Introduction: The Coronavirus Guides

Here at Zeihan on Geopolitics, our job is to help people make sense of the world. We have done so by blending the studies of military affairs, economics, culture, demographics, energy and tech. About two years ago we realized the “end of the Order” theme that undergirds all our work was starting to become very present. (For those of you not familiar with our work, the short version is the era of global connection – of globalization, if you will – is ending).

To prepare for the next era, we have steadily expanded our expertise into the six dominant economic sectors that shape the human condition: agriculture, transport, industrial commodities, manufacturing and finance. In fact, as of February, our next big project was to produce a book which would describe in detail how these six sectors will convulse and transform in the years to come in a world without global structures.

Coronavirus has, to put it mildly, forced us to adjust a few things.

First, while the pace of humanity’s shift from the Order to the coming Disorder has been accelerating in recent years, coronavirus has both altered the context and launched it to light-speed. This series of newsletters is designed to give readers an idea of the depth and permanence of the changes. And where players do have some agency, to provide a bit of insight into the movers’ goals, capabilities and limitations.

Second, you will notice that some pieces have sections reminiscent of others. This is in part intentional. We anticipate many coronavirus-tinged newsletters in the next several weeks. Our goal is to enable readers to pick and choose the digestible bits relevant to them. But this is also in part the nature of the beast. If we were to assemble this into a single, coherent, non-repetitive narrative we’d need to first be at least most of the way through the crisis. That’d really not help anyone understand where we are today, what’s coming tomorrow, and what they might consider doing to prepare for the future. So we are opting for a degree of repetition rather than a treatise for the ages.

Third, this is, to be blunt, a bit of an advertisement. The bulk of the research for the new book has already been done, and most of our time this past two weeks has been to apply our findings to our newly changed circumstances. We are ready to go. In addition, most of our income comes from putting Peter on a passenger jet to go and interact with large groups of people. That business model requires…modification. Our current business lines fall into three buckets:

  • large-scale Zoom conferences on the topic of the day,
  • custom teleconferences in which clients submit their specific questions for in-depth discussion,
  • full videoconferences for the audience of the client’s choice.

For information on rates and bookings, please contact as at zeihan.com/consulting/

And now, on with the series.

Coronavirus: The Survival Guide

by Melissa Taylor and Peter Zeihan

Note from Peter: Dealing with health issues that impact family structure is not my strong point either topically or mentally. The bulk of this newsletter is the product of one Melissa Taylor who is both my chief researcher and a mom. If the text reads empathetic, instructive, and unambiguous, that’s Melissa’s voice. If it is snark in the face of despair, that would be me.
 
I just shared a lovely meal with my family. We all brought our own food and chairs, sat outside, and maintained a constant 6ft bubble around everyone, especially my parents. It was hard with a toddler running around, wanting to hug his uncle and grandparents. But despite that, it was comforting. This family gathering would have made most people laugh in disbelief a few weeks ago. But now it’s the new normal until we’ve been free from exposure long enough to relax… a little bit. That’s about 14 days, though even that might not be long enough to be sure.
 
Coronavirus manages to play into our weaknesses in a big way. Our brains are bad at comprehending risk, understanding probability, anticipating and accepting big changes, or dealing with uncertainty. So if this crisis has hit you like a ton of bricks, you’re not alone. And don’t worry, those spring breakers in Miami? They’ll have their own…moment.  
 
I’m sure you’ve guessed from our company name – Zeihan on Geopolitics – that we are not doctors. But making the world a bit more comprehensible is what we do, so we have turned our efforts to compiling the best information that we could find to help you understand the virus and protect yourself. I assure you this is purely selfish. If you all get sick, who will read our stuff?
 
There are three reasons you should stay home and try your damndest not to get coronavirus. The first is that we do not know enough about the virus. Yes, it’s been around for 3+ months, but in part because of the Chinese attitude towards information control and in part because of the nature of viral medicine our understanding is limited. We don’t know if there are long-term consequences to infection for those that recover, but there are indications coronavirus can leave patients with permanent lung damage. There could be other permanent damage. We won’t know until we have people who have survived it get fully checked out months after their recovery. That will take, well, months.
 
Second, you need to protect yourself and your family. Yes, about half of cases are so mild that they’re mistaken for a mild cold. But “mild” in the medical lexicon means something else: that you simply don’t need to go to the hospital. Another roughly 30% of the cases are that flavor of “mild”: people who experience the worst flu-like symptoms of their life.
 
The next level up, “severe” affects an estimated 15% of cases. These people end up in the hospital because they require supportive oxygen treatment and are hardly able to use the bathroom on their own. Are most of these “severe” cases older and/or suffering from pre-existing conditions like asthma? Absolutely. Are they all? Absolutely not.
 
Finally, about 5% of sufferers experience “critical” symptoms. They need a ventilator to breathe. That’s the fancy way of saying they need to be on life support. The largest study – one out of China – indicates half the people in this category didn’t make it (although keep in mind that it appears roughly half of all cases are so mild that they were never diagnosed with coronavirus in the first place, so it’s believed the true fatality rate is far closer to 1% of all cases than 2.5%… as long as hospitals are functioning).
 
Which brings us to the final reason you should take this seriously. Regardless of the country you consider, no hospital has enough ventilators. America has more critical care beds than anyone else (almost more than everyone else) and we only have 100,000. Those who recover successfully from the “critical” category need a week or so of intensive care.
 
That means if everyone lines up and gets sick in a very orderly process, and no one anywhere has a heart attack or stroke or gets in a car accident or gets stabbed or shot or otherwise needs critical care, it’ll take nearly three years to cycle through everyone who coronavirus puts into ICU. Even then, this pie-in-the-sky scenario only gives everyone precisely one week of treatment. For many that simply isn’t enough. But with hospitals overloaded, no one will be allowed to linger in those critical care beds.
 
We have a word for what happens when you have to choose who gets help. Who to save.
 
Triage.
 
The Italians and Iranians have been mournfully struggling with that for days. They now have guidelines for who gets any time in critical care and who is left to die.
 
In the worst-case scenario, four times as many Americans will die than during the whole of World War II, including the lives of doctors and nurses risking their lives for you and everyone you love. You can literally save lives by staying home and binging Netflix. So do it. Now.
 
Here are some other ways to save lives. Maybe even your own. Let’s start with personal protection based on our current understanding of the virus.
 
Keep Germs at Bay – Washing your hands is the absolute best thing you can do. Watch this short video on doing it properly. Coronavirus may live on cardboard for a day, plastics and metals upwards of three days. So don’t wear your shoes in your house, clean or quarantine anything coming into your home from outside for at least three days, and use normal alcohol (at least 60% alcohol), peroxide, or bleach based cleaners frequently on commonly touched surfaces. Yes, some of this is overkill. Here at ZoG we are all about viral overkill.
 
Masks – Donate them. Seriously. There are doctors and nurses going without and everyone knows someone in the field. Reach out to them. It’s not that masks offer no protection, its that unless you’re up in someone’s face – like a health professional – the chances of your mask helping you with anything is extremely low. Keep a small stash in case you get sick to protect your family members from your germs. When more supplies are available, wear a surgical mask everywhere, but not for you. Masks for the general public are more about not spreading illness before you become symptomatic, than protecting you as an individual.
 
Leaving the house – If you must go out, bring hand sanitizer or alcohol wipes. Wear your glasses. Put on your least serial killer-looking pair of gloves. Don’t shake hands. (Peter’s greeting preference is the Bruce Lee fist-in-palm bow, Melissa goes with the hand-guns *pew pew*.) Keep distance. Pretend the people you’re interacting with are the extended family members you only see at holidays that you’d rather not see at holidays. Six feet is good. Two meters (six and a half feet) is better. Open air is better than enclosed spaces. Keep your hands off of your eyes, nose and mouth. That’s just gross even if there isn’t an epidemic. Most major grocery stores these days have apps which enable you to order and even pay for food ahead of time. That way you just need to pick it up. Use them.
 
Health – The heathier you are, the better. Get the flu shot. Not because it will protect you from coronavirus, but because you do not want to have the flu and coronavirus at the same time. Coronavirus at its core is a respiratory condition, so get in shape. Run, hike, swim, whatever it is that helps you breathe deeper and easier.

This graphic is from Our World in Data, an excellent source of well researched, accessible data on coronavirus.

What you should know
 
Symptoms – Symptoms usually appear in about 5 days after exposure, but it could be as many as 14 days (or maybe more. See “We don’t know enough.”). Some people never show symptoms but still spread the virus. This means that if you have been in a risky situation, you should stay away from people with compromised health for at least 14 days. If you develop symptoms, they will likely include fever and a dry cough. You may get extremely tired or have muscle pain. If you are short of breath, you have likely progressed from the “mild” to the “severe” category…overnight. It’s time to call your doctor, immediately.
 
If You Are Sick – Stay home, even if it’s clearly not coronavirus. Isolate yourself from your family to the extent possible. If you get coronavirus, that does not mean your immediate family already has coronavirus even though you’ve likely been contagious for a few days. They should take precautions from you. The CDC has advice for disinfecting your home

A couple of things to not worry about.
 
Don’t horde food – The United States is the world’s largest food exporter by a ridiculous margin. Your grocery store has been preparing for this and warehouses are full even if workers are struggling to keep retail shelves stocked. Tech supply chains fall apart because it’s difficult to make an iPhone if you only have 99% of the parts. Food supply chains are the opposite. A taco without salsa may not be fabulous, but you can still eat it. And you only have to have one of the 500 types of salsa which typically make it to your store to enjoy it. (Melissa lives in Austin, so really not exaggerating about the 500.) You may have to come back another day (so don’t let your personal food stores get too low), but more food is incoming. And because food will continue to be prioritized, this should be true even if things get much worse before they get better. And for goodness sakes, don’t horde tap water. It is strictly monitored, safe, and there is no reason to think it’s going offline. Regulations and practices for producing bottled water are not nearly as rigorous and producing bottled water is far more labor intensive (i.e. people cough all over that stuff).
 
Don’t horde gasoline – Heard of the shale revolution? The United States isn’t simply a net exporter of crude oil, it is the world’s largest exporter of refined product. Product like gasoline. Unlike manufacturing, oil production and refining and fuel transport are extremely low-employment activities. There’s zero reason to expect disruptions to any part of the system for at least the remainder of this calendar year.
 
How long will this last? We would love to tell you, but we just don’t now. You should start settling in. Best case scenario estimates are a couple months. But that probably just means that about then we will relax…only to a few weeks later have to cope with a flare up in this or that city. There are any number of treatment regimes which show promise, but what we really need is a vaccine. At the soonest that will be October. And that’s very unlikely

My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It is about the shape of a global Disorder when the Americans go home.

READ THE INTRODUCTION TO DISUNITED NATIONS

The Geopolitics of American Fear

Today, I’m not going to go through all the country-by-country details of the ongoing coronavirus pandemic. My team and I are working diligently – franticly – to assimilate a huge amount of ever-changing information. As soon as we have some preliminary conclusions, we will share them. But for now we just don’t have enough hard data.
 
That will change soon.
 
This coming week (March 23-28) the South Koreans will be in the fifth week of their epidemic. To be blunt it is what I’ve been waiting for. The “typical” coronavirus experience for someone who requires hospitalization and survives is about 25 days end-to-end; five weeks is about what we need to get some good data.
 
Why the Koreans? The South Koreans are technically minded, they have a top-notch health care system, they are culturally wired for quick responses, their first instinct isn’t to lie about everything, and they believe in math. They will soon provide the world with the best and most holistic information about all aspects of the virus. If coronavirus had first erupted in South Korea, I have zero doubt it would have been contained, squashed, and we’d not be discussing it at all, much less living under self-imposed quarantine.
 
Until I have that information, however, I think our time is best served discussing the ongoing panic. In particular, the (I’m not sure this is quite the right word) positive aspects of the panic. There is more to American panic than toilet paper shortages.
 
The American geography is by far the best on the planet. The Greater Midwest is the largest chunk of temperate zone, high-quality arable land in the world, and it is overlain by the world’s largest internal navigable waterway network. Development and industrialization is the cheapest there of anywhere in the world. Barren deserts, rugged mountains, dense forests, giant lakes and ocean moats make for a nigh invasion-proof homeland. For five generations the United States experienced greater development, rising standards of living, easy financial access, minimal health concerns, rising economic growth, all in an environment of almost perfect security.
 
This has many, many outcomes. Three are worth highlighting:
 
First, considering its riches, its low development costs and its security, the U.S. economy is geographically set up for massive success. It isn’t about policy or governance or ideology. It is about place. That cannot be copied. The American system has exited every decade in a stronger position than it was in when it entered, including the decade periods of the Great Depression and Great Recession. It came thru the 1920s Spanish flu epidemic (a far more deadly pathogen than coronavirus) just fine. It will come through this one.
 
Second, the United States isn’t very good at national governance. When geography takes care of all the big issues, there is little need for a large, overarching, competent, national government. And it shows. The U.S. isn’t Germany or Korea, countries that live in geographic pressure cookers and so governance has to be top notch to ensure survival. This isn’t Russia which is paranoid for good reason and so must excel at intelligence operations. This isn’t Brazil where the terrain and climate are hostile to development and so excellence at infrastructure policy is essential. America’s lack of federal competence means that when there is a crisis it all comes down to the personality, skill and contacts of the person at the top. America’s initial reaction to the coronavirus isn’t its first failure of presidential leadership. But America’s sublime geography means the country will survive this failure to have others down the road.

Third, Americans are cocky. When your national founding myth is one of achievement with minimal adversity, it is eaaaaaaaaaaaaaaaaasy to become convinced you are the Chosen People and life is simply about navigating oneself from success to success. Of course, I think we all realize this isn’t how things actually work. From time to time something or someone punches you in the face. And when that happens to Americans, we absolutely, positively, lose our shit.

Americans have no sense of proportion. The same thing that gives us our can-do optimism and arrogance means that when we face unexpected challenge we fear the covenant with God has been broken and doom doesn’t so much beckon, but instead will crash down upon us presently. And so we panic. We overreact. But we overreact with the power of the world’s largest and most stable and most technologically advanced economy. We overreact with the strength of a continent. We overreact with the world’s most powerful long-range military, a military that absolutely controls all global waterways. And in doing so we reshape the world. Not on purpose, but simply as a side effect of our panic.

American history of all eras is rich with examples of such manic-depressive behavior. Some “recent” ones:

  • The Pearl Harbor panic fostered the deepwater dominance strategy, culminating in a Navy more powerful than all other players combined.
  • The Sputnik panic brought us a root-to-branch overhaul of the educational system and industrial plant.
  • The Vietnam depression married tech to military strategy and brought us JDAMs, cruise missiles, the Internet and cell phones.
  • The 1979 and 1983 oil shocks led directly to deepwater oil production and the shale revolution.

Our allies understand this. Winston Churchill famously noted that “Americans will always do the right thing, after exhausting all the alternatives.” So do our rivals: a common Russian phrase during the Cold War was “Americans feel that if it is worth doing, it is worth overdoing.”

Americans have not felt a panic since the September 11 attacks. It has been two decades since we were scared. We are due. I always assumed the next fear-response would be because of something that some dumbass country did to the United States, thinking the Americans were over the hill. Then the full force of the United States military and economy would crash down upon it and wipe it from memory.

Apparently, viruses can trigger America’s fear-response too.

In the past 96 hours the United States has gone from functionally zero actions against coronavirus to among the world’s most invasive. And unlike other countries – China comes to mind – who have only instituted constraints on specific areas where there are known coronavirus outbreaks, the Americans have instituted their restrictions nationwide. America now hosts the largest population in the world under lockdown.

The speed and depth of the change is something only Americans can culturally manage, and this is only the beginning.

The scale of resource application that is about to occur is nothing less than historically unprecedented, rivaled only by American actions in previous fear-response incidences.

  • The Federal Reserve’s new bond-buying program to support the markets? Its only analogue is what the same Federal Reserve did back during the 2008 Financial crisis, but this time it was done in a day instead of a month.
  • The industrial plant’s re-tooling to make medical supplies? Completely unprecedented…unless you compare it to America’s post-Sputnik industrial overhaul.
  • Want to see something really impressive? Watch the process for crafting, manufacturing and distributing the coronavirus vaccine. The US just started human trials on March 16. That’s a solid two months faster than any such trials, ever. (And if that were not enough, in the heart of the crisis the US government is attempting to wholesale purchase the German firm furthest along in generating the German anti-coronavirus vaccine. Needless to say, in Germany this is perceived as a total dick move.)

Americans are capable of incredible ideological, economic, technological, logistical, military, and cultural leaps when the panic sets in. The coronavirus crisis is by no means anywhere close to being over, but the switch has been flipped. Now comes mobilization.

These are “merely” things the United States is doing at home. With a few weeks (maybe days?) the Americans are going to do what they’ve done during every other fear-response. Apply (perhaps unfairly) that fear to all aspects of all of their international relationships.

The timing of this particular fear-response gives it far greater weight than those that have come before.

The global system as we know it – the system that has enabled everything from global manufactures trade to global energy trade to the existence of the European Union to the rise of China – is an American creation, designed for the Cold War. That system was the payment to our allies to side with us against the Soviet Union. That system ceased serving American strategic interests at the Cold War’s end, and in the days before coronavirus it was coming to an end. Coronavirus has sped things up, severing most of the remaining ties that bind the world together. No one else has the military capacity to ensure freedom of the seas, nor the demographic consumptive capacity to fuel global commerce. Since their economy is largely self-contained, the Americans really don’t care if the system collapses.

And that was before the coronavirus-induced fear response.

In this environment, other nations need to be extremely careful, lest they court American wrath. America has a near-infinite capacity to act, a near-immunity to blowback, and a near-zero concern for consequences. It isn’t clear to me that there is yet recognition of this fact in the wider world.

Russia’s continual use of military aircraft to needle the North American air defense envelope during an American fear-response is monumentally stupid. I lack the vocabulary to communicate how fantastically foolish it is for Chinese state media to spread conspiracy theories that the US Army originated coronavirus and dropped it into Wuhan. Even Europeans whining that the Trump administration acted too hastily in enacting travel restrictions on flights between Europe and the United States wasn’t perhaps the right time to take issue with American policy.

Yes, all-in-all it has been a crappy couple of weeks, and we should just bake into our expectations that the next three months won’t be even remotely fun. But honestly the real news is that we are now – right now – suspended in a deep-breath moment between eras of history, and the world’s only superpower is absolutely terrified.

My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It is about the shape of a global Disorder when the Americans go home.

READ THE INTRODUCTION TO DISUNITED NATIONS

The Oil Wars Are Going Viral

We just had the second-biggest oil price drop on record as Asian markets opened March 8.

For the past couple of weeks the Saudis have been attempting to cobble together an oil production cut of about 1.5 million barrels per day. As of last Friday, they had been sufficiently successful to get buy-in from the bulk of both OPEC and non-OPEC members, but there was one niggling hold out: Russia. On March 7 any pretense of a deal collapsed and the Saudis committed to flooding the market. First, they lowered their asking prices for crude being shipped to Europe and Asia. Second, they announced plans to quickly ramp up output from some of their spare capacity.

There was a hilarious day-long window where the Russian propaganda machine seized control of the narrative and fooled a host of financial reporters into proclaiming that Russia was going to war with the U.S. shale industry. It is difficult to delineate just how incredulous such a claim is since U.S. shale output has a lower production cost than Russian crude, but hey, people fall for propaganda allll the time. 

The primary reason I laughed when I read those breathless headlines is that the Russians couldn’t launch a price war even if they wanted to do so. The problem is all about location. Much of Russian production happens on difficult land that can turn swampy in the summer and freeze solid during the winter. If those wells are shut-in, particularly during the winter, the risk of well damage (up to and including explosions!) is high. In the truly frozen sections of Russia, when the time comes to restart production, you can’t just turn them back on. You must re-drill them. In winter. Likely the following winter. 

Russia has never cut production on purpose. Its “cuts” in 2019 were nothing more than some seasonal maintenance. The last time the Russians actually reduced output it was the Soviet collapse. It then took Russia nearly two decades to get back to where they had been. 

Much of Russia’s power in the world, triply so in Europe, has to do with energy politics. The Continent counts Russia as one of its top three energy suppliers in any given year, and with the Brits now out of the EU that dependency will increase. Moscow (rightly) sees the American shale patch as a threat to that influence and so has sought to use propaganda to thwart the sector where possible, up to and including bankrolling some American environmental groups to lambast shale (ask Michael Moore and Jill Stein for details). 

And at least to a degree, some of the Russian scuttlebutt on all things oil and shale are correct. The Russians supposedly have been ranting of late that the last round of Russian/OPEC oil output cuts in 2019 simply provided more market share for American shale to fill. That’s totally what happened. 

Anywho, the Saudis made the reason for their moves crystal clear late March 8, saying they would compete for market share at every point they can reach where the Russians currently sell their oil, with the intent of underbidding any Russian offers. Saudi Arabia is nearly unique in that it can turn production on and off on a three-month time scale. Most other countries can’t, and certainly not the Russians. In fact, the only oil production zone in the world that can adjust faster than Saudi Arabia is…the American shale patch, where new wells can come online in under six weeks, and where depletion rates are measured in months rather than years.

We’re already scraping the $30 a barrel level. That’s the number where about two-thirds of U.S. shale operators find themselves crying themselves to sleep at night. Even worse (or better based on your point of view), oil prices are likely to remain lower for longer.

The first reason is the most obvious: 

Courtesy of the spreading coronavirus epidemic, best guess is nearly half of the Chinese workforce is still off-line this week, and much of China’s industrial plant remains shut-down due to quarantine efforts – most notably in the industrial heartlands of the Yangtze Valley and the Pearl River Delta. China is undoubtedly going to suffer a real recession this year, which will absolutely impact manufacturing supply chains as well as the supply of consumer products globally in the second and third quarters. Chinese oil demand has probably dropped about 2 million barrels per day. 

Avoiding additional widespread infections throughout the rest of China is probably statistically impossible at this point, and it is spreading globally like, well, a virus. Iran, Italy, Switzerland and South Korea have robust epidemics that have erupted in just the past two weeks. Follow-on epidemics are all but certain in France, Germany, the United States, Canada and, well, nearly everywhere else later this month and into April. The virus tends to hit less harshly than a cold in 6 out of 7 cases and is not particularly lethal if you are under age 70 and otherwise healthy, so CALM DOWN, but for everyone’s sake follow normal sanity about exposure and hygiene. Following sanity means less movement and travel and interaction and since oil is the fuel of transport, that means less oil gets used. Everywhere.

The second reason is more…colorful. Riyadh and Moscow have rarely gotten along, with their biggest big blow-up occurring at the instigation of none other than Ronald Reagan. In the mid-1980s the Saudis expanded oil output in order to wreck the overextended finances of the Soviet Union. It was part of a collage of factors which heralded the Soviet collapse. With the Russians increasingly active in Iran and Syria and Iraq and Afghanistan, the Saudis have plenty of reasons to dust off an old tool and whap the Russians on the face.

The third reason is more…personal. With the Americans stepping back from the world, the Saudis are finding themselves facing off against the Iranians without the American buffer between them. The Trump administration’s anti-Iranian sanctions are strangling the Iranian economy, an economy that survives on oil exports. Shrinking what little income Iran is still getting via a price war isn’t a dumb move.

The fourth reason is simple economics. Saudi Arabia is annoyed not simply by Iran and Russia, but other oil producers which range from Venezuela to Ecuador to Libya to Nigeria to Angola to Norway to Azerbaijan to Kazakhstan to…American shale. Saudi Arabia has lower production costs than them all. Anything that takes the snuff out of the competition is something that’ll make the Saudis smile. Of all of these, U.S. shale will bounce back fastest, but there will be a lot of bankruptcies and consolidation between here and there. Other countries will face outcomes far more painful. 

The final reason is less about economics and local strategy and more about resetting Saudi Arabia’s position in the world. The Syrian Civil War is in its final chapter. The Iranians and Russians are on the winning side…while the Saudis are on the losing side. If Russian-Saudi relations are already deteriorating, it doesn’t take much of a push for the Saudis to remind the Russians (and everyone else) that there is another field of competition – one in which the Saudis excel and the Russians (and everyone else) do not.

My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It features a whole section on Saudi Arabia’s attempts to reassert itself and, when it can’t, burn it all down.

READ THE INTRODUCTION TO DISUNITED NATIONS

The “Gift” of Coronavirus

In the past couple of weeks coronavirus cases outside of China surged. Particularly worrisome clusters emerged in South Korea and Iran, countries which serve as transport hubs for their respective worlds. US President Donald Trump is doing his normal rambling press conference thing, contradicting most of what little information that is out there. Data coming out of China is more positive, but the idea that China and only China has cracked the code on how to stop a highly virulent virus from spreading in dense population centers is, in a word, dubious. Is anyone not feeling at least a bit…twitchy?

Let’s shift the conversation: Coronavirus may be the most positive thing that’s happened to the global economy in recent years.

China is the world’s workshop. There are precious few complex manufacturing supply chains that don’t link to the mainland in at least some way, with computing, electronics and automotive by far the most exposed. China represents a bit more than a fourth of global manufacturing output all on its own and sports seven of the ten busiest container ports in the world.

The two zones in China most impacted by coronavirus are the Pearl Delta and Yangtze Valley. Most of the 150 million people in China under some degree of involuntary quarantine reside in these zones. The Pearl and the Yangtze are the two most technologically advanced portions of the country, sporting the most sophisticated industrial bases. These regions are by far the most internationally connected of China’s population zones.

The viral epicenter city of Wuhan is one of the largest automotive manufacturing centers in China. Nissan and Honda alone manufacture nearly 2.25 million automobiles there annually. Dongguan, a city in the Pearl River Delta, is known as “the world’s factory” and on its own produces an estimated one-fifth of the world’s smartphones and one-tenth of its shoes.

We’ve all read about how this or that product or company or industry faces pressure from the Chinese shut-ins. So far, shipping companies have cancelled over 80 sailings of container ships, meaning that tens of billions of dollars of goods, many of them inputs into other goods, either weren’t produced or couldn’t get where they needed to go. The sudden lurch in China’s $70 billion annual auto-parts exports industry is already stalling automobile manufacturing in South Korea and Eastern Europe.

But here’s the thing: China’s position in the global system is artificial, and it was going to end anyway.

A look back:

To distill America’s entire Cold War strategy: the Americans created a global Order to provide an economic incentive for membership in their military alliance network. The Americans broke the empires and paid everyone to be on their side against the Soviets. Of the many unintentional side effects was the fostering of an environment where no one shot at anyone else’s shipping, no matter how valuable that shipping might be.

In absolute terms, China is by far the biggest beneficiary of this American-led Order. Japan and the Europeans had carved Chinese territory into imperial spheres of influence. The Americans ended that. China’s manufacturing prowess required the economies of scale of all China being under a single government system. The Americans enabled that. China’s import-export model requires freedom of the seas for commercial shipping to sale the ocean blue without military escort. The American Navy guaranteed that. Without the American-led Order, the Chinese would have never been able to unify or industrialize or modernize or urbanize.

Today, as the Americans step back, there is less than zero hope for the Chinese to step forward. China’s navy is short-range, designed to recapture Taiwan.  Convoying clusters of slow-moving supertankers to and from the Persian Gulf is simply beyond China’s capability, much less enforcing the sort of all-ocean maritime safety that the Americans have done as a matter of course these past seven decades.

If anything, it is worse than it sounds.

Energy: China has had no equivalent of the American shale revolution. As the Americans have achieved net energy independence, the Chinese have quadrupled down on becoming the world’s largest oil importer, with the bulk of their oil needs sourced from none other than the Middle East. China lacks the ability to convoy tankers to and from the region (past oil-importing regional rivals Japan, Taiwan, Vietnam and India no less), much less intervene in a way that might preserve oil flows in the way the United States has done almost pathologically these past seven decades.

Agriculture: Some 80% of global foodstuffs can only be produced with imported inputs, whether that input be fuel or fertilizer or fungicide. China has plowed under its best farmland to build all those factories, making the country more input-dependent than most: China today uses some five times the inputs per unit of food of American farmers and still hasn’t achieved food self-sufficiency. In a world without trade China can neither import sufficient foodstuffs from a continent away nor grow its own. Failures in food distribution have crashed far more governments than war or disease. Just ask Mao how he rose to power.

Manufacturing: Modern manufacturing is a logistical marvel that taps hundreds of facilities in dozens of countries, but that system is based on frictionless international trade. Break just a few links and the entire network collapses. A modern car has about 2000 parts. If you are missing ten, you’ve got a large paperweight. Even if the Chinese could somehow magically maintain their globe-spanning supply chains without a globe-spanning navy, there remains the question of who would buy everything?

Demographics: The One Child Policy has gutted the country’s next generation of consumers far more effectively than anything the Cultural Revolution or Great Leap Forward ever did. The mean Chinese aged past the mean American about two years ago, so a consumption-led system at home is simply off the table. Slow-moving aging throughout the bulk of the world is doing something similar in Europe and Canada and Brazil and the former Soviet Union and Japan and Korea. Even if somehow the Chinese could make their manufacturing system work without the American security blanket, the export-based model upon which contemporary China is based would have ended this decade anyway for want of consumers.

In a world where the Americans do the security heavy lifting and guarantee the world access to their consumer market – one of only a few that will not contract in the 2020s and 2030s – China’s global integration efforts aren’t simply smart, they are doomed to succeed. In a world in which the Americans’ step back and the rules by which the world works change, China is doomed to do the other thing.
 
Which means coronavirus is giving us a rare gift. A glimpse into a future without globalized manufacturing in general, but in specific a glimpse into a world without China.
 
Any company or industry that can weather the suspension of industrial activity in the Pearl and Yangtze should be able to manage the coming global collapse with relative ease. Any that can’t, well, they now know precisely where their exposures are. The question now is whether impacted firms treat this as a one-off or the serendipitous peek that it is.

My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It contains a big fat trio of chapters on what makes for successful empires and countries, much of which focuses on China. Spoiler alert: It doesn’t look good

READ THE INTRODUCTION TO DISUNITED NATIONS

Get Ready for Some Maps

Hey everybody,

I really appreciate the excitement and support for Disunited Nations. This has been a crazy project since Day One and there aren’t words to communicate how thrilled I am that it is finally not simply real, but available! Thanks to everyone for helping make it a reality!

I hope those of you who picked up your copy of Disunited Nations are thoroughly enjoying the experience. But there is one thing that I wish was different. Unfortunately, there isn’t a publisher out there that will let me give you the full color maps in all their glory. The Kindle and the audiobook versions don’t even get the graphics! And so, with each book, I make sure my readers have access to them on my website. The Map Archive is officially open! 

If you haven’t bought it, go check out my introduction (below). If you have friends that haven’t bought it, please do consider forwarding this email. And I do have one more hard ask: please submit a review wherever you bought a book… when you finish reading.

I’ll leave you, for now, with a graphic from the book. It’s the first graphic in Disunited Nations and one of my favorite graphics ever. It highlights just how much the world has benefited from the American-led Order. So much of it is not simply at risk, but about to violently unwind.

Thanks again, 

Peter Zeihan         

READ THE INTRODUCTION TO DISUNITED NATIONS

THE BOOK IS HERE

It is with great, nay, ecstatic enthusiasm that I present to you Disunited Nations! That’s right! It is finally here. Two years in production, the book is now in stock at Barnes & Noble, Amazon, and every independent bookstore of size. It will be put out front on March 3, and advance orders are shipping…now!
Zeihan’s more controversial projections will keep readers squirming, usually with pleasure….Another masterful, often counterintuitive, relentlessly entertaining geopolitical thrill ride.
Kirkus Starred Review

Zeihan integrates a wealth of information and data into lucid analyses written in accessible, boisterous prose… The result is a stimulating look into the geopolitical crystal ball.
Publishers Weekly Review

READ THE INTRODUCTION TO DISUNITED NATIONS

Introduction to Disunited Nations

We are only five days out from the release of my third book, Disunited Nations: The Scramble for Power in an Ungoverned World. As a final tease, below are the chapter headings. As you can see this book is a full-on once around the world. We’ll chop through all those countries that we’ve all thought of as the countries of the future and show how they will be anything but. But more importantly we’ll explore a few countries we rarely think about that will rise to dominate the human condition.

As an added kicker, at the end of this letter is a link to the full intro…

INTRODUCTION:
Moments of Transition

CHAPTER 1:
The Road So Far 1

CHAPTER 2:
How to Rule the World, Part I: The American Model

CHAPTER 3:
How to Rule the World, Part II: The British Model

CHAPTER 4:
How to Be a Successful Country

CHAPTER 5:
Japan: Late Bloomer

CHAPTER 6:
Russia: The Failed Superpower

CHAPTER 7:
Germany: Superpower, Backfired

CHAPTER 8:
France: Desperately Seeking Dominance

CHAPTER 9:
Iran: The Ancient Superpower

CHAPTER 10:
Saudi Arabia: The Anti-Power and the Destruction of the Middle East

CHAPTER 11:
Turkey: The Awakening Superpower

CHAPTER 12:
Brazil: Sunset Approaches

CHAPTER 13:
Argentina: The Politics of Self-Destruction

CHAPTER 14:
The Misshape of Things to Come: The Future of American Foreign Policy
Thread 1: Unwinding the Global War on Terror
Thread 2: The Order Hangover
Thread 3: Strategic Retrenchment
Thread 4: Profits Without Borders
Thread 5: Desperately Seeking Instability

CHAPTER 15:
The United States: The Distant Superpower

CHAPTER 16:
Present at the Destruction: The Dawning of the Fourth Age

Zeihan’s more controversial projections will keep readers squirming, usually with pleasure….Another masterful, often counterintuitive, relentlessly entertaining geopolitical thrill ride.
Kirkus Starred Review

Zeihan integrates a wealth of information and data into lucid analyses written in accessible, boisterous prose… The result is a stimulating look into the geopolitical crystal ball.
Publishers Weekly Review

READ THE INTRODUCTION TO DISUNITED NATIONS

Almost There

Allllmoooost Theeereeee

We are now only six – SIX! – days away from final publish of Disunited Nations: The Scramble for Power in an Ungoverned World. The book is now in stock everywhere, with advance orders about to be shipped out.

This has been a fun, if exhausting, project to work on this past year and I am absolutely thrilled that the book in about to be in everyone’s hands.

Reviews are starting to come in as well. We’ve already received some great coverage from Kirkus and Publisher’s Weekly. As of yesterday, the hardcover, Kindle and Amazon versions are taking up three of the top five spots on Amazon’s new releases list for Globalization & Politics, while the book has hit B&N’s top 100 list. 🙂

If you’d like to get a copy the day of publish without needing to hunt down a bookstore, you can get on board with the final batch of pre-orders here.

And for those of you who cannot wait, I can offer you my Cutting Room Files – parts of the book that were snipped for length, and then adapted for publish in the context of the day.

Happy reading!

In the first of the Cutting Room Files, the Koreans have a hideously distasteful choice to make. They must prepare for a world without the Americans and that means they must find a new security guarantor. The menu of options are not encouraging.

There is good news and bad news for Mexico in the coming Disorder. On one hand, the country has lashed itself to the American market through NAFTA2. On the other hand, cartel violence is only getting worse. Part 2 of the Cutting Room Files.

Unless Canada can get its shit together, the system will split along provincial, economic, demographic and ideological lines. The Canadian election with its minority government wasn’t exactly encouraging. Part 3 of the Cutting Room Files.

In Part 4 of the Cutting Room Files, Japan is a country exceedingly well set up to not simply survive in a world without America, but to dominate its neighborhood. Even if it’s off to a bit of a rocky start…

Brexit provides the Americans with the biggest opportunity to lock the Brits into strategic enslavement since Lend-Lease. This time, it will come in the form of a trade deal. Any realistic alternative seems unlikely. Part 5 of the Cutting Room Files.

The Phase1 trade deal with China is moving forward but its not the major deal Trump was hoping for. That would take a fundamental reshaping of the Chinese economy. Sounds easy… right? Part 6 of the Cutting Room Files.

The Eurozone had enough nails in its coffin before the Trump presidency. Now its looming debt, demographic and security crises are about to feel the pressure of Lighthizer-led America First trade negotiations. Prognosis for Europe? Less than good. Part 7 of the Cutting Room Files.

One of the perks of my work is that I can avoid the squabbles of domestic politics. But the dysfunction is just so loud and the Democrats and Republicans are just so broken… Part 8 of the Cutting Room Files.

The Cutting Room Files, Part 8: American Politics

I try to avoid US domestic politics in most of my work. In part because domestic politics are a loud and busy space, and it is easy to have your work get lost in the noise and rage. In part because – especially at the primary level – it is mostly fluff that doesn’t move the national needle.

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