Peter Zeihan, Author at Zeihan on Geopolitics

Why The US Needs Mexico: Replacing Chinese Manufacturing

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

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

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

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

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

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

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

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

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

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

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

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

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

The End of Germany as a Modern Economy

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

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

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

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

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

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

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

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

And then there’s you.

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

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

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

You can pre-order now at the link below!

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

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

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

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

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

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

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

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

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

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

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

And then there’s you.

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

Deglobalization: The US Navy’s Withdrawal as Global Protector

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

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

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

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

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

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

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

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

And then there’s you.

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

Hamas Attacks Israel and Netanyahu Declares War

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

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

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

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

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

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

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

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

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

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

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

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

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

Russia Might Lose Its Influence in Moldova and Transnistria

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

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

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

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

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

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

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

And then there’s you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Russian Oil Thrives Despite European Sanctions

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

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

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

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

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

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

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

And then there’s you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

European Sanctions Cause Russian Natural Gas Collapse

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

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

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

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

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

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

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

And then there’s you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The European Union: Will It Adapt or Die?

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

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

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

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

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

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

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

And then there’s you.

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

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

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

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

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

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

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

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

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

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

US Discovers Huge Lithium Deposit: What It Means…

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

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

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

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

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

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

And then there’s you.

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

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

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

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

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

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

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

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

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

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

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

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

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Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

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