The Future of Drone Tech: Russian Scale

Photo of a military drone

While Ukraine has dominated drone innovation, Russia’s been able to mass-produce proven drone systems at a scale that Ukraine cannot match. The Russians have also been incrementally improving their drone tech.

Russia has been replacing propellers with jet engines and equipping certain drones with air-to-air missiles. So, despite Ukraine’s advantage on the innovation side, the Russians aren’t getting left in the dust.

Up to this point, both sides of the conflict have been able to draw on their strengths to adapt to the new tactics and tech that hit the battlefield.

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Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. Today, we’re doing another episode in our ongoing series on evolving drone technologies. And today we are specifically looking at the Russians. Most of the breakthroughs that we have seen that have reshaped the battlefield in the Ukraine war since March have been Ukrainian longer range, better targeting, faster assembly, mass manufacturing. Go go go go go go. 

But it’s not like the Russians have just been sitting there. Yes, yes, yes. Most of their parts are coming from the Chinese system and they’re just being assembled in Russia. But that doesn’t mean that the Russians don’t have a military industrial complex. In fact, still today, they easily have the third most powerful one in the world, legacy of the Soviet system, with a few things that have been added here and there. 

But when the Russians really shine, it’s when they take a proven technology and then apply it to a new platform and mass manufacture it. And we are now in the early stages of seeing that with what used to be called the shards. Those are the the dumb drones that they originally brought in from Iran. They now call them Garin if they’re made in Russia, Iran, and we’re now into the third and even the fourth generation. 

And the single biggest difference is that the Russians are taking the propeller off as method of propulsion and slapping on a jet engine. So the original shards travel at about 100 miles an hour, maybe 120 if they’re pretty zippy. The new ones coming out of Russia are traveling at pushing 400 miles an hour. So that’s problem number one, because there just aren’t very many interceptors that the Ukrainians have access to that can catch one of these drones. 

Usually what happens is you fire a bunch of interceptors and anything that doesn’t hit on the first pass as the penetrate turns around and chases it, that doesn’t work when your interceptor can’t catch up. And with the Garin four starting to come online now, we’re seeing more and more of these relatively cheap drones punching through air defenses because you only get one shot. 

That’s problem number one. Problem number two is as much advances as the Ukrainians have made in interception and long range strike. They still just don’t have control of their own airspace. Yes, they’ve got decent anti-aircraft capabilities. And yes, that has kept the Russians at arm’s length, where they launch glide bombs, then take 20 miles to glide down, hit their target. 

But the Ukrainians have lacked the ability so far to impose a degree of air superiority that would allow them to actually go after where the fighter jets are. So their solution has been longer range, bigger payloads go after the bases that these things launch from. That’s been working, but it’s not enough. 

And now the Russians are about to do something else. They have started putting something called an AR 60. That’s an infrared driven anti-aircraft missile on top of a Garand, and then sending that in so it doesn’t go as fast as, say, a MiG would go into a thousand miles an hour roughly. So the drones are going about half that speed, but then they launch an anti-air missile. 

So any F-16s or Griffins or Rafael’s or any other vessels, any other aircraft that the Ukrainians actually are able to get in the sky are going to start facing wave after wave of cheap, disposable drone firing a single missile. About the only good news news is that the missile itself weighs enough that that Garand cannot then also carry a warhead. 

So it’s just a one shot deal, not a two shot deal. But you throw a few dozen of those on the front every day, and it’s almost impossible for the Ukrainians to get anything up in the air, much less provide any sort of screen, much less project power into Russian territory to prevent those glide bombs from coming. 

So, yes, most of the breakthroughs, most of the changes, most of this really impressive stuff that we’ve seen in the last three months has been from Ukraine. It has been hurting Russia. It has been causing a lot of damage. But it doesn’t mean that the Russians are just lying there. They’ve basically taken steps to ensure that they can still hit nearly any target they want in Ukraine. 

They just have to send a few more of these jet powered drones after it. And there is no way that Ukrainians are anywhere close, getting any degree of control over their airspace. And as long as that happens, then if they do, the Ukrainians do manage to launch a ground assault, they’re going to be doing so under a hail of glide bombs, because they can’t really do much about it.

Will Ukraine Make a Play on Crimea?

A magnifying glass on a map of Crimea | Licensed by Envato Elements

Crimea has become one of the most important fronts in the war in Ukraine. Both the Russians and Ukrainians see Crimea as strategically essential, and neither side is willing to let it go.

Ukraine isn’t quite ready to reclaim Crimea yet, but they are making it as difficult as possible for the Russians to continue operations there. From continuous strikes targeting transportation checkpoints, Ukraine has forced Russian convoys onto predictable routes where drones and artillery can more easily attack.

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Transcript

Hey everybody. Peter Zeihan here. Coming to you from Colorado. Today is the 12th of June, and we’re going to take a look at what’s going on in the Ukraine war, specifically on the Crimean front. Now, the Crimean peninsula is a chunk of territory that juts out into the Black Sea, about midway down the Ukrainian coast. 

Historically speaking, it’s been a strong Russian outpost and one of the few places where the Russians have been able to project naval power. 

But during Soviet times, Khrushchev, who was Ukrainian, transferred the Crimea peninsula to the Ukrainian unit of the Soviet Union, which is something that pissed off all the Russians. And the Russians have been wanting it back ever since, especially in the post-Cold War environment. Well, in 2014, in the first phase of the Ukrainian war, the Russians did manage to capture it and have been using it as a military springboard to attack southern Ukraine ever since. 

The issue for the Ukrainians is that the very definition of Ukraine is the Dnieper River, which flows down through Kyiv and enters the Black Sea of the vicinity of the Crimean Peninsula. So if you control Crimea, you can threaten that opening as well as Odessa, which is, for all practical purposes, Ukraine’s second city in its window on the world. 

So there is no version of a Russia that fails to get Crimean, has any sort of naval strength or power in the Black Sea. And for Ukraine, there is no version of Ukraine in which it doesn’t control the Crimean peninsula, or can have any sort of economic integration with the rest of the world in a meaningful way. So it really is one or the other. 

Anyway, at the moment the Russians are controlling it, but at the moment the Ukrainians new drones, which have better range and better targeting, the ability to even themselves, have been pummeling all of the logistical lines that supply the Crimean peninsula. There’s really only two sorts of routes. In one is the Crimean bridge over the strait, which has been hit enough that it can’t handle large vehicles or trains, just light traffic. 

Or you can come on land through southern Ukraine in occupied territory, hugging the coast of the Black Sea, and then go into a series of bridges that cross into the peninsula. That way, at its narrowest point, the connection is only about nine kilometers wide. 

And so, while there are a number of routes through those nine kilometers, none of them are great. With all the new drones, though, Ukraine now has the range to hit all of those bridges, and in the last few days they’ve been hitting all of them almost at the same time. And so we’ve seen sustained pressure by the Ukrainians on the entire logistical system that allows Crimea to function. And remember that now, naval drones are a big thing in the Black Sea. 

So the Russians have evacuated most of their naval forces from Crimea and can no longer reliably supply the peninsula that I see. So everything has to come by truck or by train. And now that entire backup transport system has been put under huge threat. So what we’re seeing is fuel shortages, ammo shortages and manpower shortages in Crimea and large scale the end of Crimea as a military springboard to attack southern Ukraine, because they just can’t get the gear and the material that they need. 

Now, does this mean that a Ukrainian attack on crime is imminent? No. There’s still the very real issue of this transport problem working both ways. If the Ukrainians decided to surge across. They’d first have to cross the Dnieper, get into occupied southern Ukraine, and then go to Crimea. What the Ukrainians are doing is making it so that Crimea is a strategic loss for the Russians, and a drain on the resources, rather than anything that can gain that, that they can take over themselves. 

And that seems to be working very well. I just don’t want to oversell this. Yes, the Kerch Strait, for all practical purposes, is out of commission from a military point of view. Just can’t handle the cargo. But all of these bridges north south that go from Ukraine proper into Crimea, a little different. Most of them are not going over large bodies of water that are deep. 

Some of them are like rail bed and you can’t really blow up a rail bed. Others are crossing dikes that separate some of the marshes and the saltwater lakes that dot its area so they can attack the road bed, and in doing so, put in a crater that makes it so that has to be repaired. But those repairs can take just a week or two and a real problem. 

The real issue of what the Ukrainians are after here is to try to destroy as many of the crossing points that are close to Crimea, especially in the eastern part of the isthmus, as they can to force the Russians to go further north and route around the entire area and come into the peninsula from the west, where the infrastructure is more difficult to destroy, because if they can do that, then the Russians are bringing their forces far enough north that the Ukrainians can attack them with more conventional weapons like, say, artillery. 

And anything that slows down the trucks makes it that much easier for a drone to hit it. Keep in mind we now have memory drones hunting at volume in Russian occupied territories of Ukraine where Ukrainians can get a drone into the general area and then release it, and the drone will pick its own target and fly in and hit the target. 

And jamming no longer works. And so for the first time of the war, we’re seeing the Russians large scale about abandoning their attempts to resupply Crimea. But they have to run a gantlet every single time. And if the Ukrainians put up giant pothole in the middle of the bridge, all of a sudden the 50 odd trucks that were about to cross it have to stop. 

And if you’re a drone hunter, that’s exactly the sort of environment that you want. So we’re seeing a sort of highway of death situation. If you remember Desert Storm from 92 getting set up here, where it’s probably only a matter of time, where until the Ukrainians are able to basically bottle up a series of Russian convoys in areas where they can’t really maneuver and then just wipe out the whole thing. 

You do that a few times, and the entire Russian logistical effort for the southern front crumbles. Keep in mind that two years ago, the Russians had almost run out of military supply trucks, and if not for huge shipments from China, they would have. Now we’re in a situation where the Ukrainians have set up kill zones, where they’re probably going to be able to wipe out those supply trucks faster than the Chinese can make them. 

And that is a serious volume issue that the Russians are going to have a hard time dealing with.

The Future of Drone Tech: Hybrid Drones

A quadcopter drone with mountains in the background

A new drone has appeared on the scene in the Ukraine War. This hybrid drone blends the precision and control of FPV quadcopters with the range and payload of fixed-wing drones.

Almost every drone style has been battle-tested in Ukraine. We’ve seen FPV drones wreak havoc on the frontlines and fixed-wing drones strike deeper inside Russian territory. However, these new hybrid drones offer the best of both worlds.

Ukraine is already seeing early success with the hybrds, meaning these drones could be a game-changer when combined with other innovations we’ve seen. Russia will develop countermeasures eventually, but we’ll see if Ukraine can capitalize on the opportunity this summer.

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Transcript

Hey everybody. Hello from the Vegas airport at 0 dark 30. Today we’re going to pick up on the drone tech series and talk about different kinds of drones, specifically first person drones, which are typically quadcopters or hex copters. Verse is glide drones and flight drones, which are more fixed wing. Both of them have their own places. And one of the things we’re seeing in the Ukraine war today is that they’re starting to merge a little bit. 

So first quadcopters or hex copters, you’ve seen them. These are the hobbyist ones that have been pressed into military use, with new models coming out pretty much every week. The advantage of a quadcopter is control. They can hover. They can land to conserve fuel. You have direct control over them at all times, and that means you can do really crazy things like position them above a military asset, like a tank that has a hatch open and drop something on it, or even drop the helicopter right into it. 

You can fly into a hangar and look around and figure out what it is you want to go after the repair bay and aircraft, a fuel tank, whatever it happens to be. The degree of precision really is extreme, but the problem is, is these things have to have the rotors spinning all the time, so that really limits the range. 

At the beginning of the Ukraine war, these things really only had a range of 2 to 3km, which is about the same as a javelin missile by the way. So the way to extend range was to fly them towards an enemy position, land a lot of nearby and then send one ahead to Scout, and then the others would spin back up. It would buy you a little bit more control and flexibility, but ultimately range was the issue. But as the batteries have gotten better, specifically lithium phosphate batteries and they’ve improved aerodynamics, the range has gone from 2km to 5km to ten kilometers, 20km to 25km. 

And that has turned the entire front line into an area just littered with drones all the time. There’s also a lift issue, so their warheads generally are 10 pounds or less, with most of them being like 3 pounds or less. Fixed wing are different. They require some sort of launching system, which sometimes is no more complicated than kind of a large scale slingshot. They can carry more. They get a lot more lift because they have a wing system that gives them lifts. Quadcopters have no lift. You just have to have the rotors running. And this means that the fixed wing drones have significantly larger range, typically four and five times as long. If you’re spending the same amount of money and a significantly larger payload, because once they get up to a certain altitude, they can just kind of glide for a while and conserve fuel. 

And you can also build larger models. There’s definitely an upper limit when you come to a quadcopter. As they get bigger, you the lift to weight ratio changes against you, so you can only get so big, whereas a bigger and bigger and bigger airframe for fixed wing generates more and more lift proportionally. And so it’s the fixed wing ones that are carrying the bombs that are in excess of 100 pounds, who can fly 600 to 700 miles, really without any major problem. 

And those are the ones that are being used against most distant targets, and especially things like refineries and infrastructure. The advantages pretty extreme there. You can bring a lot of destructive power at significant range. The problem is control. With an FPV drone, you generally have either a digital tether from, say, satellite or cell phones or a fiber optic cable. 

But when you’re starting to talk about a fixed wing drone, the further away they get, the more the chances are that they can be disrupted by electronic warfare. You never have a line of sight to them anymore, and if they fly through an zone, you probably are going to lose the drone. Although there’s certain things you can do with buffering that allows them to kind of stay the course in the hopes that they’ll emerge on the other side of it. 

And you can pick up the signal again. But as a rule, the further away you go, the greater the chance you’re just going to lose control altogether. So these two broad classes have kind of defined everything with the war fees for close in and fixed wings for further destruction of infrastructure. But what we’ve seen in just the month of May is a new hybrid drone coming out that looks a little bit like a biplane, but the most of the rotors are horizontal as opposed to vertical, or the Ukrainians are starting to do is put detachable wings on the drones to get some of the best of both worlds, so you still use the horizontal rotors to achieve the thrust that’s necessary to leave the ground. But as they get going. The wing bevels into place and they can get lift from that as well. And in their first iteration of these things that have popped up in just the last few weeks, we’re already seeing the Ukrainians using these new hybrid drones to go 100km, which is double what we had before just in April. 

And it’s 20 times what these sorts of drones could do at the beginning of the war for years ago. And what that means is, in one stroke, these new drones are roughly doubling the strike range of Ukrainian closing drones, increasing their weight capacity a little bit, too, because of the extra lift. That is something that the Russians are wholly unprepared for. Basically, with each stage of this war as a new weapon has been developed. There’s a period where the attacker, whoever that is, achieves local supremacy and a significant tactical advantage. 

And then the other side developed countermeasures or copies of the technology, and the situation equalizes. But we’ve had so many Ukrainian innovations hit just since March that the Russians are reeling. So we now have memory drones that are hunting and self-selecting targets 50, 60, 100, 150km behind the front line, completely eviscerating the entire logistical system and now close in. 

Individual Ukrainian drone operators have doubled their hunt range. So any sort of movement within 50 to 60km of the front on the Russian side is becoming a no man’s land. Russian positions are becoming isolated and without the Ukrainian suffering any blowback whatsoever. It’s not that the Russians have had to abandon all offensive capability, but they can only focus in specific points. 

And that requires a degree of massing of forces. And those massing of forces usually happened more than 30km away, but less 100km away. All of a sudden, that is no longer viable. So we’re seeing a disintegration on the front right now. The question at this moment is whether or not the Ukrainians have enough offensive plunge and mine removal capacity to take advantage of that in any sort of sustained way, or we’re just waiting for the Russians to adapt these tactics adopt them to their own. 

It’s just too soon to know. But considering that this is happening in the first week of June, we have all of June, all of July, all of August, all of September in the first half of October, which is kind of the ground fighting season when the climate encourages offensive activity. And the Ukrainians have now spent the last 2 to 3 months preparing the battlefield in a way that has just completely decimated the entire Russian order of battle and pre-positioned logistical caches. 

At the same time, preventing troops on the front from being supplied with new men, new equipment, food, water, all the rest of the things. So I don’t want to overplay this because Russia’s defensive capabilities are immense. But it does look like this could be a summer where the Ukrainians break multiple parts of the front, and if they can get through those minefields, then we really are in a new game.

Armenian Election Signals It’s Done with Russia

Flag of Armenia in front of an apartment complex

Armenia has long depended on Russia for just about everything, from energy to security, and even broader economic integration. However, the weekend election results in Armenia reflect a rejection of pro-Russian politics and a desire to find a new path forward.

This was likely to happen anyway, as Moscow has its hands full with everything else going on, but the big question remains: who can fill Russia’s shoes? Not many Armenians will like the answer…

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Transcript

Hey everyone. Peter Zeihan here, coming to you from Colorado. Today we’re going to talk about Armenia. America is one of the former Soviet republics that is in the South Caucasus, in a little pocket between Azerbaijan and Turkey. East and west and north and south. Former Soviet Republic of Georgia. Not. Not Atlanta and Iran. It’s a difficult position to be in. 

There’s only 4 million people now, and a population has been hemorrhaging ever since the Cold War ended. It’s a little state that has been completely dependent on security guarantees granted by the Russians, and in fact, in a series of conflicts with John. If it wasn’t for those Russian security guarantees. It Armenia would have ceased to exist a long time ago. 

But as much as we talk about drones in the Ukraine context, what a lot of people forget is that the first real wave of these new generation of drones that are changing warfare were used between Armenia and Azerbaijan, with the Azerbaijani using a lot of Turkish weapons and basically completely obliterating the Armenian Air Force, its tank forces and its artillery in a one month war that happened all the way back into 2020. 

I believe since then, Armenia has panicked is probably the best word for it. They’re landlocked. They don’t have their own energy. Most of the electricity comes from a single nuclear power plant, the fuel provided by Russia, and most of the security comes from a Russian base as well. Well, with the Ukraine war and all these new drones Armenia’s position has gone from untenable to something flirting with state collapse. 

And so there is a recognition among the political elite of Armenia that something’s got to change and that Russia can’t be part of the solution, because if Russia was going to be part of the solution, they would be doing more. But they’re completely consumed with the Ukraine war and especially today, now that the Russians are basically watching their entire front line collapse in real time, there is not going to be any help for Armenia. 

So today is the 8th of June and we had elections over the weekend. The ruling party, Civic Armenia, ruled by a guy by the name of passion, got about 50% of the votes, swamped the other parties. The Russians have been using their old playbook that they have used in Ukraine and in Georgia, in the United States and in Germany. 

And the United came everywhere to try to discredit their foes and boost their chosen proxies. And it’s kind of funny, with the exception of the United States, it really hasn’t worked anywhere. But it’s generated so much backlash from the non-Russian forces that people really turned out in numbers anyway. The guy, the party who are trying to find a new path one decisively. 

They’ll have an absolute majority in the Parliament. And the question now is what’s next? There is no good path. Let’s start with that. The Armenian mindset globally is defined by the Turkish genocide during the end times of World War one, when hundreds of thousands, some people would say 1 million or 2 Armenians were killed in Turkish territory. And that singular memory is seared into the brains of all the survivors and their descendants. 

And so the idea of having any sort of long term deal with Turkey is something that is really just rejected. But now that the Russians are no longer part of any possibility, it’s something that they have to consider. You’ve got Azerbaijan on the east, which are allied with the Turks, get their weapons from the Turks, coordinate with the Turks. 

From the Armenian point of view, they’re just as bad to the south. You’ve ever run, which has always been a window on the world. But the recent degradation in relations between the United States and Iran means that Iran is no longer a viable option for goods coming in and out. And that just leaves Georgia to the north, which is in the process of sliding into authoritarianism. 

I guess that is another place where Russian misinformation has worked, and it’s not reliable either. So really the bottom line is either they cooperate with the Turks to a degree or they have nothing. So we do have real talks going on among Yerevan, Baku and Ankara about what is next. And this has to involve some sort of trade quarter. 

It has to involve some sort of Azerbaijan energy so the Armenians can keep the light on. The Trump administration has gotten involved with handshake deal. JD Vance was there a few months ago basically saying that we will provide nuclear fuel to your facility. It’s not clear if that is an above board or possible outcome, because this is a nuclear power plant that is ancient and decrepit, and it’s not clear that the Americans can even make fuel rods that will fit into it. 

But it’s at least the start of a place to talk. And now that we’ve had the vote, we’re going to see if this old new government can actually take concrete steps. But anything that does not involve a formal deal with Turkey is something that’s not going to go anywhere. So they’re going to have to take the hardest step first. 

And screaming in the background you have the Armenian diaspora, which has always been very, very gung ho when it’s Armenian lives in Armenia that are a threat as opposed to their own. And of course, the Russians looking to sabotage this at every opportunity. I don’t mean to suggest that the Russians haven’t taken a hit in global and regional affairs in the last couple of years. 

They obviously have, but I would not count them out when it comes to the ability to sabotage political deals. That is something they are very, very good at. So this election is really the start of a very difficult process, and we’re not going to see it wrapped up this year.

The Future of Drone Tech: Mid-Range Drones

Photo of a military drone

The battlefield of the Ukraine War continues to be transformed by drone innovations. The latest is the (affordable and scalable) modification of existing drones to travel farther and independently identify and strike moving targets.

This has eliminated the notion of a safe rear area, as these drones can strike anywhere and anything. This makes moving troops, fuel, and ammunition much riskier for the Russians. If Ukraine can continue to produce these modified drones at this rate, we’re looking at a much different battlefield in just a few months.

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Transcript

Hey all, Peter Zeihan here, coming to you from Italy, Rome. This is the let’s try column there. And we are in the forno de, which I again doubtfully mispronounced. Anyway, continuing with our open ended drone series, there’s a couple of things that are going on in Ukraine that are fundamental breaks with previous military technology in the mid-range drone category, so that’s things that are free flowing roughly 10km to 200km. 

So not quite mid-range, not quite short range somewhere in between. Basically you’ve got a two step process. Step one is you have a pilot that kind of directs a drone to an area. And step two, the drone has the capacity with just a little bit of memory and a little bit of optics to kind of look around and pick a target and zoom in on it. 

This is already a significant step up from just what the Ukrainians were using two months ago, because it can actually target moving targets now, speed, which this is unraveling and shifting is really crazy. Anyway, what this means is that the concept of a front line from a logistical point of view, is basically collapsed. Used to be that the front line was a real danger zone, where if you were within 20km of it, then the fiber optic drones and the first person drones could target anything and do so in the hundreds of drones per day. 

Further back, you’d have things like the American app cams or advanced artillery that maybe came from the French. That would push back the Russians to force logistical support into an area that was more than a couple hundred kilometers from the front, so they’d be out of range, because we all remember from two years ago when the cams arrived in Ukraine. 

Then all of a sudden, all of these ammo dumps and airfields started blowing up. So the Russians just moved everything back. Well, with these new pieces of equipment, it’s not individual strikes, it’s not dozens of strikes. It’s hundreds of strikes every day. And they’re targeting everything from individual troops to trucks, which means that the entire logistical tail, not just the depots, the entire logistical tail going all the way back from the front line to wherever the supplies are, is now under threat every day from every angle. 

And we’re seeing a de facto collapse and the Russians capacity to even man the area. And so what we’ve seen in the last is 3 or 4 weeks is significant Ukrainian gains in any number of parts of the front, because the Russians can’t bring troops forward, they can’t bring fuel for they can’t bring ammo forward. And if they try, the Ukrainians just dice them up. 

So nobody has superiority in this area. But instead of having this shadow zone of 10 to 20km around the front, it’s now stretching halfway to Moscow. And in that sort of environment, the Russians don’t have a strategy, can’t have a strategy, because they’ve always relied on strategic depth to protect them. But that doesn’t work when you can have a free ranging weapon system that’s in the hundreds and very soon in the thousands that’s going over this entire zone, and anything that’s on a road or train is suddenly a target. 

This single point advantage isn’t going to last forever. Eventually, countermeasures will be developed, but it’s much more difficult for the Russians to do that than for the Ukrainians. But we’re going to save that topic for another day. Oh, one more thing. It raises the question of how financially viable this is long term for the Ukrainians. And the short answer is extremely. 

These are not fundamentally new drones. These are modifications made to existing proven models like the Seth or the dart, for example. Really, all you need to do is plug in a small processor and a moderately sized memory chip, nothing that was considered cutting edge in the last 15 years, so nothing’s under export control are really inexpensive. Total modifications, probably top out, about $100 per drone and in some models no more than 15. 

So yeah, they can do this in the tens of thousands per month. No problem at all. 

The Future of Drone Tech: Long-Range Strikes

Drone firing a missile

Ukraine has ramped up its long-range drone program, allowing it to strike targets up to 1,800 kilometers away. So, what does this mean for Russia and its oil?

With Ukraine able to strike targets well into Western Russia, energy infrastructure is increasingly vulnerable. Thanks to the recent surge of foreign financial support rushing into Ukraine, drone production has ramped up. Russia might be able to shut down and restart the southern oil fields, but any fields shut down in the permafrost would take years or even decades to repair and restart.

So, expect Russian transport and export capacity to continue to drop, especially if these longer-range strikes continue throughout the summer months.

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Transcript

Hey, all. Peter here still in Rome, approaching all the forums, continuing our open ended series about the changes of military technology. Now we’re going to deal with longer range drone system things with an excess of 300km. The Ukrainians have launched a series of systems over the course of the last roughly ten weeks that have increased their range upwards of 1800 kilometers total. 

So for those of you in metric, that’s roughly 900 to 1000 miles. And Moscow was only about 300, 350 miles from the front line. This means that Ukrainians can relatively reliably strike anything that is west of the Urals at this point, and even a few things opposite the URLs, if they really push it. These things are carrying warheads that are typically in excess of 100 pounds. 

They’re using them to heavily target not so much military assets directly, but infrastructure related to energy production and transport, pumping stations, refineries, ports, that sort of thing. Now, pre-war, the Russians exported about, oh, 2.5 million barrels per day of oil and about another million and a half barrels per day of refined product that is now facing some sphere problems. 

It’s really hard to give you accurate numbers because everything is changing day by day, and the Russians aren’t just sitting there. They’re repairing things as they go. So let’s talk about the technology and then talk about the impact. So first the technology, unlike the modified short to medium range drones where it’s just a matter, you know, just a matter of putting a couple new pieces of semiconductor to give it a limited decision making capability. 

This is a range issue. And so with the range issue, Ukrainians are limited by their industrial base, which they’re rapidly building out. We’ve had the number of drones per day in use, roughly Quinn Tipple over the course of the last ten weeks, and there’s no reason to expect that to slow. If anything, it’s probably going to accelerate. One of the things to keep in mind is because of the Iraq war and America’s inability to provide adequate air defense and missile defense to the Arab states, as we now have a cavalcade of countries in the Middle East and Europe that are providing funding for the Ukrainians to expand their industrial plant all over the place, and that’s giving them cash that is necessary to expand industrial plant and build out at home. Keep in mind that there are so many startups in Ukraine that are providing drone technology now that the Ukrainians actually ran out of money to fund them all. That’s not a problem anymore. So everybody is in the process of spinning up, and by the time we get to mid-summer, we’re probably going to be seeing daily strikes in dozens, if not hundreds of these things across the length and breadth of Russia regularly, every single day, most likely in terms of impact. 

It’s hard to get firm numbers on this because everything is a moving target. But oh yeah, fun little fact. The Romans had so much marble they used it for like, dust boards. Anyway, what this means is that we’ve had over 80 discrete energy targets across Russia come under sustained attack, sometimes getting hit three and four times a week. 

Major ports have gone offline and back. Online tanks are gone, pumping stations getting damaged. Even direct pipe strikes probably. There’s really no average here. But I would say on average, we’re looking at an overall reduction of somewhere between 1.5 and 2.5 million barrels per day of a combined transport and pumping and port capacity, and that gets well into the danger zone for the Russian system. 

The Russian oil complex kind of has two big phases down in the southern provinces. You can have some older fields that are basically supplied by water injection, and those you can run on reduced capacity or even shut them down safely and bring them back later. But collectively, that’s only about one to maybe 1.2 million barrels per day. Everything else is in permafrost territory, and because of heating and cooling problems, you can’t maintain a steady temperature at the production site at the bottom of the wellbore. 

In the pipelines and the pumping stations, everything cracks apart. Or in the case of some things, wax congealed in it. And then you have to replace the infrastructure completely. We’re now on the point where that has to be shut down, at least in part, and that stuff cannot be restarted on anything less than a multi year time frame. 

The last time this stuff all got shut down, it was in the aftermath of the Soviet collapse, and it took the Russians 20 years to bring it back up to snuff like they had it during the Soviet period. So we are now already today at the beginning of the end of Russia, as a country that can even export petroleum or petroleum products at all to its west. 

And if you keep up this crescendo of attacks throughout the summer, by the end of the year, the Russians really won’t be an oil power in the western provinces at all. And that includes most of the western and northwestern Siberian fields as well. That’ll just leave what is out on the east side of the Urals, which is a separate infrastructure. 

But at the rate the Ukrainians are going as entirely possible, that that may be in range by the end of summer anyway. So from a war point of view, this is how Russia pays for everything. All is the single largest inflow point for the Russian state budget, which funds. Of course, the military natural gas is kind of like the kicker on the side, but most of the natural gas, a lot of the natural gas has already been shut in because it can’t be redirected in the way that liquid oil can be. 

So the Ukrainians haven’t felt the need to go after it. They’ll probably find some reasons in the next few months, as energy targets become harder to find, because there just won’t be all that many left. And that’s Palatine Hill behind me. That’s one of the original seven cities of Roman, where most of the rich folk lived during the High Imperial period. 

One more detail. We already have reports from several Russian oil officials talking about shut ins in places like Tatar, Saturn and Bashkir stand, which is where the water recovery basically pumped down. Water increased well pressure, and the oil comes up and you skim the oil off the top, where that’s already been shut down by a significant margin, at least in the high hundreds of thousands of barrels. 

But we’re also getting that’s the stuff you can turn back on. We’re also getting some reports of things further north, where we were getting some panicked reports about wells that will never come back on at all. So we’re already well into this, and the Ukrainians aren’t letting up, if anything. Intensification over the summer.

Russia Tucks Tail in Mali

National Flag of Mali

The Russians are getting the boot from the Sahel, and it’s all thanks to an unusual alliance between Tuareg separatists and a local branch of Al-Qaeda. These rivals have teamed up in Mali to drive back the Africa Corps, Russia’s paramilitary force.

When the French withdrew from the region, the Russians stepped in and picked up operations. However, maintaining control in the region is no easy feat, and the Russians are figuring that out. The Sahel’s harsh geography, the war in Ukraine, and now, jihadist groups partnering with Tuareg separatists, are all weakening Russia’s position

Without reinforcements or easy extraction points, this could turn into an embarrassing retreat from the region for Russia.

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Transcript

Hey all. Peter Zeihan here. Coming to you from Colorado. Today we’re talking about Africa, specifically the central African country of Mali, which is in the transitional zone where the tropics bleeds into the desert and an area called the Sahel. What we’ve had is over this past weekend, Tuareg forces, their local ethnic separatists and a branch of Al-Qaeda which operates in this area. 

Both of these have been militant forces operating in the area for quite some time, decided to coordinate their attacks, their normally quite robust rivals, and attack the city of Kadal in the northern part of the country, in the Sahara, as well as a number of other places throughout the country. And in doing so, they forced Russia’s Afrika Korps into full retreat. 

The Afrika Korps is the successor to what used to be called Wagner, basically, a group of people who have had the ethical part of their brain. Mellon scooped out and basically sent to kill people for the power of Russia. In the case of the in general in Mali, in specific, they cut security agreements with local governments that are not particularly nice to their people, and in exchange, they get mining concessions, most notably. 

And for them, definitely, what they’re after is gold, because it allows the Russians to evade sanctions more effectively. They just fly gold for payment instead of having to worry about, say, the US dollar system. Anyway, the quick back story is as Ukraine war got going really, really hard in the last couple of years, Wagner became more a group of paramilitaries. 

With the ethical center scooped out, Ragnar became more and more important to the Russians in manipulating not just events in Ukraine, but throughout the world, because they were basically soldiers for higher that would carry out the interests of the Russian state, which in general is to cause as much trouble in as many places as possible to cause problems for Western governments. 

So in the case of the Sahel, the target was always France, where in French former colonial territories here and the French had troops throughout the countries in order to fight the jihadist remnants of al-Qaida. And in that they were doing, I would argue, a relatively decent job. 

For the French, Al-Qaeda was the target, and they would cooperate with anyone who had helped them against al-Qaida in this case, including the Tories. And the government of Mali was like, well, you’re cooperating with one of our secessionists against the militants. We don’t like that. It’s a sovereignty issue. And then the Russians came in and the French were booted out. 

And some version of that has happened throughout what is once known as French West Africa. And the French footprint in the region now is basically zero. And we have Russians now across the entire band. But as as I said, what happened when this went down is the cell is not a particularly great place for anybody. There’s not a lot of water. 

So you don’t have population density, which means you have these isolated populations, posts like Cadle that have a few tens of thousands of people. And that’s it, which means that any sort of rebel group or militant group can run fast and free through the rest of the country, just like we saw in Iraq or Afghanistan and the war on terror, just like we see sometimes in northern Mexico with the cartels, just like we see in Syria with ISIS. 

You can’t really impose any sort of control over this region long term, because you can’t have the civilizational tools that are necessary to do it. And so now it’s the Russians turn to get their asses kicked. And so the issue here for the Russians is unlike France, which is not involved in any sort of broader military conflict, and unlike France, which actually has some expeditionary capacity, the Russians don’t. 

They’re involved in a large war. So only so many forces can be dedicated to the Afrika Korps or Wagner or whatever you want to call it. And in addition, there’s no chance of backup, which is a real problem. So the Russians only have about 2500 troops in region, and that includes their logistical tail. So most of what they have been focused on is destabilization and wealth extraction. 

And now that the actual fight has been joined, they are not doing very well. I always assume that by this point, countries be working to remove the Russians for any other reasons, because they are really a trouble. But when it comes to the countries of the Sahel, where state capacity is so low, getting any sort of assistance is good, especially once you’ve kicked out the French. 

So the the Russians are still fighting these groups in other parts of the country. They’ve only evacuated Cadle. But if the Tuareg, Al-Qaeda, it’s not an alliance that’s too strong. But if their truce holds, they can keep up the attacks. The Russians really have nowhere to go. You’re looking at a potentially a particularly embarrassing retreat they can’t count on the Russian state airlifting them out because the capacity isn’t there. 

And it’s just way far, too far away. Whether or not this will be the beginning of the end of the Russian presence across the cell. We’ll see. But there is a relatively embarrassing retreat in store now that will probably continue from north to south across the entire country.

The Return of Kremlin Terrorism

During the Cold War, Soviet intelligence agencies actively sponsored or even created terror cells throughout Europe. A recent mass shooting event in Ukraine suggest a return to old habits could well be happening.

The most obvious fertile ground would be pro-Russian or Russian-speaking populations in Ukraine. Next on the list would be far-right political movements across Europe.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Colorado. Over this past weekend, we had some interesting developments in Ukraine. Not on the front, but back in Kiev. A Moscow born individual who had lived in Bakhmut in eastern Ukraine previously, took seven people hostage in a supermarket and, caused quite a bit of ruckus before police took him out. 

Russian intelligence is not what it was during the Soviet period, but in bits and pieces it’s been rebuilding its capacity. And among the many tricks that the Russians developed during the Cold War was some really good divide and conquer ideas. Despite the size of the Soviet Union, Russian leader, Soviet leaders always had a very good appreciation for just how technologically backwards and corrupt and untrained their forces were. 

And they knew if it came to a direct fight with NATO, they really only had two options. Number one was to absolutely swarm, NATO forces with superior numbers. And number two was to provide some sort of distraction back in the Western countries so that the Western attention would be divided. Now, they never really got chance to test that theory in combat. 

And God forbid they’re able to. Now, but they’re starting to rebuild some of those distraction policies. And I’m not now talking about those, Novichok poisonings we’ve seen or dragging and anchor on the seabed. Those are all really easy things to do. If we ever get into a real hot fight with the Russians, expect to see dozens of those every week. 

This is different. This is sponsoring the creation of terror cells. Across the West. We had a number of groups who were basically ideologically motivated to hate capitalism that, the Soviets would basically work to build out supply and sometimes even task. 

Now, I’m not suggesting that this specific case in Kiev was Russian instigated. I really have no idea. What I can tell you that even though Ukraine is at war and is awash with weapons, this is the first mass shooting event that we have seen in the country during the conflict, and it is going to make a few people in the Kremlin think wistfully of old tools from old days. So regardless of whether or not the Kremlin was involved, it has certainly occurred to them now that there is something to work with here. 

What they can work with kind of falls into two general categories. First, pre-war, roughly one fifth of the Ukrainian population was, ethnic Russians. And another fifth was Ukrainian ethnics. But Russian speakers, primarily, even though the Russians have caused the most damage to the pro-Russian parts of Ukraine, complete, with looting and rape camps. You’re still going to be able to find a small minority of pro-Russian groups in those areas. 

The Ukrainians would call them collaborators that might be willing to do something along these lines. And remember, it doesn’t take a lot of people. You don’t even need 1% of the population. You just need a handful of people who are broken and zealots and who are willing to kill for someone, whatever that reason happens to be. And in a place like Ukraine, where there has been shooting for so long, and where the Russian intelligence network is so deep and where there are still millions of Ukrainians and Russian ethnics of Ukrainian nationality living under Russian control, the recruitment might not be as hard as you think. 

If you go further west, you fall into the second category. We have probably past peak far right in Europe. One of the things that we have seen over the course of this war is, as a rule, Europeans becoming more and more anti-Russian because the Russians have been doing sabotage throughout their countries, in addition to now threatening their direct, military and strategic existence with the Ukraine war. 

And what would happen after that means that hard right forces, whether either in Finland or in Hungary, are broadly in retreat. I mean, this is Europe. There’s 30 countries. I don’t want to make that two blanket of a statement, but they’ve really found it difficult, to get too much traction in the current environment. And that is before Donald Trump kind of lost his mind and started berating all of his allies, including the ones on the far right. 

So in just the last couple of weeks, we’ve seen links between elected officials in places like Italy fall apart, and in places like Hungary, where Trump actually personally campaigned for the former prime minister or caretaker prime minister. Now, we’ve seen that for soundly rooted when the political appeal of these groups fails and their chances of getting power, the, the traditional way through the ballot box starts to fade, you’re going to have zealots and hardcore groups among those, factions that are going to be willing to seek other options. 

I mean, we’ve certainly seen that here in the United States. And we probably will in the months and years to come as Donald Trump basically implodes conservativism in America. And until the Republican Party can reform with more traditional conservative forces like, say, business interests, you’re going to see elements of MAGA really get ugly. That is happening in Europe, right now. 

And if you take the Russians on one side with their Intel network and take a disintegrating kaleidoscope of rightist groups in Europe, on the other, the idea that you can form these ideological based violent groups, terror groups is really not much of a stretch. The biggest difference is that the last time around, because it was communism, Moscow generated support among the hard left, whether it was environmentalists or radicals or pro-worker groups or anarchists, where this time they’re going to be doing it among the right the nationalist groups, the neo-Nazis, the biker gangs. 

It’s a different feel. About the only good news I have out of this is that it’s it’s new. These groups don’t have a history of being violent in the pattern of militant groups in the 60s or 70s. And the Russians are out of practice for this specific sort of work. It’s one thing to send an agent to Salisbury and poison a guy’s tea. It’s quite another to actively plan militant attacks in countries that, ever since 2001, have really been upping their internal security, capabilities. So this will happen. A lot of these people will be caught, the Russians will be exposed. But the volume of people that you need to stir up to start this sort of process is so low. And there are broken people in every community. 

The Russians are just going to be taking advantage of them in a way that they haven’t until now.

The Energy Crisis: Downstream Impacts

Globe shot of energy hubs

The global energy crisis has moved from theoretical to very real. As the last shipments sent before the war begin to arrive, we are now hitting a turning point in the energy crisis.

Rationing and black markets have already sprung up in Asia. Some countries have found ways around the shortage (for now), but that has created new issues for others. The Europeans will feel the heat in the coming weeks, as oil from both the Gulf and Russia disappears.

The U.S. has also lifted sanctions on Russian and Iranian oil that is already in transit, temporarily easing shortages, but undoing years of work to limit export income for these countries.

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Transcript

Hey all, Peter Zeihan here, coming to you from Colorado. Yesterday we talked about what was going on with energy markets, primarily in the upstream, dealing with disruptions out of Russia and Iran. Short version. It’s pretty bad. It’s getting worse. Now, I wanted to deal with things that are close to the consumer where it’s pretty bad and getting worse. 

It has now been five weeks, which means that there’s a half a billion barrels of crude oil that hasn’t made it to market 

The final tankers from pre-war shipments from the Persian Gulf arrived in all of Asia last week. The final tankers will arrive in Europe this week and starting next week, the disruptions to from what the Ukrainians are doing to Russian oil exports will start to affect Europe as well. 

A mix of things here. Let’s start with who’s feeling what. Because of the shortages in Asia, we already have widespread rationing and the development of black markets. It’s affecting different countries in different ways. So for example, India has gorged on the thin stream of Iranian crude that’s coming out, and the legalization by the Americans of Russian crude that is out and about. 

And that has allowed them to avoid any sort of direct energy crisis as regards to oil and oil derivatives. However, almost all of their cooking, I should say all. But for about half the population, their cooking is done with propane liquefied petroleum gas that is exclusively produced for them in the Persian Gulf. That has gone to zero. And so now they’re seeing an energy shortage in that regard. 

Places like New Zealand and Thailand and Taiwan and the Philippines and Vietnam are all experiencing degree of energy shortages and rationing. And already the country that is most panic and should be is Korea, because their options are very, very limited and they’re a major industrial player in Japan at the moment, is avoiding this largely because they have access to sources from the Western Hemisphere and a navy that can protect them if it comes to that. 

And at the moment, the Chinese are okay, not because they’re not experiencing energy shortage. They absolutely are. But China has an overbuild of refineries. And so part of their economic model was to build refineries, absorb crude from abroad, refined into fuel, and then export that fuel. And so the way the Chinese have avoided an energy crisis is by stop exporting fuel. 

So at the moment China is okay, but those fuel exports now have stopped arriving in various places and countries like Australia, New Zealand, which used to get their fuel from China, their refined fuel suddenly aren’t. So we have a different sort of rationing and energy crisis. In Europe it’s going to hit them from multiple angles, but they do have a little bit more time. 

Like I said, the last tankers from pre-war Persian Gulf exports arrived this week. So it’s only now that the crunch really begins. The problem will be in 2 or 3 weeks, because they have this weird little setup where Russian crude can’t be bought in Europe, but it’s exported somewhere else, refined a product and shipped back. So we’re now starting the fuze on that, and in three weeks the Russians, will basically be a non-factor in European energy. 

At the same time, the Persian Gulf becomes a non-factor in energy. And it’s going to be a mess all around. A couple other things. Number one, there are more ships leaving the Persian Gulf. We saw 20 to 30 on both Saturday and Sunday, which brings up us to about one fifth of pre-war levels. The difference is Oman, which is the country that controls the southern side of the strait. 

Last week we talked about how the Iranians had set up a tollbooth system and were charging about $2 million per vessel and then kind of sort of escorting, ships through the northern part of the Strait of Hormuz in their territory. Oman is now doing the same thing in the south, basically to tankers, ships, whatever they happen to be are either re flagging or changing the trans front doors to say, Omani owned. 

And Oman has always been kind of the neutral power in the Persian Gulf. The Iranians have always kind of considered it in a different basket compared to Kuwait, Bahrain, Gutter and Saudi Arabia. In the UAE, which are more of the American camp. So far, the Iranians have not targeted these Omani vessels. I’m not saying that they this is a safe path. 

It’s not. But it has allowed some ships to get out. I will underline, however, that almost all of the ships that are using this route are leaving. Very, very, very few are coming in. Those that are typically Iranian flagged using the northern route. So of the two 300 ships that were stuck in the Gulf before, some of them are getting out. 

Nobody’s going back in. And that means that the oil production, even if it continued, even if it wasn’t damaged, still has no place to go. Let’s see. Finally, the big achievement of the Trump administration in this war so far in energy markets has been ending. the sanction system on places like Russia and Iran. They have now lifted fully the sanctions on purchasing what’s already on the water. 

And that has allowed basically the last 4 or 5 years of attempts to isolate the Russians in the last 10 to 15 years of attempting to isolate the Iranians economically, to vanish into the ether. If there’s going to be an effort by the United States or any other country to limit the legal access to these crudes, they’re going to have to start completely over. 

So the last 5 to 15 years of efforts to kind of squeeze these economies is now broken. Now there’s plenty of other things, physical damage, for example, that are drastically affecting both of these markets, primarily the Russians. But it is interesting to say that it took a war launched by Donald Trump on Iran in order to make Iranian oil legal again.

Winners and Losers of the Iran War: Ukraine and Russia

Toy soldiers advance across a map with an Iranian flag in the foreground

The Iran war has slashed oil exports from the Persian Gulf, creating a global supply shortage that’s just starting to hit markets. As prices are driven up and broader economic impacts unfold, winners and losers will begin to emerge.

Russia was enjoying the boost in oil revenues until Ukraine took out a chunk of its energy infrastructure with drone strikes. And those strikes don’t look like they’ll stop anytime soon. Russia’s support for Iran is also garnering political backlash that will weaken Putin’s long-term position. Ukraine is emerging as a winner, as its low-cost drone tech has secured deals with Gulf states to scale production and secure Ukraine’s position as a leader in military tech.

The Iran war is reshaping global alliances in ways nobody could have predicted, so we’ll continue to explore the winners and losers of this conflict in this new series.

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Transcript

Hey, all Peter Zeihan here. Coming to you from Colorado. So today we’re going to dive into our open ended series on the impacts of the Iran war on everybody else. We’ve talked about the United States at length and the Persian Gulf countries, of course, but what about everyone else? The region used to export 22 million barrels of crude a day. It is now down to probably something between 10 and 12. So we’re already looking at a shortage of 400 to 450 million barrels that haven’t gotten out, and a lot of that shut in is going to remain shut in for assuming no additional damage. It’ll remain shut in for a minimum of another nine months after the guns stop firing. 

And in the case of some of the Iraqi production, probably well over two years. These aren’t shale wells where you can just turn them on and off. Anyway, that has a lot of, in fact, a lot of people. We are only in the preliminary days of seeing oil prices go up. It was only last week that the last of the oil tankers pre-war from the Persian Gulf made it to Northeast Asia. 

And it’ll be this week that the last make it to Western Europe. So what it was a failure in throughput is now becoming a failure in supply. And we’re going to see that impact all kinds of things. So let’s start with the former Soviet Union, specifically Russia and Ukraine. In the opening days of the war. The conventional wisdom was twofold. 

Number one, there’s no way that Ukraine comes out of this in a better position. The Western world, the whole world is going to be distracted by what’s going on in the Persian Gulf, which for most countries is more significant than what happens in the Russian near abroad. The United States is going to be diverting its weapons system, most notably its missile interceptors, to its own needs in theater, rather than sending them to Ukraine. 

And on the flip side, Russia is going to make mat bank. Oil prices had been moderate until the war started, and now they’re regularly over $100 a barrel. And if you consider that the break even cost for a lot of Russian fields are between 30 and $50 a barrel. And they went from selling hit 60 to 100. 

You know, you’ve seen the profit for Russian oil sales increased by a factor of five or more almost overnight. And that cash coming in is obviously going to remake what Russia can do with the war. Most of their equipment is comes from China, but the China insist on hard currency payments and that requires oil sales. That was the conventional wisdom, and there’s nothing wrong with that. 

But now that we’re five weeks in, we’re seeing a much more nuanced picture with a lot of unexpected upsides and downsides for both sides. Let’s start with the Russians. The Russians have been actively providing intelligence and techniques and hardware to the Iranian government to target the United States’s forces in region. While Donald Trump remains firmly in Putin’s pocket, that is drastically adjusting things in the Defense Department and on Capitol Hill, where we’re seeing significant unrest in the United States with Donald Trump’s policies, in a way that can’t help, the Russians long term. 

More importantly, the Russians and the Iranians are not the only ones with drones. And during the war, the Ukrainians have showcased a new set of hardware with a little bit longer range and have used it to completely destroy the export capacity of Russian oil exports from the Baltic Sea. 

It’s conservative, removing a million and a half barrels a day of exports, maybe up to 2 million, because the Russians can’t really redirect. They don’t have a backup pipeline system. And so what was originally this big windfall has turned into a structural loss for them in terms of oil exports. They’re still earning more money overall. 

But once the Ukrainians are done with the Saint Petersburg region, they’re just going to turn those drones onto the next oil producing and transiting system. And we may not have any meaningful Russian exports from either the Baltic or the Black Sea within three months, or that close second Ukraine itself. The year that the Ukrainians have had to basically operate without American assistance, they’ve used to great effect and innovating into the drone space, specifically encounter, drone technology. They’ve got something called the Brave One, which can fit into a duffel bag. It has limited range. Not a great success rate, maybe 50%, but it only cost 2 to $3000 to make, versus 30 to 50,000 for a Shahed versus 4 million for pack three. 

So Zelenskyy in the last couple of weeks has been all over the Persian Gulf, signing deals specifically with Kuwait and Qatar and United Arab Emirates and Saudi Arabia, each multibillion dollar deals to invest in drone production. The Ukrainian problem this last year hasn’t been innovation. It’s having the cash necessary to buy all the materials to make it. 

Probably half of the industrial plant that they’ve expanded in Ukraine in the last year is not being used because they don’t have the money. Well, say what you will about the gold farmers money is not the limiting factor. So we’re going to be seeing money pouring into these facilities in Ukraine, which is going to drastically increase the defense of Ukraine from the Russians. 

At the same time, they’ll be exporting drones to the Gulf states and the Gulf states will be building their own counter drone factories. So we’re talking about a whole number of countries that five years ago, no one really considered to be at the forefront of military tech. All of a sudden at the forefront of military tech in a way that the United States can’t participate in and isn’t benefiting from. 

So we’ve seen Ukraine and Russia get weird ups and downs in ways that were completely unexpected just a few weeks ago. But perhaps the biggest impact of this is because the Russians are so actively assisting Iranians, is that all of the Arabs of the Persian Gulf are noodling over what’s next for them, vis-a-vis the Russians and the United States. 

And if you remember back to roughly 1985, when Reagan really started pushing hard on the Soviet Union, that was the year that the Saudis decided to drastically open up oil production in order to flood the market and bankrupt what was then the Soviet Union. We now have the beginnings of a second generation of some sort of alliance like that. 

But instead of the United States, it’s the Europeans, instead of NATO, it’s Ukraine. And so we’ve got a number of pieces moving here, building new geopolitical alignments that really look very, very bad long term for Russia. None of this I probably would have guessed two months ago, but here we are.