Why a Russian-Chinese Pipeline Won’t Happen

An oil pipeline closeup

If China and Russia are so buddy-buddy now, why don’t they build pipelines across Siberia to bypass the Persian Gulf?

There are more issues than I can cover in this video, but here are a couple. Their recent cooperation is less of a friendship and more of a “the-enemy-of-my-enemy-is-my-friend” situation. Geography is the bigger problem, though, with thousands of miles separating Russian energy sources and Chinese population centers.

Even if a pipeline plan was put in place, neither side would want to pay for it, and Russia wouldn’t have the technical expertise to develop it. So, unless maritime shipping goes completely offline, this pipeline isn’t happening.

Prefer to read the transcript? Click here

Transcript

Hey everybody, Peter Zeihan here, coming to you from Middle Chain Lake in southeastern Yosemite. This is one of my favorite places in the national park system. We’re just going to pan around from time to time as I’m doing this video. Have it all to myself. Anyway. 

Today we’re taking a question from the Patreon crowd. Specifically, if China and Russia love each other so much, why don’t they just build a pipeline or cluster of pipelines connecting them to one another and not have to worry about the Persian Gulf at all? 

Great question. Let’s start by saying that the Chinese and the Russians do not love each other very much. They are arguably two of the most racist cultures in the world, and the culture that they’re most racist against is one another. The Chinese see the Russians as backwards barbarians, and the Russians see the Chinese as peasants. So any sort of collaboration they have is in reaction to other things, not because they actually like one another. That’s part one. 

Part two. It’s simple geography. It’s a distance issue. The population of Russia, for the most part, is hard up on the European boundary, and the bulk of the Chinese population is within spitting distance of the Pacific coast, which leaves something like 7 to 8000 miles of great wide open empty in between. Now, if you want to have a pipe, you’re going to have pumping stations, and that’s already a very long way to go. So if you go in from European Russia to Asiatic China, you’re already talking about pumping costs that are well over $80 a gallon. Most likely, that’s on top of the tens of billions of dollars that it would take to actually build the pipeline. That’s number two. 

Number three, the oil and natural gas that the Russians have is, for the most part, in the wrong place. It’s almost all in northwestern Siberia, which is actually further from China than European Russia. So it’s easier to do, say, a rail line going to China than it is a pipeline. And so the eastern and Western networks for the Russian energy distribution system just don’t connect. There’s like one spot and it’s pretty small. So whenever the Russians go, oh, we’re just going to send our oil and gas somewhere else and not to Europe, it’s mostly bullshit because they just don’t have the capacity to do so in large volumes. 

That brings us to the final point, is that there are a few fields going out into Asiatic Siberia, places like Kovykta which is just to the northeast of Kazakhstan, and places like Sakhalin Island, which is just to the north of Japan. These are places where the conversation isn’t silly. The distance is only, you know, a thousand miles or so, as opposed to going all the way across the continent.   

The problem here is that the Russians don’t have the technical skill that’s necessary to tap these fields. And so in the case of Kovykta, that was a BP project. And when BP was basically shown the door a few years ago, it stalled. And in the case of Sakhalin, not only did the Japanese kind of call dibs on that output, but it takes super majors like Exxon or BP or Japanese firms, most of which are now gone because of the war, in order to keep the output going. So it just doesn’t justify anything. 

Whenever Putin and Xi get together, the conversation always is, hey, let’s do a pipeline. And they both always say, yeah, hey, that sounds great. And then they both point at the other one, say, and you pay for it. The Chinese see no reason to pay for infrastructure that is going to cost so much to operate. And the Russians see no point in paying for infrastructure that will benefit the Chinese. So we just get these stalled statements and no real motion. And this is how it’s been going for the better part of the last 30 years now.  

Now, if you change the circumstances, if you remove maritime transport altogether, then all of a sudden we’re having a different conversation. But that doesn’t make the project any cheaper. So you’re still talking about tens of billions of dollars to get the infrastructure in the ground, and then a transit costs that is about the same as prices are right now. So you’re talking about a very nasty change in circumstances if that’s how you want to go. All right. That’s it for me for today. Take care.

Russia Is Struggling to Defend Its Own Capital

Image of St. Basils Cathedral and the Kremlin in Moscow, Russia

A leaked Moscow memo stated that Russian air defenses are being concentrated around the Kremlin. This leaves the broader Moscow region, including refineries and key infrastructure, vulnerable to Ukrainian attacks. And if Moscow is this vulnerable, it gives you an idea of just how bad things are throughout the rest of Russia.

In addition, the Russians are looking to kick off a peripheral mobilization of ~300,000 people. However, all of the recruitment sources carry political risks for the Kremlin. If they depopulate the Far East, it weakens the border with China; if they take non-ethnic Russians and could fuel unrest; or you target immigrant workers and worsen the labor shortage.

Prefer to read the transcript? Click here

Transcript

Hey, everybody. Peter Zeihan here, coming to you from Colorado. Today we’re talking about the combination of things that have come out of Russia. We’ve got two things. The first one is that a memo that was being circulated among the Moscow mayor’s senior staff has leaked. And basically they are admitting that even with the government, the national government, the Kremlin, redirecting the bulk of the country’s air defense to the Moscow region, the defenses are so concentrated around the Kremlin itself that they’re not providing enough anti-air defense for the broader metro region, which is the economic and political and cultural hub of the country, which means that refineries which are on the outskirts can’t really be protected at all. And they are expecting the refining system to not simply continue to come under attack. But they’re expecting the city to run out of fuel before the end of the year, and perhaps a lot sooner than that. So they are spitballing ideas of what to do about that. And the leading candidate right now is to break up Russia’s refining complex instead of the 100 odd refineries it has right now, and build a thousand plus that are just much, much, much smaller. 

Now, it isn’t so much that this is a good idea because it’s not. You’d lose economies of scale. You’d still have to cluster the refineries around pipelines. So you have like five refineries, smaller refineries, where a bigger one used to be. That doesn’t really solve the problem, but more importantly, it would take years to build out and require lots and lots of equipment that the Russians can’t build and would have to import. So all of a sudden the sanctions come into place. So it’s really not feasible. But the point that the smartest people in the largest and most successful city in Russia are now desperate for options simply to keep the fuel flowing, tells you everything you need to know about the stability of the Russian economy right now. Because this is the capital, this isn’t some far flung province out on the edge. That’s piece one. 

Piece two came out of Kyiv with the Ukrainian President Zelensky sharing some intel that they’ve been garnering on the Russian military system. Apparently, according to Zelensky, the Russians are preparing a fresh what they call peripheral mobilization for this coming September immediately after elections. And when they say peripheral in Russia, what they mean is non-ethnic Russians. Ethnic Russians, according to Russian statistics, are probably about 75% of the population and of course make up the super majority in the major cities, most notably Moscow. But when you move out of the Moscow region, out of the Saint Petersburg region, you’re going to be hitting higher and higher ethnic minority concentrations. And there are several republics, several dozen republics across Russia where non-Russian are either the full majority or the near majority. So far in the war, the Russian government has done everything it can to not pull ethnic Russians into the fight, favoring the forced recruitment of non-Russian ethnics whenever they possibly can, because they’re feeling is if those people rebel, you can just kill them. But if Russians, ethnic Russians rebel and you put them down like the Russians like to, that might spawn more protests in other Russian regions. And if you don’t have the buy in of the Russian population, or at least it’s apathy, then that is how the Kremlin falls, because that’s happened before. Reasonable, reasonable political analysis. The problem, of course, is that this is not the first time the Russian government has done this. It’s done this in three rounds so far in the war to date. And with the Russian government losing somewhere between 25 and 45,000 people a month in this war, the question is, how long can this hold the line before things break? 

According to Zelensky’s Intel? And so far, when the Ukrainians have shared things like this on the development of the Russian military, they tend to be right, I’d say 90% of the time. But, you know, some of the details might be fuzzy. The Russians are talking about this peripheral mobilization, about 300,000 people, which would be enough to supply troops to maintain what the Russians have been doing at the last years burn rates for another 6 to 9 months. So it doesn’t really change the math in the long term. It simply allows the Russians to continue to plot on with what they’re doing as to where the people would come from. The greatest hits, where the greatest percentage of the local population would be drawn out, would probably be from the Far East. These are areas that are relatively lightly populated, relatively low urbanization, penetration. And basically the Russian state just goes through and rounds people up when they’re going about their daily business. The second big concentration would be recent passport holders. So there are a lot of people who have moved from Central Asia to Russia because as bad as the economy is in Russia, it’s worse in Central Asia. So especially in places like Tajikistan or Kyrgyzstan, you’ve got several million people over the last 20 years who have moved north. And because they’ve had to get passports, they are in the system. And so basically what the Russians are doing is saying, hey, you’re in the system, we know where you are. Come work in the war because you don’t have a choice anymore. Getting Russian citizenship, the price is dying in Ukraine. The biggest concentration, the biggest numbers are going to be from ethnic republics that are closer to Moscow, that are more densely populated. So you’re talking here about places like Chechnya, Tatarstan, and Bashkortostan, densely populated provinces with reasonably high birth rates, especially compared to the ethnic Russians, where you do have a presence of the Russian state that can basically force people in. 

All of these come at certain risks. When you start taking out people from the Far East, you’re depopulating them to the point that there’s an open question about relations vis a vis the Chinese, who have 100 million people just on the other side of the border. When you start going after the people who are recent passport holders, you disincentivize people to come into Russia where there’s a demographic bomb going off in real time even before the war, and you’re losing the workforce, you need to keep the system going. And when you go after groups like Chechnya, Tatarstan, and Bashkortostan, you’re talking about big population centers that if they ever did rebel, it’s not clear whether the Russian state could resist them. A new Chechen war would be as bad for the Russians as what’s going on in Ukraine right now. And if the Tartars or the Bashkirs rebel in any meaningful way, the Russians lose all the infrastructure connections they have to Siberia and Siberia, at the moment, is the only part of the oil complex that is likely to still be exporting a year or two from now. So none of these are good decisions, but it’s not like there’s a better one on offer, and we’re now seeing the entire system start to seize. 

Russia, though, is capable of maintaining an incredibly high tolerance for pain, basically suffering as the Russian equivalent of baseball. And none of these by themselves are enough to break the system. But we’re seeing the weight increase at the same time as we’re seeing the Russians start to not just stall on the front, but be turned back. And every major Russian revolution in the past 300 years has been because the Kremlin has lost a military conflict. So you take the social pressures that this mobilization are likely to generate, play that against the battlefield situation. And yeah, this is looking pretty bad for the Kremlin.

Ukraine’s Flamingos Crush Russia’s Space Program

A cruise missile launching into a starry night sky | Licensed by Envato Elements

Ukraine sent a flamboyance of Flamingos (cruise missiles, not those pink things) and struck a Russian space complex in Samara. This complex was responsible for assembling Soyuz-2 rockets, as well as electronics and precision testing.

The missiles used, the Flamingos, are Ukraine’s version of the U.S. Tomahawk; dumber than the Tomahawk, but cheaper and easier to produce. These strikes and Ukraine’s growing large-scale strike capability are crushing Russia’s industrial and technological base.

Prefer to read the transcript? Click here

Transcript

Hey everybody. Peter Zeihan here, coming to you from Colorado. It is the 15th of August. And the news is that Ukraine, using a modified weapon system, has just attacked the city of Samara in Russia and severely damaged one of the space complexes, specifically the place where the Russians assemble the Soyuz-2 rockets. This is the primary Russian launch vehicle to get satellites up into space. Damage levels at this point are questionable, but we know there have been hard hits on the major buildings that actually do the work, especially for things like electronics and precision testing. So for the moment, Russia’s space program is now offline, and the idea that the Ukrainians won’t hit again is kind of silly. 

Right now, Russia has kind of a hybridized space program. They’re still participating with the United States on the ISS, although I wouldn’t expect that to last a whole lot longer. ISS is the International Space Station, and they do have some legacy satellites up there, but they were hoping to build their own network of a couple hundred satellites. That to be kind of a local Starlink equivalent, so that they have independent military observation and independent communications, that is at a minimum on hold now. 

They were really only planning on launching ten, maybe, if they’re really lucky, 20 satellites a year. And now that’s completely at zero. In addition to that, there’s the question of how the Ukrainians did this. It’s something called a flamingo missile. Now, if you remember back a year or two ago, there were some conversations about the United States sending some of its new truck mounted Tomahawk missiles, which is the United States premier mid strike cruise missile. Anyway, sending them to Ukraine. Ukraine lobbied very, very hard for that. But ultimately the United States decided no. So the Ukrainians, for all intents and purposes, built their own. The Flamingo has a warhead that is significantly more powerful than the Tomahawk. It’s modular, but it can be up to 1000kg, which is well over twice what the typical tomahawk carries. It has a slightly better range with a lighter warhead. It’s not quite as fast. Probably the biggest weakness of the Flamingo versus the Tomahawk is that the United States can use, off course, it’s satellite network to retask it on the fly, where the Ukrainians cannot yet do that. Although, considering, what they’re doing with drones, some version of that is probably going to be possible in the not too distant future anyway. 

It, in essence, is a flying truck bomb. It’s not as accurate as the Tomahawk, but because it hits so much harder, it is almost as good. And the really important thing is it’s because it’s a simpler piece of equipment. Fiberglass instead of titanium. The Ukrainians can crank out three of them a day where as the tomahawk, they can only produce about 60 a year. So that’s what, five a month? Yeah, five a month. So a half a dozen of these things were used in the attack on Samara. Most of them were shot down, but with three a day being the production rate, it’s very, very simple to see this being a major industrial factor in the weeks and months to come. 

So in summary, the Russians probably won’t have a space program by the end of the year that makes them completely dependent upon third party reconnaissance, primarily from China. The Ukrainians are being able to throw so much tonnage into the air that there’s really no industrial facility in Russia within a thousand miles of the border now that is safe at all, because if you’re not going to defend your space program as Russia, there’s really not much left that is more important aside from Moscow itself. And we’ve seen a contraction of Russian air defense around critical sites in Moscow and very little else. What we’re seeing is the disembowelment of Russia’s capability of being a technological power, and all that’s left is for it to be a resource power, exporting raw materials such as crude oil, in order to get the currency it needs in order to purchase Chinese product. But as the Ukrainians basically march with drones through the entire industrial plant, that capacity is disappearing. And we’ll probably see an end of Russia’s ability to be a large scale resource exporter before the end of the year as well, at least as regards the Black Sea and the Baltic Sea. And that’s going to be over two thirds of the total. So we really are seeing the industrial destruction and removal of Russia from the global space. 

That has thousands of downstream impacts. And that is a topic we will revisit at length in the days and weeks to come.

Russia Loses Its Foothold in Syria

Russian flag at dusk with a moon in the background

Russia’s strongest military foothold and gateway in the Middle East is now gone. Russia has agreed to end its presence at the Latakia airport and Tartous port, as it hands over the reins to Syria’s transitional government.

Tartous was Russia’s primary hub for projecting power into the Middle East and Africa, and without it, Moscow will struggle to do much in the region. This is part of a broader trend of Russia scaling back positions and focusing its military capacity on the Ukraine War.

Prefer to read the transcript? Click here

Transcript

Hey, all, Peter Zeihan here, coming to you from Colorado. And the news is that on August 9th, that was this past Sunday. We have a new agreement between the transitional Syrian government, which is led by Sunni jihadist, formerly allied with Al-Qaeda and the Russian government, to basically end Russia’s military position in Syria. For the last 15 years, the Russians have maintained a strong military presence in two locations in Syria: the Latakia airport and the Tartous port, both of which have been under direct Russian military control the entire time, and the Russians have used both positions, both to intervene forcefully in the Syrian war, which ultimately ended up on the losing side, and then second, to protect naval and air power throughout the Mediterranean. That now comes to a close. The day that the agreement was signed, the 9th of August, the civilian administration in Syria took formal control of the airport again, and within three months they will take control of the Tartous port as well. Technically, there’s a face saving measure here that these will be joint training centers, but there’s really not a lot that the Russians bring to the table here. In addition to the fact that there are well among 90% of the Syrian population that used to be the target of Russian attacks, the idea of joint training with the Russians is a little, let’s just call it galling. So I expect the Russian position to be nominal. They might maintain a bit of an intelligence outpost, maybe a little observation, but that’s it. 

So we’re talking in excess of a 90% reduction in what the Russians used to get out of these bases within a very short period of time. And this marks the end of the Russian high water mark in the Middle East in the post-Soviet era. It’s not that they don’t have ties. They work with the Houthis, they work with the Iranians. They even have decent relations with the Israelis most days. But these were the only two military facilities that Russia has outside of the former Soviet Union, and it was the only way that they could reliably project power into the Mediterranean. And because the Turks control the straits that connect the Black Sea to the Mediterranean, and now that these ships that the Russians used to keep at Tartous have to go home or go somewhere. The ability of the Russians to even have the range that is necessary to protect power doesn’t exist. So we’re looking at the entire southwestern arc of the former Soviet space, basically becoming a no go zone for Russia. We’re seeing some color of this in many other operations around the world, as the Ukraine war basically sucks up more and more Russian military bandwidth. 

They still have things like the Russian Legion that are running around in Africa, causing coups or preventing them based on the day, but without the ability to reliably resupply their forces through Tartous, the ability of the Russians to even maintain those positions is going to be shriveling. So it’s a good day if you’re anybody but Russian, and if you’re Russian, you now have to focus almost exclusively on the Ukraine war, which I would argue was always how it was going to go. 

We’ll save the Ukraine war itself and the long term prospects there for another day.

Ukraine Closes the Sea of Azov

NASA satellite image of the Sea of Azov | Photo by NASA and creative commons licsense

Ukrainian drone attacks have effectively shut down Russia’s use of the Sea of Azov, which is a critical export route for southern Russia.

The sea connects the Volga River canal system to the Black Sea, allowing agricultural goods, coal, iron, and more to reach global markets. And with Russia’s rail network already overburdened, losing this waterway is devastating.

If Ukraine expands these drone attacks into the eastern Black Sea, the shadow fleet will face even further disruptions. With no quick solutions on the table, the Russian economy and war effort will be on its back foot for quite some time.

Prefer to read the transcript? Click here

Transcript

Hey everybody. Peter Zeihan here, coming to you from just below Cupid Peak, above Loveland Pass. And over here we have Grays and Tories and Grizzly Mountain. Not going to be able to do those today because we got lightning moving in. Boo. But I’m still going to do a video for you guys. I just got back from Yosemite and still catching up on everything that happened. 

But one of the big things that happened in the Ukraine war is that the Sea of Azov is now offline. The Sea of Azov is a body of water to the east of the Crimean peninsula, that’s Russian occupied Crimean peninsula, and to the south of Russian occupied lands in southeastern Ukraine. It’s a waterway that freezes sometimes in the winter. 

But the real important thing is that is the outlet for a huge amount of cargo. The Russian system is not well set up for shipping cargo. A lot of stuff has to go by rail, but the Russians are literally running out of ball bearings, so they’re hitting the max of what they can do, and they can’t replace the cars and the speed that they need to. 

So they’re seeing reductions in throughput. That makes it much more important to ship things by water. The problem is, is that the Russian coast of the Black Sea doesn’t have any navigable river outlets. It’s somewhat rough and mountainous. And so what happens is you’ve got an inland waterway, the Volga, that goes near Moscow and snakes through Russia and empties into the Caspian Sea. 

The problem is the Caspian Sea is a landlocked body of water. So what the Soviets did is they engineered a series of canals and locks that go from the lower Volga near the Caspian over some low ridges, and get into the Don River system. And the Don empties into the Sea of Azov. So, in essence, if you’re shipping coal or iron or especially agricultural products, you get it onto the Volga. 

You go through a series of locks until you get to that connection. You take the canal over to the Don, to Rostov on Don, and then you get into the Sea of Azov, and from there you get into the Black Sea in the wider world. Well, while I was gone, the Ukrainians hit over 200 ships in like a week in their first big push and basically shut off the sea of his off completely. 

So any of the cargo that used to use this waterborne export, which was one of Russia’s main ones, the primary one for southern Russia, suddenly has nowhere to go. They go onto the rails, but the rail system already overloaded and honestly starting to fall back. So a couple of things from this. Number one, we’ve got a lot of Russian cargo that is now just trapped. 

It has nowhere to go and there’s really no quick fix here. The Russians have withdrawn a lot of their air defenses from places even like Crimea, to put it around Moscow, because Ukrainians have shown that any target that’s within roughly a thousand miles of the front is something they can in force. And that’s forcing the Russians to the air defenses that they have in places where they will serve political purposes. 

Because of Moscow, came under heavy drone attack every single night for a month that might shatter the political coalition that holds the Russian system together. Right now. That’s one. Number two, Rostov on Don. This is one of the city’s one of the two cities in Belgorod that serves as nodes for transporting military gear to the front, and it has now lost all of its economic wherewithal. 

It’s now just a military outpost, in effect. This is something that’s going to have a huge impact on the Russian economy and ultimately crimp Russia’s ability to get stuff to the front, because if that river is no longer available, if the canal system is no longer available, if the receipt of is of is no longer available, then one of the more wealthy cities in Russia just lost everything that made it work except for being a military depot. 

And you should expect more tax there over and over and over again in the not too distant future. Third, now that the Sea of Azov is offline, next up is the Black Sea. It’s not that much further. The Ukrainians have loads of drones that are capable of taking the war now just across the Crimean Peninsula and into the ocean, and we’ve already seen dozens of attacks on things like tankers and Borchers, everything that’s in the shadow fleet. 

So look for the Ukrainians over the next couple of months to repeat what they did in the Sea of Azov in the eastern side of the Black Sea, because no ships go there, really, unless they’re part of the Shadow Fleet. No one else wants to dock directly. And it’s not like they haven’t been warned if they decide they want to try. 

The only real solution here that the Russians have, because air defense isn’t going to cut it, is to up their attacks on the Ukrainians to the point that it attracts the Ukrainians ability to do this. But since it’s from mobile launch sites with ever evolving drones and drones at the moment, the Russians haven’t figured out sorry about the wind drones. 

At the moment, the Russians haven’t figured out how to replicate. That’s something that undoubtedly can’t happen this summer. This is going to be a problem for a year from now, or a potential solution for a year from now. And now we’re getting to India and I’ve got to stop so by.

Russian Sleeper Cells Don’t Scare Me

A man in sunglasses with Russian glyphs behind him on a red cyber background

The idea of sleeper agents being embedded in the U.S. is largely unrealistic. In contrast, the far more realistic threats that should concern you are short-term operatives carrying out intelligence-gathering or financial activities.

The Hollywood special “sleeper cells” are only worth the investment for major assassinations or mass-casualty events, not routine sabotage or espionage. Whereas, planting foreign intelligence operatives through legal means and for shorter periods makes much more sense. However, the U.S. can typically detect this kind of thing through its vast and interconnected signal detection network.

Prefer to read the transcript? Click here

Transcript

Hey all. Peter Zeihan here coming to you from Colorado. Today we’re taking a question from the Patreon page. Specifically, what with everything that’s going on in the world today, with all the changes the United States involved in the Middle East, the Russians literally on the warpath, the Iranians now having ample reason to hate the United States for fresh reasons. And the Chinese, of course, always pushing, pushing, pushing. 

Do I worry at all about things like sleeper agents? Let’s clarify what most people mean by sleeper agents before I answer that. So the idea is you have some highly trained operatives that go into an enemy state, establish themselves as locals, get jobs, raise families, buy homes, and live among the target population for years while they do research towards a specific end tax to justify the investment. 

The reason I don’t worry about sleeper cells is that specific thing towards an end task to justify the investment. Having somebody with a deep skill set in Intel is one of the most expensive things that you can do. It’s like astronauts, F-35 pilots and then the high end spies. So if you’re going to put them somewhere where for years you’re not going to get a payback, you’re talking about having to have a payback on the backside. 

That is on the scale of assassinating somebody like the president or causing mass casualties, simply getting in and stealing a piece of technology or blowing up a pipeline or something is not going to cut it. So no, this is not something I worry about. Does that mean I’m not worried about us, the United States being penetrated by foreign intelligence? 

Totally different topic. The United States is a free society. The United States allows people to fly in with limited background checks. And if you’re going to have an Intel system that wants to flood your country with foreign operatives, you know, student visas, for example, is a very easy to get way to get in. That’s how some of the nine over 11 attackers got in, for example. 

But that’s a very different sort of operation. Those are operators that would be in the United States, people who are operational who have specific tasks. So, for example, in the past, the Russians, both during the Cold War and more recently in the post-Cold War era, have sent dozens of people into the United States to gather information from wherever they can. 

It’s not a sleeper unit. That’s somebody who’s actively reporting. And it’s that sort of act of reporting that U.S. Intel signals intelligence in particular, is very, very good at rooting out. And ultimately, we did Hezbollah. You know, the group in Lebanon has sent people here primarily to love this, buy cigarettes. They bought them in one state. They sold them in another state, set up a little smuggling system within the United States to take advantage of the difference excise taxes. then sent the money home. They also accrued equipment that they were going to send home. But that sort of activity do it in bulk enough to generate money. That is the sort of thing that also tends to pop up on the radar of law enforcement, right down to the local level. The bottom line is, while we may have a free society, we’re still an information society. 

And because we have local law enforcement, state law enforcement, federal law enforcement, and then regulators at every level for everything means it’s really hard to establish some sort of like deep root into the American system to carry out some hypothetical attack. So while we have a lot of operational folks and there are spies in the United States and have been spies, we’ve never had anything that kind of fits the generic term of sleeper cell. 

So for sleeper cells is really tends to be restricted to to low end and really not particularly realistic fiction. This is not something I lose any sleep about. Which isn’t to say that I don’t lose sleep.

Russia Gets Knocked Off Its Horse

Iconic photo of shirtless Putin riding a horse in Russia | Creative Commons license from Flickr: https://www.flickr.com/photos/jedimentat/6230779369

Ukraine has struck a key semiconductor facility in Voronezh that could significantly weaken the Russians’ ability to produce advanced military equipment.

Russia is already struggling to replace military hardware lost in the war, and damage to this facility (and the other major chip plant near Moscow) would force it to depend heavily on Chinese components. These would be less compatible with Russian military systems and would reduce the quantity and quality of Russia’s weapons.

As Ukraine continues to expand its drone capabilities with foreign support, we’re entering a new phase of this war where Russian tech limitations play a bigger role on the battlefield.

Prefer to read the transcript? Click here

Transcript

Hey everybody. Peter Zeihan here. Coming to you from Colorado. It is the 22nd of June. And today we’re going to talk the military industrial complex of Russia, specifically as regards information technology, specifically as regards semiconductors. The reason we’re talking about that today is that the Ukrainians sent a large bevy of cruise missiles into a military facility in Vienna, which is a city in south central Russia, just north of the Caucasus. 

Verna is an industrial plant that dates back to 1959 that is primarily servicing military needs. So they make semiconductors there. They are cut from the wafers, they’re tested their package, and then they’re prepared for incorporation into various military technologies like fighter jets and tanks and especially missiles. Anyway, we don’t have good damage reports from it because it’s the Russians and they’re not going to tell us, but the whole thing appears to be on fire. 

And that’s usually really bad for semiconductors, which every stage of the process requires. Clean room conditions, aside from the Russians, only have one other place that makes semiconductors at all. It’s called Zilina Grad. It’s just to the northwest of Moscow. It’s three facilities that are quite a bit smaller and therefore easier to target for. ResNet has extensive anti-air defense because of the Ukrainian drones. 

Zilina grad not so much. And I would bet your ass that the Ukrainians are going to be targeting Zilina grad very, very soon. Now let’s talk about what’s at stake here for the Russians, the type of chips that are used in military equipment writ large are actually pretty basic because, for example, for missiles you only do one thing once. 

You might need chips for guidance systems, you might need chips for things like IR goggles, whatever. But those are not cutting edge nodes of seven nanometers or below, or even cutting edge direct all nodes of like 28 nanometers to seven nanometers. These are really dumb chips. And the Russian military complex reflects that. So with a few specific exceptions, that they can make it very, very, very, very low run rates. 

The most advanced semiconductors that both of these facilities, the Leningrad and can make is about 90 nanometers. And then scaling back to 150. And even that uses extensive imported foreign equipment. The only chips that the Russians can make without any help is about 350 nanometer, which I could probably bash together in my kitchen if I was willing to watch a lot of YouTube tutorials, which I am not. 

Anyway, where does this leave the Russians? Well, with virescens offline for an indeterminate period, probably permanently, Ukrainians will hit it again. And with the Leningrad not long for this world, the Russians now have to find another way to make their gear. And they were already having a significant problem. They were only manufacturing new gear writ large at one fifth to 1/20. 

The weight that they were burning through it in the war. Part of that is the Russian industrial complex. Part of that is just the nature of this conflict, where the Russians just throw scads and scads and scads of things against everyone to see what it sticks. But the biggest part of the strategy that the Russians depend upon is using fighter jets to drop glide bombs from, say, 20 miles from the front line so they never even get in risk range. 

And then using long range weapons in order to target things like the Ukrainian power grid. All of that requires these chips. And yes, you can pull a chip out of something like a massager unit or a smart margarita machine or a washing machine and plug it into your military gear. But military hardware is hardened. It needs to be able to handle things like vibration and heat and maneuvers. 

And washing machines are not designed to the same specs, which means you’re going to have much, much, much slower performance and much, much higher failure rates. And when you’re talking about like a hypersonic missile, you might as well not even try. The Chinese can or export to the Russians chips of the appropriate technological level. But just as with the washing machine chip, the chip wasn’t designed for the hardware. 

The hardware wasn’t designed for the chip. So the failure rates are going to go through the roof, which means that probably in just a few days, the only hardware that the Russians are going to have that is advanced is stuff that’s in the warehouses, is currently being assembled, or is on its way to the front already. They will not be able to replace them with additional hardware at the same rate or with the same quality levels. 

And the Russians were never really known for high quality levels. So for conventional weaponry, helicopters, jets, tanks, missiles the Russians now are probably facing down a qualitative collapse in what they can do. At the same time, they’re looking at a quantitative limit at what they can produce, even with extensive Chinese help. Ukrainians, on the other hand, when it comes to drones, are already the numerical and technological leaders in this conflict, producing more drones and better drones than the Russians have for several weeks now. 

That’s still spinning up, especially with the infusions that have come in from the Europeans. Now that the Trump administration has dropped, kicked them, and they’re desperate to develop new technologies. And from the Arabs of the Persian Gulf who are furious with the Trump administration for the Iran war, all of them are basically underwriting the Ukrainian defense industrial base now. 

And the only people who are underwriting the Russians are the Chinese, and they insist on getting paid. Anyway, you fast forward just a few weeks and this is going to start to impact the front line, because without this higher end equipment, all of a sudden the Ukrainians are punching at the same weight that the Russians are. That doesn’t mean the war is over by any stretch of the imagination. God, no. Russia is still the largest country on earth. They still have a significant holdover equipment list from the Soviet times. They still outnumber the Ukrainians 4 to 1 in any battle that matters. Outnumbering the Ukrainians 3 to 1. They still have a lot going for them. But if they can’t replenish their weapons, if they can’t replenish their tech, then it all becomes whether or not the Chinese make a political decision or not. 

So what we’re probably going to see over the summer is significant change in how this war is fought. We’ve gotten a glimpse of that in the last couple of months with the new Ukrainian drones targeting things like logistics, but now the Russians are going to either have to a figure out a way to counter that without microchips, unlikely, they’re going to have to be dust off weapon systems that to this point they’ve been unwilling to use, like, say, nukes, which have, let’s just say complications or three. 

The Chinese are going to have to put their shoulder into the conflict in a way they just haven’t yet. Either way, this long, slow grind of the last three years is over, and this is about to become a lot more dynamic very, very soon.

Ukraine Starts Cracking Open the Occupied Territories

Ukrainian soldiers holding their flag against a dark sky Photo licensed by envato elements: https://app.envato.com/search/photos/1ac20b11-1fac-4c14-9452-b1e5ca99fccc?itemType=photos&term=ukraine+war

Russia’s logistical nightmare in Crimea is just beginning. With Ukrainian strikes ramping up throughout Russian-held Crimea, Russian authorities have suspended civilian fuel sales since new shipments can’t reach the peninsula.

Since many of you have asked, the Kerch Strait Bridge primarily remains open to allow civilians to leave Crimea for Russia. However, Ukraine’s broader strategy for Crimea is to systematically destroy the infrastructure needed to supply it. And with the new drone supplies and capabilities, this is very plausible.

Much of the territory Russia has occupied since 2014 has become increasingly difficult to supply, and without effective countermeasures, Russia’s strategic position is steadily weakening. This isn’t a done deal, but the momentum is shifting in Ukraine’s favor.

Source link: https://arcg.is/09O0OS
Prefer to read the transcript? Click here

Transcript

Hey all, Peter Zeihan here, coming to you from Colorado. Today is the 21st of June. And the new news is that in Russian occupied territory in Crimea, in southern Ukraine, Russian authorities have suspended all fuel purchases for all civilians, whether it’s personal cars or businesses. Short version is that the Ukrainians have now deployed enough drones reliably, enough that can target things like fuel trucks, that there is no more fuel coming in. 

The Russian Navy has long since abandoned the province, and everything has to come in by rail. And those rail bridges have now been damaged or truck. And now the Ukrainians patrolling with dozens of drones at a time over the territory and basically hitting the drugs before they can get anywhere close. So we basically have whatever little fuel is left being hoarded by the military. 

And the only reason that the Kurt Strait Bridge remains operational, that’s a that’s a bridge that comes from Russia proper over straight at the Sea of Azov into Crimea, is so that civilians in Crimea can flee to Russia. It’s not that the Ukrainians are planning a final push or anything to take over the territory, but they have systematically damaged all of the infrastructure that allows the Russians to supply Crimea. 

And as big of a deal as that is, and it is, and there will be more of it in the future. It’s just the first start of a broader Ukrainian offensive. Most of these attacks are coming from places like Kherson, which are just on the other side of the Dnieper River. But there are a couple of towns further up Nikopol and Dnipro, where the Ukrainians are starting to launch attacks as well, not interrupting logistics going to Crimea, per say, but logistics going to other parts of the occupied territories. 

Keep in mind, in the early days of the war, the Russians came in from the north, the east and the south and Crimeans in the south. The stuff in the north was eventually purged. It’s the stuff in the east that is now in question and in the southeast, because we have multiple provinces, that includes Donetsk and Luhansk that are hard up on the Russian border, and that provides a lot of backstop for the Russians. 

Ukrainians can’t dislodge those further. But as you move south and along the coast by cities like Mariposa and Meteor Pol, that does not apply. They can only be supplied by road or rail, just like Crimea or by sea, just like Crimea. And the sea link has already effectively been cut, and the Ukrainians have already been going aggressively after the ports in that region. 

And so the next stop is to do basically what they’ve done to Crimea, further to the northeast and east and east and east, until they get hard up to the Russian border, or at least into the Donetsk region, where the Russians have a few more geographic advantages. Basically, what we’re looking at here is roughly two thirds of the territory that the Russians have captured since the first war, going back to 2014, is now becoming a sandbag that the Russians cannot reliably resupply. 

And while Crimea might be the literal bridge too far because it’s just too far away, you can imagine a situation where the Russians lose access to that entire southern zone, or the ability to supply it, and the Ukrainians start crossing the river, or coming across at, say, Dnipro further north, and punching through and basically excising the Russians from the entire area. 

Not suggesting it. It’ll be quick, not suggesting to be easy. There’s still lots of minefields and this is still Russia we’re talking about here. But the balance of forces in this entire region is now shift. And the question isn’t will the Russian strategic position collapse? It’s how and what will the Russians do in reaction to that? There’s still a lot of options in the table. 

There’s still a lot of ways where this can go horribly, horribly wrong. But the Russians have yet to come up with a way to counter the Ukrainian memory drones that are capable of selecting their own targets, which makes them. And now that those are being produced in the hundreds per day, the Russian position across the entire southern parts of the occupied territories is really falling apart.

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.

Prefer to read the transcript? Click here

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.

Prefer to read the transcript? Click here

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.