If You Think Mexico’s New Government Is a Problem, Wait Until You See Its Solutions

Mexican President Claudia Sheinbaum raising hand behind a podium

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Mexico’s newly elected president, Claudia Sheinbaum, is settling into her new digs. Despite her qualifications and experience, will her leadership actually look all that different from former President Andrés Manuel López Obrador (AMLO)?

While AMLO may have been popular, his policies and ideological governance will mark him as one Mexico’s worst leaders. Since Sheinbaum and AMLO are closely aligned, I’m not so sure we should expect anything different from the new president.

To make matters worse, the judiciary system has been weakened thanks to AMLO’s reform merging the National Guard into the military. So, Mexico’s political system is – let’s call it – fluttering.

We also need to touch on the geographic and economic challenges facing Mexico. AMLO attempted to redistribute wealth to help benefit the poor, but the country’s situation hasn’t improved…especially with the rise of the violent cartels. Sheinbaum has her work cut out for her, but let’s wait and see if she decides to follow AMLO’s policies or lead a bit more pragmatically.

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

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

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

And then there’s you.

Our newsletters and videologues are free and we will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey everyone. Peter Zeihan here. Coming to you from a very damp North Carolina. Today we’re going to talk about changes going on in Mexico. Claudia Shane Bond is the president elect. She took office on October 1st, which is Tuesday. Tuesday? Yeah. You’re seeing this Wednesday? She is of the people who have run for office in North America in recent years, probably the most qualified.

Unlike, Justin Trudeau. She wasn’t a kindergarten teacher. She actually was a mayor of Mexico City. No less. And unlike Trump, she wasn’t a marketer. She had a real boy job. And unlike, folks like Harris or Biden or Obama, she wasn’t a senator. She was actually responsible for people and getting the trains to run on time. So in terms of expertise and managerial skills, she’s clearly the top of the heap.

The question is whether or not she’s going to show any independence. The outgoing president’s, Andres Manuel Lopez Obrador is going to go down in history as one of the worst leaders in Mexico, despite the fact that he’s leaving on relatively a popular point. He was an ideologue who wanted to punish most of the other factions that are responsible for policymaking in Mexico.

And in doing so, he dismantled a lot of the country’s institutions. In fact, in his last couple months in office, he basically gutted the judiciary. So if you’re an American, imagine that your most popular hated presidential candidate wins, and then he or she goes through and changes the way the judges are appointed. So instead of going through Congress, it just goes through party caucuses like that person’s party caucuses.

Some version of that is basically what Mexico has now, which is going to make it very difficult for the country to recover and have any sort of judicial independence in any sort of multi-party system. The question now, of course, is whether Shane is going to be part of the problem or part of the solution. And considering that she considers herself Lopez Obrador’s protege, I can’t say that the prognosis is particularly good here.

We also have another reform that has just been pushed through, the lower house of Congress just approved the folding in of the National Guard into the military writ large. It’s already passed, the upper house or is it the upper house? Just passed it. Anyway, it’s already passed both houses of Congress and now goes to the states where they need 17 states to ratify it.

And considering that Lopez Obrador’s and Shane Bonds party controls 20 of the state legislatures, that should be a pretty straightforward process that then comes back to Mexico City and the president formally stamps, it becomes law. Now, why does that matter? Well, the National Guard was set up a few years ago because the military was so horrendously corrupt and Mexico City needed a new semi military operation that could fight the cartels.

Now it’s just getting folded back in in order to guarantee central control by the president. So we’re looking at the tools of violence of the state being consolidated under one party, and we’re looking at the judiciary being consolidated into one party and using elections. That one party has already dominated most of the political conversations of the country.

Now, this was done without a coup. This was done through the ballot box. One of the downsides of the Mexican economic model is it’s grossly in equal. And because the country’s so difficult to manage, because it’s so difficult to build, it’s a mountainous issue. Most of the country is mountainous in the north. It’s desert, mountainous in the south, it’s jungle mountainous, and in the middle it’s just mountainous.

And so you get a lot of oligarchs who basically take control of their local cities. And this is how it’s been since independence back in the 1800s. And so Lopez Obrador, to his credit, sees this to the degree as a problem. And he wants to wrest power away from these local oligarchs, or could be used, if you want to use the Spanish term and give power to the people.

And so instead of having the most economically unequal state in the world, which is how Mexico was when he came in, he’s been redistributing, resources from the states to the federal government. Then the federal government has been giving them primarily to the poor. And that has one of the reasons, primary reason why Lopez Obrador, despite, wrecking the country, is leaving on a high point, because you have a lot of people who’ve never read and would speak for them.

The challenge moving forward is we’re now looking at a situation where the security situation in Mexico is going to degrade massively. We’ve got a civil war going on among the Sinaloa cartel, which used to be the most powerful one in the country, and we have now. Security in the country is the responsibility of the military, which is corrupt.

And for the last five years, Lopez Obrador has refused to move against the drug cartels. So they’ve basically taken over many, many aspects of everyday life, including in the Mexico City Central region as well. So Shane Bond has her work cut out for her, and we will find out whether this relatively pragmatic governor is going to be able to ditch the ideology and rule like a normal person, or whether she’s going to make it even worse.

China, Navy, Nukes, Tech, and Politics

Photo of a submarine emerging out of the water

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Our focus turns toward China today, specifically at the technological struggles facing the Chinese military and manufacturing industry. And yes, we’re starting with the nuclear submarine that sank in port…

The Chinese have been looking to make some upgrades to their technological capabilities across the board, but they’re not gaining much traction. As evidenced by the nuclear submarine that sank near Wuhan, China’s nuclear deterrent system is one area that could use some love. Unlike the US nuclear triad that provides redundancy and security, the Chinese really only have ICBMs to bail them out of nuclear troubles.

While the sinking of that sub is embarrassing, it’s far from the only area that the Chinese could use some help in. China is a manufacturing hub for low-tech stuff, including less advanced semiconductors. However, China has struggled to make much (if any) progress on the chip front, because they lack the expertise and access to operate the necessary machinery.

And things aren’t likely to improve anytime soon. US-China trade tensions are on the rise, and the coming US election isn’t likely to change that…regardless of who wins. With sanctions, tariffs and technological controls limiting China’s capabilities, it will be difficult for them to achieve technological parity with the US.

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 free and we will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Salt Creek Beach, just outside of L.A., in California. Today, we’re going to talk about beacon policy, technology, China, and the U.S. elections. Yeah, that’s going to get me in trouble pretty much everywhere.

Okay, so the new news that leaked out over the last few days is that back sometime in the spring, the Chinese new nuclear attack submarine sank at a dock via Wuhan. It was a first-in-class ship, and first-in-class ships are notoriously buggy, but they usually don’t just, you know, sink. They had to fish it out of the river with a bunch of floating cranes.

Now, I don’t want to suggest that submarine engineering is easy, especially nuclear submarine engineering, but I gotta say, like, the definition of a submarine is something that doesn’t sink unless there’s a torpedo in it. So getting the basics wrong on this sort of thing is beyond embarrassing. And if you can kind of put this in context, imagine if in San Diego, a nuclear-powered vessel sank in harbor and the government tried to hide it from everyone. That’s basically what’s gone down here.

So, very, very sloppy engineering work, a sloppy propaganda campaign. But from a strategic point of view, I think it’s really important to understand what the Chinese do and do not have when it comes to nuclear deterrence. They have silos—ICBMs that would launch mostly from western China. They don’t have a functional sub arc, and they certainly don’t have a bomber arc.

So we’re talking about one type of deterrence, not the three that the United States has for redundancy. Now, whether that’s good, bad, or indifferent depends on what you care about, but the whole reason the United States maintains the triad is so that no matter what flavor of attack hits the United States, it always has at least one, probably two, backup plans. That sort of deterrence means countries aren’t going to nuke the United States, even before you consider things like missile defense. China is nowhere close to that, not in number of warheads, and certainly not in delivery methods.

This brings us to the general topological issues that the Chinese are trying to crack here. China has a lot of ambitions, and they say they’re planning on going into this, that, or the other thing. But desire is not the same as performance. So, consider, for example, semiconductors. The Chinese have something called deep ultraviolet technology that they’re pretty decent at, and chips that are in the 80-90 nanometer range or dumber, they can make themselves. But when the chips get more advanced—and that’s like what you put into most automotives, for example—they need not just foreign equipment, but foreign staff and foreign software.

Most of the chips being made today—things that are, as a rule, 20 nanometers and smaller—don’t use that technology unless you want to be wildly inefficient with it. Instead, they use something called extreme ultraviolet lithography, which is a technology basically completely controlled by the Dutch company ASML. Even if the Chinese were able to get their hands on some of those more advanced machines, it’s not like they could operate them. There are staffing issues, experience issues, and software issues. Plus, the Dutch have built their machines with remote kill switches, so they have to be involved in the process.

I don’t mean to say this to insult the Chinese. I mean to say this to insult everyone. No country controls enough of the semiconductor supply chain for anything that’s mid- or high-tier chips to do it themselves. You’re talking about a constellation of thousands of companies and dozens of countries, and it really does take a village. So, the Chinese desire to do all of this in-house? It’s just not going to happen, or at least not without a significant shift in how this technology works. It’s more likely to get more complicated in the future rather than less, which means we pretty much know what’s going to happen with U.S. politics and trade relations, because the parameters of what can and cannot be done with the technology are already known.

So, regardless of who wins the American presidential election—and we all have our own ideas on that—we’re looking at a situation where, on the Trump side, we know that tariffs are the plan. But the Biden administration has never repealed any of the tariffs that Trump put into place. On the Harris side of the equation, we know that technological controls are the preferred tool. But I can’t imagine a President Trump ever repealing those.

So, we’re looking at a tightening technological noose as the United States does something that China just can’t call on other countries for. Because, even at the depths of the Trump administration, when relations with allies were at their lowest, you still had countries that needed the United States for this, that, or the other thing. And so the United States was able to do technological sanctions on things like lithography that basically stalled the entire Chinese technological push.

They were able to use older technology like that deep ultraviolet I mentioned in order to brute force through some relatively low-quality chips that hit a couple of technological markers but were huge energy hogs, took up a lot more space, and generated a lot more heat. Not the kind of thing you’re going to use to reset the technological tables, especially when you start talking about some of the newer things ASML is trying to work on, like high numerical aperture, getting down to a one-nanometer chip. The Chinese don’t even have a finger in that world yet.

It takes everyone, played out across the economy, and there’s only so much the Chinese can do. They just don’t do the high-end stuff at all. They do the low end; they do the assembly. And that’s a multi-trillion-dollar operation—that’s not something to be scoffed at. But that’s not the same thing as parity, nuclear or otherwise.

Russia: Threats, Deterrence, and the War of Numbers

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So far in the Ukraine War, the Russians have threatened Finland and Sweden with nuclear annihilation for joining NATO, Germany with nuclear annihilation for providing tanks, Britain with nuclear annihilation for providing missiles, France with nuclear annihilation for merely discussing the possibility of troops, and America with nuclear annihilation because it was a Tuesday. Needless to say, the credibility of Russia’s threats leaves something to be desired…

Russia has struggled to maintain a credible “red line” (referring to the point at which Putin will push the shiny red button) for quite a while now. With the US ready to launch a counter attack should nukes fly, the Russians are already hesitant to pull the trigger, but their recent failed missile test and refusal to enter negotiations means they don’t have a ton of options.

In all likelihood, Russia’s only path to victory in Ukraine relies on sheer manpower. Which means they’ll keep sending wave after wave after wave of their population into the meat grinder until something shifts in their favor…because that’s all they know how to do.

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

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

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

And then there’s you.

Our newsletters and videologues are free and we will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Kolar, Wisconsin. I love this place, except in the winter when—oh my God. Anyway, back on the 26th. The 26th. The 25th. I can’t remember the exact date. Anyway, sometime in September, the Putin government, Putin himself, announced a new nuclear doctrine for the threshold of when they would actually hit the big candy-like red button.

The Russians are having a problem because they have established all kinds of red lines—dozens of them—over the last two and a half years. Whenever someone has crossed them, whether it’s Ukraine in the war, or weapon supplies from the United States, Germany, Britain, or Turkey, the Russians have ignored their own red line.

So they’re having a credibility problem with their deterrence policy. Putin’s announcement a couple of days ago was about trying to reestablish that. He said that now any non-nuclear country who has an ally who is a nuclear country, should the non-nuclear country use a non-nuclear weapon against Russia, it justifies a nuclear strike on the nuclear country.

This is a stupid, pointless press release—kind of reminds me of the Obama era—because it’s already been violated a few hundred times. The Russians have had a real problem establishing or reestablishing deterrence because they keep saying stupid things like this, which are nonsensical. Immediately, the world goes on, and it’s shown to be a bluff.

Now, the issue is that the Russian conventional military is not all that. By the numbers, Ukraine should have been gone a long time ago, but it’s still punching well above its weight. And that’s before you consider that most of the Western alliance is providing the Ukrainians with ammo and weapons. So, how do you reestablish deterrence?

Well, the first, easiest, most direct, and most reliable way is to have a conversation—to basically call up the United States, establish a summit, and talk about strategic issues, of which nuclear weapons are one.

The Russians have firmly refused that option because if they do that, they have to talk about Ukraine. They have to talk about war crimes. They have to talk about mass kidnappings. They have to talk about the weaponization of sexual violence. They have to talk about encouraging migrants to go to Europe by breaking countries in Africa and the Middle East. They have to talk about all the things they’ve been doing over the last 2 or 3 years that they see as giving them a little bit of leverage.

Of course, the Europeans and the United States have acted, and so the Ukraine war is continuing. Ukraine still exists. For the Russians to establish deterrence by negotiation, they have to put everything else on the table, and they are not willing to do that. As a result, we’ve had no meaningful summits in the last three years with anyone.

What’s the second thing you can do? You can do a demonstration nuclear test. The problem is that the Russian nuclear force has degraded just as much as the Russian conventional force. Less than a week ago, the Russians tried to test out one of the new intercontinental ballistic missiles, and it blew up in the silo.

Now, this is really bad—not just from an embarrassing point of view or a deterrence point of view—but most of the avionics for Russia’s ICBM arsenal were built in Ukraine. This new missile that the Russians were testing was their effort to build a domestic supply chain. It is now apparent that, at least at the moment, that is not possible.

It begs the question of just how reliable the rest of the Russian nuclear arsenal is. If they hit the big candy-red button, will anything happen? If countries aren’t confident that things will launch, deterrence can’t happen.

The third thing you can do is nuke someone. The problem here is, while the Russians have bled away and pissed away their deterrence, the United States has not.

The United States continues to test, fine-tune, and deploy its weapons. It made very clear to the Russians in the early weeks of the Ukraine war that if Russia were to throw a nuke into Ukraine or anywhere else, the first thing the United States would do is use its conventional forces to destroy every Russian military and civilian asset—shipping around the world, every single port within range of conventional force, every single port the Russians have.

If that nuclear weapon were to hit a NATO ally and not just Ukraine, the first few weapons the United States would send back would target Putin personally. So that’s not an option either.

So, what’s left?

What’s left is nothing good. You get Obama-style pointless press releases and Trump-style bluster. That is what passes for strategic policy in the Kremlin these days. Now, whether or not any of that is sustainable over the long run is really not the point. The question, ultimately, is how will the Ukraine war play out?

Remember, Russia is still a large country, and even on its back, it still has a huge amount of resources and manpower to throw at the situation. They’re not bottomless anymore—this is not 1920 or 1980—but the Russians still outnumber the Ukrainians at least 3 to 1. They have an industrial plant that, while atrophied, is still an order of magnitude bigger than anything the Ukrainians have.

They have the Chinese providing huge amounts of components. Probably half of all the weapons systems the Russians have built in the last two years are majority made with Chinese components. Upwards of one-quarter of the artillery shells being used by the Russians on the front are coming from North Korea.

And, of course, all the Shahed drones are coming from Iran. So, there are very real flows here. It’s ultimately a question of whether the Russians can put the numbers to play. To that end, the Putin government, just before that disastrous failed nuclear missile test, announced that they were expanding the military to make it the second-largest standing army in the world.

If Russia is going to win, that’s how—through numbers, by ignoring the casualties, and just steamrolling them. If that sounds inhumane, it’s because this is how Russia has won every single war in its nearly thousand-year history. So far, in this war, they haven’t really put their weight into it. We might be seeing that change now.

If the Russians are going to win, this is how it’s going to go. It’s not going to be because of nukes.

The Civil War of the Sinaloa Cartel

The Sinaloa Cartel, once the dominant organized crime group in Mexico, is turning on itself. This is just another notch along the downward spiral of the Sinaloa Cartel since the arrest of El Chapo years back.

The most recent fighting started after “El Mayo”, a top cartel figure, was betrayed by one of El Chapo’s son and arrested in the US. This newly vacated position caused a power struggle and each of the cartel’s factions is hoping to grab control. The fighting is currently the worst in the Sinaloa state, but is expected to spread throughout Mexico and even spill into the US.

As the fighting ramps up and chaos ensues, we can expect to see disruptions to the distribution network and perhaps the worst news for those who love the white powder…higher prices.

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

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

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

And then there’s you.

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

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Transcript

Hey everybody, Peter Zeihan here. It is the 22nd of September here in Colorado. Well, I guess not just in Colorado. Anyway, the news today is coming out of Sinaloa state in northern Mexico, where there have been at least 100 murders and a whole bunch of abductions as the Sinaloa Cartel is basically devolving into civil war.

Now, the Sinaloa Cartel is rather unique among organized crime groups in that it’s not simply about power or money. It’s run as a business. There was a guy by the name of El Chapo who used to run the place, and he essentially brought together all his chapter leads to compare best practices and figure out how they could run drugs to the United States with less friction and disruption to local law enforcement and local populations.

The concept was pretty straightforward: “Don’t shit where you sleep.” The goal was to maintain good relations with the people where they operated, so they wouldn’t turn on the cartel or go to the government for help. This strategy allowed Sinaloa to become the largest organized crime group in Mexico by far.

However, they were so successful that the United States made El Chapo public enemy number one. Eventually, the U.S. was able to capture and extradite him. He’s now serving multiple life sentences in the American prison system, where he’ll never see the light of day again.

That left his organization in the hands of others who aren’t as competent as he was. El Chapo was, without a doubt, a murderous thug, but he was a murderous thug with a business degree and some managerial skills. Since his capture, the factions he used to control have started to go their own way.

Things really started to unravel back in July, when Ismael Zambada, also known as El Mayo, who used to be the accountant and has taken over most of the operations, was lured to Texas by one of El Chapo’s sons. The second he landed, American law enforcement arrested him. It appears that El Chapo’s son betrayed El Mayo and turned him over to the authorities.

Now, El Chapo has more than one son, and each of them controls a faction of the organization. With El Mayo out of the picture, they’re now fighting among themselves for his share of the cartel.

Cartels aren’t monolithic, especially in a place like Mexico where internal transportation is difficult. The cartel is made up of several dozen groups, mostly locally defined, where local chapters might even use different names, have different organizational structures, and only give lip service to the central leadership. It’s like Canadian politics, but with a lot less politeness.

As long as there’s a strong leader who’s skilled with words and has a firm hand, this system can work and hold together. But when the leader is in prison, his deputy is in prison, and his kids are fighting over what’s left, things fall apart quickly.

Now we’re seeing the largest organized crime group in Mexico break down, and Sinaloa, the heart of the organization, is where the splits are occurring. Over the next few weeks, we can expect to see this violence expand, not just beyond Sinaloa into the rest of Mexico, but also north of the border.

El Chapo’s business-minded approach didn’t just make Sinaloa the largest drug-running group in Mexico—it made them the largest organized crime group on the planet, including in the United States. As the leadership fights among themselves, we’ll see similar breakdowns in their local distribution and retail operations, especially in the U.S., where many of their operations are carried out by local gangs.

This will likely lead to higher drug prices due to distribution disruptions and more violence as the organization fractures at the regional and local levels. Whether that’s good or bad, I’m not sure.

New Ukrainian Weapons Hit Russia Where It Hurts

Photo of a military drone

Ukraine has successfully attacked several major Russian ammunition depots, with explosions detectable hundreds of miles away. These strikes suggest Ukraine’s war strategy is evolving…

There are a handful of factors contributing to the success of Ukraine’s tactics: vulnerability of Russian ammunition, Ukraine’s new missile-drone hybrid weapon and Russian rail system targeting. Combine all of these and you get a recipe for Ukrainian success.

The strategic shift we’re seeing now could pose some serious challenges for the Russians moving forward.

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

Hello, everybody. It’s Peter Zeihan coming to you from a foggy Colorado. It is the 22nd of September. In the news over the last 4 or 5 days, the Ukrainians have managed to blow up a handful of major arm depots within Russian territory, some of them a couple hundred miles from the border. The three places in question are cross-border, Tow Rope Pets, and two corvettes.

Yeah, pretty sure that’s right. Anyway, one of these explosions was big enough that it was detected by seismic monitoring stations a thousand miles away, which is cool—kind of creepy. Kiloton-range explosion. We’ve got four things going on here, all of which are pretty significant, and when you put them together, it suggests a change in the tempo of the war.

The first thing to understand is that the Russians don’t move and store ammo like normal people. They don’t use forklifts, crates, or pallets; they just have things in boxes moved by hand. So, when something goes wrong—and things often do—it’s very volatile. That’s definitely what happened at all three of these facilities.

The second development is that the Ukrainians have brought a new weapon system into play. The technical term is “drone missile,” which is a bit shy of a cruise missile. The name of this system is a letter, and I’m not going to apologize for mispronouncing it because the Ukrainians chose that name specifically because it’s difficult for the Russians to pronounce—so I’m in the clear. The NSA, anyway. Its range isn’t nearly as good as some of the drones the Ukrainians have been fielding over the course of the summer.

Some of these drones have hit targets a thousand miles from the front, but these probably have a range of no more than 300 miles. However, because it’s a missile instead of a drone, it flies much faster, is much harder to intercept, and can carry a much heavier payload. The bigger Ukrainian drones can carry warheads about 75 pounds, with most of them carrying a third of that. But these new missiles likely have warheads 2 to 5 times as large. I say “likely” because they’re new, and last week was the first time we saw them in action. That said, they’re being used in large numbers—specifically in the attack on Tow Rope Pets, which involved at least 100 of these missiles. This is not just a case of 1 or 2 missiles being launched; entire fleets are now in play. For their debut, that’s pretty impressive from a manufacturing point of view, leaving aside logistics and military planning.

The third issue is that Russia, when it moves cargo more than the final mile, usually relies on rail. Russian territory is vast, and the value of agricultural land in Russia is low. Precipitation is fickle, and the summer season is short, so the amount of income Russian land can generate for the state per square mile is very low. Of the major agricultural zones in the world, Russia’s is by far the lowest in terms of income generated.

This means the Russians can’t afford a normal transport method like having a road network that individual farmers can always access. They simply don’t have the income necessary to build or maintain such a network, so they need something more cost-effective—hence, rail. About 90% of what moves in Russia, whether it’s barrels of oil, bushels of grain, or stacks of ammo canisters, moves by rail. It’s only in the final mile that cargo is moved by hand or maybe by civilian car if it’s a military asset. This system has lots of vulnerabilities, but it’s hard to target trains because rail networks are difficult to disrupt long-term. If a rail line gets blown up, you just lay new track.

In the recent attack, it appears that a train was present, unloading ammo at the time, and it was hit, causing the entire depot to explode. I must emphasize that I’m using local Russian reporting, so take it with a grain of salt. But usually, the Russians don’t celebrate their own trains and ammo dumps getting blown up. “Celebrate” is the wrong word, but you get the point. Unless this was an amazing coincidence, it suggests the Ukrainians have found a way to track Russian rail movements in real-time.

There’s reason to think this is true because a few weeks ago, the Ukrainians attacked Russia to the north and took over large portions of the Kursk province, including a rail depot at a place called Susa. If this allowed the Ukrainians to tap into or hack the Russian rail network, they could now know the schedules and locations of Russian locomotives and what they’re carrying. If they’re carrying ammo and heading to a warehouse full of more ammo, well, that’s a target-rich environment for the Ukrainians. So, we should expect more of these kinds of attacks.

Which brings us to the fourth and final issue: a potential change in targeting. If the Ukrainians do have better intel on the rail system and now have these faster, more lethal, mass-produced missile drones, the logical next step is to target Russia’s power generation and distribution systems. Unlike in the U.S., where half of our cargo by ton-mile is moved by truck, rail is critical in Russia, and two-thirds of Russia’s locomotives are electric. If Ukraine can disrupt the electricity system, the entire Russian transport system could fall apart.

We may already be seeing early stages of this. We know the Ukrainians have used drones to attack power centers in Crimea, though it felt like a test run—there weren’t many drones involved. But if they now have better intel on rail systems and weapons to hit ammo and transport networks, we’ll likely see much more activity within 150 miles of Ukraine’s borders to the north, northeast, and east.

We’ve seen Russian counteroffensives in places like Kursk peter out in the last 72 hours, as well as in the Donbas, where Russian forces were on the verge of capturing a Ukrainian rail network at Borowski. The Russians had been making steady progress toward this goal for months, ever since they captured the fortress city of Avdiivka. They got within 5 or 6 miles of Borowski, and if they had taken it, Ukraine’s ability to move forces along the front would’ve been crippled. But the assault stopped, likely due to the kind of attacks I’ve just described.

This is bad for Russia in the short, mid, and long term. It affects their ability to reach the front, let alone supply it. Remember, the Russian military doesn’t operate on quality—it’s all about throwing huge numbers of troops and shells at the enemy and incrementally advancing. You can’t do that without a robust rail network, and the Ukrainians may have just found a way to strike at its heart.

Immigration: Social Costs vs. Economic Benefits

Its easy to sit up in an ivory tower and say immigration is always good because of the economic benefits; however, turning a blind eye to the social implications of immigration would be irresponsible in a well-rounded discussion. Here’s what Canada and Germany have going on:

Canada jumped on the immigration train fairly early in order to counteract their demographic decline. This influx of young immigrants helped stabilize the population, boosted labor productivity, and brought in more taxes than it cost in benefits. Butttt Canada’s social fabric is rapidly changing due to this new (and growing) population of immigrants.

On the other end of the spectrum, we have Germany and they’re not exactly known for their history of immigration. Over the past few years, the Germans have brought in large numbers of refugees from places like Bosnia, Syria and Ukraine. That has created some hefty social challenges, which will only continue to grow as Germany must bring in millions of young immigrants annually to balance its demographics.

While there is a strong economic case for immigration, we must also consider the social and political costs that it comes with. No amount of money can make a round peg fit in a square hole…

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

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

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

And then there’s you.

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

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from the top of the Grand Canyon of the 12. I’m in Yosemite, just below Glen Allen. This is where I’m going to be hiking for the next couple of days. Not bad!

Today, we are taking an entry from the Ask Peter Forum, and the question is: Could you go through the numbers on the pros and cons of mass immigration into countries, specifically like Canada and Germany?

People always talk about the economic upside and the tax benefits, but they rarely mention the downsides, like crime and social identity. It’s a reasonable question, especially as we see more and more countries aging. Since we have more nations basically aging out, immigration is often brought up as one of the few, if not the only, possible patches or even solutions.

Let’s start by saying Canada is a special case. Canada knew 30 years ago that they were headed for a German-style demographic implosion. Under the Harper government and later under the Trudeau government, they made the decision to open the floodgates and become an immigrant country. You’ve probably had, I mean, they didn’t count the statistics the same way we do in the United States, but roughly 3 to 4 million immigrants have come in and become Canadians during that period.

Most of these immigrants were in their 20s and 30s, as Canada specifically targeted younger people, unlike the migrants they had received in earlier years. This managed to stabilize the numbers, but only so long as they keep those inflows coming, because native Canadians, to use a church term, still have a very, very low birth rate. There’s no replacement coming from within the population, so a new social fabric is developing.

The numbers, which I don’t have top of mind, I apologize, are unequivocal: the new migrants, especially those under age 40, generate far more in tax payments than they take out over their lifetime. It’s a definite net fiscal benefit. In terms of jobs, as a rule, the people who migrate tend to be the more aggressive, skilled, and educated of their countrymen. This gives you a boost in labor productivity. Not everyone is an Elon Musk, but you get the idea.

Third is crime. Unequivocal data shows that in every country that tracks these statistics, crime committed by immigrants is significantly lower—typically at least a third lower—than crime committed by the native-born population.

Fourth, there’s something people usually don’t think about: education. In the United States, it costs over $150,000 to graduate a kid from high school. That’s just the government cost for education, not the societal cost of raising the child from birth to age 18, including healthcare. One of the benefits of migrants is that, you know, another country has already paid those costs, and now you’re benefiting from their labor. Economically, it’s a very easy case to make.

Two things to keep in mind. Number one: not all migrants are the same. Take the United Kingdom, for example. Indian migrants and family reunification—basically, the UK would bring in one person from India who meets all of these criteria we’ve discussed. But then they bring in their extended family, and all of a sudden you’ve got 60 Indian Brits, half of whom are over 60. It’s a different story if you’re bringing in new retirees; the cost to society can be very, very high.

Also, in the German case, the migrants from Syria—about a million of them—were 80–90% male. So, you’re not getting much of a demographic boost there because there weren’t enough women to have more children.

The second complicating factor is social cohesion. If immigration has been a part of your social fabric for decades or even centuries, absorbing people from different places is relatively easy. Countries like the United States, Australia, New Zealand, and Canada have done this in phases for a long time, so if someone says their parents are from a different country, most Americans won’t even blink. People in the U.S. assimilate very quickly.

But if your country doesn’t have that culture, like Germany, and you suddenly open the floodgates, things start to look very different. The first real wave of migration into Germany happened during the Bosnian wars in the 1990s. Germany did the right thing for the right reason by taking in refugees, but it changed the social character of the country. They did it again in the 2000s with Syrians, and now they’re doing it with Ukrainians. If you wait too long, until there are more people in their 40s than in their 30s, 20s, 10s, or even newborns, you’ll end up with a very different place.

This is the situation that Canada will face—not right now, but in 20 or 30 years. They waited until late in the day to start bringing in millions of people. If it happens over a long enough period, society can adapt. But in Germany’s case, this has all happened relatively quickly. To maintain their demographic standing, Germany may have to bring in 2 to 2.5 million people under age 30 every year for the next 20 years, just to stay where they are. By then, those people will form the majority of the country, which will make it a very different place.

If you look at immigration purely as a numbers game, a fiscal issue, or an economic growth issue, it’s a slam-dunk case. But we don’t live in that world. And you know what we call the gap between the ideal and reality? Politics.

Why You Should Ditch Your Pager (Hezbollah Operative Edition)

If your pocket starts to feel warm in the coming days, here’s a few questions you should ask yourself. #1 – Are you trapped in the 80s? #2 – Are you affiliated with any terrorist organizations? If you answered yes to either of these questions, you should probably throw your pager away…but hopefully all of my readers ditched their pagers before Bush Senior left office.

If you haven’t heard by now, a sophisticated Israeli operation targeting Hezbollah in Lebanon was carried out on September 17. While Israel has not officially claimed this attack, it appears to be the next chapter in the rising tensions between Israel and Hezbollah.

Israel’s operation involved intercepting pagers somewhere along Hezbollah’s supply chain, implanting explosives, and then returning those devices to the supply chain to eventually end up in the hands of Hezbollah operatives. Those devices were then detonated earlier this week. Hezbollah has evolved into a political and militant power within Lebanon, so they’ve somewhat limited conflict with Israel to help maintain their political footholds.

This attack resulted in a number of casualties among Hezbollah and also provided the Israeli’s with a strategic understanding of who is involved with the organization. As of now, I don’t expect this to escalate into a broader conflict.

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. Today, I’m recording this on the 18th. Yesterday, the 17th of September, we had several thousand pagers explode in Lebanon, injuring at least 2,800 people and killing at least 12. This was undoubtedly an Israeli operation. The Israelis aren’t saying anything about it, but no one else would, and no one else has a vested interest in doing this.

The target was Hezbollah, which is a militant/political organization in Lebanon that the Israelis have been dealing with over the last several months, and vice versa.

Okay, so what’s going on?

Number one, Hezbollah is not new. It’s been around for decades. Israel is not new. It’s been around for decades. Basically, since Hezbollah’s formation—it’s been around for 40, 50, 60 years—they’ve always been involved in conflict with Israel. However, things have evolved over the last 15 years in a more peaceful direction. The two haven’t come to direct blows since a brief air war in the early 2000s. The reason is very simple: Hezbollah is not a typical terrorist organization. They also have a political wing that is part of the government in Lebanon.

There’s a whole class of people in Hezbollah who don’t see a vested interest in firing rockets into northern Israel because they are now part of the power structure. If you challenge Israel in a way that makes them feel the tanks need to move, there’s nobody in the neighborhood who can stand up to them. So, you get this hybridized organization where there’s a militant wing and a political wing.

I’m not suggesting any of them are nice people, but not everyone wants to have a war. In fact, even on the militant side, in the aftermath of the Hamas attacks last year, Hezbollah knows they are fortunate that Israel has its hands full with a suppression operation in Gaza. The danger, of course, is that everyone in the Middle East always wants the last word.

Both sides—Israel and Hezbollah—have been doing attacks on each other, just like the Iranians, in order to get the last word. But since no one will let anyone else have the last word, we keep having these layered attacks that escalate, settle down, escalate again, and so on.

I have no reason to believe that this is any different. I don’t think it’s going to lead to a general war, but Hezbollah will feel like it has to respond, and then Israel will feel like it has to respond, which will make Hezbollah feel like it has to respond. Welcome to the Middle East. This is just what the place looks like on a good day.

This does not change my assessment that the Middle East is still the most volatile part of the world and has been for a little over two years now.

Now, what about this attack specifically?

Well, a few things. First of all, this is clearly against international law—using a civilian network, the telephone network, to trigger civilian devices (pagers) in civilian areas of Lebanon is clearly not legal. But because Hezbollah has a militant wing and has been launching missiles and rockets into Israel, I really don’t see anyone who matters bringing a court case against the Israelis for this one. So that’s kind of a minor sideshow issue.

Far more important: this was a pretty sophisticated attack. The Israelis have had a lot of intelligence failures over the last few years. They completely missed the Gaza operation, and they’re botching their counterattacks into Gaza now. This should have been done months ago, and they’re making no appreciable progress. They’ve had to go back over areas they’ve already cleared, over and over again. This has the makings of a quagmire operation for them.

Now, let me explain how this attack likely happened. The pagers were manufactured in Taiwan. They were shipped to Hungary, where a Hungarian company’s distribution system took over. Somewhere between Taiwan and Hungary—and these things being delivered to Hezbollah—the Israelis got a hold of the shipments and implanted explosives in them. Probably what they did was swap out the batteries and replace them with a hybrid battery-explosive system.

There’s no way to remotely hack a pager and turn it into a bomb. Sorry. The most a pager would do is get really hot if tampered with. So, the sophistication to do that without anyone noticing, and getting it into thousands of people’s hands, is kind of impressive.

There’s also the operational aspect. Hezbollah uses pagers because cell phones can be easily tracked if you know what you’re doing. Pagers only send a signal when they’re on, so they’re a much simpler technology but safer if you’re trying to avoid having the Israelis drop a bomb on your head. Well, the Israelis have now hit a couple thousand people who were part of the Hezbollah supply chain and distribution system.

It’s not like everyone who has a pager in Lebanon got hit—just the people who had gotten pagers from Hezbollah. The vast majority, if not all, of them were affiliated with the organization in an operative way. So, the next step here is that the Israelis undoubtedly had observers in hospitals across Lebanon. They’ve either confirmed or identified hundreds, if not thousands, of Hezbollah agents and operatives. That’s a rich intelligence trove. It doesn’t get much better than that. Not to mention, a lot of these guys are going to have holes in their thighs and will be easy to identify after they heal because they’ll be limping for the rest of their lives.

You’ve got to give credit where it’s due—that was a brilliant operation.

Finally, it raises the question of what else the Israeli intelligence services have been up to. After those recent intelligence failures, there was an open question as to whether or not Israel had lost its mojo. Clearly, at least some people in their intelligence services have not. If they can interrupt a supply chain of pagers, what else can they do?

Manufactured goods in Lebanon—everything is imported. So, that’s an opportunity for the Israelis to reach out and tackle anything that Hezbollah might have an independent supply system for.

Today, on the 18th, we found a second wave—walkie-talkies, something else that is hard to hack—that exploded and probably injured another 300 people. Now you’ve got a bunch of Hezbollah folks walking around missing fingers. The Israelis are not done here, and Hezbollah will react, but we have seen a level of sophistication in Israel today and yesterday that we just haven’t seen in the last few years.

Whether they’re doing this because they have some broader plans or whether this is just the most recent tit-for-tat, I don’t have an answer for you. But what I can tell you is that operationally, Hezbollah has now been marked, and a more traditional assassination campaign would be so much easier than it was just three days ago.