Ho Hum Harvey

Between 2000 and 2012 I worked at a place called Stratfor, which specializes in geopolitical forecasting. As I was one of the few members of the staff who had experience working in more than one region of the world, I wore many hats – one of which was to serve as an as-needed energy analyst. In that role, I found myself diving into everything from the Brazilian pre-salt to pipelines in the former Soviet Union to European Commission electricity regulations to Chinese state firm expansion policies to Japanese supply chains. And every year from May to October one additional brick was dropped onto my plate: hurricane watch.

Oil is one of the few truly global markets out there. There may be many categories of crude oil, but most are broadly fungible (you can swap out one crude for a variety of others in a pinch). Furthermore, demand for oil is inelastic – meaning that you have to have it to participate in a modern economy. So when something blocks one flow from reaching the market, the entire world suffers not just a price increase, but a sharp one. Back in the 2000s, hurricanes regularly plowed through the Gulf of Mexico – at the time home to about one-third of U.S. oil and natural gas output. In 2005 alone over a dozen major storms hit. (BTW, by far the best place to get info on active hurricanes is Weather Underground).

Each such event required an analysis of the storm’s path in relation to energy infrastructure so that I could estimate how much production had to be taken offline as precautionary measures, and then gauge the storm’s strength vis-a-vis the subsea pipe network to guesstimate how long production would remain shut in. In many cases, output would not recover for over a year. Price increases in excess of $10 a barrel for oil and $1 a gallon for gasoline were par for the course.

Hurricane Harvey is plowing through the Gulf of Mexico as I type. The storm is expected to edge into the Texas coast within the next 24 hours and then… just… sit… there. For at least three days. It is by far the worst-case scenario for the offshore energy industry. Not only does everything need to be shut-in, but the on-shore supporting infrastructure and staff will have to hunker down against 100+ mph winds for days. Damage assessments – much less repairs – will not be able to begin until at least Wednesday, and likely longer. The humanitarian impact looks dire: millions of coastal Texans will have to hold on for at least 72 hours before emergency services can begin to mitigate Harvey’s pummeling.

Harvey’s biggest economic impact will be on the various refining and petrochemical facilities that dot the Texas coast from Brownsville to Houston. It is the greatest concentration of such facilities in the world, and, at a stroke, supplies about one-third of American fuel needs. Rain that will be measured in feet as well as storm surges will flood much of the zone, and high winds will conspire with flat terrain to slow that excess waters’ draining back to the ocean. Energy prices will certainly rise in response.

But probably not by all that much.

Unlike the 2000s when a moderate storm or a glancing blow would reliably send oil prices skyrocketing, things are different in 2017. Part of it is that the U.S. hasn’t been hit by a meaningful storm in a decade, and so stockpiles of various fuels are at comfortable levels. But a far bigger factor at work is the shale industry. The shale sector didn’t exist in 2005, but now it accounts for most U.S. energy production. Every single shale well in the United States is on land, which means all the 9ish million barrels a day of shale oil output – some 70% of total U.S. output, just isn’t very vulnerable any longer. (In fact, Harvey is even providing an opportunity for the industry to test the theory that shale production is stormproof: Texas’ Eagleford shale play will get over a foot of rain.)

It isn’t just hurricanes that don’t much bother energy markets. It’s that, well, nothing much does.

We’ve been at $60 for a barrel of oil or below for three years now and things have not been quiet. Think of what’s happened of late: ISIS has taken over Iraq’s western desert, Iraq’s Kurds have achieved de facto independence, China is putting a naval base in Djibouti, Brazil’s entire political order is collapsing, Mexican oil output has cratered, net Southeast Asian energy exports have ceased, North Sea oil is in terminal decline, Venezuela is giving civilizational collapse the ole’ college try, Saudi Arabia and Iran are already fighting an eight front cold war and using a lot of bullets in doing so, Russia invaded Ukraine along one of its export pipeline routes resulting in Western sanctions on the entire Russian energy sector, Donald Trump and Kim Jong Un are trading nuclear annihilation threats. And yet oil prices just cannot get a lift.

So long as we are in this happy geopolitical moment where the global system still exists, shale has poured oil on troubled waters – providing one very welcome bit of calm in an increasingly-troubled world. But don’t get too comfortable.

It is all temporary.

As the retrenchment that the Americans began under Barack Obama accelerates under the Trump administration, the ability and willingness of the United States to hold the global center is fracturing. And soon, so will the global system as a whole. At that point, the United States will have a large, deep, stable energy market that is supplied from within the confines of North America. And the rest of the world will have to learn to deal with Iraq and Iran and Saudi Arabia and Russia and Ukraine and China and Indonesia and Venezuela and Brazil without any security arbiter. The result will be an energy crisis global in scope, except for the United States which will not participate. Expect the U.S. presidency and Congress to quickly (re)enact an oil export embargo to sever local oil markets from global oil markets. U.S. and Canadian prices will likely ceiling below $70, while everyone else will be lucky to have prices double that.

For more on how the American and global energy sectors will evolve and convulse in the years ahead, read The Absent Superpower: The Shale Revolution and a World Without America.

The Turning Point

I’m on a mid-term break in my annual Unplug&Recharge effort, and am taking stock of what’s changed while I was out of cell phone range, and therefore blissfully ignorant of everything from CNN to Fox to Facebook to the Journal. The loudest development in my opinion seems to be what I’ll refer to as the Scaramucci Interregnum. Before I left for backpacking in Wyoming on July 13 Sean Spicer was the White House Communications Director, and Reince Priebus was the Trump administration’s chief of staff. While I was gone, Anthony Scaramucci rode into town, Spicer and Priebus left, and Scaramucci himself was dismissed shortly thereafter. Trump now has a new chief of staff in John Kelly, who served previously as the Secretary of Homeland Security.

Let’s break down what this all means.

First, an in-your-face personality like Anthony Scaramucci (aka “The Mooch”) was a horrible choice for a position that is all about smoothing ruffled feathers and keeping people – including  those hostile to the administration’s views and policies – informed. But his presence did present us with something very useful. His profanity-laden tirades demonstrated that Donald Trump has opinions on how much is too much. Considering the president’s own, shall we say, disinterest in self-censoring, this in and of itself is a notable discovery.

Second, the Interregnum has signposted a sharp change in the administration’s domestic political capacity. The departure of Spicer and Priebus removes two of the three “mainstream” domestically-focused Republican personalities from the administration. The only one remaining is Vice President Mike Pence. While the Veep is hardly a wilting flower, historically the Vice Presidency is only as powerful as the Presidency enables it to be. Trump may be many things, but “enabler” isn’t the word I typically reach for when I try to describe him.

Without any “establishment” personalities left, the leading advisor to Trump on all things domestic is now Steve Bannon, a nationalistic populist who has some rather… eclectic and non-standard views on how everything should be. Many were critical of the “adults” in the Trump administration for their mixed record on guiding the president to a more conventional path. On domestic politics, there are no longer any adults left. Expect things to get lively.

Third, expect them to get chaotic too. John Kelly was a fine Marine general and seemed quite capable and at home in Homeland Security. I have no problem with senior military personnel serving in civilian administrations and have written before about my support of and respect for people like Defense Secretary James Mattis and National Security Advisor H.R. McMaster. In foreign and strategic affairs, the top-down model of management that is typical of military minds works. After all, you don’t want some low-level bureaucrat making strategic policy without supervision, or even with much wiggle room on the specifics of implementation.

But chief of staff is a political job. It is about balancing dozens of competing players, many of whom by design are attempting to manipulate or deceive the president, and yet still must be considered. It is a position that is a combination of gatekeeper, ego juggler, reality-checker, cat-herder, and selective censor. The military isn’t exactly known for cranking out such people. Solid chiefs of staff have broad exposure, deep expertise and/or cut-throat political instincts: Jim Baker, Josh Bolten, Rahm Emanuel. Kelly is smart as a whip and good at what he knows, but this isn’t the job for him. Which leaves Trump both under the influence of Bannon and lacking someone who can capably manage the chief executive’s affairs. Get ready for not just press reports by Twitter, but policy by Twitter.

Speaking of Twitter, a Twitter follower recently asked me for confirmation that despite all the… activity in the White House these days, does a functional plan still exist to promulgate American power in the long run? It’s a reasonable question. I’ve long taken the view that American power will grow in both absolute and relative terms for at least the rest of this century. That, in a nutshell, is the theme of The Accidental Superpower.

Let me be clear: there is no plan. The Americans have hardly ever had a plan. From an international and strategic viewpoint, America’s strengths are not and never have been in its governing system in general or any administration in specific. Instead, America’s strengths come from a balance of factors which exist entirely outside of the political realm:

  • Geography: The United States occupies the world’s best lands interlaced with the world’s best naturally-occurring transport system, the Greater Mississippi system. In addition, any potential invaders are separated from the United States by the Atlantic and Pacific Oceans. That leaves the Americans free to develop without fear of outside interference, yet gives them the capacity to intervene across the world at times and places of their choosing. And should things get dicey, the Americans can always just head home. For them – and them alone – defeat doesn’t mean someone is parking their tanks in your lawn.
  • Demography: Countries that survive in the long-term have a population balance between mature workers to invest and pay taxes, and young workers to raise children and whose consumption powers the economy. Most of the world’s countries have run out of young workers already: Germany, Japan and Italy are the worst – all are rapidly aging into national oblivion – while Russia, China and Brazil aren’t far behind. The United States is one of the (very) few advanced countries where the balance is even remotely stable and sustainable.
  • Energy: Love it or hate it, energy is a requirement of modern life. For the last several decades, global politics was heavily colored by the need to bring energy from far-flung locations in the Middle East and Siberia to East Asia, Europe and the United States. No more. America’s shale revolution has already transformed the United States into a net energy exporter, and by 2020 it will likely even be an oil exporter in absolute terms. And if you’re of the Green persuasion, the United States is the First World power closest to the equator, making it the only one that can actually harness solar energy in meaningful volumes.

These are things that no president can screw up. The United States survived Bill Clinton, George W. Bush and Barack Obama. The ride may often be wild, but the United States will survive post-Interregnum Donald Trump as well.

Other countries, not so much.

The three factors of geography, demography and energy enabled the United States to impose a global Order during the Cold War that, in essence, outlawed conflict among the allied powers. Maintaining that Order was difficult – it required constant consultation and coordination. Falling from Order to Disorder, in contrast, is eeeeeasy. The Cold War is over, and the American president no longer has a functional executive staff that is capable of consulting and coordinating. All it requires is not a goddam thing.

Since America’s strengths are natural and apolitical, the United States will broadly be fine. For countries that lack geographic strength and isolation, demographic heft and stability, and energy access or independence, however, life outside of the Order is looking mighty scary.

Which makes it absolutely critical for other countries to have their own plans if they are to survive the Disorder to come. Unfortunately, most of them are slipping into narcissistic populism, bald denial, deer-in-the-headlights panic, or some terrifying combination of the three. There are exceedingly few countries that boast the combination of factors required to even attempt to chart their own destinies in a sustainable manner.

I’m certain that in a few years domestic pundits will (correctly) use the Scaramucci Interregnum to signpost the beginning of a (more) volatile and unpredictable Trump White House, but there’s more at stake than that. The real issue of the day is that the transition from global Order to Disorder just accelerated from a slide into a free-fall.

And now we get to see what happens next: Now we can begin to witness the rise of the New Orders. The – ultimately successful – efforts of four specific countries to reshape their neighborhoods in the wake of the American withdrawal from the world.

As for who those four countries are, how they’ll do it – and above all else – why they’ll be the only four to succeed, you’ll have to wait a bit. You see, the next book isn’t done yet.

But I do have a cover to share…

Qatar, PACOM, and the Absence of US Foreign Policy

So, two things that happened in the past week that were of interest to me.

First, Saudi Arabia issued its official demands that the Qatari government would need to meet for the Saudis and their allies to end their diplomatic, political and economic blockade. With deep conditions ranging from the shuttering of the al Jazeera news service to a complete realignment of the country’s foreign policy from one of independent stances to something more appropriate to a province of Saudi Arabia.

Second, I spoke at PACOM in Hawaii about the changing nature of American power. The subsequent discussion focused heavily on the evolving role of the U.S. military as the country’s geopolitical priorities shift. The two neatly dovetail and highlight one of the deepening challenges the U.S. government faces in the next few years.

Let’s start with the background.

Near the end of World War II at the Bretton Woods conference the United States struck a deal with the allies. In the post-war order, the United States will defend not just your countries, but all your trade. You will no longer need to fight one another to access raw materials or markets. Furthermore, the American market — the only one of size to survive the war — will be open to you. All you have to do is side with America against the Soviets. Put simply, the United States pledged its military and economy to subsidize history’s largest alliance network.

By 1992, however, the Cold War had ended and — caught up in the transition from the Bush Sr administration to Clinton — the Americans neglected to craft a replacement strategy. The world changed, but U.S. strategic overwatch and subsidization of the alliance did not. All the various Cold War allies — ranging from the Germans to the Koreans to the Chinese to the Greeks — continued to benefit economically, but the Americans no longer received the strategic deference that was part of the original Bretton Woods deal.

Twenty-five years later, the economic cost of such an outdated strategy has led to the perception in many Americans’ minds that the world is freeloading on American security commitments. This isn’t intolerance or a fit of pique, it is a reasonable response to Washington’s inability to craft a replacement for a security policy that is a generation out of date. Such perceptions heavily colored the populist nature of the 2016 presidential election, and of course the election of Donald Trump — and now the American retrenchment is in full swing.

Yet it hardly started with Trump. American strategic policy has been on autopilot since 1992. The Clinton, W Bush and Obama administrations were too distracted, disinterested and/or unaware of the intricacies of the international system to meaningfully update the original Bretton Woods deal. In Donald Trump the Americans now have a leader just as distracted, disinterested and/or unaware as his three immediate predecessors. What is different about Trump is that as a populist he feels no attachment to the Bretton Woods system, so there is no natural inclination to just let-it-ride. Consequently, there are a growing number of breaches as the freshmen president, by action and inaction, peels away bits of the old system — but doesn’t replace them with anything new.

Such peeling is on full display with U.S. policy to the Persian Gulf. Trump’s first overseas visit wasn’t to traditional partners like Canada or Mexico or traditional allies like the United Kingdom or Japan, but instead to Saudi Arabia where Trump was quickly sucked into a gilded flattery fest of Trumpian proportions. The Saudis emerged from the visit-glow thinking they had the White House’s stamp of approval to restructure their region in whatever way they saw fit. Their first act wasn’t to move against ISIS or Iran, but Qatar — a tiny country the Saudis have long viewed as unnecessarily close to Iran, unnecessarily promiscuous when it comes to sponsoring political groups opposed to Saudi goals, and in general unnecessarily free-willed.

Qatar, however, didn’t buckle — and that brings us to PACOM.

The U.S. military apparatus is charged with dispensing and enforcing U.S. strategic policy. As part of such duties, the military must constantly interact with allies and rivals around the world. That takes soldiers. Sailors. Marines. Airmen. Bases — and those bases require commitments to local and regional security concerns. That takes engagement, reliability, consistency. Every. Single. Day. By far the Americans’ largest overseas base these days is in Doha…the capital of Qatar. The CENTCOM base there has been the nerve-center for all US operations in Syria, Iraq and Afghanistan for some 15 years now.

The Qataris believe — correctly — that the U.S. military has their back and so there is no need for them to back down to the Saudis. The Saudis believe — correctly — that the Trump administration has green-lit their desire to restructure their region more to their liking. The Trump administration believes — correctly — that the U.S. strategic policy it inherited needs an overhaul, but has yet to craft that replacement policy.

The result in the U.S. military and diplomatic community is an overriding sense of confusion and frustration. Their standing orders are clear, but the shifts out of the White House are equally clear. And increasingly, the two contradict. The folks at PACOM can’t figure out, for example, whether they are supposed to treat China as a threat, a partner, a rising power who should be engaged…or given space. And mixed messages aren’t the best things when dealing with multiple aircraft carrier battle groups.

The issue is not so much Trump’s tendency to make policy via Twitter (although that obviously doesn’t help), but instead that ever since the Cold War ended the Americans have not had a goal.

Until the Americans select a new one they cannot have a coherent strategy. Until they have the national conversation required to select that goal, these deepening splits between needs and actions will only widen, leaving allies new and old not just in a lurch, but often acting against one another — as Saudi Arabia and Qatar are now.

There are plenty of places where this disconnect between emerging strategic interests and outdated policy will grind. Some of the louder ones include NATO, where it is no longer clearly in America’s interests to defend Europe against Russia. At the DMZ, where North Korea is far more a threat to South Korea, Japan and even China than it is to the United States. In the South China Sea where Chinese aggression is less a threat to American interests than to Taiwanese and Japanese. In Kuwait where America’s lack of oil import needs staggeringly reduces the Americans’ interest while staggeringly increasing Saudi belligerence. America’s use of Turkey’s Incirlik airbase will likely evaporate for a mix of reasons ranging from disenchantment with the evolution of the Turkish political space to a general feeling that the refugee issue is Europe’s problem, while Syria is Turkey’s problem.

Other places generate a lot less heartburn and — even without some new overarching strategy — are likely to keep their current levels of American involvement regardless. The UK, Canada and Australia have been and will remain America’s closest allies under almost any reasonable scenario. Morocco and Algeria are reliable partners in the struggle against Islamic militancy. Proximity and economic centrality will keep the Americans involved in Panamanian affairs for as long as water transport is a thing. Singapore sits on the world’s most strategically located real estate and is likely to be a valued partner until the end of time itself.

Perhaps the quirkiest aspect of all this are the countries likely to suffer the most from the policy discombobulation.

On the surface the Qatari-Saudi spat seems like it would deliver the Persian Gulf to Iran on a silver platter. But no. Within the first week of the argument, Turkey had deployed troops to its airbase in Qatar. Nothing is easy in the Middle East, even (especially!) for powers inhabiting the region. Turkey’s push to support Qatar is a clear indication to Tehran (and Riyadh) that even if US troops left the region tomorrow, Iran gets to look forward to facing off against yet another superior economic and military power. Unlike the United States, however, Turkey has a bevy of permanent regional interests directly opposed to Iran’s own, and occupies prime real estate in the neighborhood.

Trump’s wobbling on NATO seems like it gives the Russians everything they want — a Europe without the American security umbrella. But no. With the Americans out, the Germans have no choice but to rearm — and every time that has happened, it hasn’t turned out well for Moscow.

Loosening security ties with the East Asian rim seems like a dream come true for the Chinese. But no. Not only does that force Japan, Korea and Taiwan to massively bulk up their defense capacities (and perhaps go nuclear), but China’s extensive international economic position is utterly dependent upon the Americans keeping markets open and sea lanes safe on a global scale. Without America, there is no Chinese economic miracle — and most likely a naval war with Japan that China simply cannot win.

What will the Americans decide they want out of all of this? What will their new goal be? No clue. American politics are loud and messy and amped up with righteous indignation at present. Even if Americans could start the national conversation on finding that elusive goal today, I doubt they’d come up with the final answer in this presidency.

Gathering Strength

Elections are funny things. They are the culmination and distillation of forces economic, political, military, technocratic, social, racial, ethnic, linguistic and cultural. Elections are the small bites that the media loves because they’re easily digestible data points, plus the dates are announced ahead of time. After the Brexit and Trump surprises of last year, election-chasing has become the new sexy. Think of the global cheers when Le Pen lost in France. Or the consternation when Turkey’s constitutional reforms went through. Or the sighs of relief when the Dutch and Austrian elections didn’t result in victories for neo-Nazis.

Drawing conclusions can be difficult. Of the endless minutiae that factor in, voters ultimately have to select from a less than subtle palette of choices. Making sense of it all is as difficult for the outside observer as it is for the voter. Generating predictions in such conditions are, in a word, problematic.

I’ve kicked out three big election calls for 2017, and all are in need of updates.

The Germans

If the polls hold at where they’ve been for the past nine months, Angela Merkel will earn her fourth term as chancellor this autumn. Her primary opposition (which just happens to double as her current coalition partner) has hemorrhaged nearly its entire leadership cadre in recent years and ruling with Merkel’s Christian Democrats has contaminated them in the eyes of most center-left voters. Such disenchantment, however, hasn’t really benefited Germany’s other two leftish parties, leaving Merkel & Co. with a commanding lead. Considering all the crises that continue to batter the European system, having Merkel’s deep expertise and calm demeanor at the heart of all things European remain the Continent’s most positive and reliable feature.

The Brits

Tory leader and Prime Minister Theresa May called snap elections this spring, and to many (me included) it appeared her Conservatives were poised for an epic routing of their opposition.

Didn’t happen. Come election day (June 8) the Conservatives stumbled, losing their majority and only being able to continue ruling because of assistance from the DUP (think: Orange). Many might remember the Ulster Unionist Party (UUP), the pro-British Protestant party that dominated Northern Ireland during the Troubles. The DUP are to the right of the UUP, who incidentally lost their two seats in parliament during the snap election. The party’s supporters are among the most pro-Brexit, pro-life, pro-British, anti-gay, anti-immigrant, socially conservative and Eurosceptic parties not only in Northern Ireland but throughout the UK. And these are the people Theresa May (and her more moderate, center-right party) will have to court in order to stay in power.

Two things changed. First, the Conservatives made a series of policy-release gaffs, denting their credibility as the only adults in the British political system. The Tories made deep inroads against the Scottish Nationals, focusing on putting the Scottish independence issue to bed for now, but it cost them against a massively underestimated Labour party.

Second, British Labour is no longer of the center-left. Jeremy Corbyn, often lampooned as the “British Bernie Sanders,” ran a sophisticated and successful campaign that even included a law & order platform heavy on the sort of pro-security spending and rhetoric that are the hallmark of not just the Right, but the hard right. The shift provided Labour its best showing in a decade, especially as younger, urban voters came out in higher numbers than expected.

May’s government’s top task will be to negotiate the country’s exit from the European Union with nothing resembling a mandate. Odds are a hard crash out of the EU that will generate a multi-year recession – and that’s the positive case. The less-positive case involves May’s government falling to its mildly-rebellious front bench or to the whims of a chaotic and hostile Labour opposition.

France

La Republic En Marche! didn’t even exist as a party 14 months ago, and after the June parliamentary polls its coalition now holds a commanding majority of 350 in the French parliament. The hard-right National Front quadrupled its representation, but only to 8. The real story is the absolute gutting of the conservative Republican-led alliance down to 137. The Socialist-led alliance lost the most, dropping to 44, following steady gains that began in 2004.

The question is what does this mean for the Fifth Republic. En Marche! is new. Most of its legislators have never held public office. The same holds for the party’s leader and France’s new president, Emmanuel Macron.

Here’s France’s problem:

The economy has been moribund since the 1970’s and consistently fails to preform to snuff. The primary obstacles are cultural and regulatory: the post-WWII social welfare model has put down remarkably deep roots in France, leading the French to value government services and quality of life over the sort of activity that tends to generate taxes and… well, high quality of life. The result is a combination of ennui and rage that government isn’t doing more (sound familiar?).

The issue has gotten so bad as to contaminate France’s foreign relations with its most important partner: Germany. French governments have consistently demanded that the EU subsidize all things French with German money, as well as to use more German money to pay for whatever ails the broader European system. The Germans have politely, if firmly, declined to do so. Macron realizes and acknowledges that until such time as France can repair its own house, calling upon the Germans to fork out more for Europe just isn’t going to happen.

With a commanding majority, Macron and En Marche! will attempt to force the sort of economic, cultural and social overhaul that the last several French governments have tried and failed to do. Succeed or fail, expect strikes of a scale that France has not seen in decades (which is saying something).

If Macron is successful, then he will carry the case to Berlin that the Germans need to dig deep to pay for the federalization of the European Union. That means a common budget, common government debt, and some sort of sharing of existing liabilities. For Marcon’s case to get any hearing, his reforms at home must be far more painful than anything any French government has enacted since Napoleon.

So what does it all mean?

The common thread here is centralization.

Merkel is slowly, steadily, quietly, drawing power within the German and European system. Politically, it is to marginalize her opponents at home and abroad. Strategically, it is to prepare for a world with a more active Russia and Turkey and a less active America.

May has to wield her minority government as if she had a crushing majority. The only way to do that is to strengthen state institutions so that whoever holds them has an outsized influence in all things British. Somewhat ironically, Jeremy Corbyn’s shift to the hard right will make it easier for the moderate right to do just that.

While Marcon has the best political tools of the three, he is also attempting the most dramatic transformation: attempting nothing less than a complete overhaul of French policies and economic system. That will require the government forcing its will on an often unruly population who has the tendency to vote “No! What was the question?”

The centralization theme isn’t exactly coming out of the blue.

The world has felt more chaotic of late as the problems we face are getting larger and the tools we have used to respond for so long no longer work. Europe has had a migration problem but the tools needed to manage it are overwhelmed. The financial crisis left much of the world scrambling to get back to where they were a decade ago. But most importantly, the organizing principles of the world Order have been flaking at the edges. Governments the world over are starting to feel the cold as the Disorder sets in.

The rapid changes on the horizon require agile, quick decision making and implementation. These are anathema to many of the multiparty, parliamentary systems that dominate Europe. Germany, Italy and Spain in particular are amalgamations of smaller competing statelets that have been cobbled together over centuries – they’re not designed to allow the central government to implement changes easily. It is hardly a problem the Europeans have a monopoly on: Canada functions as ten countries in one – with all the complications that holds for policy. Brazil is confederal, while Japan struggles with a deep state that resists change in all its myriad forms. India is less a country and more a geographic expression akin to the Holy Roman Empire.

So countries are consolidating. Britain is preparing for a bruising Brexit. Japan has built its largest carriers since WWII and their constitution doesn’t even allow them to have a wartime military. The European Commission is desperate for a roadmap to demonstrate the end of the EU is not nigh. The Indian government is hoping to obliterate the opposition Congress Party as a political force so it can rule unfettered. China’s preparing for political lockdown at its autumn party gathering. Russia’s implementing Snowden-stolen social monitoring techniques at the speed of thought. France aims for a root-to-branch consolidation that guts parties and unions (most of us call these pillars of civil society). Turkey, Hungary and Poland are implementing personality cults. Liberal heartthrob Justin Trudeau wants to nearly double Canadian defense spending (yes, that Canada). Angela Merkel – brilliant, measured, and often boring – is openly discussing Germany’s need to secure its own defenses (and if that doesn’t terrify Europe as much as it titillates Putin, I don’t know what will).

As weird as it sounds, the United States is – so far at least – the exception. Donald Trump’s consolidation moves are typical for any freshman leader, not someone eyeing a storm on the horizon. Funny enough, it took Trump’s Twitter account to make the rest of the world look up.

Read The Absent Superpower for more on why each of these countries is – or isn’t – likely to succeed.

Curious About Cuba

Last week President Donald Trump announced a partial revocation of his predecessor’s diplomatic opening to Cuba, reinstating pieces of the decades-long embargo impacting financial transfers, trade and transport.

As a rule, I don’t get too worked up about this or that president’s policies on this or that country. It is a big world. As a massive, domestically-focused economy with immense strategic depth and insulation, the United States has enormous wiggle room to both make mistakes and take the long view. Even presidents as aggressive as FDR during times as tumultuous as World War II can afford to sit back and watch things unfold. The bar for what actually impacts the homeland is pretty high.

Cuba isn’t one of those things – or more to the point, the Caribbean isn’t one of those places.

The reason is movement. Moving things by water is less than one-tenth the cost of moving them by land, making rivers among the most strategic economic assets on the planet. The interconnected rivers of the Greater Mississippi system have more miles of navigable waterway than the rest of the world’s internal waterways combined. That is the core reason the United States is a superpower.

But rivers have one mission-critical downside: they have to end somewhere. If a foe can threaten the river’s mouth, then trade possibilities face a pretty brutal cap. Securing river mouths and keeping them free of foes was a leading topic of much of Europe’s genocidal centuries.

For the Americans, the problematic bit isn’t just New Orleans, the last stop on the Mississippi’s course to the Gulf of Mexico, but also the island of Cuba which truncates access between the Gulf of Mexico and the wider Atlantic. And even if the Americans can get past Cuba, they still need to neutralize all maritime choke points in the Greater Caribbean region.

If anything, it is more serious than it sounds. For the United States has more waterways than “merely” the Mississippi. The Intracoastal Waterway lies behind a series of barrier islands that broadly parallel the East and Gulf Coasts. One of those Cuban-pinch points is the Florida Strait, which could enable a hostile Cuba-based power to not just block American trade in and out of the Gulf of Mexico and Mississippi, but also disrupt internal maritime transport from New York, Richmond, Savannah and Miami from reaching New Orleans, St Louis, Louisville and Minneapolis.

Any extra-hemispheric power that is able to partner with any spot in the region could turn the Americans from an outward-projecting superpower to one whose own internal transport systems are in question.

There’s more to the Caribbean than Cuba, more to Panama than cheap shipping, more to Venezuela than cheap oil, more to the Bahamas than beaches, and more to Grenada than cheap medical school. These places and more are the collective garage door to the United States. A hostile Caribbean threatens the United States in a way that a robust China, a war-drum-beating Soviet Union or German-dominated Europe cannot. As such, American strategic policy since roughly 1800 has been borderline neurotic about forcing the Caribbean into a shape that works for the United States. Just how neurotic? What was truly scary about the Cuban Missile Crisis wasn’t just how discombobulated the Americans were, but how logical it was for them to risk nuclear war to keep the Soviets out of Cuba.

At its core, Obama’s sunshine policy was about putting the Cuban bit of the Caribbean puzzle on the path to bed – permanently. It wasn’t like Cuba had been a threat to the Americans since 1992. Left with just its own resources, Cuba is merely an irritant. Yet as a geopolitical strategist I did find it nice to shift the country firmly out of the “watch closely” category with Iran and Ukraine on my wall map, and lump it in with the “meh” column that serves as home to Belgium, Belarus and Bangladesh.

Does this mean Trump’s decision is foolhardy? Not at all. Trump is at least partially right: the Obama administration really didn’t play hardball with Havana – the bilateral warming put next to no pressure on the Castro regime to liberalize, much less stand down. To use the president’s terms, a better deal can certainly be had. Trump holds most of the cards here, and there are plenty of options: everything ranging from a firmer diplomatic stance to economic sanctions that target other investors in Cuba to the threat (or use) of (para)military force. And since at present there is no extra-hemispheric power that seems interested in making Cuba its local military footprint, there is no time pressure either.

But that doesn’t mean that Cuba will remain in its post-Soviet no-man’s-land forever. Trump’s actions must have follow up. For if all this backtrack does is buy time and space for someone else to insert themselves into Cuban affairs, then much of what gives the Americans all that strategic insulation, economic power and room to maneuver – much of what makes the United States a global superpower –could be in doubt.

Qatar Caught in the Disorder

Saudi Arabia is in the midst of a full-court press against the government of Qatar, leading a coalition of countries as varied as Egypt, Bahrain, the UAE, Yemen and the Maldives. All these states and more have severed diplomatic relations, in addition to barring all land, air and maritime transport to and from the tiny Persian Gulf country.

So what’s up?

Think of the relationship between Saudi Arabia and Qatar like the relationship between the United States and France during the Cold War. It was obvious to everyone who was stronger, and France didn’t appreciate playing second fiddle. So, in order to balance relations and maintain some independent standing, France would cut side deals with the Soviets. Little that Paris did was purposefully hostile to Washington, but France was certainly the gap in the Western wall.

Qatar is a Sunni Arab country, just like Saudi Arabia; in fact, Qatar is the only other country claiming Wahhabi Islam as its official state religion. But that doesn’t mean Qatar — with a citizen population less than one-twentieth that of Saudi Arabia — wants Riyadh to be the boss of it. Qatar’s independent streak is borne out of a perception of its options. Qatar is the only Persian Gulf state not utterly dependent upon oil. Instead it exports natural gas in liquid form, making the Qatari economy resistant to any minor Saudi meddling. Doha has weaponized news media in the form of Al Jazeera, routinely blasting out stories critical of its neighbors (read: the Saudi royal family) throughout the Arab speaking world.

Most importantly, Qatar has worked to bring other powers into its side of the Persian Gulf. The most obvious of these powers is Iran — Saudi Arabia’s arch-nemesis (shameless plug: for lots of information on the coming war between Saudi Arabia and Iran, see Chapter 7 of my new book, The Absent Superpower.

But Qatar has hardly stopped there. Qatar has also pursued an aggressive foreign policy that seeks to back Islamist groups — oftentimes militant Islamist groups — throughout the Middle East. Based on your politics, many would agree with the Saudis and classify some of these Qatari-backed groups as being in the terrorism business.

A few things come from this:

First, this points to how emboldened the Saudis must feel after Trump’s visit and sword-dancing bonanza. Riyadh is desperate to position itself in the region before Iran can get back on its feet, however wobbly. An early step is to ensure that all regional states fall in line, and fast. Qatar has long been the most defiant Gulf Arab state. Any concessions Doha grants in upcoming days will be an important message to Oman and Kuwait, who have yet to side with the Saudis in halting trade with Qatar. Also important is the reaction of Turkey — the only other Sunni state in the region that might butt heads with Riyadh over who is really in charge.

Second, the Saudi strategy seems expressly designed to bring about a rupture in Qatari-American relations. One of the balancing powers the Qatari brought in to offset the Saudis is the United States. CENTCOM established a forward headquarters in Qatar to coordinate the Afghan and Iraqi Wars, and now CENTCOM plays a leading role in anti-ISIS operations. So long as the Americans have CENTCOM in Qatar, there is only so much the Saudis can do to counter Qatari ambitions. But should the Trump administration conclude the Qataris are Iranian-loving terrorist-sponsors, CENTCOM would relocate back to the American mainland in a heartbeat. That wouldn’t just leave tiny Qatar utterly alone, it would probably result in its de facto annexation by Saudi Arabia within a few years.

Third, welcome to the new normal. From 1945 until … last month, the world was more or less American-managed. The United States used its control of global markets, global security and the global ocean to build a series of alliances and institutions to hold everything together. In this system, the participants gained global market access, global resource access and physical security in exchange for deference to Washington on defense matters. They also agreed to not do certain things. Near the top of the no-no list was economic warfare: embargoes, for example, were to be relegated to history. The United States would arbitrate disputes to prevent them from spinning out of control, particularly between countries that were on the ally list. Countries like, say, Saudi Arabia and Qatar.

The United States has been backing away from such active management since the Clinton administration and I’ve long maintained that whoever was elected president in 2016 would be the leader to preside over the formal abandonment of that system. (Lots on that in my first book: The Accidental Superpower.) Trump won. Trump is on deck. Trump is trashing the American-built, -maintained and -brokered global Order. Bereft of American overwatch, regional powers are taking matters into their own hands. The Saudi-led actions against Qatar are a (very small) taste of the Disorder to come.

Fourth, do not allow yourself to get caught up in the Saudi propaganda. While the groups that Qatar (and Iran) back are not nice people, it isn’t as if the Saudis are paragons of pacifism. Saudi foreign and security policy going back to the 1980s is to export Saudi malcontents to conflict zones, as well as to supply fighters within and beyond their region with weapons, intelligence and money so they can bloody Riyadh’s foes. By the very definition that the Saudis are using to condemn Qatari actions, the Saudis are the industry leaders in the terrorism business.

You can easily make a strong case that Qatar, Saudi Arabia, the UAE and Kuwait are all complicit with militant groups of all sorts — and have been for decades. Sometimes they control these groups, sometimes they simply assist them, sometimes they lose control and the groups rebrand, sometimes factions within the sponsoring countries keep supporting the militants even after control is lost. This last is certainly what happened with mujahedeen-turned-al Qaeda 20 years ago and is happening with al Qaeda in Iraq-turned-ISIS today. No one in the Persian Gulf has clean hands.

Fifth, a key characteristic of the emerging Disorder is that while the United States will not feel that it is nailed down to express security guarantees or global structures, it still will intervene from time to time and will still play favorites. While I believe it is high time for the United States to bring CENTCOM home, I also read Saudi actions as an attempt to shape American behavior. Is there room for Saudi-American cooperation on a great many issues? Sure. But as the U.S. lets the global order break down, there will be constant risks of being coopted, bribed, tricked and otherwise manipulated into subconsciously adopting the goals of other countries as America’s own.

Qatar is just test #1.

Some Inconvenient Truths

U.S. President Donald Trump pulled the United States out of the 2016 Paris Climate Accord June 1. In the past 24 hours the media has been, in a word, lively. Trump’s decision was an appeal to a base that has hungered for these kinds of dramatic, headline grabbing actions – and the media has not failed in providing the “liberal clamoring” that so energizes Trump’s supporters.

Let’s get my personal politics out of the way. I’m a Green. I’ve got solar panels on my house. I recycle. I drive a Prius. I backpack the Rockies in the summer. I would have handled the Paris Agreement differently, but I certainly agreed with its tenor and thrust. I’m part of the whole “Science is Real” movement because of, you know, the Enlightenment.

I’m not a normal Green, however, because of, you know, the Enlightenment. I can do math. And that means that I’m pretty good at looking into the guts of a topic and sussing out facts and trends that supporters of this or that movement or ideology often find unsettling. Climate change in general and the Paris Agreement in specific are no exception.

As a Green, it might be uncomfortable to admit but the reality is that the market is driving green technology development and application in most economies, especially the United States. If you agree with former President Obama’s statement that cities, states and businesses (i.e. the engines of the US economy) are picking up the mantle of leading on responsible climate action, then the market will ultimately decide how well and how long countries adhere to “green” behaviors.

The real inconvenient truth for those condemning Trump for the Paris withdrawal revolves around fossil fuels. They certainly have problems, but fossil fuels don’t all pollute equally. The new combined cycle natural gas burning power plants that have been going up in recent years have but half of the emissions of coal, and because natural gas is either a waste product out of the shale fields or can now be produced at roughly $2 per 1000 cubic feet (less than half the forty-year average), it is wiping coal from the board. Most Greens hate natural gas because it is cost-competitive with pretty much everything – especially alternatives – but the bottom line is because of shale natural gas the United States is going to meet its Paris commitments regardless of what happens to the agreement itself. With or without Obama, with or without Trump, with or without the EPA, and largely with or without alternative energy sources.

Alternatives just are not ready to take over baseload capacity, and until that happens we are stuck with fossil fuels. Despite the rise in effectiveness in and demand for solar and wind technologies, another inconvenient truth is that peak daily demand for power in most places is just after sunset, while peak seasonal demand in most places is after sunset in the winter. That desperately degrades the solar argument anywhere that has high solar variation between summer and winter (like most developed countries). I, however, live in Texas – a sunny location where peak supply and demand line up almost perfectly.

Between cost and recharge cycle restrictions and safety, battery technology needs at least another decade to work out the kinks before it can really start to square the supply/demand circle. In the meantime, it isn’t as if lithium extraction is the most environmentally sound practice; if you like lithium batteries and electric cars in their current incarnation, you have to love strip mining. And always keep in mind that many of the components of your standard cars are recyclable or reusable, but your Tesla’s fuel cells – or at present any lithium car battery – are definitely not.

Which brings us back to the Paris deal.

It’s unclear what Trump’s withdrawal from the Paris accords will have on climate change, because it’s unclear what a non-binding agreement like Paris could do in the first place. Critics of the U.S. withdrawal who note the U.S. is joining the ranks of Syria and Nicaragua are inadvertently making the point for me: there’s no way a non-binding deal that has members as diverse as Vanuatu, Germany, Brazil, India and Congo is going to be entered into and applied equally across the board. That even the big oil companies – the traditional bugbears of environmentalist nightmares – are on board with the Paris deal shows both how toothless it is but also how much industry has already shifted toward reaching the emissions aims it sets out. And to do so with or without a deal.

I’ve found it particularly entertaining that many seem to be cozying up to China. CNN went so far to publish a story titled “Has Donald Trump Given the World to China on a Silver Platter?” China being the country that has added more soft coal burning capacity than the rest of the world combined during the past decade. Germany is also often feted as the future of Green politics – despite continually moving away from cleaner fuels like natural gas and nuclear in favor of lignite coal. Yes, Germany has installed loads of solar power capacity, but because the sun does not actually shine in Germany all those panels are in essence giant paperweights. U.S. per capita emissions have been collapsing since shale kicked in; China’s have tripled since 1990. Despite Germany’s PR sparkle, their emissions reductions have far more to do with demographic decline than alternative energy. In fact, German emissions reductions have actually slowed since they started their solar buildout.

The booming noise of 10,000 pundits and analysts in what has become standard media covfefe misses the forest for the trees. Trump isn’t just the poster child for an obnoxious new form of politics, but also for a far deeper geopolitical shift that is already past the point of no return. The question is not if China will lead on climate change, or whether France or Germany will pick up the mantle of Leader of the Free World, but the most critical inconvenient truth is that the era of unipolar global leadership is slipping away from us.

Love or hate the United States, love or hate the global order, the United States created and maintained that order to serve its Cold War interests. The Cold War is long gone, and now the U.S. – quite belatedly I might add – is letting the order go. We are no longer living in an age where the U.S. has the will or ability to continue being the lead on everything, everywhere, all the time.

We’re all gaining insight and empathy into the minds of carriage makers in the face of rising automobile production, or whale oil traders at the dawn of the kerosene era. Everything we know for the past 70 years is predicated upon American-instilled international stability. That’s the European Union. That’s the Communist Party of China. That’s Brazilian soy production. That’s Toyota. That’s the iPhone supply chain. That’s even the Paris Accord. None of them can function without the American-maintained Order. We don’t know how to function during such a fundamental paradigm shift.

The end of the Paris Agreement has triggered the ultimate in rear-view-mirror longing. It’s a waste of time to mourn a nostalgic view of what America’s role in the world once was. Our effort would be far better spent preparing for the Disorder to come.

Life After NATO

For all intents and purposes, the North Atlantic Treaty Organization – the foundation for American security for the past seven decades – ceased existing on May 25, 2017.

While attending a highly anticipated (some might say dreaded) meeting with NATO heads of state and government in Brussels, U.S. President Donald Trump delivered a speech railing against member-states who have failed to meet economic obligations to the defense pact, going so far as to indirectly abrogate the alliance’s cornerstone: the provisions for collective defense under Article V of the treaty.

Article V is the backbone of the NATO alliance: that an attack against any individual member will be treated as an attack against all members, and will be met with a requisite response. Article V is perhaps the biggest piece of what incentivized the Europeans to resist Moscow throughout the nuclear-tinged threat of the Cold War era. But after the fall of the Soviet Union in 1991, the Europeans steadily gutted their militaries, redirecting funds to ballooning social programs and pensions.

I cannot emphasize enough that while the breach between the United States and the rest of NATO is happening on the Trump administration’s watch, this is not a position that will change once Trump is gone.

After the 9/11 attacks, the Bush administration made it clear to the NATO allies that future relations would be viewed through the prism of cooperation on anti-terror programs. In response the French and Germans partnered with the Russians to oppose the Iraq War. During the first Obama administration, the White House explicitly asked NATO to increase its troop commitments to the Afghan conflict to prevent the Taliban’s re-emergence. With a very few exceptions the European allies didn’t just fail to provide, they rejected Obama’s request with fanfare.

I’m not asserting the Americans’ wars were smart plays, or that the link between anti-terror programs and other aspects of strategic policy is what I would have done. I’m saying that the American complaint that the European allies are not carrying their weight – and that there is an explicit link in the American mind between anti-terror support and ongoing NATO security guarantees – is neither new, nor a surprise, nor merely the position of a political outsider like Trump. This is policy. This is bipartisan. This is done.

And holy crap does that throw a lot of things up in the air!

So what does life after NATO look like?

  • United States. Freed from needing to maintain static deployments throughout Europe or from preparing for mass Army deployments to the Continent, and freed from needing to be responsible for global security in general, the United States can revert to their pre-World War II strategic posture: one of permanent offense. Few troops manning front lines. Little need to rush to the aid of every country on the planet. Yet boasting a military capable of intervening anywhere, anywhen. For the roughly 4.5 billion people on this planet whose physical and economic security was dependent upon active, constructive American engagement, an America that is a persistent wild card is quite possibly the worst outcome of all. And what does the U.S. need to put into place to make this happen? Not a damn thing.
  • United Kingdom. Theresa May has already struck a deal with the Trump administration to more closely coordinate strategic policy. This wasn’t done because of NATO’s imminent end, but because of Brexit. The Brits leaving the EU means they need to massively increase the size of their diplomatic and intelligence operations. May offered to trade the information such operations generate for a closer alignment with the Americans. From the point of view of the London-Washington alliance, the hard work has already been done.
  • Russia. Moscow has been praying for a breach between the Americans and the Europeans for decades, and the day has finally arrived. Not a moment too soon either. The Russian demography is in terminal decline and the country will largely lose the ability to field a credible army in just a few years. Russia’s current borders are completely indefensible with its current military, much less a smaller one, so Moscow believes it must expand to something more closely resembling the old Soviet borders. This will bring it into conflict with eleven different countries, five of which are standing NATO members. The one country that could have stopped a Russian assault? The United States. Expect Russian operations within, against and beyond Ukraine to accelerate now that the Americans are no longer a major factor.
  • Poland and Romania. Warsaw and Bucharest are, well, screwed. Poland and Romania are two of the five countries that the Russians feel they must at least partially secure. Neither have a hope of fighting off the Russians without massive amounts of outside assistance, and with the Americans exiting stage west they will be forced to turn to local powers – powers with which both have less than ideal relations.
  • Germany. There is zero hope for Poland without tens of thousands of German troops fighting on Polish soil. Considering that currently Germany doesn’t have tens of thousands of deployable troops, and even if they did, historically German troops haven’t tended to leave Poland after being there, and Warsaw-Berlin relations are about to become dizzyingly complicated. Every time the Germans have armed, the result has been a broad-spectrum European war. It is far too soon to call that inevitable, but unless the Germans prove comfortable with Russian troops within a couple hundred miles of Berlin, the era of German pacifism is nearly over.

  • Turkey. The Turks have been de facto out of NATO for over a decade, following a breach in relations with the George W Bush administration in the run-up to the Iraq war. Now, how much progress the Russians make in the Balkans and Caucasus is largely up to politics in Ankara. Figuring out the specific path forward is an exercise in futility. Not only are the Turks only now waking up from a century long geopolitical coma and they have yet to figure out what about their neighborhood really matters to them, Prime Minister Erdogan is cut from the same nationalistic, populist cloth as the American, Polish and Russian presidents. But whatever happens, relations with the Germans will be key. Germany and Turkey are the only countries in Europe that have the potential manpower to hold off, much less roll back, a Russian advance…and the two are currently in a spat that is dangerously close to severing formal diplomatic relations.
  • Sweden. The final three NATO countries the Russians will target are the Baltic Trio of Estonia, Latvia and Lithuania. All three Baltic states count Sweden as their strongest and most enthusiastic sponsor. Sweden now has a choice to make. Continue with its policy of neutrality and watch its Baltic apprentices die, or act. Sweden has the military, economic and diplomatic strength to forge and lead a Scandinavian alliance to bulwark the Balts against the Russians. Now we’ll see if they have the will.
  • Japan. Shinzo Abe was the first foreign leader to visit Trump after his election (and then the second one, after May, to visit after inauguration), and he came with a big fat bribe. Abe knows that Japan is likely to find itself in a full-court conflict with China in the not-too-distant future and needs to be sure the Americans will at a minimum remain neutral. Assuming no American-Japanese hostilities (and the bribe seems to have done the trick), Japan is highly likely to give the Chinese a drumming. The Chinese are more dependent upon maritime supply lines for both merchandise exports and energy imports, while the Japanese navy has longer reach and less strategic exposure. And now that Japan’s second new carrier is fully operational, the Japanese are pretty much good to go.
  • China. For Beijing the Americans leaving NATO is quite possibly the worst outcome of all. If the Americans are not nailed down defending a long land border in Europe, American power becomes far more freeform. That hugely expands the role of the American Navy in American strategic planning, and the Navy is the branch most capable of containing Chinese power. Even if American relations with Japan were to significantly cool, China just became completely boxed in.

One final thought:

We have not had large-scale regional – much less global – competition outside of the American-Soviet rivalry for 70 years expressly because the Americans took care of pretty much everything. But the Americans have been moving slow-motion in the general direction of disengagement from their Cold War alliance system since 1989. Today’s developments are not the final word on that disengagement, this is simply the end of the interim where people didn’t really know where the Americans stood. We are only now starting to understand the degree to which the Americans just are not going to be there.

Remove the Americans and every country in the world – starting with the European nations – needs to figure out how to look after their own economic and physical security. Different countries will have different ideas of how to do that, and many of those ideas will be mutually exclusive. History is about to start moving again.

And history is bloody.

Should you find any of this interesting (or terrifying) you can read more at the link to the archive at the top of this email. And in a shameless plug, my newest book – The Absent Superpower – has a full chapter on the coming war between Russia and the Europeans.

The Left Leaves

A terror attack in the United Kingdom May 23 killed at least 22, and injured dozens more. As the attack targeted a youth pop concert, a high proportion of the deaths were among children and teenagers. United Kingdom Prime Minister Theresa May immediately cancelled all her ruling Tory Party’s campaign events — national elections are June 8 — so her government could focus on the crisis. The country’s other parties quickly followed suit.

As of yesterday, the Tories had this election locked up to the degree that a generational shift in UK politics was in the offing. If the polls are accurate, the Tories would have eaten deeply into the holdings of other parties not just in England, but in Wales and Scotland as well. Ongoing Brexit talks have justified and energized the Brits separate-and-superior mindset, and Theresa May has been using that energy to reshape the UK political space. That means, among other things, the British Labour party moving into the political wilderness, the de facto absorption of the anti-EU UK Independence party into the Tories, the Liberal Democrats’ return to the fringes of British power, and the evisceration of the Scottish National Party’s stronghold on Scottish politics and an end (for now) of talk of Scottish independence.

That was before the attack.

Between the rally-round-the-flag effect of terror attacks and the fact that the ruling Tories are the law-and-order party, the UK is now on the cusp of a complete overhaul. Barring some truly unprecedented revelations that bring down May and the entirety of the Conservative leadership, the Tories will walk away from the June elections with the strongest showing of perhaps the last century. In the election’s wake, Labour will not simply be weak, it will be gone and it is unlikely to come back in a meaningful way.

What’s going on in the United Kingdom is hardly unique; Center-left parties are collapsing across the developed world. It is a symptom of a wider change in the way we all live.

Contemporary political systems are an outgrowth of the economic structures established by the industrial revolutions of the 18th and 19th centuries.

Before those economic revolutions the world was a constellation of fairly small places. Low-output per hour of work in agriculture forced most of the population to be farmers. Life before semis and railroads and globalized supply chains meant that foodstuffs needed to be lugged around by horse and backpack. Cities — places where you could not grow your own food — were small as well as, well, revolting. Cram a bunch of people in a small space with no running water or plumbing, make them dependent upon food that has to be carried in from somewhere else, and things get gross and violent pretty quickly. In such a world, there weren’t a lot of mass-mobilization politics. Either you were a landowner or other flavor of aristocrat who ruled, or you were a pleb who didn’t get a vote.

The First Industrial Revolution of roughly 1760 to 1820 upended that system. The introduction of mechanized energy such as steam engines enabled us to shift from producing goods by hands to producing them with machines. Such mass outputs increased worker efficiency while concentrating the geography of production. The result was mass urbanization and mass worker concentration. Within a few decades these economic evolutions shifted the balances of power. The “Left” catered to those who provided the labor in the new order, while the “Right” represented those who controlled the land and capital. There are many different ways to categories the Left and the Right, but the transition to industrialization is where the political cleavages in the modern world started, and have remained the most powerful delineating factor in Western politics ever since.

Plenty of folks vested in the pre-industrial order fought tooth and nail against the emerging political landscape, but they faced two insurmountable challenges. First, the winds of history were blowing and you cannot un-invent technology without removing the bedrock of the civilization that supports it (i.e. devolution into anarchy). As the new Lefters and Righters gained power, these older groups fought back. Political instability and even revolutions were the rules of the day. And even when the old-order folks won, its isn’t like their areas suddenly de-industrialized. New challenges arose the very next day until all the old world was swept away.

Second, there was a new country on the scene that had the gall to let the people decide who would be in charge. Those pesky Americans devised a political system — democracy — that was (quite accidentally) able to reshape itself, contain and ultimately harness the new economic-political lines of identification. Democracy quickly became a way to accelerate the shift from the old world of aristocrats, plutocrats and royals to a newer system with a deep economic rationale that enjoyed broader support.

The Second Industrial Revolution of 1860 to 1945 was the equivalent of rocket fuel in a station wagon. Machine tools gave way to assembly lines. Coal gave way to diesel and gasoline. Railways, telegraphs and ocean-going fuel-burning cargo ships took over global commerce. Many of the new developments — in transport, medicine and sanitation — were expressly designed to counter some of the more disgusting aspects of early industrialization. Antibiotics, sewers, electricity and new distribution techs didn’t just make cities bigger, but also removed some of the features that made them death traps when compared to the countryside — accelerating urbanization. The countryside, where Left-Right classifications weren’t entirely appropriate, became systematically less important as populations en masse shifted into the urban worker-capital categories.

This broad system of political alignment then held until about ten years ago.

The financial crisis of 2008 was a watershed because it seized up traditional capital markets. That disruption damaged everything that the economic structures of the industrial revolution sustained: life-long careers (and even jobs), labor unions, traditional manufacturing, employment patterns…and the Left-Right split that represented all those things in the political arena. The 2008 crisis occurred just as computerization was really hitting its stride, and the link between capital and capital-owners has blurred. Unequally distributed wealth isn’t the point — it is that capital is no longer linked at the hip to organized industry. Capital is now free-flowing. It goes to any place in any industry in any volume based on what looks promising.

That is exciting, but it is also disruptive. Less Walmart, more Amazon. Fewer assembly lines, more 3D printing machine shops. Fewer accountants, more TurboTax. Fewer unions, more Uber. Fewer financial firms and more AI-driven stock trading. Fewer supermajors and more tiny firms using infotech to wrestle oil out of shale formations. Fewer landlines and all the labor and mammoth companies that go along with them, more iPhones that just require the odd cell tower. We are now in a Digital Revolution that is redefining the relationship between labor and capital. Sure, it means that you can do more with less and have fancy gadgets, but it also means that anyone who had a stake in the old system — whether a line worker or a bank teller or a secretary or a stock broker or a roughneck — has to abandon not just their job, but their career. And that has political consequences.

The new technologies are far less labor intensive — meaning fewer workers. The new technologies have far lower barriers to entry, so there is no monolithic employer — meaning no unions to support, and no employer to bargain with or fight against. The traditional “Left” just doesn’t fit in the world rapidly unfolding, and so it is collapsing. Everywhere.

  • In the United States the populist uprising that elected Donald Trump is a textbook case of how economic evolution shapes political choice. Line workers — even union workers — deserted the Democrats en masse for Trump. What’s left of the Democrats — and they’ve lost over 1000 elected positions at state and national level since 2008 — is now incapable of taking any stance save a general opposition to all things Trump. That’s not enough to hold, and they face a generational wipeout in the 2018 by-elections that is likely to hand the Republicans their strongest Congressional majority in decades.
  • French presidential elections in May eradicated the ruling Socialists. Their candidate didn’t only not make it to the second voting round, he only garnered an 6% share of the first-round vote. Parliamentary elections in June may well reduce them from the dominant party in the National Assembly to the fourth-largest.
  • The European financial crisis has gutted the political stability of Europe’s peripheral countries. Greece is ruled by the nationalist-communists. Italy will likely have a comedian as prime minister by year’s-end. The Spanish Left is being displaced by a party that takes its developmental cues from Greece.
  • In Israel the economic shift has been so holistic that it has nearly banished the Israeli Labor party — the party that founded Israel — from the Knesset.

The only significant country where the Left is holding any ground is Germany, a country artificially re-constructed after World War II to have a very specific — and durable — political system. And even there the Social Democrats are on course to lose their fourth consecutive election this fall. (Yes, the center-left actually rules Canada — the only place of note that it still does. but Canada both lives in strategic nirvana and is disastrously complicated from a domestic political organizational point of view so I’d not draw too many lessons from the Great White North.)

What’s left of the economic Left is being subsumed by populism, a movement that broadly speaking is unhappy with the current state of affairs, thinks that everyone is out to get them, wants change, wants it now, and wants to use a mass government overhaul in order to force the issue (in the 1930s we would have called this national-socialism). Populism has managed to capture much of the Left’s thunder in a wide variety of countries including — but hardly limited to — Hungary, Poland, Austria, Finland, Israel, France, Italy, the Netherlands and Turkey. Yes, Trump is a symptom of the Populist rise. But so too are Bernie Sanders and Elizabeth Warren. (There are many types of populists. None have ever ended up delivering what they promise.)

It is tempting to say that politics is cyclical and the Left will recover, or that it botched the chance to rule in the past two decades and it just needs a little time in the wilderness to reconnect to its roots, or that the Left can embrace other issues like identity politics and social issues to reinvigorate itself. But that misses the point. The economic Left has lost power everywhere. The grab bag that remains is important and will obviously color political and social evolutions, but it cannot define the era. Such awkward coalitions can garner votes, but not in the quantities sufficient to govern. The term “Left” itself may be appropriated by new and varied causes — the most likely is to support the coalition of those devastated by Apple, Amazon, Uber and the rest — but those are not workers, but instead the opposite. The rubric that has defined the Left for nearly two centuries is gone.

And before those of you on the Right get too excited, just because the Left disappears doesn’t mean the Right wins. The Left is not alone in dissolving into the Digital Revolution. The Right as we understand the term is finished too. Trump won by running against the Republicans. May is in charge in the UK because the traditional Right collapsed in the Brexit vote. France’s Right is in just as much trouble as the French Socialists. The Right parties of Poland, Israel, Austria and Japan are now more nationalist and/or populist than that the classical Right in the labor-capital divide.

It is about to get a whole lot worse. As the global demographic flips into mass retirement around 2022, the availability of capital that has made the Digital Revolution so broad and deep will drastically shrink. Currently, changes in capital allocation are breaking down our “normal” Left-Right political systems, but the Digital Revolution’s advances at least maintaining an economic structure. Remove all the capital that makes the Digital Revolution possible and we’re in for a world of hurt…with populism the only political movement that has traction.

The last time our economic-political systems faced this much evolution and upheaval, the disruption lasted over a century and culminated in the world wars. The issue is that you can’t have normal political parties unless you have a grand vision, and you can’t form a grand vision unless you understand the rules of the game. As the developed world moves into a post-industrial economic system — and one in which the global population structure shifts from young, working tax-payers to retirees — we don’t know what those rules are. And until we do, we cannot begin process of exploring how to rule ourselves.

France Dodges a Bullet…By Catching a Bullet

The results are in:

Emmanuel Macron defeated Marine Le Pen of the National Front by 66% to 34%, making him the youngest president in French history.

Many were worried about the implications of a Le Pen presidency as the right-wing, pseudo-racist, anti-European populist has called bluntly for an immigration ban, a withdrawal from the euro and EU, the severing of most economic connections with the wider world, and a general break with the whole French system since World War II.

But while there were admittedly a couple of big gulp moments during the campaign, I wasn’t ever really that worried about such an outcome. France’s pro-European instincts are still pretty strong, and the French political center is robust as well. As soon as it became apparent that the center-right wasn’t going to go down the rabbit-hole, I was pretty sure that Le Pen didn’t have a serious chance. The bullet would be dodged.

Which isn’t the same as me saying that all is good in the state of France.

Just because the center remains strong in the French electorate doesn’t mean it remains strong in the French political system. In the first of France’s presidential election’s two rounds, the two parties that have ruled France since the formation of the Fifth Republic only scraped together 26% of the vote between them. And Marine Le Pen increased her father’s share of the vote – when he made the second round a decade ago – by half.

So should the French be congratulated, even celebrated, for their election results? Sure. But let’s not get ahead of ourselves. All the trends in play that enabled the National Front to so hugely improve its vote take remain fully in force, and all will push France in a much darker direction in the months and years to come.

Automation at home and abroad continues to erode the earning power and job prospects of French workers. So long as the global trade system and EU survive, the French system’s lack of competitiveness continues to hollow out the French economy. France’s vulnerability to energy shocks continues to deepen.
Europe’s sovereign debt crisis is loads worse than it was in 2007, and continues to sap economic activity in France’s Spanish and Italian neighbors. Inward immigration from France’s colonial legacies continues to flow as those former colonies face issues of systemic collapse. Germany remains shielded from the worst of most of this, and so long as it is the heart of the EU not just geographically, but also economically, financially and politically it will continue to ascend at France’s expense. France is trapped in a system it cannot control and that system is in terminal decline. I’d be scared and angry too.

And let’s not understate the challenge the new president faces. The entirety – yes, the entirety – of the parliament is made up of parties that were just wholly discredited on the national scene. The new president doesn’t have a single legislator in office. The comparison is imperfect, but can you imagine if Donald Trump ran on a third-party ticket to become president? How do you think the Democrats and Republicans would treat his priorities when they hold all the legislative cards?

Sure Macron can try to capture the French imagination (and some seats) in the June parliamentary elections, but so too can Le Pen. And now that one-third of the French electorate has broken the seal and voted for the National Front, it is highly likely that Le Pen’s (massively) more organized and institutionalized party will do just as well as Macron’s neophyte on-a-shoestring En Marche. When we get to the next presidential election, France is likely to have a president with few successes, an ossified and discredited center-left and center-right, and a National Front that has racked up dozens of electoral successes in both national and regional bodies.

Doesn’t take a pessimist to guess how that will turn out.