Which BRIC’s Member Will Survive?

The future for most of the BRIC countries is not – as Rihanna so eloquently put it – “shining bright like a diamond.” If I had to choose between Brazil, Russia, India and China, my money is on India outlasting the others.

Most of you know where I stand on China, and its collapse is inevitable. Russia has been shooting itself in the foot for ages, and its recent war on Ukraine is only going to bring them closer to that final bell. Brazil has a better demographic outlook than China and Russia, but geographic constraints and dependence on China will catch up to the Brazilians sooner or later.

Thanks to a stable demographic picture and growing need for self-sufficiency, India stands out as the most resilient. As long as these factors remain, India is set to do very well…even if they have to do everything on their own.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Maine. That’s New Hampshire over there. Because, you know, what? You state. Today I’m taking an entry from the Ask Peter Forum, specifically of the original BRIC countries: which one do I think is going to do the best and stand the test of time and why? And it’s always… there’s no boat.

The waves can’t be good anyway. Well, let’s do a process of elimination. First and foremost, China — let’s dispose of that. Demographically, China is facing national dissolution. The birth rate has now been lower than the United States since the early 1990s, and it’s already at a point where it has about the same number of people over age 50 as under.

So, we are looking at ethnic dissolution of the Han ethnicity before the end of this century. To think that there can be a country that comes out of a place with no people? No. It’s just a question of how China dies. And that’s before you consider that this is a country that imports almost all of its energy, imports almost all the components that allow it to grow its own food, imports almost all of its raw materials, and is completely dependent upon exports to the wider world in order to absorb all of its manufacturing capacity.

It is the country on the planet that is most dependent in absolute terms on globalization, and that means on the U.S. military to make sure that its ships can travel without being molested, no matter where in the world they go. That is a bad business strategy. And we’re going to be seeing the end of the Chinese system and probably of the Chinese state within ten years. So, not them.

Russia second. Very exposed geography: 5,000 miles of external border that really doesn’t have an anchor in any sort of geographic barrier. They have to defend the whole thing. Part of the logic of the Ukraine war is to get closer to the old exterior crustal defense they had during the Soviet period, where they could rely on things like the Tension Mountains or the Carpathians to shorten that external barrier.

So, they’re in a weird situation that if they don’t expand, they can’t actually shorten their external borders. Russia today actually has longer external borders, even just by drawing on a map, than the Soviet system did, despite losing all 14 of the constituent republics. So, geographically, that’s a bad situation. Demographically, we don’t have nearly as good of a picture of Russian demography as we do of the Chinese because the Russians stopped collecting census data 17 years ago and just started making up the data.

But at the time, they had one of the worst demographic structures in the world, and even by their official fabricated data, they’re in the bottom ten. So yes, Russia is not long for this world. The question is whether it dies this decade, next decade, or the decade after. There are some things they can do to buy themselves more time. They’re not nearly in as poor of a situation as the Chinese are, but they’re certainly not an economic power, and they can’t even maintain their raw materials exports without external help.

Third up: Brazil. Demographic situation is much better. Brazil didn’t really begin industrializing and urbanizing in fervor until the 1990s. Now the birth rate has dropped by almost three-quarters since then. But even if they keep aging at their current rate, they’re not going to face a Chinese or a Russian situation before at least 2070. So there’s still a demographic dividend to be had.

Their problem is more geographic. Think of Brazil as a table that has lost two of its legs, but the two legs that fell off are the ones to the interior. So if you want to start from the coast and get into interior Brazil, you first have to go up an escarpment and then gradually down into the interior. That means it has very, very high infrastructure costs because everything requires going massively uphill from these tiny little flat plains in the cities that are on the coast.

That makes Brazilian cities dramatic and beautiful, but it also means that everyone’s living on a postage stamp in a slum, and the only real city that they have that you would recognize anywhere else in the world is Sao Paulo. Up on top of that escarpment, which is a normal city, and so the economic hub. But it makes its interaction with the rest of the world very, very difficult and expensive.

So it’s not that Brazil is flirting with failed state status like China or Russia, but it’s very difficult for it to operate unless somebody is going to underwrite its development. Now, since roughly 1990, that country has mostly been China because the Chinese are not price-sensitive when it comes to getting raw materials, and so they will basically fund the development of infrastructure in Brazil in order to get to the farms and the mines that are in the interior and bring it out.

But in doing so, they also built joint ventures with a lot of Brazilian companies — joint ventures, which was Chinese for stealing all the technology that the Brazilians had so painstakingly developed over the last 40 years, taking those technologies back to China, mass-producing them, and forcing all the Brazilian companies out of business. So Brazil is actually less advanced now than it was 30 years ago. And that’s a really tough road to hoe.

The final country, of course, is India, and that is the default winner. But they probably would have won on their own anyway. Like Brazil, they had a demographic moment, and they’re now aging. And like Brazil, they didn’t really start to industrialize until after 1990 because they were basically pro-Soviet and didn’t want to participate in something that was U.S.-led, like globalization.

And so they are aging very quickly. But again, like Brazil, this isn’t going to be a real problem till at least 2070. In addition, India has never had a manufacturing pulse like, say, Brazil did. So there’s no place to fall. There was no place for the Chinese really to cannibalize these. What they need to do now, what the Indians need to do now, is more or less the same thing we need to do here in North America.

If they still want stuff in a post-China world, they’re going to have to build up their own industrial plant. And that is a growth story, but it’s going to be a more complicated one than it is here in the United States because the United States has partners in this. We’ve got Mexico and Canada and trade deals with Japan and Colombia and Korea, a solid relationship with Taiwan. And if the Brits can ever figure out what the hell Brexit means, I’m sure the Brits will be brought along for the ride as well.

That means that we have help in building out our supply chains, and we can all specialize in the things that are the best. India doesn’t have that. Every country that India borders hates India, and India hates every country it borders. So India is going to have to do all of this by itself, and that will make it more expensive. And that means it can’t get any help. And that means it has to build up the infrastructure with its own system in a way that we just don’t have to do in the United States.

There’s a pro and a con for that. The con is obvious. The pro is that this is an Indian story. With India doing this for its own reasons, on its own time schedule, in its own way, for its own needs. Yes, it will take longer. Yes, it’ll be a little ugly. Yes, it’ll be a little dirtier than it could have been otherwise. But it means that India will be globally significant even if it’s not globally involved.

And in a globalizing world, that’s just fine.

The UAE and India Look to Localize Semiconductor Manufacturing

A couple more countries have joined the campaign trail to buildout their semiconductor industries: the United Arab Emirates and India. Let’s break down the different approaches to this buildout and how they might turn out.

The UAE is attempting to sweet-talk Samsung and Taiwan’s TSMC to build a semiconductor fab facility in places like Dubai and Abu Dhabi. In case you didn’t know, these places aren’t exactly known for their engineering expertise or labor forces capable of carrying out these complex operations; meaning these facilities would likely be filled with labor imported from South Asia. Basically they’re paying for the facility to be closer to home, but not actually doing any of the work.

India, on the other hand, is working on a more sustainable model. Bringing together Powerchip and Tata, the Indians are focusing on producing less advanced chips. Don’t be fooled though, these chips and the fab facility where they are made would be vital for the growing tech sector in India. By using local labor and addressing the infrastructure issues associated, India’s approach leans towards functionality over prestige.

While both are attempting to localize semiconductor manufacturing, the UAE and India have different approaches that will likely have very different results.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from a hotel room where I’ve been laid low by a 24-hour flu problem. It’s like, hope it’s only 24 hours. Today we’re going to talk about semiconductors and something interesting that’s happening in the world of fabs. Dubai and Abu Dhabi, which are the two main cities in the United Arab Emirates and the Persian Gulf, are holding talks with Korea’s Samsung and Taiwan’s TSMC about building a fab facility in the Persian Gulf in the United Arab Emirates.

Normally, I would just wave this away because semiconductor fabs are one of the more, if not one of the most, complex manufacturing systems in the world. And there aren’t a lot of people in the Persian Gulf that can do basic math, much less, you know, high-end engineering. But I thought it might be worth exploring why it still might happen and what it would look like.

TSMC and Samsung are not the same. TSMC is what’s called a fab fabricator, and Samsung is more of a conglomerate, right? And so TSMC is part of an ecosystem that involves several thousand companies that come together to provide the materials and the designs, and TSMC simply puts it together. In fact, they don’t even design the managerial process.

What usually happens is a foreigner, typically someone who’s from Japan or the United States, designs a chip in league with the end user. And then that design is given to TSMC. And then that designer typically goes out and sources all of the materials that are necessary to make the chip, ensures that they’re high quality, and then brings them to TSMC themselves.

It’s a little bit oversimplification, but think of TSMC as the world’s best direction followers. They don’t have a lot of intellectual capital in terms of interpreting the designs. That’s all managed by the American or the Japanese guy. Instead, they have an ecosystem of hundreds of companies within Taiwan who then take individual pieces of the design and figure out how to make it most effectively.

And then all of that information is combined under the American or Japanese person’s tutelage in order to provide a very, very specific series of instructions for TSMC, which they then follow. I’m not saying this to suggest that TSMC isn’t good at what they do. Oh my God, they’re the world’s best. But the really high value-added isn’t done in the fab; it’s done outside the fab by others. Samsung in Korea is a little bit different. They’re more of a conglomerate. They have a design house, and they handle more of the instruction-building themselves. But still, these two companies, Samsung and TSMC, are two of only three companies on the planet that can make the high-end chips that are smaller than five nanometers.

The third one is Intel in the United States, which is a little bit more similar to Samsung than TSMC. Anyway, the point of all of this is it’s really, really complicated, requires a lot of really, really smart people who are really, really good at math and engineering. And the Persian Gulf is not known for having any of that.

UAE is basically a financial center because things, concepts like interest, are illegal under Islamic law. So UAE has found a way to kind of do an end run around Sharia laws and the such. And basically, if you’re in the Middle East and you want your money to actually earn something, you bring it to Dubai. And then Dubai does the investing, usually via third-party nationals.

So the idea that you could have a high-end fab in UAE using local labor is hilarious. So it wouldn’t use local labor. The UAE is basically a slave state, and they bring in people from other countries to do all of their work, most notably South Asians. And so if, if, if you get a fab facility operating in the UAE, it’s going to be manned almost exclusively by Indians.

And which brings me to the next point that India’s getting the fab. But they’re not doing what the Emiratis are doing and trying to get the world’s best, so it’s kind of a feather in the cap. No, they’re just going for functionality. So the company Powerchip is partnering with Tata, which is an Indian industrial conglomerate, to build a fab facility that will not make the high-end chips.

The best chips they will make will be 28 nanometers, which is what you are going to see in your typical car, going down to 110 nanometers, which is Internet of Things sort of quality. Nothing particularly sexy. But India, to this point, has not had a single fab operating in the country. It’s a problem of not labor or labor quality.

It’s a problem of infrastructure. So if we have something in Dubai or Abu Dhabi, it’ll be the Emirates with their rock-solid power system, paying for everything and importing all of the labor and all the technology. And the only thing about it that will be Emirati will be the address. And then in India, we’ll have a system where the state will try to set up a better power grid locally to where this facility is going to be.

And then the local labor will be right there. So two very different models to get to two very different places, bringing different assets into play.

Lessons on Elections and Faith from Unexpected Places

We’ve got a few more elections to talk about today, and who knows, maybe the US might even learn something from South Africa and India.

Over in India, Prime Minister Modi’s BJP party didn’t quite get the majority vote they expected, so that necessitates a coalition government. Many are even citing this as a good thing for India, as to limit Modi’s increasingly authoritarian rule. The crazy thing is that this election was clean, well-run, and everyone has accepted the results.

In South Africa, the party who has been ruling since the anti-apartheid era – the ANC – also fell short at the polls. So, they’ll also need to form a coalition, although the other parties rounding out the coalition aren’t exactly first round draft picks. Despite the ANC’s corruption, the election was still accepted as free and fair.

Here are my takeaways from today. #1 – India and South Africa will be forming coalition governments. #2 – the people of India and South Africa have more faith in their electoral processes than Americans do in theirs…yikes.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Birmingham, Alabama today. We’re in town about a couple of the major elections that have happened recently. I mean, we’ve already covered Mexico, but I want to do South Africa and India now, the conventional wisdom in most places is actually correct on this one. In India, the government of the BJP, which is Prime Minister Modi, suffered a significant setback, polling as recently as a week ago or a week before the elections indicated that they were on track to get a two thirds majority, which would have allowed the Modi government to amend the constitution without restriction. 

and instead they came at it under 50%. And so they actually have to form a coalition government. So they’re still in charge. Modi still the prime minister, but it has been a significant hit to his prestige. and lots of people are talking about how this is a savior, Indians seizing control of their own democracy and preventing an autocracy from happening because Modi has become more and more authoritarian as he’s been prime minister. 

All of that is correct. I would argue that Modi’s reputation for being an economic whiz has proven wrong, and he has mismanaged a lot of the government finances and a lot of economic policies, turning towards populism. And that was rejected to a certain degree. but rather than poopoo Modi or the BJP in general, I think it’s something that is far more important is what’s happening under the hood. 

this is a country that has lots of issues and infrastructure and education and equality, but they just ran an election where a billion people voted and the government didn’t win in the way it had hoped. And it’s okay. the trust in the political system is high. The Indians may have their faults, but wow, do they know how to count votes? 

They ran a clean election. The government has accepted it. Modi has accepted it. That’s something that we could probably learn a little bit from. the other country, of course, is South Africa. There you’ve got the ANC, which fought against the apartheid system back in the 70s and 80s. that has basically run the government ever since, usually with a supermajority. 

And they too have now gotten the smallest share of their vote in a very long time, if not ever, and again below 50%. They also will have to form a coalition. Here are the problems a little bit more intractable, because there aren’t a lot of people to draw from. you’ve got a group called the Democratic Alliance that is basically, like a pro-business libertarian group that is primarily ethnically white. 

You’ve got the Economic Freedom Fighters who would fight Latin American socialists to be two conservatives. And then you have a new group that has formed by the former, president of the country, Jacob Zuma, basically around his cult of personality. I mean, Zuma is arguably one of the most corrupt people in human history. who’s trying to make a comeback. 

so whoever the ANC has to form a coalition with, it’s going to be awkward. but again, here, the ANC, which is known for corruption, has just run an election in which they lost and no one has an issue with it because it was free and fair. One of the things we forget about in the United States is we actually do run the most free, most fair elections in the world. 

Don’t believe me? Believe a guy by the name of Chris Coons, who was Donald Trump appointed election integrity advisor, who said the day of the election four years ago that it was the cleanest election in American history. Now, Coons was, of course, fired within an hour for making that statement, but he hasn’t recounted. And of all of the challenges we have seen to the American electoral system in the last three years, of all the court cases, not one shred of evidence has yet to be produced indicating that anything had gone wrong. 

The day of running elections isn’t hard. Believing in them. That’s a little bit more difficult. 

India’s Counter-Piracy Operation: A Geopolitical Wormhole

Today we’re talking about the Indians and pirates – sorry sports fans, not those ones. India launched a successful counter-piracy operation off the coast of Somalia, which has helped reaffirm its global strategic importance, but raised some eyebrows in the process.

India has a unique geopolitical position: they have an ultra-nationalist view on trade and an extreme reluctance to integrate with other nations. If you look back to the Cold War era, partnerships with Russia have left a bitter taste in the Indian’s mouths.

So, India will be pursuing its own economic path, independent of outside forces. As they look to double the size of their industrial plant, what they lack in quality, they’ll make up for in a market of 1.5 billion people.

The eyebrow raising portion of all this is that it means India could launch its own piracy operations. Meaning India will likely be the de facto controller of trade in the Indian Ocean Basin – a critical route for oil transport.

Other countries will have to find ways to work around this new obstacle, and financial incentives are probably going to be the best option. The US is far enough removed to take a hands-off approach and let the Indian’s determine the future geopolitical landscape of this region.

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

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

And then there’s you.

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

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TranscripT

Hey everybody. Peter Zeihan here coming to you from the winter wonderland that is Colorado after a snow storm. It is the 8th of January. And the news today is that the Indian navy has successfully engaged in a counter pirate operation and freed a vessel with a majority Indian crew from pirates off the coast of Somalia. This is nearly at the outer reach of what the Indians can reach, which the rebel forces and counter-piracy operations are always lots of no fun for everyone.

And so this is a pretty important tactical victory. And I think it underlines the role that I see India playing in the region in the future. Now, India is not like any other country in the world. It’s certainly not like the United States. They have a very nationalist view of trade and they don’t like to integrate with anyone.

And they are an ideology vehicle, opposition to globalization because it was American led and during the Cold War, the Indians tended to be more pro-Soviet to the point that even when the Soviet Union wasn’t around anymore, the Indians tended to be fairly pro-Soviet. But we’ve seen this weakening in that position over the course of the Ukraine were not because they’re having a change of heart, but because they’re realizing that all of the billions of dollars that they spent on developing joint weapons systems with the Russians was basically stolen.

And they’re never going to get any of it. So the Indians, from a national security point of view, are increasingly going their own way. That may include some deals here and there with the United States, but those will be tactical, not strategic. And it’s going to be a very l’écart experience, as opposed to, say, the American relationship with Japan or with Australia or even with Saudi Arabia.

India is going to do its own things for its own ways. Also, India doesn’t really like anyone and there aren’t a lot of countries out there that like India, so they won’t be partnering with anyone else in economic matters for manufacturing. They’re going have to do more or less the same thing that the U.S. is going to have to do as the Chinese system breaks down.

And that means doubling the size of their industrial plant. But they’re not going to have a joint manufacturing system with Bangladesh or with Pakistan or Sri Lanka or with Iran or with Myanmar. And those are all the countries that the border. So India’s industrial plant is going to expand massively, but it’s all going to be in India. That will affect quality issues, of course.

But, you know, India is a market with 1.5 billion people. I think they’re going to deal with that just fine. What that does mean, however, is their threshold for military action is going to be very, very low compared to a lot of other countries because they’re not integrated with anyone. They’re also the first major stop for oil going out of the Persian Gulf to East Asia, which is where it almost all goes.

And now the Indians have conclusively demonstrated that they’re capable of doing anti pirate operations. Well, not to put too fine a point on it, but if you’re good at anti pirate operations, you’re also, by default, very good at pirate operations. So now that the Indians are not beholden anyone, and now that we are seeing a breakdown in the Chinese system, we’re going to see the Indians taking that de facto control, the de facto management of any trade that happens to come through the Indian Ocean Basin, and that includes the world’s largest oil transport route.

So the issue for everyone else in the area is whether or not you can find a way of dealing with the Indians. And to be perfectly blunt, the best way to do that is cold, hard cash, because the Indians are otherwise more or less going to be self-sufficient in the world that we’re going to, and no one can reach them.

They’re literally a continent away from all the other potential players. And as for the United States, if we have an India that is a little bit that’s the best word, persnickety in its own region, that’s fine, because there aren’t a lot of U.S. interests that pass through that region in a post China scenario. So this is just where we’re headed.

And the Indians very clearly are a step ahead of everyone else.

India, After America

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The Accidental Superpower: Ten Years On

With a new “10 years later” epilogue for every chapter, comes an eye-opening assessment of American power and deglobalization in the bestselling tradition of The World is Flat and The Next 100 Years.

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Countries across the globe have all benefited from the global order, but what happens when it comes crashing down? Thankfully for India, they are one of the few countries that will avoid much of the suffering.

India gets their energy from the nearby Persian Gulf (so no energy crisis for them), Indian agriculture is largely self-sufficient, and India isn’t overly dependent on trade…so what does this seemingly bright Indian future look like?

India (along with the rest of the developing world) has been overrun by Chinese manufacturing, but with China collapsing, the Indians will have to reclaim their manufacturing industry. Thanks to India’s widely differentiated labor market, this should make for a reasonably smooth transition. In all likelihood, India will become a manufacturing world power, even if all it does is supply its domestic market.

If you look at the attached graphic, you’ll notice India has a pure demographic pyramid at the top and then, at age 35, a sheer drop-off. This is a result of industrialization,  but it does mean they’re having a period of hypercharged economic growth. The question we need to ask is, when does their luck run out?

India is a pocket power, meaning they don’t have a ton of great “expansion” options, and their geography will limit economic and strategic expansion. However, the geography that keeps India in place also helps to keep others out.

For that reason, India is very pro-India…meaning they are only looking out for number one and are willing to go out and take something if they need to. Luckily for the Indians, there won’t be many people who could stop them, either. Luckily for everyone else, we’re not to that point quite yet…

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

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

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

And then there’s you.

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

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India’s Assassination Program in North America

The Accidental Superpower: Ten Years On

With a new “10 years later” epilogue for every chapter, comes an eye-opening assessment of American power and deglobalization in the bestselling tradition of The World is Flat and The Next 100 Years.

ORDER MY NEW BOOK HERE

A US federal grand jury has voted to issue indictments against a handful of ethnic Indians (with alleged ties to the Indian government) who the US Department of Justices claims participated in an assassination program in North America.

This program has reportedly targeted individuals alleged to support Sikh separatist groups in India. As a result, one Canadian citizen has been killed, and the program has targeted an American resident with dual American-Canadian citizenship.

If there is any validity behind these claims, relations between India and North America will need some patching up.

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

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

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

And then there’s you.

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

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TranscripT

Hey, everybody. Peter Zeihan here. Coming to you from my bed because I’ve thrown out my back and I’m going to be here for a couple of days. The news aside from that is that there’s a lot afoot in relations between Canada, the United States and India. Recently, the United States has issued an indictment of a number of folks in India, many with ties to the government for an assassination program in North America, which, according to the Americans, has killed at least one Canadian citizen and targeted unsuccessfully someone with dual American Canadian citizenship.

Both these people are ethnic Indians, and as the indictment goes, there are factions within the Indian government who have used state resources to set up a murder program in North America and take out folks that they say are supporting separatism in India. Now, the reality of the situation on the ground in India is that separatism peaked probably back in the 1980s.

Not that it wasn’t serious then, it was, but now it’s really been talking about in any sort of meaningful way in the last 20 years, unless you happen to be an ultra nationalist and the BJP, which is the ruling party in India and is pretty much a shoo in at this point for reelection next year, has a severely ultranationalist faction.

And that means we got to pick this parliament. Okay. First of all, a lot of the negative stereotypes about India when it comes to things like government inefficiency are true. A lot of societies think of government as a cash cow where you get jobs, you don’t necessarily have to do anything. And there’s going to be some truth to that in any society.

But in India, it’s particularly robust because we do have the world’s largest administration and oftentimes it’s considered a minor miracle. If anything gets done, because there are so many clashing authorities, not just between the local, the state and the national government, but within the different bureaus of the national government. And the government is absolutely treated as a cash cow for whoever the ruling party or parties happen to be.

And in that sense, the BJP is no exception. But what that means is, as a rule, getting anything done within the Indian government, especially when it involves foreign security policy, is next to impossible because the institutions are just so lethargic and overpopulated and under supported. What that means is whoever did this, it’s entirely possible that it was done without the knowledge of the BJP leadership in general, the Prime Minister in particular, Modi.

The Prime Minister is certainly a nationalist in himself, but he’s not like advocating going out and killing someone else’s citizens on a different continent. But it’s perfectly reasonable to expect that there’s a faction of the BJP who is ultra nationalist, who has used their links to the state now to launch something like this independent of the federal government.

When Justin Trudeau first announced almost in passing that a Canadian citizen had been killed by Indian agents, you know, it sparked a bit of an uproar. But then the Canadians started releasing details about the people who did it and to be perfectly born, a lot of them were kind of chubby. And, you know, the world of international espionage is many things, but it doesn’t spend a lot of time at the buffet at Caesar’s Palace.

These are folks that have to be really pretty much geared up and goers and Trump are not known for being particularly agile assassins. So, you know, they got caught both in Canada and in the United States in particular. And now the question is, what is this going to mean for relations? Now, if this theory is correct, that this was just kind of a rogue faction within the political sphere as opposed to actual professional intelligence agents?

Then someone’s head can be put on a platter. When it was just Canada and maybe some countries quietly back in Canada, that was one thing. But when they moved into the United States and attempted to kill someone. my. Even at the height of the Cold War, the Soviets would have never even dreamed of that. Even with relations as bad as they have become with the Chinese, the Chinese would never even think about going after an American citizen in America.

But apparently there was someone in India. They thought they were exempt. And, you know, that’s a hard pause. Yes, you can suck up a lot in great power politics when it comes to the treatment of your allies. But if someone’s coming after your citizens, that’s a very different sort of picture and that generates broad spectrum retaliation. And if this is a proto ally like India may be to the United States, that pretty much sinks all statesmanship options between the two countries right there.

So I would guess, especially if this theory is correct, is over the course of the next few weeks, tensions are going to cool. The Canadians are already being fairly smug about saying that they’ve already cooled quite a bit and that the United States is directly involved. Canadians love to be smug and eventually someone will be. Carl pulled to the carpet, maybe not publicly, but in the eyes of the governments in the United States and Canada, we know that this is something that has drawn attention from the very top because the White House in the United States has now leaked that Joe Biden actually talked to Prime Minister Modi about it at the last big summit.

I think it was the G20 summit. So this is now a top tier issue. And if Modi is serious about wanting to have a partnership with the United States in order to get better defense equipment because they know no Russian equipment sucks or to have a friend against the Chinese should anything break down there. Well, you know, you don’t go to your potential allies homeland and start killing people.

I’m sorry. That’s just that’s just rude. So this is probably not going to exactly get swept up under the rug. We will prob ably have someone who has to pay and there will probably be an extradition before all is said and done. But that doesn’t mean that it has to be loud unless of course they try to kill someone else, in which case all bets are off.

India Assassinated a Sikh Emigrant on Canadian Soil

While giving a parliamentary testimony, Canada’s Prime Minister, Justin Trudeau, accused the Indian Government of assassinating a Sikh emigrant living in Canada who supported an Indian separatist group.

Intelligence from the Five Eyes has revealed that Trudeau’s claim was valid. This is significant because it means India is willing to “take care of business” outside its borders and could impact the entire Indian diaspora globally.

This will undoubtedly strain relationships between the Five Eyes and India moving forward, but there are still greater power politics at play. Although India’s stance will tarnish some relationships, it will still benefit from the anti-China actions taken by the West and the rest of the world.

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

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Transcript

Hey everybody. Peter Zeihan here coming to you from Colorado today. We’re going to talk about something that you guys have been writing in for weeks about what is up with the Indians and the Canadians yelling at one another over this assassination plot. For those of you who are unaware, the Canadian prime minister, Justin Trudeau, accused, who actually kind of mentioned it in passing in a parliamentary testimony that the Indian government had assassinated a Sikh emigre on Canadian soil.

The guy had Canadian citizenship. He had renounced his Indian citizenship. But the Indians have never liked this guy because he supports one of the separatist groups in India. It wasn’t a group that was part. I mean, this issue has basically been resolved in India’s favor. But he didn’t stop talking about it while he was abroad. And so as the accusation goes, the Indians wanted him dead and did it.

This has a number of implications. It took me so long just to kind of get to the bottom of it, because it involves intel that hasn’t been made public for the most part. But let’s say five things. Number one, looks like it was true. The intelligence didn’t come from Canada. It came from the United States and the Five Eyes system.

Five Eyes is a group of five Anglo countries Canada, Australia, New Zealand, the United Kingdom and the United States that share intelligence on almost everything. Anyway, the intelligence originated from the United States because that’s going to sound weird. Or maybe not. The United States has much better intelligence capabilities in Canada than the Canadian government does. So yeah. And then it was verified by the British government.

And the Brits have much better information gathering in India than the Canadians do. So all of the five eyes have basically kind of quietly said Canada was right on this one. That makes things a little bit complicated because, two, we have never seen the Indian government assassinate anyone outside of arm’s reach of their own borders. This is a fundamentally new capacity for them.

Now, assassinations are a little bit coming into vogue. The Russians have obviously picked up the pace for that considerably, even before the Ukraine war with radiation and poisoning and polonium being their preferred methods, although they’re not afraid of a gunshot to the head. And if you ever see somebody jumping out of a hospital window, that was only an assassination.

These kind of Russian culture are the Americans, of course, are are fans of it, too, as long as it’s done by a drone where we really frowned upon it when it’s done in person for some reason probably left over from the Cold War issues. And then, of course, the Brits are good at it anyway. Seeing this with India is significant because the Indian diaspora is arguably the largest on the planet, and if the Indian government starts patrolling it using extraterritorial and extralegal means that is going to rub a lot of people wrong in a lot of places, and eventually it’ll probably end up offing someone that actually matters to a government and not just because

it’s a citizen. So this is not yet a really big deal, but it has the potential to become a very big deal in the not too distant future. Number three, Canada is among the largest destinations for Indian students traveling abroad, and the Indian diaspora in Canada has become its fastest growing ethnic group. Now, obviously, the people who leave a country are not Brazil patriots.

So expect to see a lot more agitation within Canada as a result of this, as opposed to quieting down. If the Indian goal was to quell discussion of these topics, they probably just achieved the opposite because Canada, for all, for its faults, is a free country with a more or less free press, even if it is a little bit slanted, in my opinion.

And it’s very easy for anyone to say anything about anyone, anywhere. And because of freedom of information and the ability to send electrons around the world in a second, that will generate actually a lot more publicity in India as well. So this probably wasn’t the smartest play by New Delhi if their goal was to keep this very, very quiet.

Okay. More significantly, number four, relations with India. You know, by the five eyes putting their stamp of approval on the Canadian statement, that obviously raises the question about what relations between the Brits, the Australians and the Americans are going to be with the Indians. The Americans and the Australians are in the quad grouping with India, which is a kind of a security talk shop.

And the Brits obviously have ongoing relations and economic and otherwise with everyone who’s in the Commonwealth in their former colonies. So if you’ve got a major power, India starting to do things that are incredibly unsavory from the point of view of democratic norms, that is absolutely going to impact relations. The question is how much? The issue for the Americans and the Australians, of course, is China trying to try to try to China.

And honestly, I don’t think in this relationship we’re going to see too much of a change. Which brings us to the fifth issue, which is the nature of great power politics. When you have identified a country that you see as a large threat, a lot of the niceties that dominate the normal diplomatic and economic discourse fall by the wayside side in favor of hard security concerns.

And that means you are willing to partner with different sorts of countries and personalities that you normally wouldn’t even consider. So, for example, when Hitler was on the scene, we were best buds with Stalin, sent him billions in today’s terms, tens of billions of dollars of military aid in order to fight off the Nazis. Then when Hitler fell, we got into bed with Mao, who was the greatest mass murderer in history, in order to counter Stalin.

So the idea that we would partner with a mostly democratic but little bit unsavory India in order to counter what has become the most totalitarian government in the world. That’s an easy decision to make, but it does mean that the nature of the American and to a lesser degree British and Australian relationship with the Indians is going to change.

We never considered Stalin or Mao or French. They were allies against a very specific threat. And when that threat was neutralized, the relationship changed again. Now, there are a lot of decisions that Indians are going to have to make in the next several years as actions against the Chinese heat up. And the question will be whether or not they want a more productive relationship with these Western nations.

There’s a lot of water under that bridge. The answer may very well be no, but that means India will be doing Indian things with Indian policy for Indian interests. And to be perfectly honest, looking back on the last 70 years, that’s not much of a change. India unofficially sided with the Soviets in the Cold War, but they were very big on non-alignment for the most part carried it out.

What we’re seeing today is just kind of the slightly greater power equivalent of that same sort of political ideology. Now, sitting here in the United States, it’s easy for me to wag my finger and say that this is not the best thing for India or Indians, but I don’t get a vote in this. This is a decision to be made in New Delhi specifically, and to be perfectly blunt, in a world where lots and lots of countries are aligned against the Chinese and in my opinion, the Chinese are long for this world.

India is going to do very well regardless of what the relationship with the West happens to look like. This is their decision. Doesn’t mean we have to like it.

The BRICS Summit: Significant or Hoopla?

Have you ever seen a couple of 3-year-olds sitting on the playground talking gibberish and acting like they’re making life-changing decisions? Well, that’s what’s going on at the BRICS summit in South Africa this week.

BRICS comprises Brazil, Russia, India, China and South Africa, and if you’re struggling to find some overlap between those countries…you’re not alone. With limited economic ties and diverse interests, this group of countries struggles to connect on anything meaningful.

To complicate matters further, BRICS is looking to add some new members to their ranks: Iran, Saudi Arabia, the UAE, Egypt, Ethiopia and Argentina. I urge you to try and come up with a worse list of mid-tier countries to bring on if you want to expand your geopolitical influence.

The varying interests of the current and new members will likely halt any meaningful conversation. The practical significance of this summit and BRICS as a whole is – limited – to say the least. And if you were hoping this would shake up the global landscape, I’m sorry to burst your bubble.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

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Transcript

Hey everyone, Peter Zeihan here. Today we’re going to talk about the BRICS summit. It was originally intended to be a two parter, one during the summit and one after. But because programing got shot down yesterday. We’re combining this into one. So it seems to a little bit disappointed. That is why. And here we go. Hey, everybody. Peterson coming to you from the shore of Lake, where I have been visited by a whole bunch of goats.

They were very curious anyway. Today we’re going to talk about something that is in progress. And that’s the BRICS summit in South Africa. They’re trying to come up with a series of plans of what to do. They’re trying to consider whether they should let in new members. And odds are that this is just going to be a really stupid summit that’s going to amount to nothing.

But it’s still worth talking about because it’ll give you an idea of the architecture of the international system. And you never know. They might be able to pull something out of the fire. So the reason I have primarily been dismissive of the BRICS since the beginning is because it was never an organization. It was never a grouping that was founded by its members.

It was some finance guy who’s like, Look, we’ve got all this capital because the baby boomers haven’t retired yet. We should put it into bonds. And we’re some big bond markets. Oh, yeah, Brazil, Russia, India and China. That’s it. That’s all it was. And then taken to later, they led in South Africa in a in a fit of pique.

Nothing’s going on here. There’s never been any meaningful deal. They have formed a development bank, but now over 90% of the capital comes from China. And there are reasons for the BRICS to talk with China. It is a significant trading partner, but there’s no reason for them to speak with one another. Brazil, aside from exports to China, doesn’t trade with the rest of them at all.

Same with South Africa, same with Russia. India is a special case, and if there’s one country that doesn’t like China, that would be India. And, you know, every once in a while you’ll hear them talking about forming a global currency or a new alternative currency to challenge the dollar. And then they start talking about details and all falls apart.

So right now, India, China, South Africa and the BRICS own bank are on record saying that they’re not interested in a global currency. The only two countries are left are Russia, who thinks that everyone should use the ruble, of course, and Brazil. How can I qualify? Describe Brazilian foreign policies these days, especially on economic issues, kind of. Lodhi DA.

Not a lot of substance beneath rhetoric anyway. So the purpose of this summit is to bring in dozens of leaders from other countries and see if they can kind find something that they can all agree on. A history suggests the answer will be no and everyone is coming with their own list of grievances and desires. The Russians want everyone to sign up with them and boycott the West until the West agrees to give them their way on Ukraine.

Of course, Russia’s not included in that. Russia is still allowed to talk. The first is still how to to trade with whoever they want. The Chinese are hoping to get enough countries on board that they can then walk into Washington and demand trade concessions. They don’t care about all the other countries. They just want them for themselves. The Indians are there because they are more of a classic nine nonaligned power.

But as the Chinese become more rambunctious, the Indians have become more and more edging towards being in the American camp. So the normal rhetoric that you would expect to see out of the Indians just isn’t there. The South Africans who are hosting are pretending to be neutral in all this and say they don’t have an opinion. The Brazilians are very logical and that’s it.

We’re going to turn around here anyway. Why might this one spark? Why might this still matter? Well, if you look back to the Cold War period when we had the nonaligned movement, that’s what a lot of these countries are from. Not Russia, not China, but a lot of the ones who are now showing out, they saw themselves as not east, not west, not first or Second World, but is something else.

And they try to come together for a common thing called the new international economic order. And the idea was that the West should restructure their trade practices in order to benefit some of their former colonies. It didn’t amount to much at the time. Eventually it became known as the ACP group Africa, Caribbean Pacific, a former colonies of the Europeans who have a degree of preferential trade access when it comes to European markets.

But it never got the restructuring that they really wanted. The reason I’m even less optimistic this time around is because the interests of the groups that are showing up are far more diverse than anything that we had in the early post-colonial era back in the sixties and seventies. So if they do decide, if BRICS does decide to do something, it will probably be about expanding their membership.

And that would be one of the most effective ways that I can think of to make sure that BRICS never achieves anything at all because they don’t agree on any much right now. So this is going to be an unofficial two parter. We’re going to wait to see what comes out of the summit. And then I will let you know what I think about the new roster.

All right. That’s it. Bye. Okay, here’s part two. So BRICS did decide they wanted to expand to involve six members in the six countries they involved. Indicate to me that BRICS has no plans of doing anything useful in the future. Those countries in no particular order are Iran, Saudi Arabia, the United Arab Emirates, Egypt, Ethiopia and Argentina. And I mean, honestly, folks, this is hilarious.

Okay, so let’s start with what the naysayers are going to say about how this does matter and explain why it doesn’t. They’re saying that because of the addition of the three countries in the Persian Gulf region plus Egypt, that this grouping, BRICS, now produces about half to 60% of global oil. And that means the downfall of the dollar, the formation of an alternate currency, the end of the petrodollar, divestment, the United States.

And it’s the end of an era. And, you know, the short version is absolute bullshit. Number one, Saudi Arabia does sell a few loads to China in yuan, and Russia does sell a few loads in yuan or rupees in order to get around sanctions. But the Russian system is kind of by itself. And as Russia follows no one, as with the Saudi Arabians and the Emiratis, that might be a little different.

Well, you got to look at why they’re considering doing anything in non-US dollars. They’re looking for a security guarantor. They’re afraid that the United States is going to leave the region. And if it does, they’re on their own. And since they don’t like to be outside of air conditioning, national defense is something they’re not very good at. So they’re basically open to all potential takers when it comes to not oil sales for sales sake, but as a way of getting into your security planning.

The Saudis have gone with the U.S. dollar for the last several decades, not because it was the global currency, not because they’re part of a caucus group that is basically with the BRICS. And they’re not in any sort of meaningful organization in which the U.S. and Saudi Arabia members, they have a bilateral relationship that was based on security, and that was the reason why they use the U.S. dollar.

That’s the reason why they bought refineries on the U.S. Gulf Coast, because they saw the United States as the country that ultimately would bleed and die for them. And they’re looking for alternatives, not because they want an alternative, but because the U.S. is probably not interested in that role anymore. There are also right now trilateral negotiations going on among the Americans, the Saudis and the Israelis, in which the Saudis are seeking a Japan style security guarantee for themselves.

Now, they’re probably not going to get that. They’re probably going to get a lot of things that they’re after. But the bottom line is that for the Saudis, this has never been about the money. It’s never been about the currency. It’s about who’s going to take a bullet for them. And the Chinese simply lack the capacity to deploy at range in a way that the Saudis would be willing to accept and believe, especially since the primary foe that they’re worried about is none other than Iran, which is how it has been, added the BRICS as well.

That brings us kind of the second problem here. The the BRICS have realized that if you’re going to add a country like Iran, that is how should I say, has some firm opinions about security issues, for example, that it should be in charge of the Middle East. Well, then you have to add anyone else from that region at the same time.

Otherwise, you can never have any of them because the Iranians would do the vetoing. So that’s adding the UAE, Saudi and Iran at the same time. It guarantees that you can expand the organization in the future, but it also guarantees that on all significant issues, you now have members inside the organization that going to be in diametrically opposed positions forever.

So we already know that BRICS can’t have a meaningful energy policy because now you have a number of opposed powers Russia, Iran, Saudi Arabian, UAE, all in at the same time. What a shit show. Okay, next up, Argentina and Ethiopia. Ethiopia brings very little the table. It’s one of the ten poorest countries between per capita terms in the world.

It’s landlocked. It’s one of the handful of countries in the world that is not part of China’s one belt, one road, because even the Chinese like there’s no investment case there. So they added in in order to get a little bit of African flair into the organization. And that’s about it. Argentina is not poor. It has a entitlement complex in which it thinks that everyone should give it money and should never have to give any of the money back.

And the reason they applied for BRIC membership is they’re hoping to get Chinese money. It’s not that the Argentineans are anti-U.S. dollar in any meaningful way. It’s just they’re anti paying back their debts. And so they’re always looking for a new financial access point in order to leech off of it until it goes away as well. So honestly, you know, best of luck with those two because there definitely a drain on the organization and they really don’t bring much to the table.

Okay. Who am I looking to? Oh, yeah, Egypt. Egypt is basically a U.S. satellite state. The U.S. basically pays Egypt and Israel and Jordan, for that matter, to not go to war with one another. So thinking that there’s a security play here from bringing the Egyptians in. No. If anything, it’s a bit of a Trojan horse. It is a large developing country.

I would argue that the reason it got brought in is because of India, which still has a lingering love of the nonaligned movement in which Egypt was a reasonably potent player politically but economically. Strategically, I’m afraid not. All right. Is that everybody? Yeah, that’s everybody. When an organization expands, usually one of two things happens. Either one, you’ve got an overwhelmingly powerful single member that kind of decides how things go.

And that would be the United States and NATO’s, for example. Option number two is you expand it with each member, you bring in differing viewpoints, and eventually it paralyzes the organization from doing really much of anything. And the BRICS is definitely firmly in that category right now. This is really only going to amount to anything in the midterm now if one of two things happens.

Number one, the Chinese pay for everything, and that means subsidizing the existence of the Argentineans, as they believe they should be subsidized, which is a hefty price. And very, very poor countries like Ethiopia. The last time a major power tried to do this, it was the Soviet Union. It was the 1970s, and it broke the bank. So not very likely that the Chinese are going to pay for influence in places that they actually can’t control and don’t really bring them much if they did.

The second option is we could see this very, very rapidly expand to basically become the new nonaligned movement. Of course, it would be different this time because the Chinese very clearly have elements in mind and the Russians very clearly have some goals in mind. And it’s difficult to imagine a lot of the world’s middle and lesser powers following the lead of these two countries.

I mean, yes, a lot of the global south has not been interested in condemning the Russians for what’s going on in Ukraine. That doesn’t mean they want to follow them. And anyone who’s not blind realizes the Chinese has some very clear, very nationalist, very, almost hateful, domineering goals for the Chinese rise. And in that sort of environment, no one wants to be a pawn because all of a sudden the nonaligned movement is going to align with a global pull.

No. So where does that leave us? Well, I think if you look at what really went down at the summit, you get your answer. Chinese President Xi Jinping didn’t even show up to some of the opening ceremonies where he was expected to give a pole speeches. The Chinese don’t see this as a useful vehicle, except rhetorically, and that means you shouldn’t treat it as anything else.

All right. That’s it for me by.

Brain Drain and Capital Issues Plague India’s Tech Industry

Today’s video comes to you from the base of Saint Mary’s Glacier in Colorado.

With semiconductors top of mind for everyone, let’s dive into India’s tech industry and see if they can cement their place as a tech powerhouse. Despite government incentives for tech investment, big players like Foxconn are still pulling out of multi-billion dollar plans.

This isn’t a corruption or infrastructure problem. It’s just a case of brain drain – meaning the Indians in this talent pool pursue (more lucrative) opportunities outside of India once they’ve reached a certain skill level. Without a talent pool to choose from, everything else falls apart.

The second problem for the Indian tech space is capital. If you want to build a semiconductor fabrication plant, you better have some deep, deep pockets. Despite India’s size, its pockets just aren’t deep enough to be a world leader in tech.

Does that mean it’s all downhill for India? Absolutely not. The Indians have proven their dominance in several areas, and the collapse of the global order won’t impact them like most countries. India’s future is golden, and they will be a major world player…but their tech industry isn’t going to be why.

Prefer to read the transcript of the video? Click here

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

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TRANSCIPT

Hey everyone. Peter Zeihan here coming to you from the foot of the Saint Mary’s Glacier in Colorado. Today we’re talking about Indians. Semiconductors and tech in general. In the last week, well, maybe two weeks by the time you see this, Foxconn, the big semiconductor company, pulled out of a joint venture with Vedanta in the state of Gujarat, which is Modi’s home state, Modi being the prime minister of India. Modi has put up $10 billion in any government, I guess has put up $10 billion in order to attract investors into the tech space. And the pull out of Foxconn is kind of par for the course and for good reason. There wasn’t a corruption issue here. There wasn’t even an infrastructure issue. It’s a talent issue.

India is probably the country in the world that suffers the greatest volume of brain drain. No one ever doubts that Indians are actually good at I.T. and technological work in general. The question is whether it’s the Indians that are in India that are good at it, opportunities to move abroad into states that have higher incomes, more stability, less religious persecution, blah, blah, blah, blah, blah. All that stuff has really pulled the talent out of India, not just for the last several months or years, but decades. And Indians who are in that sector tend to move to Southeast Asia, where they can be in upper management, as opposed to staying in India, where they’re working for less money in order to have a more middling position. And when you’re doing tech infrastructure and tech industrial plant, that talent is everything. And Vedanta, the partner, is a typical Indian conglomerate and is broadly useless in training up these people because of the same problem. As soon as there’s an opportunity, as soon as you get them the skill set, they move. It’s something I can relate to. Personally, I am from Iowa, which arguably has the best educational system in the country and yet people like me tend to leave in droves as soon as opportunities arise for them elsewhere. So that’s kind of general problem one.

The second problem is just as insurmountable. The amount of capital that is required to make a semiconductor fab facility is absolutely massive, even if it is only the 28 to 40 nanometers that this facility was supposed to build. Now 20 to 40, that’s like a very low end tablet or a midrange internal combustion vehicle or a really, really, really, really fancy something for the Internet of Things. So what I kind of consider bread and butter chips, but nothing too crazy. That said, these facilities still run in the billions of dollars, oftentimes topping $10 billion if you want to do them at scale. That’s a lot of cash for a system like India. Now, India is a very large economy because there’s a lot of people and it’s a big place. But even the largest of the Indian conglomerates tend to get dwarfed in this space by the middle players in the tech space internationally, just because the level of capital is so difficult, the effort, the skill set, the labor force, the command of details that it takes to do something like this requires a massive organization and a metric shit ton of capital, and that is just not something that the Indians are very good at.

Now, does this mean that I think that the whole idea of shining India no more. Yes, but let me explain that. So before all you Hindu nationalist writing about it, what an evil person I am. I think India’s future is golden. India’s the first stop out of the Persian Gulf whenever you have an energy crisis. Companies like Reliance Industries have shown that India can dominate heavy and mid industry whatever its chemicals are agriculture or industrial materials. India is an excellent place to get stuff done. It’s got a multifaceted labor force that’s going to make it dominant in manufacturing, especially as the Chinese have more and more problems. They showed with COVID that they could develop their own vaccine. That works, unlike the Chinese one, which is other. Well, India has a very bright future. They’d never globalized under the American led order. So as globalization breaks down, India is going to broadly be fine. But India is going to do things for India by India in Indian ways, and that’s a negative as much as it is a positive. Capital flight will continue to be an issue. Technological acumen will continue to be a problem in the workforce. So India’s perfectly capable of ruling its neighborhood and doing very well for itself, and yet not being a technological power. These are two very different things.

So bet on India? Yes. Bet on Indian semiconductors? Probably not. Alright. That’s it. See you guys later.

Mr. Modi Goes to Washington

Prime Minister Modi is stateside and prepping for his address to Congress and state dinner. While a summit with Modi may have been inevitable (as he’s the leader of the most populous country and up-and-coming power), we need to look at India’s relationship with the rest of the world to see what might come of this meeting.

Given India’s fractious decision-making system – with most decisions occurring at the state and local levels – operating as a “country” is out of the question. India is only interested in things that impact India, so relationships and allies won’t work. The Soviets established ties back in the day, but that relationship is functionally over.

India has other factors that have inhibited its ability to form strategic relationships (or contributed to its ability to remain independent). Geographic barriers have helped keep others out, but also prevent India from projecting power. India is near the Persian Gulf, so they don’t need to worry about an energy crisis. They have decent demographics and plenty of time before any problems would arise. The collapse of China will send India into an industrial boom where they will be able to manage everything in-house.

All of these factors have enabled India to become a globally significant economy without being globally wired. Now the question remains…do I see anything meaningful coming out of this meeting? No, but a conversation about the future is better than nothing.

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TRANSCIPT

Hey everybody. Peter Zeihan here. Iit is the 21st of June. Well, here’s Loki. Today we’re talking about India. Look, he’s from India. Bengal. Anyway, Prime Minister Modi is in Washington right now. And by the time you see this on Thursday, he’ll be getting ready for his address to Congress as well as official state dinner.

There was some debate in Biden world about whether this is going to happen because in the past, Prime Minister Modi, especially before he was prime minister, hasn’t been a particularly nice guy. A little on the corrupt side, a lot of the popular side is willing to use religious divisions in order to further his political agenda, which is, you know, relatively distasteful from the American point of view and a lot of other points of view. Many would argue the Indian point of view anyway. He is still the leader of the most populous country in the world and an up and coming power.

So obviously there was going to be a summit. The question whether he would be welcomed as warmly as he has. A few things we need to talk about India, the Indians and the relationship with the wider world and the United States in particular. First and most obviously, the Biden administration has a few things that it wants from the Indian administration, that it would like more cooperation on things like the Ukraine war and sanctioning Russia.

They would like more cooperation on things like tech sanctions and in general, the diplomatic isolation of China. And the Biden administration is going to get none of that. The key thing to remember about India is that India looks out for India’s own best interests. And while every country does that to some degree, the big difference between India and everyone else is that India is not really a country.

It’s more like the Holy Roman Empire, where there is technically a central government, but almost all decisions that matter are made at the state and local level. And so while Modi is nominally the leader of this, and that does give him significant power and influence, he is only the most powerful of several dozen personalities across the Indian system who have decision making power.

And so the capacity of India to act like a state in the way that we think of that with France and China and Japan and the United States and the rest is very, very weak. Second, because of this internal, fractious, ever shifting coalition in competition, India, first and foremost concerned about how do things in the world impact India and makes it very, very difficult for the Indians to identify with any other power in terms of friendship or family or alliance or in sometimes even partnership.

So unless they see someone on the outside that is backing them and to the hilt for absolutely every little thing they care about, they’re going to call the relationship at best complicated and cold. It’s a very myopic way of looking at the world. But India has a very peculiar geography. It’s basically locked off from the rest of the world by a series of geographic and geopolitical barriers.

There are mountains and deserts and oceans and jungles and jungle, mountain and jungle deserts that general deserts. Sorry, desert mountains that separated them from everyone. And that’s not even all of it, because in a lot of these border territories, you’ve got hostile powers, whether it’s Pakistan, Bangladesh, Myanmar or, of course, China. So the ability of India to interact with the rest of the world has always been circumscribed.

And unless you are willing to back India on everything that involves their immediate neighborhood, without question, they’re going to view you with a bit of suspicion. This is one of the reasons why the Soviets during the Cold War were able to make India into a bit of a partner because they had no interests in Southeast Asia. So they just backed who ever happened to be the biggest power India, against everyone else.

And so the Indians developed a bit of a shine on all things Moscow, which has persisted long after the communist system has ended. What this means for the United States is India cannot ever be family. It can never be an ally, it can never be a friend, but it can be a partner from time to time. But because the Indians view everything through the very short sighted lens of national interest, they don’t have anyone who will watch their back.

The Russians have proven they’re not a reliable partner and the Indians are backing away from their defense cooperation with them, because the Indians now realize that the money that they’ve spent has been wasted, that the Russians can’t maintain their own output. They’re actually asking for some of the components back in order to support the war in Ukraine and at the high end works like the Brahmos cruise missile.

That’s just not going to happen at all. And so the Indians, you know, they’re not dumb. They’re short sighted. There’s a difference. And eventually you get to a certain point where they realize now they would only be putting good money after bad. And that means the Russian partnership, if that’s the right term, is now functionally over as well.

India is also not going to help the United States in boxing in the Chinese because they have a hard time seeing past their own nose. And anything that reeks of American leadership, which, you know, obviously would be in play here is something the Indians are going to reflexively recoil against. Now, does this mean that I think India is doomed?

No. Far from it. A couple of big things to keep in mind. Number one, geography works both ways. India has a hard time projecting out other powers, have a hard time projecting in, especially on land for naval powers like the United States and Japan. That’s less true. And that’s one of the reasons why this quad idea exists, because Japan, Australia, the United States and India can cooperate to a degree on naval issues that affect the Indian Ocean Basin because Japan, Australia, the United States don’t have strong interests in the Indian Ocean Basin, especially now that the war on terror has been closed down.

There was a period for the last 20 years where Indian American relations were not hostile but problematic because the United States had to be up to its hips in all things Pakistan in order to get military supplies to its operation in Afghanistan. Now that that’s over, the Indians and the Americans can commiserate about how much they dislike all things Pakistani, and that’s done wonders for their relationship.

Second, India is the first major country after you leave the Persian Gulf, which means that no matter what happens with global commerce or global energy, India is the first in line and it will never really have an energy crisis compared to what’s shaping up for the rest of the world. That’s amazing. Third, India’s demographic structure, while not perfect, is night and day different from the country they love to compare themselves to?

And that is China. New data out of China in just the last few weeks indicates the demographic profiles of Harvard. Worse than even I thought. The Chinese are now publicly admitting they have about half as many five year olds as ten year olds. So you carry that forward with some of the other problems that dividing reified with their own demographic strategy.

And it looks like whatever I was thinking was going to happen, which was already pretty atrocious, may have already happened. And we’re looking at a complete hollowing out. Now, India started to industrialize in a big way 35 years ago, and so the birth rate has dropped. But at current rates of birth rate decline, India will not find itself in a Chinese style situation for another 60 to 70 years, and that’s a long time for things to go right.

So India does have a demographic dividend to go along. A young adults that had fewer children in the past, that generally spells an opportunity for a 20 to a 30 year consumption driven growth opportunity. That’s not without risk. But on the mechanics of it, the next couple of decades look great. And then the fourth, as the Chinese face problems, a lot of the manufactured goods that the world has been importing from the Chinese system are going to go away.

Now, that means if countries still want stuff, they to have to build out their own networks to build that stuff themselves. If that applies to India just as much as everywhere else. So we should expect to see a 2 to 3 decade industrial boom in the Indian space as well. Now it will be different from what’s happening in Mexico because remember India has no allies, no friends and very few partners, and those partners are erratic.

So the sort of manufacturing synergies that Canada, the United States and Mexico and to a lesser degree Central American Columbia can generate. India has to do it all itself. And that means it’ll be more expensive, more time consuming and slower to happen and use more labor, be less productive, less efficient at the end of the day, have lower quality product.

But in a fractured world, India will have something that a lot of countries won’t. It’ll still have stuff. And in that sort of world, India looks good. They are perfectly capable, the Indians, of running an economy that is globally significant without being one that is globally wired. So for Biden, do I think anything of substance is going to come out of this summit?

No. The geography of India, the politics of India, the ideology in India probably precludes that. But that doesn’t mean that the relationship has to be hostile. And if there’s going to be a major power in a different hemisphere, in a strategically interesting area, you should at least have a conversation. And so think of that as what’s going on with the Biden administration right now.

Not a plan for the future, a conversation about it. We could do a lot worse. All right. That’s it. Take care.