India Archives - Zeihan on Geopolitics

The U.S. Helps India and Russia Helps Iran

There have been two major developments involving India, Russia, and the Iran war being conflated. These are two separate issues altogether.

The first involves Trump granting India a temporary waiver to import Russian oil. This was done to prevent a severe energy or economic shock in India. This is a pragmatic move, rather than a pro-Russia policy shift. The second revolves around Russia helping Iran with targeting information. This is a longstanding Russian strategy of undermining the U.S. globally.

Although some U.S. policies toward India appear to be improving, a major shift is unlikely unless and until some of the Russian sympathizers in the current administration are removed.

Hey, everybody. Peter Zeihan here, coming from a snowy Colorado, finally got a big storm. Oh. Anyway, today we’re going to talk about something that a lot of people are conflating that deals with Iran and the oil trade and Russia and India and sanctions and terrorism, blah, blah, blah. A lot of people are tying this all together with a nice big bow.

It’s not quite that neat. So the two big things, number one, the Trump administration has granted India, a series of waivers, right now, courtesy of the Trump administration. We have sanctions on a few Russian oil companies and, Donald Trump managed to cut a deal with the Indians, about how six weeks ago, I think it’s been now, where the Indians would stop, importing Russian crude.

I definitely had my doubts about that at the beginning, but it seems like it’s actually sticking because, there’s now this waiver, the issue is that the Indians had been grabbing oil in excess of a million barrels a day. Really? Since the Ukraine war got going, and it was one of the big financial lifelines.

And now that the Trump administration has put sanctions on Russian companies, they have slowed, not stopped, but slowed. But now, with the Persian Gulf being closed for I believe we are in day ten now, the Indians only other source of crude was from the Persian Gulf, and that has functionally gone to zero. So in order to keep the Indians on board, the Trump administration has granted this waiver, allowing the Indians to bring in, temporarily, at least for a month.

Russian crude. That’s piece one. Piece two is we’ve had a number of leaks from the international community, especially from the American intelligence services and also from Congress, that the Russians are actively assisting the Iranian government with, targeting of American troops. Which is definitely true. The people that are deeply anti-Trump are, conflating the two saying that, Trump is basically Putin’s, sex toy.

And so therefore, Trump has been looking for any opportunity to, cut the Russians a deal and absolutely anything. While there may be a little bit of truth behind the thrust of that, linking these two events is not correct. Let’s start with the Indians. If you’re going to split the Indians off from the Russians, if you’re going to have a better relationship between American India, causing an economic depression is not a good way to do that.

So once the United States started the war in Iran and the Persian Gulf got shut off, your choices were either to try to somehow force India to have, an energy induced depression and then still be pro-American, which would have been a very, very tall order or issue these temporary waivers. So the temporary waivers make a lot of sense.

I’m not a big fan of the Russians having any market, but if you took the Russians out of the equation at the same time you took the Persian Gulf out the equation, you’re talking like 25 million barrels a day of global oil production that has nowhere to go and can’t get anywhere. And that would have been disastrous if it was all focused on India.

If you want to focus on China, it’s different conversation, different video. Okay. So that makes sense. The second one, the Russians have maintained links to basically any group that has ever targeted the United States, whether that is various derivatives, Al-Qaeda, Iran, or more specifically, the group in Iran that is calling most of the security shots, which is the IRGC.

And of course, they’re continuing to provide targeting information just like they did for the 20 years of the war on terror. Anything that keeps the Americans bottled down anywhere else in the world gives the Russians the free rein to do whatever they want in their neighborhood. That is a time honored Russian tradition, going back all the way to the czars.

So of course, of course, of course they’re doing this, which puts, the Trump administration and Donald Trump personally and kind of an awkward spot. The information is coming from so many sources, international domestic, military intelligence, congressional that, there’s a lot of texture and detail to the accusation. Specific cases have been noted. So of course it’s true.

And that puts Trump in that position because he is basically giving Putin the benefit of the doubt in everything regarding global affairs and the Ukraine war, and specifically. And now we have his most recent, crown jewel in his foreign policy, Iran, that has been actively undermined by the Kremlin and Putin personally. Does this mean that we’re about to see Donald Trump turn over a new leaf?

That’s a lot more realistic when it comes to the Russians? Let’s not get ahead of ourselves. Remember, that surrounding him, you’ve got Wyckoff, who was maybe the dumbest person Western civilization, who was the prime interface between Putin and Trump. And all he does is regurgitate Putin’s propaganda in Trump’s presence.

Number two, you’ve got the vice president, JD Vance, who is a not so closeted white supremacist who thinks that the Russians are the great hope for the white race. And third, you’ve got, the director of national security or national intelligence, Tulsi Gabbard, who basically has stood against the United States on any meaningful foreign policy position for the last 15 years and has been very, very pro-Russian from the very, very beginning.

The key thing about Tulsi Gabbard is that she controls the daily presidential brief that the intelligence community puts together for the president. So I would be shocked if details about what the Russians are doing even made it into the document in the first place. So this basically has to grind on. We’ve already had a half a dozen Republican senators, and a number of Republican House members go public in the last 72 hours screaming at Trump to finally, finally, finally fix this and get rid of people like Tulsi Gabbard and Steve Woodcock and actually have a foreign policy that is worthy of the United States.

But as we all know, Trump, really doesn’t care what anyone else thinks. And he’s really not even concerned about the midterm elections because, he’s already a lame duck. And even when he controlled both the Senate and the House, he’s really never bothered going to Congress for anything. So why would he care what Congress looks like?

Anyway, things are slipping. Bit by bit in the right direction for more realistic foreign policy versus the Russians. And things are kudos to Donald Trump slipping in the right direction for more productive relations with the Indians, as well. I was very doubtful that the Indians would abide by any sort of ban of Russian products. But yet here we are, and the market is proving it.

Russian Urals crude sold on the Indian market has actually now risen above the Brant benchmark. That is kind of the global standard. And the only way that would be happening is if we had a sudden surge in purchases because of the waiver. And that’s exactly what’s going down. So a lot of moving pieces here, and I’m not trying to convince anyone that we’re about to have a dramatic change in foreign policy.

That would be more realistic. But we do finally have multiple vectors moving in the same direction at the same time. You will not see a meaningful change in policy, however, until Wyckoff and, Gabbard are gone. I don’t see that as imminent. But then again, Kristi Noem finally got let go after six months of horrible mismanagement at DHS.

And again, the Republicans in Congress are not so quietly celebrating, in media. So, you know, there is hope here. Let’s just not get overexcited until we actually see the backsides of some of these people who functionally work for the Russians.

India Takes on the Shadow Fleet (Bonus Video)

An Indian War Ship off the coast of India with fishing boats on the shore

India’s navy has begun seizing shadow fleet tankers in its exclusive economic zone. If India continues down this path, other countries will likely join the bandwagon, marking the end of the shadow fleet.

Disruptions to the shadow fleet wouldn’t just impact Russia’s key export income, but also global energy markets. With 3-4 million barrels per day funneling through the shadow fleet, everyone would feel that. India has maintained close ties with Russia, so this move comes as a surprise to many and signals a major realignment.

As I’ve said in other videos covering the shadow fleet, once the first domino falls…the rest will quickly follow. We’ll just have to wait and see if India is willing to topple the first one.

Hey everybody. Peter Zeihan here coming to you from Colorado. I have kind of a weird one for you today. There was a report in the Wall Street Journal today confirming information that was originally released on the Indian Navy’s Twitter account. That was then subsequently deleted, that the Indian Navy has been carrying out raids and capturing shadow vessels in India’s exclusive economic zone. Starting almost two weeks ago on February 5th. Today is the 17th.

Back story. The shadow Fleet is a group of roughly 1000 oil tankers that carries crude for sanctioned countries, most notably Venezuela, Iran and Russia. And apparently, these ships, the three ships that the Indians have so far grabbed, come from some combination of those three, with the Russians absolutely involved.

The United States, after it captured the now former president of Venezuela, Nicolas Maduro, has gone after the parts of the shadow fleet that were actively carrying Venezuelan crude at the time, chasing them up on their way to Europe, chasing them into the Indian Ocean, I believe about eight have been captured so far. Eight out of a thousand is not a lot.

But when the world’s naval superpower decides it wants to do something on the high seas, it’s really not hard for the United States to do it. And now it appears that the Indians are getting in on the act as well. This is really interesting from my point of view, for three reasons. Number one. Once another country joins the United States in targeting the shadow fleet, it’s probably only a matter of days.

Two weeks before many, many other countries do it. There are a lot of countries that don’t like Venezuela or Iran or Russia. Especially the Europeans. And now that India of all countries is joining in, we should expect a couple of dozen other countries to do so as well, which would completely remove the shuttle fleet from functioning, in less than a few months, considering that there’s something like 4 to 5 million barrels a day transported in this matter that can have a really big impact.

Economically or politically, based on who decides to take advantage of the situation. So that’s one. Number two, the fact that, the Indians are involved. India has been the second largest beneficiary of the shadow fleet since it really started getting going in the early days of the Ukraine war back in 2022. Basically what happens is someone affiliated with Russia or around or Venezuela goes out and buys a decommissioned oil tanker that probably doesn’t match current safety norms, gives it a fake insurance policy, puts a fake flag on it, and sends it to pick up the crude from one of those three countries.

That crude then comes somewhere in the high seas, where it comes up against another shadow vessel, and they pump the crude from one to the other in a sea to sea transfer. Relatively dangerous. But these guys are busting sanctions anymore, so that’s not their primary concern. That then happens once, twice, three times more. Maybe they mix two crudes into another hold, or something.

Anyway, eventually, another shadow vessel disgorged that cargo in a purchasing country, typically India and China and the Indians and the Chinese say, oh, we have no idea where it came from. You know, it’s just a convenient fiction. It’s just a question of who decides to enforce maritime law. Well, like I said, India is one of the big beneficiaries here and historically has been the second largest beneficiary of this process.

And so for them to go out and grab ships in their own economic zone, who have been doing these CDC transfers for four years now to break that policy changes, the economics of the shadow fleet in the politics of India very, very deeply. A couple of things here. Number one, India has always, always, always been pro-Russian versus pro-American and has sided with the Russians.

Because of the affiliation they had with them back during the Soviet period. So, you know, went away. Modern Russia has nothing to do with the Soviet Union. But the Indians kind of are still fighting the cold War ideologically from a certain point of view. So them flipping, matters. Second, because these are Russian vessels that have Russian flags.

Having the Indians go against a Russian situation so boldly is really, really notable. It’s also been 11 days since this happened. And the idea that just happened once for three vessels is kind of curious. So I don’t understand why the Indian Navy posted this. I do understand why they tore it down right away.

Because this is the sort of thing that will reverberate through the shuttle fleet very, very dramatically. Because if their ships are being confiscated and captains are losing their vessels, the entire capital investment is lost. And it won’t be long before the other captains basically throw in the towel or enough of them are grabbed that it changes the economics of shipping this stuff.

So all of that combined is number two lot going on there. Number three.

Russia. Russia. Russia. Russia. Russia. The Russians have been exporting somewhere between 3 and 4 million barrels a day this way for four years. And it is their primary source of income now. And if this is about to go away, then we’re going to see some very dramatic changes in a number of things in the eastern Hemisphere. Number one, the Ukraine war, if the Russians have lost their single largest source of income that will manifest on the battlefield, the Chinese may be supplying the Russians with all the gear that they can pay for.

But the key thing there is pay for. And if the Russians can’t, then a drone war where the Russians can’t get enough drones is one where the Russians start losing territory. And we’ve seen just in the last 96 hours how when the Russians lose communication equipment, they start to lose coherence on the front line.

And can no longer advance. This would be far more dramatic. Two. If the Americans and the Indians are seen eye to eye on things like the Russians, those are two big changes I’m going to talk about India, but about the United States. There are a number of people within the Trump administration who have been blatantly pro-Russian in this entire conflict, but now it appears that that might be changing.

One of the fun things that happened about three weeks ago is we had a summit between US President Donald Trump and the Indian prime minister Narendra Modi and Trump said at the end of their meetings, the United States was going to drop its tariffs by more than half to allow Indian products back in the United States.

And in exchange, the Indians were going to stop using Russian crude. The Indians said, thank you, Mr. Trump, for the tariff withdrawal, but not a single Indian government person statement post has ever said anything about not using Russian crude until now. And apparently now it looks like maybe less than two weeks after that summit, the Indians started going after Russian tankers.

So maybe Trump really did get a deal. Just the Indians are doing that. A little bit on the down low. But now that they’re actually confiscating tankers, it’s not very down low anymore. And if you have the Indians stabbing the Russians in the back, and the Americans and the Indians now starting to get along in economic and strategic matters,

That changes all the economics and the politics and the strategy of everything in South Asia, because the United States has reasonable relations with Pakistan. It’s been India that’s been clinging on to the Soviet era. If that’s no longer the case, if Russian influence has really been purged, then we’ve entered into a fundamentally new era. And if the Indians are stopping crude from Russia getting to India, you can bet your pretty ass that they’re going to stop it from getting into China, because now China is the only country that has been taking that is still taking Russian crude in volume.

And now all of a sudden, we’re talking about the entirety of the 3 to 4 million barrels of the shadow fleet being gouged out of the Chinese economy. Now, a lot of this is a couple steps removed from what we know right now. I don’t want to say that all of this is destined to happen, but you remove that much crude from the system all at once, and the whole system feels it.

You remove it all from one country’s system all at once, and that country is fucked. So we’re looking at a broad, structured rearrangement of things in Russia and Ukraine and India and China, perhaps all at once. The question is whether or not the foreign policy team in Washington can actually hold that together, considering how much they’ve purged the decision making apparatus in the State Department and the National security apparatus and in the military.

This is a lot to hold in your head all at once. But if we are moving in that direction, we are looking at the single biggest shift in international politics of at least the last four years. And that will keep me very busy for months to come.

India: Overhyped or Global Player

Is India overhyped or genuinely important moving forward? Well, you could make a case for both.

India struggles with national unity due to diverse groups spread across a fragmented geography. This, and a difficult list of neighbors, limits power projection and forces largely self-contained growth. But India has something that most other countries lack, a relatively young population; this cohort will extend India’s consumption-driven economy into the 21st century. India also sits along the path of major energy flows, giving it influence and power in the region.

So, India might not look like a classic global superpower, but its demographics and geography outweigh the internal struggles it will face.

Peter Zeihan here, coming to you from Arizona and back by popular demand. It’s biscuit. Hey, there you go, buddy. Today we’re going to talk about India. One of the things that people really get wrong about India is it either matters or completely doesn’t matter based on your point of view. And it can be both at the same time. So first let’s talk about why a lot of India is overhyped.

Let’s start with the geography. So in most countries, you have some sort of geographic feature. Usually a river valley that the ethnicity has risen up around, and then they expand from there into other zones. and then there’s, some sort of geographic barrier separating them from other countries. So, for example, the Po Valley in Italy or the greater Mississippi in the United States.

Gets something or, the various rivers of Europe because you’ve got, you know, Dutch rivers and German rivers and Russian rivers and all that kind of stuff. Well, part of the problem you have in India is you got a lot of river valleys, most notably the Ganges, but there aren’t any clear geographic points of separation among them. So everybody gets their chocolate and everybody else’s peanut butter.

And, it’s very difficult to achieve just the basics of national unity. So even today, only about half the population of India actually speaks Hindi. And you’ve got large minorities, of which Muslims are the single largest at about 15% of the population. And that makes, national unity almost impossible. It’s more like the Roman Empire than, modern. I’m sorry, not the Roman Empire or the Holy Roman Empire rather than a modern nation state. And it’s actually the third largest country in the world for Muslim populations, after only Pakistan and Indonesia. And he’s just ignoring me now. That’s just rude, buddy. Anyway, getting everybody to agree on anything is kind of crazy. And it takes five weeks to do national elections because the place is so large and so varied.

Geographically, it’s got a problem with its neighborhood as well. It is surrounded by countries that it does not like and countries that do not like them, not just Pakistan, but Myanmar and Nepal and Sri Lanka and Bangladesh and India believes that none of these things should matter. And you should just look at the fact that it’s 1.5 billion people and it’s a large country.

So it should be a global power, but it doesn’t have the ability to project power within its own neighborhood, much less out of the Indian Ocean basin. And you keep looking. And the Indian Ocean basin is kind of disconnected from the rest of the planet. Anyone who has the power to get there can easily dominate economic trade in the area, but the countries that are in the region have to go a long way to get to anything, because you get the Middle East with all its sand.

You hit the jungles and mountains of, Southeast Asia. You hit the Tibetan Plateau in the Himalayas. It’s just really hard for India to be a player in any meaningful way. But any country that can project past those barriers into South Asia, they do pretty well for themselves. And that’s why the Brits were able to control the area for so long.

Okay, so that’s why, the cards are kind of stacked against. Chomp chomp chomp chomp chomp. That’s why the deck is kind of stacked against, the country. But why does it matter anyway? Well, you know, 1.5 million people and, well. Or is most of the advanced world started industrializing back in the 1920s to 1950s.

And so their populations urbanized and people started having fewer kids. And you play that for today, and we’ve got population bombs going off. India didn’t start the process until the 1990s. And while their birth rate has dropped by almost three quarters since then, it is nowhere near as demographically age as most of the rest of the world.

So if they keep aging at the current rate, they’re still going to have a strong consumption LED system for their pretty much the remainder of the century minimum 2070, maybe even a little bit longer. You’re you can’t eat my thumb. That helps a great deal. Especially considering that India more or less needs to do the same thing that the United States does.

As the Chinese fail, and that’s double the size of their industrial plant. So the problem that the unions are going to face is that because they don’t like anyone and because no one likes them, and because they are very anti-free trade and any for any number of reasons, strategic, economic, political, ideological. Anyone that you on my jacket?

You are just weird this morning. Where was I? Oh, yeah. No trade. So all of their manufacturing supply chains have to be done in India. For India. They don’t have partners like the United States does. I mean, we’ve got trade deals, of course, with Mexico and Canada, but also with a number of other countries, including Israel and Colombia and Chile and others, and so we can participate in economic links with other places and we can all focus on, you know, you can’t eat my shoe.

No, not the shoe, not the shoe. back up here. Come on, come on, come on.

Here we go. Where was I? Oh, yeah. And so they’re not going to be linking with anyone else. Which means it’s going to be a longer store. It’s going to be a slower store. It’s going to be a dirtier and more expensive story. But it’s going to be an Indian story. And that is absolutely. Theres, one other thing to think about from a strategic point of view here goes back to the shoes.

Is that, in any version of the world where the United States steps back from maintaining their global naval structure and allowing trade to continue? There’s going to be a problem for some sectors more than others. And the one that matters the most to the Indians, of course, is energy, because the Persian Gulf is right there. In fact, if you stay out of the Persian Gulf, you’re on your way to anyplace important.

Your first stop is going to be India. So India doesn’t need a navy that is capable of projecting power on a global basis to be very significant, because ultimately you like that. That’s what you’re after. Your head is heavy. The, because India has the ability to protect or interfere with the supertanker energy shipments coming out of the Persian Gulf.

So if you happen to be downstream from a shipment point of view, whether that’s in Northeast Asia or Southeast Asia or even the American West from seaboard, if you don’t have good relations with the Indians, you’re going to have some problems reliably accessing the Persian Gulf for energy. And since this is where today, half of all globally traded energy is sourced, that is going to be a real problem for everyone except India, because India will ultimately be the broker.

So it matters just not necessarily in the way that a lot of people are thinking. And the way it matters is evolving very, very rapidly. And I look forward to seeing what they do with all of it. And now you’re chewing on my calf. Okay, I’m going to go and change clothes, bye.

What’s Wrong with the EU-India Trade Deal?

Made in India. Cardboard boxes with text made in India and indian flag on the roller conveyor. Licensed by Envato Elements: https://elements.envato.com/made-in-india-cardboard-boxes-with-text-made-in-in-8X3N3JR

The EU and India have struck a trade deal, but it’s not the breakthrough it’s being made out to be. Just because you sign a trade deal doesn’t mean that integration magically appears.

Both sides of this deal are highly protectionist and have no interest in introducing new competition to their markets. This deal is fairly modest; some tariffs get lowered, but there are enough barriers in place for either side to block trade wherever they see fit.

One of the problems with global trade deals is that it only works if the oceans are free and the global rule of law is intact. The EU would be better off spending its time strengthening relations among regional nations, rather than looking far and wide.

Hey all, Peter Zeihan here. Coming to you from the Caribbean. A little breezy today, so apologies about the sound quality. I remember well, shielded spine. I could anyway, today we are talking about the new trade deal that was just signed between India and the European Union. People are talking about, oh, it’s one third of world trade and it’s a big deal.

It’s all about the Trump administration, blah, blah, blah, blah. Let’s not get ahead of ourselves. A couple things to keep in mind. First, on size one third world trade, considering that one quarter of world trade is the European Union, and you’re just attaching India to that, keep your numbers straight. Second, there’s a bigger problem here among the first world economies.

The European Union is by far the most protectionist. It does things to basically encourage mass industrial production. And because they don’t have the demographics to consume what they produce, a lot of that has to be exported. And in terms of agriculture, their agricultural lobbies are incredibly powerful. So the single largest line item in the budget of the European Union going back decades has been to subsidize farmers and producers.

And at times that’s been half the entire budget. And that really hasn’t changed. So whenever the European Union tries to sign a treaty with anyone, they want to shove manufactured agricultural products down the throat of whoever it is, and it makes it very hard for the European Union to do that in a meaningful way, unless the country in question has no interest in agricultural products or no interest in manufactured products, of which there are a few.

So the European Union has a real hard time signing deals, because if anyone wants agricultural or industrial access to the European space, they immediately come up against a series of entrenched interests. So, for example, the America’s order deal that’s been in the news recently, they started negotiations on that in the 90s, and they finally got the final ratification.

The European Parliament is like, nah, let’s shove this off to the court to see if it’s actually legal. So we’re pushing 30 years since they started talks there, and it still hasn’t happened because on the other side, Murphy’s Law is very protective of their industries. So if this deal were to go through the Mercosur, one, the South American countries, most notably Brazil and Argentina, would be able to shove agricultural products into the EU, which is something that is wildly unpopular.

And the Europeans would be able to shove industrial products into South America, which would be wildly unpopular locally. So this doesn’t happen. India, if anything, is even more protectionist. Almost every industrial sector that they have is wildly subsidizing every farmer, basically riots, every year when they try to liberalize their agricultural system. So the nature of the deal that has been negotiated is actually very, very calm.

There’s not a lot involved in it. And while it does reduce tariff levels, it does nothing to address non-tariff barriers. So for example, if in the European Union, that decide that the trade coming in from India market the sorting, they can easily put up a non-tariff barriers that doesn’t require approval of the member States or their regions, which is one of the things that the Canadian free trade deal with the Europeans.

A few years ago. Secondly, that same applies on the Indian side. There they have a cart blocked, national security exemption that they can use for any reason that they want. So yes, everyone is looking for a non-American alternative for trade. No, it’s not something that’s easy to do because there are so many entrenched interests and systems across anyone who wants to do anything meaningful.

The fact that the European Union internally is a trade union has taken 60 years to build, and those are countries that are so close together that a degree of integration is almost unavoidable. You start talking about places on the other side of the planet. It gets almost insurmountable. Finally, and this is the issue that everyone ignores when they’re talking about free trade.

There is no free trade on a transcontinental or trans oceanic basis, unless there’s freedom of the seas and global rule of law, and the only country that has ever been able to impose that is the United States. Now, I would argue decisions that we made back in the 80s, in the 1990s have changed the nature of the US Navy to the point that can no longer patrol globally at all.

And all of the countries of the world combined, if they put all of the navies into a single force and agreed on every single deployment decision, all of that combined is still nowhere near as powerful as the US Navy. So we’re leaving the World war deals like this. Conversations like this among the EU and the Indians or the EU and the South Americans mean anything because there’s no capacity to enforce safety.

And even if that could somehow exist, I have no doubt that French farmers or Belgian fascists or Indian manufacturers would get in the way of all of the details that would matter. So it’s a nice talk, but ultimately what countries need to do is something like what the European Union has done and develop an internal, a regional structure that can support as much of that trade as possible.

And you only deal with countries beyond your region when you have absolutely no other choice.

American and Indian Relations Sour

The global rise of right-wing populist governments has complicated the relationships between many of the dominant countries and leaders. The latest is America and India.

That trade deal everyone was optimistic about hasn’t quite played out so smoothly. India is facing steeper tariffs due to its ongoing or persistent trade relationship with Russia. Trump and Modi both expected special treatment for…being themselves; obviously, that didn’t play out for either of them.

Whether India decides to lean into its ties with Russia, form a stronger relationship with the US, or remain independent, its decision will carry huge implications for the global order. As these populist leaders continue to reject the old ways of doing things and seek to build new ones, small disagreements are more likely to intensify.

Hey, all. Peter Zeihan, I’m here coming to you from Colorado. And today we’re going to talk about relations between India, the United States, which have apparently just dropped into the crapper in the last couple of weeks. If you go back a few weeks, you know, maybe two months, there were very positive signals coming out of both Washington, DC and New Delhi that a meaningful trade deal was imminent.

And it’s all falling apart. And not only is there no deal, India is now paying some of the highest tariffs of any country selling the United States. Right now it’s about 50%. And Trump has said it’s probably going to go up based on how relations with the Russians degrade. The Indians are saying this isn’t fair because lots of countries trade with the Russians.

And so why should India be the only countries paying a penalty? And I’m not saying that there’s nothing to that point, but it kind of misses the point of how this works and where it’s leading, the United States and India right now, as well as a number of other countries that include China and Turkey and Russia, have rightist populist governments that focus on what makes their country special versus everyone else.

These are not the sort of governments that normally get along. Normally, these are the type of countries that find themselves duking it out on the battlefield with one another. The reason that hasn’t happened is because we’ve been in this weird moment in the post Cold War environment where the old consensus has basically prevented it from happening.

One of the things that, right wing governments, right wing populist governments hate is the idea of a transnational group of liberals who impose some sort of policy on things. And, you know, maybe there is something to that. But keep in mind what that means. If you have a multiple of countries that include, but are not limited to Japan, Korea, Taiwan, the United States, Canada, Britain, Germany, France, Italy, Spain, and on and on and on that broadly agree on the rules of the game and things like individual liberty and things like international cooperation and things like economic integration.

Then there’s no reason for them to have an antagonist military approach to one another. There’s too many other things in the system that stabilize the relationship. But if you have countries that don’t see things that way, that focus on what makes countries different and unique, as opposed to on the same side, then you don’t have those are resting factors and you can get more conflict, not necessarily of the military form, but of any kind of form.

And those are exactly the types of governments where you have rising in the world today. In the United States, we have Trump, in India, we have Modi in Turkey, we have a guy by the name of Erdogan who’s been dragging the country this direction for 25 years. In Japan, we are seeing a cracking of the post-World War Two consensus around centrist politics in, China.

We’ve got chairman G who is now basically a tinpot dictator of a second world country. In Canada, we’ve had a bit of a hiccup where we looked like the government was going to go a different way in the last elections, in polls right now in Britain and in Italy and in France and in Germany, the hard right is the more popular than has ever been before.

And of course, the Russians have been run by nationalists for quite some time. What this means is that consensus around liberal international values is breaking down in a way that we have not seen since the days before World War Two. And if you go back and look at your history, especially for the first half of the century and the period before World War one and World War two, we had a lot of governments that kind of fit the mold that we’re moving towards right now.

Now, does that mean that we are doomed to have another major international conflagration on the scale, the World War? No, no different world? A couple big things to keep in mind. Number one, there are no countries, with the exception of the United States right now, that could fight in more than one theater. But if you don’t have things like trade and integration tying countries together, then it is really easy for small flaps to turn into big ones.

What happened with India in particular is both Trump and Modi assumed that because the United States and India were so special that any deal would be done their way, and that’s just not how it works. Also, India has never really had a free trade agreement with anyone, so anyone who thought that a deal was imminent really hadn’t been paying attention to modern Indian economic structure or history.

Where does this take us right now? Oh, India has to figure a few things out. During the Cold War, they were neutral, but broadly pro-Soviet. In fact, they were pro-Soviet. Even when the Soviets went away. And India now is a country that has agency in capacity. There are major refinery center. They are major stop on the path of all merchandise trade and energy trade between the Middle East and East Asia and between East Asia and Europe.

They have a military that is capable for their needs. It can easily interrupt those flows, and they have an economy that is increasingly wealthier and increasingly diversified, increasingly technologically capable. What they don’t have is projection power, either economically or strategically. Their military is designed for the problems that they have. It’s designed for Pakistan, it’s designed for Sri Lanka and Bangladesh.

It can’t project to the Middle East. It can’t project to East Asia. It is a unit to itself that defines how the Indians see themselves. They don’t see themselves as part of any coalition. They see themselves as their own thing. And if you put someone from a populist right in charge of that, if you accentuate that mindset, then the potential for arguments with everyone become very, very real.

So India is one of those countries that matters, but it matters which side it doesn’t fall on because it empowers whoever is opposite. In the environment that we’re in today. We’re in this weird little situation where the country that the Indians are most dependent upon is China, which obviously makes Indian politics a little colorful these days. The Indians were thinking that their moment had arrived, that they had become strategically special and could have a leg in the American coalition without actually having to do anything that was never going to fly.

But the Indians also, wherever they do put their foot, are going to matter. One way or another. So the debate right now is whether or not they should buddy up with the Russians again. If they do, they’re bearing almost all the risk. The Russians would get almost all of the reward. But this is what happens when you have a rightist government that sees themselves as special in a way that maybe doesn’t necessarily jive with strategic reality.

Modi is learning that, Trump is learning that. And in time, pretty much all of governments like this will learn it. And when that happens, decision making becomes a lot more hostile because no longer are they rebelling against the existing order, they’re looking to build their own. And when that happens, we start getting new strategic relationships and hostilities. And that can boil up into something a lot more substantial.

The Future of Tourism: Part 1

If you’ve followed me for a while, you’ll know that I take my travel very seriously. Unfortunately, it seems that my work keeps crawling its way into my personal life, because deglobalization is changing tourism as we know it.

Global tourism will decline; I suppose that’s a no-brainer if global trade and relationships start to breakdown. But the collapse of China could have an outsized impact on the developing world and tourism to these countries.

India is poised for long-term success, but the coming years will likely be much more unstable, making tourism in India less appealing in the coming years. Brazil is a country heavily integrated with China, and if that stops, the Brazilians will be looking at economic and social collapse. Which means Brazil will also be much less attractive for tourists.

Hello, Peter Zeihan here. Coming to you from arches. Today, since I’m on vacation, kind of, we’re gonna talk about tourism. The places you need to go while you still can. We are going through a period of massive economic change globally where demographics are basically smashing the old model before you even consider what’s happening in the United States with the globalization and populism.

And the end result is there are a lot of countries that people like to think that they want to visit that aren’t going to be options for much longer. So the point of this video is to give you an idea of where you should prioritize, because time is very, very limited.

All right. Quick reminder of what everybody is up against with globalization. Global trade is obviously going to collapse. That reduces access to things like finance and energy and food products. And so you’re looking for long term stability for a place does it doesn’t have the, the beauty that you’re after, physical or cultural, whatever happens to be, but has the ability to maintain a degree of stability itself.

Big part of this is going to be when China collapses, which is not far off. A lot of the Chinese money that has been flooding into specifically the developing world to fund things, is going to go away. Keep in mind that a lot of the things that Chinese are funded were never funded before, because they were not necessarily great investment options.

The Chinese view money as a political good. That’s why their money supply is so huge. Anyway, first country we have to talk about is India. India is a country that overall, I think is going to come out on the positive side of the globalization trend. But India is a big place with over a billion people. And to think that they’re going to go through a massive industrialization process that’s going to double their industrial plant and adapt to the collapse of China as a source of consumer goods and collapse to the international trade system, which has allowed them to reach out, without massive social upheaval, is being overly optimistic.

India will still be there. India is actually probably going to be entering one of its greatest growth periods in its history, and India has been around a long time, but they’re going to be a lot of growing pains, and that’s going to generate a lot of social stress, which is going to change the profile of what you would do for tourism in India.

Next up is Brazil. Brazil has a lot more exposure to the trends that are coming, and it’s a very high dollar producer for agricultural commodities because it needs so many inputs, most of which come from a different continent. So if anything happens to globalization, they lose access to those inputs on a reliable basis, and a lot of the land goes follow because it just has no innate fertility.

In addition, they suffered a double blow from the Chinese number one. They’re one of the top investment targets for the Chinese who are trying to get that agricultural product to China. And without that investment, you should expect infrastructure spending to basically come to a standstill. And secondly, back in the 2000s under the Lula government, the Chinese formed all kinds of joint ventures with the Brazilians, which basically meant that they went into Brazil to set up joint production facilities, but they stole absolutely everything that wasn’t locked down, most notably, the intellectual property took it back to China, produced it at a bigger scale, and drove all of Brazilian industry out of business. So Brazil today has basically become a two horse economy, high cost agricultural product, high cost, industrial inputs such as iron ore, all of it underwritten by the Chinese that all goes away, which means that Brazil will have to absolutely invent itself again.

That’s going to be, at best, a 30 year process. And in the meantime, the social breakdown and the economic breakdown that is going to plague the country is going to be immense, meaning that there aren’t going to be a lot of places in Brazil that are really worth going to. But the Copacabana, right on the beach is kind of the quintessential expression of Brazilian economic inequality.

You basically have these really, really rich pockets that will still be beautiful and they’ll be surrounded by slums. For those of you who have been to Brazil before, you notice that that is not exactly a new concept, but it’s going to become much more concentrated and the disparities will be much more obvious.

Did Trump Just Wreck US-India Relations?

The Attari–Wagah border ceremony at the border crossing

With tensions rising in India and Pakistan, it was only a matter of time before Trump had to step in and put his foot in his mouth. Basically, what happened is the Trump administration announced a ceasefire and peace talks between India and Pakistan…seemingly without consulting either side.

The tit-for-tat military exchanges between India and Pakistan were bound to end in peace talks anyways, but having a third-party (i.e., the US) step in, goes against everything in the “how to engage with India” handbook. And given the extreme disparity between India and Pakistan’s demographic and economic situations, external mediation undermines the Indian position. So, feelings were hurt.

And when feelings get hurt, relations and policies will suffer. That means US-India relations are at their lowest point in decades, and all those years of developing a closer relationship with India went up in smoke.

Hello, Peter Zeihan here. Coming to you from Canyonlands National Park. And today we’re going to talk about India and Pakistan and how it intersects with what the Trump administration has recently done. Specifically, India and Pakistan recently had a near war exchange. Some Pakistani militants who may or may not have been loosely affiliated with the very weak Pakistani government, launched an attack inside Indian territory in Kashmir and killed a lot of people, and took their time about it.

It showcase the general security incompetence of the Indian government. So the Indian government felt that it had to respond. And it hit some targets in Pakistan, some of which were military. And then we got tit for tat back and forth attacks that were just gradually escalating, hitting more and more sensitive issues. Until such time as we got peace talks, brokered by the Trump administration.

Now, Trump being Trump, he made peace talks all about him. And he announced that there was now a ceasefire without really consulting either the Pakistanis or the Indians. I made it very clear in the situation to come that all three parties would be involved in the talks, blah, blah, blah, blah, blah. Nothing that sounds too incendiary unless you know anything about India.

The Indians have had the firm position for over a half a century now that any negotiations between Pakistan and India should be that negotiations between Pakistan and India, with no third party involved at all. And so the very involvement of the Americans was something that New Delhi saw as an insult. And the reason is pretty straightforward.

India has a population that’s roughly nine times the size of Pakistan, an economy that’s closer to 12 times the size of Pakistan. And that’s probably being overly favorable to the Pakistanis. So in any real negotiations on anything, the Indians feel that they should hold all the cards because they do hold almost all of the cards. And if you bring in a third party, they’re going to tilt towards some degree of equality between India and Pakistan, which India rejects on principle.

And that’s exactly what has gone down. And so we now have arguably the worst relationship between India and the United States that we have seen in the last 30 years. Now, that might seem grossly overexaggerated, but think back to what we’ve been doing for the last 30 years. In the aftermath of the September 11th, 2001 attacks, the United States found itself needing to be involved in a ground war in a landlocked country.

And the United States is a naval power. So we found ourselves doing things that we don’t like to do in places we don’t like to do them, and we had to rely on countries for transit. And Pakistan was the most important of those. During the Cold War, it was okay to side with Pakistan against India because India was relatively pro-Soviet.

But in the post-Cold War environment, we found ourselves dealing with a jihadist government that was fighting a jihadist insurgency in order to transport gear through jihadist territory, to get to other jihadist territory to fight different jihadis. It was a pain in the ass, and we had to do it for 20 years. And at every step of the way, we found ourselves at odds with the government in Islamabad as Pakistani militants were attacking every aspect of the American operation, oftentimes in league or at least informed by the Pakistani government.

We hated every single second of it. And so, as the United States has gradually removed itself from Afghanistan over the last 15 years now, we’ve been bit by bit by bit, edging towards a better relationship with the country that we would rather have the relationship with. Not Islamist Pakistan, not weak Pakistan, not militant Pakistan, but a democracy in India that has a lot more shoreline and is a much more logical partner for us long term, and holding off China and protecting sea routes and making a partner with the country of the future that has a much bigger market.

Or that’s how it was until this week. Basically all of that work has now been unwound, because we took the one thing that the Indians cared about and basically took a big steaming dump on it. So this is something that the Trump administration would have known if they had talked to people in the CIA or the NSC or, the State Department.

But all of those people have been fired. And so we basically now have a new foreign policy that has partnered with the wrong side and the partner that we have been trying to get away from since 2002. Blehhh.

India Complicates the US Fentanyl Crisis

The 2025 US threat assessment has revealed that India is now a significant source of precursor chemicals used in fentanyl production, alongside China.

Fentanyl is a synthetic and much easier to produce then cocaine, meaning just about anyone can do it. Trying to pressure supplier countries and crack down on drug labs doesn’t work with a substance like this. Since fentanyl precursors are legal, regulating them is tough and inspecting shipments is a losing battle. So, a new strategy will be needed.

The only effective long-term solution to this crisis is addressing demand and consumption within the US and given historical American drug policy…it’s going to require a lot of work.

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Hey, all. Peter Zeihan here coming to you from a snowy, foggy morning in Colorado. Today we’re gonna talk about something that came out in the new 2025. And that’s American, threat assessment. And basically it says that some of the precursor materials that are being used for fentanyl are now not coming necessarily from China, but from India.

So quick backstory. Fentanyl, unlike cocaine, is a synthetic. It is manufactured rather than grown. And because of that, it takes about four man hours, 4 to 6 man hours to make a single dose of cocaine. Because you have to clear land, you have to grow the crop, you have to harvest the crop, you have to dry the crop.

You have to then process the crop and eventually ship it north. A lot of involvement because it’s an agricultural product. Not so with fentanyl. With fentanyl you get your pre precursor materials. You process those into something called a precursor material. Fancy. And then you basically cook the stuff in a lab for a week. And then you have several thousand, probably several tens of thousands of doses that you ship north.

It only takes a few man seconds to make a dose of fentanyl. The problem is twofold here, the way the United States has chosen to go after fentanyl is, number one, to try to put pressure on the countries that are providing the precursor materials. The issue is that one of these countries is China and the precursor materials are legal.

You use them in any number of things, from making installation to medicine. So you can’t like, not produce them. And it’s very easy for you to siphon off a very small amount to ship to the United States. So you’re talking about things that are measured in liters here. In fact, all of the precursors that were used to make all of the drugs, all the fentanyl that was intercepted at the U.S. border could fit into 33, oil drums.

It’s not a lot of material. Once this stuff gets to the United States, it’s repackaged and sent into Mexico, typically by just a pickup truck. And then it’s distributed to the drug labs, which are just little facilities about the size of your average garage, typically in your average garage, where the processed into the final drug and it’s shipped north.

And so what the U.S. does is it tries to convince the countries that are producing the precursors to not and it tries to convince the, countries that are have the drug labs to have better security. And it’s not that these are stupid plans, but they’re not going after the low hanging fruit. The low hanging fruit is how you shipped the stuff from China, the United States.

And that’s the post office. If you’ve got a decent scanning system for small parcels, you’d probably be able to cut that link. But even that isn’t going to do very much because the precursors are legal and they can come from anywhere. And this is where India’s getting on it. One of the things that we see whenever we’re fighting the drugs is we don’t get good data until it’s two years out of date.

And so two years ago, India didn’t make the radar at all. And the Biden administration and now the Trump administration are talking to the Chinese about trying to find out which Americans are doing this to crack down on the personnel. It’s probably the better way to do it. And in the meantime, you squeeze the balloon, it just pops up somewhere else where it’s legal.

And then, of course, the border crossing from Mexico to the United States isn’t really something that we can lock down. And even if we could, one liter of finished fentanyl is enough to create somewhere between 50 and 100,000 doses based on the purity. So all you need is one dude in a backpack to get through to supply the entire country for a couple of days.

And at the end of the day, there’s no reason that those labs need to be in Mexico any more than the precursor materials need to come from China. The stuff is ubiquitous. It doesn’t take much of a capital investment to set up operations, and you can do it in Kansas and just as much as you can do it in Mexico.

And for the precursors, you can do it in China, you can do it in India. You could do it in new Jersey. So, the only real way to get fentanyl under control, it would be to address the consumption side of the equation. And that has always been a flaw in American drug policy.

Which BRIC’s Member Will Survive?

Photo of BRICs summit from earlier years

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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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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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.

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The Absent Superpower

Acceptable range (2027)

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

Acceptable Range (2027)

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

Acceptable range (2027)

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

Acceptable Range (2027)

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

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Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript