Middle East Archives - Zeihan on Geopolitics

The Future of Tourism: Part 2

We’re continuing our discussion on the future of tourism with a few new regions. Today we’ll be looking at some at-risk European countries, an unstable Middle East, and an uneven Southeast Asia.

Okay. Next is Europe. Europe faces two situations as well. The first is clearly demographic, with countries like Germany and Italy just aging into obsolescence. You’re looking at the complete collapse of their industrial model over the next decade, which will take the entire social model with it, because without people to pay for the welfare state, oh, angry Germans, who are willing to protest and get sketchy, of course they’re going to be really old.

So it’s not going to have the same connotations that it might have, say, 50 years ago. The other piece of the equation. Yes. So, you know, got steep wobbling, financial collapse, industrial collapse, employment collapse. And on the other side, you’ve got the Russians who are going to push until the day that they can’t, obviously, unless you are into adventure tourism.

Russia and Ukraine are already out of the tourist list. And if the Russians are successful in Ukraine, they will push further west. The whole line of states, going roughly from Estonia down to Bulgaria are in some degree of danger, which means that all of them, all of a sudden become only the type of tourist locations that very specific types of tourists go to.

So if there’s anywhere in Central Europe that you are interested in now is absolutely the time.

All right, let’s see. Next up, the Middle East. Who? Everyone in the Middle East basically falls into one of three categories. Either they rely on oil income directly. Number two, they rely on oil income indirectly from another state, or they are Israel. All three of these categories look kind of sketchy. Oil requires a significant trans national trans oceanic transport system.

In any system where globalization is no longer a thing and no one is providing security on the water that is in danger. So the only oil producers that will continue to be oil producers are those that both can maintain control at home. Short list there, as well as cut a deal with a local or regional security guarantor in order to keep everything running from the oil point of view.

To get to an end user that eliminates sales to places like Japan or Korea, Taiwan or China, which is kind of the bread and butter for most of the Persian Gulf countries right now. So this gets really dicey really fast. The North African say Algeria have a much better position because they just have to get over to Europe.

But for the countries that are on the dole, you know, whether you are Morocco or Jordan or Yemen, the money’s just going to stop coming. So you should really count on that going away. And that just leaves Israel. Now, Israel imports three quarters of food, imports 90% of its energy, and there is no version of economic transformation that Israel is capable of where those two things go away.

So the only way Israel continues to be a viable state, especially if it’s going to be a tourism destination, is if it manages to cut a deal with a new regional security guarantor. That will not be the United States. The U.S. won’t have the reach of the interest that will be Turkey. So watch Turkey very closely for the next decade.

It’s probably going to be one of the fastest growing, most successful, most powerful countries, not just in the region, but in the world for decades to come. And how Israel makes its bed with the Turks will determine everything about the sustainability of the Jewish state.

And finally, Southeast Asia. Southeast Asia is the part of the world that I expect to do the best. Is the world to globalize after, of course, a little adjustment period, because it can pick up anything that the Chinese drop and has the perfect mix of demographic structure, geographic accessibility, a history of basically not going to war with itself.

It’s going to be a manufacturing powerhouse and kind of a globalization in miniature that the ten countries that are in the area, but not everything is the same for everybody. Some countries are going to do better than others. And kind of like with India, when you change the economic profile of a country really dramatically, you have people who win more than others.

And that will be nowhere more extreme in terms of differences than in Southeast Asia. So what will be true for Luzon and Java and Bangkok and ho Chi Minh City and, Hanoi will not be true for Mindanao or Sumatra or Lao or other places that are a lot poorer. Basically, you have this huge split within the region, and then among the region between the countries and the locations that can do very, very well in this sort of environment.

And those it can’t. And so, you know, this is going to sound really strange, of course, but when you want to go to another country, you need to do your homework first. And in the future, Southeast Asia is going to offer both the best and the worst.

Trump Takes on the Middle East

Israeli successes across the Levant have transformed the broader Middle East, wrecking the countries and militant groups that have long scourged the region. The moment is ripe for a complete reordering of regional norms. To capitalize upon this rare moment, Donald Trump wants to invest blood and treasure in the region’s most worthless and historically fraught chunk of land in order to build…hotels?

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.

Alright. We’re now going to do the third in our opening series on what Trump is doing in his new administrative term. And today we’re talking about the Middle East. Now, the Middle East is ripe for change. We’ve had, wow. We’ve had a lot of shifts in just the last six months, but really in the last two years.

So quick review. After attacks a little over a year and a half ago, now you’re gonna have to go. Wow. Has been that long? By Hamas. That’s the political group. The terror group that rules the Gaza Strip, which is an extreme southern Israel after the launch of terror attack. And Israel killed over a thousand people and took a couple hundred people hostage.

Israel’s been on a tear. It started with a borderline incompetent, invasion and occupation of Gaza. No matter how much went back and forth and how much it smashed and how much it bombed, and how many people were arrested, it just couldn’t root out Hamas. Because everybody who lives in Hamas is basically living in an open air prison.

And the people were given an opportunity to leave. What little they had was destroyed. And it was very, very easy for Hamas to replace any of its war losses with new recruits, because we got 2.2 million people with absolutely no options anyway. Well, that was all going on. And I’m just like, this is looking really bad. Israel was doing other things, and then it launched a decapitation strike using exploding pagers and of course, a lot of airdrop bombs on a military group, a terror group called Hezbollah in southern Lebanon.

And in doing so took out the entire leadership. But shortly after that, the Turks managed to maneuver things over in Syria so that the Syrian government collapsed. And all of a sudden, if you’re Israel, you’re looking around and things have gotten pretty good. Hamas is in a box. We haven’t been destroyed, but they haven’t been able to strengthen, and all of the regional allies are gone.

Hezbollah has been decapitated, and the only way that you would resurrect Hezbollah is with a lot of additional support and training and personnel, which, ironically, would come to or through Syria, which is now gone. And that left Iran, which was the ultimate sponsor for Hezbollah and Syria on the wrong side of Iraq and really unable to do anything meaningful.

And so they were reduced to using diplomatic attachés to shovel cash into the country, one envelope at a time. And it’s just not doing what they needed to do. Even if Iran is able to regenerate Hezbollah, it took them 30 years to do it the last time. It’s not going to turn on a dime here. So there’s a real opportunity, not just for Israel, but for everyone in the Middle East, to turn the page and move on to something new.

It helps that no one in the Middle East likes the Palestinians at all. And specifically Hamas. So there’s a possibility here with a little bit of leadership and a little bit of creativity of the United States, that we really could open a new book. Now, just don’t turn a page, open a new book on what the Middle East is.

So Donald Trump wants to build a hotel. Donald Trump’s idea is that all of the Palestinians of Gaza will be relocated to another country. Keep in mind, all the countries hate them. And the United States will take ownership of Gaza, which is a little chunk of land sandwiched between Israel and Egypt, making it the least strategically valuable chunk of territory in the entire region.

And it will develop it into a resort area. And oh my God, opportunities like this don’t happen. But once a century or so. And this is not how you cement the future of a new region. Let’s just let’s just go down the reasons why this is a horrible idea. Number one, moving 2.2 million people. Let’s leave aside the whole genocide human rights thing.

I’ll let other people tackle that topic. Let’s talk mechanics. The last couple of times that we saw people relocated against their will, governments were participating in the relocation. Specifically, you had the partition of India, where a newfound India and Pakistan were basically agreeing to swap Hindus and Muslims so that they weren’t living among one another, and they had a better chance at having a peaceful coexistence.

The one before that is called the Beninese decree. In the aftermath of World War Two, when newly Soviet satellites like Poland and Czechoslovakia uprooted Germans and shipped them off to, the new German boundaries, specifically East Germany. When that happened, you had states that had agency and capacity and, gravitas to make it happen. So the new East Germany did a massive building program in order to accept its own people, back its own ethnic ethnics.

And the Soviets helped with transport and food. Also, you’re talking about northern Europe, which even in the aftermath of World War Two, had some of the densest transport arteries on the planet, including roads and trains. You had the same thing in India. This is part of the old British colonial mandate or the Raj. And as a result, you had the parts of Pakistan and India that are viable, economically viable, climatically livable, were attached to one another.

And so you could basically just run people on the roads, on the rail, back and forth until you achieve what you wanted. Also, in both cases, they were moving. People had housing to move into in the case of Germany, we’d had a population drop in the war. In the case of India and Pakistan, people were moving in each other’s homes.

It was ugly. It took years. There were definitely lots of complications, but it kind of sort of worked. That’s not what we’re looking at here. Number one, the Palestinians don’t want to move. Number two, there’s no infrastructure at all linking them to anywhere else. You either cross through the unpopulated part of Israel, that is the Negev, in order to get the unpopulated part of Jordan before you eventually get into a place that has already 70%.

How a Palestinian. But the leadership of Jordan is Hashemite Arab, and they hit the Palestinians, and they basically oppress the people, so they have a chance of retaining their throne. You throw 2 million pissed off Palestinians in that mix and Jordan goes from being a quasi failed state and a satellite of Israel to a chaos cannon in no time flat.

And all of a sudden, you’ve taken the problem of the Gaza Strip and turned it into a formal state called Jordan. Alternatively, you could go through exodus in reverse and cross a scenario where there’s almost no roads and certainly no rail. Then you get to the, Suez Canal where there is a bridge, thank God, and you can get over to populated Egypt, literally Exodus and verse, where the Egyptians say to the Palestinians and find a place in a country that is failing because it is now unpopulated, the ability of the country to grow its food itself.

And that’s before you consider global climate change or global trade breakdowns, which means that very soon the Egyptians won’t even be able to sell cotton and citrus on international markets to buy wheat to feed their own people. So you’re basically pre-judging the Palestinians for starvation and then we get a new access the other direction with Palestinians instead of Jews.

Those are the only option. So the only places you could walk from Gaza, we’re talking 2.2 million people. You cannot relocate them any other way. And when you’re done assuming all of that works, somehow you now have a chunk of land that is nothing but rubble abutting unpopulated Egypt and lightly populated southern Israel that you’re going to turn into.

What of Las Vegas, of the Middle East? No. And for that, you’re going to burn American blood and treasure, which is going to take way more than what we used in Iraq in order to get something in a place that nobody wants to be anyway. I’ve heard dumber ideas. Not often.

Yeah, I’m done with this one. Tomorrow we’ll talk about China.

No, I’m not done. I forgot to give you the forecast. So if Trump proceeds in trying to get the Arab states of the Middle East who don’t have the capacity to come and get the Palestinians to uproot the Palestinians, who don’t have the infrastructure to move the Palestinians or house or feed or water the Palestinians, if he tries to get them to do it anyway, talk about pressure on the relationship.

We’re at this wild moment where both Russian and Iranian power and the bulk of the Middle East has been broken in a short period of time. At the same time, if Trump does what he says he wants to, he will provide a years long window of opportunity for both of those countries to reestablish their old position, and then some, because Trump will do what Trump does and he’ll put pressure on everyone.

He started with Jordan. He moved to Egypt. He’s now working on Saudi Arabia, by the way. There’s even less infrastructure connecting Saudi Arabia to the zone in question. And he’s going to keep pushing and pushing and pushing. And if he does that, all relations with all Arab countries are going to freeze. And it will be very, very easy for the Russians and the Iranians to reestablish their position, however, and wherever they want.

Now I’m done. Tomorrow’s China.

Can Venezuela Help Out with a Middle East Oil Shortage?

With the increasing possibility of disruptions to the Middle East oil supply, I was asked an ~interesting~ question on how to solve it. Could foreign intervention in Venezuela open its oil supply as an alternative to Middle Eastern oil.

Before we look at Venezuela, we need to know who might be interested first. The US has its oil needs figured out, so it’s really only the Europeans that would consider this. There’s plenty of crude in Venezuela, but years of mismanagement have left infrastructure and fields in poor condition. Couple that with a host of security issues, political instability, and a heavily armed civilian population…and it’s definitely not a cakewalk.

Even if the Europeans were willing to make the massive investment to revamp the oil industry in Venezuela and put forth a substantial military presence to establish the order needed to make this possible, they would still need the sign off from the US…and that’s probably not going to happen without some major incentives.

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 the Golden Horn above Denver and it’s probably my last snow free day of the season. Anyway, We are. Oh.

Oh, deer.

Today we’re taking a question from the Patreon crowd. Specifically with everything in the Middle East starting to look very Middle Eastern again, would it be worth considering some sort of operation in operation?

To remove the government of Nicolas Maduro of Venezuela so that the world has another source of crude available for when the Persian Gulf becomes a place you really don’t want to be? Might sound a little neo imperialist, but that’s a pretty good question. You got 20 million barrels a day of crude that comes out of the, the Persian Gulf states.

And any meaningful conflict that involves Iran or Saudi Arabia, clearly is going to take a substantial percentage of that off line. And even if the oil fields in the United Arab Emirates and Saudi Arabia take no damage, and even if those two countries stand, and even if the bypass pipelines that get around Hormuz or go to the Red sea, operate at full capacity, you’re still talking about roughly how 12, 12 to 13 million barrels per day that’s under severe threat.

So the idea of being able to get some more crude out of Venezuela is a solid idea from a supply point of view. In addition, if you look back at history, the original oil embargoes that OPEC did, were Arab. They were not they didn’t involve all oil producers. And back in the day, Venezuela was not a participant in them.

So we saw more production out of Venezuela, which didn’t simply, cushion the blow.

But I would argue that over the period of several weeks to months, it actually broke the back of the embargo. So having Venezuela in play is obviously great. That said, the country that would do something like that is 100% not the United States.

While the United States does prefer heavy crude, Venezuela has been such an a sneaky producer for so many years, more than a decade now that, with the exception of a few incidental cargoes, U.S. refiners just don’t even want to take delivery of the stuff because they can’t plan on it. You tool your refineries step by day, week by week, by month, by month, year by year, based on what you anticipate, the blend of crudes coming in going to be.

And so if you can’t rely on a particular supplier, it’s better for you simply not to use it at all. And ever since the early days of Hugo Chavez, maybe going back to 2007, there have been very, very few refineries in the United States who have chosen to use Venezuelan crude. I know that doesn’t match the rhetoric.

It’s always about, oh, we’re not going to ship to the Americans anymore. Well, the Americans weren’t buying anymore. So if Venezuela were somehow magically to come back into the mix, its specific grade, a very heavy, very sour crude would have a hard time finding a local buyer. That’s problem one. Problem two. The middle row government is well, it’s like Zimbabwe levels of incompetent, Zimbabwe being a country that was one of the world’s great breadbasket until the government of Mugabe and his successor just drove it into the ground and made it a food importer, under first Hugo Chavez.

No, Nicolas Maduro, we’ve basically seen the, cronies of the government literally rip up everything, even if it was nailed down, and sell it oftentimes for scrap. So the country now imports 80% of its food. It used to be a food exporter. And, its total oil output is kind of bouncing back and forth between 500,000 million barrels per day based on what happens with, Chevron, the American company, which is really the only one that’s still operating there.

Most of the reservoirs have suffered extreme damage. The infrastructure hasn’t been maintained. And don’t get me started on the refineries. Oh, there’s like chunks in their gasoline now. But just for the record, chunks of gasoline is a bad thing. So, if you could wave a magic wand and change the government and change the investment strategy and, make them not klepto those.

Oh, yeah. Important detail. The Venezuelan government is not socialist. It is not communist. It’s a kleptocracy. And of course, we should be scared of that anyway,

If everything was perfect, it would still take probably an investment of 40 to $50 billion upfront just to get back to where they were five years ago when they were exporting, like, a million barrels a day, maybe producing something close to a million and a half.

Keep in mind that the fields that Venezuela has are old, they’re technically challenging, and they produce a very sludgy type of crude. So you really to know what you’re doing. And today, there’s only a handful of companies that have any experience working with that. One of the Chevron, the other ones, Conoco. And then there are some companies that say in Canada that work with the oil sands, which is probably the closest analog, but it’s even not a very good one.

And as a rule, the Canadian oil sands operators don’t operate anywhere except for the oil sands. So simply building up the skill set that would be necessary to attempt this would be huge. Third, most of the oil is in one of two places in the western part of the country. You’ve got a region called Maracaibo, which is about as anti Maduro and anti-trade as you can get, but the government’s efforts to basically destroy their own state have had a big impact there.

And Maracaibo itself is lawless, complete with pirates operating offshore. And in Maracaibo a lot of the crude is produced from offshore wells, most of which are in the process of going down to zero. So you have a split politically in the country that you’d have to deal with. The second part of the crude comes from the southern belt, the Orinoco Belt, which is super heavy, far more technically challenging, and a lot of that is just vanished from the market completely.

So if you want to bring either of these in, you don’t simply need to change the government. You need to restore basic security to the country. And then you’re talking minimum, bare minimum. Something like 50,000 troops. Remember, one of the things that Hugo Chavez did is he paid people to be on his side. And he didn’t just pay them with food and with fuel and with cash.

He paid them with AK 47. So arguably, of the countries in the world that are not actual war zones, the densest footprint of assault rifles in the population is in Venezuela now. So anyone who’s going to come in for any reason, even if the locals in general are welcoming the stability and they be able to get food, they’re going to be dealing with the significant population that is armed to the teeth and not with little pop guns.

Okay, you put all that together and the US is like, no, sir. The United States is now not just a net exporter of crude oil, but by the end of this calendar year, probably is going to be exporting 5 million barrels of refined product. That’s a greater volume of refined product exports than all but three countries in human history have ever produced as raw, crude.

So the idea that the United States is going to launch a war for oil is just silly. It’s going to happen. It’s going to be because countries in Europe realize that the Russians aren’t coming back to the table, not in the way that matters in the Middle East is as unstable as ever. Ergo, this conversation that means that we are left with the Europeans basically thinking, well, where else can we go?

And one of the very few options that is not West Africa or North Africa is going to be Venezuela. So they’re going to have a choice. Do they go into Libya, which is basically a stateless zone now on its own. Can’t even call it a civil war. Civil war requires a state. You can go into Nigeria where with over 100 million people, the chances of imposing a security environment on Nigeria that the Nigerians don’t want is silly.

So we’d have to be even done with partnership with them. So even with a lot of cash, you’re going to be dealing with a very corrupt system and slow growth of output, or you’re talking about a military occupation and enforceable reconstruction of Venezuela. Leaving aside the little issue that the Europeans are a little bit out of practice at that, they would have to get American permission as well.

Monroe Doctrine and all that. And for the United States to give the Italians, the Brits and the French and the Germans approval to invade, basically a country in the Western Hemisphere, let’s just say that whatever was being offered in exchange would have to be really nice. And I’m not sure there’s anything in Europe that we want that badly at the moment.

So interesting idea. The crude is there, but the country that would have the capacity to do something but the United States really doesn’t care. And the countries that do really care would have to build up a whole fresh set of tools and then bribe Washington in order to make it happen. So it’s an interesting exercise, but nothing that I think is going to go down this decade, next decade though, everything’s game.

The UAE and India Look to Localize Semiconductor Manufacturing

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

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

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

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

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.

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.

We encourage you to sign up for the Patreon page at the link below.

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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.

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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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.

Libyan Oil Gets Shut Down Over Government Duel

An oil refinery positioned in the desert

As a result of the power struggle between the two governments in Libya, roughly 70% oil production in the country has been shut down. This could significantly impact global oil supplies and is a glimpse at the instability within Libya.

The Libyan National Oil Company halted production at the major fields, which takes ~700,000 barrels of oil offline every day. The western government in Tripoli and eastern government in Benghazi are both vying for control of the country’s oil revenues, but no one is getting much of anything right now.

This shutdown could carry implications for European countries like Italy, which refine much of Libya’s crude. It could also ramp up demand for US crude, which the Americans won’t be mad about. The fallout of all this shouldn’t be too large, but could spell trouble for the future of Libya and its energy sector.

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.

Hey, everybody. Peter Zeihan here, coming to you from a bright Colorado day. Today, we’re going to talk about a country that I haven’t brought up in over a year—Libya. Basically, the Libyan National Oil Company announced that it’s shutting down production at a couple of major fields. Collectively, Libya produces about a million barrels a day.

The announcements were going to affect over 70% of that. Whether or not there’s going to be more, we don’t know. This is a crazy story. If you remember back to the 2000s, in the early days after the Iraq war, a number of governments were led by tinpot dictators who were so arrogant that they were convinced that the Iraq war was actually about them. It was a warning for them, and so they rushed to cut deals with various powers to make sure that they weren’t the target of the already planned invasion. In the case of Turkmenistan, you had a guy basically rush into the Russians’ arms. In the case of Libya, you had Gaddafi appealing to the United States and voluntarily turning over his proto-WMD program to try to make sure that he wouldn’t be knocked off like Saddam was.

Well, that was the beginning of a series of processes that led to a little bit of a political opening in Libya, which ultimately culminated in a bit of a civil war with NATO special forces. After six months of just waiting for somebody to take off, Gaddafi basically led these militant forces to the presidential palace, and the government collapsed.

Since then, a new government has been put in place, internationally recognized and based in Tripoli. But they were supposed to have elections over ten years ago, and they never did, so they lack legitimacy. That’s in the western part of the country, where most of the people are. In the eastern part of the country, you’ve got another government based in Benghazi, which is a mix of Russian-backed groups, mercenaries, Islamists, and a guy named Haftar, who’s a real asshat.

What has been going on in the last 12 years is that all of the oil—most of which is produced by the eastern government—is processed through the central bank, which is the only institution in the country that has access to foreign currency and can do forex transactions. It is headquartered in the western part of the country, where the legitimate government is.

Both sides have been mucking with the equivalent of the Federal Reserve in this country in order to get a bigger cut of the money for themselves and to deny any money to the other side. The most recent development is that the Tripoli government in the West has kidnapped a couple of senior staffers and tried to push out the chairman of the central bank to get their way.

So the folks on the Benghazi side, where the oil is, have said, “You know, screw you guys. We control most of the oil, so we’re just not going to produce it. No money comes in anyway.” As a result, we have 700,000 barrels a day that are going offline. It might actually increase in the days and weeks to come.

It could be offline longer than just this political dispute because Libyan oil, especially the stuff in the eastern part of the country, is very waxy. If it’s not kept warm, it basically turns everything into a soft candle, including the pipelines, which will take a lot of maintenance to clear out. This has a lot of implications for a lot of people.

The Russians are going to be pissed off because they have managed to get themselves a cut of the energy revenues. The Italians are both on the pro and the con side of this—pro in that they are the ones that end up taking and refining most of the crude that comes out of Libya just because of proximity.

But they also have refining capacity that can handle over twice what the country actually uses. They are a refining hub for southern Europe. So you’d actually have more pain in places like Spain and France and throughout southeastern Europe in the Balkans because they’re going to make money regardless. Part of the problem here is that with Russian crude no longer part of the European diet, Libyan crude was one of the substitutes.

Another big winner is going to be the United States because while the Libyan crude is waxy, it’s also pretty light and sweet and has a fairly similar chemical makeup, minus the wax, to U.S. shale crude. The U.S. exports 3 to 4 million barrels of that a day, and having another half a million to a million barrels of demand out of southern Europe is something that would make American producers quite happy.

This is just what Libya is going to look like until one side or the other wins, or the two sides come together and form a unity government, which is definitely not going to happen. The only other reason that there might be any hope is that there might be someone in Europe—France or Italy most notably—who decides to go in, knock heads together, and basically just take over the fields and run the country themselves as a colony.

We’re not there yet. We don’t have energy shortages in Europe at the moment, and they’ve managed to find a lot of ways to adapt to Russian stuff going offline. Libya’s million barrels a day is not insignificant, but it’s not enough of a shock to cause a political or military reaction out of the European countries. But it is a little bit more pressure.

So if something were to happen to, say, the Persian Gulf—which, thank God, has been one of the most stable parts of the world these last couple of years—then we’re in a different world. So it’s another thing to keep an eye on. It’s more amusing than problematic at the moment, which I can’t believe I’m saying about the loss of nearly a million barrels of crude.

But this is the world we live in today. Watch the European PMs; they’re the ones that have the agency to do something about this if stuff gets real.

The Houthis Are Still Attacking Ships in the Red Sea

A photo of an oil tanker set against a red orange sunset

The Houthis attacked an oil tanker that had been previously abandoned in the Red Sea. They denotated charges, but only managed to start some fires (as of now). This lackluster attack isn’t the scariest thing, but it does highlight the growing dangers of commercial shipping in the region.

This attack is a decent example of the incompetency of the Houthis. It also highlights the problems with addressing these attacks, because there is no real power that could put an end to it. This is just one of several incidents carried out by the Houthis in the Red Sea and insurance costs are skyrocketing as a result.

As this region grows increasingly stateless, alternative insurance methods are emerging to support shipping. These come at a significant cost and they are likely to worsen as these attacks continue and escalate.

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.

Hey, everybody. Peter Zeihan here, coming to you from sunny Colorado. We’ve had a few things go down in the Red Sea that I thought were worthy of pointing out, just so everybody knows what’s what. The big issue that I’ve seen is back on the 21st of August, so about a week ago, a tanker by the name of Sow Union was hit.

The Houthis, a militant terrorist group operating in Yemen, are the ones behind it. They’ve been launching missiles pretty regularly over the last few months, targeting commercial shipping. They started by going after anything associated with Israel in some way, and then branched out to anyone who doesn’t pay them. The Chinese started paying protection money, and the Houthis started hitting Chinese vessels anyway. So, basically, if you’re sailing in the region, you need to get a really good insurance program, which is hard to get these days, or sail at your own risk. The Sow Union was a Greek-flagged tanker carrying crude. It’s a Suezmax tanker, which can carry about a million barrels.

The tanker was disabled and abandoned, and it’s just been floating there full of crude. A few days later, the Houthis sent out a motorboat, placed explosive charges throughout the vessel, and started a series of fires. Now, I’ve long said that the Houthis are among the world’s most incompetent terrorists—certainly the most incompetent in the Middle East. They’re not very good at what they do, but they operate from an area that’s basically stateless, so there’s no authority that can root them out.

I have no doubt that if a “real” military went in there, they could be destroyed really quickly, but then you’d be left ruling Yemen the next day, which is a thankless task—nobody wants to do it. The only country that might theoretically try would be Saudi Arabia, but they are arguably the most incompetent military in the world, and certainly in the Middle East. So, you shouldn’t expect a military solution to this anytime soon.

One of the reasons I point out that the Houthis are incompetent is that despite having full control of the ship and placing charges, they failed to breach the hull. The ship isn’t sinking. In fact, they didn’t even cause an oil spill; they just caused a bunch of fires. So it’s out there burning—a potential environmental catastrophe because the Red Sea doesn’t circulate like, say, the North Sea. But it hasn’t happened yet.

The point is that if you want to stop this, you either need to impose a Wisconsin-like physical order on Yemen, which would suck for whoever was involved, or you need to remember that the Houthis are incompetent. You need to go after the people sponsoring the Houthis—namely, Iran and Tehran. But no one is going to attempt a regime change in a place like Iran, which is basically a mountain fortress, in order to solve the Houthi problem. So, it would have to be a political deal.

Now, no one seems chomping at the bit to do that. Even if there was a broad-spectrum deal where, say, the United States and Iran could look past their differences and kiss and make up—and to be clear, that deal is not on the table at the moment—it’s not going to happen in an election year. The Iranians just got a new president, and while he’s not crazy—he’s actually fairly moderate—one of his first actions isn’t going to be cutting a deal with the “Great Satan.”

So, what we’re seeing in the meantime is that the Red Sea has basically become a stateless region where anyone who sails through does so at their own risk. We’re pushing the boundaries of what is possible with maritime insurance. As of three years ago, just before the Ukraine war, if you had an insurance policy and you sailed into an area where there were gun exchanges, the cost of your policy would go up by a factor of ten immediately. And if someone was actually targeting civilian shipping, your insurance policy would be null and void. But then the Ukraine war happened, and you now have major countries—most notably India, China, and Russia—setting up these alternative insurance programs for their ghost fleets in order to get crude out of Russia on the cheap and get it anywhere else.

This has provided a weird constellation of coverage options that include things like getting shot at or taken over by a government. So, we do have stuff still trickling through there. It’s not container shipping because container ships are really expensive, whereas an oil tanker is basically just a bottle with an engine.

We’re finding out what’s possible in this brave new world, and from a weird point of view, the Russians and the Houthis are doing us a solid here because they’re providing some alternative methods to ship things in a world where globalization and rule of law are breaking down. But there are side effects—the most obvious one being much, much, much higher insurance rates for everything. Keep in mind that every insurance company has its own insurance company, called a reinsurance company. All of this ultimately percolates up to the top, and the reinsurance companies have to charge higher premiums, which they pass on to insurance companies, which pass on to you for your house and your car.

So, yes, we are finding ways to keep maritime shipping afloat as globalization kicks in and we enter a more violent world, but it’s going to cost you a higher car premium.

Tensions Rise in the Middle East, But Don’t Expect War

There’s no shortage of news coming out of the Middle East, but today we’re going to look at the rising tensions between Israel and Iran and Iranian proxy Hezbollah.

While we’ve seen multiple attacks between Iran and Israel (and Hezbollah is poking around as well), a broader war is unlikely. Each of these players is preoccupied and has bigger fish to fry. Israel with Gaza, Hezbollah integrating with the Lebanese government, and Iran having to manage an increasingly complex domestic political environment.

The big news is obviously Israel’s assassination of a Hamas leader in Tehran, but there’s been a handful of back-and-forth attacks between the two countries. While Israel isn’t likely to topple the Islamic Republic via its targeted assassination campaigns their successes have resulted in rising domestic criticism of Iran’s Revolutionary Guards.

Tensions—and attacks—between Israel and Iran/Hezbollah will almost certainly continue, but in terms of a major conflict or significant policy change…I wouldn’t expect much.

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.

Hey everybody, Peter Zeihan here. Coming to you from Colorado today to popular acclaim, we are going to talk a little bit about what’s going on in the Middle East of late. There has been a lot of tit-for-tat attacks across the region, with the Iranians broadly on one side and the Israelis on the other, Hezbollah somewhere in the middle.

And the question really comes down to whether or not we’re going to be seeing a broader war here. Punchline? Probably not. Israel has its hands full in Gaza. It really doesn’t want a wider conflict. Hezbollah, which is the militant group that, from certain points of view, facto runs Lebanon, definitely does not want its position overthrown because it’s no longer a pure terror group.

It actually is more or less the government, and that means it has exposures that are a lot easier to be exploited in a direct war, as opposed to a terror group, which can just go to ground. They’re much more vulnerable because they’re much more powerful. And then third, in Iran, they’re trying to go through a political transition. They’ve got a new president, and the Supreme Leader who makes all the real decisions is older than Biden.

And we know that he doesn’t have much time left either, so they don’t want the disruption that a major war would cause as well. The problem, of course, is that the Middle East, to put it in Western terms, is basically like a barroom argument and that everybody wants to have the last word. So in the last few days, the Israelis have assassinated Ismael Haniya, who is a Hamas political leader who was in Tehran, and they assassinated him in Tehran.

So the Iranians are furious, obviously, and feel that any idea that you can provide security for your own allies in the region, but not you can’t even do it at home, makes them look incredibly weak. So they feel they need to strike back, so they probably will. But remember, what preceded this was Iran leaning on Hezbollah to fire a bunch of rockets into Israel.

And so before that, the Israelis killed a Hezbollah commander in Beirut. And it’s just it’s been back and forth, back and forth, back and forth. Everyone wants the last word. Nobody wants a war, but everybody wants the last word. It’s not the most perfect picture for strategic stability, but I have to remind you that this is what the Middle East looks like on a good day.

And of late, the Middle East has had a lot of good days as long as the major players, Hezbollah, Israel, and Iran in the situation don’t feel that they would benefit from a wider conflict. All we get are these sort of high-profile blam back-and-forths. Everyone is seeking to close the argument. It’ll never close, but it also means the violence is unlikely to rise to a certain level above what is basically, for the rest of the world, a degree of background noise.

Okay, so the other thing to keep in mind on this is now there is a discussion going on internally in Iran. As I mentioned before, a new president, the Supreme Leader is failing. One of the things that we have seen since the Iraq war back in 2003 is that Iran has more and more and more given a free rein to the IRGC, which is basically their paramilitary arm, who controls large chunks of the economy at home and is basically in charge of shooting people abroad.

And as they’ve been given a longer and longer reach, they’ve basically indulged in every little fantasy they possibly could, when it comes to revenge and picked fights with everyone. Well, that’s coming home to roost now. That’s one of the reasons why the Israelis have dropped the hammer on Iranian interests here and there of late. Well, there’s a discussion now going on in Iran about whether or not they’ve gone too far, whether they’re causing more problems than benefits, whether they’ve become too important of a power player on their own, whether they’re breaking away from the clerical establishment and starting to set policy.

Now, these are all reasonable conversations. And in a normal country, these conversations would be front and center. In a place like Iran, where democracy is a, how shall we say, limited, it’s interesting that it’s finally boiled up. And it took the humiliation of the Haniya assassination on their home turf to kind of underline it to Iran about how bad the IRGC has gotten.

Now, you shouldn’t expect a singular decision here to suddenly change the math. The person who matters in Iranian politics is the Supreme Leader. And if he feels that the IRGC has gone too far and needs to be reined in, he will have to do something about that. But like I said, he is failing. So we are probably going to see a cosmetic continuation of the tit-for-tat with Iran.

It’s their turn. But back at home, we’re probably going to see a significant amount of instability and shifting as the various players and most notably the Supreme Leader actually have to make some really hard decisions about the future of the country. And for the Supreme Leader, this is also about legacy. And he probably doesn’t want his last legacy to be like taking a hammer to the IRGC. Anyway, exciting times, but probably not a war.

Things I (Don’t) Worry About: Water Wars

When people start talking about wars over water, everyone pictures tooth and nail, Mad Max-esqe fighting…but our imaginations might be getting away from us here. Allow me to paint a more realistic picture for you.

There are some practical limitations to water wars. Water isn’t easy to move and redirecting rivers or directional flows is time consuming, expensive, and hard to do. To add another layer of complexity to the mix, most water sources are held by countries of power (you know, water tends to help with things like food production, industrialization, growing populations, and military development). So, when a dry country decides it needs water, there’s often not much it can do.

Sure, there are always exceptions to the rule. Egypt depends on the Nile River, Central Asia relies on those diminishing glaciers, and the Middle East will have some choice words over dam construction. However, the majority of countries that lack water resources, simply cannot conquer or secure water from other nations.

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.

Hey everyone. Peter Zeihan here coming to you from snowy Colorado today. We’re going to do another one in the ongoing open series of things I do and do not worry about. This is one that I do not for the most part worry about, and that’s water wars. You’ve got to admit it’s a sexy idea. The idea that a country that is dry and desperate for water is going to march on another country to take it.

But a few things to keep in mind. You can’t take the whole hunter with you. Water is very bulky and very dense and very difficult to move and it clings to itself with friction. So pumping that is difficult. So you’re not talking about just conquering a river basin and somehow redirecting it. You’re talking about conquering the river basin and occupying it.

And for most countries, that’s a pretty heavy carry under any circumstances. So that’s number one. The bar is high. Number two, the countries that have water are the world’s major powers and the ones that do not have water are not major powers. Why? Well, they have water because if you have water, you can grow food. If you can grow food, you can industrialize yourself.

If you can industrialize yourself, you can build your own military without having to import a lot of equipment. And if you don’t have water, you don’t get to do any of those things. So there are very, very few places where you’ve got a dry country next to a wet country where there’s even a theoretical possibility of the dry country doing anything.

That doesn’t mean that there aren’t any exceptions. There’s just very, very few. Let me give you three. And really, that’s it. Number one, Egypt country that’s on the river. It needs the river to survive upstream. Ethiopia has been building some dams. I can see some scenarios where the Egyptians would spend special forces in to damage or destroy the dam.

The problem with that strategy now, though, so the dam has been built, the lake behind, it’s being filled. So if the dam were to go away, so would Egypt. So, you know, number two, Central Asia. The glaciers of Central Asia have been desiccated for about 50 years, ever since the Soviets built a series of water diversion systems in Turkmenistan and Uzbekistan to grow cotton in the desert because they didn’t want to be depended on American cotton or Egyptian cotton.

You fast forward that 50 years and the glaciers are pretty much gone and the flow and the rivers that I’m going through dry are falling precipitously and the whole area is desiccated. So I can see a scenario where a dry country, Uzbekistan, which has the third largest post-Soviet military marches in and just takes over Tajikistan and Kyrgyzstan so that its own people have something to drink.

The third one involves the Middle East, and this is actually an issue of the West countries taking issue with the dry countries. There have been issues in the past in the Jordan Valley where various countries, most notably Lebanon, have built dams on rivers that would impede the flow to the Jordan. The Israelis have a problem with that. So they bombed the dams.

Similarly, you’ve got a wet country, Turkey and a dry country, Iraq and Syria, where the Turks have built lots and lots of lots of dams in southeast Turkey called the Grand Anatolian Project, in order to improve agricultural possibilities for the southeastern part of Turkey and provide an economic ballast to dissuade, say, Kurdish separatism. However, if you happen to be downstream in Baghdad, this is a bit of a problem in your places drying out.

But again, you’ve got a wet country, Turkey, doing things that are messing with the water table in a dry country, Iraq. And there’s not a lot that Iraq can do about it. So there are plenty of things that are worth fighting over in the world. Water is arguably one of them. But the countries that don’t have it don’t have the capacity to go get it.

So I don’t worry about that one.

Geopolitics of Terror Groups: ISIS and ISIS Khorasan

With the recent attack on Moscow, I received some requests to do a breakdown on the geopolitics of ISIS. First things first, there are two largely unaffiliated groups at play here – ISIS-Khorasan and the more widely known, ISIS.

The original ISIS (aka the Islamic State of Iraq and Syria) primarily operates in the middle Fertile Crescent region. In recent years ISIS has not done well, losing control over all the territory it once controlled, being reduced to little more than a strategic nuisance.

ISIS-Khorasan has no specific region in which it operates, but rather targets Shia populations and engages in violent activities against secular governments it perceives as oppressing Muslims, such as Russia.

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Hey everybody. Peter Zeihan here coming to you from Frigid Colorado. We’re taking a entry from the Ask Peter System today in the aftermath of attacks by the Islamic State of Khorasan on Iran and more recently on Russia. I was requested to do a geopolitics of ISIS video. So here we go. Couple of things to keep in mind. First of all, ISIS’s and ISIS Khorasan are two very different groups.

So I can do a geopolitics of ISIS. ISIS’s core power is in the middle Fertile Crescent between western Syria and central Iraq. So basically, you’ve got the Euphrates Valley that goes from the Persian Gulf up through central Iraq into western Iraq. Northern Iraq then comes back down to the cities of harm, Hama and Aleppo or Aleppo, excuse me.

Well, that is the zone that technology and people and ideas and trade are percolated back and forth through a lot of human history, especially the earlier days. And in that zone, the thing to remember is that the crescent is very, very, very thin. While you do have Mesopotamia in the east, where the Tigris comes into play, in the zone between the rivers, it is a major agricultural zone.

And while you do have more rainfall in extreme western Syria, when the Lebanon mountains merge with the the highlands that eventually become Anatolia in the middle, you only have the Euphrates. And even in modern days with industrial level technology, in many cases, the green belt where you can grow food in the central Euphrates region is only a few miles from north to south.

And because of that, they’ve never been able to develop kind of the dense population centers because there’s never enough food production. And the zones that you can do something with are very, very skinny and very, very worn, which makes it very difficult to patrol it. So think about this this way. If your city was a half a mile wide but 20 miles long and the proportions are much worse for Iraq, if you were of your police station is getting all the way down and all the way back would be difficult.

You want something that’s spread out from a central point like, you know, say, a Chicago or Houston or Dallas or most of our cities. It just makes a civilizational penetration much more difficult and eventually hit hard. Does it do anything? So this is the zone that ISIS’s from water is limited. There’s only one source aside from the oases, and either you control it or you don’t.

And so geopolitics, that region tend to be very visceral and very desperate. And this is part of the reason why ISIS is so violent, because it is a battle for survival among groups every single day. Now, it also means that groups like ISIS are not long for this world. If you look at the region from a broader perspective, if you go further west, you hit the Levant, which has powers like Israel and the core of Syria to go north.

You get into Anatolia and the Turkish territories, and if you go east, you get into Mesopotamia, which is have been a cradle of civilization for quite some time. This zone in the middle can’t do anything. And the zone in the middle has never been powerful enough to penetrate into any of those other three zones. So the only time this zone in the middle matters at all is when all three of those major areas are off light at the same time.

And if you go back to ISIS’s heyday ten, 15 years ago, that’s exactly where we were. Syria was in a civil war that the central government had almost lost. Iraq was reeling from the effects of the American occupation, was not able to patrol its own territory, much less things on its fringes. And the Turks had not yet reemerged from their century long self-imposed geopolitical sleep.

It was a very different situation. And so ISIS was able to form, recruit, expand, dominate groups and basically go on a series of small genocides. It was pretty nasty. Now, that’s not our situation. The Syrian government has, for the most part, stabilized. Even if the civil war is not quite over. The Turks are back in the game and are crossing the border regularly.

And Iraq is a power worthy of its name again. And so ISIS is basically fallen from controlling territory to just a few outposts that move around and a general insurgency in some of the least valuable property in the Middle East. So that’s icis. ISIS Khorasan is different. ISIS chorus on things that ISIS’s a bunch of wimps because they don’t kill enough people, specifically Shia, ISIS’s primarily Sunni.

I Scorsone as well. And they see Shia as the worst apostates of all and so they are not interested in holding territory. They are interested in taking the battle wherever it may go and wherever there’s a secular government. And so that has taken them against the Taliban, which they think are a bunch of horses. Let’s take it up against the Iranians who are Shia.

And that’s taken them against the Russians, who they see as oppressing their fellow Sunni followers. Because of this, you can’t do a geopolitics of ISIS Khorasan because they’re not interested in territory. They don’t have a home territory. They’re actually fairly egalitarian as to who they take into their ranks as long as you’re not a Shia. And in the case of the Russian space, there are a lot of subjugated Muslim populations with probably the Uzbeks being the most important that are willing to join violent groups.

And so one of the things that it appears to be with ISIS course on is they’ve been recruiting pretty aggressively from within the former Soviet sphere. Uzbeks, Tajiks, some Kyrgyz, maybe some to some Turkmen, and hopefully not, but most likely. So Dagestan is Chechens about Kurds and Tatars. Those are all people who live within the Russian Federation today.

So the danger here for the Russians is very, very real from a security point of view, an analogy, a logical point of view. But you can’t do a geopolitics of ISIS’s or ICE’s Kurdistan because they don’t have a core territory. They’re a splinter group that’s based entirely on ideology. So ISIS is not the sort of group that can expand much beyond its current footprint and certainly not beyond that part of the Middle Euphrates, where from time to time they can kind of expand its course on as a different sort of category.

They are not constrained and it could very well be coming to a place near you. That was way more inflammatory than he deserved. While there have been certainly plots interrupted by ISIS because American interest, there’s no sign that the uproar in the United States for that yet.

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