Ukraine War Peace Talks

A mural of a ukraine flag with a peace sign in it

Ukraine and Russia peace talks are proceeding furiously, but going nowhere, mostly because the Trump administration is trying to make this a rush job and has neglected all the important details.

Steve Witkoff has been the lead on these negotiations, but with no foreign policy experience, we’re getting the kind of results you would expect. The pattern looks something like this: Witkoff meets with Ukraine or Russia, he’s force-fed propaganda, he regurgitates that back to the White House, a fantastic new deal (aka a one-sided propaganda piece) is written up, the other side rejects it, and the pattern repeats itself.

We’re seeing deals being drafted that completely ignore the redlines established by either side, so it’s quite clear that these peace talks aren’t going anywhere, anytime soon.

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Transcript

Hey all Peter Zeihan here coming from Colorado. And today we’re going to talk about the status of the peace talks with Ukraine and the Russians to end the Ukraine war. We’ve we’ve had really two big problems with any meaningful negotiations so far. Number one, Donald Trump really wants a peace deal, but he really doesn’t care at all about the details. 

So whatever the peace deal of the moment is, it’s on his desk. He’s like, this is wonderful. This is the best deal ever. Let’s do this. And when countries push back, he screams at them and starts to threaten them. Until this point, the country that he’s been screaming at and threatening has usually been Ukraine. And that is because of the second problem, and that is the US chief negotiator, who’s a guy by the name of Steve Wyckoff, would cough, is a real estate mogul from New York, old buddies of Donald Trump. 

And he has said on a number of occasions in a number of venues that he knows nothing about negotiation and nothing about foreign affairs, and he’s proud of that. He has no intention to ever learn anything. So I and others have always thought that Wyckoff was just rabidly pro-Russian because he doesn’t meet with Ukraine. He’s never met with Zelensky, who’s the Ukrainian president. 

Just goes to Moscow, sits down, tilts his head back, and the Russians pour a few gallons of Russian propaganda into him. He comes back to the white House, vomits it forth. Trump says, oh, this is wonderful peace idea. Let’s do this. And when the Ukrainians refuse to agree to demands in from the Russians to basically withdraw their troops and shut down their army and never seek a defensive alliance, the Ukrainians say no. And then Trump goes off the handle. That’s basically been the pattern for this year to this point. 

What changed in the last week is that Steve Wyckoff met with Zelensky for the first time, and guess what happened? He tilted his head back, and Zelensky poured a few gallons of Ukrainian propaganda down his throat. Witcoff came to the white House and vomit it forward. All of a sudden we have a Ukrainian peace plan that ignores all of the Russian demands. Specifically, would allow for an article five style security guarantee with the United States. One of the things that the Russians have refused to even negotiate on is Ukraine ever joining NATO, because they don’t want the other countries, most notably the United States, to get involved in the conflict? 

Remember that for the Russians, it’s not just about Ukraine. It’s about pushing their Western periphery back to an area that they find more defensible, so that that periphery actually matches geography, so that they can use mountains and seas to defend themselves. That means not just conquering all of Ukraine, but also all of Finland and Latvia and Estonia and Lithuania and Moldova and big chunks of Poland and Romania as well. 

So anything that involves foreign troops, the Russians will generally reject. But Trump, having not done the homework, think that’s just means NATO. So the new plan by the Ukrainians is for a NATO style guarantee to not be with the alliance, but be with the United States and Germany and Poland and France and basically every NATO countries signed a bilateral deal instead. 

And Trump, this is the last deal in front of us. Like this is a wonderful idea. And so this is the peace plan. It is still a stupid peace plan. It’s just meets one side’s point as opposed to the other side’s point. What that means for me is I am now gone from thinking that would cause is just rabidly pro-Russian to realizing the word cost is just really fucking stupid and Trump can’t tell. 

So why would an alliance of the structure with Ukraine be as horrible of an idea as every plan that’s come forward to this point? That’s been from the Russian point of view? Well, remember, for the Russians, Ukraine is not the end of the story. It’s the beginning of the story. And so if we are now directly involved in the third Ukraine war, because that was what the next one would be, then the Russians would use all the weapons systems that they have available, including their nukes and their intercontinental ballistic missiles, because all of a sudden they are in a multi theater war. 

And that means that this deal in its current form, pretty much guarantees in exchange, it’s going to sound horrible. But for the United States, the best outcome of these talks is something that fails and continues with NATO and the United States supporting Ukraine and helping them build up an independent defense capacity so they can stand up to the Russians on their own. 

And that means ongoing weapons transfers and ongoing assistance. The alternative is to leave the Ukrainians out to dry, in which case the Russians don’t stop at Ukraine and come right into NATO countries, or to put American troops on the ground to defend the Ukrainians against the next Russian assault, in which case we get that exchange. So this deal is just as bad as everything that has come before. 

What I do find really interesting is we actually have some talk on the specifics, not just in the white House in Congress, but because a bilateral security alliance requires Senate approval and ratification. And we’re already starting that process now, I don’t think that this will happen. I don’t think this should happen. But, you know, Steve, what comes next stop is in Moscow. 

So I’m sure he’s going to change his mind again and come up with a new plan that will go before Trump, and then he will change his mind again and we’ll get back to this cycle. But the real thing that has changed in just the last few days is now an understanding that the details don’t matter to this administration at all. 

And unless and until we get, at a minimum, a new chief negotiator for Ukraine, this is just the cycle that we’re in. A lot of screaming and no real change.

The Russian Breakdown

Russian soldiers in formation

Should the war in Ukraine result in a Russian loss, what will the future hold for Russia?

Well, we know the road ahead for the Russians is going to be a rough one, but that doesn’t mean the country will collapse from within immediately. The military and internal security services hold too much power, and since the heavily propagandized, aging, ethnic Russians account for 70% of the population, an internal uprising isn’t of concern.

The real threat to Russia comes from the outside. Neighboring countries or those with an interest in seeing Russia remain destabilized could take advantage of its weaker borders and limited economic and strategic capacity.

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Transcript

Peter Zeihan here coming to you from Colorado. And today we’re going to take a question from the Patreon page, a bit of a what if, if the Russians lose the war in Ukraine or what does that mean for national stability within Russia proper? Are we looking at an immediate disintegration or what? Great question. 

Now, there are a lot of examples in Russian history of where the center has broken. And a loss in Ukraine doesn’t necessarily mean that the Kremlin loses power, but there’s really two big pillars of power in Russia. One is the military and the other one is the internal security services. And the important thing to remember about Russia is, unlike a country like Iran, where the country is actually half non Persian, and so the military is primarily responsible for occupying itself in order to keep all the minorities, under control in Russia. 

That’s not the case in Russia, even if, the Russian census data is completely fabricated, which it probably is, we probably have at least 70% of the Russian population actually being ethnic Russian. So among those populations with the possibility of Saint Petersburg, where there might be an economic push for independence, most of the Russians are going to stay put. They’ve been conditioned. They’ve eaten nothing but propaganda for quite some time. And most importantly, most of the young people are gone. Not only is the birthrate in Russia been dropping since before World War two, it plummeted under Khrushchev. Fell even more to Gorbachev and particularly nosedived in the 1990s. You add in a million casualties in the Ukraine war, in another million people under age 30 fleeing. And there really isn’t that youth generation that generally generates, revolutionary activity. And the Russian population will be concerned about losing what little they have left. So the chances of them being really rebellious are pretty low. The other 30%, of course, is a different question. You’ve got a number of minorities, mostly Turkic, of some flavor or Bashkors, Tatars, Chechens, English. This is where things would get really interesting. So, the military’s primary goal is to be on the borders in the Russian sphere and prevent any sort of invasion. And in a post Ukraine scenario where the Russians lost their borders are very, very, very long. And so they really won’t be available for any sort of domestic suppression of rebellion that will fall to the intelligence services, which are just as strong now as they were three years ago. 

So you can have an open rebellion in places like Tatarstan or Bashkortostan and the Russian government remains relatively capable of dealing with those. Now, they can’t deal with it everywhere, as we saw in the Soviet system, when the internal services were much stronger than they are today. If you’ve got two dozen places going into some degree of rebellion at the same time, then you’re kind of screwed. 

But when those two dozen places went into rebellion at the same time last time around, they were Kazakhs and Uzbek and Georgians and Latvians and Estonians and Armenians, and as a Rajani, none of them were ethnic Russians. And when the Soviet system fell, 14 of the 15 constituent republics of the Soviet Union were not majority Russian, and they are now independent states. 

What was left with rump Russia is much smaller, much more difficult to defend, but is actually more ethnically homogenous. So the Russian state, the Kremlin, would have a much better chance of suppressing internal dissent. 

Now, this is all pretty much a starvation diet because they post Ukraine. Russia loses a lot of its income. Its security situation is much worse. 

Its financial position is considerably worse, and there would probably be pressure on it from the entire western and southwestern periphery, because once Ukraine wins, you’re going to have any number of European countries that include, but are not limited to two Finland, the Baltics, Poland and Romania, who are going to be pushing at the Russians to try to make sure they stay off balance. 

The Turks will probably get on that to the EU’s backs down south will probably get into that. And based on the circumstances in East Asia, Japan or China could get in that as well. So I wouldn’t say that a post Ukraine. Russia is long for this world, but it’s not probably going to fall from within without a lot of help. Russia is in a relatively slow motion decline. It’ll probably still be there regardless of what happens in the Ukraine war by 2040. But once you fast forward past 2050, that’s when the demographic shift really starts to shift. And most of those Turkic minorities have strong birthrates. You combine that with what happened in the war, in gutting the younger generation and very, very, very low birth rates and high death rates among the Russian population. 

By the time you get to 2060, you’re in a very different environment and then you can start thinking about an internal disintegration, but it’s going to be from the outside first. And, the end of all of this really does depend on what happens to Ukraine. Because if Ukraine falls, then the Russians have a more secure external border. 

It’ll buy them 20, 30 years. That’s not a rounding error. That’s why they’re doing it in the first place. But we are still looking at the end of the Federation before the end of the century. That’s pretty much just a question, whether it’s front loaded or not. 

Uh Oh for Space

NASA photo of the ISS

The Russians had an oopsie with the launch pad at their main heavy-lift launch site following the launch of their Soyuz MS-28 spacecraft heading for the ISS. The unintended destruction of this launch pad cripples Russia’s space capabilities.

However, it’s not just Russia that will feel the heat from this. With the ISS slated for retirement within five years, the lack of Russian participation puts the future of the ISS…up in the air (excuse the pun). NASA isn’t ready to step in, and private sector plans for independent stations all require the ISS functional and in place.

With the Russians unable to maintain a modern satellite network, coupled with their international isolation on the ground, what’s stopping them from sabotaging low-Earth orbit? It wouldn’t take much for them to trigger a Kessler Syndrome event. Not a great look for the future of space.

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Transcript

Hello from chilly Colorado. It’s like four degrees here today. Peter Zeihan here, today. Well, last week during Thanksgiving, something blew up in the former Soviet Union. And it wasn’t in Ukraine. And it wasn’t in Russia. It was in Kazakhstan. Kazakhstan is the second largest of the former Soviet republics, kind of nestled under south central Russia. 

What blew up was at the cosmodrome, which is where the Russians centered their space program during the Cold War, because you want your launch spot as close to the equator as possible. So the spin of the Earth helps you launch things. Anyway, the Kazakh Cosmodrome has been where everything has been happening, for the i.s.s., that really matters. 

Most of the heavy lift is there. The U.S. does launch things first with a shuttle and now with, SpaceX’s Dragon capsules. But it’s the Soyuz that come out of Russia that really have the really heavy lift. Anyway, when they did a launch, the launch pad blew up and repairs are going to take a minimum of months, maybe years. 

And this may be the beginning of the end of the ISS. That’s the International Space Station. Now, the ES was put up there as part of an American, Russian, post-Cold War, hey, we’re all friends now program back in the 1990s and has been the core of manned exploration ever since. However, it’s getting old and it was going to be retired within five years. 

But now, without the heavy launch capacity, at least in the short term, probably longer. It’s unclear whether the Russians are going to continue to participate in the program at all. 

It’s not the 1980s anymore. With Ukraine war three years ago, the Russians have become persona non grata in pretty much every aspect of international cooperation, even Eurovision, with the exception of the space program, because from the American point of view, without the Russians involved, it’s a question whether there would be a space program if all the certainly the ES itself is now in jeopardy, which means we have two problems. 

First of all, without heavy lift capacity, it is questionable whether the ES can persist and there isn’t a replacement program in place right now. NASA has no no plans to put up a replacement system. And there’s a lot of science and a lot of work being done at the ES that really can’t be done anywhere else. 

The plan is for private companies to go up and have their own satellite systems. It is unclear if anyone is ready for that, and everyone’s plans revolve around starting attached to the I.s.s. and then when the ISS is commissioned, moving off on their own, that plan may no longer be viable. And if we’re entering a period where there is no manned operations in space and things like satellite repair become really difficult, especially for the bigger ones, that’s problem. 

One problem, too, is the Russians. The Russians of late have had a very. If I can’t have it, no one can have it, approach to really everything. Because the Soviet Union used to be a superpower. Until the Ukraine invasion, Russia was a major power. And now Japan, Korea, Taiwan, the United States and all the Europeans have basically shut the Russians out of everything they can. 

They just don’t matter in international forums to the degree that they used to. And they certainly don’t have the cash to splash around to buy friends like they used to. So where does that leave them? Well, if the ISS fails and they can no longer have heavy space launch, then all of a sudden the Russians don’t have much need for satellites. 

We did a video, a couple weeks back. We’ll share that on this one, where we talked about something called a Kessler syndrome. Basically, there are thousands, soon to be tens of thousands of satellites in low Earth orbit, and very few of them are Russian. The Russians can’t maintain what they have. So you got some old Cold War relics up. 

There are a few things that have been launched since then, but for the most part, this is Starlink and to a lesser degree, American telecommunications. it doesn’t take a lot of imagination to think of how the Russians could disrupt that, because though they don’t have heavy space lift, anymore, they do still have space left. 

They have their own cosmodrome in Russia proper, can’t get the huge volumes and the weights up, but it can certainly say go up and blow up a few satellites. And if you do that and you cause the, the shotgun effect of high velocity debris, Mach 25 it doesn’t require taking out too many satellites to cut a cascade reaction that basically makes low Earth orbit unusable for several years. 

And the Russians are now in a position we’re considering that doing it on purpose, is probably crossing their radar now, because if they can’t use space in a meaningful way anymore and everyone else has taken their toys and go on home, then the Russians really don’t see the negative of making space unusable. 

Ukraine Targets the CPC in Recent Drone Strikes

Image of a drone firing missiles

Over the weekend, Ukraine expanded its attacks on Russian energy infrastructure to include facilities tied to the Caspian Pipeline Consortium (CPC), as well as the shadow fleet of tankers that Russia uses to bypass Western sanctions. All told, roughly 2.5 million barrels a day of Russian and Kazakh oil exports are now in mortal danger.

The Baltic Sea is the next-best route for the shadow fleet, and if any European powers decide to help Ukraine…that could be shut down quickly as well. That would leave the Pacific (out of Vladivostok) as the only viable route for the shadow fleet.

Sure, the world is currently in an oil oversupply, but if both the Black AND Baltic routes went down, the global system would be pushed to the limit.

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Transcript

Hey. Coming to you from Colorado. We got snow. Finally. A couple things happened over the last few days and the Thanksgiving holidays. We’re going to start with Ukraine. All energy related. So, the Ukrainians obviously have been using heavier weapons and, bigger drones and rocket drones and naval drones to attack Russian energy assets across the length and width of all of western Russia. 

They’ve now done a couple of things that are not necessarily unprecedented, but added together are going to really challenge what’s going on in global energy markets. The first is the port of Novorossiysk. Now Novosibirsk is a major naval base and has been a major Russian loading facility for crude for some time. And over the weekend, the Ukrainians hit it again with some naval drones. 

But most notably, they hit something called a loading booey, which is exactly what it sounds like. It’s an offshore Bui that a tanker comes in, docks with, and then loads up with crude. But this time the, Bui doesn’t belong to the Russian government. It belongs to a group called the CPC, the Caspian Pipeline Consortium, which is a consortium of international companies that operates the Tengiz super field on the northeastern coast of the Caspian Sea. 

Tengiz Chevron was the original company that founded. This dates back to the Soviet periods. It was the first real foreign direct investment by Western companies, in the former Soviet Union. And eventually, Chevron became the functional operator, along with some Kazakh and some Russian companies. Anyway, CPC is responsible for about 75 to 80% of the total exports of Kazakh oil. 

But because the pipeline has to go through Russia, because the Russians were just dicks when all of this was being negotiated, the Russians throw a lot of crude in the pipeline as well, and sometimes even crowd out Kazakh crude. So the Ukrainians see it as a viable target. So, Tengiz, is a big deal. The CPC consortium is a big deal, but overseas is really where it’s at, because that’s not just an export point for Kazakh crude, but a lot of Russian crude as well. 

Now it’s under regular direct attack as specifically CPC, aspects. So you’re talking about, just from CPC, roughly 1.4 million barrels a day is under a degree of threat, and then another million barrels a day of purely Russian crude. So if the Ukrainians can keep this up and it is kind of the next target in the crosshairs, that is a significant reduction in potential flows. 

That’s part one. Part two is the Ukrainians deliberately, again, using naval drones, went after a pair of shadow fleet vessels in the Black Sea that were coming in from Istanbul. They were empty at the time, which is probably the only reason that the Europeans haven’t screamed bloody murder, because if you actually had an oil spill in the Black Sea, all of it has to flow through downtown Istanbul on the way to the Mediterranean. 

It would be a mess. But we now have the Ukrainians actively, deliberately targeting the shadow fleet, which basically means that the between targeting overseas on the front end in the Shadow fleet, on the back end, the entire Black Sea is now a no go zone, for the Shadow fleet tankers and for Russian oil experts in general. 

And we’re going to lose somewhere between 2 and 3 million barrels a day of flow just from that. That is a big deal in of of itself. But it also brings up the next stage of this Russian shadow fleet. Tankers only depart from three locations near, Saint Petersburg, on the Baltic, near and over a sea on the black, andnear Vladivostok, on the, the Pacific coast. 

One of those is now functionally shut off. The next one to go is going to be the Baltic. And the question will be whether the Ukrainians do that themselves. It is further away it would be harder to do, or whether the Europeans assist, because every tanker that flows out of the Saint Petersburg region has to go through EU and NATO members Estonia, Latvia, Lithuania, Finland, Sweden, Poland and Denmark, as well as Norway and Germany. 

So, you know, if there’s any one of those countries that decides to assist the Ukrainians in any meaningful way, whether it’s time on target information, intelligence, information targeting, going after themselves, allowing the Ukrainians to fly through the airspace or dock at their ports, whatever it happens to be, then you’re talking about roughly two thirds to three quarters of Russian oil exports from a pre war point of view being gone. 

And we’re now in a position where we can talk about what that’s going to look like in just a few months. Now the global energy supply is at the moment in oversupply. So losing one to maybe even 3 million barrels a day of Russian crude is not something that’s going to break anybody. Except for Russia, of course. 

But once you start talking about the black and the Baltic being off at the same time, we’re already up against the upper limit there of how much flow you could probably remove from global systems without everybody, like having a CS. You combine that with more and more targeting of the shadow fleet itself so that there just aren’t tankers available. 

And then we get into some really interesting positions. It looks like calendar year 2026 is going to start off with a bang, and I am here for it.

Trump’s 28-Point Peace Plan to End the Ukraine War

Ukraine solider on a armored vehicle with a split screen of Donald Trump

Both the Ukrainians and the Russians will hate this plan. For Ukraine, the plan bans NATO membership, cuts the military in half, establishes weapons restrictions, and cedes key regions like Crimea, Donetsk, and Luhansk. For Russia, the plan accepts Ukrainian independence, freezes military ambitions in Europe, affirms the post-Cold War security order, and directs frozen assets towards Ukraine and the US.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Colorado. And today I’m going to pick up on something that the Patreon crowd has been pestering me for for over a week, and that’s to comment on Donald Trump’s 28 point peace plan that he’s trying to impose upon the Russians and the Ukrainians. And the reason that I have held out until now is because it hadn’t been published. 

And so we were only seeing things that were leaked out of Ukraine or Russia about how unacceptable it was. And rather than just repeat what other people were saying about something that hadn’t seen, I figured that wasn’t fair to anyone. So anyway, the full thing is now released. We’re going to go ahead and publish that as an attachment to this video so you can read it yourself. I think Donald Trump is getting a little bit of crap from all quarters on this one for good reason. Not because I think that the document is overly pro Russia or pro Ukraine, just because there’s a lot in it that’s going to piss off a lot of people. It’s probably unworkable. But let me break it down. 

So the core concept behind this fight is that Ukraine knows that its demographics are turning terminal, and it knows it’s going to lose the ability to field a large army to defend themselves against external aggressors, or at least as they define it, external aggressors. And in the post-Soviet settlements going back to 1992, Russia’s borders actually got longer than they were into the Soviet period and were drawn back from a series of geographic barriers that they had counted on for defense during the Soviet time. 

So if you look at the map of the Soviet Union versus Russia, they were anchored in the Baltic Sea, in the Polish plains, and in the Arabian Gap, which is where Moldova is roughly, as well as down in the arid lands of Central Asia. And they pushed right up to things that are hard to invade through the Baltic, the Carpathians, the Caucasus Mountains, the tension and so on. 

So in the post-Soviet settlement, Russia contracted back into open zones on the other side of those borders. And now basically its entire frontier is open. And, the Russians fear that not necessarily going to be invaded tomorrow, but at some point down their line and with their demographics terminal, it’ll be a bloodbath. And that’ll be in the Russia. 

I don’t necessarily agree with that, but it’s a reasonable position for a country like Russia that’s been invaded so many times in its history, and it is the foundation of their foreign and strategic policy. Ukraine is a big, wide open area on the wrong side of those borders. So no matter what version of an independent Ukraine there is, there are parts of Ukraine that are less than 300 miles from Moscow, and there are no real geographic barriers in between. 

So you can have an independent, secure Ukraine or an independent, secure Russia, but you can’t have both. And so Russia’s position is as long as Ukraine exists in any form, it is a threat to the very existence of the Russian Federation, and the Ukrainians feel pretty much the converse. 

So the plan, let’s start with what has been making the rounds more the Ukrainian view of things and why the Ukrainians think the plan is unworkable. It forces them to never apply for NATO membership and enshrine that refusal into their Constitution. It forces them to cut the size of their army by half and restrict the type of weapons that they can develop, and it forces them to permanently give up three provinces the Crimea, Luhansk and Donetsk, Luhansk and Donetsk are the core of the Ukrainian industrial zone. 

And right now the Line of Control goes roughly right down the middle of it. So this would take two territories that the Russians haven’t even conquered completely, give them completely to the Russians, and then freeze the conflict along the line of control everywhere else and make a demilitarized belt in between. 

On the west side, the Ukrainian side of that line of control. There’s no geographic barriers whatsoever. And so it’d be very easy in the future for the Russians simply to amass troops and march on Kiev. It would not be a difficult war, especially if Ukraine was denuded of weapons. So from the Ukrainian point of view, this feels like a guarantee of a follow on war that they have no hope of winning. 

And so the Ukrainians are trying not to reject it out of hand because they don’t want to piss off the United States, specifically Donald Trump. But there’s very little reason to expect for them to like this doesn’t mean it’s better for the Russians. The Russians are expected to treat this as the end of all wars and all military action in the European sphere. 

They are to now say that this is a settled issue and that all existing deals, all security developments in the post-Cold War environment are fine, and they are to codify that under Russian law. They furthermore have to accept that European forces can and will be stationed on rump Ukrainian territory, something that they’ve always been diametrically opposed to and they have to put into their constitution that Ukraine is an independent country. 

In essence, if this deal goes through, the Russians are codifying that. They’re done. They’re codifying that. They have no chance of ever getting back to the Carpathians or the Baltic Sea or the caucuses or any of the rest, and they basically just die slowly sort of dying quickly in a war, completely a nonstarter. But my favorite part of this document is what the United States would do with the frozen Russian assets, which are about $300 billion. 

Some of them would go to help rebuild Ukraine, but a big chunk, over 100 billion of them would go into a fund that the United States gets to direct however it wants. Basically, Donald Trump is hardwired into the agreement. The Russians paying the Americans a bribe of $100 billion. So. Let me tell you what I really like about this plan.  

It actually goes through and puts its finger on all of the issues of contention, which is something that the Trump administration has largely ignored to this point. So the idea that this is a document that was made by the Russians is incorrect, because there’s plenty of things in here to make them furious as well. It’s kind of like a, Ukraine Russia primer, maybe like a 201 course for understanding what the real issues of the, conflict are. 

It is assumes that by giving everyone nothing that they want, that everyone will agree to it. And I think that’s a bit of a stretch. I don’t think this is workable at all, but it does at least acknowledge what the real issues are. And for this administration, that is a catastrophic improvement in circumstance. 

But giving yourself $100 billion bribe for the honor of brokering the deal, that was that was just really rich. So will this go anywhere? Almost certainly not, in its current form. It’ll be rejected by the Ukrainians and the Russians almost reflexively. And if you address the issues that either side is concerned with, it only makes it even less palatable to the other side. 

But the fact that there’s actually an understanding here is a big step forward. The problem is that from everyone who has talked with anyone in the white House in the last week, is that Donald Trump is just done with this. He’s like, this is just too complicated. I just want it to be over. So let’s make it over. that was possible, this war would have never happened in the first place. So we’re nearing the point where Trump, through a exhaustion of commitment of time, is peeling away from this. And that could go just like it has on any number of occasions the last six months, any possible direction. But the only type of guidance I can give you as to specifics is that General Kellogg, who has, his history, of course, in the U.S. military, who has been one of the mediators, is now leaving the administration, meaning that the only person left who has the Ukraine portfolio is kind of a top tier issue is Steve Wyckoff. 

And see if Wyckoff really is fully in the Russian camp and absorbs the propaganda like a sponge. So that’s not great. But beyond that, clearly someone who has some idea of what’s going on Ukraine actually was involved in this. I consider that a win.

Ukraine’s New Drone Killer: The Octopus

Photo of a military drone

Yet another innovation has come from the Ukraine War. We’re talking drone-on-drone warfare. Codename: Octopus.

The Octopus is designed to hunt and destroy other drones. Ukraine sees three main aerial threats from Russia: missiles, glide bombs, and Shahed drones. The last on that list is the real nuisance for Ukraine; these cheap, pre-programmed drones are volleyed into Ukraine by the thousand. Enter the Octopus.

The Octopus drone is a cheap, mobile hunter drone that intercepts the Shahed drones mid-flight. If this new tech proves to be effective, it could change the way drone warfare operates, and a new phase of the drone arms race would commence.

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Transcript

Hey, all. Peter Zeihan here. Coming to you from Colorado. Today we’re going to talk about a new drone technology that you’re probably going to be hearing about pretty soon. It’s called the octopus. It’s a Ukrainian design and unique among drones to this point. It is designed to hunt drones. So the situation that Ukrainians are in is they basically face three kinds of threats from the Russians when it comes to the air. 

Threat number one, our missiles, primarily a mix of hypersonic and, ballistic, which can be and are intercepted by a variety of air defense systems up to and including the American Patriots. And it’s not that the Russians don’t know how to make good missiles or anything, but what we’ve seen in the last three years that even their best ones, even their supersonic ones, can be taken down by a patriot. 

Pretty reliably. It doesn’t mean that anyone should rest on their laurels or anything, but that threat has, to a degree, been addressed. The second category are something called glide bombs, and they’re just what they sound like. A Russian jet drops the bomb from over here. It is. Has a thin kid on it, and the bomb glides upwards of 15 to 20 miles. 

So that you can’t really intercept. It doesn’t have a lot of guidance, if any, on it. So from the thins, and the only way you can stop those is to push back the envelope where the jets are dropping from. In this, the Ukrainians have had some degree of success. They’ve got their own jets. 

They’re getting F-16s from a number of NATO countries. And every once in a while, they regularly put their patriots on the front line to shoot down jets that come too close. It’s not a perfect system, but it is something that’s been partially addressed. And the third and most problematic category are cheap mass produced drones, specifically the Shaheds that are, designed in Iran used to all be made in Iran and shipped to Russia. 

Now the Russians have their own assembly and manufacturing capacity. Out further east, away from the front. Shahed cost somewhere between. Oh, based on the model and the number that they’re making $20,000 to $90,000, for the most part. And the problem with your Shahed. Well, pros and cons. First, the cons of the Shahed, there’s so cheap that they really don’t have much for optics or sensors or compute power at all. 

So what happens is the Russians program in specific coordinates, and the head flies there and crashes at those coordinates. So, whenever you see that the Russians have hit a school or a mall or a hospital or an apartment complex, they actually programed in those specific coordinates. So every strike is a war crime. Second, because they’re so cheap, the Russians can field at first a few than a few dozen, and now more recently, a few hundred. 

And the understanding is that by the end of this year, the Russians will be producing these things in the, the thousands of units per month. And so very soon, the Ukrainians are going to be dealing with thousands of these at a time in a single assault. And defending against that is almost impossible with all the technologies we have right now. 

Because if you’re going to use an anti-missile missile that is expensive, each missile costs significantly more than the Shahed does, and you now need hundreds, if not thousands of them. And most countries don’t even have that kind of volume in their arsenal. So that leaves you with things like machine guns. And while there are a couple things out there that work great, their point defense, and they can’t roam and hunt. 

So what the Ukrainians are doing with the octopus drones is an attempt to build a small, cheap drone that can go out as the Shaheds are on their way in and basically work through the way through formation. Pick them off one at a time. And the idea is that the Shaheds, cost more than the defensive drones, than the octopus. 

That’s the theory will work. We’ll see. The Ukrainians, because this is an operational weapons system, are not providing really much of anything in terms of details as to the range and the cost and all that good stuff, but a few things that we know have to be true. Number one, unlike the Shaheds, which don’t have really a processing memory at all, you’re going to need both a GPU and a microprocessor in the octopus drones, because they have to be able to perceive and hunt. 

You need the GPU for decision making capacity. You need the microcontroller for low latency. Those two chips together probably cost, call it 40 bucks for the GPU and probably another 20 bucks for the microprocessor. These are things that Shaheds don’t have because they’re stupid drones. 

That’s still not very expensive. And if you’re talking about something with a relatively limited reach that can hunt something that’s flying 120 miles an hour, it’s theoretically possible that you could drop the cost of that to below the Shahed, because a Shahed has to fly several hundred miles before it gets to its target. 

So a very different profile for the type of weapon system it has. Also, if you have a decent yes, we’re talking 14 nanometer don’t get crazy decent ish GPU along with some, some Dram memory, for probably Nand memory. Ukraines. Yeah, let’s go with Nand difference. Dram is faster and can store more, but it loses all of its memory when it’s powered down. 

Nand doesn’t store nearly as much. It’s not nearly as quick, but you can leave it in the on the shelf for a couple of months, and nothing’s going to happen to the data on it anyway. You throw a bunch of these against a fleet of incoming  Shahed, and if they miss the first one, they just go for the second one and so on.  

Anyway, according to the Ukrainians, these are already in mass production, producing over a thousand units, a month. And if this is true and if it works, it is going to change the face of warfare in the drone age. At this point, drones fall into two categories. Those that can self target kind of like the  Shahed. 

But because GPUs are very subject to vibration and heat and moisture, they’re not hard. You can’t get a good GPU in it to do any real decision making. Just basically they get to the point of arrival. They look around the first thing that they see that hits the target set, they go for that. That’s it. That’s as smart as it gets. 

Or you have a live link back to a controller or a data center, and someone else is making the decision and, programing it step by step. In the first one, you don’t get a lot of accuracy. In the second one, you might get great accuracy, but it’s very easy to jam. So to this point, aside from shooting it down, the only defenses that the Ukrainians or anyone has is to be really good with jammers. And the Ukrainian jammers are now the best in the world, far better than American jammers. 

If you can have a counter drone drone that’s inexpensive, that changes the math. Again, provides an entirely new type of defense that countries can use to protect against drone onslaughts, and probably changes the math of these cheap, mass produced drones that the Russians and the Iranians are doing. 

Anyway. We’re going to know before the end of the year whether this thing works or not. And then we start an entirely new sort of drone race with a fundamentally new type of defense.

Crippling the Kremlin with Russian Sanctions

landscape of the kremlin in Moscow, Russia

The Trump administration’s sanctions on Russia’s energy sector are proving to be more substantive than the other policies we’ve seen.

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Transcript

Hey, all. Peter Zeihan here. Coming to you from Colorado. Today we’re talking about the sanctions that the Trump administration has put on the Russian energy sector, most notably on Rosneft, which is a state oil monopoly near monopoly, and Lukoil, which is the largest technically private company, but is really indirectly run by the state as well. A couple weeks back, the Trump administration put punitive tariffs on the two companies, saying that, no one can deal with them at all. 

And, if they do, they can’t deal with the United States or access the US dollar. And since all, crude traded internationally, well, well over 99.9% of it is exchanged in the US dollar. That basically means being shut off from global finance, among other things. We’ve had a few developments. First, a minor one with Hungary, Hungary’s president, Viktor Orban, who is, well, it’s kind of a weird cat anyway. 

He is an anti European anti-American pro Russian stooge, is the very short and to be perfectly honest, not particularly biased view. He’s been, working to sabotage sanctions on all things Russia and embargoes on all things Russian ever since the Ukraine war started, and has actually said that, if the Russian troops were in Kiev, they’d probably be better for Hungary because Hungary wants a piece of Ukraine as well. 

Anyway, he was in the white House and managed to, Sweet talk his way into getting an exemption from the sanctions. Hungary has been basically using and gorging upon Russian crude for the entirety of the Ukraine war and has been trading, exemptions to European sanctions and tariffs and such, in order to maintain access in exchange for letting the Europeans do what they want more broadly with the Ukraine question. 

And he was able to repeat that feat with Donald Trump this past week. I wouldn’t count on that lasting because no country that borders Hungary has a similar exception. So now that the sanctions are in place, there won’t be Russian oil or natural gas flowing through Ukraine to Hungary and even things like nuclear fuel are gonna have to be flown direct, but they’re going to have to be flown around the war zone that is Ukraine. 

And if you have radioactive material in your plane that trigger some other issues anyway. So, the Ukrainians are saying it’s a permanent exemption, that the Trump administration is saying it’s a 12 month exemption. The, the disconnect between the two is pretty typical for Trump’s deals on anything, and how the Hungarians are going to be squeezed out of this. 

It’s not a real problem. There is no alternate infrastructures that comes in through Slovakia or especially through Croatia. So they’re going to be fine. So it’s temporary issue. The broader issue is that Lukoil is actually an international company, whereas Rosneft’s holdings are all domestic. And for Lukoil, who holds assets in the United States, a lot of fuel stations. Or oil fields in Iraq. You’re actually talking about a substantial amount of production and financially viable assets that they’re going to have to now dump. Now, they were planning on selling them to a trading company based in Switzerland called governor. Now, governor was this is kind of funny. It’s a shell game. 

Back in 2014, the first time the Russians invaded Ukraine, governor was set up by a Russian who was affiliated with Lukoil. And then he immediately sold all of his shares to his Swedish partner because he knew he was going to be sanctioned. And it’s been operating as an independent, independent trading, platform ever since. The whole time it’s basically been a front for the Kremlin. 

And so the feeling was that governor was just going to buy all the assets. The Trump administration still hasn’t staffed up. Almost a year into its administration. And if you want to actually have a sanctions regime that is meaningful, you have to have a staff on it full time to deal with all the loopholes that will pop up. 

That’s been a big one. Well, the Treasury Department under Treasury Secretary percent, figure that all do all by themselves or with some help. I don’t really care how. And have already said that they oppose the sale to governor. So the assets are going to have to be split up on a national basis and sold more viably to get away from Russian influence, which is, you know, great. 

This is the first time in any sort of economic policy out of this administration that there seems to have been any awareness of some of the political and economic realities at the ground level. Normally we get a big broad tariff policy and then countries figure out how to get around it. The Chinese certainly have done that over and over and over again. 

But at least on this one point, the Russians have not. And that is absolutely worth noting. And giving credit where credit is due. Let’s see. There was one more. Oh, yeah. Rosneft has is a state monopoly. It’s technically incompetent. It really has very few petroleum engineers, and it’s gotten to where it is as being the biggest company in Russia by absorbing the assets of other people who have, from time to time fallen a foul of the Kremlin. 

Maybe that’s Yukos, which was run by a one time Russian oligarch. Maybe that’s T and CPP, which was a partnership that was part owned by British Petroleum. They just call themselves BP now. Anyway, it’s expansion through government thuggery rather than the traditional methods. Well, that that’s now reached its peak because there are a number of projects that Rosneft is involved in and is technically the operator that it can’t operate. 

It can only run the projects with foreign partners who are doing most of the technical lifting. And the biggest and most important of those is something called Sakhalin. Now that’s an island off in the Russian Far East, just north of Japan, that produces some of the world’s most difficult to produce crude oil in league with a company called Exxon, and which produces liquefied natural gas with a couple of Japanese companies, Mitsu and Mitsubishi. 

Well, now that the sanctions are in place, the Russians are going to have to run Sakhalin themselves, and they don’t know how to do offshore, and they don’t know how to do liquefied natural gas. And they certainly can’t operate in the Sakhalin environment. So here we’ve got a project that is the single largest dollar item of foreign investment into Russia ever. 

That’s probably going to shut down over the next few months because the Russians can’t operate it themselves. Unless, of course, there’s something that weird goes on where Exxon, for example, gets an exemption to the sanctions, which I don’t find likely. Anyway, that’s the money. Russia, most of which is pretty good for Ukraine and honestly, broadly positive for the United States as well. 

So, you know, mazel tov.

New Strategies in the Ukraine War

Photos of military vehicles in Ukraine at night

The strategies implemented by Russia and Ukraine are shifting once again.

Russia has shifted away from targeting Ukraine’s power grid and is now striking rail infrastructure instead. These mobile targets are harder to defend, and the fallout is much worse for Ukraine’s energy and logistics networks. The Russians are also closing in on Pokrovsk; this city has been a key transport hub for Ukraine, and losing it will be a major setback.

The Ukrainians are strategizing as well. Strikes are penetrating deeper into Russian territory, hitting oil infrastructure and ports. The shadow fleet tankers are included in the target list, which could open a new can of worms for the Russians and countries backing their oil trade.

These shifts have the potential to reshape not only the war in Ukraine but also global energy markets.

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Transcript

Hey everybody, Peter Zeihan here. Coming to you from Colorado, today we’re taking a look at some of the new things that are happening on the Ukraine front. Three big. Number one. The Russians have changed their strategy when it comes to bombing civilian targets across Ukraine. For the last three years, they’ve been going after power plants, capacitors, transformers, that sort of thing. 

Natural gas transport infrastructure, substations, all all that. What they’ve discovered is that when you’re willing to do things that are not OSHA approved, there’s only so much you can do. So yes, they can knock off the power over and over and over and over again. But the Ukrainians get a little cheap equipment. It’s been imported. 

They, tie some wires together, and the power comes back on. So I don’t mean to suggest for a second that the Russians have. It inflicted a great deal of pain on the Ukrainian population, but it hasn’t had nearly the impact. I thought that it was going to have. And while, the Ukrainians have power that’s off every day, it hasn’t been able to shut the country down in the way that the Russians thought they were going to be able to. 

Also, whenever you go after a power plant, it’s a known location. And while that means it can’t dodge, it also means you can in place, anti-missile and anti-drone defenses and the Ukrainians have gotten incrementally better at that. Bit by bit by bit over the last four years as well. So they’re changing strategy. The Russians are now going after the rail network and specifically the rolling stock, because you can’t have a fixed offense on a train that’s moving. 

So the Russians basically figure out what the train schedules are and then send a fleet of drones and specifically go after, the engines. These are a lot harder to replace. They’re a lot more expensive. And a lot of Ukraine’s power grid now, because of damage to the natural gas transport system, has been coming from coal, the coal shipped by rail. 

And so it’s having actually probably a bigger impact in a shorter time period of time, than anything that the Russians have done in the last 3 or 4 years. So having a much bigger impacts, much harder to defend against. Once you have enough drones that you can expend them on moving targets, that’s one. Number two, we seem to be nearing the end for the city of Procrustes. 

Procrustes is a rail and road hub in southeastern Ukraine that the Russians have had under assault for over a year, and now they’re actually Russian forces in the city. They’re nowhere near to have clearing it and securing it, but it is no longer able to be used by the Ukrainians for transport at all. So they’re having to fall back through eight major transport arteries that combined and Procrustes, where the Russians have been after it for so long because as long as the crossing was in Ukrainian hands, the Ukrainians have been able to shuttle troops to wherever the hotspots happen to be. 

You move across, even if it’s just destroyed, it doesn’t become a Russian rail hub. The Ukrainians have to fall back quite a bit and then deal with much longer routes, in order to get at things wherever they need to go. The Russians have surged more and more troops into the area, and they are on the offensive pretty much across the entire front. 

They’re only making incremental gains. Like I said, they’ve been after Procrustes for over a year. But this is going to slow the Ukrainians reaction time significantly. Whether that will spell more advances for the Russians in the future remains to be seen of course, because the rules of this war change every six months. Which brings us to the third point. 

The Ukrainians are targeting differently as well. They’ve been using their rocket drones and the longer range drones to go deeper and deeper into Russian territory, going after more and more sensitive energy infrastructure. And we’re now in a situation where roughly 60% of the Russian transport system for oil that matters is under the gun in some way. 

The Russians, are taking hits not just in the refineries anymore, but also their ports. And on the first and 2nd of November, overnight, we had a number of Ukrainian drone strike out at a place called Tusa, which is one of the two major ports on the Black Sea. To ops is important because it serves as an outlet not just for Russian, but Kazakh crude. 

And the Ukrainians didn’t simply hit the pipe control system, didn’t simply hit the loading burst. They also hit at least two, perhaps as many as four of the tankers that were there. Now, we don’t have damage reports because the Russians don’t talk. And the tankers that carry Black Sea crude at this point are pretty much all shadow vessels. 

So they’re not registered with normal, law enforcement internationally. So they’re not talking either. But a couple things to keep in mind. Number one, to observe one of the four largest offloading facilities in the Russian system, even partially offline. That’s kind of a big economic hit. And it’s a lot closer than some of the targets in, say bus Korea Center. 

Tatar said that the Ukrainians have already proven that they can hit. So they actually have the possibility of taking this one off line if they hit it hard enough and repeatedly enough. And the Ukrainians are showing a penchant for hitting the same target over and over and over until it’s just not in the equation anymore. This would be the first major port that the Russians would have lost to, and more importantly, is the shadow fleet vessels. 

Now, part of what makes them a shadow fleet is that they are under insured or not insured at all. And in that sort of scenario, the financial risk is not borne by the international community. So if you dial back to the beginning of this war, one of the things I was really concerned about was that if a single ship went down, because it was targeted by a sovereign state like Ukraine, that we would see an unraveling of global maritime law. 

The way it works is companies purchase insurance for their vessels. And if something happens to that vessel, the payout is massive. Well, part of the way the sanctions work, especially as designed by the Europeans, is that they’re no longer providing maritime insurance for the vessels that dock at Russian ports. So they have to be off the ledger. They get insurance from, say, the Russian government, the Chinese government, the Indian government, instead of normal things like, say, Lloyd’s or Swiss wheat or whatever else. 

And that means that the financial risk is not assumed by the international community, but instead by these specific governments. Now, we have not had a shadow tanker sunk yet. We’ve had some confiscated. That was exciting. That happened in the Baltic Sea a few weeks ago. But we not actually had one sunk. But now we have the Ukrainians deliberately targeting multiple shadow tankers. 

And sooner or later, one of them is going to go down. And when that happens, it’s going to be really interesting to see how the payout happens, because if, the Russians or the Indians or the Chinese don’t pay up and all this insurance is null and void, and then the shadow tankers are basically a free for all. 

If you happen to be anyone else who doesn’t like the Russians and will probably see mass confiscations if the Ukrainians, the Indians or the Russians do payout, then the Ukrainians have every interest in hitting as many tankers as possible, because as large as a financial loss to the supporters of the Russian system, as possible. So one way or another, we have just kind of passed an interesting Rubicon, and we’re going to know in the next month or two how this is going to play out, because for the Ukrainians, there’s absolutely no downside to hitting the tanker. 

There may have been a year or two ago because back then the concern of the white House was that high oil prices were going to impact the Democrats chances of elections. I thought that was really bad math. From an economic point of view, you draw your own conclusions politically. But now two things have changed. Number one, Trump really doesn’t care about economic damage with any of his policies. 

So why would this one be any different? Second, and arguably a lot more importantly, we’re now in a massive oversupply situation for crude on a global basis. We’re probably somewhere in the realms of 2 to 4 million barrels a day. Too much crude. Which means that if it wasn’t for all the risk premiums out there, political, geopolitical, military or otherwise, we’d probably already have an oil price crash, which means that the world can get by with substantially less Russian crude than it thinks that it needs. It’s all adding up for a lot more direct action from the Ukrainians on all Russian energy targets. And I think the shadow fleet is where we need to watch the most closely.

Bonus Video – Russia: Trump Pulls the Trigger

A Russia and Ukraine button on top of a Ukraine flag

After months of being played by the Russians, it seems US President Donald Trump has had enough. On 23 October the United States has fully sanctioned Russia’s largest oil firms, barring interactions with US firms and corporations. Here’s what it means, what’s at stake, and what’s next.

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Transcript

Hey all. Peter Zeihan here coming to you from Winona Terrace in Madison, Wisconsin. Just had some fried cheese curds for breakfast because, duh. Today, it’s the 23rd of October, and we have to talk about what just went down between the Trump administration and the Russians. Trump has been trying to force the Russians into a peace deal. 

It’s not going to happen. The Russians, see the war in Ukraine as the start of a broader geopolitical offensive that they need in order to survive through the century. The right, basically, it’s a border issue and a demographic issue. They didn’t do the Ukraine war on a whim. They didn’t do it to satisfy someone’s ego. 

They did it because they think they need it to survive. Anyway. 

Trump is attempting to put a stop to the conflict. And so the Russians have been stringing him along, making him look like a fool and then going back on everything they agree on. Anyway, Trump has had enough of it, apparently. 

And today Trump put sanctions on the two largest oil companies in the country. One of them is Rosneft, which is the state owned monopoly or near monopoly. And the other one is Lukoil, which is technically a private firm but takes its cues from the government. 

Full sanctions, which basically means that any American national cannot do business with any of these companies. The impact on the United States is going to be limited to Lukoil at the moment. Lukoil has a number of gas stations, service stations throughout the country, about 150, and supplies crude and gasoline to the U.S. market in a limited way. Rosneft is different. Rosneft is does all of its business in Russia. It’s not particularly sophisticated company. 

It just happens to be large and it’s absorbed pretty much all of the activity in the former Soviet Union that it could, So direct impacts on, Rosneft are somewhat limited. There are some projects that Rosneft and Lukoil have with American firms in the former Soviet Union, however, not Russia proper, primarily in Kazakhstan. There’s a super field called Crouch Cannot that does natural gas, oil and condensate. 

And then there’s the super field of Tengiz, which is on the shore of the Caspian that ExxonMobil is very involved in. If these actually get shut down, you’re talking about multiple billions of dollars of loss for American companies. In the case of Lukoil, they’ve put over $20 billion of investment in this thing over the last 30 years. Now, I would argue that all of this was going to go down anyway sooner or later. the Kazakh crude that was coming out of Kazakhstan was always going to go away. The route is just to secure this, you have to go through, not just difficult parts of Kazakhstan, but then through Russia to get to the Black Sea, to load on a shuttle tanker, to get out to sea, Istanbul. 

Eventually you get to the Mediterranean, we can get on a bigger tanker and eventually go around Africa or through Suez and eventually get around India. You know, it’s just it’s a crazy route. It only works in a fully globalized, safe world, and that’s not where we are anymore. So this was all going to fail anyway. But at some point you rip off the scab and it looks like we might be there now. 

This is not enough to even remotely make the Russians consider changing their point of view. The only thing that might, might, might get their attention is a full embargo by the United States and the Europeans that prevents any crude and any natural gas from leaving Russia whatsoever. That’s going to require a lot more than just this. But it is the first time that the Trump administration has done anything that isn’t even marginally inconvenient for the Putin government, and it’s going to be interesting to see how the Russians respond to that the next stage, because I don’t think this is going to generate the effect that Trump wants is to look at something called secondary sanctions, which is something that the United States kind of has a bad rap of with the wider world. Basically, we don’t like you, so we’re going to sanction anyone who does anything with you. Iran has always been the key target of that. And secondary sanctions have often targeted a few, European companies here and there. Well, the Europeans really don’t like the Russians right now. 

So if we get secondary sanctions, they’re probably going to go against countries like India and China. And then we’re in a very different environment. We’re not there yet. But this result is, from the Russian point of view, relatively minor. And it’s not enough to seriously get their attention. And so if Trump is serious about pressuring the Putin government, that is the next step. 

The question, of course, is whether Trump’s cabinet and institutions can handle that. We still haven’t seen Trump build out the government. It’s still be cleared out. The entire government. When he came in, he still hasn’t replaced most of those positions. And implementing the secondary sanctions requires a lot of legwork in a lot of places. Unless you just want to say, I’m sanctioning everything in China, which would be, you know, notable. 

So he’s probably gonna have to find some sort of hybrid approach, and he’s probably gonna have to create it from scratch with minimal input from a team that largely doesn’t exist. So we’re seeing in real time some of the weaknesses of the Trump administration’s ability to implement policy. But again, we’re not there yet. That’s probably a challenge for next week.

A Break for Ukraine

Ukraine solider on a armored vehicle with a split screen of Donald Trump

President Trump might finally be throwing the Ukrainians a bone, as the US may begin providing the precision targeting intelligence for strikes deep inside Russia. This marks a major shift in US policy on Ukraine.

Let’s zoom out first. For decades, US presidents would avoid actions that could spike global energy prices. Well, that held true through Trump’s first term and until Biden left office, but Trump 2 has shaken things up.

The erratic policy implemented by the Trump administration has been hard to follow, but the Russians have gotten more favorable treatment so far.

Things now seem to be shifting. Trump realized that Putin had been playing him this whole time, so Trump may finally be switching up policy. Couple this pivot with Ukraine’s recent strikes on Russian energy infrastructure and we could see Russian oil exports crippled very soon. This means Russia’s main source of funding for the war would quickly dry up. Places like China and Iran will have to decide if they want to bankroll Moscow without any incentives…

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Transcript

Good morning, everybody. Peter Zeihan here coming to you from Colorado. Today we’re talking about what’s going on in Ukraine and with the Trump administration. The new news is that the Trump administration. Well, let me rephrase that. Donald Trump personally, says that fairly soon the United States is going to be providing the Ukrainians with precision, targeting information. 

For the Russian energy system deep within the Russian Federation itself. Now, there’s a lot of back story that got us to this point. So let’s handle that before we move forward. The US administration, not just this one, all of them going back at least until the 70s. I’ve always been a little paranoid about energy prices as result of just the nature of economics. 

Energy demand tends to be inelastic. If you need a gallon of gas to get to work, and the price of gas goes up by 100%, you still need a gallon of gas to get to work. So it tends to be something that is very politically sensitive. And as a rule, political leaders, presidents are unwilling to do things that they know. 

We’re going to drive up energy prices. Now that relationship has loosened quite a bit in the last 20 years, largely because of the shale revolution in the United States, which has taken the United States from the world’s largest oil importer to the world’s largest oil exporter, which has some interesting effects on lots of things. But that general feeling remains. 

Now, back during the Biden administration, the Ukrainians started targeting Russian energy assets, most notably refineries, in an attempt to disrupt gasoline and diesel deliveries. The military tends to use diesel. The civilians tend to use gasoline. The idea was if we can stop the fuel flows, the Russians will be able to prosecute the war as much. In addition, the Russians don’t have a lot of storage, so if they can’t process fuel, they have a limited export capacity. 

And that means that they will have to shut in some production. Well, the Biden administration shut that down because they were afraid of the impact that it was going to have on global energy prices, which is not a ridiculous point of view, but I still think it was wrong because the shale revolution has changed of that. But the previous administration really didn’t understand petroleum energy economics, so I can’t say I’m shocked. 

That was the conclusion that they came to enter the Trump administration. The Biden administration was pretty pro Ukraine there just a few things they didn’t want him to do, like targeting energy. The Trump administration has been very erratic. In the early days, they were pathologically hostile to the Ukrainian government, up to and including inviting Zelensky to the white House just so they could yell at him. 

And relations. I don’t want to say they’re in the deep freeze, but they have not been great. Trump, as part of his reelection campaign, tried to convince everybody that he and Putin were best bros, and all it would take was one conversation between Trump and Putin for the war to end. Which, of course, was always really incredibly stupid because the war is happening for geopolitical reasons. 

And the only people think that the Russians invaded because Biden was president are Trump the people around him and some MAGA hardcore folks is the Russians think it’s hilarious that they’re actually Americans believe this. It’s a strategic issue. It’s a demographic issue. The Russians have been pushing towards the Carpathian since the 17th century. It didn’t change because of who was in the white House anyway. 

The Russians have gone out of their way to denigrate the American president, to make fun of them, to call them stupid. In the Kremlin, behind closed doors in European venues with the Chinese. But that information, as a rule, doesn’t make it back to Donald Trump, because Donald Trump has this really weird quirk. He feels that he has to be the smartest person in the room, and he likes to talk a lot. 

So what that means is he has gutted the top of the national security and foreign policy staff to make sure there’s no one ever in the room with him that could tell him something that he doesn’t want to hear, or would make him not appear to be the smartest person in the room, which means he’s basically gutted it completely. 

He’s not using the State Department. He’s not using the National Security Council. He has, however, installed a woman by the name of Tulsi Gabbard as the director of National intelligence, and she has gone through the CIA and the other intelligence bureaus and basically gutted them of the Russian experts, top to bottom. And she’s also the person who has the final say in what goes into the Presidential Daily Brief. 

So she makes sure that anything that makes the Russians look bad doesn’t actually make it into the brief. For example, Putin laughing openly on TV about Donald Trump’s stupidity. Anyway. 

Will this time be different? Because we’ve had lots of periods where Trump has got an inkling that something is wrong, and then Tulsi Gabbard has talked him down, or Putin has talked him down. Maybe, and the reason is because there’s another personality involved and this person is absent or his name is Steve Wyckoff. Now, if you remember back to Trump one, Jared Kushner was all the big deal, smart guy, basically served as a presidential envoy and actually got a few things done. 

For example, the Abraham Accords, which is the sum of the total peace deals between the Israelis and some of the Arab states. Kushner wanted nothing to do with Trump, too. he saw how the sausage was made from the inside. And Trump won. And he and his wife, who is Trump’s daughter, just bugged out. 

And so it’s the dumb sons that are actually in the white House now. Anyway, I’m getting I’m getting off track here. Where was I going with this? Oh, yeah. Wait, wait. Cough. So, what? Cough has no foreign policy experience. And Trump basically entrusted him with the entire portfolio for all negotiations all over the world, all of which have gone really badly. 

So when Wyckoff shows up at the Kremlin, the Russians sit him down. They tilt his head back and they pour gallons of Russian propaganda down his throat. He goes Ben back to the white House and vomits that up in front of, the president of the United States. And that becomes gospel. And that is the primary reason, combined with Tulsi Gabbard, as to why we’ve really seen no movement. 

But things have changed recently because a couple months ago, if you remember there was a summit directly between Donald Trump and Vladimir Putin, and it was supposed to last for several hours, and it was over very, very quickly. Putin thought he had Trump completely wrapped around his little finger. And if you look at policy from the last six months, that’s not exactly a shock. 

But Trump finally realized that this guy had been laughing at him for the whole time. And we started to get Trump looking at other bits of information like, I don’t know, media or talking to his wife. And he started to realize that he had been played the fool and that he was acting like a fool, and that perhaps the only way to change things was to change policy with a wild idea, I know. 

So we now have this, potential change in policy. The Ukrainians have started targeting Russian energy infrastructure again. Again, mostly going after refineries, but going after some pipeline places. And they’ve probably now reduced Russian refining capacity by 25%, which is the most it’s been offline since the Russian collapse back in the 1990s. The post-Soviet collapse. If if the Trump administration actually does what it’s talking about doing US satellite guidance combined with the weapons the Ukrainians already have, would be capable of targeting individual pumping stations anywhere in western Russia. 

And the Russians export about 5 million barrels a day through their various methods, about two thirds of that going out through the Baltic Sea, in the Black Sea, which are all within range of Ukrainian weapons. If you take out just a couple of the 

pumping stations per pipe, those exports go to zero. Now the Ukrainian thinking is if you do that, you basically destroy what has been Russia’s number one income source for the last 30 years. 

Oil exports. And then countries like Iran and China, which have been taking money from Russia and sending them drones and drone parts, will have to decide whether they want to directly subsidize the Russian government’s war in Ukraine. I find that unlikely. Iran is really in some dire straits right now. They need the currency. 

They don’t want to treat Russia as a charity case. And the Chinese, that’s probably a bridge too far, no matter how bad relations with the United States happened to be. So if that happens and the Russians have to fight on their own, it doesn’t mean that the war is over. But it means you have a catastrophic shift in fortunes on both sides. Will this happen? That’s entirely up to Donald Trump. 

He has changed his mind by my math, 77 times since January 20th. Who knows? But once the Intel is provided, for every day that it is there, the Ukrainians will definitely be striking. Both the Russians and the Ukrainians over the last year have been building up their drone capabilities, and we’re now regularly seeing attacks that use hundreds of drones on each side. 

You combine that with the precision targeting information, much less Western weaponry, and you can have a really dramatic change in the course of the war in literally a matter of days, and we may about be there.