs that we have seen in the energy sector that were related to things that had nothing to do with the energy sector, those are probably behind us, and it should make all of this a lot more reliable in the time to go.

And it’s time now to start talking about the second shale revolution, and we’ll hit that tomorrow.

India Assassinated a Sikh Emigrant on Canadian Soil

While giving a parliamentary testimony, Canada’s Prime Minister, Justin Trudeau, accused the Indian Government of assassinating a Sikh emigrant living in Canada who supported an Indian separatist group.

Intelligence from the Five Eyes has revealed that Trudeau’s claim was valid. This is significant because it means India is willing to “take care of business” outside its borders and could impact the entire Indian diaspora globally.

This will undoubtedly strain relationships between the Five Eyes and India moving forward, but there are still greater power politics at play. Although India’s stance will tarnish some relationships, it will still benefit from the anti-China actions taken by the West and the rest of the world.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado today. We’re going to talk about something that you guys have been writing in for weeks about what is up with the Indians and the Canadians yelling at one another over this assassination plot. For those of you who are unaware, the Canadian prime minister, Justin Trudeau, accused, who actually kind of mentioned it in passing in a parliamentary testimony that the Indian government had assassinated a Sikh emigre on Canadian soil.

The guy had Canadian citizenship. He had renounced his Indian citizenship. But the Indians have never liked this guy because he supports one of the separatist groups in India. It wasn’t a group that was part. I mean, this issue has basically been resolved in India’s favor. But he didn’t stop talking about it while he was abroad. And so as the accusation goes, the Indians wanted him dead and did it.

This has a number of implications. It took me so long just to kind of get to the bottom of it, because it involves intel that hasn’t been made public for the most part. But let’s say five things. Number one, looks like it was true. The intelligence didn’t come from Canada. It came from the United States and the Five Eyes system.

Five Eyes is a group of five Anglo countries Canada, Australia, New Zealand, the United Kingdom and the United States that share intelligence on almost everything. Anyway, the intelligence originated from the United States because that’s going to sound weird. Or maybe not. The United States has much better intelligence capabilities in Canada than the Canadian government does. So yeah. And then it was verified by the British government.

And the Brits have much better information gathering in India than the Canadians do. So all of the five eyes have basically kind of quietly said Canada was right on this one. That makes things a little bit complicated because, two, we have never seen the Indian government assassinate anyone outside of arm’s reach of their own borders. This is a fundamentally new capacity for them.

Now, assassinations are a little bit coming into vogue. The Russians have obviously picked up the pace for that considerably, even before the Ukraine war with radiation and poisoning and polonium being their preferred methods, although they’re not afraid of a gunshot to the head. And if you ever see somebody jumping out of a hospital window, that was only an assassination.

These kind of Russian culture are the Americans, of course, are are fans of it, too, as long as it’s done by a drone where we really frowned upon it when it’s done in person for some reason probably left over from the Cold War issues. And then, of course, the Brits are good at it anyway. Seeing this with India is significant because the Indian diaspora is arguably the largest on the planet, and if the Indian government starts patrolling it using extraterritorial and extralegal means that is going to rub a lot of people wrong in a lot of places, and eventually it’ll probably end up offing someone that actually matters to a government and not just because

it’s a citizen. So this is not yet a really big deal, but it has the potential to become a very big deal in the not too distant future. Number three, Canada is among the largest destinations for Indian students traveling abroad, and the Indian diaspora in Canada has become its fastest growing ethnic group. Now, obviously, the people who leave a country are not Brazil patriots.

So expect to see a lot more agitation within Canada as a result of this, as opposed to quieting down. If the Indian goal was to quell discussion of these topics, they probably just achieved the opposite because Canada, for all, for its faults, is a free country with a more or less free press, even if it is a little bit slanted, in my opinion.

And it’s very easy for anyone to say anything about anyone, anywhere. And because of freedom of information and the ability to send electrons around the world in a second, that will generate actually a lot more publicity in India as well. So this probably wasn’t the smartest play by New Delhi if their goal was to keep this very, very quiet.

Okay. More significantly, number four, relations with India. You know, by the five eyes putting their stamp of approval on the Canadian statement, that obviously raises the question about what relations between the Brits, the Australians and the Americans are going to be with the Indians. The Americans and the Australians are in the quad grouping with India, which is a kind of a security talk shop.

And the Brits obviously have ongoing relations and economic and otherwise with everyone who’s in the Commonwealth in their former colonies. So if you’ve got a major power, India starting to do things that are incredibly unsavory from the point of view of democratic norms, that is absolutely going to impact relations. The question is how much? The issue for the Americans and the Australians, of course, is China trying to try to try to China.

And honestly, I don’t think in this relationship we’re going to see too much of a change. Which brings us to the fifth issue, which is the nature of great power politics. When you have identified a country that you see as a large threat, a lot of the niceties that dominate the normal diplomatic and economic discourse fall by the wayside side in favor of hard security concerns.

And that means you are willing to partner with different sorts of countries and personalities that you normally wouldn’t even consider. So, for example, when Hitler was on the scene, we were best buds with Stalin, sent him billions in today’s terms, tens of billions of dollars of military aid in order to fight off the Nazis. Then when Hitler fell, we got into bed with Mao, who was the greatest mass murderer in history, in order to counter Stalin.

So the idea that we would partner with a mostly democratic but little bit unsavory India in order to counter what has become the most totalitarian government in the world. That’s an easy decision to make, but it does mean that the nature of the American and to a lesser degree British and Australian relationship with the Indians is going to change.

We never considered Stalin or Mao or French. They were allies against a very specific threat. And when that threat was neutralized, the relationship changed again. Now, there are a lot of decisions that Indians are going to have to make in the next several years as actions against the Chinese heat up. And the question will be whether or not they want a more productive relationship with these Western nations.

There’s a lot of water under that bridge. The answer may very well be no, but that means India will be doing Indian things with Indian policy for Indian interests. And to be perfectly honest, looking back on the last 70 years, that’s not much of a change. India unofficially sided with the Soviets in the Cold War, but they were very big on non-alignment for the most part carried it out.

What we’re seeing today is just kind of the slightly greater power equivalent of that same sort of political ideology. Now, sitting here in the United States, it’s easy for me to wag my finger and say that this is not the best thing for India or Indians, but I don’t get a vote in this. This is a decision to be made in New Delhi specifically, and to be perfectly blunt, in a world where lots and lots of countries are aligned against the Chinese and in my opinion, the Chinese are long for this world.

India is going to do very well regardless of what the relationship with the West happens to look like. This is their decision. Doesn’t mean we have to like it.

The Southern U.S. Border: Venezuelan Immigration

Photo of the US-Mexico border

Today, we’re peeling back another layer of the U.S. immigration onion – Venezuelan immigrants. Since Hugo Chavez took power in the late 90s, Venezuela has been spiraling into a political and economic crisis, so fleeing the failing state is the best option. (The damage inflicted was so deep, and his successor so incompetent, that Chavez’s death didn’t help at all.)

These aren’t the typical low-skilled immigrants showing up at the southern border; these Venezuelans are highly skilled and educated. This begs the question – could this be the solution to the US labor shortage? The short answer is no, at least until immigration reform occurs.

But the long and treacherous journey these Venezuelans make isn’t for economic reasons; it’s simply to avoid starving to death in their home country. The dynamics of the southern U.S. border are changing, and Mexico’s role will also evolve.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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Transcript

Hey everybody. Peter Zeihan here coming to you from chilly Colorado, where fall has definitely set in. Today, we’re going to talk about the situation on the southern border as regards a very specific group of people, the Venezuelans. For those of you who don’t follow South America, Venezuela used to be one of the most advanced countries in the developing world with excellent health care, education and infrastructure.

But in 1988, a populist by the name of Hugo Chavez won an election and took the country down the path into populist desolation, complete with a gutting of the industrial base, the destruction of the oil sector infrastructure fell apart over the next 20 years, and as of three four years ago, the country actually fell into famine, which is just bonkers because this is a country that used to export about 3 million barrels a day of crude and be a significant food exporter as well.

Today, well, as of the first of the year, oil output had dropped down to nearly a half a million barrels a day. They’ve increased that by maybe a third to half. At this point, well, but they import over 80% of their food. And while they’re in a bit of an ideological war with the United States, most of that food comes from the United States via Colombia, which is a country that the socialist ideologues in Venezuela say that are their enemies.

Anyway, the whole place is falling apart. Something like 7 million people have already fled the country out of a famine, population of over 40 million and more coming every day. Most of those people, single largest chunk over 2 million, have gone to Colombia. Most of the remainder are elsewhere in South America, and roughly a half a million have made the very long, very dangerous trip through the Colombian jungles and mountains.

Through the Darién Gap was a section of lowland jungle where Panama meets South America. Then, all the way up through all of Central America and all of Mexico in order to reach the United States. A couple of months ago, the Biden administration granted them a degree of protected status because these are not your normal migrants. When we think of migrants today on the southern border, we’re not thinking of Mexicans.

Mexicans are way too skilled and the situation at home, despite the crime economically, actually is pretty decent. We haven’t had positive migration out of Mexico to the United States in 15 years now. In fact, it’s been negative in most of those years with more people going home than the other way around or American Snowbird in, for example. Venezuelans are different.

Most of the Mexicans who migrated in the eighties, in the nineties, in the 2000, the 20 tens didn’t come from northern Mexico, which is the wealthy part of the country, or central Mexico, which is the political zone. But the southern areas that have kind of been left behind. They’re of a different ethnic stock. A lot more indigenous blood education levels are lower.

And that’s why Mexicans in the United States have a reputation for doing manual labor. The Mexicans who have doctorates for the most part, stay home or work in northern Mexico, and there are a lot of them anyway. The flows more recently have been Central American countries, most notably Honduras, Guatemala and El Salvador. All countries that are flirting with failed state status.

And so their infrastructure is poor, education is poor, economic outcomes are thin. Agriculture is limited to tropical, which is very low value added, does not require skilled labor force. And so these are people who are desperate to look for anything else. And so, ironically, America’s capacity to interdict migrants is seen as a plus because it means their state capacity here in the United States, which they don’t have at home.

And as long as their countries are failing, they’re going to continue to look for ways to come here. Venezuelans are from category. Any Venezuelan who is over age 45 is one who was educated in the pre Chavez days, and that means he or she benefited from one of the most sophisticated educational experiences in the entirety of the developing world before Chavez drove the entire place into the ground.

So these are people with tradeable skills, master’s and doctorate degrees, and they are walking 3000 miles for a chance to avoid famine. So I’ve often said that the only way to keep the Central Americans out is to basically shoot anyone with a tan who tries to cross at the border. That wouldn’t work for Venezuelans because where they’re coming from has fallen so far.

Its standard of living, arguably, is now below that of the central American states and is going to get worse. We are looking at outright state collapse in Venezuela and everyone who has something that’s portable, mostly a skill set, is on their way to somewhere else. So a few things to keep in mind. Number one, we are facing the labor shortage in the United States that will not let up for a minimum of 20 years at some point, the American political system is going to have to deal with that.

And our options are fewer goods, fewer services, especially for retirees and much, much higher inflation or a degree of immigration reform. Now, I don’t think we’re going to get that in the near term. It will coming up on a political election year. Both the Trump team and the Biden team are furiously anti-migrant because they’re trying to court the unions into their political coalitions.

And the unions are arguably one of the two top most anti migrant and immigration groups in American politics today. So we’re not going to get it anytime soon. And of course, in the short term, Congress is not functioning because we don’t have a speaker for the House. So there’s that to a. But these are the sort of people, honestly, that the United States has always said that it wants skilled labor, not unskilled labor.

Second, no matter what happens on the border, no matter what our policies are going to be, these people are going to keep coming because their state is literally dying behind them. And what limited capacity we have to fly them home just starts the journey again because the alternative is to starve. So that’s not great. Perhaps third, most importantly is that the nature of Mexico has really evolved in the last five years.

The Mexican birthrate started to fall 35 years ago when NAFTA was operationalized, which means that the Mexican birthrate has been falling steadily that entire time and now is only just barely at replacement levels. That means Mexico has become a net destination for inward migrants. And so for the first time and all of these conversations about the border, we actually have the Americans and the Mexicans more or less coming to the table with a similar point of view.

And that is going to provide some interesting opportunities, especially since we can’t get any sort of legislative change when it comes to managing the flows. I don’t mean to suggest for a second that the situation on the southern border is about to solve itself. Hardly, but it is about to change pretty significantly in ways that are going to have a hard time wrapping our minds around.

We’re seeing more and more skilled migration coming up from the South and that’s not what we have set in our mind. So changes to come. We’ll see where it leads.

Israel, Hamas and Gaza: Q&A w/ Peter Zeihan

In the early hours of October 13, Israeli military officials issued an evacuation order for the residents of Gaza City, a sprawling metropolis with over 1 million people. This evacuation order has warranted an early release of our Q&A video, initially scheduled for Monday.

Within this video, I’ll break down what’s going on with Israel and Hamas, what this means for the Gaza Strip and the implications for relations in the region and wider world.

As this continues to develop and you have more questions, feel free to drop them at this link.

Prefer to read the transcript? Click here

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

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado the morning of October 13th. We just had our first very light snowfall. The news is that last night, my time and early in the morning on the 13th, the Israeli government ordered all the citizens, the Palestinians of Gaza City, to evacuate to the south because their assault is imminent. The Israelis are going to be rolling in with a significant ground force with the intent of rooting out the entirety of Hamas leadership.

And maybe they even have some indication as to where their hostages are evacuating a million people, plus, which is what lives in Gaza. Two other places within the Gaza Strip, which is the most densely populated spot of humanity on the planet, is a practical impossibility. Of course, people on the other side of the argument are going to say it would have been really nice if Hamas had given the Israelis 24 hours to evacuate before their assault problems on all sides.

Anyway, we had recorded a lengthy video answering to as many of your questions as possible on what’s going on with Israel and Hamas and the Gaza Strip and what it means for wider relations in the region and beyond. The intent was for that to publish on Monday. But in light of this development, we decided to go ahead and release it.

Now, everybody, Peter Zine here coming to you from fall in Colorado. Lots and lots and lots and lots of you who had questions about what’s going on in Israel with the Gaza assaults. I’ll do my best to kind of rapid fire through these. So many questions. Okay. Question number one, how did the Israelis not know? Israel supposedly is the gold standard for intelligence and there aren’t a lot of things in the area that honestly they need to worry about all that much.

If you look at the big picture, Lebanon is a known quantity. Yes, Hezbollah, there is a problem, but Hezbollah is a political party in Beirut. And so there are lines of communications. There’s phones you can tap. And while they’re always worried about fighters in the hills of southern Lebanon launching attacks, whether rockets or missiles or artillery across the border, it’s kind of a known quantity and there are avenues to gather information.

So it’s an issue, but it’s not a critical war series. And civil war hasn’t been a problem on the Syrian border in over a decade. Actually, honestly, it’s been a problem on the Syrian border in three decades, especially since the Israelis literally control the high ground in the Golan Heights. So that’s not an issue. Jordan’s a satellite state that is dependent upon Israel for economic support.

So that goes away. Egypt is functionally an ally and the bulk of the Egyptian population is on the other side of the Suez Peninsula. So there’s just not people there that can theoretically cause problems. That just leaves the Palestinians and there is no one thing for the Palestinians. It’s Palestinian territories are broken into two chunks. The first one is on the West Bank of the Jordan River and kind of a crescent around Jerusalem.

And here you’ve got the PLO who is basically calling the shots. And while the relations between the Israelis and the PLO are Palestinian Liberation Organization, for those of you who don’t drink the Kool-Aid, while relations aren’t ever good, it is a semi functional local government and there are relations and that means there’s ways to monitor what’s going on.

And so that area has been relatively quiet. And then there’s Gaza where Hamas took over what’s been about 15 years now. Gaza is basically an open air prison that houses 3 million people. It’s about twice the size of  the District of Columbia. So it’s one of the most densely populated places on Earth, heavily industrialized lifestyle, but no industrial inputs.

All the food from 90% of the food, 90% of the energy is imported along with all the liquid fuels. So to think that this zone could create a industrial power that controls Israel is of course laughable. But to think that people living in a prison camp, knowing that the height that they could aspire to be mayor of the prison, that’s as good as it gets.

You can understand why some less than savory ideologies might bubble up and why people might think that the situation is hopeless. Or when I go kill a bunch of people, I don’t mean that as justification and just as explanation. Anyway, this is the 1b1 the one thing that the Israelis have always been obsessed about. That’s where all of their microphones appointed.

And so the fact that they missed this is just mind boggling, because there were hundreds of fighters involved, dozens of vehicles using six different transport options. And the Israelis missed it all. Which leads into the second point. In Israel, there will be political connotations here and it will lead to the fall of the Israeli government. Now, the Israeli government was never particularly popular.

And so they’re enjoying at the moment a bit of a rally around the flag moment. And Netanyahu was smart and reached out to all the opposition parties to create a national war council to prosecute the conflict. He really needed to do that. He did do that. But the civilian government underneath that, that’s someone that’s in trouble. Part of its demographic.

The Israelis have some laws that protect basically people who commit themselves to Judaism. So if you’re studying to become a religious scholar and all you do is study the Torah, you don’t have to pay taxes and you don’t have to serve in the military. And that means that you can have lots of kids and don’t have to pay for them, which, you know, encourages people to have kids.

And that means somewhere between ten and 30% of the population, based on where you draw the line of the population, basically doesn’t work but can still vote. And think of that relative you have who’s on disability insurance and doesn’t work and who sits in his La-Z-Boy all day and bitches about how people are screwing up the world a problem and they are a rising demographic because of population growth.

I mean, the demographic and that means that they have been the king maker in any number of governments in recent decades. And they are a strong, strong minority within the Israeli system, and there’s no way to get rid of that. One of the many, many outcomes of being Jewish in a post all the cost world is that you value the opinion and you refuse to silence the voices of anyone within your community.

So the political system in Israel, it works on something called proportional representation, where you vote for a party and if the party gets 10% of the vote, they get 10% of the seats. Normally, if you’re going to have a political system like this, you want to have a floor so that the real whack jobs don’t get into government.

And in Israel, there really isn’t one functionally because they don’t want to silence anyone’s voices. So you have this whole rainbow of whack job right wing parties, right? Which is probably about the right term, is to call them religious fundamentalist parties who are supporting the current government. And they’re not very good at what they do because they’re coming from a stock of people that doesn’t value secular education at all.

So here in the United States, we’ve got Matt Gaetz gets the Florida guy who caused the downfall of Speaker McCarthy and basically made the American Congress nonfunctional. Take him take his awesome hair away and clone him. And that is roughly 40% of the Israeli government right now, people who are absolutely mind numbingly incompetent but have very firm ideas on how the world should work.

And they’re the ones who are now having to explain how they have presided over the greatest intelligence debacle in the world in the last 50 years. That will have consequences. So let’s do a Ron next. At the moment, there are no smoking guns indicating that Iran is behind this. But I would be shocked if they didn’t put their finger on the scale, at least for the timing.

Also, considering the various ways that the Hamas fighters launched into Israel that required nonstandard supplies, which had to come from the outside, and Iran is the most likely suspect. But really, it’s about the timing. The Saudis and the Israelis were working on a normalization process that if it would have completed, you would have taken the most powerful country in the Arab world, Saudi Arabia, economically, and as well as one of the larger ones.

And put it basically in the same bucket for security issues as the Israelis. And that would have triggered a number of other countries to follow suit, including places like Oman and Kuwait. And if that would have happened, basically the Iranians would have been facing a wall wall opposition throughout the entire region. Because, remember, the Iranians are Shia and Persian, where most of the region is Sunni and Muslim, Sunni, Shia being the two sets of Islam and Persians and Arabs being the ethnicities.

If that had happened, Israel would have been able to basically work through the Arab world to contain, be the Persians, the Iranians. And it would have been a downhill slide from there, no matter what happens with policy for anyone in the rest of the world. So they had a vested interest in disrupting that and we will probably find out in a month if it worked or not.

There’s an argument going on in Saudi Arabia right now about what to do and how much value to ascribe to the Palestinians. There was one pro forma news release that came out a couple of days after the attack, and that’s been it, although and I can’t underline this enough, this is not an alliance and Hamas is not a proxy of Iran.

Hamas is doing Hamas things for Hamas reasons that are defined by their position in Gaza, living in a prison camp. The Iranians think at best that the Palestinians are animals. Remember, there’s a religious and an ethnic split here. Hamas, like the Saudis, are Sunni and are Arab. And so the Iranians officially consider Hamas, the Palestinians and the Arabs in general to all be apostates and therefore worthy of elimination.

So if there was a deal on the table for the Iranians from anyone on anything like trying to get a discount at Red Lobster, they would sell out Hamas in a heartbeat. And that may well happen considering everything being up in the air these days diplomatically in the region. OC For thing what to expect next in the war, it’s going to be awful.

Hamas is not a unified organization and we’re not talking about the Catholic Church here. We’re talking about an institution that officially runs the place. But they import all their energy and their food. So they in charge of a little bit of distribution, and that’s about it. Security is managed by dozens of independent factions who pay at most lip service to the central government of the Hamas led Gazan government.

And that means that each faction does their own thing in their own way. And the challenge that the Israelis have always had is figuring out who to hold responsible when one of these groups does something. And because if you punish the Hamas formal civilian government for something that a militant group did, it’s not like the formal civilian government has tools or even awareness over some of these factions.

And best guess here is that we have a new faction in play because we see new tactics, new approaches, new aggressiveness, new seem of absolute brutality that we have never seen in the Palestinian movement before. And with that in play, the Israelis are doing what now? The key, and they’re trying to dismantle all of Hamas. So everyone that they are aware of who is in the Hamas chain of command and any faction they’re targeting for elimination now, and they’ve already delivered something like 4000 tons of explosives into the Gaza so far, basically wiping out the entire human infrastructure of the entire organization, every individual faction.

But considering the intelligence failure, that means they’re probably missing the one that actually did the attack. And the only way that the Israelis might be able to find and eliminate those people is by going into Gaza hard on the ground and going building them by building room by room until they find the people that they’re looking for and kill them all.

So you’re talking about a building by building scouring of a zone with 3 million civilians. That will likely take months, if not years. And the human damage will be immense because again, this is a zone, densely populated industrial area with no food or water or power. The scale of the devastation is something we have not seen since at least World War Two.

I think the closest one that I can imagine would be the Russian siege of Grozny in the nineties, which conservatively killed 20,000 people out of a population of a quarter of a million. You’re talking about a zone with so many more people. So no matter what side of this that you are on, be careful who you condemn. No one is in a good situation.

No one is going to come out of this looking good. No one is going to come out of this anything but bloody and bruised and scarred. So careful you condemn, except, of course, the terrorist who do the attacks pluck those guys. Okay, finally, the American angle. The idea that the United States didn’t see this coming, that doesn’t really strike me as an intelligence failure.

Just we have to focus. U.S. has a lot of interest in a lot of places and a lot of eyes and ears, but it has to focus on the places where it sees a strict national interest. Of late, most of that activity has been in the Ukraine zone. So Moscow, Kiev, places in between in order to assist with the war effort.

Israel is a capable country that largely takes care of itself and we have zero interest in Gaza because there’s nothing economically there. It doesn’t sit astride any sort of transport routes. It has no resources. It’s not a manufacturing hub. It’s not an intellectual technological hub. It’s a camp. So we basically let the Israelis deal with that because it’s their concern.

That’s how we deal with pretty much any zone where we don’t have a direct national interest. We outsource to the locals. Okay. But we now know there are at least a handful of Americans who were involved in the attacks on the receiving end and who were kidnaped and taken back into Gaza. And that’s a problem. The United States is not a perfect place, but part of the social contract between the American population and the American government is no matter who you are or where you are, no matter what you have done, we will send to the Marines for you.

But first, we have to know where you are. And since the Israelis had such a colossal intelligence failure, there’s no one to ask which puts the U.S. in an awkward position. There are really only two approaches approach. Number one is you put every eye and every ear that you can spare on the Gaza just to find a couple dozen people.

That’s a huge expenditure of effort for very little payback. We’re going to do it, but that’s a lot of things we can’t be doing instead. And once we know that, we will send in the Special Forces and maybe a marine group and basically blaze a path in and get them out and hopefully it’ll go better than what happened in Iran in 1979.

Feel free to Google that. If you’re under the age of 40, you don’t really catch the reference.

There’s only one other approach that might garner something working from the theory that the Iranians put their finger on the scale for this assault. The Iranians are the only people who have meaningful access to the people who actually carried out the assaults. The first rule of intelligence is you have to go where the information is. Sometimes Americans forget that we put a lot of effort into breaking people who had nothing to do with it because they just happened to be proximate.

For example, waterboarding Osama bin Laden’s driver didn’t get much, but in this case, the people who know something are friends or at least coworkers with the Iranian government. And that means one of the very, very, very, very few places where the United States can turn for information on where to send those special forces is Tehran. So regardless of what you think of the Trump administration or the Biden administration or American approaches to the Middle East in general, we now have a clear and present reason to engage with the Iranians in order to get the information that we need to fulfill one of our most basic sacred social contracts.

And that’s the only way forward for us. What happens in the rest of Gaza, from the American point of view, has now become secondary. It’s all about getting our people back, and that is not going to be a pretty process. Okay. One of these days, people are going to ask me friendly questions, but that’s probably not going to be for a while now.

So everyone take care and I will see you again soon.

Why Rising Capital Costs Could Kill Greentech

The Greentech industry has reaped the benefits of cheap capital for years, but that’s all changing as demographics take a turn and investment patterns start to shift.

Financing Greentech projects requires a boatload of upfront capital, and if the cost of that capital rises, the viability of those projects has the inverse effect. This means the Greentech space will be in hot water even if economic growth holds steady.

Sure, Biden’s Inflation Reduction Act will help the US a bit, but there’s no replacing private investments. This isn’t an isolated issue either; if countries with solid Greentech potential want to see their industries thrive, we will need to see some major breakthroughs.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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Transcript

Hey everyone. Peter Zeihan here coming to you from Mexico City. And today we’re going to talk about some of the challenges that are facing the green tech space. If you’ve been following stock tickers in New York in general, you’ll know that there’s been a lot of pushback from the financial world about everything that has to do with wind and solar and interconnections, not just in the United States, but on a global basis with many communities getting sticker shock and changing some of their plans.

Now, this, of course, is going to be a story that’s going to look a little bit different everywhere. But there is a common theme, and that has to do with capital. One of the things that really sets green tech apart from any other power generation, whether it’s in transport or the generation itself, is that you have to pay for it all up front.

The the system is different. So like if you’re going to build a coal plant or a natural gas burning power plant, most of your cost over the life of the facility is going to be the fuel. Actually setting up something that, you know, burns it is not all that complicated from an expense point of view. But with solar and with wind, where the fuel is free, all of the expense is upfront, or at least two thirds of the total versus less than a fifth for most conventional systems.

And that means it has to be financed. Now, from 2000, literally from 1997 until very, very recently, that has not been a problem because we’ve been living in an environment of absolutely dirt cheap capital, and it’s been a demographic moment. The baby boomers were in their forties, fifties and early sixties, and in that time frame in your life, your expenses have gone down, but your incomes are high and they’ve been socking away all the money that they’ve got to prepare for retirement.

All that capital makes it into various different investment opportunities, whether it’s T-bills or the stock market. It makes it very easy for people, for corporations, for governments to borrow at scale. Well, as of the fourth quarter of 2022, the majority of the United States is baby boomers. The majority of the world’s baby boomers had moved into retirement, and they’ve liquidated their savings and they’re not generating any more.

And they’ve moved their savings into less prospective projects. So a lot more cash, a lot more government debt, a lot less things like stocks and bonds. And that means that the cost of capital has already gone up for everyone. And we’ve seen mortgage rates just in the United States double in the last 18 months. And for large projects like wind turbines and solar panels, we’ve seen it closer to a tripling now over, say, a ten year payback, which, you know, is just kind of a good benchmark.

That means that the interest costs have gone up to the point that the overall payback is going to be at least a quarter higher than it was just a year and a half ago. And if you have to finance your GreenTech project, all of a sudden you’re facing an expense that you weren’t having to deal with before. Now, this, to a degree, this sort of overbuild and retrenchment happens with any industry as people kind of grasp the realities of that.

Maybe solar and wind aren’t as great for our community as we thought they were going to be. But the capital that’s going to hit everyone everywhere, it’s going to slow economic growth on a global basis. And for projects that are very capital forward, like green tech, it’s absolutely going to retard the progress of everything. And the United States, we’ve got this little thing called the Inflation Reduction Act that the Biden administration was able to get through Congress, which is basically a green plan that is going to help a lot with making the finances of green tech a little bit better.

But it was never going to replace private capital. It’s just going to supplement. And now, since we need 25% more minimum, probably closer to half again more by the time we get to 2026, it’s going to be able to start seeing some of the edges off, but not fundamentally change the problem. But if you’re in other countries, I’m thinking here, places that have good green tech potential, places like Argentina or South Africa or Mongolia or Greece or Mexico.

That borrowing difference is everything. And unless we have a significant breakthrough in the economics and the physics of solar and wind in the next couple of years, it’s just not going to cut it. So my recommendation remains the same that it’s been for the last three years. We know the texts in their current form won’t get us to where we think we need to go, which means we need better technology.

And until we develop that, the rest of this is just kind of spinning in place.

Why The US Needs Mexico: Replacing Chinese Manufacturing

A photo of mexico city at night

If you’re an American considering picking up a new language and have narrowed it down to Chinese or Spanish – it should be a no-brainer. As China slips into utter collapse, our southern neighbors will pick up the slack and “hola” will get you much farther than “nǐ hǎo”.

As the US pulls manufacturing from China, we’ll look to Mexico City to fill that void. This region not only holds over half of Mexico’s population but also represents the largest untapped workforce globally. So, the workforce is there, but we’re still missing a couple of pieces of the puzzle.

A massive industrial buildout will have to happen for this transition to work – and quick, too. I’m talking about new rail and border infrastructure, beefing up the I-35 corridor and improving connections within the US manufacturing industry.

If the US and Mexico can execute this buildout within the next five years, finding an alternative to Chinese manufacturing will be much easier. However, if the two amigos don’t get aggressive soon, we might have to throw a couple more languages into the curriculum.

Prefer to read the transcript? Click here

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

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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Transcript

Hey everybody. Peter Zeihan here coming to you from Mexico City. And for those of you back in the States, this is a town you’re going to all have to get used to get to know very well, because it’s the solution to a lot of the upcoming problems. Now, for those of you guys who have been following me for a while, you know that I have been very concerned that the Chinese system is breaking, the demographic situation is terminal.

The government itself seems to be incapable of making decisions now. And Chairman Xi is basically purge the entire system of anyone with a positive IQ. Which means that all of the manufacturing industrial base that exists in China is something going to have to get by without very, very soon. The question is whether that’s one year from now, four years from now or ten years from now, but certainly no more than that, which means if we still want stuff, we’re going have to make it differently.

And that’s where Mexico comes in. Now, a lot of folks point to the nexus between Texas and northern Mexico as being a very successful model. And I agree. Over the last 35 years, the industrial plant that’s built up there has made itself all by itself the third or fourth largest on the planet next to China ink, of course, and the German system in Europe.

But that is not probably something that we can pull off. Again, I mean, yes, there are ways to improve that with infrastructure, with labor, with capital. Tech. I agree with all of that. We should do all of that. But the bottom line is that Texas has run out of people and it has now had to recruit from the rest of the United States just to expand its footprint from where it is now.

And Northern Mexico has run out of people because they’re all already working in that Texas Mexico synergy. And it’s great and it’s wonderful and it’s not done, but it can’t double or triple. And that’s exactly the scale of what we need to do. The solution is to integrate the rest of the United States with the rest of Mexico, specifically the Greater Mexico City region, which is home to over half of Mexico’s population.

And it’s the largest untapped workforce in the world at the moment. That means massively expanding the infrastructure that connects the two countries. Today, about 80% of the traffic and manufacturing between Texas and northern Mexico is by truck, which is among the least efficient ways that you can move things. But it does allow for a lot of small connections with small and medium sized enterprises on both sides of the border, contributing to very complicated supply chains, particularly in automotive.

We need to think bigger. We need a better transport system to take things at bulk so there’s not necessarily less integration between the various stuffs on both sides of the border. But the value add can really explode because we can do things at scale. And for that, we need rail. We need a rail system that connects areas beyond the Texas Triangle to the Mexico City core.

Right now, there’s only one multimodal rail system at all that comes south from the border, as far south as the very edge of the Mexico City complex. We need to expand that system by at least a factor of four in the not too distant future. In addition to expanding the border infrastructure, in addition to expanding America’s I-35 corridor, in addition to expanding the Texas Triangle’s connections to the rest of the manufacturing zones in the United States.

If we pull this off in the next five years, we’re going to be in great shape. And if we don’t, well, then we’re going to have to figure out what sort of stuff we don’t actually want. No pressure.

The End of Germany as a Modern Economy

I’m sitting along a cliff band around 12,000 ft in the high alpine, and I’m hoping the scenery might soften the blow I’m about to deliver to my German readers…the future of Deutschland is not looking bright. Three unsolvable problems will lead to Germany’s collapse as a modern economy over 20 – 30 years.

The Germans chose two of the worst trade partners around, Russia and China. While cutting ties with these countries is a good strategic move, it has resulted in detrimental losses. Any success the Germans once saw in their trade relations has now collapsed.

German labor is staring down the barrel of a collapse as well. With highly skilled laborers aging out, the industrial base of the German ecosystem will have no one to prop it up. The Japanese were able to mitigate a similar situation, but they started that process decades ago.

To complicate things further, Germany has managed to run their energy portfolio into the ground. The Greens have ditched cheap energy solutions for wind and solar, but even when combined, those fall well short of energy demands. So the Germans are stuck with lignite, and if anything happens to that…yikes.

No matter what angle you look at Germany from, the combination of all these factors is a death sentence. While their decision to resist Russian blackmail early in the Ukraine War was the moral high ground, they may have driven the last nail into their coffin.

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

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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PRE-ORDER NOW—The Accidental Superpower: Ten Years On

I’m excited to announce the release of my new “10 Years On” edition of The Accidental Superpower. All the original eye-popping assessments of American power and deglobalization, plus a bevy of new text to bring you up to speed on the insanity of the decade since its initial release.

You can pre-order now at the link below!

Pre-Order the book now

Near the end of the Second World War, the United States made a bold strategic gambit that rewired the international system. Empires were abolished and replaced by a global arrangement enforced by the U.S. Navy. With all the world’s oceans safe for the first time in history, markets and resources were made available for everyone. Enemies became partners.

We think of this system as normal – it is not. We live in an artificial world on borrowed time.

In The Accidental Superpower, international strategist Peter Zeihan examines how the hard rules of geography are eroding the American commitment to free trade; how much of the planet is aging into a mass retirement that will enervate markets and capital supplies; and how, against all odds, it is the ever-ravenous American economy that – alone among the developed nations – is rapidly approaching energy independence. Combined, these factors are doing nothing less than overturning the global system and ushering in a new (dis)order.

For most, that is a disaster-in-waiting, but not for the Americans. The shale revolution allows Americans to sidestep an increasingly dangerous energy market. Only the United States boasts a youth population large enough to escape the sucking maw of global aging. Most important, geography will matter more than ever in a de-globalizing world, and America’s geography is simply sublime.

The key thing to note here is that the US never did this for themselves (sure, it came with some perks, but there was a greater purpose). At the end of World War II, the US knew something had to be done to stop the Soviets. So, the US created a global trade network to incentivize enough countries to “stand up” against them.

As the Cold War ended, the US ran a cost-benefit analysis, and something wasn’t checking out. The globalized system that once worked in favor of the US alliance network has started to shift in favor of countries outside of that group.

The US Navy still has a global presence, but it is nowhere near the scale it once was. As this presence continues to taper off, what will the repercussions be? The ultimate result will be the collapse of globalization, but the path there is undecided.

If there were a perfectly ironic ending to the globalized world, it would have to be the Russians causing the total collapse of supply chains and bringing this globalization endeavor full circle.

Support medshare's ukraine fund
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Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

Deglobalization: The US Navy’s Withdrawal as Global Protector

If you’ve read my latest book, The End of the World Is Just the Beginning: Mapping the Collapse of Globalization, you know that a driving force behind deglobalization is the US Navy stepping away from its role as patroller of the world’s oceans. So why is this happening, and what will it change?

The key thing to note here is that the US never did this for themselves (sure, it came with some perks, but there was a greater purpose). At the end of World War II, the US knew something had to be done to stop the Soviets. So, the US created a global trade network to incentivize enough countries to “stand up” against them.

As the Cold War ended, the US ran a cost-benefit analysis, and something wasn’t checking out. The globalized system that once worked in favor of the US alliance network has started to shift in favor of countries outside of that group.

The US Navy still has a global presence, but it is nowhere near the scale it once was. As this presence continues to taper off, what will the repercussions be? The ultimate result will be the collapse of globalization, but the path there is undecided.

If there were a perfectly ironic ending to the globalized world, it would have to be the Russians causing the total collapse of supply chains and bringing this globalization endeavor full circle.

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

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

Support medshare's ukraine fund
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Hamas Attacks Israel and Netanyahu Declares War

Hamas, a terror/political group (depending on your politics), has launched an attack on Israel. This has been a multi-faceted attack spanning land, air and sea. Prime Minister Netanyahu has declared war on Hamas as a result.

We’ve already seen Ukraine issue their support of Israel, which is notable based on Israel’s hesitant stance on the Ukraine War. I’ll also be keeping an eye on the ongoing talks between Israel and Saudi Arabia on normalizing diplomatic ties.

These attacks have the potential to break some longstanding logjams in the geopolitical schema of the Middle East. I’ll continue to monitor the developments in Jerusalem and Tel Aviv and issue updates as I have more info.

Prefer to read the transcript? Click here

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

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

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

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

Transcript

Hey everyone. Peter Zeihan here comes to you from central Texas. It is the 7th of October. And the news today is that in the early hours of today, Hamas, the political terror group based on your politics that controls the southern enclave of Gaza in southern Israel, launched an attack into Israel proper, demolishing a little bit of the border. Land, sea paraglider attacks and literally thousands of missiles.

And so far they’ve kidnaped at least several dozen civilians and a handful of soldiers and took them back to Gaza with them. Netanyahu Benjamin Netanyahu, the prime minister of Israel, has declared war on Hamas and military operations are forthcoming. It’s very hot situation on the ground, very fluid. Don’t have a lot of information for you there. And obviously there’s people who are much better at that than I am.

What I can tell you, there’s a there’s two kind of things that kind of stand out that we need to watch here. Number one, within minutes of the news being reported, the Ukrainian government offered its support to the Israeli government in the in defending against the assault, which is far more than the Israelis have offered to the Ukrainians in response to the Russian invasion.

The Ukrainians have been a little annoyed with the Israelis trying to sit on the fence. The Israelis, for their part, have a population that is roughly one sixth Russian. And so they’ve been trying to not get involved as much as they can because they’re always trying to keep their lines of communication open to the Russians as a way to manipulate events in the Arab world.

It’s going to be very interesting to see if this changes the mindset of folks in Israel at all, because for them dealing with groups like Hamas is kind of an existential issue. And for Ukraine to come down so quickly and so publicly on their side is definitely noteworthy. There is no direct indication of Russian involvement here, but there are a lot of tactics.

We’re very familiar that we’ve seen the Hamas group has actually shared footage of some of its attacks, including attacks on civilian targets, which, you know, under normal circumstances would be considered a war crime pretty much anywhere. But the rules in the Middle East are a little odd. And we know that the senior leadership of Hamas has been in and out of Moscow quite a bit over the course of the last year.

So it’s going to be interesting to see how that whole dynamic changes politically. Second aspect is political, strategic as well, and that is that the Saudis and the Israelis have been hip deep in negotiations on a normalization program. Right now, most of the countries of the Arab world still don’t recognize Israel as a independent state, an entity that has broken a little bit under the Trump administration with Morocco and the United Arab Emirates switching sides.

But now the question is whether the Biden administration gets Saudi Arabia to switch sides. And the debate, of course, is about the Palestinians, not between the Saudis and the Israelis, but among the Saudis. There’s a debate going on within Saudi Arabia itself. It’s generational over whether or not they should just ditch the Palestinians, completely normalize relations with the Israelis, and just move on.

The older generation of the king, who’s probably senile at this point, wants to continue to back the Palestine peons. Were the younger one ruled by Crown Prince Mohammed bin Salman really doesn’t care at all. So we’re going to find out really quickly here who actually holds power in Riyadh. And that is going to have any number of implications, because whenever the world’s largest oil producer and exporter decides to change its political stance on regional affairs and starts backing that up with money, oil and military power, a lot of interesting things can break through very quickly.

So watch Jerusalem and Tel Aviv first to see what they say about Ukraine. Watch Riyadh to see what they say about Hamas. And it’s not very often that we have a big logjam like this, potentially breaking free all at once. It’s going to be interesting to hear.