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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Transcript

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.

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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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If you sign up for our Patreon page in the month of October, the proceeds from your subscription for the remainder of 2024 will be donated directly to MedShare. So, you can get our all of the perks of joining the Patreon AND support a good cause while you’re doing it.

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Transcript

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.

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Transcript

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.

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

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

And then there’s you.

Our newsletters and videologues are 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.

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Transcript

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

Photo of black oil barells

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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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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.

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Transcript

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.

Why You Should Ditch Your Pager (Hezbollah Operative Edition)

If your pocket starts to feel warm in the coming days, here’s a few questions you should ask yourself. #1 – Are you trapped in the 80s? #2 – Are you affiliated with any terrorist organizations? If you answered yes to either of these questions, you should probably throw your pager away…but hopefully all of my readers ditched their pagers before Bush Senior left office.

If you haven’t heard by now, a sophisticated Israeli operation targeting Hezbollah in Lebanon was carried out on September 17. While Israel has not officially claimed this attack, it appears to be the next chapter in the rising tensions between Israel and Hezbollah.

Israel’s operation involved intercepting pagers somewhere along Hezbollah’s supply chain, implanting explosives, and then returning those devices to the supply chain to eventually end up in the hands of Hezbollah operatives. Those devices were then detonated earlier this week. Hezbollah has evolved into a political and militant power within Lebanon, so they’ve somewhat limited conflict with Israel to help maintain their political footholds.

This attack resulted in a number of casualties among Hezbollah and also provided the Israeli’s with a strategic understanding of who is involved with the organization. As of now, I don’t expect this to escalate into a broader conflict.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Colorado. Today, I’m recording this on the 18th. Yesterday, the 17th of September, we had several thousand pagers explode in Lebanon, injuring at least 2,800 people and killing at least 12. This was undoubtedly an Israeli operation. The Israelis aren’t saying anything about it, but no one else would, and no one else has a vested interest in doing this.

The target was Hezbollah, which is a militant/political organization in Lebanon that the Israelis have been dealing with over the last several months, and vice versa.

Okay, so what’s going on?

Number one, Hezbollah is not new. It’s been around for decades. Israel is not new. It’s been around for decades. Basically, since Hezbollah’s formation—it’s been around for 40, 50, 60 years—they’ve always been involved in conflict with Israel. However, things have evolved over the last 15 years in a more peaceful direction. The two haven’t come to direct blows since a brief air war in the early 2000s. The reason is very simple: Hezbollah is not a typical terrorist organization. They also have a political wing that is part of the government in Lebanon.

There’s a whole class of people in Hezbollah who don’t see a vested interest in firing rockets into northern Israel because they are now part of the power structure. If you challenge Israel in a way that makes them feel the tanks need to move, there’s nobody in the neighborhood who can stand up to them. So, you get this hybridized organization where there’s a militant wing and a political wing.

I’m not suggesting any of them are nice people, but not everyone wants to have a war. In fact, even on the militant side, in the aftermath of the Hamas attacks last year, Hezbollah knows they are fortunate that Israel has its hands full with a suppression operation in Gaza. The danger, of course, is that everyone in the Middle East always wants the last word.

Both sides—Israel and Hezbollah—have been doing attacks on each other, just like the Iranians, in order to get the last word. But since no one will let anyone else have the last word, we keep having these layered attacks that escalate, settle down, escalate again, and so on.

I have no reason to believe that this is any different. I don’t think it’s going to lead to a general war, but Hezbollah will feel like it has to respond, and then Israel will feel like it has to respond, which will make Hezbollah feel like it has to respond. Welcome to the Middle East. This is just what the place looks like on a good day.

This does not change my assessment that the Middle East is still the most volatile part of the world and has been for a little over two years now.

Now, what about this attack specifically?

Well, a few things. First of all, this is clearly against international law—using a civilian network, the telephone network, to trigger civilian devices (pagers) in civilian areas of Lebanon is clearly not legal. But because Hezbollah has a militant wing and has been launching missiles and rockets into Israel, I really don’t see anyone who matters bringing a court case against the Israelis for this one. So that’s kind of a minor sideshow issue.

Far more important: this was a pretty sophisticated attack. The Israelis have had a lot of intelligence failures over the last few years. They completely missed the Gaza operation, and they’re botching their counterattacks into Gaza now. This should have been done months ago, and they’re making no appreciable progress. They’ve had to go back over areas they’ve already cleared, over and over again. This has the makings of a quagmire operation for them.

Now, let me explain how this attack likely happened. The pagers were manufactured in Taiwan. They were shipped to Hungary, where a Hungarian company’s distribution system took over. Somewhere between Taiwan and Hungary—and these things being delivered to Hezbollah—the Israelis got a hold of the shipments and implanted explosives in them. Probably what they did was swap out the batteries and replace them with a hybrid battery-explosive system.

There’s no way to remotely hack a pager and turn it into a bomb. Sorry. The most a pager would do is get really hot if tampered with. So, the sophistication to do that without anyone noticing, and getting it into thousands of people’s hands, is kind of impressive.

There’s also the operational aspect. Hezbollah uses pagers because cell phones can be easily tracked if you know what you’re doing. Pagers only send a signal when they’re on, so they’re a much simpler technology but safer if you’re trying to avoid having the Israelis drop a bomb on your head. Well, the Israelis have now hit a couple thousand people who were part of the Hezbollah supply chain and distribution system.

It’s not like everyone who has a pager in Lebanon got hit—just the people who had gotten pagers from Hezbollah. The vast majority, if not all, of them were affiliated with the organization in an operative way. So, the next step here is that the Israelis undoubtedly had observers in hospitals across Lebanon. They’ve either confirmed or identified hundreds, if not thousands, of Hezbollah agents and operatives. That’s a rich intelligence trove. It doesn’t get much better than that. Not to mention, a lot of these guys are going to have holes in their thighs and will be easy to identify after they heal because they’ll be limping for the rest of their lives.

You’ve got to give credit where it’s due—that was a brilliant operation.

Finally, it raises the question of what else the Israeli intelligence services have been up to. After those recent intelligence failures, there was an open question as to whether or not Israel had lost its mojo. Clearly, at least some people in their intelligence services have not. If they can interrupt a supply chain of pagers, what else can they do?

Manufactured goods in Lebanon—everything is imported. So, that’s an opportunity for the Israelis to reach out and tackle anything that Hezbollah might have an independent supply system for.

Today, on the 18th, we found a second wave—walkie-talkies, something else that is hard to hack—that exploded and probably injured another 300 people. Now you’ve got a bunch of Hezbollah folks walking around missing fingers. The Israelis are not done here, and Hezbollah will react, but we have seen a level of sophistication in Israel today and yesterday that we just haven’t seen in the last few years.

Whether they’re doing this because they have some broader plans or whether this is just the most recent tit-for-tat, I don’t have an answer for you. But what I can tell you is that operationally, Hezbollah has now been marked, and a more traditional assassination campaign would be so much easier than it was just three days ago.

The Gaza Conflict and Shifting Politics in Israel

Photo of Gaza with destroyed buildings

*This video was recorded last week, prior to Peter departing on his backpacking trip.

The conflict in Gaza has been raging on for nearly 300 days, and there is no end in sight. However, Israel is heavily reliant upon American tech and weapons and that relationship could be changing.

The political situation in Israel is complex. As the country grows more conservative and reactionary, tensions between the three largest population groups are rising. These groups are the Palestinians, secular Jews, and the ultra-Orthodox (Haredi).

The Haredi are gaining influence and have some hardline policies against Palestinians. In 25 years, their voting power will rival that of secular Jews and Israeli policies will be drastically impacted.

This shift in local politics is amplified by the shift in international relations with the Americans. The US remains a strong supporter of Israel, but shifting demographics and growing criticisms of Israeli practices in this war indicate that this could change in the coming decades.

Prefer to read the transcript? Click here

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

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

And then there’s you.

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

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Transcript

Hey everybody, Peter Zeihan here. Today we’re going to talk about Israel. There is no reason to expect the Gaza war to end anytime soon. And while both Israel and Hezbollah really don’t want to have a military conflict, there are some factors that are pushing them more in each other’s face. So, we can’t rule out a specific war there.

But what this does is keep Israel top of mind for a lot of American security planners, especially for the White House, because at the end of the day, Israel relies on American tech transfer and weapon procurement in order to keep its own security in order. And the question is whether or not that is in a degree of danger.

Let me cut to the chase and say that the short answer is no, for now. There are two issues that kind of define this problem. The first is that the political evolution of Israel is towards a much more stodgy, reactionary approach to not just politics, but security.

If you consider Israel and the Palestinian territories as a single unit, there are three forces in play. The first, of course, is the Palestinians themselves, who are capable of resistance, but not in a traditional manner. What we saw back in October with the terror assaults, that’s about the most they can hope for.

There are no anti-tank rockets, no air forces, no tanks. So, from a security point of view, this is a pain and tragic, but it’s not a traditional state challenge. It is an ongoing, grinding issue of occupation and resistance that will always be there in the background. The second group are the Jews, specifically the secular Jews, who have controlled the governing system of Israel for the last 75 years.

Now, these, of course, break into different groups with different politics, just like any other country. But ultimately, they’re all drawn from a similar political stock, if you will. The third group, the one that is disrupting this balance, if that’s the right word, are the Haredi, the ultra-Orthodox, who are much more conservative and, for the most part, not integrated into Israeli life.

Until very recently, they were not even contributing to the military. We’ve recently had a change in law there, which we will link to that piece and the implications of it here. Anyway, this is a group that basically lives on the government dole and does what their rabbis tell them to do. It’s not that simple—don’t send me hate mail for that statement—but these are people who are not as sophisticated as the secular Jewish population.

And they have some very, very, very strong opinions on what should be done to and about the Palestinians. Much more hawkish, but they haven’t really contributed to the assets that are necessary to carry out that policy because they pay very little taxes. Most of them haven’t served in the military, and yet they want a very hardline response.

Well, for the last couple of decades, this ultra-Orthodox coalition has been a bigger and bigger factor in internal Israeli politics and has been the kingmaker in any number of governments, including the current one. Because they’re basically paid to exist by the state, their numbers are growing very rapidly, and we’re going to need a position within the next 25 years where they are going to be neck and neck in terms of voting power with the traditional secular Jews.

That transition from here to there is going to generate a very different set of policy options in Tel Aviv and Jerusalem. So, the question is, how does this relate to the Americans? Well, in the short term, it really doesn’t. Donald Trump, when he was president, was very pro-Israeli, very anti-Palestinian. His policies reflected that, and the folks in charge of the Israeli government were very supportive of that.

Under Biden, there’s been a little bit more oblique criticism. The Palestinians, of course, would disagree with that assessment. But Biden is basically starting to call a spade a spade and has said that some of the things that the Orthodox-tinged government in Israel is doing are perhaps not legal internationally and border on, from time to time, a little bit genocidal. At times, that criticism has boiled up in international affairs and actually affected Israel’s ability to access American weapons.

It hasn’t gotten to a break point, because one of the advantages in the United States of having a president who’s older than dust is he remembers when the Jewish state was formed, which means he remembers personally the Holocaust. He remembers Abraham, and Isaac, and all the rest. So, he knows that in the long sweep of history, what’s going on right now is a bit of a bump.

But Biden will not be there forever. Trump will not be there forever. And we’re having a demographic shift in the United States as well. In Israel, right now in 2024, the majority of America’s baby boomers, who are probably the most pro-Israel generation we have, have already retired. Over that same transition period, while the ultra-Orthodox sects are going to rise to power in Israel, America’s baby boomers are going to die out.

And the younger generation coming up, the Zoomers and, to a lesser degree, the millennials, are not nearly as evenhanded when it comes to Israel versus the Palestinians. So, demographics are absolutely against Israel on this topic. But never forget that demographics are like a glacier; they move slowly. They don’t matter until the day they do. We’re not going to hit that day in the next four years, but we will hit it in the next four decades.

So, for now, the Israeli government, regardless of its makeup, can be assured of long-term American support. But long-term does not mean permanent.

No More Military Exemption for Israeli Ultra-Orthodox

The demographic pyramids below reflect the Israeli government’s best (public) understanding of the changing profile of its population. The two fastest-growing segments are Palestinian-identifying Muslim Arabs in Gaza and the West Bank, and the ultra-Orthodox Jewish Israelis. Not only do these two groups have starkly different ideas about what the future of disputed territories look like, they have increasingly little common ground with what one might call the more secular, moderate core of Israeli society at large.

The Israeli Supreme Court just ruled that the ultra-Orthodox community will no longer get exemption from military service. This addresses a number of long-standing issues, but it could spell trouble for Netanyahu’s political career.

The ultra-Orthodox community makes up 10-20% of the population, pays less taxes relative to their share of the population than secular Israelis, receives subsidies, has low labor participation…so until now, the rest of the population has been picking up the slack. By eliminating military exemption for the ultra-Orthodox community, that extra weight can be lifted from the remaining population.

As you would expect, the ultra-Orthodox aren’t thrilled with this decision and they’ll likely be making that known politically. Since the ultra-Orthodox parties are key supporters of Netanyahu’s coalition, don’t be surprised if we see some changes soon. This will only be amplified by criticisms of Netanyahu’s handling of the Hamas conflict and strategic incompetence.

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

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

And then there’s you.

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

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from square top mountain and back behind me is Argentine Peak. Edwards. And I think Kelso. It’s the 25th of June. And today we’re to talk about what’s going down in Israel. the Supreme Court just ruled that the country’s ultra-Orthodox, who have been granted exemptions from serving in the military for decades, can no longer give exemptions because it’s a discriminatory long term issue, is that, the ultra-Orthodox are somewhere between 10 and 20% of, Israel’s population, based on where you draw the number. 

And since they pay very low taxes and qualify for all kinds of subsidies and don’t serve, most of them don’t work. And so they have high, very, very, very, very high birth rates, very, very low labor participation rates. And they don’t serve in the military. so there is an issue that has to become a larger and larger percentage of the population, just the the sheer weight of what, is then dropped on the shoulders of everybody else becomes almost insurmountable. 

Keep in mind that there is an Arab minority in Israel that, secular, not like they’re protesting or throwing bombs or anything, but it’s a very real issue from a national identity and a social management point of view. there’s also a short term issue that has to do with the Netanyahu government. most of the parties that subscribe to ultra-Orthodox are part of Netanyahu, Prime Minister Netanyahu’s governing coalition, and have been for quite some time. 

Israel’s had a lot of government the last 20 years when since Netanyahu kind of came into the burst on the field, he’s definitely their longest running prime minister overall. Anyway, what’s the best way I can put this into American terms? Think of Matt Gates. You know, the guy from Florida with really good hair, talks a lot of shit about the military, but thinks that the military is a solution to everything. 

We should bomb this country and invade that country. But he’s never served. so take blowhards who don’t really contribute to the system, thinking that they know best about how to use military power. strip away the good hair and, the child sex trafficking charges and the drug charges or allegations. Excuse me. And basically, from a political point of view, you just described most of the ultra-Orthodox parties, in Netanyahu’s coalition. 

So they talk a big game, but they don’t really contribute to the solution financially or in terms of, people with boots. there’s another issue, of course, and the whirlwind export havoc. And there’s also a very short term issue. After the Hamas assault on Israel back in October, Netanyahu was able to convince most of the parties in parliament, to form a unity government, because the feeling was the attack had been on everyone. 

So everyone should have a say in how things unfold. since then, Netanyahu has not shared power with unity government all that much. And so party after party has left, accusing Netanyahu of not having a plan for the war, accusing Netanyahu of prolonging the war for his own political purposes in order to solidify his position as prime minister. 

and, accusing him and the ultra-Orthodox overall of just general strategic incompetence because this attack shouldn’t have happened. Hamas is like the one thing that the Israelis are watching every single day. It’s there shouldn’t have been no surprise attack. And here we are eight months later, and there’s no sign that the war is going to conclude. 

And in a number of places where Israel has supposedly already cleansed the area of Hamas fighters, they’ve popped up again. So, the international condemnation from the point of view of people who have left the Israeli government is now for nothing, because the Israelis have basically paid the price of launching a major war and, being at least indirectly complicit, a lot of unpleasantness. 

But there’s still no sign that the war’s end is in sight. that means that, that Yahoo really, really needs the Orthodox to hold onto power while other parties in Parliament are actively agitating for fresh elections. We only take one significant coalition partner in, in India, whose coalition to force new elections in which, I would probably not do very well. 

And you had throw the Supreme Court today into that mix, and you’re undoubtedly going to have at least some or ultra-Orthodox who think they might get a better deal with a different government, as opposed to having to serve in the military or actually be actively involved in changing the law so that their own people have to serve in the military, since they’re sitting in the government right now, when the case has been made. 

Anyway, so significant decision changes things on the domestic and the international fronts. And that’s all I’ve got. All right. I got to cross this. 

The (Much Extended) Agony of Israel and Gaza

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I’ve avoided talking about the Israel and Gaza conflict as much a possible (given that there’s no favorable outcomes for anyone involved), but some recent changes have forced my hand.

The humanitarian crisis in Gaza is reaching critical levels due to massive destruction and severe shortages of resources. The real kicker is Israel’s renewed offensive in northern Gaza; the presence of Hamas fighters and bodies of hostages in previously “cleared” areas has revealed some MASSIVE shortcomings in Israeli intelligence.

Hamas will continue to recruit new fighters, and do so rather effectively given the harsh conditions in Gaza. Israel will attempt to sort out its intelligence issues and military struggles. And all of this is an unfortunate indication that this conflict has no resolution in sight.

Prefer to read the transcript? Click here

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

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

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

And then there’s you.

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

Support medshare's ukraine fund
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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from the via della Costa, which is the old Roman road that was used to transport everything, through the Ligurian coast of Italy back in the day. today is the 27th of May. You’ll clearly get this tomorrow. Anyway, today we’re going to talk about something that I, as a rule, have been avoiding. 

And that’s the Gaza conflict. this is one of those intractable conflicts where there’s really no version of it that goes well for anyone. And when I first addressed this issue back in November, shortly after the October attacks by Hamas into Israel, if for those of you don’t remember the specifics, basically we had several hundred to a few thousand, two low hanging, Hamas fighters cross into Israel, kill over a thousand people, engage in a pillage of raping and destruction, and ultimately kidnaped, a fair number of hostages and then back to Gaza. 

Israel shortly thereafter launched an invasion of the Gaza Strip, where Hamas is based, launching what has now been a six month conflict that has generated no end of bad press and horrors for everyone involved. there’s no version of this that ends with a settlement. Israel has been deeply wounded and isn’t going to stop. And Hamas has absolutely no problem sheltering behind the civilian population in Gaza. 

And Israel has no problem targeting the civilian populations as part of an effort to get to Hamas. So there’s no there’s no friendly outcome here. and so I’ve been avoiding talking about it because when you have an intractable conflict like this, all you have is the horror. And both sides, based on your point of view, are doing horrible things. 

So, I’ve been avoiding any work because we’ve had a an unfortunate development that makes this situation worse. over the last 2 to 3 months, Israel has been pushing steadily south, basically purging the territories of Hamas fighters as they go. And, the last reasonable estimate that I have seen suggests that somewhere upwards of two thirds of Hamas fighters have been killed. 

So from a certain point of view, you know, if you get that number up to 100%, then the war’s over. Then we can get on to the next stage of reconstruction and figuring out what a post Hamas Gaza looks like. And that is absolutely the Israeli goal. what has most people occupied at the moment is that, the people in Gaza, the civilians who have has little to do with Hamas as they can pull off, have been compressed into an ever smaller territory as the Israelis have gone section by section through the Gaza Strip to cleanse it of the fighters. 

as of about two weeks ago, we were anticipating something called the Rafah offensive. Rafah is the southernmost major city in, the Gaza Strip. And the hope, hope, hope was that we would be approaching the end game of this conflict. The idea is that all of Hamas has now been boxed into that section, and all Israel has to do is go in there and shoot them out. 

Now, the humanitarian side of this, of course, is atrocious because as you’re basically taking the most densely populated chunk of territory in the world and bit by bit, removing the areas that civilians can go to. a humanitarian, crisis has erupted. about 60, 65% of the housing stock in Gaza has been destroyed already. So what’s left of people who were already living in what was basically a prison camp are now living in a compressed zone, raising less than a quarter of the land area. 

So just, you know, a humanitarian tragedy. We are already seeing famine, at least on the scale of what went down in Venezuela two years ago and probably approaching what happened in Ethiopia in the 1980s. keep in mind that Gaza has nothing. they don’t generate their own power. They can’t grow their own food. there’s no value added manufacturing whatsoever. 

They basically subsist on aid. So that’s where we were. And then about ten days ago, Israel announced that they were renewing an eye offensive in the northern part of Gaza, an area that supposedly they cleared months ago. Kabbalah, the refugee camp. I don’t know why they call it a refugee camp. The whole place is a refugee camp. 

was the specific spot. It’s a place that used to be a Hamas stronghold, before the war began. And they have the Israelis have since completed that assault. And so here’s the problem. If this is an area that has already been cleansed, there shouldn’t be any Hamas fighters there at all. But what we’re learning is that Israeli intelligence is not nearly as good under the current government as it should be. 

I mean, if there is any issue that Israel should be obsessed with, it’s what’s going on in the Palestinian territories because they’re hard up against them. And it was a failure of intelligence of the current government, that allowed the attacks of last October to occur. And now there’s been a follow up failure. And that even in areas that have been cleansed, Hamas is operating, suggesting that for the last six months of routine, what was the Israeli effort hasn’t been nearly as effective as they thought. 

And in the last couple of days, we’ve gotten the results of this new Kabbalah offensive, and they found the bodies of some of the hostages. So it’s not just that the Israelis missed these people as they were going through the first time. They missed what was one of the primary worrying was just getting their people back, which means we’re entering into a new phase of the conflict where there is no end game. 

Israel under the current government seems to be incapable of fighting this war to what the Israelis would consider a reasonable conclusion, and instead they’re getting dragged into a Afghan style semi urban campaign of just guerrilla suppression in an area that’s roughly one eighth, one ninth the size of Rhode Island and has a population of about 3 million. 

This doesn’t end without something very seriously cracking and breaking, and it is not clear to me at the moment what that might be. on the Palestinian side, Hamas has now the perfect recruitment system. They are in a land war of occupation on their home turf. There are 3 million people living in poverty and starvation. That is the perfect recruiting tool. 

And Hamas has been using it very aggressively and very successfully, would take a degree of PR incompetence to not be able to recruit in that environment. And on the Israeli side, the only way that this goes well for them is if they can break through this intelligence logjam and actually destroy Hamas faster than I can recruit. I don’t think that’s possible anymore unless you just kill everyone. 

and so that’s very unfortunately the situation at the moment. And I don’t see it improving any time soon. I would love, love to end this one on a little bit of a positive note, but what little hope that I had that this conflict was about to wrap up is now gone, and we’re looking at something far more intractable. 

Sorry.