Over the last few weeks, we’ve seen Iranian oil hit markets at nearly decade-high volumes…but production has remained relatively flat. So what’s really happening here?
Many of the sanctions being placed on Russia were originally used on Iran. And as we’ve seen Russia sell oil at a massive discount, Iran is following suit to come under the sanctions regime (rather than just smuggling it out). Basically, Iran is just selling oil LEGALLY now. Let’s compare Iran’s situation with Russia’s.
Russia is facing an existential threat, so nothing is off the table for them. Iran’s situation isn’t as dire, so they can have some patience. Russia produces most of the stuff needed to survive, so pissing countries off or stepping on toes isn’t a concern for Putin. Iran can’t sour their relationships because they still import a lot of stuff.
This gives Iran a chance to do something the Russians wouldn’t even consider…talking. Meaning there are opportunities for everyone still on the table.
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.
Coming to you from the edge of Giants Playground in CO’s Lost Wilderness. Today we’re talking about Mexico’s energy sector.
As I was heading out on this trip, a fire broke out in Mexico’s Cantarell oil field, which has long been Mexico’s largest oil-producing asset. However, even before this fire, oil production from this field was already down to but 1/8 of peak production.
The Cantarell field was developed over a century ago and has accounted for most energy production in modern Mexican history. This meant Mexico never had to develop the infrastructure or workforce for a broad-based energy sector.
Even though Mexico has plenty of accessible oil fields, they can’t develop them due to a lack of skill and strict anti-investment laws. So energy production in Mexico is falling off, and there’s no reason to expect that to stop anytime soon. Within a few years, I expect Mexico to become a net energy importer (with most of that being refined product coming from the US).
But it’s not all bad…Mexican energy production might be slowing, but consumption is also rising. And thanks to NAFTA, Mexico is tied at the hip to the US. So even without a strong energy sector, Mexico’s future still looks bright. If government officials would stop lining their pockets and put that money where it should be, Mexico’s future could be even brighter.
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zeihan here. Coming to you from the edge of the Giants playground in Colorado’s Lost Wilderness. Today, we’re talking about energy in Mexico. Specifically, just before I left on this trip, there was a fire at the Cantarell offshore oil field, which has long been Mexico’s single largest oil producing asset. At its peak, it was producing about 2 million barrels a day. It’s down to less than an eighth of that now. And that was before the fire. Probably talking about about 150 right now as – 150,000 barrels per day that is – as they go through recovery operations.
Now, the Cantarelll was originally developed over a century ago, and it’s unique as formations go in that it’s a giant, basically a volcano with all the pressure building to the top. And so all you have to do is put a few holes in the cap rocket attack offshore and the pressure does the rest. You can see every well that taps the controls to per field from all of the other wells. And it has been the mainstay of Mexican energy production for the entirety of modern Mexico’s history. That means that we’ve got a problem here. The Mexicans never had to develop what you consider a broad based energy sector, and so they never had to really develop the intellectual capacity and the labor force to do broad scale oil production in multiple zones. And so there’s a lot of oil production in Mexico that by global standards would be very easy to develop. But the Mexicans absolutely lack the techniques and the skills and the capital that is necessary to do it themselves. In addition, they have the world’s most draconian anti investment laws. Makes it almost impossible for anyone outside the United States to play. Now, as a country that borders the United States, those laws were set up with the idea of keeping the Americans out because they see that as a geopolitical weakness. I can see that point from them, their point of view. But it does mean that Mexico has seen their energy production drop bit by bit by bit for decades, and there’s really no hope to expect it to reverse anytime soon, even though they do have some super fields, some of which are onshore, they just can’t develop them themselves.
Now, there’s another problem because of the general incompetence of the Mexican state oil company Pemex. Mexico also is one of the world’s largest importers of refined product, even though they’re still technically a exporter of crude. And every drop of that comes from the United States. It’s gotten so bad in recent years that Mexico, at least on paper, is actually using more American refined fuels than they generate for themselves. The current government, under AMLO, that’s Lopez Obrador, is his last name, is building a refinery that honestly, they probably don’t know how to operate. And even if they did, it’s kind of hard to have confidence that it’s going to work because they already have refineries that are doing horribly. So we’ve got a bit of a boondoggle where the money should have been spent on things like, I don’t know, skills development that is estén instead going on white elephant projects that are designed to make Mexico City sound good to itself.
Where this takes us is Mexico is in basically a not so slow motion collapse as an energy producer of any type. And within the next few years, Mexico will certainly be a net energy importer no matter how you’re going to run the math. Now, that’s not as bad as it sounds. It’s not just the production that is falling. It’s also consumption that is rising. Remember that courtesy of NAFTA, NAFTA to Mexico or the United States are bolted together at the hip. And. Whereas, the United States is really good at the high end labor stuff for things like semiconductors and tech design, it’s also really good at the low end stuff would use a shale revolution and turns it into things like precursor materials, plastics. Mexico’s good at everything in the middle, and it’s value add is arguably the best in the world. So it’s not that the Mexicans don’t have skills. They just don’t have energy skills in the state monopoly sector. So it’s perfectly capable for Mexico to have a successful future, even as it becomes more and more vulnerable to anything the United States does in energy. Now, with a country that is literally leaking mechanics and is excellent in middle manufacturing, should we get a change in approach in Mexico City? The idea that Mexico can get back into the energy game is not, it’s not a ridiculous idea. But the current government is definitely more interested in lining its own pockets and making ideological statements than solving any of the endemic, misaligned skills and corruption issues that have plagued the Mexican energy sector for the bulk of the last century.
So at a minimum, we need a change at the top before we can get a change in the energy sector. I don’t see that happening this year. We can talk about it next year or the year after.
Today’s video comes to you from the base of Saint Mary’s Glacier in Colorado.
With semiconductors top of mind for everyone, let’s dive into India’s tech industry and see if they can cement their place as a tech powerhouse. Despite government incentives for tech investment, big players like Foxconn are still pulling out of multi-billion dollar plans.
This isn’t a corruption or infrastructure problem. It’s just a case of brain drain – meaning the Indians in this talent pool pursue (more lucrative) opportunities outside of India once they’ve reached a certain skill level. Without a talent pool to choose from, everything else falls apart.
The second problem for the Indian tech space is capital. If you want to build a semiconductor fabrication plant, you better have some deep, deep pockets. Despite India’s size, its pockets just aren’t deep enough to be a world leader in tech.
Does that mean it’s all downhill for India? Absolutely not. The Indians have proven their dominance in several areas, and the collapse of the global order won’t impact them like most countries. India’s future is golden, and they will be a major world player…but their tech industry isn’t going to be why.
Prefer to read the transcript of the video?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.
Hey everyone. Peter Zeihan here coming to you from the foot of the Saint Mary’s Glacier in Colorado. Today we’re talking about Indians. Semiconductors and tech in general. In the last week, well, maybe two weeks by the time you see this, Foxconn, the big semiconductor company, pulled out of a joint venture with Vedanta in the state of Gujarat, which is Modi’s home state, Modi being the prime minister of India. Modi has put up $10 billion in any government, I guess has put up $10 billion in order to attract investors into the tech space. And the pull out of Foxconn is kind of par for the course and for good reason. There wasn’t a corruption issue here. There wasn’t even an infrastructure issue. It’s a talent issue.
India is probably the country in the world that suffers the greatest volume of brain drain. No one ever doubts that Indians are actually good at I.T. and technological work in general. The question is whether it’s the Indians that are in India that are good at it, opportunities to move abroad into states that have higher incomes, more stability, less religious persecution, blah, blah, blah, blah, blah. All that stuff has really pulled the talent out of India, not just for the last several months or years, but decades. And Indians who are in that sector tend to move to Southeast Asia, where they can be in upper management, as opposed to staying in India, where they’re working for less money in order to have a more middling position. And when you’re doing tech infrastructure and tech industrial plant, that talent is everything. And Vedanta, the partner, is a typical Indian conglomerate and is broadly useless in training up these people because of the same problem. As soon as there’s an opportunity, as soon as you get them the skill set, they move. It’s something I can relate to. Personally, I am from Iowa, which arguably has the best educational system in the country and yet people like me tend to leave in droves as soon as opportunities arise for them elsewhere. So that’s kind of general problem one.
The second problem is just as insurmountable. The amount of capital that is required to make a semiconductor fab facility is absolutely massive, even if it is only the 28 to 40 nanometers that this facility was supposed to build. Now 20 to 40, that’s like a very low end tablet or a midrange internal combustion vehicle or a really, really, really, really fancy something for the Internet of Things. So what I kind of consider bread and butter chips, but nothing too crazy. That said, these facilities still run in the billions of dollars, oftentimes topping $10 billion if you want to do them at scale. That’s a lot of cash for a system like India. Now, India is a very large economy because there’s a lot of people and it’s a big place. But even the largest of the Indian conglomerates tend to get dwarfed in this space by the middle players in the tech space internationally, just because the level of capital is so difficult, the effort, the skill set, the labor force, the command of details that it takes to do something like this requires a massive organization and a metric shit ton of capital, and that is just not something that the Indians are very good at.
Now, does this mean that I think that the whole idea of shining India no more. Yes, but let me explain that. So before all you Hindu nationalist writing about it, what an evil person I am. I think India’s future is golden. India’s the first stop out of the Persian Gulf whenever you have an energy crisis. Companies like Reliance Industries have shown that India can dominate heavy and mid industry whatever its chemicals are agriculture or industrial materials. India is an excellent place to get stuff done. It’s got a multifaceted labor force that’s going to make it dominant in manufacturing, especially as the Chinese have more and more problems. They showed with COVID that they could develop their own vaccine. That works, unlike the Chinese one, which is other. Well, India has a very bright future. They’d never globalized under the American led order. So as globalization breaks down, India is going to broadly be fine. But India is going to do things for India by India in Indian ways, and that’s a negative as much as it is a positive. Capital flight will continue to be an issue. Technological acumen will continue to be a problem in the workforce. So India’s perfectly capable of ruling its neighborhood and doing very well for itself, and yet not being a technological power. These are two very different things.
So bet on India? Yes. Bet on Indian semiconductors? Probably not. Alright. That’s it. See you guys later.
Apologies that this video is a few days behind schedule; finding a signal up here in the mountains is harder than the hiking I’m doing.
Unless you’ve been living under a rock (or stuck in the mountains), you’ve probably heard that the Kerch Strait Bridge was attacked again. While this attack took Russia’s vehicular transport capabilities offline, there’s much more at stake here.
This bridge is Russia’s most important logistical infrastructure in this war. It serves as the primary method Russia uses to get equipment, troops, and fuel into the front. They fancy this route in particular because it is out of artillery range, unlike the mainland alternatives.
Due to the vehicle bomb attack last year, the Kerch Strait Bridge was already operating at a limited capacity; vehicle transport was fine, but only one of two rail lines was operational. So with this new attack taking the vehicle spans offline, the singular light cargo rail line is the last man standing.
This is bad news for Russia, and if they can’t fix it quickly, it could evolve into a massive global embarrassment. Right now, the Ukrainians have a chance to make a huge breakthrough, but if they can’t make it happen soon…it may never happen. So be sure to keep a close eye on Ukraine.
Note: A single lane of road traffic reopened on the bridge yesterday, but the point remains that there won’t be anything happening at scale.
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.
There’s been a lot of movement in Turkey’s neck of the woods, so the Turks have had to change their stance on several issues. Given Turkey’s strategic positioning and importance, expect huge regional implications.
Turkey has said it will intervene with grain shipments regardless of what Russia does. Turkey won’t operate as Russia’s middleman anymore, meaning the Turks won’t be the weak link in NATO’s chain. Turkey gave Sweden the green light to join NATO. That’s not even scratching the surface of the issues Turkey has faced.
The Sea of Marmara and eastern Thrace are some of the world’s richest chunks of agricultural land. They also happen to be surrounded by regional trading routes. Turkey will be a significant regional player if it continues to hold these areas. But there are limits to the power this gives them…
While Turkey can project a great deal of power, it can’t be done everywhere. Choosing where to focus will be done through careful evaluation of the neighborhood; given the constant change in this region, it would be foolish not to expect Turkey’s strategy to adapt and evolve regularly.
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zeihan here. Coming to you from just below James Peak in the James Peak Wilderness. Today we’re going to talk Turkey. There’s been a lot of motion in that part of the world in the not too distant past, in the lead up to the NATO’s summit in Vilnius, during the summit and days after in the lead up to the NATO’s summit in Vilnius, during the summit and days after in the lead up to the NATO’s summit in Vilnius, during the summit and days after the Turks have changed their positions on a number of significant issues with huge regional implications. So just a quick rundown. The Turks have said that they’re going to intervene
in green shipments coming out of Ukraine. Now, there has been a deal that the Russians, Ukrainians and the U.N. have agreed to that allows Ukrainian grain to leave Ukrainian ports and not get shot at by Russian ships as long as the Russian ships can inspect the ships on the way in and on the way out to make sure that they’re not engaged in any sort of smuggling. The Russians have been backing away from that agreement and it’s basically done at this point. The Turks are no longer serving as a middleman for a lot of financial transfers and good transfers from the rest of the world to Russia.They have traditionally, I should say during the war to this point, they have been the weak spot in the NATO wall, if you will. And anything that the West used to sell to Russia or something that’s under sanctions would be sold to Turkey first and forwarded on to the Russians in violation of the sanctions, or at least to an end run. But they’re no longer doing that. In addition, the Turks gave the green light so that Sweden can join NATO. They’ve been blocking that now for over a year and all of a sudden it just evaporated. Now, there are a lot of people talking on the West about how the Turks are back in the club.Both of those statements are at best premature, but they’re probably just completely wrong and the reason is that the Turks are their own thing. Now, unlike the Western world or the Russian world, with a very clear geography that binds everyone together, the Turks have their own the Sea of Marmara region and Eastern Thrace are one of the richest chunks of agricultural land in the world. It’s got a navigable waterway system, and it straddles a number of regional trade routes. So the Turks are always going to matter. Whoever controls this area is always a going to be a significant regional power, iif not a global power. But this area is not endless. This is not the American Midwest, something that allows the United States to project power globally. This is a zone that is bracketed by a number of other regions that all matter. The Agean, the Caucasus, southern Ukraine. The Crimean Peninsula. The Balkans. Mesopotamia. The Levant. The Turks can project and do project power into all of these regions. But the Sea of Marmara region is not sufficiently powerful to give the Turks the ability to project in all of them. And so Turkish foreign strategic policy has always been about making choices, and that means they have to evaluate their neighborhood on a case by case basis, and those evaluations have to be updated from time to time. Well, if you go back to ten or 15 years ago, we had the start of the Syrian civil war, and the Turks were very upset with the entire Western coalition because of the war and what had led to it. The Turks didn’t want to see an independent Kurdistan, but the Americans relied upon the Kurds of northern Iraq in order to fight part of the war against Saddam Hussein
and with the Syrian civil war. You had, again, a Kurdish enclave, northeast Syria, that basically existed under western de facto sponsorship. There were also spats with the Israelis
to a degree backed by the United States and the Europeans. And so the Turks entered into a period where they found it easier to project power south into areas where the Americans
and the Europeans were not being very successful. In that sort of environment, There is a softness in relation with the Russians because the Russians were perceived at the time as being a bit on a roll. And so the Turks found it easier to accommodate the Russians
rather than to stand against them. Well, in the last year and a half, a whole lot of things have changed. Number one, the Americans are losing interest in Iraq and to a lesser degree, Syria, meaning that the de facto sponsorship of the Kurds has weakened quite a bit. The Russians have shown themselves to be not nearly as impressive as they look like they were. And with the Ukrainians doing better, better and better day by day by day. The Turks are wondering whether or not it’s really worth the effort, especially in the face of strong American opposition. During and leading up to the summit, the Biden administration and from the very top we’re talking here, the president and Secretary Yellen, the treasury secretary, made it very clear to the Turks what would happen to their banks if they continued serving as middlemen for the Russians. And since then, many of those banks are linked to the ruling party. That message was taken loud and clear. So the costs and benefits have changed. And all of a sudden the Turks are looking at this in a different light. So all of a sudden the South is not wide open and open to fissures that they can exploit. Suddenly, relations with the Israelis are a little bit better. Suddenly the Turks are evaluating the Russians from a different point of view and seeing them as perhaps the weak spot in their periphery these days. And so we’ve seen a lot of changes. And of course, with the summit, everyone was together and everyone had to have these conversations in real time. As regards to the United States negotiations about the transfer of F-16s to Turkey were off the table because there were concerns they were going to be used against the Kurdish minority or against countries that the United States really didn’t with the Turks going to war with. All of a sudden, that’s back on the docket. The Canadians had restarted negotiations on drone transfers, military technology to help make drones. Now, these are the same drones that the Turks have been transferring to Ukraine over the last year and a half. But the reason the Canadians had had an embargo on it is because two years ago, the Turks had transferred them
to the Azerbaijanis in their war with Armenia, all of a sudden everyone’s getting along again
and we’ll probably see some warming in relations between the Europeans and the Turks as well on a number of issues that deal with the visas, the migration, everything else. Anyway, the bottom line of all of this isn’t so much that Turkey has flipped. It’s that Turkey’s evaluation of its neighborhood changes regularly based on the strength, the power, the accession or the fall of every country in their region. And in the last two years, we’ve had a massive shift in the power balance and it would be strange to think that the Turks would not adjust accordingly. Now, winners and losers, it all depends upon who you are and what you care about. Obviously, the West broadly is pleased with the direction that the Turks are going right now, and there’s reason to believe that this has some legs. But if you’re on the other side of the equation, especially if you’re in interest of the Russians, all of a sudden this is really scary. So, for example, Armenia, Azerbaijan, the Azerbaijanis are ethnically Turkic. The Turks consider them their ethnic brothers and their friends. Armenians, on the other hand, are the complete opposite. And now that you’ve got countries like Canada saying, It might be okay for you to use your weapon systems in the
Armenia – Azerbaijan conflict. If you are Armenia in many ways this is the worst of all worlds, an Azerbaijan that is coming high off of the last war win. A turkey That’s probably going to start shipping weapons in mass again. And a Russia who has been your security guarantor
who all of a sudden is up to its eyeballs in a problem that it can’t solve in Ukraine. Things like this are going to be shaking out across the entire region as the larger geopolitics evolves. Okay. That’s it.
Russia announced on Monday that the Black Sea grain deal will not be extended. This initiative has enabled Ukraine to export agricultural products through Russia’s blockade of the Black Sea; however, Ukrainian exports are only at a fraction of pre-war levels.
The termination of the grain deal should sound alarm bells for everyone. As one of the world’s largest grain exporters, Ukraine has played a vital role in feeding the world’s population. With exports already limited, the end of this deal will likely spark widespread shortages, price increases, and famine.
So why did Russia terminate the deal? Reports from the Kremlin state that not all conditions outlined in the deal had been met, so the agreement ceased to be valid. Admittedly, I’m a bit surprised that the intermittent coordination between Kyiv and Moscow lasted this long…and that’s before we even look at the Kerch Strait Bridge being attacked (again) on the eve of this deal’s expiration date.
Speaking of the recent attack, we’ll have an update on the Kerch Strait Bridge as soon as I can upload the video from the mountain tops here in Colorado.
To give you a refresher on the Black Sea Grain Deal and some context on how we got here, the video below contains my thoughts from August 2022 and March and June of 2023.
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.
California has been one of the most successful states in the US, primarily because of things outside its control. Large-scale inward international immigration has enabled California to continue its population growth. The millennial desire for an urban coastal experience has brought a constant influx of people in their 20s and 30s, which has helped with taxes and a steady labor force. Now combine all these people with a rich capital environment and boom…Silicon Valley.
Ideas flow from the tech startups in the valley to factories in China, Japan, Taiwan, etc., making California the gateway to East Asia. And when those products get imported back to the States, their first stop is the Long Beach Port along CA’s coast. This is just another external element contributing to California’s solid economic model.
But now, all of the factors that have propped up California are flipping. Immigration is stalling. The capital situation is upside down. The cost of living is through the roof, so the labor force is moving to places like Texas. Rising tensions with Asia are causing reshoring and nearshoring. The only thing California can do now is reinvent itself.
Whether they can do it or not is a discussion for another video…
Prefer to read the transcript of the video?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.
Hey Everybody. Peter Zeihan here coming to you from my home in Colorado. I’m in the process of packing up for an extended backpacking trip, so I am going to be mostly out of pocket for the remainder of the summer. We’ve recorded a couple dozen videos already and I’ll still be recording things while I’m out, but I’m probably not going to be able to comment on events of the moment because I will be out of reach and able to access news indefinitely, unable to upload a video on a regular basis.
We still aim to man the newsletter to at least the tune of three or four per week, however, so plenty of content you may have noticed. The world’s a mess right now. Plenty of things to talk about, even if they’re not about events that have boiled up in the last 24 hours. And so I want to give you a kind of an idea of what some of those videos might look like.
And so this one is on California. Now, California has been one of the most successful economic cases in the United States for the last four decades, for a mix of reasons that are largely beyond the control of California. So the first one is immigration. Natural population growth, even among migrants in California has been negative for some time, and it has only been with large scale, inward international migration that Camilla, for you, has continued to grow in terms of population, want to the millennials.
One of the things that we saw when the millennials came of age in the 2000 and the 20 tens is they wanted an urban coastal experience. And California, L.A., San Francisco were some of the big beneficiaries of that. So you’ve got millennials going from the middle of the country to the coasts. And L.A. thrived in that sort of environment.
It was still not enough to overcome an internal population decline. But having this constant influx of people in their twenties and then later in their thirties really helped with tax rates, really helped with the labor force. You put these two things together and then you apply the third factor, which is capital availability, and you get a very different economic model.
One of the things to remember about capital availability is it’s determined by the number of mature workers you may have used to be the rest of the population. Basically, when you’re your twenties and your thirties, you’re borrowing a lot to fund consumption for college, for raising kids, for buying homes and whatnot. That capital comes from people who are in their late forties to early sixties where the kids have gone away and they’re at the height of their earning experience, but their expenses have gone down.
So that has been the baby boomers since roughly 1990. And it’s generated a capital environment that’s been wonderful. This has been great for economic development, for a lot of regions, a lot of states, a lot of countries. But in California, when it came together with those millennials that were influencing, we got the tech sector because what is technology except imagining things that don’t yet exist?
And in order to make the future happen, you need two things. Number one, you need a huge number of people in their twenties, in their thirties, to do the imagining and to do the design, to make the prototype, to figure out how to operationalize it. But that entire process from idea to operationalization, that generates no income. And so you have to have a lot of cheap capital to pay those people and to pay for the work.
Well, that has been the environment in California for the last 25 years. And so we get Silicon Valley. And then fourth and finally, California has been the gateway to the United States from East Asia in two ways. Number one, California, with the tech sector, with all of that imagining, has designed new processes that could be applied to new manufacturing in new, new locations, whether that’s Japan, Korea, China, Vietnam or the rest.
And so part and parcel of the American de-industrialisation process under globalization has been made possible by the ideas generated in Silicon Valley. And then California makes money on the other side of things because as these products are coming back into the United States, a lot of them go through the port of Long Beach. So California is the first landfall.
Well, folks, all four of these trends that have made California. California have now flipped. The American political system, both left and right, has turned anti-immigration. People forget that the most anti-immigrant group in the country is first and second generation Mexican-Americans who see themselves of having crossed the right way. And everyone else needs to stay on the other side of the border in California.
Populations of Hispanics coming in from the South has been the single largest sort that has now turned flat to negative. In fact, overall migration from the south across the border to the north has been flat to negative for 17 years. It’s just it’s only now hit California. Number two, the capital situation has changed dramatically. The baby boomers are no longer mature workers.
They’re majority retired. So capital costs have gone up by about a factor of five in the last six months. They’re probably going to go up by a similar amount in absolute terms over the course of the next year and a half, which means Silicon Valley in its current form has been totally screwed by the lost capital and now the lack of people.
The millennials are no longer in the age group where they’re seeking those formative experiences. They may be late to the party six years later than most generations to this point so far. But they are doing all of the normal things now getting married, having kids, buying homes, and none of them want to do it in California. And so they’re moving out of California, back to the states that they’re from or to places that have brighter economic horizons for example, Texas.
And that’s why we see Texas grabbing more seats in the Electoral College of California’s extent, because the millennials are no longer benefiting California on a net basis. They’re moving away. And then finally, there’s Asia. The Chinese system is arguably in terminal decline. There are demographics of beyond atrocious higher capital costs globally make it difficult for companies to justify fresh investment outside of their home.
Domiciles. Trade tensions are forcing near shoring and reshoring, and the Chinese themselves are now entered into kind of a narcissistic political system that is ossified and incapable of making long term decisions or plans. That is weakening the case for exports from the East Asian sphere to the United States. California is the loser for all four of these trends.
And just as all four of these trends owed nothing in the original development in the seventies, eighties and nineties to anything done in Sacramento. Same with end. So California is going to have to reinvent itself. It’s going to have to come up with a new economic model that doesn’t require cheap capital and ample labor and international connections and high IT development.
It’s going to have to do something new, whether it can. Well, that’s a question for a different video.
Hello from Bison Peak in Colorado. By the time you see this, the knot should be tied on Sweden joining NATO. There’s still a little arm-twisting that will go on behind the scenes, but most of the heavy lifting is done (and Turkey got the bribe they wanted, sooo everyone’s happy).
From a strategic POV, this is a huge win for NATO. Sweden is, bar none, the most capable country to join the alliance in the last 50 years, not just another security consumer mooching off everyone else. In addition, Sweden’s capabilities are also hyperfocused on one goal in particular…keeping Russia in its place.
Sure, the Swedes have been relatively neutral in the past, but they’re still armed to the teeth with shiny new toys. And from the perspective of the Americans, getting Sweden on board was the best possible outcome.
For the alliance as a whole, Sweden is more than just another name on the list; it’s a country that could reshape NATO’s entire outlook on the war in Ukraine.
Prefer to read the transcript of the video?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.
Hello from Bison Peak in Colorado. I’m at about 12,000 feet right now. Probably won’t be staying here for the night anyway. By the time you get this message, everything should be pretty official. It looks like the Swedes are going to be joining Naito at the Vilnius summit. The Turks, after making a couple of outlandish demands, they basically indicated that they were looking for a bribe.
Apparently behind the scenes got the bribe that they were after and have given a preliminary approval. Now, this is not done until it’s done. You still have to have the Turkish parliament sign off on ratification. And after that there is one more obstacle with the Hungarian parliament. Hungarian Prime Minister Viktor Orban has actually been acting as a advanced force for the Russians in Nieto in the EU.
So there are some complications could could arise. But the heavy lifting has been done now and that’s just to require a little bit of light arm twisting to probably make it happen. I have no idea what the bribe is that the Turks demanded and received, but everyone seems pretty pathetic. Things like this happen in Europe all the time anyway.
So on to the strategic issue. First and foremost, Sweden is the most capable country to join NATO’s since its formation back in the 1950s 1952. I believe you had your initial batch of Atlantic countries, which included, say, Britain and the Netherlands and Canada, the United States, obviously, those were very capable countries. And then in 1955, West Germany was admitted almost as a subject state.
The Germans were not allowed or issued opinions on strategic issues, and so they basically just served as a bulwark within the to the allied system until we had reunification in the 1980s. And since then, the countries that have joined, whether it’s during the seventies and the eighties, with countries like Greece or Spain or Portugal or in the post-Cold War era, such as Latvia or Romania or Poland, they have definitely fall into the category of what they like to call security consumers, countries that don’t have militaries that are right size to their needs and or have extreme geographic vulnerability to potential hostiles.
Sweden is the first country of note that has does not achieve that pattern. Sweden has been a major industrial military power over a half a millennia. And the reason we don’t think of Sweden as a major player is because for the last 300 years it’s been neutral in a conflict called the Great Northern War. Three centuries ago, Sweden was the preeminent military power of the entirety of Europe and almost ended up ruling it all.
And it took a coalition of everybody else, including the Russians and the people that we now think of as the Germans, to break Swedish power in Northern Europe. Since then, they have enforced a degree of neutrality on themselves, literally going back centuries. But they are not a normal, neutral country. They are armed to the freakin teeth. They are a maritime power.
But unlike the United States that has maritime interests in every ocean basin, theirs is entirely focused on the Baltic Sea. They have arguably the best amphibious military capability outside of the United States and the United Kingdom. And again, it’s very, very focused on a very specific geography. And that means that with the Swedes within the NATO’s firmly, you get that sort of defense competence with a cooperation that is very, very focused on one thing and one thing only.
And that is Russia. The Swedes have been quietly advocating for positions that will box in the Russians and that will encourage independence and development in places like the Baltic republics ever since 1992. Now they’re not doing it as a neutral. Now they’re doing it hand in glove, and it’s only going to be a matter of time, I would say, weeks to months, not years to decades before Sweden emerges as one of the leading voices within the alliance itself on pretty much everything that matters as regards the Ukraine war.
That means defense cooperation, that means military procurement, that means pushing for democracy in all of the fringe states. That means hemming in the Russians. That means taking a relatively forthright position vis a vis the Chinese. It is basically you’re looking from an American point of view, is it the best country in the world? Just joined the network. And unlike countries like, say, France or Turkey or even the United Kingdom that have their fingers in a lot of pots.
And so there’s always conflicting interests in the Swedish military. Every day, you wake up, you prepare for one thing, the war with the Russians. And there is a war with the Russians right now. All right. That’s it for me, everyone. Take care.
Note: This video was recorded back in June, but it helps paint a picture of what is going down at the NATO summit.
As the NATO summit in Vilnius wraps up, we’re left with a result that was more or less expected. Ukraine won’t be getting called up to the big leagues anytime soon, but it’s not all bad news for Zelensky…
Now you’re probably thinking that the main reason NATO was formed was to keep Russia (formerly the Soviet Union) at bay. While that may be true, NATO has no interest in getting into a direct conflict with Russia.
On top of that, Ukraine doesn’t quite cross off all the requirements on the list. So even if everything went perfectly at the summit, the accession process still requires unanimity…so don’t hold your breath.
Despite NATO leaving Ukraine out of the party, that doesn’t mean they won’t try to tip the scales in Ukraine’s favor; many NATO countries have already offered aid, supplies and support and that won’t be stopping anytime soon. A new wave of aid will be headed Ukraine’s way, so at least Zelensky wasn’t left completely high and dry.
While missiles, artillery, rockets, and an air force are all part of a combined arms warfare system, there’s simply no substitute for ground forces. The Russians are finding that even Ukraine, a country they dwarf militarily and economically, can have a shot at the title if they have the numbers and the right equipment.
Prefer to read the transcript of the video?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.
Hey everybody. Peter Zeihan here coming to you from the Monterey Airport. Thunderstorms in Denver have delayed my departure, which means I’m stuck here for an extra 4 hours and I’m going to get to know the bartender very well. But I figured I might as well record some thoughts since I had the time on the topic of waiting in the wings for other people to make a damn decision.
But it was a good time to talk about NATO membership and the case of Ukraine. And now the NATO alliance is built by a series of countries that have unanimously agreed to look out for one another’s security. And that is something that has never happened in a multilateral environment before. Most security agreements that exist on the planet today and throughout human history have been at most bilateral pacts where countries are willing to back away. Its only article five of the NATO alliance that actually legally binds countries to look out for one another. Obviously, that’s the theory, and practice can be somewhat different. But the issue is this has always been the best security guarantee among countries at any point in human history. And Ukraine wants in. And there was a great joke going on last year when the Ukrainians were doing a great job against the Russians. Like, you know, that Nito is seeking membership in Ukraine rather the other way around. The conversation has again started up about what might be necessary for the Ukrainians to actually join NATO.
Let me start with the punch line. Not this year, not next year, not the year after. Not the year after that. For Ukraine to join NATO. One of the core issues, it has to be that you don’t have a border dispute with any of your neighbors and that eliminates Ukraine or right off the bat, even if the war were to end tomorrow, the Russians are certainly going to have some quibbles with the Ukrainians when it comes to where the international border is. And until that is resolved, one way or another, this is completely off the table. That was true for the Italians back in the immediate post-world War two environment. That has been true for the Croatians in the post Yugoslav war scenarios, and that is true for the Ukrainians today. There’s the second issue that while NATO’s was formed to keep the Russians at arm’s length, NATO’s is not like giddy about the possibility of getting into a slugfest with a nuclear power. And so as long, again, as we have these hostilities going on between Ukraine and Russia, it’s not that NATO countries are going to put their finger on the scale and try to adjust the outcome. That’s not what I’m saying at all. But they don’t want to get directly involved. And an Article five guarantee would guarantee that NATO’s immediately goes into a state of general war. So if you’re Ukraine, I’m afraid you have to take what you can get and do what you can do on your own. NATO is there. NATO’s helping, but the Article five guarantee that is years ahead. And even if Russia were to be defeated completely tomorrow and its fangs were moved so it could never launch another war again. Only then could NATO’s begin the process of its 30 odd members actually going through the accession process.
And that all by itself is another five years. Alright. I’ll see you in, I don’t know, like 20 minutes or something.
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With weapon systems moving toward hypersonics, what’s the point of holding geographic positions anymore? Theoretically, this works…at the push of a button, you can deliver a precise payload across huge distances…but the Russians have shown us this isn’t quite reality.
As the Russians descended into demographic decay, plugging these geographic access points NOW was their only way to prevent a future invasion. Sure, hypersonics are an excellent deterrent, but they’re expensive, can’t carry that large of a payload, and defense systems like the Patriot have proven rather effective.
Oh, and the Russians can’t even make the semiconductors necessary for more advanced targeting and strikes…so unless their enemies never moved, they’re probably looking at a surplus of really expensive paperweights.
While missiles, artillery, rockets, and an air force are all part of a combined arms warfare system, there’s simply no substitute for ground forces. The Russians are finding that even Ukraine, a country they dwarf militarily and economically, can have a shot at the title if they have the numbers and the right equipment.
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.
