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Israel’s Strategy for Iranian Nukes

Photo of Israeli Troops overlooking an area

With the Iranians eyeing nukes, why haven’t regional powers like the Israelis stepped in and squashed those dreams?

Targeting Iran’s nuclear capabilities isn’t so straightforward. Plutonium is a byproduct of civilian nuclear reactors (and they’re not going to target those), uranium is abundant and can be sourced fairly easily, and uranium enrichment centrifuges can be easily moved…so, targeting their nuclear infrastructure is impractical.

Israel has opted to disrupt Iran’s nuclear hopes in other ways. They eliminate key experts via assassination programs, launch cyberattacks and keep tactical airstrikes in their back pocket. And given Iran’s declining industrial capabilities, this nuclear program serves more as a bargaining chip than a serious attempt at weaponization.

Should Iran fly a little too close to the sun and get a nuke within arm’s reach, you should expect Israel and Saudi Arabia to quickly put them in their place.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide 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, so we can be sure that 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.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody. Peter Zeihan here. Coming to you from three sisters in Taranaki, New Zealand. And today we’re taking a question from the Patreon family. Specifically why Israel hasn’t struck at Iranian nuclear facilities in an attempt to prevent the Iranians from ever developing a bomb in the first place. And there’s a number of reasons for this. But the core issue is this.

And there’s too much to go after to do it reliably. So let’s go through the materials of what you need to to make a meaningful bomb. First of all, you need the raw materials, either uranium or plutonium. Now, any civilian nuclear power reactor is going to generate a lot of plutonium as a byproduct. So we’ve got about a one gigawatt, power plant, which for a nuclear power plant is pretty much a run of the mill.

You’re going to generate enough waste plutonium every year to make about a dozen plutonium bombs. So unless you’re going to take out the nuclear facilities, you’re not going to be able to remove that from their supply chain. And, bombing a civilian nuclear power plant obviously comes with a few consequences. As for uranium, uranium is one of the most common materials on Earth.

And so it’s very easy to source. In the early Cold War days, when we thought it was rare, we, the United States, cut a deal with the Australians who at the time had most of the global production, basically cornered the market. But since then, it’s been discovered in all kinds of places. And the world’s largest producers are Canada, Australia, Kazakhstan, Russia and China.

So, you know, removing those countries from the mix. Yeah, I’m not going to happen. Even if you did. Ultimately, you only need a few tonnes of the ore to generate the yellowcake that you need, in order to generate the finished metal that you need for lutetium. So going after the raw materials really isn’t a play. Moving up the value added scale, however, you get some more options because, you know, these raw materials don’t do anything, by themselves.

You need the system that’s necessary to purify and extract the plutonium from the waste material and then purified in the metal. There are a lot of chemicals you can go after there. But again, most of those are globally available under the civilian supply chain. So it’s a limited on the uranium front.

If you have your raw uranium ore, you basically have to mix it with chlorine gas to make a material that you can then run through a centrifuge over and over and over and over to extract the specific type of uranium that is fissile, that can go into a bomb. Those centrifuges are definitely a weak point in the process that is restricted technology.

And in order to have a weapons program of size, you also need a lot of them. Now, the problem here is it doesn’t matter where those things are. You could have a cluster of a few thousand in one place. You could disperse it. And whenever people talk about striking Iran’s weapons systems, the Iranians just move the centrifuges around because they can be easily individually loaded into trucks and move wherever they want.

So, you know, you do a single round of airstrikes, you might get some of them. You’re certainly not going to get all of them. And you only need so much of this stuff in order to make a bomb. Then you’ve got the the metallurgy. There are different types of weapons systems, that use plutonium and uranium, and there’s different ways that you can combine them to make an explosive product.

But this is an engineering question. And ultimately, this is where the Israelis have chosen to focus. Can’t go after the raw materials. You can’t go after the equipment. You go after the people with the experience of how to turn these processed materials into something that can go boom. And so Israel focuses on what it does well. Instead of surgical strikes, they have an assassination program.

And whenever an Iranian nuclear scientist starts to get a little bit too productive, he tends to, fall down some stairs after getting shot in the back of the head with some bullets. So it’s not that the Israelis aren’t doing anything to contain this threat, it’s that they’re striking the weak point in the system, which is the personnel.

One of the wild things about Iran is that their industrial base today is significantly less sophisticated than it was back in 1980. This is a country that has been in long term industrial decline for any number of reasons, sanctions of which are only one part of it. And that means the Israelis have found it actually pretty easy to pick off individual people who are involved in the weapon system in order to snarl the whole system.

Now, that doesn’t mean that’s the only thing they do. They also engage in a degree of sabotage and cyber hacks. And if push came to shove, I have no doubt that they’re willing to do tactical airstrikes. But you’re talking about something that can be dispersed. You’re talking about something that once you do start going after it, the, receiving country, Iran in this case, has a vested interest in keeping the system as dispersed as possible and then accelerating the work.

So until now, the Iranian nuclear program has mostly been a negotiating chip that they are willing to trade away in exchange for a broader deal specifically with the United States. And that’s one of the reasons why this technology, which was developed in the 40s, still hasn’t been replicated in the Persian Gulf. There’s also a strategic side to this.

Israel is already a nuclear power. And if the Israelis ever really did feel that the Iranians were getting close, they’d probably use their own systems to make sure that Iran could never cross the threshold and they’d do a preemptive nuclear strike. The other side of the strategic question is Iran is not alone in the neighborhood. Closer to home.

Just across the Persian Gulf are the Saudis and the Saudis and the Iranians don’t care for each other very much. And the big difference between these two is that Saudi Arabia has much deeper pockets. So if Push ever did really come to shove, and it did look like Iran was going to develop a functional weapon, not only would they be risking a preemptive Israeli nuclear strike, but the Saudis would probably just go out, write a check, and buy some nukes from another country, most notably Pakistan.

So for Iran, the nuclear card is not nearly as valuable as most people seem to think it is, because they know if they even try to draw it from the deck, they’re gonna get hammered real hard. So this is something I worry about. Not really. And whenever there’s something in the Middle East that I don’t worry about, I call that a win.

The Syrian Consequence: Iran Goes “Defensive”

Syria was critical for Iran’s influence in the Arab world. For 40 years the Iranians could project power via Syria and Hezbollah, but the collapse of the Assad regime means Syria’s role as buffer and distraction has ended. So, what’s next for Iran?

With Hezbollah in Lebanon severely weakened and Hamas constrained in Gaza, there’s not a whole lot of reliable proxies distracting regional powers. As eyes turn to Iran, it will need to shift its focus to threats that are closer to home. We’re talking Pakistan, Azerbaijan, Iraq, and Saudi Arabia.

As these regional adversaries begin putting pressure on the Iranians, they will likely respond more aggressively than we’ve seen in recent times. This could lead to heightened tensions and potential conflict with the likes of Saudi Arabia.

This marks a larger shift in the Middle East, as regional instability moves eastward toward Iran’s borders.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide 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, so we can be sure that 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.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hello, everybody. I’m here coming to you from Okura Kuru in New Zealand. Today we’re going to talk about, more consequences of the Syrian civil war coming to an abrupt shift with the fall of the Assad regime. And today we’re going to talk specifically about Iran. Now, Iran’s primary method for intervening in affairs in the Arab world has been through Syria, because here you have a nominally Arab Sunni state in the middle of the region.

Now, Syria has never been ruled by the Sunni Arabs in the modern age. It’s always been by the Assad family, who are a minority called Alawites, which are generally considered to be a heretical sect. But by influencing, affecting, emboldening and empowering the Assad dynasty, the Iranians were basically able to keep everyone on their toes and off balance.

One of the things to keep in mind if you’re a country like Iran, which is basically a mountain fortress, is that, if everyone can concentrate on you, you don’t stand a chance. So the trick for successful management is to make sure people are occupied with other problems. And in a world where the dominant superpower is a naval power, the United States.

You want to keep them locked down with concerns on land somewhere else. And so that’s why the Iranians were always active in Syria. That’s why the Russians were active in Syria. It was just a distraction play more than anything else. Well, now that Syria has fallen, now that the Assads are gone, now that Syria is going to find a different course, Iran is discovering that everything that has worked for in the last 40 years is kind of falling apart all at once.

Hezbollah, which is the militant faction in Lebanon that intervened in the Syrian civil war and has gone to war with Israel a couple times, has basically been beheaded. And the question is whether it can reform at all. And Hamas is now in a box. That’s the militant group in Gaza, and there’s really nothing left, which means that everyone can focus on Iranian issues that are closer to Iran proper, which is a real problem for the regime.

Now, I don’t think that overthrowing Iran is even remotely realistic. This isn’t Russia, where it’s a cluster of people at the top. This isn’t China where it’s a one man show. This is not

Syria where there’s a dynasty. Iran is a theocracy. And so there’s a class of over 10,000 mullahs that rule the country.

And that would be a hell of an assassination program in order to overthrow the political system. But that doesn’t mean there aren’t threats. And that doesn’t mean that there aren’t ways that Iran can be contained and contained. And mostly that’s going to have to do with local issues that have to do with naval prominence and energy policy. Keep in mind that the Persian Gulf is where half of all internationally traded oil is sourced from Iran, even in low times, is going to be a major oil producer and exporter.

So as you crunch down the outer perimeter of where the Iranians have influence, and it moves from Lebanon to Syria to Iraq in the Persian Gulf, it is easier for external powers to pressure Iran right at home. In many ways, this is the worst of all worlds. And what we’re probably going to see in the next few years is Iran being forced to respond in kind within its own inner periphery.

And so that’s less stuff going on in the Levant. That’s less stuff going far away in places like Yemen. And it means having to deal with opposition, both international and local, right around their inner perimeter. Expect to see more going on with Pakistan and the Baluchi rebels that are operate on both sides of the border. With now the Iranians more on the offensive and suffering from Baluchi attacks, rather than empowering them somewhere else.

Expect to see Azerbaijan, which is majority Shia but secular, taking a more pro-American line to contain Iranian power to the north. Expect to see Iraq empowered, which, you know, Iraq is a majority Shia state, but they’re Arabs and not Persians. And in times when Iran tends to get, how should I say this? Insecure, they tend to be very active in what we think of as Mesopotamia, today’s Iraq.

And I would expect that to become much more inflamed, especially as Turkey becomes more involved in the broader region. But the real issue, the real fight is going to be between Iran and Saudi Arabia, because they are the two biggest energy powers. They were the two largest economies in the Persian Gulf. And in any scenario where Iran is on the defensive.

Saudi Arabia has a really big checkbook. And while Sunni militants have hit out at the United States and hit out at Israel and hit out Russia and everyone else, the ethnic group, the religious group that the Sunni Arab militants like okay, are most opposed to are Shia Persians. Most of these groups were originally founded with the intent of taking Iran or its predecessors down a notch or three.

So expect to see a lot more violence as Saudi Arabia starts to write a lot of checks to hem in Iran on all possible points of the compass. And the only way that Iran can return the favor in any meaningful sense is to do a normal war. So, ironically, the end of Iran’s power in the western parts of the Middle East, in places like Syria, is probably going to lead to a more aggressive Iran.

And from their point of view, a defensive Iran. And the only way that they can stop the attacks that are likely to increase upon them is to take the fight to a country like Saudi Arabia. That’s, to be perfectly honest, doesn’t have a functional military on its own. So the next chapter of Middle Eastern history isn’t going to be any more or less violent than the one that came before.

It’s just the violence is going to be further east and closer to Iran’s borders.

The Syrian Consequence: Israel’s Opportunity

Photo of Israeli flag in from of some buildings

The Russians aren’t the only ones trying to figure out what to do following the chaos in Syria; Israel is also reassessing their regional positioning. However, while Israel’s regional strategy will need to be revamped, they have an opportunity to capitalize on this situation.

Syria previously limited Israel’s ability to find security in the region, but a window for change has been opened. With the Shia crescent and its influence on this region being disrupted, the threat that Iran and Hezbollah once posed to Israel has greatly diminished. And while Israel is a bit preoccupied with Gaza and Hamas, there’s not a real threat to Israeli statehood.

It would seem Israel could be ready for a new strategy, but regional relations will be critical in determining how that plays out. Between Egypt, Jordan, Lebanon, and Iran, there’s plenty of countries to keep an eye on; although, the most important places to watch will be Syria and Turkey.

As Syria builds back, we could see a Sunni Arab consolidation, which might cause bigger problems for Israel down the road. But Turkey will be the final boss here; depending on how Turkey approaches Israel, that will determine which strategic path Israel will be forced to go down.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide 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, so we can be sure that 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.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, everybody. Peter Zeihan here. Coming to you from Egmont National Park. That’s Mount Taranaki in the background. And I’m walking through the ahu Kawakawa swamp, which is nonstandard. Anyway, we’re gonna continue talking about the consequences of the fall of the Syrian government. And today we’re going to cover Israel. There’s an old adage going back to the late 70s, that says that there is no war without Egypt and no peace without Syria.

The last major Israeli, Arab conflict was in 1973, and it was a surprise attack. That probably shouldn’t have happened, but it ended with a resounding Israeli victory. And after that, it set the stage for peace talks with the Egyptians, which concluded under Jimmy Carter in 1979. But Syria always stayed on the outside. And the whole concept of that phrase is that Israel is a vulnerable state, and until it has peace with all of its neighbors, it has peace with none of its neighbors, because there just isn’t any strategic depth.

But now the situation has changed. And there is an opportunity here for Israel to do a few things differently, should it so choose, the border with Egypt is internationally monitored, and Egypt is as close to a friend as the Israelis have in the region. And that provides some strategic opportunities here, especially since now that the, northeastern border is open.

So this is gonna take a few places. First of all, the Golan Heights, that’s a chunk of territory that the Israelis captured from the Syrians in a series of conflicts throughout, the 20th century. It hasn’t really been settled, because there’s always this idea that there was eventually going to be a land for peace deal. Well, that doesn’t have to happen now.

So you should expect to see the Israelis make the most of what is actually some significantly fertile territory that, could help a country that imports over half of its foodstuffs. Second, the remaining security concerns are now somewhat limited. There’s this thing called the Shia Crescent that starts in Iran, goes through Iraq, through northern Syria and into Lebanon.

And the idea is this is the area that the Iranians would use to project power. And one of the big fuck ups that the Americans did with the Iraq war is basically shatter what was an Arab Sunni power that ruled that area and allowed the Iranians to penetrate into the region very, very deeply. They don’t control Iraq, but they’re certainly the first power in the country.

Well, now, with Syria broken. The Shia crescent has been cut in half, and the Iranians can no longer drive or even reliably fly equipment or arms or men, to the western part of the crescent, which means that Hezbollah, which is the militant group that the Iranians founded and sponsored, but the Syrians manage, that operates mostly in Lebanon.

Is now, I don’t want to say dead. That’s maybe the wrong word, but certainly gutted. And it will have to do with its own resources and without the Syrians or the Iranians to manage them or reinforce them or provide them with weapons. That’s not a lot. And that’s before you consider that over the last couple of months, the Israelis have done a damn solid job of gutting the entire, Hezbollah leadership.

So there’s still a lot of anger. There’s still plenty of people to recruit from. But as a functional organization, Hezbollah is functionally gone at this point. And with Syria now gone, there’s really no way to rehabilitate it very quickly. This is not the cold War. This is not a period of heavy globalization where freedom of the seas is sacrosanct.

This is a world where if you want to get equipment from A to B, you have to basically get it there yourselves and provide the military escort that’s necessary. And Iran’s not a naval power. Okay. That just leaves where this all started. In recent days, Hamas in Gaza. Now, my assessment of what’s going on there really hasn’t changed.

Hamas, rules Gaza. Gaza is occupied territory. As long as it’s occupied territory, there will be no end of people who are willing to fight the occupiers. And the occupiers are the Israelis. The only question is whether or not the organization that runs the place can get enough equipment and weapons, to fight back in a meaningful way like they did, a year ago, October, when they did that big assault that killed a thousand people.

The Israelis are in the process of crunching that down. They’re building a cordon in the edge of Gaza, and then cutting it in half, basically splitting into tiny little cantons that they feel they can manage more directly. Now, this will guarantee that the population will always be hostile to them. But you’re talking about a low level simmering insurgency, as opposed to something that could generate the military organization that’s necessary to actually attack a state.

So it’s ugly. It will continue to be ugly in fact, it will probably from a human rights point of view and a starvation point of you get uglier. But that doesn’t mean it’s a threat to the state of Israel. And that’s everybody, everyone around, Israel has now been clipped or befriended. Jordan is basically an economic satellite who’s indirectly sponsored by Israel and the United States.

Egypt is relatively friendly. Lebanon, in a good day, is a failed state, and without Hezbollah, they might actually be able to make a go of being a semi ish kind of sort of normal state. And Iran lacks the ability to, dick around in Israeli affairs so long as there is no Syria. Now, there’s two things to keep in mind for a longer term.

First of all, Syria itself. One of the reasons that the Israelis never got involved in the Syrian civil war is they felt that if the majority in Syria was able to take control, the Sunni Arabs, then they would be dealing with something like Gaza and Hamas, but on a much larger scale. And so they didn’t like Assad or Assad Syria, but they felt it was the least bad option.

So as whatever post-assad Syria consolidates into a new form, the Israelis are going to be acting very, very cautiously. You’re going to be watching very, very closely. And they’re May based on the way politics evolves, maybe a strong, far stronger case for Israeli intervention in post civil war Syria than there was during civil war.

Syria, of course, will probably have a second civil war. Now all the Sunni Arabs figure out who’s in charge. So as long as it hasn’t consolidated, Israel is fine. Once it starts to consolidate, Israel is going to be watching very closely because it might not like the form that it takes. What’s next? Second. And the bigger question, the longer term question and the question that ultimately is going to occupy, Israeli strategic thinkers for decades is the relationship with Turkey.

Now, in the past, the Israel Jews got along with the Ottoman Empire. And during the Cold War, the Israelis got along with Cold War era Turkey. But that is not where we are right now. Turkey is in the process of redefining what it is to be Turkish, and based on how that definition goes. There may or may not be room for Israel in that definition.

The issue is, is that Turkey is a major power and there is nothing that Israel could ever do to change that. And so Israel is stuck dealing with whatever the new Turkish identity happens to be. Now, me taking the arm chair, look, a a turkey that partners with Israel is one that de facto controls the entire eastern Mediterranean.

Egypt would probably be brought along for the ride and becomes a major regional power in its own right. An Israel that doesn’t get along with Turkey is one that is locked down in a series of local conflicts. That greatly sap its power and its ability to project in any direction. So if the government of Turkey can decide that Jews are okay, then we go one direction.

And for the powers of Europe, all of a sudden Turkey is a major player that they can’t be ignored. If the Turkish leadership decides that the Jews are the problem, then we have a very different situation with the European side, with the Israelis, to keep the Turks boxed up. Now that is a debate and a question and a time frame that would be decided years from now.

But now that Syria has been broken, that is the next big thing on the Israeli and the Turkish agenda.

America After the Election: Foreign Policy & Does Turkey Have the Power to Control Israel’s Future?

America After the Election: Foreign Policy

Listen, I debated even entertaining an election video for today, but since this question was so good, I just had to record one.

The question is: what aspects of American foreign policy are going to stick with us regardless of who wins the presidential election? The answer is not as eloquent.

I’m sure that not one of you will like what I had to say and that’s fineeeee, because as long as I pissed off everyone, I should be in the clear…and I coincidentally planned an international trip, so enjoy! Muahahahah!

Does Turkey Have the Power to Control Israel’s Future?

Israel has had a lot of eyes on it lately and many are starting to wonder what the future looks like for this small and arid country. Let’s break this down through the lens of deglobalization.

With US involvement and globalization set to decline, Israel could be losing a very valuable partner. Remember that the US has supported Israel with critical resources like food and energy, as well as on the security and military fronts. That leaves some pretty big shoes to fill.

I don’t want to discredit Israel entirely because they have established themselves as a technological power, but that can only take them so far. The main shortcomings being energy, food, and protection. Thankfully there are some viable options out there.

Saudi Arabia and Israel have already begun working together and I would expect that to continue. Turkey, who will take some convincing to enter into a partnership, would be a powerful addition to the team (Turkey is poised to be the regional leader moving forward, thanks to its military and economic power). And then we’ll throw in Egypt to round out the roster.

I don’t want to put too much stress on this, but if Israel can’t figure out its relationship with Turkey…the Israeli future could look bleak.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide 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, so we can be sure that 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.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody. Peter Zeihan here. Coming to you from Colorado, well we are two-thirds of the way through our first ten inches of snow for the season. Ooh. Happy election day to everyone. I had considered just letting this pass and just dealing with the crap that’s going to inevitably happen after. But I got a really good question from one of the Patreon crowd members.

So I figured I would take a shot at it, before I leave the country for a couple days. So, the question is this: what aspects of American foreign policy are going to stick with us regardless of who wins the presidential election? Great question. I do not have a great answer. In the world until roughly…

Oh, let’s call it 2012. We had something in the United States, when it came to foreign policy and strategic policy, called the bipartisan consensus. And the idea was that the Soviet Union was bad. Global communism was not a great idea. And the way for the United States to secure its security, as well as its economic well-being, was to build an alliance network that would span the world and pursue a free-trade world,

a globalized world with everyone so that most countries of consequence would have a vested interest in benefiting from participating in the American security agreements rather than going and doing something else. And that gave us NATO and the Japanese and the Korean, the Taiwanese alliances, and all of that, and built the nonaligned world into an economic powerhouse that wasn’t necessarily aligned with the United States, but really wasn’t aligned with anyone else either.

Broadly worked. But then in 2012, we had eight years of a visceral disinterest in governing, by Barack Obama. And then we got Donald Trump and Joe Biden, who were two of the most economically populist presidents we’ve ever had. And over that 16-year period, the bipartisan consensus has withered away. And the party that was responsible for basically writing most of the real policies, the Republican Party, has now

found itself in a different place with the national security conservatives and the business conservatives not really even part of the party architecture any longer.

And there are some factions of the Republican Party that are finding themselves very strangely aligned on some issues with Russia, China, Iran, and North Korea. So, to say that security policy is no longer up for grabs in the United States is not paying attention to what’s really going on. What that means is the United States is in a period of flux, not just politically, internally, but internationally.

Now, this is the topic of a lot of my workings,

Starting with The Absent Superpower and The Accidental Superpower ten years ago. But what we’re seeing in the United States is also churning other things, which means that very few of the things that we consider to be normal national security and economic precepts are likely to survive because the institutions of the parties that formed them are themselves up for grabs.

And we’re seeing the leadership of both the Democratic and the Republican Party taking the institutions into a nonfunctional era. They will reform, and we will get to a situation where we can have a meaningful conversation about foreign policy again, but it’s probably not going to be for a few more years. So we’re stuck with what we have.

So let’s start with the Democrats and Kamala Harris. How can I say this without sounding like a complete prick? She’s an empty suit. Kamala Harris’s only job experience before she became vice president was being a prosecutor, which is, you know, better than the last three presidents, but it’s still not a lot. It’s a relatively minor view of anything.

And so when you look at anything she’s going to say about anything, she’s never actually implemented anything. And so you have to take everything with a big block of salt. In her first year as vice president, she was at Joe Biden’s side in every press conference, every summit, every meeting, and it got to the point that Biden’s staff decided that, no, we don’t want her around.

So they gave her a task that they knew she would fail at and gave her no power to carry it out. And that was going down to solve the border. And so, lo and behold, it was a failure. And then they were able to shovel her off to the side for the next two and a half years until it turns out she’s the presidential nominee.

So if you are voting for Kamala Harris, do not fool yourself. You are voting for an unknown, somebody with very limited experience, and who will come into the White House without a circle of people around her who are competent. They’re going to be people she’s picked up, people who are not loyal to her personally, most likely.

And so it really is a crapshoot. And then, of course, we’ve got the Republican side. And I’m going to put aside for the moment most of my feelings on Donald Trump on strategic issues. I would just ask you to look at really any of his interviews or rallies

in the last three weeks, especially the one that was in Michigan two days ago.

The degradation that I saw during the debate with Biden was in full swing, and this guy is just not all there anymore. So even if he does become president, he probably won’t be for very long. Keep in mind that he is older now than Joe Biden was when Joe Biden became president. And the mental fortitude required for the job is immense.

And Trump just doesn’t have it. So don’t kid yourself. If you’re voting for Trump, you’re actually voting for JD Vance. And JD Vance is even more of an empty suit than Kamala Harris. He’s also a bit of a chameleon, which I don’t know if it’s a plus or minus. He wrote a somewhat famous book,

Hillbilly Elegy, a few years ago, and since then, he’s partially repudiated what he said.

And then he said that Donald Trump was a horrible person, should never be president, and was a danger to democracy. And he’s obviously repudiated that. This is a guy who will say anything to get closer to power. And if Trump wins, he will be the next president. So we’ve got two candidates here who both seem to be fairly economically populist, both of which have no experience in the real world,

and no experience in government—very limited, anyway. And that’s what’s on the docket. So any sort of institutional loyalties are weak to none. Any sort of policy experience that might give us an idea of what they might prioritize is negligible. And so any sort of policies that might have consistency, from the last 20 years to the next four, it’s going to be a short list.

The issue with foreign policy in the United States is that most of it is a presidential prerogative, and it’s very rare that Congress has any say in any of it, at least in the formative stages. And so if we don’t know who, institutionally speaking, politically speaking, ethically speaking, the next president is going to be because there’s no track record,

we don’t know what they’re going to prioritize at all, and we don’t know how they would react to any hypothetical scenario because they’ve never had to do it before. The only policies that are an exception, then, are issues where the president has chosen to cede a degree of authority to Congress and lock something in with an act of Congress that limits the president’s room to maneuver. Those sorts of policies will probably stick because it would require an act of Congress to overthrow them.

In the case of the United States, that’s a very short list of things. And most are related to trade, of which by far the most important policy that falls into that bucket is NAFTA. Now

I’ve made no bones about my general dislike of Donald Trump on any number of issues, but what he did with NAFTA 2 renegotiation, I thought, was brilliant because it was the right thing at the right time with the right partner.

Mexico has become our number one trade partner. And if there is a future for the United States economically, outside of being locked into a very dangerous and unequal relationship with China, Mexico will be the core of whatever that happens to be. And so having the hard work done already, and having it be the isolationist right of the United States that did the negotiations, I thought was great.

So no matter who becomes president next, I think NAFTA is fine. And honestly, that is the single most important foreign policy priority the United States has. So at least when it comes to preparing for whatever is next in the world, as the Chinese become more belligerent and as they start to fall apart, as the Ukraine war crescendos and we face the Russian demographic dissolution as the European

fractures because the population there is making it very difficult for them to do anything else.

The most important single piece of our future was done by Donald Trump, and he deserves credit for that. And I don’t think that whoever his successor is—Harris or JD Vance—is going to have the political authority or interest in overturning that. So, you know, hurray. Now, with that said, I have now probably thoroughly pissed off everybody on both sides.

You should go vote. And you should know that by the time you’re seeing this video, I’m already out of the country, so have a good one.

Hey everybody. Peter Zeihan here, coming to you from the coast of South Carolina. Several of you have written in on our Patreon forum with questions about what the future of Israel will be, especially as the world de-globalizes. Well, a little background, and then we’ll go into it.

So, number one: Israel is not a big place. We’re talking about a country that’s roughly the size of New Jersey, in a large neighborhood that is pretty arid and not exactly full of friends. Yes, Israel has built a surprisingly dynamic society with an amazing level of technological acumen, but it didn’t do it alone. The question is whether it can sustain itself; it’s basically a de facto sponsorship of the United States from the beginning. And while, for example, its missile defenses are impressive, the real ones—the ones that intercept the ballistic missiles, the arrows—have never functioned without American participation in terms of targeting, tracking, and even, you know, firing.

So, by far the most capable state of the region, but the PA isn’t exactly high. Here’s a country that imports the vast majority—over 80%—of its energy. And despite all the talk, a kibbutz is something like three-quarters of its food as well. So it’s in kind of a pickle. It requires foreign sponsorship for security and it requires access to economies outside of the region for its energy and its food. You remove the United States as the security guarantor, or you remove globalization, and this should, in theory, be one of those countries that, without a radical change of affairs, is simply going to dry up and blow away.

Now, I don’t think that is Israel’s future because a few things are going to change, some of which already have. One of the things that so frustrates the United States about Israel is it acts on its own. It has agency. When you are so much more technically capable and have so much more reach than your neighbors, you have some options. And the Israelis often exercise that. They often engage in military and paramilitary operations that are directly opposed to U.S. interests. And because of that, the Israelis have this view that no ally is worth forever. If push comes to shove, you do what you feel you need to do. And if it happens to piss off the person who ensures you get fed and the lights come on and the missiles get shot down, well, that’s so be it.

They know that at some point down the road they’re going to have to do things differently. And while they probably can’t do it on their own, that doesn’t mean that they can’t find a new friend. So, the question is, who are the candidates?

Well, in terms of energy, I would argue that they’ve already found that one. Starting over 15 years ago, the Israelis basically built a de facto alliance with Saudi Arabia. Saudi Arabia would provide them with some intel on Iran and some energy. And in exchange, the Israelis would provide the Saudis with backdoor access to American weapons systems that the Americans were willing to sell to Saudi Arabia, along with the training that was necessary so they could use them. In addition, anything that involves Iran, the two of them will operate pretty closely.

Now, this doesn’t mean they get along on everything. Obviously, when it comes to the Palestinians, there are still some fine details to work out. But the two of them get on pretty well behind the scenes and publicly spout a lot. But behind the scenes, they’re actually getting along great; they’re reasonable friends. Agriculture is easier. There are a lot more countries in the region that provide food surpluses, most notably in Europe. So it’s not like the Israelis need access to the globalized system to keep the food flowing.

But when it comes to security, that basically tells you where they’re going to get their food. Every country in the Middle East is in the process of wondering when the United States will pull back and, if so, who they should go to. And none of the options are particularly good if you’re an Arab. If you consider that the French and the Brits and the Turks have all had colonial empires in the region, no one really wants to go back to that day. But if you’re Israeli, you’ve got some options because the Israelis were never really a traditional colony; it was formed by the Zionist movement in the aftermath of World War II.

Partnering up with France, or Britain, or in my opinion, Turkey, is something that can be done with a minimum of cultural pain. Of the three, the most likely candidate will be Turkey—not because it’s the closest cultural cousin; it’s the opposite. But if Turkey is not a friend, then Turkey will most likely be an enemy. And having an alliance with someone against your local foe puts you really at the mercy of your ally. But if the Israelis can find a way to bury the hatchet with the Turks, then you take the largest economy and military in the area, with the most projection-based economy and military in the region, and you get a very powerful pairing.

That’s going to be pretty easy to justify joining. So I think the future of this region is likely to be Turkish-led, to a degree Israeli-managed, Saudi-fueled. And those three will have no problem bringing in Egypt as a big bulwark partner in North Africa. That quad is likely to be the power center for this region in a post-American system. And they have everything that all of them need—energy, security, naval access, food, and a really good network of intelligence systems.

I know a lot of you are going to say, “Wait a minute, doesn’t the Turkish government hate Israel right now?” Yes. I didn’t suggest any of this was going to be easy. The issue is that the Turkish government can protect Israel from, say, France or Britain, but France or Britain can’t really protect Israel from Turkey. So there’s really not a lot of strategic choice here. You know, if you’re Saudi Arabia, the idea of reaching out to a distant power like Japan or China makes a degree of sense. But for Israel, the potential foe is near and present. So if Israel cannot find a successful way to get along with Turkey, then Israel will vanish.

This is a region that is actually pretty easy for the Turks to get at. They’re not too far away. They only have to punch through Lebanon, and Lebanon is not really going to fight back. Not to mention you’re going to talk about a really meaningful blockade that would starve Israel of food and energy as well. Far better to find a way to get in bed with the Turks than the other way around.

So again, never said this would be easy. Never said there wasn’t a lot of work to do.

Israel Attacks Iran, Again – Part 1 & 2

An Israeli F-35I "Adir", the model of aircraft reported to have taken part in the strikes.

Part 1

Recently, Iran attacked Israel, again. And so last night Israel attacked Iran, again. Believe it or not, this is normal AND good news! At least until the Russians come to the party.

Part 2

Now that we’ve had a bit more time to see what happened in Israel’s latest attack on Iran, let’s dive a bit deeper. Israel struck military facilities like missile storage and production sites, but avoided nuclear and oil infrastructure.

This damage will set Iran’s missile capabilities back for a while, but these defenses were lackluster to begin with. A more significant takeaway from this attack was the absence of any meaningful resistance for the Israeli aircraft, which pokes some serious holes in the Russian-made S-300s and similar Chinese models.

Israel’s attack not only diminishes Iran’s military power, but also gave the world some insight as to shifting regional power dynamics.

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Hey, everybody. Peter Zeihan here. Coming to you from Austin, Texas. It is the 27th of October, and we’re going to do a follow-on to yesterday’s video about the Israeli retaliatory strike on Iran. Now that we know a little bit more about what was hit, the Israelis were able to target military facilities. They didn’t go after the nuclear program and they did not go after oil facilities.

Instead, their primary targets were facilities that stored missiles and were a critical component in the construction of the missiles that the Iranians like to use. Basically, there’s two types of fuel that you can put in a ballistic missile. The first is liquid fuel. This is cheaper and technically easier, but it’s very dangerous because you can’t store the rocket fuel in the rocket.

If you’re not going to launch in the next couple of days, you generally leave them empty. So, it’s easy to know when the bad guys are going to launch a bunch of missiles because satellite images can show the trucks pumping in the somewhat toxic, very explosive, very dangerous fuel.

Now, the Iranians have moved on from liquid fuel to solid fuel, which is much more stable. You can store the fuel in the rocket indefinitely, but it’s more technically involved, and the Iranians don’t know how to do it themselves. They bought the facilities to make this fuel from China, and now those are mostly smoking holes in the ground after the Israeli raid.

Until these facilities are rebuilt, and given Iran is now under much stricter sanctions than when it acquired these originally, the Iranians will have a hard time running their missile fleets as they have been, which is clearly what the Israelis were aiming for. They may have one or two operational fuel fabrication facilities left, but certainly not at a scale that poses a real threat to Israel.

So, you know, strike one, Iran. The second point to keep in mind is that wherever Israeli fighter bombers went—whether over Iraq, Lebanon, or Iran itself—they took out all the air defenses along the way. Most of the air defenses the Iranians use are called S-300s, which are the second from top-of-the-line system that the Russians produce and export.

The top model is the S-400. The Iranians knew this strike was coming, had plenty of notice, and still couldn’t shoot down a single Israeli jet. Between this raid and the war in Ukraine, where many of these S-300s are in use, we’ve been getting a bit of an awakening for people who have relied on Russian equipment all these years—it simply couldn’t do the job.

All of these air defenses are now smoking holes in the ground. On a larger stage, this has made the Israelis quite confident that whenever they feel the need to establish air superiority, they don’t even need jets—they just need to take out the air defenses since no one in the region has competitive air power.

Looking at the broader strategic picture, the Russians do have some S-400s, but not enough to provide full coverage, and they’ve already lost several in the Ukraine war. Yes, the S-400 is the most advanced air defense system the Russians have, but it’s not that much more advanced than the S-300. More importantly, the Chinese have their local air defenses, the HQ-9 and HQ-22, which are essentially knockoffs of the S-300 floor model, though upgraded in some ways with Chinese technology. We’ve never seen them in actual combat, but now we know the Israelis, who don’t even have a first-rate air force, were able to take out every S-300 they encountered. This suggests that the U.S., with its superior air force, would likely have no trouble operating in a similar environment if push came to shove with China.

Surely this isn’t what the Iranians planned when they conducted their raid on the 1st of October, but they’ve given strategic thinkers a lot to chew on, indicating that air defenses on the other side might not be nearly as interesting or capable as we’ve long assumed. So, you know, as

**Photo of an Israeli F-35I “Adir”, the model of aircraft reported to have taken part in the strikes by Wikimedia Commons.

The (Next) Gulf War Is Coming

Photo of a destroyed building in the middle east

If you’ve read my book The Absent Superpower, then today’s video shouldn’t come as a surprise to you (yes, I wrote it nearly ten years ago!). If you’ve been stuck under a rock and haven’t gotten the chance to read it -OR- you want a refresher, you can purchase a copy below.

You can even purchase an autographed copy as well here

Given the recent conflict in the Middle East, I’m worried that an oil crisis could be brewing. The main players that might kick off the (next) Gulf War are Iran, Israel and Saudi Arabia.

Israel was recently attacked by Iran and their retaliation could be devastating for Iran. Should they choose to target critical Iranian oil infrastructure – most of which is conveniently located near Kharg Island – Iran’s exports would plummet. Should that happen, an Iranian attack on Saudi oil fields wouldn’t be out of the question, and then we could be talking about 20 million barrels per day being under threat.

That means a global oil price of $300 per barrel is in the cards…but not for everyone. The US has the domestic supply to maintain a price closer to $60 per barrel (outside of California, because they still rely heavily on Persian Gulf imports). China would get the snot knocked out of ’em if it does play out like this. The UAE and Saudi Arabia would keep some exports alive thanks to pipelines that bypass the Strait.

Before you go buy a few drums of oil to throw in the basement, let’s wait for Israel to decide what their retaliation plan looks like.

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Hey, everybody. Peter Zeihan here, coming to you from the gloomy California coast. Got a nice little inversion layer going on out there. Anyway, today we’re going to talk about something that I haven’t really talked about in my professional career because I never thought it was going to happen until we had a change in circumstance. Well, we’ve had a change in circumstance, and now it’s time to talk about it.

And that is the possibility of a severe oil crisis because of a conflict in the Middle East. Now, back at my old job at Stratfor, they were always beating this drum. The idea that Iran was about to close the Strait of Hormuz and oil prices go to $500 and blah, blah, blah. And I was always the dissident voice because unless and until Iran feels it has no other choice, that doesn’t work because all of Iran’s crude goes out through the Strait of Hormuz.

Now, when I left, I went on my own. My second book, written about ten years—ten years ago, how did that happen?—mentions the three wars of the globalization period, conflicts that will boil up because the U.S. has stepped back, and whether the countries feel they have an opportunity or because they’re desperate, they take matters into their own hands.

Now, one of these I called the Twilight War, which is now in the opening act with the Ukraine conflict as the Russians try to reshape their neighborhood. But the second one, I called the Next Gulf War. And it’s about a conflict in which Iran and Saudi Arabia fight each other at each other’s throats because they can’t reliably get energy out.

So they try to take out each other. In that scenario, you basically have potentially 10 to 12 million barrels of crude that is at risk. Now, I haven’t brought this conflict up very much since I wrote the book because the circumstances haven’t warranted it. Especially in the last three years, it’s all been about Ukraine and Russia in their Twilight War.

But in recent days, I am reassessing. And specifically, the concern is after Iran launched a couple hundred missiles at Israel a couple weeks back, the Israelis have made it very clear that they intend to retaliate in the time and place of their own choosing. And they’ve specifically shortlisted Iran’s oil sector as potential targets. There is a very obvious target point.

It’s called Kharg Island. There is subsea infrastructure that links via pipe the mainland to the island. And then all, all, all of Iran’s offshore loading platforms are just off the island. This is the only meaningful export point for Iranian crude. And as the Israelis have proven, back in April when we had the previous Iranian assault on Israel, they can take out any air defense system in the country.

If you remember back then in Isfahan, which is where the Iranians have the nuclear program headquartered, the Israelis took out the air defense around the nuclear program specifically to prove that they could if they wanted to. So any sort of air defense and Kharg is almost a rounding error in the Israeli calculus. And there’s no bridge here. It was not built by the Iranians.

It was built by Westerners in the days before the Shah fell. So if Israel decides to move, it’ll just take a couple of sorties. They’ll be done in an hour. And Iran’s entire oil export capacity would be devastated. And in that scenario, suddenly Iran doesn’t have much to lose and, out of desperation, would probably make a push to take out Saudi Arabia.

The scenario specifically outlined in the book involves a military invasion that crosses into Iraq and Kuwait, heads south, making a beeline for the oil fields. Keep in mind that the southern half of Iraq is Shia-populated and has generally had a very pro-Iranian slant ever since the war against Saddam Hussein back in the 2000s. Whether or not it would be an easy invasion is open for debate based on how or whether other countries, such as the United States, get involved.

But even if that is not an option, all of those missiles that the Iranians launched recently against Israel, they have more than enough to take out oil export and processing facilities on the western side of the Persian Gulf, notably Saudi Arabia. Most of Saudi Arabia’s crude comes from the Ghawar region, which is hard up against the coast, and all of the loading platforms are also on the Gulf Coast.

Well, most of them. So you’re talking between the two of them, a significant reduction in what is globally available. If it was just Iran, not a big deal. You’re talking about a million barrels a day. They’ve been under sanction for a while. They’ve mismanaged their own system. But if you bring in Gulf states, most notably Saudi Arabia, all of a sudden that 1 million turns to 10 million or more, and that doesn’t count what comes out of, say, Iraq or the UAE or Kuwait, all of which would be in the way of a potential conflict.

So now you’re talking potentially 20 million barrels a day. You want oil prices above $300? That’s how you get there. Now, not everything is equal for all players. Yes, currently we have a single global oil price. But in that scenario, that system would shatter because in the United States we have a populist president, and the people running for president are populist.

And back in 2015, U.S. Congress granted the American presidency the authority to summarily end all American crude oil exports, which have been several million barrels a day for a while now. The shale revolution really is rocking and rolling. And so if we have oil prices shoot up, you would have the president, whoever it happened to be, end exports. That would create a super-saturated market within the United States while denying the rest of the world another few million barrels per day, sending prices up even higher.

So you’d have a functional ceiling in the United States of $60 to $70 a barrel, and you’d have a functional floor in the rest of the world, probably around $200 to $300 a barrel. So you get a global depression. At the same time, the United States just kind of skates right on. Second, the country that would suffer the most by far would be China.

It is the largest consumer of crude from Saudi Arabia, from the UAE, from Kuwait, from Iran. And all of those sources would be in danger in some way, if not going completely. Third, on the producer side, not everyone in the Persian Gulf would suffer equally because the Saudis and the Emiratis have seen some version of this problem coming.

And so both of them have built bypass pipelines that avoid the Strait of Hormuz completely. So roughly 5 million barrels a day, maybe as much as six and a half, could still get out. That’s enough to take a lot of the sting out from a budgetary point of view. And if you’re Saudi Arabia and oil prices triple but your exports halve, you’re actually in a net financial superior position.

Assuming the Iranians don’t conquer you. And then finally, in the United States, there is one state that would be in a different situation, and that would be here in California. California doesn’t have any pipes that connect it to the oil fields of Ohio or North Dakota or Texas. And it is the one oil producer in the country that has not benefited from the shale revolution because of regulation out of Sacramento, which means that in this scenario, they’d be kind of hosed because they actually import most of their crude from the same place the Chinese do—the Persian Gulf.

So in the rest of the country, you’ve got a ceiling on energy prices. But out here on the West Coast, you’re looking at $10 a gallon for gasoline, triggering a significant schism in the economic outcomes, even within one country. So this has gone from something that was just kind of out there in the future, if and when de-globalization really gets going, to all of a sudden it’s a meteor.

And now the chances it’s going to happen? Well, I mean, really that’s up to Israel. And then, of course, the Iranian reaction. But I would say it’s somewhere between 1 in 4 and 1 in 3 to happen over the course of the next few months. And considering the depth of this disruption, I hope everyone sleeps well.

The Downward Spiral of the Chinese Economy

A man holding a Chinese Yuan in the middle of Tinannamen Square

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If you ever need to make an online dating profile, be sure to add “long walks on the beach discussing the economic challenges facing China” to the list…I promise you’ll double the dates in no time.

The Chinese have been struggling with economic growth since the beginning of COVID, missing their growth rate target repeatedly and on the verge of a recession. Attempts to bail themselves out continue to fall short, likely because these stimulus measures do not address the core problems (that the population is aging and private consumption is plummeting).

That’s not even an exhaustive list either. The Chinese banking system is severely strained as well. With the government pushing for more lending at low/negative rates, the banking sector is in dire straits. Until major reform hits China, the spiral down will continue…and a larger financial crisis will continue to creep closer and closer.

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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.

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Our newsletters and videologues are free and we 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.

Hey everybody, Peter Zeihan here, coming to you from the South Carolina coast. And today, we’re going to talk about the normal things I talk about when I’m walking on the beach, and that’s Chinese finance. Okayyy? Let’s get that out with a straight face. Okay. For those of you who have been watching the Chinese markets and the economic recovery—or lack thereof—over the last year, you’ll notice it’s been kind of a rough year for them.

By their own statistics, they’re not going to hit their 5% GDP growth target for the year. And if you talk to private folks who have a more realistic understanding of what’s going on, the China that is what’s left of the Chinese bureaucratic system has basically gutted its own statistics to the point where they’re becoming literally useless. We are talking about a borderline recession.

We’re not in China, and this isn’t new. The Chinese economy stumbled in the fourth quarter of 2019 with the onset of Covid. And aside from a couple of blips here and there, it’s kind of been down in the dumps ever since. It wouldn’t surprise me if we had an actual forensic audit done on Chinese books and found that the Chinese economy writ large over that entire period was actually roughly the same size it was before.

The data isn’t out of malfeasance. It’s just the system is outdated. It’s a flag, so you don’t get accurate data at the local level, much less at the national level.

Anyway, in the last couple of weeks, we’ve seen a huge number of measures—not huge stimulus, two different things. They’ve tweaked the mortgage rate a little bit and reduced something called the reserve requirement, which is the percentage of bank deposits that have to be held back at the bank in order to make loans.

All of these things are mildly stimulatory, but they don’t get to the core issue that China now faces: it has so few people under 50 that there just isn’t much of a consumption base to be boosted. And that’s before you consider that the government of Chairman Xi Jinping really doesn’t see private consumption as a meaningful driver of economic growth.

From an ideological point of view, the idea that people would spend on themselves as opposed to spending on the state is something that seems to be a little alien to him based on his rhetoric and speeches. Anyhow, that also kind of ignores the point. We’ve talked a lot about consumption, investment, and trade.

But something we don’t talk about very often are Chinese banks, which are the method by which capital makes its way into the Chinese economy—like in most economies. And that is also completely broken. The Chinese method of encouraging economic activity is to lean on the banks so they lend to everyone for everything, often at zero to negative rates once you adjust for inflation. And when you put a bottomless supply of capital in front of anyone, they will gorge on it, and you will get economic growth.

But whether that growth is stable or sustainable is, of course, questionable. Basically, for those of you in the United States, I’ve just described subprime, Enron, or the savings and loan crisis. It’s all fine until someone actually has to start valuing the loans that are on the books. And when you flood the market with credit, a lot of these loans just don’t work out.

In the U.S., we call these “non-performing loans” (NPLs). If 1.5% by value of a bank’s loans go into that NPL category, then a government regulator will knock on your door and force you to change your policies to bring that number down. Once you get over 2%, that’s when banks start snapping like matchsticks because there isn’t enough margin on those loans to grow out of them.

Well, in China, the margin is sometimes zero or even negative. And because the concept of fiduciary responsibility doesn’t exactly translate well into Mandarin, many of these loans that should have never been made have gone bad. By most internal estimates, China’s total NPL ratio for the entire banking sector is somewhere between 5.5% and 6%, which would basically mean their entire banking sector is, well, out of luck.

This doesn’t mean every bank is there, but for every bank that is below that number, there’s at least one or two above it. As a rule, the least stable banks are the ones that aren’t on the coast. Investment inflows, export activity, and foreign money mean coastal banks tend to run tighter ships.

But as you move inland, especially to poorer, more agricultural areas, it’s all about Chinese state banks, whether they’re the big four national banks or smaller regional ones. So, if you want to talk about the future of Chinese economic growth, it’s not going to be boosted by changing the reserve requirement.

It’s going to be improved by getting the banks into a position where they can actually function a bit more normally. But that can’t happen until they deal with the NPLs. In the U.S., every time we’ve dealt with NPLs, it’s only been because we had a recession linked to the financial sector, like the subprime crisis of 2007–2009 or the savings and loan crisis in the 1980s. China will need to go through something similar.

But you’re talking about something at least an order of magnitude worse. And in relative terms, because the U.S. economy is much stronger than China’s, you’re talking about something even worse than that. So, it’s nice that the Chinese stock market is having a little bit of a pop, but none of the underlying issues have been addressed. Trying to make credit easier when credit is already overextended will simply make the inevitable crash that much harder.

How Effective Are the Israeli Defense Systems?

Photo of Iron Dome missile defense system firing

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Israeli defense systems are getting put through the ringer as of late, so let’s talk through each of these systems, how they’re doing, and what the US involvement looks like.

The Iron Dome is what we hear about most often; this is what intercepted the rockets from Hezbollah. This system is designed to counter unsophisticated rockets, and thanks to Israel’s small size, it does this quite well.

When the bigger stuff starts to fly, like ballistic missiles, that’s when the Arrow system comes into play. While its been successful against the recent attacks from Iran, the US was helping out on the tracking/targeting side of things, so we don’t have a true measure for how good this system is on its own.

That helping hand from the US is key, not only because its helping the Israelis defend themselves, but the US is also getting some valuable, real-world testing for tech that can be used back at home. So, its a bit of a win-win 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 free and we 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.

Hey, everybody. Peter Zeihan here, coming to you from the South Carolina coast. And we’re going to talk about technology that’s been in the news a little bit, and that’s missile defense, specifically the Israeli system that has proven to be remarkably successful in recent years, both at shooting down Hezbollah rockets coming in from Lebanon and, more recently, ballistic missiles coming in from Iran.

A couple of things to keep in mind—three things to keep in mind. Number one, there is more than one system here. The first system is called Iron Dome, and that is the anti-rocket system deployed in northern Israel that’s been intercepting the rockets coming in from Lebanon. Now, it’s not that this isn’t an impressive system in its own way, but the rockets being fired by Hezbollah are oftentimes garage projects.

And as such, you’re not talking about something that is particularly sophisticated or moving particularly quickly. Basically, what happens is the Israelis launch a lot of interceptors when a barrage is coming in, and they kind of loiter until they can lock onto a rocket, and then they zip down and hit it. But even if they miss, a lot of times these things have a very high dud rate.

Over a third of them probably don’t even explode when they do hit, and they have next to no guidance. In fact, most have had no guidance at all. So it’s good for what it is, but let’s not overplay it. Also, keep in mind that Israel is the size of New Jersey, and the northern border with Lebanon is very, very short.

So, from a technical point of view, it’s relatively easy to guard that sort of territory. The second system, second thing to know, is the ballistic defense system called the Arrow system. And it is significantly more sophisticated than what’s going on with Iron Dome. This was pulled into play to defend Israel against the ballistic attacks that came in from Iran last week.

Now, the problem here is in assessing how successful it is. We really don’t know, not because it hasn’t shot missiles down, but because it hasn’t done so alone. In the recent attacks from Iran, the United States has been there, present, shooting things down too, and linking the radars together. And we just don’t know how well the Israelis could do if it weren’t for American involvement in the defense.

It probably still is among the best in the world, but everything that has been thrown at it has already had to deal with the United States. Everything has basically been designed before the year 2000. You’re talking about missiles that are at least 20 years old, off of designs that are at least 30 years old. Calling it cutting-edge is probably the wrong phrase.

Again, this is a country the size of New Jersey. You don’t need a lot of arc of coverage in order to shield the whole thing. And even with those factors in play, a lot of the missiles still made it through. They didn’t cause any substantial damage, but that is a fault of the missiles, and maybe, perhaps deliberate targeting, avoiding civilian areas more than anything else.

And then the third and final thing to keep in mind is that, for the United States, this is a perfect layout. U.S. assistance with both of these defense systems, with the intent of then taking them, modifying them for our uses—whether in terms of deployment, theaters, or the homeland—and then scaling them up. And so, believe it or not, all of the ongoing agony and violence of the Middle East, in many ways, is providing the perfect testbed for missile defense for U.S. defense systems.

Okay, I’ve got to hit the beach today, but anyway, until that, bye.

Impacts of an Israeli Strike on Iran’s Oil Sector

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Following my video on Iran’s attacks from the other day, I feel it necessary to explore the possibility of an Israeli strike on Iran’s oil sector and the affect it would have on global markets.

Iran’s oil exports hover around 1 million barrels per day. Thanks to sanctions, mismanagement, and maturing fields, production has taken a hit over the years. Regardless, that’s a million barrels per day that could vanish from the markets, which means a $10-15 increase per barrel on top of the “war premium”. Not a global catastrophe, but it will still hurt.

The US is fairly insulated from shocks to the global oil markets (like this one), so I’m not worried about the US. Should this get really bad, the US president can authorize a suspension of crude exports which would create a glut of oil in North America…similar to what we’ve seen with natural gas prices.

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Hey everybody, Peter Zeihan here, coming to you from the beautiful chaos that is Dallas Love Airport, headquarters of Southwest Airlines. In the aftermath of a video I recently did on the Israelis and their potential strike on Iran — specifically targeting the oil sector — I thought it would be worth noting how that could affect a few things, most notably here in the United States.

So, Iran’s oil production has been suffering for years. Part of it is due to sanctions, but mostly it’s because their regulatory regime is really punishing for would-be foreign investors. They basically require that the state take a leading role in everything, and the state company is not very good. Most of the oil fields in Khuzestan are mature and require a lot of technology that the Iranians don’t have and don’t understand in order to make them produce meaningfully.

Everything else worth having is offshore, but the Iranians have absolutely no ability to operate offshore by themselves. So while the numbers that officially hit the market ebb and flow because of the sanctions regime — and whether or not the Iranians are attempting to sneak around sanctions — the actual flow is about a million barrels per day of exports. Sometimes it’s as low as 400,000, sometimes it feels a little bit higher, but about a million. Now, if you remove a million barrels a day from the market, we’re going to feel it. But that’s only 1%, so you would expect, in a purely market-driven environment, for that to kick up prices by ten, maybe fifteen dollars a barrel. Of course, since it would be due to someone dropping a bomb on something, there would be a war premium on top of that.

The impact globally is going to be felt, it’s going to be real, but it’s not going to be huge. As for the United States, I’m really not concerned. The U.S. is no longer an energy importer. We’ve come a long way since 2007, when we were importing something like 14–15 million barrels a day, thanks to the shale revolution.

The United States is now arguably one of the lowest-cost producers in the world, and our production is well over 20 million barrels a day. Moreover, the U.S. has diversified its economic strength and is now absorbing far fewer barrels. Now, if you look at the headline numbers, you’re not going to see that, but that’s because the U.S. Energy Department calculates things differently from everyone else.

We look at the amount of crude we actually consume in total, including what goes into our refineries for products that are then exported. That’s not how most countries do it. The argument here is that nobody consumes raw crude; it has to be turned into something. So, it’s not a stupid way to look at the data, but it does make it seem like we are more dependent on international trade than we actually are.

In fact, if you consider all the types of crude that the U.S. produces — raw crude, natural gas liquids, condensates — we now have such a huge surplus that by the end of this year, the U.S. will be exporting 5 million barrels a day of roughly defined product. In the history of the petroleum era, there are only three countries that have ever produced more than 5 million barrels per day of raw crude, and we’re exporting that much in refined product.

So, the degree to which the United States is insulated from this is robust. Now, do keep in mind that oil is an internationally traded product, and so there is more or less a single global oil price point because it is an easily exchanged commodity. But if we ever get to the point that there is an oil shock — I don’t think that will happen with Iran — but if we do, and prices get to a point that the American president finds untenable, the U.S. president, courtesy of powers granted back in 2015, has the authority to summarily suspend all exports of raw crude. And we do a lot of that too. If that happens, the crude gets trapped within North America.

We get a supersaturated energy market, and then North American energy prices separate from global energy prices in a manner very similar to what has already happened with natural gas prices. U.S. natural gas prices, because of a similar glut in natural gas, are as a rule one-fourth to one-eighth what they are in Europe or Asia. So if we ever do get into a situation where crude prices get sketchy, you can count on the American president — whoever it happens to be — to enact that power.

Then, all of a sudden, we’ve got energy prices here that rarely go above $60, because every shale oil field we have is cost-competitive at that price, while everyone else screams past $100 on their way to $200 and more.

Okay, that’s it for me. Of course, the biggest downside of being here is that, because Southwest is a hub and it’s open seating, you have to check in 24 hours online in order to get a decent seat. And because I was launching this new thing called Patreon 24 hours ago, I forgot. So I am C-51. I will be the sad person up against the bathroom, trying to squeeze this lengthy, 6-foot-5 frame into a middle seat that does not recline. Pray for me.

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