The Future of Ohio: Manufacturing Growth and Political Shifts

If you’ve ever spoken to an Ohio State fan, you know that they’ll tell you how amazing they are without you asking. Unfortunately for all of us, I’ll be adding to their boasting list today because there’s plenty of success and growth in store for Ohio.

After years of stunted economic growth caused by the Jones Act destroying its manufacturing base, Ohio is ready to turn the page like Bob Seger’s hometown. As Ohio’s reindustrialization process kicks off, we’ll see plenty more projects like Intel’s semiconductor facility pop up throughout the state.

Ohio’s political stance has long aligned with national sentiment, and we’re now seeing the state shift toward populism. Between a political shift and Ohio’s manufacturing resurgence, it’s a safe bet that this state (and all those Buckeye fans) will continue to play a critical role in the country’s future.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from not Idaho and not Iowa, but Ohio. Iowa’s got corn and pigs and soy and insurance and Idaho has potatoes and wheat and the Snake River, Ohio excels at things like manufacture. Or at least they did. Ohio is one of the states has been really hurt by something called the Jones Act, which is something that bars cargo ships from transporting cargo between American ports unless the vessel is 100% American owned.

Captains built in 75% crude. It’s something we did in 1920 as part of the Interstate Commerce Act that absolutely destroyed the ability to move things on the water. And since Ohio is bordered to the south by the Ohio River, which is one of the world’s great waterways, and then the north by the Great Lakes, which are one of the world’s great waterways, Ohio is arguably the State of the Union that has suffered the most.

It also took a big hit because of globalization. Ohio is also the state that has arguably suffered the most from globalization because it had the economic geography that was excellent in terms of lots of flat land that was easy to build infrastructure on and a lot of legacy infrastructure from its industrial period. But with globalization and the United States basically elevated places that didn’t have very good geography as part of our plan to defeat the Soviet Union.

And that meant that places with subpar geography thinking here, Brazil or India or China were able to get a huge leg up. And that gutted a lot of the manufacturing base here. Now, Ohio is still a significant manufacturing player, just not as rich as there used to be. And part of the decline in the use of the waterways and because of globalization is part of the reason why Margo and Donald Trump have done so well in this state and why the state’s politics has taken such a hard turn to the populist right that is in the process of shifting maybe not the political stuff, but all the economic trends.

Globalization means that we need to rebuild a lot of industrial plants in other parts of the world, and all of a sudden geography matters again, and Ohio’s looking pretty good. Ohio is one of the healthier demographers in the advanced world, suggesting that it has a pretty robust potential workforce. And the state and the local governments here in the Columbus area have been very aggressive at going out, including the investment with the single biggest achievement they have been the intel facility that is just down the road here.

Intel is an American semiconductor manufacturer who was the world leader until about six years ago when they made a bad bet. They bet that this new thing called extreme ultraviolet lithography was just not ready for prime time. And they designed their chips using an older type of technology that’s much more expensive to operate and a lot more finicky.

But turns out that EUV actually was ready and the company that bid on or BET on it was TSMC, which is the semiconductor manufacturer out of Taiwan. So today, all the world’s best chips are basically made in Taiwan. And while Intel has designed some of the chips that TSMC makes, they don’t really mean facts for very many of their own.

Certainly not here in the United States. This new facility that’s under construction in Ohio seeks to change that. Specifically, they’ve got these two models called the 20 A and the eight A if works by 2025, they’ll be produced in this facility and they are sub five, even sub three nanometer, which will almost overnight elevate them to producing some of the world’s most advanced chips.

So far, $20 billion have been sunk into this facility, 2 billion of which is local and federal subsidies. And if Intel has its way over the course of the next decade, that number, 20 billion, will increase to a hundred billion. And that’s just for fabrication. That doesn’t include any follow on businesses that are likely to pop up from network effects, whether that is assembly or testing or light manufacturing to take these chips and put them in things that we use every day.

So the potential here for the Ohio region to grow is explosive, and that even assumes that we don’t do anything with the Jones Act. And if we do that, all the old manufacturer, it is likely to come back as well because you just can’t beat the local geography here for internal transport. So will that have political connotations? Probably delay and that’ll get really colorful, but we’re going to cover that in a different video.

I’m just outside Columbus today and we’re going to talk politics a little bit. We’ll use a link in this mail to give you an idea of where I generally think U.S. politics are going. But the general issue here today is we’re at an inflection point. Ohioans are proud that they’ve been voting for the winning side in almost every presidential election for over a century, with all the events in 2020 breaking their pattern.

And the reason both for it happening and the pattern break is Donald Trump. So before 2020, Ohio was the middle of everything middle class, middle income, middle and manufacturing, middle and services. It was very representative of the United States as a whole. So it was very easy to track the political winds based on what the Ohioans were thinking, but they did suffer quite a bit from globalization and something like the Jones Act, as you saw in the previous video.

And so there’s a lot of resentment in the state. And since Donald Trump basically ran on resentment and people who felt they had been left behind, Ohio switched and now is considered a generally populist conservative, socially area. However, if you remember some of my other work, you know that the political factions that make up the country are moving around basically the the American political system is made up of two very large parties because the electoral system forces that into form.

Basically, you have to get one more vote than the other guy in order to win the seat. And so therefore, you don’t want to alienate any potential voters. And in that sort of environment, you two huge parties that are made up of independent factions that shift around based on changes in economics, sociology, politics, demographics and in the last 30 years, we’ve had a lot of things go down.

We’ve had the rise of the baby boomers and now the retirement. We’ve had hyper globalization and now it’s end. We’ve had the rise of social media and the implosion of information transfer. And through all of that, the two parties held together until very recently. And in the Trump era, that relationship is breaking down. Now, Trump did a lot of things for a lot of reasons to a lot of people, but the ones that matter for this discussion is he elevated a faction known as the populist to power, and they are now the single largest voting bloc in the United States.

They’re very powerful here in Ohio. But in doing so, he drove away a number of more traditional factions. He would call them RINOs that include the entirety of the business community. But he was able to court other groups that are more socially conservative, people like the Catholics and the Hispanics over to his side. And as part of that process, there’s now a tug of war between the Democrats and the Republicans over the future of organized labor, where an organized labor is only become more and more powerful over the next decade because we need to build out the industrial plant.

And most of those jobs are blue collar, and we’re an environment of labor shortage. So we’re going to see more and more strikes. What this means is the business community and the labor community, which have traditionally been the two most powerful voting blocs in Ohio, are suddenly Sweden voters. So everyone got used to Ohio being the man in the middle and ultimately representing what we were all thinking.

We’re still there. It’s just that the two factions that matter the most are at the moment not part of the political process. So what we’re going to be seeing over the next few years between this massive re industrialization and buildout and this political shift is Ohio is still going to be the man in the middle. And where they come down is going to determine the shape of our political parties moving forward.

And we’re seeing those arguments across the Ohio political landscape right now with everyone engaged in everybody angry and everyone hopeful, all at the same time. So stay tuned. Watch Columbus. And they’re going to give us our first good taste of what our post-Trump party structure is going to be.

Hollywood on Strike: The Future of Writers and Actors

The entertainment industry is changing, and the writers and actors are making sure their voices are heard. With all the technological changes hitting Hollywood, strikes like these shouldn’t come as a surprise.

As we’ve seen with the fall of Blockbuster or the demise of RedBox, this industry is constantly evolving. The old revenue models must be reimagined and updated as we move into the streaming service era.

But what does that mean for the screenwriters who can no longer determine viewership metrics and get paid royalties? Or for the background actors sacrificing their digital rights so CGI copies of them can be made and used forever?

This strike is an inevitable step in Hollywood’s evolution, and these questions will change the industry forever.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from Seattle. It is late October and this is one of those that can store. So you probably won’t see it till November. But whatever the topic I want to discuss today is strikes in Hollywood of all places. We’ve got two separate strikes going on, one of which has at least temporarily been resolved, one involving the writers, which for the moment is behind us.

They’ve settled and one involving the actors. And the issue is, honestly, one of technology with the advent of a sufficient processing power to allow streaming services over Internet connections. We now have a number of major providers such as Hulu or Apple or Amazon or Netflix that are not just providing legacy shows, but new shows and transmitting them to their end users and consumers to a completely different network that doesn’t use the normal TV radio approach, VHF, things like that.

Well, this means different models used to be that all the income came pretty much from advertising, and now there are different ways to do it with, say, a per month subscription charge. You’re going to see more and more and more in this going forward. So we have to split it in those two factions. So first, the labor that deals with the screenwriting and then the labor that deals with the acting.

So screenwriters, this is going to be an ongoing issue largely because of the revenue play. When screenwriters used to produce things, whether it was for television or movies before, they’d work directly with the movie house, which would generate their income from either advertising or ticket sales. Now that you’ve got streaming, the question is what constitutes readership or viewership?

Because it’s not the same model. And is it something that’s a once and done? Is it something that gives them income over time? Because unless you’re an A-lister where you can demand whatever terms you want, everyone else has to kind of suffer through and for the writing. The rise of air is providing more and more support for people who are particularly creative and leaving everyone else by the curb.

But as problematic as that is, from the point of view of the writers, it’s a disaster for the actors. We already have technology that allows us to fill in the background with either a complete greenscreen generated system or even to a certain degree, extras. And I think the the two movies that have demonstrated how this technology is coming along, the best one is Ant-Man two, the one where we had some characters who in today’s world are in their sixties.

But we had a couple of scenes where they were shown when they were in their twenties, in their thirties, and you can use the technology to make people look younger. We’ve also had World War Z, which is a hot mess, great book, horrible movie. But when you had the swarms of zombies, you know, those weren’t real zombies. They were all CGI generated.

And we could see how they looked very, very real. Well, you play both of those movies forward because those are both five years old now. And we’re getting to the point where you can film an extra from a number of different angles and insert them into the background just fine. And so part of the reason that the actors were striking is because they were being asked to sign documents to basically surrender their future digital rights.

So you’re an extra in this movie, you’re filmed, and then they reserve the right to recreate you royalty free in the future. And obviously, if you’re a low ranking actor or an extra an aspiring actor that pretty much end your career. It won’t really hurt the A-listers, but pretty much everybody else would be left in the cold and very soon we’re going to be able to take footage from people who are dead and use A.I. Technologies to put them into leading roles if we want to.

And so the the balance, the ability for you to profit off your skill set in your presence all of a sudden isn’t there anymore? And it’s a question of who generates the revenue at the moment, the law suggests it’s the people who control the A.I. driven software. It actually designed the movies in the first place. So from a writers point of view, this is going to get a little bit stickier as we move forward, but it’s going to be more of an evolutionary process.

But for the actors, you’re actually looking at the evisceration of an entire class of people, and that will take with it the way movies are produced. Because if you can just have a handful of A-listers and be listers who are doing kind of a number of the main roles and have the star power to draw people and everything else is computer generated and it looks as real as the real thing.

Then we’re in a fundamentally different model for everything and we’re probably going to be in that environment by the end of this decade. So one way or another, Tinseltown is going to be very, very, very different, and it’s probably going to have a lot fewer people.

Russia Backs Away From Nuclear Test Ban Treaty

If you were hoping to start your week off with some cheery news – it might be best to skip this video. Russia has stepped away from the Comprehensive Test Ban Treaty, so we have plenty to discuss today.

My initial concerns aren’t about a return to nuclear testing but rather a much darker scenario – that control of Russia’s nuclear arsenal may be compromised. We’ve already seen failures and cracks throughout the Russian military, but have those vulnerabilities made it to the nuclear program?

If Putin hits the shiny red button and nukes take off, we know how that ends..but what happens if Putin hits that button and nothing happens? I’d prefer to keep that can of worms shut, but we’re nearing a reality where that might not be possible.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from the California coast. And it is the 2nd of November. And the big news today is the Russians have withdrawn from something called the comprehensive test ban Treaty, which aims to ban all tests in all forms of all sorts, all types of nuclear weapons. It’s a little bit different from most of the arms control agreements that exist in the world.

Most of the effective ones are bilateral treaties between the United States and the Soviets, plus Russians that have dealt with nuclear ceilings and the numbers of weapons and their stationing and their dispositions, and sometimes even down to conventional weapons. And most of this proliferation excuse me, most of this none proliferation regime is in danger right now because the Russians have stopped enforcing or have simply pulled out of treaty after treaty, prompting the Americans to follow suit.

The city. But never entered into force, however, because it was a multilateral effort, unlike all of the Cold War treaties where Moscow and Washington sat down across a table from another to hash out the details, sometimes with London or Beijing or Paris in tow. The city beat was always a multilateral effort that involved over 100 countries. And so when it was first adopted by the U.N. General Assembly back in the nineties, the hope was that we had entered into a fundamentally new era where everyone would agree that nuclear war is perhaps not something we should aim for because it came from the UNGA, because it wasn’t negotiated primarily by the nuclear powers.

The nuclear powers, for the most part, have not abided by it. It’s not that there’s been a huge amount of testing, but all the other powers have decided to. What’s the most polite way to say this? Pretend the treaty doesn’t exist. So countries like the United States and China have signed it. Same with India and Pakistan. But they never ratified it.

The Brits and the French have signed and ratified, but with a couple of exemptions in there. And now the Russians have basically joined the Americans and the Chinese and the Indians and the Israelis and everything, and basically saying that we’re not going to buy this by this at all. Now, it doesn’t mean that a return to nuclear testing is imminent.

In fact, there’s an open question of whether or not the Russians can even do a quality nuclear test any more longer. They’ve had a number of instances in the last three years where they’ve tested some of their ballistic missiles and they’ve discovered that a lot of them just don’t work anymore. And remember that if you’re going to test something that the world can see, you’re going to b, b that piece of hardware because you don’t want to look like a fool if it doesn’t work.

And the Russians on multiple occasions have looked like fools when it doesn’t work. So the real risk here isn’t so much that the Russians are going to test. The risk is whether or not their command and control over the nuclear arsenal is actually intact, because we have seen that the Defense Minister Shoigu has basically, even in the height of the war in Ukraine, continued to steal from the military hand over fist.

And you hope you hope that he’s not stealing a particularly interesting components from, say, the nuclear program, but the guy really has no ethics and no sense of patriotism. So you really can’t rule that out. The nightmare scenario for me remains is what happens if Putin hits the big candy like red button and nothing happens. And we now have seen on multiple occasions that American intelligence has penetrated so far into Moscow that we’re basically not even knowing what Putin has for lunch before he even wakes up in the morning.

And in that sort of a mire, what do you do when somebody tries to kill half a billion people but fails?

How To Read “The End of the World Is Just the Beginning” in Your Language

NEW translations are available now!

Have you wanted to read The End of the World Is Just the Beginning but haven’t been able to find it in your native language? Well, you’re in luck! We’ve just added a couple of new translations to the list, and plenty more are on the way…

FOR OUR SPANISH READERS

Shop spanish version

FOR OUR PORTUGUESE READERS

Shop PORTUGUESE version

FOR OUR READERS IN TAIWAN

Shop Taiwanese version

FOR OUR READERS IN SOUTH KOREA

Shop South Korean version

FOR OUR SLOVAK READERS

Shop Slovak version

FOR OUR THAI READERS

Shop Thai version

Looking for a different language?

AVAILABLE IN 10+ TRANSLATIONS

Click the link below to see what languages are available and where you can purchase them…

Get your new book here

FOR OUR POLISH READERS

Here’s a sneak peek at the cover of The End of the World Is Just the Beginning being released in November of 2023

Click for more info

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

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

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

And then there’s you.

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

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

Why EVs Aren’t The GreenTech Panacea

When the major auto manufacturers start changing their EV plans, it’s probably a sign something’s not quite right. For all those who think they’re better than everyone else because they drive a Tesla, this video is for you…

Most people see electric vehicles and think it’s good, but remember to read that fine print. Given an increased reliance on Chinese manufacturing and issues with the energy mix and materials, those “planet-haters” driving internal combustion vehicles likely have a smaller carbon footprint than EV drivers.

Transitioning the world’s fleet of cars to EVs is just plain impractical unless we uncover a bottomless supply of materials and invent a new battery chemistry. Until that happens, we’ll continue to see EV sales fall and auto manufacturers lean away from EV plans.

In an ideal world, we would prioritize more practical green technologies instead of pissing away capital and resources on Elon’s new Model XYZ123.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado, where we’ve just had our first big winter storm and probably get a little bit more on top of the nine inches we got last night. Anyhow, the news of the moment is that a lot of major auto manufacturers are scaling down their plans to make the electric vehicles. Ford and GM have both suspended or canceled plans to build a couple of new facilities for Battery TV assembly.

No changes to their internal combustion engine vehicle plans. Tesla has indicated a significant drawdown in their global production capacity. And in fact, they’re saying they’re going to suspend and maybe even cancel the plans for the Gigafactory that they were going to be building in Mexico, although that’s very TBD. There are a lot of issues in play here. But let’s start with told yourselves, this is something that was never going to work.

From an environmental point of view, most EVs are best questionable. The data that says they’re slam dunk successes assumes that you’re building the EVs with a relatively clean energy mix and the recharging it with 100% green energy. And that happens exactly nowhere in the United States. The cleanest state is California. They are still 50% fossil fuel energy. And they lie about their statistics because they say they don’t know what the mix is for the power that they’re importing from the rest of the country, which is something like a third of their total demand.

And the stuff that comes from the Phenix area in Arizona to the L.A. Basin, which is something like ten gigawatts a day, which is more than most small countries, is 100% fossil fuel. But California claims to not know. More importantly, on the fabrication side, because there are so many more exotic materials and because energy process to make those materials is so much more energy intensive, all of this work is done in China and in most places it’s done with either soft coal or lignite.

So you’re talking about an order of magnitude more carbon generated just to make these things in the first place compared to an ice sheet. And that means that these things don’t break even on the carbon scale within a year. For most, you’re talking about approaching ten years or more. And that assumes you buy the Chinese data, which is right.

Okay. So that’s kind of number one. Number two is materials. These vehicles require an order of magnitude more stuff, more copper, more molybdenum, more more lithium. Obviously, graphite and the energy content required to put those in a process is where most of the energy cost comes from. But the more important thing is, is if we’re going to convert the world’s vehicle fleets to these things, there’s just not enough of the stuff on the planet.

I’m not saying that we can’t build a time, but that time is measured. In decades, humanity has never doubled the production of any industrial material at any time in history. Within a ten year period, if it was something we were using before and supposedly we need, you know, ten times as much nickel and all the rest, so the stuff just isn’t there.

So even if this was an environmental panacea, which it’s not, we would never be able to do it in a very short timeframe. You’re talking the century plus most likely third cost your typical even if you want to compare it to something that’s an internal combustion, it really depends upon the model. The cheapest ones are going to still cost about 10,000 more than their equivalent.

The more expensive ones can be upwards of 70,000. And so this is not a vehicle whose for most people and that’s before you consider little things like range anxiety and I’ve rented I think if it’s real is that there just aren’t enough charging stations. So in order to build out the electrical system that we need, in order to have a nationwide EV program, we need to basically increase low end the amount of electricity generation and throughput of our system by about half.

Now, there’s only been one year since the 1960s where the United States is ever increased the amount of electricity generated by more than 3%. And that was the year we came back from COVID. And so we didn’t have to install any new infrastructure for that. We would have to generate the sort of build up that we did back in the fifties when the country was electrifying for the first time.

And that’s going to require an order of magnitude more, almost two orders of make well, let’s call it 20 times more equipment when it comes to things like transformers and cables than we have done in 75 years. And if we started building out the facilities necessary to build those things today, they will not be ready at scale within four years.

And then you can begin the build out in four years and it’ll still take another decade. So no, no, no. But finally, I mean, the EV manufacturers really don’t pay any attention to any of this. The real issue is that sales are down for these reasons and more people just aren’t interested in EVs at the current time. They’re not as reliable.

They don’t have the range. People are a little nervous about the technology in general, and perhaps most importantly, if you’ve got a new style of EV that comes out, these are new technologies. Not a lot of people want to play today’s prices for yesterday’s EV. And so what we’re seeing is cars building up on the lots, not internal combustion cars.

Those lots are empty but EVs are building up on the lots and people just aren’t buying them without absolutely massive discounts. And the discounts are now to the point that the whole industry is no longer profitable, even with the subsidies that came in from the Inflation Reduction Act. Ultimately, if people don’t want them, these are not going to be sold.

And so we have now converted 1% of the American vehicle fleet to EVs, and it looks like we may be very close to the peak, but for me, a green who can do math, this couldn’t come soon enough. We have limited capital, we have limited resources, we have limited material inputs and we have limited labor. And we really need to focus on the technologies of the green transition that work.

And this isn’t one of them.

The Ukraine War and MedShare Donation Match

We’ve been talking about the Ukraine War for quite a while now, but I still get questions asking why. So, we’re looking at the historical significance of this region and what this conflict means for all of us.

Before we dive in, I’m pleased to announce our donation matching drive for the month of November. We will be matching up to $40,000 in donations this month to our chosen charity partner, MedShare International.

MedShare is a non-profit humanitarian organization committed to delivering life-saving medical supplies to areas in need around the world. We have been particularly proud to support their mission of supplying medical supplies and equipment to care for the victims of the ongoing conflict in Ukraine. Your donations help deliver surgical kits, life-saving equipment and other urgently needed medical supplies – and in November, your impact will be doubled through our matching donation.

Please click the link below to donate, and all of us at Zeihan on Geopolitics, thank you for your generosity.

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

Russia’s invasion of Ukraine is not an isolated incident; the Russians have been carrying out similar attacks to secure their borders for decades now. So if Russia isn’t stopped in Ukraine, they will continue until all of those critical access points are taken.

As long as Russia is committing war crimes, targeting food and agriculture infrastructure, and attacking the power grid, we must support Ukraine. So, I urge you once again to support MedShare and donate at the link below.

Reviving Water Transport in the United States

The US is blessed with one of the most prolific water networks in the world, yet it operates at sub-optimal levels. You’ve all heard my thoughts on the Jones Act, so you can probably guess where the blame falls once again.

Something will have to change as the US reshores its industry and attempts to build out its manufacturing footprint. Thankfully, reviving water transport in the US is a low-hanging fruit. All it requires is some amendments to the Jones Act and its regulations on waterborne commerce.

If we can manage that, we’ll all enjoy some nice economic growth thanks to reduced product transport costs and a boost to US manufacturing.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here. Coming to you from Milwaukee, where I’m doing a little street hiking along the Kinnickinnic river, which is, you know, say that five times fast. This used to be one of the great industrial heartlands of the United States. Big into steel. Big into heavy manufacturing. And the reason was because of what’s right here next to me.

Moving things on water is about 1/12. The cost of moving them by land and courtesy of in the Air and the nearby Lake Michigan. Milwaukee, just like Chicago, just like Oshkosh and Green Bay, were part of a broader transport network that included the entirety of the Upper Midwest, of the United States and the New England States and the Mid Atlantic states.

Basically from here in Chicago. You can take your local rivers and canals out to the Great Lakes, go through the Great Lakes until you get to Erie, and then you’ve got two choices. You can either take the Mohawk River, Erie Canal and Hudson to New York direct, or you can go the long way, which goes through Quebec and Ontario in order to reach the Atlantic Ocean.

That’ll loop back around. From New York, you go south through the barrier islands system all the way to Miami from Miami. You can go through the barrier island systems all the way to Matamoros or you can hit New Orleans and go up the Mississippi River and go all the way back up to Chicago via canal that links into the Illinois River.

It’s the great circle of North America and it has long been one of the great manufacturing zones of the world until about 1920. And then in 1920 as part of it, discretionary, protectionist system, the United States put in place a law called the Jones Act, which says that any cargo transported on any vessel that goes between any two American ports has to be on a vessel that is American owned, captain, crewed and built.

And over the course of the next century, we saw cargo transport on America’s waterways drop by 97, 98%, something like that. Anyway, so we basically taken what has been the world’s most beneficial old natural geographic feature from an economic point of view and crushed it into irrelevance. Now that we are entering an environment where the United States wants to double the size of its industrial plant in the aftermath or the soon to be aftermath of the European and especially Chinese failures, we need to start thinking a little bit differently, and that means we need to start looking for things that are very, very, very low hanging fruit.

In this case, that means getting the waterways back up and running again. Because when you think about the sort of manufacturing that the United States traditionally is not good at things like electronics, it’s largely because you have different price points for different types of work. The person who does injection molding is not the same as the person who does the coding for the wires and not the same who does the software work.

You need multiple skill sets in different places, and if you can drop the transport costs for getting those intermediate products among those places, well then you’re looking at something pretty special. And we actually have that built into the American heartland itself just requires changing one law, not abolishing change. Part of the Jones Act, the Interstate Commerce Act, if you will, is about regulating commerce among the states on the water.

And some of that we still need we clearly need a national regulator. But the rest of it really, honestly can go away. And if you think that this is a nationalist issue, that, you know, we should have this all in American hands, consider that we don’t do that for truck and we don’t do that for rail and we don’t do that for air only for water, only for the thing where we have a massive geographic advantage.

So if you’re looking for a quick and easy way to stimulate economic growth in Wisconsin, in Illinois, in New York, anywhere in New England, anywhere in the South, anywhere in the Midwest, this is the low hanging fruit. All we have to do is get out of our own way.

Venezuelan Oil Sector: Biden Lifts Sanctions

The Biden administration has suspended some sanctions on the Venezuelan oil industry thanks to Maduro’s (ever-so) slight easing of political restrictions. While this may pump some air back into the lungs of the oil sector, it will take a lot more to get Venezuela back to significant levels.

The history of Venezuelan crude is about as thick and complex as its dino juice. Back in the day, the US built infrastructure to accommodate the viscous crude coming from the south. Once that crude became unreliable (in more than one way), the US closed the door on those imports.

Now that some sanctions have been lifted, we’ll likely see some more steady flows of Venezuelan crude into the system…but it will take much more foreign investment and reestablishing of trust and reliability to revive the Venezuelan oil sector.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from Seattle, Washington. It is the 20th of October, although you’re probably not going to see this one for a while because there’s a lot going on. We have a bit of a stack in front of us. Today, the Biden administration in Washington announced the suspension of some of the sanctions that are in place on the Venezuelan oil industry, which will allow a number of companies in the United States to increase their investments legally, as well as a number of refineries in the United States to increase their imports of crude from the country. 

Things have been yo-yoing, but in general going down over the course of the last decade. Venezuela today is exporting significantly less than a million barrels a day. In fact, there have been some times where it’s almost dropped to zero, and American imports of that crude have also been dropping proportionately. And in fact, at some point, there have been several months where we didn’t import any at all.

I don’t think it’s ever gotten above a half a million the last two years anyway. It’s not a lot anymore for an economy that uses or processes over 20 million barrels a day. Okay. What’s going on? Okay. Number one, the Venezuelan system is run by a guy by the name of Nicolas Maduro, who is a former bus driver with no executive experience until he took over from Hugo Chavez, who was a kleptomaniac who basically stole the country into the ground.

And so under Chavez and especially under Maduro, the mismanagement has been extreme. And they and their allies have basically stolen everything that wasn’t nailed down, including the lot of stuff that was nailed down. A lot of this stuff was really dumb. So like, you know, you’d have a a power plant, so they’d steal the generators. I mean, it’s like the degree to which we had a kleptocracy here is pretty extreme.

This is not socialism. Let’s be clear. Socialism is where the government plays a directing role in the government. This was just flat out theft, a very different sort of system. We should be afraid of this sort of system. Anyway, what Maduro has done, he’s loosened up some of his restrictions when it comes to political pluralism in the country and basically allowing the opposition to participate in a series of elections.

And the United States, as sanctions are related to those elections. So by basically being a little bit less of a prick, the United States has decided to lessen some of the sanctions. We’ve got three things going on here. First of all, the one that’s closest to home and probably the least significant is the Biden administration’s official mantra is that high gasoline prices in the United States are largely a product of decisions that are made in the various OPEC producing countries rather than his own policies at home.

Which is a little weird because the United States is the world’s largest producer of crude and arguably now the second largest exporter in gross terms. So, I mean, the solution to our gasoline issue is to build up refining capacity in the United States. So we’re not dependent on crudes that come from abroad. Which brings us to the second issue, which is the crude that comes from abroad.

American refiners knew, knew, and they were right back in the seventies and eighties that the global supply of crude, the chemistry of that crude was changing. And we had used up most of the conventional crude that was light and sweet, which is another way of saying that it has very few impurities, whether it’s sulfur and mercury. And that light sweet stuff tends to be very, very easy to refine.

So what we did is we invested hundreds of billions of dollars in retooling our entire industrial base in the refining sector so that we could take heavy, sour crudes which were thick, maybe even solid at room temperature, and may have been like three, even 4% sulfur by weight and process that into finished fuels. The idea is we can use our technical acumen and our better capital position to take the world’s crappiest crudes and refine them into the world’s highest value add products.

And so the margin buy low, sell high. You know how that works has worked very, very well for them over the last 30 years. And Venezuela is one of the sources of the heaviest crude in the world. And there are very, very, very few refineries in the world that can process this stuff except for the United States. And so when Chavez basically led his country on to a anti-American jihad and Maduro moved R0 excuse me, stuck with the ideology, American refiners became less and less interested because the Venezuelans were simultaneously driving their own industry to the ground.

So the crude quality became very erratic and the delivery volumes became erratic, and then delivery reliability became very erratic. So even though they liked the chemistry of the crude, it became too wily for them to depend upon it. So they’ve shifted primarily to other sources. With Canadian oil sands now being the preferred input. This raises the possibility in the midterm that we might be seeing some more Venezuelan crude come in because honestly, there aren’t a lot of other places for it to go.

There are a couple of refineries in India, in China that can take it in limited volumes. But then you have to ship it either around the Americas or through Panama and recombine into a larger tanker on the other side of Panama and send it across the Pacific. It’s literally more than halfway around the world, if you want to do by supertanker, because you have to go all the way around the southern tip of South America and then cross the Pacific the long way in order to get it to a destination.

So the economics of that are questionable at best. And the only reason shipments have gone that direction is because the Venezuelans have taken huge hits. So what usually happens now is Indian or Chinese or Russian traders buy the crude in Venezuela and then ships ship to the north and to the United States and pocket the difference, leaving it to the Venezuelan government to hold the bag.

It’s a delightful little trade that is only possible because of really stupid ideologies, but it happens. Okay. The third the future of the industry. Venezuelan crude is thick, it’s viscous. And some of the stuff in Orinoco, you have to basically inject steam that several hundred degrees into the formation just to make it liquid in the first place. That means it has very high development costs, basically for every barrel of production you’re going to get, you’re going to have to sink 4 to $8000 into the well, giving up one of the world’s higher development costs.

It’s not clear that the foreigners are going to be that interested in investing when you’ve got political issues, you’ve got technical issues, you’ve got infrastructure issues. And that’s even before you consider that the United States could always slap sanctions on again. So a small to moderate increase out of Venezuela, I think makes a certain amount of sense. But I would be really shocked if over the next year that amounts to more than maybe 300,000 barrels a day.

I mean, that’s that’s not nothing. And considering what’s starting to bubble up in the Middle East with Iran, that might be really necessary. But if there is going to be a game changer in the industry, it’s not going to be Venezuela. That makes the difference. Now, I understand there’s a lot of people that thinking it might and because it has in the past, if you remember back to the oil shocks of 73 to 79, it was Venezuela that broke with OPEC and turned open the taps and expanded their production footprint in order to break the Arab oil embargo.

And that had very long lasting implications for the market and for geopolitics. But you had a very different political system in Venezuela at the time. Back then, it was the most advanced of the Latin American countries with a very technical government, with high education standards and pretty good infrastructure. Now, after 25 years of slide, it’s at the bottom of most of those measures, and it just can’t do hardly any of the work itself.

It has to come from abroad. And the Venezuelans are going have to rebuild a degree of trust and reliability before the investment will flow in in the billions. And that is exactly what it would require. Okay. I’m.

Dollarizing Argentina: Run-Off Elections Between Massa and Milei

Today, we’re turning our attention to Argentina’s upcoming run-off presidential election between current economic minister Sergio Massa and libertarian candidate Javier Milei. I could do a whole series on the effects of Peronism, but this time, I’ll be focusing on Milei’s proposed dollarization program.

Argentina has defaulted on its national debt nine times, and the government can manipulate events (and people) by hitting the peso printing button. Switching to the American dollar would institute some financial responsibility, but is it feasible?

Milei would need to come up with a metric-shit-ton of US dollars for this to work, but we’re still ignoring the impact on banking stability and the risk of hyperinflation. I’m not quite sold on the idea just yet, but let’s see who gets put in office before we go further down that rabbit hole.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from Boston Harbor. The news over the weekend was that in Argentina, we had our first round presidential contest and the two finalists who will compete in the first weekend of November are a guy from the ruling party, the protest. He’s the economy minister and a guy from the libertarian field, which is Javier Malay.

And apologies if I got that name right. If you win, I’ll learn to pronounce your name. Just ask Birdie Mohammed off of Turkmenistan. Okay, let’s see what to say. Malays. Big thing is that he wants to do away with the Argentinean peso and institute a dollarization program. Three big things for us. Number one, this is more than just some financial chicanery.

This has really real implications for the Argentineans, as well as everybody else in the neighborhood, because the financial strategies of the protests are a little wackadoo. Peronism is a very nonstandard, political and economic ideology, and it combines things the worst aspects of Venezuelan socialism with corporate Nazi ism. So basically under a cult of personality on top of that.

So if you can imagine AOC of the squad and of the American Congress, you know, one of those really, really, really left wing weirdos having a lovechild with Donald Trump. I mean, it would be an ugly, ugly, ugly, hideous child. But that’s basically what Peronism is. And among other things, it’s heavily unionized. But the government represents the unions, and it believes that the government should be able to print currency and any volume to pay for everything so long as you’re a political ally.

Needless to say, this has gotten Argentina into a lot of financial trouble over the last century. They’ve defaulted on their debt, I think nine times, and it should be a very successful country based on their demographics and the geography. But policy keeps getting in the way. So if you’re an American who thinks that you can do no wrong.

Bear in mind that if you wake up every day for decades, just try to wreck everything you can eventually become Argentina. So there is a limit to what we can get away with now with that kind of in your back pocket. Let’s talk about the impacts here. If dollarization worked, it would destroy the ability of the proneness or really any government in Argentina to use their central bank and their currency in order to manipulate events.

And that is honestly the idea here that Melaye has is this if we can wreck their ability to do what they’ve been doing these last 90 years, then that entire political ideology will die on the vine because they’ll actually have to then balance the books and do things like have petitions, responsibility. And in that sort of environment, people who can do math are going to do better than people who cannot do math.

So this is there’s more at stake here than simply having a balanced budget is about eliminating what has been the dominant ideology of the country has been very, very damaging for generations. But to number two, it’s not easy. The first step to erasing the economy is to remove all the pesos from circulation. And that means that the Argentine government under Melaye would have to go out and get a lot of U.S. dollars to buy back all the currency.

And the government is completely broke. One of the reasons why the Peruvians are printing currency like mad. So the first thing they would have to do is come up with billions and billions and billions of dollars in order to buy up all the old currency. Now, doing that is beyond the government’s capacity right now, unless they do a mass devaluation and if they devalue the peso by at least, say, three quarters.

So make it worth at most 20 to 25% of what it’s worth. Now. Then the number of dollars that you need would be significantly less. So in order to stop the budget largesse and the hyper inflation that comes from that, the first step would be to trigger hyperinflation. Needless to say, that would have not just economic but political outcomes.

So not something that could be done easily, lightly or without consequences. Which brings us to the third thing, whether or not it would even work. The whole idea of dollarization in the handful of countries that have done it is they believe that their institutions are not sufficiently responsible to be granted independent monetary policy and control over printing press.

So by doing away with that completely, basically ending the central bank, you then have a system where everyone is beholden to a much more responsible monetary regimen that of the United States. You know, you can cue the laughter for those of you who are gold bugs out there. The issue with this is that there’s more things that the central bank does and just regulate the currency.

There are also the lender of last resort. They’re also the regulator for the banking sector. And if you have a central bank that does not have the capacity to step in and help the banks in a system that is as fiscally wobbly as Argentina, you’re also going to have a bank run, a bank collapse and nothing behind it to stabilize it.

So for this plan to work, not only do a lot of things have to go right that are beyond Argentina’s control, but Argentina would have to enter through a series of banking and fiscal reforms in a matter of days that most countries take a generation to do. There’s a reason why dollarization, as a rule, is not something that states do, and it’s certainly not a quick fix.

It requires years of reforms, and it’s not clear that the political and economic system in Argentina has that sort of durability or attention to detail. So honestly, dollarization, as a rule, reminds me a lot of Boston’s participation in the Revolutionary War or modern sports. They hit hard right out of the gate. They pick a lot of fights, and then they largely sit out for the rest of the season.

Armenia – Azerbaijan War: Turkey and Iran at Risk

After Azerbaijan’s lightning assault on Nagorno-Karabakh caused ethnic Armenians to flee the region, there’s potential that Azerbaijan will continue to invade Armenia proper.

The motivation for this second phase of the invasion would be to control a land corridor connecting different parts of Azerbaijan. Thanks to Stalin’s chaotic cartography, this region’s power dynamics are just a tad messy. Now mix in some complex geography and bippity-boppity-boo; welcome to the Caucasus.

There is a more significant issue playing out behind the scenes, though. If Azerbaijan is successful in this second invasion, it would place Turkish and Iranian powers within spitting distance of one another. And I can assure you that no one wants to see how that plays out.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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

Transcript

Hey everybody. Peter Zeihan here coming to you from an exciting hotel room. The news I wanted to talk today is about something that has to do with caucuses again. For those of you who remember a few weeks ago, the Azerbaijanis launched a fair bit of a lightning assault on a place called Nagorno-Karabakh, which is an area that was populated with ethnic Armenians.

And the war was over in less than three days. And pretty much all of the Armenians who were living there have since absconded and left for Armenia proper, where there’s now going to be, it looks like a second phase of that conflict where the Azerbaijanis are likely to invade Armenia proper. What’s going on here is that the Azerbaijanis are looking for a land corridor to connect to parts of the country in order to explain the significance of that and have to do a little bit of screen sharing here to Google Zoom, which was Earth, which is one of my favorite programs ever.

Anyway, here we are looking at where the former Soviet space in the north meets with the Middle East in the South and the Caucasus is this mountainous land bridge in between. And let’s just go through a little bit more, okay. So the northern caucuses or the greater caucuses is this line here very rugged, very steep, home to a lot of ethnic minorities like you would expect in any number of mountainous zone.

This is an area where the Russians have always had a problem. The Chechens, if you remember them, live right here. And then you’ve got these two little enclaves in the north, Abkhazia here in South Ossetia here, where the Russians have sent in troops and basically occupy them and make them de facto Russian territory. And some people would say that the Russians are basically trying to do this in Ukraine as well.

But it’s I think it’s important to understand that for the Russians, it’s all about controlling the access point. So that’s Ukraine, where that’s the worst that they’ve watched here in Abkhazia and South Ossetia. The Russians know that their population is dying out. So they believe that they came forward, positioned troops in the access points that they will have an easier time defending themselves.

So there is a coastal road here in Kasia. There’s a path that links the northeast Russian province, which is part of the Russian Federation with the South Ossetian province, which is part of Georgia. And they’re trying to plug those access points. So you’re going to see a lot of this, whether it’s in Central Asia or the western periphery that is near Europe.

And that actually is kind of relevant to the discussion about what’s going on in this region and where media. Now, here we’ve got the former Soviet Republic of Azerbaijan, the capital here is Baku. It’s got about half the population, the entire place, the former Soviet Republic of Europe, an independent Armenia, is right here. You have the Turks over here and the Iranians to the south know Egypt a little bit more.

And Yerevan, capital of Armenia, Mt. Ararat, is a zone that supposedly Noah’s Ark crashed into as the floods receded. It is the national symbol of Yerevan, of the Armenians, and it is not in their territory, it’s in Turkey, but they can see it. A dominates the skyline from the capital. Nagorno-Karabakh is this mountainous zone over here. This is the area that the Azerbaijanis recently liberated from Armenian control and the caravan, which is right here, is that chunk of Azerbaijani territory that the Azerbaijani would like to physically connect to the country.

And if all of this seems like just cartographic spaghetti, it is. And you can think Joe Stalin for that, because at the time that the Soviet Union was gaining control of this area in the twenties, he went through and modified all the borders to make sure that if any of these areas ever got independence again, that it would immediately be at one another’s throats.

And he wielded his pen with extreme levels of skill so that the people a little bit closer. The dominant issue in this area actually isn’t the Russians. The Russians had a defense agreement with the Armenians until very recently, and I guess technically it’s still in force. But the Russians have moved most of their troops out, moved them to Ukraine because they need every pair of hands and every gun.

And yet and that’s kind of held this area frozen. But once you get into the lesser Caucasus, remember greater Caucasus, which are the North less your Caucasus or this kind of broad zone in the south, the mountains are nearly as onerous. It’s still mountainous, it’s still difficult. But there are a lot more corridors that access this area. And in this zone, it’s traditionally not been the Russians that have been the major power.

It’s been either the Turks or the Iranians. Well, let’s see here on that. The local powers have always had those Turks and Armenians is accessing one another’s land. The Turks and the Iranians have always had a bit of a problem rubbing up against each other. There are a number of mountain passes and access points and corridors that allow access, but they’re all seasonal and limited, with one exception.

And that is this right here. This is the Cross River, and this is the best point of access between Anatolia or Turkey or the Turks in Persia or Iran in the Arabians. The thing is, Stalin, again, it’s split. So in the north, the northeast section of that corridor is controlled by Armenian. It’s home to the Armenian, the capital of Europe in the northwest chunk is controlled by the Turks and is home to Mount Ararat.

The Southeast Choke is Nikitin and it is controlled by the Azerbaijani and in the southwest Choke is Iranian, right here in Iranian Azerbaijan. So goes the thinking. The Iranians are really happy with the current state of affairs because if this corridor is split into four different chunks, then no one can really use it to pour Turkish power down into northern region.

However, what’s going on with the Azerbaijanis is they want a corridor that crosses this zone of southern Armenia and directly links Azerbaijan to Nikitin. And then there’s a road and rail system here that goes into Turkey proper. If that happens and you have Turkish power controlling over half of the corridor and the Turks can directly reinforce Baku by road and by rail.

And from the Iranian point of view, this would be a disaster, a disaster from Armenian point of view as well. Not only would they lose control of some of their southern territories, but then they would be completely locked off and surrounded by Turkish power. And if you’re familiar with your history, the Armenian genocide carried out by the Turks in World War One was pretty brutal.

And so the Armenians are looking for anything, anything to kind of grab on to a degree of independence. They need a security gear, a security guarantor. And if they can’t have the Russians and the Iranians or the all the other player in town in Azerbaijan getting control of southern Armenia would basically end that forever. And then it would just be a matter of time before Armenia itself becomes a state repeating of the Turkish system, rather than the Iranian or the Russian system, something that the Armenians would rather avoid.

But for the Iranians, this is also a national issue, because this corridor, if you continue following the south, eventually reaches the city of Tabriz, which is the capital of the northern region. Excuse me, if Iran and northern Iran is primarily populated by ethnic Azeris who are basically the same ethnic stock as the folks who run as a region.

So they have always been the group in Iran that the Iranians have been most nervous about exercising a degree of independence, that the Turks get de facto control of this area, all of a sudden that is very much in play. So we have a situation here where maybe the Russian are only being stage left because of the situation in Ukraine.

They can only focus on the things that are core to them. And since they control Abkhazia and South Ossetia, they control the access points to the Northern Caucuses, and they’re kind of declaring that good enough. But with the Turks now rising, we’re going to have a second level of contest in this region between the Turks and the Iranians, with the Azerbaijanis being a very, very, very willing ally.

So what we’re going to see over the next several weeks or months, something that the United States is concerned about, is this point becoming in play, because if that becomes in play, then this whole or all of a sudden becomes in play. And we need to start thinking about what it means to have Turkish troops in the cave in hard on another part of the Iranian border.

That’s where it is. Okay. I think that’s everything. You guys take care.