Chile Plans to Nationalize Its Lithium Industry

With the demand for lithium growing, Chile is making moves to nationalize its lithium industry. This isn’t just another money grab; it’s an effort to move up the value-add chain.

The Indonesians have seen noteworthy success with the reclamation of their nickel industry, and the Chileans are looking to take a page from the Indonesian playbook. One of the most significant changes will be the development of critical infrastructure in the Atacama Desert, where most of the Chilean lithium is found.

So who are the biggest winners and losers in all of this? China is really the only loser; much of its lithium ore supply will disappear and its processing infrastructure will sit idle. The Chileans are the biggest winners, but most countries transitioning to green energy will benefit from this. So maybe nationalism isn’t always bad…

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TRANSCIPT

Hey everybody. Peter Zeihan coming to you from snowy Colorado. And today we’re going to talk about some of the changes in the lithium market that are going on because of the Chileans. Now, the Chileans are one of the world’s two largest producers, with Australia being the other one. And most of the lithium that Chile produces comes from basically brine. They dissolve a number of things that they mine in brine pools and then it becomes more concentrated. That concentrate is then shipped out. Well, the Chileans have now announced that they have plans in progress to nationalize the entire sector so that the state will have a majority share in every single holding. Now, in a lot of sectors, when countries, especially in Latin America, nationalize things, that’s a code word for I’m just going to steal this all and strip it of parts and melt it down and make as much money as I can and leave nothing behind. That’s not how the Chileans work.

The Chileans are looking to take control of more of the production process. Now, they have done this before with the copper market about 50 years ago. Instead of having international companies come in and mine all the copper, they went in and they nationalized it and took it over and ran it themselves. Now, nationalization is not expropriation. Nationalization means you pay the people on the other side a decent price for what you’re taking. And expropriation means you just take it and they get nothing. One of the problems the Chileans had 50 years ago is they discovered when they successfully took it over and ran all the mining themselves, they were dealing with the exact same companies internationally who would then buy the ore smelted in the metal and go on.

So while, yes, the Chileans did take control of their own mines and at least the base materials were still produced in Chile by national companies, they missed out on a lot of the important value add where the real money is and the reason the Chileans are thinking of doing that with lithium now, it’s not that they haven’t learned. Its that they’ve seen someone else do something that might actually work better.

A few years ago, the Indonesians, who were the world’s largest producers of nickel or banned the export of nickel, were not necessarily nationalized, but they forced the production of processed nickel within their own borders. So they, instead of necessarily taking everything from themselves, they forced industrial plant to be built in Indonesia in order to supply international markets. Nickel, like with lithium, is a very important product and anything that is going to involve mass electrification and EVs and batteries and all that good stuff, the trillions have made it very clear, very publicly that they’re taking their inspiration for this round of nationalizations from the Indonesians. So we’re going to see a lot of investment in industrial plants in the Chilean desert, the Atacama, where most of the stuff comes from, to turn the raw lithium, not just into concentrate but into lithium metal. And who knows, down the line, they may even get into battery production themselves, although that’s a problem for another five years or ten years from now.

Winners and losers. Now, the biggest winners, obviously, are the Chileans themselves. The process of turning raw lithium into concentrate and then onto metal is not particularly sophisticated, but it is a value added product and it’s something the Chileans have always been aiming for. I have no doubt that they can do it, especially if they get a little help from foreign investors.

The biggest losers are at the top of the list: The Chinese. The Chinese have spent a huge amount of effort in the last decade or two in building massive processing capacity for copper and for lithium in China and then just importing the raw product. And Chile has arguably been the biggest loser from that, while the Chileans are now taking some of that back. And if they have even moderate success with lithium, you can bet your ass they’re going to do the same thing for copper as well, which is going to leave all that industrial plant in China stranded without supplies. Now, if you’re like me and you think that China’s going down, or if you’re more traditional economic nationalists and you just don’t like the idea of trusting a genocidal dictatorship for your raw material supplies, this is actually a really good thing for most of the world, especially for the United States. We’ve known that we need to massively increase the industrial plant and especially the processing capacity for a lot of these green tech materials on a global basis because it’s too concentrated in China. Well, the Chileans are kickstarting that process for lithium, and I have no doubt that in a year or three, they’re probably going to do the same thing for copper. We need to see this happen in a lot more places.

So is nationalization a naughty word? Maybe. But that doesn’t mean that it can’t benefit everyone, except the Chinese, over the long run.

Alright, that’s it for me.

The United States Dominates Signal Intelligence

We’ve poked holes in the US system and talked about Russian intelligence declining, so today, let’s look at what the US dominates: signal intelligence (SIGINT).

Next time you find yourself in the Netherlands, ask the local shopkeep how many languages he can speak…I bet it’s more than a few! On the flip side, if you head to the US, the answer is likely one…or two if you’re really lucky. That dichotomy summarizes America’s human intelligence (HUMINT) problem; a small recruiting pool requires lots of expensive training.

However, the US does excel on the SIGINT side of things. This is the monitoring, deciphering, and sifting of mass amounts of data (texts, emails, etc.) and tracing it back to the source. Then the human side of things identifies and extracts the most important stuff.

Since the US is such a significant world player, it’s become extremely good at this. But do they do it alone? No! The Americans partner with many allies, but four stand out: The UK, Australia, New Zealand, and Canada. With the US, they form The Five Eyes Alliance  – a monitoring and sharing agreement that has given the US a good grasp on global signal intelligence.

Encryption has made this process a bit harder, but processing power and AI have helped the US lead the way in focused signal intelligence. This doesn’t mean that the Americans have abandoned HUMINT altogether; instead, SIGINT enhances and guides the strategy for the boots on the ground.

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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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TRANSCIPT

Everybody. Peter Zine here coming to you from just above Denver. It’s almost May, which means it’s almost hiking season almost now yet. Anyway, I am going to talk a little bit about the other side of the intelligence question. So we poked a few holes in the American system. We’ve talked about the leaks. We’ve talked about how the Russians do theirs and why they’re good at and whether maybe not as good as they used to be.

But I want to talk about how the United States does things. Now, the United States is a country that, while it is firmly bilingual, all the population as a whole is not particularly multilingual. So, you know, you go to the Netherlands and you’re a random shopkeeper who’s going to speak like six languages fluently and then, you know, be able to command a half a dozen more.

Most Americans are luckily like me, if they can spell in English. And the truly fortunate among us are bilingual with Spanish. And that’s about it. And that makes a very small pool of people to draw from if you want to do large scale intelligence operations that have a human element to it. And so all of our intelligence programs include some very, very, very intensive language training because not just not a lot of people come into the space with that, especially when you consider that one of the big pools for intelligence personnel are former military personnel.

And if you are working for four or eight, you know, two or three whatever tours. Language competency in a foreign language isn’t necessarily all that common. Or maybe you have one. And since American foreign policy changes every few years based on who the rivalry of the moment happens to be, you know, we’re always having to recreate that language, that language competency, which means that when it comes to humans, we’re not that great.

In addition, the United States is a very rich country and convincing someone to go abroad and basically work in a danger zone for danger pay is a bit of a stretch, whereas if you’re in a poorer country or a country that has a lot more geopolitical strife, less written in its immediate environment. It’s an easier sell to the population.

So small pool, expensive pool. And that pool still requires extensive training. So the United States just doesn’t excel at human intelligence HUMINT. What we do excel, however, SIGINT or signals intelligence. And that’s the idea that you intercept electronic signals, whether it’s in the form of a phone call or an email or text message or a tweet. And you trace it back to its source and you monitor it, hopefully without the other side realizing that you’re doing and you just kind of get the raw feed coming in.

This is then processed with computers, which eliminates, you know, 99.9% of everything is noise. And then that last point, 1% approximately goes through a human filter where it’s sorted out two levels of importance, because the United States is the largest first world country and the largest economy in human history. And because electronic communications are now omnipresent. The U.S. has gotten really good at this.

There was a program that the Europeans hated. A few years ago, they called it Echelon, where basically the United States use that signals intelligence dragnet to cover all global communications. And while it was never as far reaching as the Europeans thought, it was still pretty cool because all you need is a radio tower to collect the information. And if you throw in global cell towers plus global satellites, that is a lot of collection potential.

Now, do we do it alone? The answer to that is a hard no. We cooperate with any number of allies, but there are four that are far more important than the others put together. The United Kingdom, Australia, New Zealand and Canada. And collectively, these form what are called the Five Eyes. They cooperate on the gathering of intelligence, the analysis of what comes in, and then they share the findings among themselves.

And that makes these four countries the tightest allies we have. Yes, we fight. That’s what family does. But it does mean that the United States has a grip, a really good grip on signals intelligence the world over. Now, there have been some issues that have come and gone through the years that have made this more or less effective.

The general obsession with the corruption that started a few years ago certainly has made it more problematic. But a I in processing power has almost kept track with that. So the United States is able to, once it identifies a person of interest, apply a lot of supercomputer time in order to crack whatever the encryption happens to be. That means that the dragnet of covering all of humanity is pretty much nonexistent anymore.

But focused signals intelligence is wildly effective, and it remains the United States number one source of intelligence information. That doesn’t mean we don’t do HUMINT. It doesn’t mean that human intelligence is not important to the United States. It’s critical, especially for any ongoing military operation. So when it comes to locating suspects, but signals intelligence tells us where to look in the first place.

And then those fewer, though, those more rare human intelligence assets are deployed once we have a general idea of what sort of neighborhood we’re looking at. Okay. That’s it for me. Until next time.

Russian Intelligence Capabilities in Decline

The Soviets once boasted the most intricate and prolific human intelligence network in the world, but things have taken a turn since the end of the Cold War. So why can’t Putin’s Russia keep pace with its predecessors?

If someone were tasked with designing the worst geographical region known to man, it would likely resemble the Soviet space. In a place like that, you must be able to conquer, convert, and control anyone in between you and the natural geographic barriers you need. So human intelligence wasn’t a nice-to-have; it was the only way to survive.

Once the Cold War ended, the Russians were left with the shell of a system; still operational but only a shadow of what it once was. Most with this specialized training moved into the private sector or more powerful government positions under Putin.

Now I’m never going to say that Russian Intelligence sucks, but it’s taken some blows that will require a long recovery. I’m mainly concerned about the misinformation-pushing-bots that litter the internet.

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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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TRANSCIPT

Everybody. Peter Zine here coming to you from Colorado. Yes, this is later in the day that we got a foot of snow. It’s crazy. Anyway, I wanted to close out the series on Russian intelligence with why the Russians seem to be significantly weaker than we would have expected them to be, because, after all, this was one of the countries that arguably had the best human intelligence collection system in the world.

I think it’s worth first exploring why I say that the Russian geography is not like the American. So the United States has great coast, great waterways, great land. It’s easy to develop. It’s easy to expand. And so when we want to do human intelligence, you have to take somebody out of that environment and then put them in another one.

And since the United States is a very large country, even though we are multicultural, it’s not like we have a lot of experience in this is going to sound really horrible. Infiltrating and conquering other peoples. I mean. Yes, yes, yes. You can make the case for the Native Americans, you know, a century ago or more. But this isn’t something that’s kind of built into a society where as the Russian system is very, very different.

Moscow McAvoy originally was a relatively small chunk of land with not great capital generation or agricultural opportunities, and it had no natural barriers like the United States has with its border with Mexico or Canada, much less the rest of the world. And so they had to go out and conquer everyone that they border. And all that did was give them territory that they had to occupy and no borders that were decent.

So they went and conquered everyone around that group, too. And they kept expanding, expanding and expanding until they reached a series of geographic barriers like the Caucasus Mountains or the Baltic Sea that either halted their expansion or even better, provided a physical barrier for anyone else coming in and anyone who has been following me on Ukraine. You know, this is kind of my core reason why I think the Russians will never back down and why this war was always inevitable.

Anyway, this leaves the Russians with dozens of ethnicities that they have conquered and are literally using as cannon fodder. And since pretty much no one on the planet has grown up saying, Oh, I want to be cannon fodder later, you have to find a way to induce their cooperation. You can’t make them part of the leadership because they’re conquered people and you don’t want them going their own way.

So you basically shoot through the entire system with intelligence operatives. So the Russians, from the beginning, hundreds of years ago, have become experts at planting their people in other populations that may be hostile to Russian interests and collecting information and recruiting dissidents and basically turning the population against one another. And in doing that, they built up a skill set that dealt that served them very well in the Soviet period.

And the Soviets basically dusted off the Russian strategy and applied it to the world writ large, not just to the Soviet bloc countries or their occupied territories or folks within the Soviet Union itself. And that meant that by the time we got to 1989, the Soviet system had the richest human intelligence gathering network in human history. But then the Soviet system collapsed and just as everything else got weaker.

Same thing here. If you don’t pay your spies, they probably weren’t going to spy as well. There was also a problem with leadership, especially after the year 2000. There was also a big problem with the numbers that they had. So a lot of intelligence operatives after the Cold War ended went into business for themselves and got into drug running and worked for cartel cells and were for people smuggling or worked with the Taliban.

They basically forswear king country or czar in country and went into business and used their skill set for criminal enterprises. And they continued to be a problem today. Second, more importantly is that Putin drew a lot of his support from people who were part of the HUMINT network, specifically on the training and the leadership side, and brought them into his coalition to run the government after he became president in 2000.

Well, most of these people, like, you know, this is a wonderful opportunity to get rich. And so they got out of the business of manning the intel networks and got into the business of government. And these are the silver arcs, if you’re familiar with that term. The siloviki are the strong men, the military intelligence folks who run the system.

The oligarchs are the people who run business in the silver arcs of the people who have a foot in both worlds. Probably the most famous Eric is a guy by the name of Igor Sechin, who runs Rosneft, which is Russia’s national oil monopoly. Anyway, so the Russians have lost most of their operatives abroad because they stopped paying them in the nineties and they’ve lost most of their traders at home because they went into the business of government with Putin.

And that has left a bit of a shell of a system. Now they’re still good because that system to train these people still exist to a degree, but it had to become a lot more focused and they became very sensitive. The Russians became very sensitive to losing their operatives. They try to use them in places where they could have cover, that it was as dense as possible.

And as a rule, no matter what country you’re in, the most reliable cover for an operative is to say they’re a diplomat because that gives them an excuse to be in the country with a limited visa overwatch. They have diplomatic immunity. So if they get caught doing something and get sent home, you just send them to another country.

Well, that had worked for the Russians for a while until the Ukraine were started in. The Europeans decided to belly up to the bar and actually start looking after some of their own security interests. And so far in the war, well over 400, probably close to 500 now intelligent operatives who were registered as diplomats have been ejected. And the Europeans, rather than just sending them home and calling the day, have shared the identities of each and every one of them with every other country in the world.

So the Russians can never to deploy those operatives ever again in any sort of clandestine role with official government cover. And that means that the Russians have to reinvent a lot of their intelligence apparatus, give you an idea of the scale that the United States had to recreate its intelligence apparatus after 911 because we had the information. But we can process it fast enough.

20 years on, we’re still figuring out how to do that. This is not something that’s going to be shaped out by the time that this war is over. This is something that is going to be dogging the Russians for at least a decade. And that leaves me with one final point. There is another class of assets, deep cover assets, sometimes called the legal, sometimes called plants, where the people are assigned to go to another country, establish a false identity and live that false identity until such time as they’re called into action.

This is really the stuff of spy novels, but it does exist. And the Russians historically have been pretty good at it. What we have seen in the last year is at least a dozen instances of these plants, these illegals, these deep covert agents being unmasked, because as the Russians have realized, they can’t train at the same rate that they used to and they lost their entire diplomatic corps access to intelligence.

They’re having to rely on their deep plants to do basic intelligence gathering. And that is not a skill that these people are. Well suited to. For one, you know, these are years, if not decades of investment in time. And they’re being asked to do basic intelligence gathering and HUMINT collection. Well, that’s like using a maserati to deliver newspapers.

I mean, yes, it’ll work, but it doesn’t take a lot of imagination to imagine something going wrong. And that has now gone wrong with a number of these agents. So I’m never going to say that Russian intelligence sucks, but why has it taken a series of structural body blows that are going to be very, very difficult and time consuming to recover from?

And in the meantime, anyone who’s looking to resist Russian influence, it’s gotten pretty simple. You just have to worry about the bot farm. Right now. Russian misinformation is still coming screaming into the system, but it’s no longer. What’s the word I’m looking for. It’s no longer part of a multi vectored approach. It’s really the only leg the Russians have to stand on.

And at some point I think it’s pretty safe to say that one of the major governments of the world was going to do something about the bot form, and then the Russians are going to have to come up with everything else from scratch. All right. That’s it for me to you all. Take care.

Top Secret Pentagon Documents Leaked by a 21-Year-Old

What happens when you give a 21-year-old access to TOP SECRET documents? They end up leaking those documents on a gaming chat platform…shocking.

Most of the information that was leaked pertains to the Ukraine War and how the U.S. has low confidence in the reports coming out of Ukraine. Nothing too far-fetched, but that doesn’t mean we should take everything in the public domain at face value. Let’s remember who is blasting this info around and how easy it is to tamper with.

Russia once boasted the largest human intelligence arm, but we haven’t seen much Russian interference since Snowden. This means they’ve gotten really good, or that capability has lapsed, and I lean toward the latter.

As the US faces another leak, the real question that must be asked is whether people like Snowden, Manning, and Teixeira should even have access to this stuff.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everyone. Peter Zeihan here coming to you from Colorado where spring has sprung and the frogs are chirping, which means, of course, later today we’re supposed to get a foot of snow. Anyway, I thought it would be worth me commenting on the recent intelligence leaks by airmen Teixeira. Let’s deal with the contents of what was leaked and then we can talk about espionage and leaks in general.

So most of the documents that were leaked relate to the war in Ukraine in some way and involve internal U.S. assessments of how the war is going and how the Ukrainians are doing. And they’re broadly less than fully complementary. Basic indication from the leak is that the Ukrainians have been suffering higher casualties than are reported and more importantly, that the confidence in the numbers provided by the Ukrainians is very low. So the U.S. really doesn’t have a good view. In addition, there’s concern that by engaging in a static defense in places like Bakhmut, the Ukrainians are losing their combat firepower, which is going to make it more difficult for them to launch future offensives. There’s nothing about either of those assessments that is particularly controversial. But before you say that everything that is now out there in the public domain is true, keep in mind that it has been the Russians now that have publicized this stuff far and wide, and they have undoubtedly changed a lot of the details in order to make their propaganda machine a little bit stronger than it otherwise would be.

But three things to come from this. First of all. Teixeira, the guy who did the leak – the U.S. airman – from all appearances, was not recruited by the Russians. And that’s something that’s kind of had me curious for a while now. Not since Edward Snowden in 2013 have we had any of our leakers have a very firm and obvious Russian connection. Snowden apologists, of course, are going to reject that out of hand. But, you know, screw them. The Russians used to maintain the world’s best human intelligence arm. And in the last decade, either they’ve gotten so good that no one has detected them functionally working really anywhere, or that capacity has languished along with everything else that we’ve seen in the Russian state services of late, whether it’s the military or their cyber capabilities or anything else. That’s probably really good news. Second, Teixeira himself and why people do things like this, it’s really an issue of foreign recruitment. Even if they’re not a foreigner involved. People are often motivated by the same factors, with the big three being ego, ideology and sex. And in the case of Teixeira, it looks like it was probably a combination of all three. He was on a gamer’s forum. He had these documents. He had access to these documents. He brought them home. He photocopied them. He took PDF photos of them, and then he published them on the gamers platform, Discord, like the whiny bitch he is.

In the case of a couple of previous big leaks, I’m thinking here of Chelsea Manning and Edward Snowden. Ideology was certainly part of it for Manning in terms of Edward Snowden clearly was paid by the Russians, clearly fled to Russia, clearly married a trophy bride as soon as he got there. So, you know, I’m sure it’s for love, but let’s be a little bit more honest here. And then ideology, of course, intertwines with Snowden as well. I think the criticism here, if there is one, is we’ve now had three leaks of significance in the last 13 years that get into the files that are top secret and above. And if you look at the three specific cases of Snowden, Manning and Teixeira, they all have something in common. They probably should have never had access to these documents in the first place. Snowden was a part time contractor, and yes, he was definitely a spy. And yes, he definitely hacked into the system. But somebody at his level should have never been near a terminal, and given access in the first place. Manning was a private at the time and definitely should have not had access to the high end stuff. And Teixeira was a 21 year old airman. Now I am not the sort of person who’s going to go in and pick apart American security policy when it comes to information. But there is a pattern here and probably something that should be addressed in the not too distant future. But the biggest bit of encouragement I had is how fast Teixeira was caught. I mean, it really only took a few days for the FBI to find them. At the same time, a bunch of independent journalists found him and then publicized his information. So at least on time, on target, we are getting better from the law enforcement side of this. But maybe we should work a little bit more in information security on the personnel side.

Okay. I think that’s it for me. Take care.

Where Are All the Russian Hackers?

Today’s video was recorded in Wānaka, New Zealand, during my yearly backpacking trip.

Since the onset of the Ukraine War, everyone’s been checking under their bed and looking in their closet for the boogeyman – a.k.a Russian Hackers – but they haven’t been there.

There are a few reasons why Russian cybercrime has been lying low. The Russians have been hitting NATO countries with cyber attacks for the past few years. Places like Estonia have learned a thing or two, enabling other NATO members to build robust cyber defenses over the past few years.

Additionally, much of Russian cybercrime is carried out by private crime syndicates, which makes going on the offense a bit easier. Unofficially, of course, the US was able to drop the hammer on many of these organizations, which limited their capabilities heading into the war.

I’m not saying everything is hunky dory, but we’re starting to see the true power of some offensive cyber tactics now on the table.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Economic Growth Is Collapsing Around the World

stockmarket candlesticks in the background

When the International Monetary Fund (IMF) releases its least optimistic report in the last 50 years, alarm bells should go off for everyone. IMF’s projected global economic growth for the next year is 2.8%, and for the next five years is only 3%. The scariest part is that these numbers are likely overly optimistic.

No matter where you live in the world, this stagnation of economic growth will hit you, from the rich world to the developing world, and even the country that has had the highest growth rates for years – China. There might be a few isolated pockets of growth seen in areas that are nearshoring or friendshoring, but this will just exasperate the economic collapse of other places as industry pulls out.

We are looking at the unwinding of the globalized world from a geographic and demographic POV. In a situation like this, low economic growth rates will always be the result.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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TRANSCIPT

Hey everybody. Hello, from snowbound Colorado where it was 60 degrees yesterday will be 60 degrees tomorrow. The news of the last couple of weeks on the economic front has been from the International Monetary Fund, which is that big international lender that helps countries get out of trouble. They are arguably the best in the world when it comes to doing economic forecasts. And the most recent forecast is the least optimistic one they’ve had in the last 50 years. Specifically, they think that growth next year, on average for the world is going to be 2.8% and for the next five years, only 3%. And honestly, they’re probably being significantly over optimistic. So let me kind of give you it from three points of view.

So first of all, from the developed point of view, the rich world, the rich world, most economic activity comes in the form of private consumption. You run on your credit card, buying a house, going to college, raising kids, buying a home, all that good stuff. Problem is that most of that activity is done by people under age 50 and with mass urbanization starting in most places around 1940, 1950. We’ve seen lower and lower and lower birthrates throughout the rich world. There is no country that is an exception to that and in many cases, replacement population growth, which would be like a 2.1 children per woman. You know, most of the advance will drop below that rate over 50 years ago. Well, you fast forward 50 years and it’s not that you’re running out of children. That happened a long time ago. You’re now running out of working age adults. Specifically, the baby boomers were the last very large generation born in most countries. And on average, the baby boomers entered retirement last calendar year. So the rich world in most cases will never, ever be capable of generating the economic growth they have in the past. And in fact, it’s probably a little worse than that, because when you stop having kids, people still get older. And so when you have a lot of 30 somethings, but not a lot of ten year olds, those 30 somethings are spending money on themselves, on cars and condos as opposed to diapers. And that’s sort of economic growth, is a lot more has a lot more octane to it. And that’s what we’ve seen in, say, Europe in the 1990s and 2000s. Well, they’re never going back to that. They can never go back to that, but statistically impossible. Okay. So secularly lower growth rates in the rich world, it’s pretty much going to be the norm for at least the next 40 years.

Second, the developing world. Now, the key thing that separates the rich world from the developing world is that the developing world isn’t as rich, you know, pretty self-explanatory there. And they need a lot of capital in order to develop their systems. The rich world is the rich world because they have favorable geographies and it’s been easy for them to trade with the world, trade with one another and build infrastructure because things are relatively flat and open and rain falls from the sky to grow crops, all that good stuff. Most of the developing world lacks one or more or all of those characteristics. And so if you want to develop, you have to have the cash come in from somewhere else and that somewhere else has traditionally been the rich world. That money is no longer available, and even if it was, it would be going to pay for pensions and health care for an incredibly large and increasingly size retired class of people. So the developing world doesn’t have the money that it needs to build infrastructure or to develop consumer markets. So without that input, the most important input for the developing world. You are looking at a secular stagnation that will last until that capital can be generated somewhere else. So not only is the rich world looking at lower growth rates for at least the next generation, so is the developing world.

And then, of course, there’s China. Now, the Chinese, as you know, tend to lie about all their statistics, but they have managed to sustain growth rates above that of the rest of the world for some time now. In the rich world, typically 2% is considered kind of middle of the road. In the developing world, it’s usually in the 4 to 7% range. And for most of the last 40 years, the Chinese have been above 8%. And even if you consider that you can’t trust all of their data, they’ve certainly been on the high end of the poorer side of the world in terms of growth rates. And now they’re thinking that, you know, 4% may be as good as it’s going to get. In many ways, what the Chinese are dealing with is the worst of all worlds. Like the developed world they are facing a demographic bomb, that’s actually a much steeper decline than any other country in the world. This is a country that absolutely is going to get old before it gets rich and reach its first world living standards. So this type of consumption led growth that we’re used to seeing can’t happen. And the export growth that they use to sell products to the rest of the world can’t happen because that requires growth elsewhere. Second, the Chinese have followed the developing world paradigm to a certain degree in throwing a lot of cash at projects, especially infrastructure, to make it work. Well China already has a great infrastructure now, and as the Japanese discovered in the 90s and the 2000s, if you already have a good infrastructure and you build more infrastructure, you don’t get more economic growth except for from, you know, the development of that infrastructure itself. It doesn’t do much follow on because there’s no need for it. Well, the Chinese have been doing this year after year after year for decades now, and they now have a debt load of probably about 300 – 350% of GDP, which again, world record. And they’re just not capable of sustaining that in the long run. And then third, and most importantly, the single most important factor behind China’s success these last several decades has been de facto American sponsorship to allow the Chinese to have risk free, secure and above all, cheap access to the world’s energy markets, commodities markets and consumer markets without them having to lift a finger. That’s clearly not in the cards anymore.

So every aspect of growth from every corner of the world looks like it’s going to be lower for quite some time. And the IMF forecast is probably overoptimistic. What we’re dealing with is the unwinding of the globalized world from both a geographic and a demographic point of view. And that was always going to generate low growth rates. Now, low on average does not mean low everywhere. We’re seeing a lot of near shoring, reshoring, friend shoring as countries want to move manufacturing capacity, particularly for critical materials and critical technologies back home. So they’re not vulnerable to say, I don’t know, a genocidal dictatorship that will be growth stories in those places, but by definition, that manufacturing capacity will not be global. So it’s a bit of a global starvation diet from a growth point of view. So for every place where you have a Vietnam or Mexico, the United States will do very well in this environment. You will have a China and Korea and a Germany that goes down the tubes, and that’s just where we are now.

Okay. That’s it for me. See you guys next time.

Iranian Seizure of Oil Tanker Could Spell Disaster for China

The Iranians have seized the Advantage Sweet, a Turkish-owned oil tanker carrying roughly 800,000 barrels of Crude. The press release (or should I say ‘slap on the wrist’) issued by the US Navy should have the Chinese very concerned about their supply lines.

Since World War II, the US has patrolled the sea lanes and enabled the safe flow of international resources and products. However, this incident is just another indication that the US is slowly stepping away from its commitment to the maritime order of protecting the high seas.

While the US can just shut down its international energy trade and operate with its neighbors in North America, places like China have much more at stake. Since China falls at the end of a very long supply chain, any disruptions could spell disaster for the Chinese economy; that’s only one of many issues they face.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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TRANSCIPT

Hey everyone. Peter Zeihan coming to you from Colorado. It is the 27th of April. You’ll be seeing this the morning of the 28th. The news that just came out is that the Iranians have snagged another tanker, a vessel called the Advantage Sweet, which is a SuezMax oil tanker, which means it probably is carrying about 800,000 barrels of crude. It is owned by a Turkish company and is registered in the Marshall Islands.

The U.S. Navy has issued a press release basically saying bad Iran, very, very bad Iran. And that’s it. This is your periodic reminder that when it comes to international energy markets, the U.S. just doesn’t care anymore. And if somebody wants to deal with Iran seizing tankers, then they will have to do it without the United States. This is a big change, of course in most people’s perceptions, especially compared to the policy sets that we have seen in the United States for the last several decades. But remember why those policy sets have existed. It’s not that the United States imports a lot of oil from the Middle East. It doesn’t, it really never has, but its allies do. And the entire basis of the American post-World War II global environment was that we will fight wars to protect resource flows and product flows so that “you” will sublimate your military needs to us. Basically, we will fight your economic war. So you don’t have to. And that gives us a free hand in control of your militaries in case of a confrontation with the Soviet Union. The Russians may be coming back in a big way, but they are not the Soviets and they do not have a global position. And so the United States, bit by bit under Obama, under Biden, under Trump, have all basically steadily reduced the American commitment to the maritime order that allows global trade and global energy markets to work. And so this Advantage Sweet, this tanker that’s been gone, the U.S. really doesn’t care.

But if you’re China, this is a problem because the entire existence of the Chinese economy and its strategic position is based on the idea that the United States, no matter what else happens, no matter what the Chinese do, no matter how much military action China carries out, that the Americans will still uphold civilian freedom of the seas. And as we’ve seen today, again, the U.S. has no interest in that anymore. So next time we do get a meaningful interruption to international energy flows, the United States basically closes its borders to energy trade. It’s self-sufficient within North America. And the Chinese are at the very end of a very long supply line that they have no hope of protecting. And that means they’ll deindustrialize. And that means it’s the end of China’s unified nation state. And of course, if you’ve been following me for a while, you know that that’s only one of the many reasons why the Chinese are going to end this decade.

Alright. That’s it for me. Till next time.

Russia (Almost) Gets Military Supplies From Egypt

Most countries put up their “no solicitors” signs when they see the Russians coming around to buy military supplies. However, a handful of countries will at least open the door to hear the pitch and Egypt just so happens to be one of those countries.

To sell military equipment to the Russians, you have to be able to check a couple of boxes. First, you can’t be worried about the political blowback from partnering with a genocidal, war-hungry country. Second, you either have a lot of extra supplies or are not worried about entering a war yourself.

Countries like China, India, Algeria, and Vietnam might entertain the conversation, but at the end of the day cannot check off both boxes. This leaves the Russians to deal with Egypt and North Korea.

Once the Americans caught wind that the Egyptians were considering making a deal with Russia, a quick cost-benefit analysis shut that deal down. That only leaves North Korea on the table. And if you want to pull out a sliver of good news from all this – that likely means North Korea won’t be entering any wars anytime soon.

This limited market is somewhat illuminating to the Russian predicament. While this remains Russia’s war to lose, if they can’t spin-up their military-industrial complex any quicker, this could be the war that ends Russia as an expansionary power.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zeihan coming to you from Colorado. One of the things that’s been in the news for the last couple of days or a couple of weeks has been that the Russians have been going out around the world trying to find military equipment that they can purchase. And one of the countries that almost nearly sold them some was none other than Egypt, a country that at least nominally is a U.S. ally. And that’s kind of caught a few people off guard. But if you look at the sort of decision making that goes into providing a country that is in a genocidal war of aggression against someone else, you can see that it actually makes a certain degree of sense to go to the Egyptians.

There are certain boxes you have to check if you are willing to supply weapons to Russia in its current environment. First of all, you have to not overtly be concerned with the political blowback from the United States. And second, you have to not really need that equipment yourself. And there are precious few countries of size with, you know, military equipment worth talking about that can actually scratch the itch for that. The single most important one that falls into both categories is North Korea, because the North Koreans have, you know, a million man army, a quarter of the population can be drafted any moment. They have been doing nothing but building military equipment now for decades. And apparently the Russians have gotten a lot of artillery shells from the North Koreans. And honestly, that tells me everything I need to know about the military posture of North Korea, because if they were concerned at all about the United States or South Korea, Japan launching a conventional military attack on them, they wouldn’t even consider selling their armaments to the Russians. So honestly, that puts North Korea not in the peacenik bucket by any stretch of the imagination. But it tells me that all the nuclear blustering is really just that, blustering. If they were concerned about a war, they would not be disarming by selling their weapons to someone else.

Other countries that the Russians have turned to that have been turned, the Russians down flat, China, India, Algeria, Vietnam. Now these are all countries that to a degree are either strategically or ideologically favorable to the Russians, but they either don’t want to antagonize the United States. That is the situation for Vietnam. Who is looking to have a firmer relationship with Washington in order to fend off China. That is the case for China, who is desperate to avoid a direct confrontation. They like stirring the pot. They like making everybody think that something is about to happen. But they know that if there was a military conflict, that would be the end of China as a modern, industrialized economy in a matter of months. So they’re certainly not going to cross that Rubicon. Algeria, if they don’t deal with the United States, they have to deal with their former colonial master, the French. And that is something they’re desperate to avoid. So from them, strategically, it’s just completely off the table. But for India, it’s different. India is always concerned that it could have another war with Pakistan tomorrow, and so they are absolutely unwilling to provide any military assistance at scale, regardless of what it might do to relations with the United States, because they think they might need that equipment themselves.

And that brings us back to Egypt. Egypt, aside from North Korea, is the only country in the world who might be willing to kind of stick it to the United States, because the strategic situation in Egypt has been stable for so long. There hasn’t been a military conflict with the Israelis since the seventies, and we now have a peace treaty that’s 40 years old. The Egyptians know there is not going to be a conventional war between Israel and Egypt or Libya in Egypt or Sudan and Egypt. So they actually have the equipment to spare, but they still have a very large military and a lot of gear they could potentially give away.

So it obviously didn’t work out. The Americans heard about it and, you know, put a little bit of a cost benefit analysis in front of Cairo that the Egyptians, you know, made the same choice. But it does kind of underline just how alone the Russians are. They have North Korea and that’s it. And if they can’t get their military industrial complex spinning up at a faster rate than what we’ve seen so far, this is the sort of war that could get them stem to stern and really end Russia as an expansionary power. Now, we’re not there yet, but this is still Russia’s war to lose. But wow are they trying.

Alright. That’s it for me. See you guys next time.

The New Zealand Dairy Industry

Today’s shenanigans come to you from Lake Pukaki in Central Otago, New Zealand.

I think I’ve found my favorite trail snack – Kikorangi Triple Cream Blue from Kapiti – I swear it will turn a 15-mile trek into a brisk walk. It just goes to show that as the world’s top dairy exporter, New Zealand has its s*** figured out, and the Americans need to step up their game.

There are two traditional approaches to the dairy sector: French vs. American. The French way is centered around small towns, with lower throughput, and offering specific products to the local community (oh, and the safety standards are subpar). The American way is to supersize everything for more reliability and a more economical system. And you don’t have to worry about subsidies like the French (and yes, everything is safer).

The issue for the French is that you can’t scale their system. The issue for Americans is that not everyone wants American Cheese. However, the Kiwis found the perfect blend of both. They have low costs thanks to mellow weather, rain, and open land. Since they don’t have many people, they have plenty of leftover products to export….and they know how to create specialized goods that people actually want.

Finding a balance of scale and specificity seems to be the sweet spot for the dairy industry…now we just have to convince Kapiti to start selling this stuff back in the States.

CHECK OUT KĀPITI

They’ve been doing it since 1984, so they know a thing or two about dairy. Although we might not be able to get this in the States, we can still admire from a distance…

LEARN MORE

CHECK OUT ÍSEY

Have you heard of creme brúlée skyr before? You need to try it…

LEARN MORE

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.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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Crumbling Infrastructure in the Russian Taiga

Today’s video comes to you from the Rockburn Track in New Zealand.

Terrain as you see in this video, doesn’t exist in many places, as it takes the right mix of altitude and humidity to form. However, this is very similar to the dominant vegetation in Russia’s northern Taiga.

This terrain makes it extremely difficult to build any form of solid infrastructure. In Russia, they wait until the ground freezes solid, then dig down to the permafrost and fill the hole with sand, gravel, or whatever else they have. This forms dikes or berms on which they can build roads, lay pipes, or install any other key infrastructure.

In a post-Ukraine War Russia, will this infrastructure come back online quickly? All of this infrastructure is old and barely hanging on, and now that the West won’t be involved anymore, I wouldn’t count on any of this coming back online for a decade (+).

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zeihan here coming to you from the Rockburn in New Zealand. And I just saw some vegetation that reminded me of something of significant import.

So behind me, you just have a normal tree stump, but it is covered in several inches of moss. You can see how my hiking pole really sinks into it. Terrain like this doesn’t exist in many parts of the world. You need just the right altitude and the right humidity in order for the stuff to grow in the first place. You’ve got it here in New Zealand, in the temperate rainforest. You’ve got it on Vancouver Island in northwest Canada. It exists in Manitoba, in what they call the Muskeg that is approaching the Arctic Ocean. And then it is also the dominant vegetation and some of the Taiga in northern Russia.

Oh, yeah, unstable ground. So it doesn’t really matter what the reason for a spongy ground, whether it’s moss or permafrost, happens to be, it’s very difficult to build artificial infrastructure. But if you want to do anything with the land, that’s what you’ve got to do. In the case of the Russian space, you’ve got that mushy, marshy top over what is ultimately permafrost, somewhere between five and 30 feet under the surface. And until you get to the permafrost, the frozen layer, everything is just goo. And so any infrastructure that you were to build in the summer would just sink into the swamp. So what they have to do is they wait for everything to freeze solid in the depths of the Siberian winter, and then they go and excavate it and then bring in rock and sand and gravel and aggregate and tar and everything else to build giant berms that go from the permafrost all the way up until you get these dikes that run over the landscape. Environmentally devastating, of course, but that’s never been something the Russians have really cared about. And then you can run roads and pipes and the such, over those berms.

So one of the things that people discuss, you know, in in a post Ukraine worst scenario, will we be going back into Russia in order to tap those resources again and, you know, even in the best case scenario where the government and the politics line up, you really should still count all the Russian stuff out for several decades because that’s how long it took to bring this stuff online. Western techs have been essential to maintaining output in the Russian oil and natural gas fields and their petrochemical center and their general industry since 1992. Because most of this raw infrastructure was built in the 1960s and it’s barely holding on by its fingernails now. And with the Western techs, the Western skills sets, the western capital gone. We’re seeing industrial accidents that are, let’s just say Soviet in scale.

So a lot of this stuff is going to have to be rebuilt and then you’re going to have to have a positive security environment that goes all the way from the point of production through hundreds, if not thousands of miles of permafrost to get to populated Russia and then finally to get out to the wider world. And that is not something you’re going to fix in three months or six months or nine months or ninety months. That’s a decade plus project minimum. And that’s a decade plus in which relations with Moscow have to be positive. So we should all kind of pencil in that materials coming out of the former Soviet space, specifically the Russian space, just aren’t going to be there for the foreseeable future. Until next time.