Peter Zeihan, Author at Zeihan on Geopolitics

Russia Might Lose Its Influence in Moldova and Transnistria

If you’re keen on finding a place that has been put through the rinse cycle by the Russians more than a few times, look no further than Moldova. Today, we’ll explore the Russian de facto state in the eastern sliver of Moldova, known as Transnistria.

This region operates as a smuggling hub and carries heavy influence in the broader political landscape of Moldova. But as the war in Ukraine rages on, Moldovians are setting their sights on a future that removes Russia as their puppet master.

If Ukraine can hold out, the Russians will lose air and land access to Transnistria – meaning Russian support for this region would become impossible. Anticipating this shift, Moldova is aligning itself with Europe and entertaining a reunification with Romania.

With EU involvement on the line, the future of Moldova (and that tiny sliver in the east) could be resting on the decisions and results of the Ukraine War.

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.

Hey everybody. Peter Zeihan here coming to you from Colorado where it’s rapidly turning into autumn. And today we’re into the third part of our kind of open ended series on the Russian footprints in the former Soviet Union, places where the Russians have managed to establish military control and kept history from moving forward in order to preserve their own geopolitical power.

And today we’re talking about an area called Transnistria, which is in the former Soviet state of Moldova, which is a tiny sliver of territory on the extreme southwestern fringe of the former Soviet space. You probably have heard of it, but if you’re American but if you’re European, you’re probably fairly aware, especially if you’re Turkish. Moldova is a chunk of territory that once was known as Bessarabia, and it sits in an area known as the best Arabian Gap, which is one of the few points where there’s sure there’s physical access to the former Soviet Union from another geographic zone.

A lot of the Eurasian steppe is, well, the region steppe itself, it’s flat and open. But there are a number of places where there are access points to go to other zones. So the I’ll take out takes you into some of the Chinese space. The Polish gap takes you into Western Europe, the Bessarabia and gap takes you down into Turkey in the Middle East.

And so it’s one of the zones that the Russians have always been incredibly concerned about because they’ve been invaded through that route on a number of occasions. So they took steps through a number of wars culminated in World War Two to try to establish a foothold in that zone so they could plug the gap. And they ultimately succeeded in the world wars and they carved it up into the territory that is now known as Moldova.

Now, Moldova, in the most recent previous incarnation, was actually part of the Romanian state. And the people in Moldova speak basically Romanian and right Romanian. The Soviets basically invented a language called Moldova, which is subtly different but is broadly understood on both sides of the border. Now, Transnistria is a thin sliver of the eastern part of Moldova. When Moldova got its independence from the Soviet system in 1992, the Russians immediately sponsored a secessionist war there in Transnistria, was able to break away with the help of regular Russian forces, and they’ve maintained a force of 1 to 2000 Russian peacekeepers other since the peacekeepers do nothing of the sort.

They have really nothing to do with security, although they’re basically there to run a smuggling state. And it is one of the most active smuggling locations in all of Eurasia, which, if you’re familiar with places like Afghanistan, that is a strong statement. They also manipulate the political system in Moldova pretty aggressively. There is a significant plurality of people in Moldova who would prefer to go back to the Soviet times because post-Soviet Moldova has been an economic basket case.

They really don’t make much except for a kind of low grade, super sweet wine some people care for not me, and they are a smuggling state as well. And probably a fifth of the female population is left for the sex trade and another fifth of the population has just left in general. So this is an area that now is, I think, two under 4 million people.

And it’s just kind of they are sandwiched between one of the EU’s poorer members and Ukraine. The problem the Russians are going to have here, though, is if Ukraine is even moderately successful in its in this war, the Russians have no footprint. They rely on air space access from the Ukrainians to access their military facilities in Transnistria. And Transnistria is on as the name sounds, on the opposite side of the East River from the rest of Moldova.

So it relies on access to all of Ukraine for things like food and fuel. So when this war started and it looked like it was all going to fall apart for the Ukrainians really quick, I did a video which will attach here about how trans this was a likely target for the Russians because they could link up with forces that were already there.

Now it looks very much like it’s going to be the opposite, that this area is completely cut off and the Moldovans are starting to make some bets on that point. And they’ve moved much closer to the European since the war began and they’ve even kind of repudiated that Moldovan language that the Soviets fostered upon them. And now there’s open talk across the political spectrum in Moldova about reunification with Romania.

If that were to happen, they would step in to the EU overnight and avoid a lot of the problems politically, economically and developmentally that some of these other former Soviet states, like the Ukrainians are having in qualifying for EU membership. So this is one of those that all it takes is the right battlefield evolution in Ukraine and this footprint goes away in a day.

That still leaves the issue of clearing out Transnistria. But as we’ve seen in Nagorno-Karabakh and the Armenian situation, when the Russians are unable to provide security assistance like now, it doesn’t take very much to move the needle. And I can easily see a situation where the Moldovans would apply to formally jwn Romania and this becomes Romania’s problem and the EU’s problem.

And since it’s a sliver of only 120,000 people and it’s hard up against Ukraine that all of a sudden would have the EU taking security steps, which is something that would be new and exciting. Okay. Oh yeah. And Romania may top member, too, so that would flip pretty much overnight. All right. That’s it for this one. Take care.

Russian Oil Thrives Despite European Sanctions

While sanctions on Russian natural gas have proven highly effective, those imposed upon Russian oil have somewhat backfired. Although oil exports have dropped by 10%, several factors have skyrocketed Russia’s earning potential.

Oil is much easier to transport than natural gas, so getting it to destinations is of less concern. There’s also a global shortage of heavy sour crude – the kind that comes from Russia’s Urals – which has driven up prices significantly. Europe’s sanction strategy targeted financing and insurance, but Russia has circumvented these restrictions via state-sponsored insurance programs and old tanker purchases.

Thanks to Europe’s phased implementation of sanctions, the Russians had ample time to find loopholes and undermine this system. The Europeans may have to come up with some more “direct” tactics to put the hurt on the Russians.

This situation remains unpredictable; we could see Ukrainian strikes on Russian ports or even some insurance claims will stir the pot. But If oil sanctions were as effective as the sanctions on natural gas, the dynamics of this war would be fundamentally changed.

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.

Hey everybody. Peter Zeihan here, coming to you from Colorado. Now, yesterday, we talked about how some of the European sanctions on the Russian energy industry were working much better than expected. So now let’s kind of flip that and talk about some that are not doing nearly as well. That has to do with oil, whereas with natural gas, Russian exports to Europe are down by 85% and Russian production is now the lowest in 40 years.

Oil has dropped off a little bit, about 10%, but the Russian ability to profit from it has skyrocketed senior earning significantly more now than it did before the war. And it’s worth explaining why in the sanctions are out of the reason why the Russians are doing so well in that field. So there’s three things to keep in mind when you’re talking about oil markets.

Number one is the physicality of things. Natural gas is a gas. It’s hard to move from place to place. And you pretty much have to have a dedicated piece of physical infrastructure, typically pipeline, to get it from A to B. You can’t chill it down in a liquefied form, roughly negative three degrees, and move it via specialized tankers that unload in specialized facilities.

But those things are so specialized, they’re not really they don’t allow for a really liquid market. Oil’s different. Oil is a liquid and it is a liquid at room temperature. So you can put it into pretty much any type of container shipping device that you want. And while the Europeans did, for the most part, stop taking oil from the Russians in perfect form, the Russians are able to export over half of their oil by water to be a tanker.

And they were even able to redirect some of the piped crude to their ports. Which brings us to the chemistry problem. Not all crude is the same. In the world of natural gas. Methane is methane is methane in the world of oil. There’s different varieties, light and sweet versus heavy and sour. Light and sweet has very few contaminants and it is very thin, almost clear where the heavy sour is thick and gooey might even be solid at room temperature and is black and viscous.

And different refineries around the world are designed to run on different grades of crude, sometimes even specific crude types from specific fields. And that makes it a little bit more of a mismatch problem that natural gas just doesn’t have to deal with. So, for example, in the markets right now, there is an oversupply of light sweet on a global scale, primarily because of the United States.

U.S. shale crude is different from most crude in that it’s trapped at the moment of geological formation. And so it never migrates through the rock strata. And it’s the migration that picks up the contaminants that makes crude heavier and more sour. Well, American refineries are designed to run on heavier and sour, so that light sweet is kind of stranded in North America.

So it has to be exported by tanker to the wider world. And so light sweet crude is trading at a significant discount to a lot of global crude grades, despite the fact that it’s considered high quality. On the flip side, we’re running out of heavy sour. Venezuela used to be a massive producer, and it’s found ever more creative ways to commit national suicide.

The Mexicans used to be a reasonably large supplier, and they’re keeping their crude at home because their economic development has demanded more energy. And the world’s single largest crude grade of all is none other than Russia’s Urals blend, which is a medium sour, medium heavy blend. And so taking even small amounts of that off the market has had an outsized impact on pricing.

And so even though there’s supposedly a price cap that the Europeans set at $60 a barrel, that anything above that the Russians shouldn’t be able to sell it. Right now, Russian Urals is going for 85. And there’s not much the market can do about it. Which brings us to the third point, which is the legalities and the niceties.

When the Europeans stop taking the piped oil and started to slim down, they’re taking of the tanker, shipped oil from Russia. They used their ability to influence global financing, global insurance, specifically saying that anyone who delivered or participated in the supply chain that took Russian crude and if it was sold above $60, they wouldn’t be able to qualify for any European based insurance or financing, trade, finance included.

And since that is the source of the vast, vast, vast majority of the world’s maritime shipping insurance, the thinking was that that is going to discourage anyone from doing it. Well, they also didn’t want to destroy their own economies when they were doing this. So they phased all this in over the course of the year. And it turns out that that was enough time for everybody who was interested to set up alternative systems.

So India, China and Russia now all offer state sponsored insurance programs for maritime shipping. And the Chinese and the Russians in particular, have gone out and purchased huge numbers of really, really old, decrepit tankers and are running them kind of under the radar, turning off the transponders so they can’t be tracked easily. And those two things together has allowed a huge amount of Russian crude to sail the world’s oceans without any even tangential connection to the European financiers that it was thought would be able to keep all of this stuff off the market altogether.

The very act of providing the market with time to adjust gave the market time to adjust for all players. And so the stuff is still coming out now. If the Europeans and to a wider degree, the West in general is going to take an ax to Russian crude, they’re going to have to get a lot more creative or they’re going to have to act a lot more directly.

Keep in mind that roughly 1 million and a half of barrels of crude every day Russian crude are flowing out of the port of Morse on the Baltic Sea and another million and a half on the port of overseas on the Black Sea. And as long as the Europeans are not willing to take direct action against that, and they definitely have the military capacity to do so, should they so choose this seems like it’s going to keep flowing.

About the only potential fly in the ointment there is on the Black Sea, and that the Ukrainians have now said that they are willing to attack targets in Russian ports. Now, since they made that threat about five weeks ago, now they haven’t acted on that threat, even though their supposed deadline now has expired three weeks in the past.

But it’s probably going to take some sort of military action by someone to remove this from the market or one other possibility, as we have some sort of mishap where those insurance claims get called upon and the Indians and the Chinese and the Russians who have never offered these insurance plans before now will probably find themselves in arbitration almost immediately when they try not to pay.

But that’s a series of if then statements that are impossible to predict at the current moment. Honestly, I’m a little surprised it hasn’t happened by now, considering everything that’s gone down in the Ukraine work. But that is where we are. So Europeans natural gas working better than expected will not working nearly as well as expected.

European Sanctions Cause Russian Natural Gas Collapse

Most of Europe has been working to reduce dependency on Russian natural gas, and boy, did they deliver. Russia’s natural gas state monopoly, Gazprom, has just reported its lowest output levels since 1978.

Sanctions targeting piped natural gas have effectively cut off supply to Europe, and the exisiting infrastructure cannot be easily redirected. While Russia has alternative natural gas sources and facilities, the limited workforce and technical challenges make these options difficult to maintain.

European sanctions are working well, and these efforts may permanently sever ties to Russian natural gas with little impact on their own systems. The Russian natural gas industry is facing an unprecedented fall from grace, but not all industries have been impacted equally…

Oil, however, is a completely different beast. We will deal with that tomorrow…

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.

Hey everyone. Peter Zeihan here coming to you from Colorado. And the news today is that Gazprom has announced its full year output levels. Gazprom is the Russian natural gas state monopoly, and it is the lowest that it has been since 1978. So. Well, pre-dating the Soviet collapse. And the reason is pretty straightforward. The Europeans have tried to cut their dependency upon Russian natural gas to zero.

And at least in terms of the piped natural gas, they’ve been pretty successful. Now, this is something that is not exactly a shock to people who are familiar with the industry. There are many aspects of the sanctions that are working better than others. This is one of the ones that definitely working better. And the reason is the nature of natural gas itself.

Natural gas is a gas, and it takes a specialized system to produce it, to transport it, and to export it. And if there is a gap anywhere along the system, whether it’s insurance or the pipes or the pumps or the legalities or whatever it happens to be, the whole thing stops and it can’t easily be redirected. And in the case of the Russian stuff that goes to Europe, almost all of it comes from an area called Uruguay, which has been in production now for a half century, goes down a couple thousand miles of pipes through Ukraine and Belarus, into Poland, Germany, Slovakia, Hungary and the rest.

And since this can’t be redirected. When the Europeans stopped taking deliveries, the Russians had to, bit by bit by bit, shut everything down. There are other natural gas options that the Russians have. There’s some that comes from eastern Siberia, well east of the Urals, that goes south into China. There are a couple liquefied natural gas facilities, one on Sakhalin Island, primarily, which goes to Japan and one of the small peninsula, which primarily gets shipped to Europe.

And those are still working mostly. But we should expect even those to go off line in the not too distant future. The problem is, is that those other facilities, the Yol, Yamal, LNG, Sakhalin, LNG, and it’s called Comvita, which is a field in the general vicinity of Irkutsk out near Lake Baikal. Those are all much more technically challenging, and the Russians didn’t do any of the work to bring them online.

That was almost exclusively done by foreigners with British major BP being the single largest player. But the Japanese Mitsui Mitsubishi are involved in Stockland as well as ExxonMobil, and most of those companies are now gone. The Japanese are still involved in Stockland, but ExxonMobil and BP are just cut their losses and left completely. And the Russians do not have the technical skills necessary to maintain those projects in the long term.

As for whether or not the Russians can come back, you know, that’s an open question. The Russians used to be the best in the world when it came to ice production and tundra production. But that was in the Soviet period. And the Soviet industrial educational system collapsed around 1985 and the Russian birthrate collapsed in a similar timeframe. So not only do they have a significantly fewer people who could theoretically be trained up in engineering the system that trained them is born.

So the youngest people who have the full suite of, say, petroleum engineering and reservoir management experience are now in their early sixties, and there just aren’t that many of them left. And for the last 20 years, most of the meaningful maintenance work that has been done in places like here in Hawaii, most of the worked on improving recovery rates has been done by foreigners with BP and ExxonMobil and to a lesser degree, the Germans and the Dutch being the major players.

That’s all gone. So Uruguay being a mature zone could probably be brought back as a significant production zone if you applied shale technologies in mass. But as the Americans have shown, shale works in areas that are relatively close to population centers because it requires a significant amount of labor. And it doesn’t work very well in places that freeze solid because you need a lot of water.

And Uruguay is a thousand miles from anything that matters. So that will probably never come back online because the Russians can’t do it themselves. And the technologies that might allow it to work simply are inappropriate for the geography in the case of exports to Europe. They are now down by 85% compared to the start of the war. What is left is just a trickle that is going to three countries Czech Republic, Slovakia, Hungary, who really don’t have any alternatives to taking natural gas supplies from the Russians, which is one of the reasons why Hungary, Slovakia and to a lesser degree Czech Republic have been the three countries that have been most opposed to the sanctions

regimes in general, and most of the exceptions that have been carved out of the sanctions regime involve those three countries. That’s not going to change this year. That might start to change next year as the Europeans are building up lots and lots of lots of interconnections so that they can cut their links to Russia. Natural gas for good.

And when that happens, all that will be left of the Russian natural gas industry is what’s going through the domestic markets. And perhaps cyclin LNG because the Japanese are involved there. And that’s completely separate political question. But that is crazy because you’re talking about the world’s largest producer and largest exporter of natural gas vanishing from global markets in less than four years.

And that is absolutely unprecedented. Honestly, it’s more than a mild shock that the price shocks that the Europeans have felt at this point have been so mild. They really have been able to bring in liquefied natural gas from other suppliers, most notably a Persian Gulf in the United States. This has put a lot of price pressure on everyone else who used to get natural gas from those locations.

But to this point, I got to hand it to the Europeans. They have put together a sanctions regime that at least in part, is doing exactly what they hoped. Jeremy. Russia now exports, cutting Russian income without unduly shocking their own system. I honestly did not think they could pull this off, but so far so good.

The European Union: Will It Adapt or Die?

The fate of the European Union will likely be decided in the coming week; if that doesn’t pique your interest, I’m not sure what will.

The meetings are set, and there’s plenty on the docket; now it’s time for the peaceful EU that has existed since WWII to face the music. To keep up with the times, the EU must rework its rule of law, fix the corruption issues, move away from its focus on agricultural subsidies, and eliminate single-member vetoes.

Once those issues have been addressed, admitting new members – primarily those under Russian threat – will help the EU balance its economic and military strengths.

The EU is a square peg trying to fit in a round hole, and if it can’t round out those edges, its 27 member states are in for a shit-storm.

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.

Hey everybody. Peter Zeihan here coming to you from Cape Cod, where we have to talk about the EU, European Union. You use a group of states, 27 of them right now, who have kind of thrown their lot together to form an economic grouping so they can economically be a bigger power on the world stage. And they’re starting to discover that economics without military power have a problem.

So they’re looking to their east, and they see a whole lot of states that are either directly threatened by the Russians are at war with them, like, say, Ukraine, and they’re coming to the conclusion very quickly that if they don’t let these countries into the EU, it’s going to actually cost them more the long run. So on the 5th of October, they are meeting with all of these governments to see what they can do.

And then on the following day, all the Europeans are meeting without the potential new members to figure out what they need to change about the EU in order to let these countries in. The issue is the identity of the European Union has always been a peace project in the aftermath of World War Two. They tried to create a Europe that was United, free and at peace, and it broadly worked.

But that environment is now gone and things need to change. So the biggest problems they have, or there’s two big ones. Number one, a lot of these states have weak rule of law and are fairly corrupt. And number two, a lot of them are heavily agrarian and courtesy of some of the evolutions of the EU early in its development.

Until very recently, over half of all EU funds were given as agricultural subsidies. That’s down to about a third now, but still a huge chunk of the budget. And all of these countries would basically absorb every scrap of cash that the EU would have. In addition, EU decision making is founded on national vetoes for any sort of big issue like enlargement or taxes.

So tiny little Greece can veto, for example, Greek bailout terms that they don’t like, which has led to the organization kind of being an institutional pygmy when anything real is involved and they tend to squabble about the most irrelevant things, such as, say, cheese policy. So if this is going to work, if the EU is going to matter, if the EU is going to survive, a lot of this needs to change and it’s not necessarily the countries that they’re looking to admit that need to do most of the changes.

They need to get rid of a single member vetoes, which means countries like France can’t shape the union to their liking anymore. They probably do get a little bit softer and things like rule of law and corruption, which is going to be of a problem because there are already countries in the EU that are backsliding quite a bit with Poland and Hungary being at the top of that list.

And they have to change the financial system so that it’s not just all going to relatively nonproductive of farmers or to big conglomerate farmers in places like Ukraine. So this is one of those situations where the world that the EU was built for doesn’t exist any longer, and they’ve got to decide if the EU can change in order to adapt to that world and shape it on the other side.

And we’re probably going to have a really good idea about that in less than a week. All right. That’s it for me. See you guys next time.

US Discovers Huge Lithium Deposit: What It Means…

Well, it sounds like the US finally decided to join in on the fun and make a lithium discovery of their own. This deposit is – supposedly – the largest ever, and it is located in the McDermitt Caldera near the Oregon-Nevada border.

I want to make clear that these are only estimates, so don’t pop the bubbly quite yet. On top of that, permitting and infrastructure buildout will take years to complete. Even when all that is done, lithium’s battery chemistry remains sub-optimal and has several limitations.

Despite these challenges, the McDermitt Caldera lithium deposit has the potential to shake up the industry. The US needs to balance this discovery with investments in researching better battery chemistry alternatives.

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.

Hey everybody. Peter Zeihan here coming to you from Colorado. A lot of you have written in asking me what I think about this new supposedly lithium deposit that has been found near the Oregon Nevada border. That’s in a place called the Mcdermitt Caldera, which, if you’re familiar with plate tectonics, is where the Yellowstone supervolcano used to be. Basically, the Yellowstone supervolcano is a hotspot, and this is where it was ages ago.

Anyway, volcanoes bring stuff up from the mantle and even the core, and they tend to be a little interesting from human point of view. And so the minerals in the caldera are undoubtedly interesting and supposedly they found a whole lot of lithium. But if the estimates prove true, it will be the world’s single largest deposit, bigger than what is in Chile or Bolivia or Argentina or Australia for that matter.

So, you know, potentially groundbreaking. And I think this is great, obviously, but for things to keep in mind, number one perspective, estimated potential real exploration has not yet been done. And until it does, you know, don’t count those chickens. Number two, let’s assume that it’s as good as we think it is. Well, you still have to build the mine.

And from the day that all the permits are approved to the day that you get first large scale production, it’s still going to be in excess of four years out in the permitting process. You’re going to add another 2 to 3. And a lot of this is on Native American land. So there’s a whole nother level of politics and negotiation that goes into it.

So I would be surprised, even in the best case scenario, if we saw a meaningful output out of this thing in less than eight years, ten is probably more likely. So the chicken counting is going to have to wait third. Let’s say we manage to get all this out of the ground and it looks really promising. Well, then you have lithium or it still needs to be processed into some sort of intermediate form, like concentrate.

And only then can it be refined into metal, and only then can it be turned into things like batteries. So there’s an entire manufacturing supply chain that has to be built up. Now the United States is starting on this. We’re working with the Australians on some of this, but this is again something that takes a minimum of 2 to 4 years to get going at scale.

I would argue that we should work on the processing regardless that way, even if this new source of or doesn’t work out, we can still tap water from places like Chile or Argentina and have more and more of the supply chain within the Western Hemisphere. Okay. What else? Oh, yeah. One more thing. Lithium sucks. I mean, we use it as our dominant battery chemistry because we don’t have anything better, but it’s not particularly energy dense.

It can only work for so many recharge cycles, and it tends to swell and heat up when you use it. So it can start fires, which is one of the many, many, many, many, many reasons why on flights they tell you that if you have a lithium battery, don’t put it in your checked bag because no one’s down there to check on it.

You have to carry it with you. Hopefully over the next decade we will figure out a and easier battery chemistry, maybe even one that’s a little bit more, I don’t know, environmentally friendly because the mining and refining that’s necessary to do lithium at scale is pretty messy. We need several hundred billion dollars into new materials science research for GreenTech and in none of the subfields is it more important than figuring out something that works for batteries better than lithium?

But until that happens, lithium is the best that we have. So this Mcdermitt Caldera, the Thacker Pass mine area, looks promising.

Ukraine War: Russia Targets Grain and Power Grid

If you’ve been around since July, you might remember me talking about Russia targeting Ukrainian agriculture instead of the power grid. If you want a little refresher, just click here:

As of September, Putin has sufficiently disrupted Ukraine’s grain exports and overall agricultural sector. Meanwhile, the Russians were bolstering their wheat exports, so global supply has held steady, and prices are still down.

Don’t rely on this Russian grain, though, because new sea conflicts, impacts on shipping routes and an unpredictable climate could change everything at the drop of a hat. The best course of action would be to help Ukraine develop better rail infrastructure and grain transport options.

As the temps begin to shift, we will see the Russians change up their strategy once again. They will transition from attacking Ukrainian agricultural infrastructure back to targeting the power grid…but just because the Russian’s focus has shifted, doesn’t mean grain markets will be stable.

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.

Hey everybody. Peter Zeihan here coming to you from Colorado today. The topic is going to be the next phase of the war in Ukraine and from an economic point of view. For those of you who’ve been watching for a while, you know that last winter the Russians went out of their way to hit the power grid in Ukraine wherever and whenever they could, because that was the way they could generate the most casualties and have the most political impact on decisions in Kiev.

And then in about May, once it had warmed up enough that you didn’t necessarily need heating in Ukraine, they switched targets to the agricultural supply chain system with a very, very heavy emphasis on the infrastructure that collects and especially exports the grain take it out. Things like grain silos and ports first in places like Odessa, and then later moving on to the Danube River Delta, which is where the Ukrainians and tried to get the stuff out.

In this, the Ukrainians have kind of faced a triple bind. Number one, they import most of the materials that are necessary, like fertilizer, in order to grow crops in the first place. Number two, there isn’t a lot of storage in Ukraine that was available because of last year’s efforts in the war. Most of the storage was full completely.

So the Ukrainians were focusing on getting that out so they could make room for this year’s harvest. And in some degrees, there has been failure there. And this stuff has nowhere to go because number three, almost 80% of this maybe even a little bit more, goes up by water, primarily through the Odessa region. And with that kind of off line, the only other option is to rail it out.

And that means you have a limited number of rail cars. You have to ship it through other countries that are already grain exporters like Bulgaria, Romania and Poland, who don’t like the idea of that stuff being dumped on their market. So most of them have barred Ukraine from having terminal arrivals for their grain and you have to keep on going.

So for every kilometer you have to go further. That’s a kilometer that that railcar has to be committed. So all in all, you’re talking about over an 80%, nearly a 90% reduction in Ukraine’s ability to get the stuff out. And now that a lot of these ports on the Danube have been damaged, there’s just no place to put the stuff from this year’s harvest.

So from the Russian point of view, mission accomplished. And now they’re switching targets. This past week, the week of the 18th of September, they’ve started switching targets again because we’re now getting into fall and they’re going after the power grid again. And over the course of the next month, I would expect that general shift to be almost complete.

They’ve destroyed the Ukrainians ability to play in international grain markets any in any meaningful way. And now they’re going to have the power grid to cause mass casualties again there. So definitely, you know, the Russians have absolutely won this round. The only way that the rest of the world might be able to help is to massively, massively expand the rail connections between Ukraine and their neighbors.

And then the next line of countries beyond. It’s not enough just to get the stuff to say, Poland or Romania. You’ve got to get it on to the water. And that means you also build out the lifting infrastructure for transferring something from rail onto a ship, because these countries were already grain exporters. That stuff is already used to capacity.

You can basically need to double the entire thing. Normally you would expect something like this to be really bad for grain prices are good, I guess. Depends on your point of view. Send them up. But miracle of miracles. The Russians have had a bumper harvest so they have increased their wheat exports by over a third and that by itself is nearly enough to compensate for all the Ukrainian grain that has left the market.

So wheat prices are actually down. Now, I am not a grain trader and I’m not trying to give you anybody price recommendations, but just a couple of things to keep in mind. Number one, the Russian climate is incredibly erratic. And so just because they had a bumper crop this year doesn’t mean they’re can have a bumper crop next year.

Keep that in mind. Number two, the Russians have said that any vessels, civilian vessels anywhere in the Black Sea going anywhere near a Ukrainian coast, they reserve the right to attack. The Ukrainians are trying to convince people to come anyway and they’ve had very, very, very limited success. But that war risk is always there. And for their part, the Ukrainians have said and have demonstrated that they can strike Russian ports as far away as never seasick, which is their major green loading facility for the Russians.

Now, they have not gone after civilian vessels yet, but again, there’s still the possibility that we can have a widespread war on the water, in which case all civilian shipping in the north eastern half of the sea is in a degree of risk. So for the moment that there’s enough grain out there, I’d not get used to it.

But at the moment, that’s where we are. Okay. Talk to you later.

African Coups: Will the French Get Involved?

There’s been a surge in coups throughout African countries, and there’s a common thread connecting them – most are former French colonies.

Looking back at the colonial histories of the French and the British, two very different strategies were implemented. The Brits opted for the economic route – targeting regions and areas of strategic significance. The French took a more ego-driven approach and focused on the biggest swaths of territory.

While the Brits primarily wanted a cut of the profits from their colonies, the French wanted to be in charge of everything, so they hollowed out systems and put their people in charge. Fast forward to the present day, the French have packed their bags and left shells of colonies primed for coups and prone to external influence from China and Russia.

As these coups run their course, French involvement could take on a number of different forms. That’s what makes this so interesting….the French are a wildcard, and their involvement comes down to how they see themselves.

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.

Hey everybody. Peter Zeihan here coming to you from Colorado. If you’ve been watching places like Africa, you notice that coups are just happening fast and furious. Obviously, I’ve lost track of how many we’re at now, at least five. But almost all of them have been former French colonies. And that is not just a correlation. There’s some something very real there linking them together.

And so I think it’s worth exploring how this is going down and why and why it’s here. And that will allow us to project for the future a little bit. So the French colonial experience was significantly different than that of the British one. The Brits were a mercantile empire, a corporate empire. They saw the empire as a way to make money.

And the French had a very keeping up with the Joneses sort of approach. So the French like the way the maps looked, whereas the Brits like the way their accounting books looked. So the Brits would go out and they would look for connection nodes, productive lands, if they can find them. But mostly with the notes where everything linked together and they put themselves in there into a cut of everything coming through.

They didn’t try to reinvent the wheel. They just tried to profit from the wheels coming through. Whereas the French it was more an issue of national prestige. So the bigger the block of territory on the map, the better. And it was kind of a sorry French people. It’s kind of a kindergarten approach to geography, trying to make your political map look great, whereas the Brits were concerned with the economic map.

So I think the best example I can give you in this region, in West Africa, there’s a country called Senegal, which was a sizable chunk of territory, former French colony. But there’s a little bite right out of the middle of that along the Gambia River called a country, say, the Gambia. And The Gambia is a former British colony.

So the productive capacity mostly is on the land that the French controlled. But all of the ins and outs and the logistics and the trade was controlled by the Brits. And so the Gambia was a much wealthier colony, would generate a lot more income for the locals and for their British overlords were Senegal. Even today is kind of not the best.

And this is reflected throughout the entire region. So the Brits would go after things like the Nile, so they would take them to Egypt or they’d go after the Highland Plains that have good agricultural zones and minerals like, say, South Africa, where, as the French would take the entirety of West Africa regardless of what was there. So a lot of the French territories are in a place called the Sahel, which is where the desert of the Sahara starts to get a little bit of moisture.

And so, you know, you can have some people and then transition into the rainforest. It’s the transition zone that economically is subpar and based on climate shifts, whether from human made climate change or things going back, it moves what areas are dry and wet. So the French were able to take control of it very easily because the local populations were, in many cases nomadic, but they never had dense population patterns.

They never had a lot of cultivation. They never had a lot of mining. They never had a lot of wealth. But the French could control it. And these are the territories that are now going through these political ossification and breaks. And now so no coincidence that it’s the French territories that are not as durable politically and economically as the former British colonies.

The second issue is one of political culture of the empires, since the Brits were primarily concerned with the income that they could get. They did not want to disrupt the initial original political and economic classes. They just installed their colonial overseers as governors general about that and allowed the locals to run. Most businesses themselves. And the Brits just took the cuts.

The French? No, no, no, no, no. It was about French control. So one of the first things that the French did whenever they came into a community is get rid by death or otherwise of anyone who was in charge. And then the French colonials would take over everything directly. They might not understand the local economy then that might not be permitted wormwood which could be a problem.

But more importantly, it meant that when the French colonials finally did leave, they didn’t leave a whole lot behind. I mean, the Indians will tell you no end of stories of how horrible the Brits were to them. It’s a case to be made there, but the Brits never really disrupted the political leadership. And so when the Brits did leave, the Indians were perfectly capable of ruling the country themselves.

In the case of the French, the French might have helped set up a specific group to take over when the French left, but that group, because it was hand-picked, would probably be resented by everyone else who was there. And by the time you fast forward to the 2020s, some of these dudes have been there for 50 or 60 years, or the sons of the original deputies and the locals don’t think very highly of them.

And so they’re getting offed in this sort of situation. The French have gotten pretty good at interpersonal relationships, and they’re very comfortable at backing the big man who’s in charge of everything. But because they never got into that kind of societal management of the British, they’re not very good at fighting the support mechanisms, aside from, say, guns and intelligence that are necessary to allow these big men leaders to actually run their countries in a capable way.

So you have a coup before all institution of government fails and is replaced by something else. It becomes very much a blank slate. Now, in blank slate scenarios, it’s fairly easy for an outside power to come in giving them on the ground floor or something new and try to usurp French power a little bit. Because the French power got wiped away when it got turned into a blank slate.

And this has provided significant opportunities for, say, the Chinese and the Russians to go into an area where they were never the colonial powers, where the historical experience is minimal. It actually makes a real gains. But this is temporary. It’s a blank slate. Nothing is established and the French are still much closer. And the local language is typically French.

And you’re dealing with an environment where the French know how to play this game, because if it’s someone else’s institutions, the French are perfectly capable of coming in and making their own blank slate. Remember, the French are much less squeamish than the Anglos about things like suitcase, size of cash and assassinations. And so what we’re seeing right now is the French are trying to decide their plan of attack.

Do they want to wipe out the people who wiped out their people double blind slate? Or do they just want to see if these people can successfully consolidate, in which case they go with that suitcase of cash? Or are the French or the Chinese going to get there first and set up their own institution, in which case the French have to come in and assassinate someone?

These are all viable options from the French point of view. But perhaps the single most important thing that people miss when they’re looking at the French and their former colonies is because the French ran their empire is basically a giant ego stroking machine as opposed to a moneymaking machine. That means that they don’t actually have significant national interests in most of these countries.

And there is nothing like, say, the British exposure to a like Gibraltar, where it’s actually a strategic interest for India, where there’s an economic interest. The French are capable of just swallowing their ego and walking away. But I think the most important thing to think about here is the French are much more comfortable in this environment and know how to manipulate it.

They’re better at assassinations if they don’t like the way it’s going to go. And because they don’t have any sunk national interest in this stuff, they have no problem walking into someone else’s experiment and just destroying it. So don’t think a French intervention or not intervention in West Africa as the sort of thing you might see out of the Americans or the Brits or even the Russians.

The sunk costs here are low, and that makes the French perhaps the most interesting thing that can happen in an interaction all tussle unpredictable because it all comes down to how the French see themselves and everyone else. Due details.

The Chinese Collapse: A Housing Overbuild

Trying to predict what the Chinese system will look like as it collapses would be a fool’s errand, but exploring China’s housing market in this context could be fruitful.

China has an investment-based economic model, which means resources and capital go towards infrastructure development and construction. As Japan and Korea have shown us, this economic model isn’t sustainable; diminishing returns will settle in, and the economy will grow stagnant.

Japan and Korea had private enterprises to help the economy balance out, in addition to international investment opportunities. In the case of China, capital flight is restricted, so citizens look to speculative bubbles for investment opportunities…and housing is the most problematic of the bubbles.

And so Chinese citizens dumped their life savings into housing, generating the world’s most massive overbuild. As China collapses and people’s money is tied up in this useless real estate, it doesn’t take much to imagine what happens next. Let’s just say Xi might be losing some of his fan base.

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.

Hey everybody. Peter Zeihan here comes to you from Colorado. A lot of you have been writing in and asking for scenarios of what the Chinese system will look like as it collapses. And Chinese history is rich with how it’s all going to hell. So putting my finger on one specific scenario I don’t think is very useful, but a lot of you have also written in asking about the Chinese housing market, and I think kind of exploring these two things hand in hand is worth a little bit of time.

So the Chinese follow a capital intensive investment model. There are there’s three types of economic growth. You’ve got consumption. Like you go out and you buy a home or you buy an iPod or whatever it happens to be. In the United States, that’s about 70% of total economic activity. Private consumption. Then you have exports. So, you know, you make something like Boeing and you sell it to the Indians.

Export led economic growth that is a system that is more popular in a place like, say, Korea or Germany. And then you have investment led economic growth, which is the building of stuff where regardless of where you get the capital, you get you build a road, you build a factory, something like that. And this has always been the method that has been favored in China and to a lesser degree, all of East Asia, because it’s something the government, for the most part, can control.

And it tends to be directed towards things that the government feels needs to be done. So roads, bridges, industrial plant and all of the East Asians have followed this pattern to a certain degree. The problem with this pattern and this type of growth is if you do it enough, you start to distort the economy and you absorb more and more capital and more and more labor and more and more resources.

And eventually you get to the point where there’s diminishing returns because you only need so many roads, you only need so many factories. In the case of Japan. They reached this point in the 1980s and they went from having stratospheric growth because this generates a lot of economic activity to just kind of a stall out. And they were left with a stack of loans worth about 50% of their GDP, $2 trillion at the time that was invested into assets that probably should have never been built in the first place.

And it took the Japanese system 30 years to churn through that, and that was 30 years of basically not having economic growth at all. Eventually, they realized the debt burden was so bad that they needed to focus what they could do on more productive stuff. And that turned out to be stuff that was not in Japan. And so we started this generation long outsourcing, the sourcing, whatever you want to call it, to countries that had better demographics and better debt profiles, most notably the United States.

And here we are now, 35 years after that process started. And the Japanese economy is more or less back in health. But it’s happened as the demographic situation has turned inside out. So consumption led growth in Japan will probably never happen again. They’re just too old. Something similar went down in Korea, but the Koreans attacked it with a fervor that the Japanese couldn’t muster, and they decided to deal with it by investing more, but going further and further up the value added chain.

And this could work in Korea because they were already among the most highly educated populations in the world, and they eventually generated things like the Samsung and the Daewoo and the Hyundai that we know today. It came at a cost. Extraordinary levels of turnover in the corporate world as entire chaebol, which are kind of giant industrial conglomerates, would go bust, which would generate a huge surge of unemployment and credit risk, which the government had to step in and assume the risk of itself in China.

It has done something similar to both of these as well as a third one. So first, building bridges to nowhere. The Chinese absolutely reached that level probably back in the early 20 tens. And most of the construction we’ve seen across China is of questionable economic use and the debt has been building up. Corporate debt has basically doubled since 2010 and it started at a level that was already in excess of American debt.

So, you know, we’re talking about a huge amount of money that has been put into things that probably are never going to have a return. They tried to follow the Korean model as well, but what they discovered is that their workforce was already fairly unproductive. And while overall productivity for the Chinese labor forces have gone up by 50 to 100% in the last 10 to 15 years, the debt load has gone up by a factor of five.

So from a cost benefit point of view, Chinese labor has actually decreased in terms of its overall productivity once you consider the cost, because in that time frame, the cost of Chinese labor has gone up by more than a factor of five or six. And then there’s a third model, unlike Japan, unlike Korea, which are, for the most part, private enterprise driven systems, the Chinese are absolutely state centric and in China and excuse me, in Korea, in Japan, the people always had options for where to put their own personal money to make their bets on their futures, prepare for their own retirements, expand their own wealth.

The Chinese don’t have that. Capital flight is strictly regulated, in many cases forbidden. And every time that the people find a new way to get money out, the Chinese government changes the law and so it all gets bottled up at home. Now, for the Chinese development model, this has proven successful at keeping the Chinese citizens money as part of the process that then funds all of that investment.

So whereas in Japan, it’s a mix of corporate and creates a mix of corporate and government. In China, the average citizen in many ways is being forced to help underwrite all this bad debt, and the Chinese citizens don’t really appreciate that, as you might expect. And so they’re always looking for outlets. Now, they can’t send their money abroad, so they looking for outlets at home.

And so China is famous for massive speculative bubbles that happen in commodities or gold or anything. And the one that has proven the most problematic and the one that has generated the most economic growth to this point has been housing. The government does allow you to own your own home. So people do that with gusto. And then they started buying apartments.

And second apartments and third apartments and fourth apartments. And basically we got an Enron style financial boom driven by growth in construction of the housing sector. Now, the new news that has come out in just the last few days that kind of crystallized this all for me was a dude in China by the name of he king, great name, who used to be an uppity up in the Chinese Statistics Bureau.

And his estimate now is that there are more there’s more housing units available that are unoccupied in China, so many available that they could house the entire Chinese population. So we’re talking an overbuild in excess of 100%. Do you kind of put that into perspective? The American subprime crisis at its peak had less than 5% overbuild because of subprime, probably closer to 3%.

And it was only because we bound up those mortgages with more healthy real estate investments and asset backed securities that it actually turned into the crisis. And we all know how that felt here. Ultimately, we had a financial crisis that lopped 5% off of GDP. If in China, you’re talking 100% overbuild in a country that is suffering from the advanced stages of terminal demographic decline and is already experiencing massive population losses against in the United States, where we had less than a 5% overbuilding, we still had population growth and inward migration.

The mind reels in coming up with a historical precedent here because there isn’t one in time. The Korean or the Japanese models were able to mostly recover from the overbuild, in part because private citizens were not wrapped up in the damage this time around in China. This specific aspect of the overbuild, which is the biggest in human history, isn’t even reflected in the debt data because a lot of Chinese have been able to pay for these apartments with cash and they now have invested for the most part, their total life savings in an asset that is probably worth at most a quarter of what they paid for it.

So in China excuse me, in Japan, in Korea, national coherence, public support for the very existence of the government was never damaged because people’s finances were only hit indirectly because of economic growth issues. But in China, you’re talking about a complete wipe out for what, for most Chinese citizens is their primary and maybe even only method of savings on top of a failure of the Korean style expansion to improve productivity on top of a failure of the Japanese style program to improve public infrastructure.

This is going to hit them from every possible angle when it breaks, and it’s going to do so by ripping the heart out of public support for the entire system and the CCP and the government in particular. So no, I am not particularly optimistic about how this is going to shake out. Quick addendum. I did a quick fact check before we went to print with this one print release, whatever on Mr. Hes data that he estimates that there are sufficient empty apartments to house the entirety of the Chinese population.

That was wrong. He says there’s sufficient spare housing to house twice the Chinese population. So everything I said before stands just underline most of it.

China’s “Diversionary” War with Taiwan: The Good, Bad and Ugly

China invading Taiwan isn’t a new topic, but would China ever use this war as a diversion or distraction? This is an unlikely scenario, but as long as Xi is in charge, we must consider every possibility.

Despite challenges to China’s political and economic system, with a leader like Xi, there isn’t a need to “rally support” for a war. In addition, capturing Taiwan wouldn’t provide China with a strategic advantage, and it would likely lead to hefty economic vulnerabilities.

The odds of a “diversionary” war happening are never zero, though. In a system like China, all it would take is a miscalculation on Xi Jinping’s part or some dark realizations setting in…

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.

Hey everybody. Peter Zeihan here coming to you from Colorado. Now, last week, I released a video on why none of us should be really surprised if the Chinese system falls apart. We’ll leave the link here for those of you have not seen it. But the most common follow up question that I’ve received from viewers has been wouldn’t this justify in the Chinese mind a diversionary war or distraction war to increase public support?

I can’t rule it out, but I don’t think that’s going to go down for three reasons. Number one, this is not a democracy. This is an autocracy where the CCP has control of the public space is huge and their ability to shape public opinion is massive. And in that sort of an environment, you don’t get the same relative effects and you also don’t have the same in stability from economic problems that you might have in a more pluralistic society.

So I don’t want to say no, but the government’s ability to shape public opinion and to stir up nationalism is pretty robust. If anything, the government sometimes has a bit of a problem containing the nationalism, not not getting it going. So from a legitimacy point of view, I don’t think it’s really necessary. Second, anyone in China who can read a map and do math knows that if they launch a war for Taiwan, it will it will not end well, not the war itself, but what happens to the next day.

China is dependent upon the international community for roughly three quarters of their energy sources, and most of that comes from a continent away. On top of that, China is in terms of absolute volumes, the most dependent on imports and exports of any country in the world. And they import the vast, vast, vast majority of the materials that allow them to grow their own food.

So if you have even a moderate effort by a small number of countries to go after Chinese commerce in the aftermath or because of a war, this country will be facing a industrial collapse in just a matter of months and a famine that will kill half the population in a couple of years. And I have no doubt that at least several years ago that the Chinese leadership understood that.

And so they primarily used Taiwan as a rhetorical issue. And most of the threats that we’re seeing now are not necessarily coming from the decision makers. Well, a third let’s assume that the Chinese can capture Taiwan in a matter of weeks with minimal damage. That doesn’t really give them anything. I mean, yes, it technically is a break in the first island chain, but the Chinese are still dependent on the international system to get everything that they need, and they’re dependent on the U.S. Navy to patrol the global oceans so that their commercial cargo can come and go.

In fact, this would actually put their potential sea lanes by Taiwan in greater risk from the Japanese, who have a better, longer range navy than anything that the Chinese have. And then there’s talk of the semiconductor industry that the Chinese would be able to scoop. But the Chinese can’t operate their own semiconductor industry. It’s not just run with foreign equipment and software.

It’s run by foreign personnel. And the Taiwanese facilities are the most advanced in the world. And honestly, the Chinese wouldn’t know what to do with it. I don’t mean that as a slam to the Chinese. I don’t think any country that took them over would be able to operate them in anything less than a decade timeframe for the Chinese would take a lot longer than that.

So it really doesn’t check any boxes now saying that it wouldn’t work, saying that a diversionary war would be unwise and would achieve nothing for the Chinese is not the same as me saying. I don’t think it would happen, but the rationale would be very, very different. So two things. Number one, it could be a miscalculation, not in the traditional sense that, you know, we don’t think anyone will do anything but a miscalculation by JI.

Remember that JI has formed such a tight cult of personality that no one’s bringing him information. So he’s literally making information, making decisions in a box without any idea of the information that flows in or the reality of the world around him in that sort of decision making structure. Sure, he could pull the trigger, but it wouldn’t be because of any of the reasons that you would normally expect.

So whether it’s economic, strategic, political or whatever, whatever we would say, you know, this might force a country to pull the trigger. None of that applies to Xi because it’s all in his head. And it’s not something that we can really guess at because we don’t know what’s shaping his decision making, because we know he’s not being fed the information he needs to run the country.

The second reason is quite darker. If you’re like me and you believe that we’re looking at the end of the Chinese system over the next decade for demographic reasons alone. Forget politics, forget energy, forget vulnerability, forget the debt, forget trade wars, forget everything else. Then there’s something to be said for pulling the trigger. Because if the Chinese system is facing that same industrial collapse and that same population collapse for other reasons, and there’s nothing that the Chinese government can do to stop that, maybe buy a little bit of time, and that’s it.

Then pulling the trigger, choosing the time and the place of a war, even if you think you’re going to lose, even if you know it’s going to result in the death of half of your countrymen, if it allows you to command the narrative of the future. Well, that means that the CCP for the low, low price of half the country’s population might be able to rule into the next era of Chinese history.

And if you’re completely amoral about it, you got to admit that might be a compelling reason to launch a war that you know what will destroy you for dark. Not saying that’s happening, but we can’t rule it out at this point.

Chechnya: Russia’s Influence and a Volatile Future

Today, we’re looking at Chechnya’s tumultuous history with Russia and what the future might hold. After two wars, a few decades of nominal Russian control and ruthless leadership, the tides might be turning for Chechnya.

That ruthless leader I mentioned, Ramzan Kadyrov, hasn’t quite set the Chechens up for success. However, as his health comes into question, so does the future of Russia’s role in Chechnya.

If Kadyrov kicks it, several complications arise for the Russians. There’s no succession plan, the flow of information could be cut off, regional allegiances could shift, and with the ongoing war in Ukraine…things could get spicy.

While it may seem like all of this is contingent upon Kadyrov’s death, most of it is inevitable. Sure, Kadyrov could help speed things along, but Chechnya (and this region as a whole) has plenty of dynamism and volatility in its future.

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Hey everybody. Peter Zeihan coming to you from Colorado. We’re doing the next in kind of an open ended series on the Russian positions throughout the former. Soviet world and how they’re disintegrating and what that can mean. We’re talking about Chechnya today now. Chechnya is a little statelet, a republic of the Russian Federation that tried to break away back in the 1990s when the Soviet system collapsed.

There were two major wars. In the first one, the Russians were soundly and embarrassingly defeated and in the second one, the Russians were able to split the Chechens into groups and allied with one of the more powerful factions. And in doing so, reassert nominal Russian control. Emphasis on the word nominal. Basically, the Russians provided this one group with troops and equipment and intelligence and money and combined with the Russian forces, they were able to defeat the others.

Part of the terms of the deal were was, though, that the Russians pretty much had to leave. And so the Russians still lost control of Chechnya. But at least nominally, this faction does adhere to what Putin says he wants to do, even though, for all intents and purposes, this faction is independent. Now that faction is run by the Kadyrov, claim a courier off.

The father was killed in an assassination attempt back. And I want to say 2000 2000 won. And his son Ramzan is, I think the most clinical way I can put it is an absolute fucking psychopath. Tortures people, murders people, runs the place in a reign of terror. Definitely not the kind of guy that you want to meet under any circumstances, or preferably even read about if you have an option anyway.

Kadeer off the junior has become part of the political support system for the entirety of the Putin regime across Russia, where he engages in a lot of intimidation, provides shock troops for, say, things like in Ukraine and does a considerable amount of what work, which is, you know, a fancy name for assassinating people that Putin doesn’t like. Now, the news that has come out over the last few days is that there’s something wrong with Rahm’s health.

Now, he has released a video as of the 21st of September showing that he’s clearly alive. And so whether there’s anything true to the rumors, I have no idea what I can tell you, that the situation where could here if JR is in league with the Russians is of limited duration and a lot more fragile than people think.

Remember, he’s basically being paid in men and equipment and intelligence and of course, cash to be on the Russian side. So if something happens to those fellows, his loyalty is, you know, available to the highest bidder. Also, he is the leader of one faction, a powerful faction. Yes, but only one in Chechen society. So if you had a change in circumstances, it’s easy to see that you can have a power struggle erupt in this area very, very, very, very quickly.

And who knows how that would shake out. And it’s perfectly reasonable to think that this would descend into a bit of a civil war among the Chechens themselves, because there are Chechens in Ukraine fighting against the Putin government and the Chechen shock troops that Kadyrov has brought in. I mean, this is not a unified polity by any stretch of the imagination.

So there are kind of four things you have to keep in mind here, that if something were to happen to Kadyrov, that we would see a lot more instability and especially incapacity for the Russians to maintain the position. The first is that there’s no second in charge in Chechnya. It’s just Ramzan himself, his sons. The oldest one is 17.

They’re certainly in no position to take over. And it’s not like they were raised in the rebellion. They were all born after the war ended. They were have been raised in the lap of luxury. And they have very active Instagram accounts. They’re social media stars among Russian nationalists and Chechens. But it’s very clear that it’s all airbrushed. And these are not people who have actually had to do any real fighting.

Could they rise to the occasion if their father was just to disappear? Maybe. But there would be plenty of others who would also try. And that’s the whole point would end in a struggle. Number two, it’s not clear that this the group of Chechens that are working for the Russian government are easily replaceable. One of the things we’ve learned throughout all of the conflicts in Ukraine with first the Orange Revolution and then the made in protests and then the 2014 war in Crimea.

Now, most recently, the 2022 war in Ukraine is that Russian intelligence authorities are not nearly as competent as they used to be. Most of the good ones went off in the 1990 and early 2000s and kind of got into business and got into crime themselves and haven’t come home. So Putin is really relying upon Kadyrov clan to do a lot of the work that used to be done by kind of the dirty hands of some aspects of the intelligence bureaus.

And if that were to vanish or, God forbid, turn on Putin, it’s not clear that it would go really well. Third, there’s more going on with the Chechens who are working for Putin than just the stuff within Russia and Ukraine. The Chechens have their fingers in a number of other frozen conflicts in the region, in the Caucasus, most notably a trio of regions within the former Soviet Republic of Georgia, which has often found itself on the receiving end of Russian violence.

There’s a Chechen enclave in a place called the Pankisi Gorge, which is just north of Tbilisi. That kind of is a de facto independent zone. And then there are two zones, Abkhazia and South Ossetia, where the Russians actually have regular troops there. And they’re physically maintaining the independence, really occupied nature under Russian control from the Georgian authorities. And if the Chechens were to flip and just go neutral in those positions, it’s not clear with the Russians being as distracted as they are by Ukraine whether or not these areas could continue to be functionally independent.

And the Georgians, of course, would love to take those territories back and then fourth and most importantly, one way or another, we’re probably going to see a reckoning here in terms of strategic control. If the Ukrainians are even marginally successful at resisting the Russians, eventually some aspects of this war are going to get to the city of Rostov on Don in southwestern Russia.

And Rostov is the primary launching point for Russian forces operating in eastern Ukraine. And it is the only launching point for Russian forces operating in the Crimean peninsula itself. And if it becomes constrained, that is what the Ukrainians need if they’re going to ever win this war. But Rostov does more than just serve as a launching point for Russian operations in Ukraine.

It’s also the primary launching off point for Russian operations throughout the entire Caucasus, including in Chechnya. So even if Kadyrov remains loyal, any even moderate success by the Ukrainians is going to impinge upon the Russians ability to influence the Caucasus at all. And then Kadyrov, when it becomes clear that the weapon and the men and the money might not be coming in the same value, he is going to have to make some decisions on his own.

And if even as he sticks where he is, other groups throughout the Caucasus, the Azerbaijanis, the Georgians, other Chechen groups, the Dagestan, he’s it’s the long list are going to start looking at the change in circumstances when the Russians simply can’t project power in force to the Caucasus region. And when that happens, the Russians will be dealing with a multi-front series of rebellions and wars that they really have proven.

They don’t have the logistics and the manpower to deal with. So Kadyrov is clearly important and his health, his survivability, his political standing, where he sides with this faction, that matters greatly. But if you step back and look at where this is going from a big picture point of view. Kadyrov’s Change of heart or change of health could only speed things up.

A lot of this stuff is inevitable. A lot of this stuff has to happen anyway. It’s just Kadyrov could make it happen tomorrow instead of three years from now.

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

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