Russian-led forces entered Kazakhstan today, under the guise of a Collective Security Treaty Organization (CSTO) peacekeeping mission. The former Soviet state and significant oil producer has seen several days of sustained public protests turned violent after raising the price of liquefied petroleum gas (LPG) cannisters, a key local transportation fuel. Although the government reversed its decision to halt fuel subsidies, the move triggered widening protests outside the initial cluster in the resource-rich Mangystau region eventually reaching the largest city, Almaty. Several cabinet officials resigned as protests grew in scope and intensity; many Kazakhs are frustrated by the economic challenges of the ongoing COVID-19 pandemic, entrenched social inequality, and endemic corruption of the Kazakh state. After protestors stormed the Almaty airport January 5 and set fire to city administration building, Kazakh president Kassym-Jomart Tokayev allowed CSTO forces into the country to help quell unrest. Details are increasingly difficult to come by amidst an internet and media blackout, but security forces have already claimed to have killed dozens of protestors.
The challenges facing Tokayev are legion, and easily discerned. What is a little less obvious are the opportunities now present for Moscow. Instability in former Soviet areas is always a delicate balancing act for Russia; protestor grievances in Kazakhstan likely mirror many of those not only in Russia, but throughout states on its periphery. Unrest is typically met with cracked skulls. But Kazakhstan’s oil and gas wealth has afforded it more economic independence from Moscow than many of the other Central Asian states. Having Kazakhstan on the ropes and in need of aid–including an open invitation for Russian soldiers that are unlikely to leave after protestors go home–is right where Russia likes its neighbors to be.
If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.
The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.
Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.
Feeding America is a great way to help in difficult times.
The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.
All anyone can talk about in Europe these days is Russia. Russia is constricting natural gas flows to Europe in order to drive energy prices higher and extract geopolitical concessions. Russia is using irregular state tools — think cyber — to manipulate European politics and exacerbate the COVID epidemic by planting misinformation about vaccines. Russia is threatening war in Ukraine, up to moving over one hundred thousand troops to the Ukrainian border region, and tapping the global mercenary community to recruit thousands of fighters to throw at Kiev. Russia is demanding the right to fundamentally rewrite the security policies of not only Ukraine, but Estonia, Latvia, Lithuania, Poland, Hungary, Slovakia, the Czech Republic, Romania, Bulgaria, Slovenia, Croatia, Albania, Turkey and Germany in exchange for a de-escalation in Ukraine.
I’m down on paper and video saying that Russia’s impending doom (more on that in a minute) will force it to take a more aggressive security posture, specifically on Ukraine. Today much of Russia’s border regions are indefensible. There are few geographic barriers to block potential invasion, forcing the Russians with their dwindling numbers to attempt to defend massive stretches of territory. What barriers the Russians do have — Crimea and the Caucasus come to mind — are only because of the sort of strategic adventurism that Putin is now threatening to Ukraine as a whole. There is a method to the madness. To paraphrase Catherine the Great, Russia can expand, or Russia can die.
But a few things have changed since I laid out my position in The Accidental Superpower back in 2014 and sketched out the general outlines of the hypothetical Twilight War in The Absent Superpower in 2017.
First big change: Ukrainian politics and identity.
Back in the 2000s, Ukraine could be very charitably called “messy.” It was an oligarch playground, sharply divided into three competing regions. The biggest region in the east was populated by either Ukrainians who spoke Russian as their first language, or actual Russians who due to the quirks of history happened to live on the Ukrainian side of the dotted line on the map. Ukraine has always been home to the greatest concentration and number of ethnic Russians outside of Russia’s borders. And these groups — both the ethnic Russians and the Russian-speaking Ukrainians — were unapologetically pro-Moscow.
It was the mix of this pro-Russian sentiment with the Kremlin’s view that large-scale political violence is often useful, that set us onto the path to where we are today. In early 2014 then-Ukrainian president Victor Yanukovych — one of those pro-Russian Ukrainians — dealt with pro-Western “Euromaidan” protesters by using Ukrainian special forces to shoot up a couple thousand people. He was driven out of office and ultimately out of country and now he is living in exile in, you guessed it, Russia.
Yanukovych’s actions against his own people — actions publicly supported by none other than Vladimir Putin — started Ukraine down the road to something I had once dismissed out of hand: political consolidation and the formation of a strong Ukrainian identity. Putin didn’t — hasn’t — figured that out. Later Russian actions — starving the Ukrainians of fuel, annexing Crimea, invading the southeastern Ukrainian provinces of Donetsk and Luhansk in the Donbas War — only deepened the Ukrainian political consolidation that Yanukovych inadvertently started.
Far from capitalizing on strong and legitimate pro-Russian sentiment, Russia’s policies towards Ukraine these past seven years have turned even the most pro-Moscow Russian citizens of Ukraine into Ukrainian nationalists.
In 2010, Ukraine was not a country. It was simply a buffer territory between Russia and the European Union with no real identity, and it would have been ridiculous to admit such a non-entity into either the EU or NATO. Today Ukraine is a country, and the idea of EU or NATO membership isn’t nearly so crazy. And that evolution is all because of Putin’s ongoing miscalculations.
Second big point: military reality.
Back in 2014 when the Russians launched the Donbas War, Putin boasted that should he choose, Russian forces could easily invade Ukraine. He noted Russian troops could be in Kiev in under a month.
It may have been a brag, but it most definitely was neither a bluff nor an exaggeration. The Russian military may be a pale shadow of its Soviet forebearer, but it is far better than the war machine which ground to humiliation in Chechnya in the 1990s. Ukraine’s military in comparison? Phbbbbt. Wracked by corruption, enervated by a lack of motivation, armed with nothing more than the pre-1992 equipment that the Russians chose to leave behind when the Soviet Union fell? There’s a reason Yanukovych used the special forces to suppress the Euromaidan protestors. The military wasn’t even up to that job. Fighting a hundred thousand or so Russian troops? That’s funny.
Since 2014, some things have gotten better. Western assistance has helped professionalize the forces. The Russian invasion has charged Ukrainian commanders some high tuition at the school of Real-Life War. Strengthening national identity has improved force cohesion. But the biggest shift is in weaponry.
Arming a country the size of Ukraine with sufficient military equipment to fight the Russians solider-to-solider would be a Heraclean effort. So that’s not what the United States has done. The Americans have provided the Ukrainians with Javelin anti-tank missiles. Javelins are man-portable and shoulder-launched, weighing in at under 50 pounds. They shoot high and plunge down, striking tanks on the top where armor is weakest. And above all, they are sooooo eeeasy to operate. If you can make it to level 3 on Candy Crush, you can use a Javelin.
Considering any drive to Kiev will be a tank operation, giving Javelins to the Ukrainians is like giving water to firefighters. It’s the perfect tool for the job. The Javelins made their wartime debut on the front lines in Donbas only in November 2021…about when the Kremlin started getting all screechy and demanding wholesale changes to European security alignments. Coincidence? I think not.
Now don’t get carried away. I’ve little doubt that Javelins would be enough should the Russians get truly serious. Any Russian invasion force would massively outnumber and outgun the defenders. But that’s not the point. Unlike in the 2000s or in the Donbas War, the Ukrainians can now slip a knife through the chinks in the Russians’ armor and make them bleed. A lot. And unlike in the 2000s, the Ukrainians now have a national identity to rally around and fight for. The Ukrainians now have the means and motive. It’s up to the Russians to decide if they’d like to provide the opportunity.
If war comes, the Russians could still reach Kiev. But it would likely take three months instead of one. The Russians could still conquer all of Ukraine. But it would likely take over year rather than less than three months. The toll on the invaders would be high and most of all the war would only be the beginning. After “victory” the Russians would have to occupy a country of 45 million people.
Which brings us to the final bit of this story: demographics.
Russia’s had a rough time of…everything. The purges of Lenin and Stalin. The World Wars. The post-Soviet collapse. Horrific mismanagement under Khrushchev and Brezhnev and Yeltsin. Sometimes in endless waves, sometimes in searing moments, the Russian birthrate has taken hit after hit after hit to the point that the Russian ethnicity itself is no longer in danger of dying out, it is dying out. And for this particular moment in time, there just aren’t many teens today to fill out the ranks of the Russian military tomorrow.
The implications of that fact are legion.
Least importantly, if somewhat amusingly, is the Russians are now flat-out falsifying their demographic data so the situation does not look so…doomed. Check out the bottom two age categories in the above graphic; the section for children 10 and under. A few years ago the Russians started inflating this data. Best guess is there are probably one-quarter to one-third fewer children in Russian than this data suggests. That’s roughly a four million child exaggeration.
Most importantly are the implications for a potential Russian-Ukrainian War. Any Russian solider lost anywhere cannot be replaced. If Putin commits to an invasion of Ukraine, Russia will win. But the cost will not be minor. The war and occupation will be expensive and bloody and most importantly for the world writ large, it will expend what’s left of the Russian youth.
Will Putin order an attack? Dunno. There was a demographic and strategic moment a few years ago when the Russians could have conquered Ukraine easily. That moment is gone and will not return. But the strategic argument that a Russia that cannot consolidate its borders is one that dies faster remains.
Perhaps the biggest change in recent years is this: the United States now has an interest in a Russian assault because it would be Russia’s last war.
Demographics have told us for 30 years that the United States will not only outlive Russia, but do so easily. The question has always been how to manage Russia’s decline with an eye towards avoiding gross destruction. A Russian-Ukrainian war would keep the bulk of the Russian army bottled up in an occupation that would be equal parts desperate and narcissistic and protracted until such time that Russia’s terminal demography transforms that army into a powerless husk. And all that would transpire on a patch of territory in which the United States has minimal strategic interests.
That’s rough for the Ukrainians, but from the American point of view, it is difficult to imagine a better, more thorough, and above all safer way for Russia to commit suicide.
If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.
The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.
Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.
Feeding America is a great way to help in difficult times.
The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.
After sketching out what was intended to be the final installment of this series, I realized the world was in a lot more trouble than I had thought. So, the “Crisis List” installment is going to be a whole mini-series of its own. Let’s begin with the country that has experienced the greatest surge in influence under former President Trump: Russia.
Throughout history the Russians have always held a weak hand. Their geography and climate make the basics of life – food and security – devilishly difficult. Their lack of navigable rivers demands huge rafts of artificial infrastructure, but that costs money that Russia’s brutal winters and vast distances simply don’t generate. Painfully short summers limit food production per acre forcing Russians to spread out to farm the necessary calories. Russia has pretty much always held the record for the fewest people per square mile among the world’s populated zones.
Add in wide-open borders that are wretched at blocking marauding Swedes, Germans, Mongols and even Poles, and Russia lives in the worst of pickles. An expensive, low-reward land. Scattered populations who quite reasonably hope that life might be better elsewhere. Looming threats of invasion.
Surviving here requires a big army (at a big cost in economic and cultural terms) and a massive intelligence system finely attuned to every whisper of dissent and every footfall at Russia’s edges.
The Americans created globalization to bribe up an alliance to contain the Soviets, but it also generated an unexpected boon for Moscow. In banding all of Russia’s traditional foes (and then some) into a single coalition, the Americans removed any strategic initiative from all their new allies. The Russians only needed to worry about the Americans. No one else. From 1946 to the Soviet Union’s very end, no one invaded Russia. Such bliss had never occurred. The Russians may have been contained but they were left alone, giving them 45 years to attempt to make their country work.
In the end it wasn’t enough time. While Soviet engineering was indeed impressive compared to what happened under the tsars, there just weren’t enough resources – human, material, or economic – to fund everything. Developing lands as crappy as Russia’s is expensive. Fighting a global Cold War is expensive.
After the Soviet Union collapsed, Russia’s leaderships have been forced to make a series of ever-more-damning decisions. What to fund versus what to leave to rot? Food production? The rail lines? The air force? The missile forces? Oil production? The educational system? Everything comes at a cost, and Russia’s resources are limited. With the Russian demography among the world’s fastest aging and arguably the world’s most unhealthy, those resources are shrinking by the year. Everything – and I mean everything – has had its funding cut. Everything but one thing: those mission-critical intelligence services.
And so it is primarily through the intelligence services that the Russians engage the world. The Kremlin realizes every other measure of their power from military force to energy exports to high-tech work is living on borrowed time.
The Russians have good reason to be worried, but to this point they’ve been able to avoid catastrophe. That’s as much due to luck with the Americans as anything else.
The Russians found W Bush intimidating as it was very clear back in 2001 he planned to massively expand the NATO alliance to Russia’s west, and amp up U.S. military tech to prevent any possibility of a Russian revival. But then came 9/11. The Russian transport system became integral to fighting the war in Afghanistan. Bullet dodged. Breath sighed.
The Russians found Obama so willfully disinterested and functionally incompetent in foreign affairs that they called him a “p*ssy” in official internal communications. Once Hillary Clinton left TeamObama in February 2013, there was no one remaining the Russians found even a touch worrisome. Russia invaded Ukraine about a year after H Clinton’s departure.
The Russians found Trump nearly as easy to dismiss. A completely insincere bit of flattery here, a casual dismissal of his political foes there, and Trump just let any matter that bothered the Russians drop. Trump’s staff were a different matter: Rex Tillerson, HR McMaster, John Kelly, and James Mattis caused problems for the Russians over and over and over. But it became clear to Moscow early on that Trump was Trump’s own worst enemy, and Trump disposed of all of his anti-Russian staffers with nary a nudge from the FSB. From the last of those staffer’s departure – John Kelly in January 2019 – the Russians didn’t have to worry about the Trump administration much at all.
So what about Biden?
Biden is not a governor with a record that can be evaluated like W Bush, or a pathologically disengaged figure like Obama, or a simplistic caricature like Trump. Biden is just a fairly normal…guy. An ideologically uncommitted guy; His political views sway with the winds. A guy whose been in politics since the planets first formed, but who has no record of leadership. What in my opinion makes Biden a questionable choice for president makes him precisely what the Russians fear most: an unknown element.
Intelligence services hate unknown elements. Finding out about their new adversary from a press release, such as the one from the State Department Feb 4 after Biden gave a speech to the Foreign Service, is not the way they like to learn things.
And so the Russians are left to fall back upon their intelligence services once again. They will be searching for weaknesses. In the country. In the government. In the president.
They have a fair amount to work with.
The Russians are absolutely thrilled with what went down in Washington DC on January 6. In the Russian mind anything that keeps Americans focused on one another is a win. But having a sitting president egg on a mob against his own law enforcement personnel? That’s a platinum standard the Russians didn’t even realize they could aim for.
Expect Russian state hacking to double its efforts against the U.S. government. In 2020 the Russians penetrated the Texas tech firm SolarWinds and used its update systems to penetrate dozens of government agencies. From what we know to this point the Russians were not expecting such runaway success, and certainly were not sufficiently staffed to chase down all the opportunities the SolarWinds effort had produced. Luckily for the Russians, Trump – like Obama before him – was utterly unenthused with the topic of cyber-security and so the vast bulk of the Russians’ labor-fruit has remained available. The Russians have had months to train and/or reassign staff to the cornucopia of new hacking options. It will be Biden that has to deal with the aftermath.
Nor will the American population get a free pass. The Russians have long been involved in supporting disruptive groups of various ideological backgrounds, from environmentalists to Antifa to peaceniks to white supremacist movements, seeing them as cheap and easy means of keeping American politics off-kilter.
This time around the Russian effort will focus on keeping Trumpism alive.
Those involved in the January 6 riots have found themselves essentially banned from mainstream social media, up to and including the former president himself. Amazon and Apple removed Parler, a censor-free platform that saw heavy usage by the rioters and other extremists, from their systems completely. Now the Russian firm Ddos-Guard, officially unrelated to the Kremlin *rolls eyes*, is providing Parler with denial-of-service-attack protection and traffic monitoring to help it get back up and running. The goal is pretty straightforward: keep America’s most violent citizens as politically active as possible, and limit America’s ability to reach some sort of resolution in the aftermath of Trump’s final days.
It isn’t like Biden lacks tools to strike back. The shale revolution has granted the Americans functional energy independence, while COVID combined with NAFTA2 have concentrated America’s economic interests closer to home. Striking against Russian energy or finances just doesn’t have the propensity for blowback it might have had a decade ago. Since the bulk of Russian state income originates from commodity sales, this is a big problem indeed.
(Please don’t write in about how Biden is going to “kill oil” and “change everything”. Biden’s executive orders on limiting shale work on federal land impact less than 1% of US oil and natural gas production. When Biden does something that will appreciably impact America’s energy mix, it’ll have global consequences and I will write about it. We aren’t anywhere close to that at present.)
The Russians also love nothing more than imprisoning dissidents, and the Feb 2 conviction of Alexei Navalny on corruption charges is a case in point. (Honestly, the only thing Navalny is guilty of is surviving an FSB assassination attempt.) Expect Biden to spin the Navalny conviction well out of proportion in order to use established sanctions tools to hit Russia everywhere under the guise of human rights policy. That’ll cause the Russians no end of trouble. (That’ll likely cause the Germans no end of trouble too, but that is a topic for another day.)
Far worse for the Russians than income losses or sanctions is the fact that Biden has selected someone for the post of CIA Director who knows the Russians very well. William Burns served W Bush as ambassador to Moscow for three years during the Afghan War. There are few Americans alive who know the Russians capacities, foibles, and dark corners better. The Russians respect him…in that special way that you respect a hated rival. Courtesy of Burns, Biden will at a minimum have both forewarning of Russian plots and retaliatory options to choose from.
Russia has tools, many tools, at its disposal. Russia can – Russia will – do a great deal of damage. But for the first time in decades the tables are flipped. This time around the Americans know more about the sitting Russian government than vice versa. For a country whose survival is predicated upon accurate intelligence, that must be terrifying.
If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.
The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.
Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.
Feeding America is a great way to help in difficult times.
The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.
Russia and Europe are tilting toward confrontation. The European defense posture for the past 70+ years has been predicated on NATO–a fancy acronym for “the United States is our security guarantor.” What can Europe expect following the US presidential election in November?
If you enjoy our free newsletters, the team at Zeihan on Geopolitics asks you to consider donating to Feeding America.
The economic lockdowns in the wake of COVID-19 left many without jobs and additional tens of millions of people, including children, without reliable food. Feeding America works with food manufacturers and suppliers to provide meals for those in need and provides direct support to America’s food banks.
Food pantries are facing declining donations from grocery stores with stretched supply chains. At the same time, they are doing what they can to quickly scale their operations to meet demand. But they need donations – they need cash – to do so now.
Feeding America is a great way to help in difficult times.
The team at Zeihan on Geopolitics thanks you and hopes you continue to enjoy our work.
The past few weeks have been…eventful. I make my living anticipating and explaining and projecting change, with an unfortunate emphasis on destabilizing and disintegrative change. Pre-coronavirus the world was already hurtling through its most rapid breakdown in living memory; Coronavirus has accelerated…everything.
Times of extreme change are often painful, but for many they provide opportunity. Leaders often shine during times of extreme change. History tends to remember people who help their people and institutions navigate periods of disruption. Reagan’s speech at the Berlin Wall ended the Cold War. Yeltsin standing on a tank, defying the military put a bullet in the Soviet brain. Meir launching a worldwide assassination program made tiny Israel a global power. Churchill pledging to never surrender set the stage for the Nazi defeat. Ataturk defying Europe’s post-WWI carve-up plans ensured that, eventually, the Turks would return as a major power. In moments like these, a few countries pull away from the pack and reinvent themselves.
I haven’t seen any of that so far in the coronavirus crisis. Anywhere. Honestly, it is a little disappointing that no world leaders are rising to the challenge. While some leaders have dealt with the crisis competently, I haven’t seen any effort by any leader to harness the crisis to put their country on a more solid footing or to prepare for the post-COVID future. The lack of global leadership effort is simply mindboggling.
Let’s run through the list:
Emmanuel Macron has hitched his star to the idea that EU countries with solid budgets (that is, the countries less spendthrift than France) should shell out more money to help the poorer countries (that is, countries like France) get by. That certainly generates him some gravitas in Rome and Lisbon, but personifying the concept of asking for a hand-out isn’t what leadership looks like.
Germany’s Angela Merkel was supposed to be retired by now. Her chosen successor stepped back in early February, just before we all became obsessed with coronavirus. With her retirement plan in tatters, the Indispensable European is now once more unto the breach, dealing with intractable issues in her quiet, competent way. Unfortunately, she is constrained by her country’s savings-obsessed culture. No one in Germany wants to bail out Europe’s weaker members, particularly since Germany’s forward-looking, keep-your-powder-dry medical and financial approach has (so far) proven successful while Southern Europe’s spend-it-even-if-you-haven’t-got-it mindset has not. Honestly, Merkel looks like she’s just tired of it all. I feel exhausted just reading about her. (And frankly, she should be tired. She’s been shoveling Europe’s shit for over a decade.)
Even if everyone loved Brexit and how Prime Minister Boris Johnson has handled it, Johnson just now emerged from some quality time in a freaking COVID ward (just in time to bring his new baby home). The UK in general – and Johnson in particular – is in no shape to lead much of anything.
The orders to tamp down any discussion of coronavirus in Japan in order to maximize the chance of the 2020 Summer Olympics being derailed undoubtedly came from the top, making Prime Minister Shinzo Abe directly culpable in a spreading epidemic in the world’s oldest national demographic. Needless to say, few are looking to Tokyo for a how-to guide.
Canada’s Justin Trudeau has the look of a man who has been completely overtaken by events…because he has been. That’s less a judgment of his leadership or his team’s management skills, and more the crystallizing realization in Canada that there is no future for Canada unless it does everything of substance hand-in-glove with the United States. That includes trade policy and energy policy and China policy and…anti-COVID efforts. Trudeau has been (repeatedly) blindsided by whatever fresh spasms of oddity have erupted from the White House, and he simply has no option but to make the best of it. Pragmatic? Yes. Necessary? Certainly. But the liberal flame has most certainly gutted out.
Russia’s Vladimir Putin proudly proclaimed Russia had COVID “under control” just ten days before the Moscow mayor launched a lock down. There’s been broad spectrum public criticism by health care workers of the Russian government’s (mis)management of the epidemic, that has progressed to several doctors committing suicide by jumping out of buildings (a favorite technique of the Russian security services for disposing of troublesome personalities). This would be bad enough at any time, but Russia’s educational system collapse in the 1990s means Russia doesn’t have a particularly deep bench of health care staffers. COVID combined with the government’s response to the bad PR coming out of the health care sector is gutting what’s left of an already woefully inadequate health care infrastructure. Needless to say, while many countries want to manage the message, no one else is liquidating their precious health care workers to do so. (And incidentally, the Russian bot farms are hard at work spreading bat-shit crazy COVID-related conspiracy theories so please quit getting your COVID news from Facebook.)
Not to be left out, most of the world’s secondary powers have slightly wacky nationalist leaders who are proving…wackier with every passing day.
India’s Modi is working diligently to disenfranchise a large portion of his own population, and seems genuinely surprised when there is (violent) push back. Turkey’s Erdogan is gayly skipping his way down a neofascist path, setting the stage for (another) harsh, ethnic-based, wipe-out of a conflict with the Arabs to the south, the Europeans to the northwest, and the Russians to the northeast. Brazil’s Bolsonaro seems committed to ensuring the epidemic hits his country as hard as possible, in part by personally leading press-the-flesh rallies against COVID-containment and mitigation efforts. Mexico’s Andres Manuel Lopez Obrador is nearly as obtuse on the topic of the virus as Bolsonaro. Moreover, he has decided against providing much of any support to Mexican firms during the crisis, ensuring that Mexico’s recession will be longer and more difficult than it needed to be.
The number of leaders who have risen to the occasion is vanishingly small. Korea’s Moon Jae-in and Taiwan’s Tsai Ing-wen have done a phenomenal job of managing the COVID epidemic, but much of the credit must go to those countries’ intelligence and diplomatic corps who are arguably the most attuned to regional disruptions. After all, for them threat detection/assessment is a matter of day-to-day survival, and their hawklike watching of China is what provided their countries’ health services with the advance warning the situation necessitated.
Honestly, the only leader who has truly outperformed is Prime Minister Jacinda Ardern of New Zealand. But while Ms Ardern continues to impress, her country’s geographic isolation grants the Kiwis virus containment/limitation options denied the rest of humanity. There are a few lessons there for others, but only a few. Yet even with these three bright spots, no one outside of their respective countries is looking to Moon or Tsai or Ardern for leadership.
That holds true pretty much everywhere. With the possible exception of Angela Merkel, not many people have looked to any of these leaders to be authorities on regional issues, much less global ones…ever. Part and parcel of true global leadership is that there can really only be one. Since the Americans for the past 70 years have provided the security architecture and economic capacity for a global system to exist, it has fallen to the man in the White House to design the response, set the course, provide the resources and, to be blunt, lead. That’s triply true in the case of the meaningful international institutions which provide the sinew of global cooperation.
Those days are over.
Since his election, Donald Trump has functionally ended NATO, eliminating the single greatest security alliance in human history. Last year the Trump administration functionally destroyed the World Trade Organization, the only institution capable of empowering the multilateral trading system. Last month the Trump administration ended American funding for the World Health Organization. A flawed institution? Sure. But to abandon it during a pandemic was, in a word, questionable. The American alliance with South Korea – long one of America’s three most loyal allies – is likely to end this year at Trump’s behest. TeamTrump is even drawing up plans to pull intelligence assets out of the United Kingdom, America’s oldest, closest, and most capable ally, in protest over the Kingdom’s Huawei-linked telecoms policy.
It doesn’t really matter whether you think Trump’s actions are warranted or otherwise. The point is that the United States de facto controlled these institutions and alliances. By leaving or killing them while simultaneously failing to establish domestically-run alternatives, Trump has vastly reduced the ability of the United States to manipulate the world. That isn’t leadership. That is abdication.
Nor is it purely an international question. Domestically, Trump is a standout in that the longer he is in the White House, the less competent he appears to be at using the tools of domestic power.
I’m not talking here about Trump’s politics, policies, or even personality, but about his gob-smacking lack of managerial skills. Nearly three and a half years into his term, there are still hundreds of positions throughout the federal bureaucracy which remain unfilled, a disturbing number of which deal with issues of health. Headless bureaucracies are broadly useless except to carry out the last orders that they were given. It is with more than a touch of irony that I must note that despite all sound and fury to the contrary, Trump’s pathological unwillingness to engage with the federal bureaucracies has actually entrenched Obama’s regulatory disfunction rather than excised it.
Nor has much of what Trump has done trimmed those bureaucracies down to size. After all, reducing staff and mandates and budgetary outlays takes active leadership, and Trump is one singularly disinterested and disengaged leader. Since Trump hasn’t disbanded the agencies or programs, America has been landed with all the expenses of a sprawling bureaucracy, but few of the benefits.
Add in daily COVID briefings in which Trump seems pathologically committed to showcasing his furiously deliberate lack of knowledge, and Trump’s levels of respect at home and abroad are at the lowest of his presidency – and trending very firmly down. Imagine how weak he will look in a few months (weeks?) when the United States experiences its second coronavirus wave.
Absent from this list of not-necessarily-failed-but-certainly-not-successful leaders is, of course, China’s Chairman Xi Jinping. Understanding just how disastrously Xi has mismanaged the coronavirus crisis and just how much permanent, irrevocable damage his “leadership” is causing China requires an entirely independent newsletter.
Stay tuned for Part II…
With the world under COVID-related lockdowns, I’m pretty much as home-bound as everyone else. That’s nudged me to launch video conferences for interested parties on topics ranging from food safety to energy markets to the nature of the epidemic in the developing world. While most of these events are for a set fee, my next video conference will be free of charge. Space, however, will be limited.
Join me May 19 for a once around the world of where we stand in the current crisis. Which countries are suffering most critically? Which are pulling ahead? What the shape of the pandemic will be in the weeks and months to come? What will the world look like once coronavirus is in our collective rear-view mirror? As with all the video conferences, attendees will have the opportunity to submit questions during the event.
Newsletters from Zeihan on Geopolitics have always been and always will be free of charge. However, if you enjoy them or find them useful, please consider showing your appreciation via a donation to Feeding America. One of the biggest problems the United States faces at present is food dislocation: pre-COVID, nearly 40% of all foods were not consumed at home. Instead they were destined for places like restaurants and college dorms. Shifting the supply chain to grocery stores takes time and money, but people need food now. Some 23 million students used to be on school lunches, for example. That servicing has evaporated. Feeding America helps bridge the gap between America’s food supply (which remains robust) and its demand (which coronavirus has shifted faster than the supply chains can keep up).
A little goes a very long way. For a single dollar, FA can feed one person for three days.
Oil demand is relatively inelastic. That’s a fancy-schmancy economic term that means people and firms’ energy demand doesn’t vary very much from day-to-day or even year-to-year. Driving to work is perhaps the most accessible example. You do it every work day. If you don’t, you don’t work. And so you drive. Your gasoline demand is stable. Inelastic. Doesn’t matter much if gasoline sells for $1 or $4.
On the price side, this means the “normal” rules of supply and demand barely apply. Even minor shifts in supply or demand have wildly outsized impacts on price. We’re used to seeing this as a shortage. China booms and oil prices go up. Iran and Iraq go to war and prices go up. Derivatives trading enters the world of oil and prices go up.
But such lopsided impacts also work the other way. In 1991 when it became apparent that the first Gulf War would be a cakewalk and threats to oil supplies were not going to manifest, prices collapsed. They did so again at the beginning of the 2007 subprime real estate crisis after being on a multi-year tear.
And now coronavirus is introducing the greatest shift in oil pricing in history. Based on who is making the guess (because no one really has good data yet), coronavirus-instigated quarantines have reduced global oil demand by somewhere between 15 million and 35 million barrels per day out of a pre-crisis level of 100 million. Global prices have plunged to as low as $20 a barrel thus far, and they have (a lot) further to go.
In the past, OPEC has often attempted to micromanage oil markets by adding or subtracting bits of crude. But never before have such changes occurred on anything but a multi-month time-frame, and never before have such changes shifted the balance by more than a couple million barrels at a time. Coronavirus’ impact is already an order of magnitude more than OPEC’s greatest action, and it all happened in just three weeks.
This evisceration of demand, the sheer scale of imminent producer collapse is only the beginning. Deepening economic dislocation combined with the greater regionalization of a post-COVID world means oil demand – and global energy markets – will never recover. Join Peter Zeihan April 10 for an exploration of the path forward for the global energy sector, with a heavy emphasis on which producers might be able to stay the course, and which we may not hear from for years.
As a rule I try to stay out of discussions about energy prices. Energy trading is a hectic business with a lot of stress, plagued by fleets of hot-headed issues that have nothing to do with supply or demand or technology. But that’s not the problem today.
The British government announced March 27 that Prime Minister Boris Johnson tested positive for coronavirus, making him the first world leader to do so. As the United Kingdom is an advanced democracy, here at ZoG we are not overly concerned with Johnson’s isolation and perhaps incapacitation or even death. Part and parcel of democracies is that succession is part of life. The UK will get through this one way or another.
However, there are many countries that are not democracies and there are many world leaders far older than Johnson…
We just had the second-biggest oil price drop on record as Asian markets opened March 8.
For the past couple of weeks the Saudis have been attempting to cobble together an oil production cut of about 1.5 million barrels per day. As of last Friday, they had been sufficiently successful to get buy-in from the bulk of both OPEC and non-OPEC members, but there was one niggling hold out: Russia. On March 7 any pretense of a deal collapsed and the Saudis committed to flooding the market. First, they lowered their asking prices for crude being shipped to Europe and Asia. Second, they announced plans to quickly ramp up output from some of their spare capacity.
There was a hilarious day-long window where the Russian propaganda machine seized control of the narrative and fooled a host of financial reporters into proclaiming that Russia was going to war with the U.S. shale industry. It is difficult to delineate just how incredulous such a claim is since U.S. shale output has a lower production cost than Russian crude, but hey, people fall for propaganda allll the time.
The primary reason I laughed when I read those breathless headlines is that the Russians couldn’t launch a price war even if they wanted to do so. The problem is all about location. Much of Russian production happens on difficult land that can turn swampy in the summer and freeze solid during the winter. If those wells are shut-in, particularly during the winter, the risk of well damage (up to and including explosions!) is high. In the truly frozen sections of Russia, when the time comes to restart production, you can’t just turn them back on. You must re-drill them. In winter. Likely the following winter.
Russia has never cut production on purpose. Its “cuts” in 2019 were nothing more than some seasonal maintenance. The last time the Russians actually reduced output it was the Soviet collapse. It then took Russia nearly two decades to get back to where they had been.
Much of Russia’s power in the world, triply so in Europe, has to do with energy politics. The Continent counts Russia as one of its top three energy suppliers in any given year, and with the Brits now out of the EU that dependency will increase. Moscow (rightly) sees the American shale patch as a threat to that influence and so has sought to use propaganda to thwart the sector where possible, up to and including bankrolling some American environmental groups to lambast shale (ask Michael Moore and Jill Stein for details).
And at least to a degree, some of the Russian scuttlebutt on all things oil and shale are correct. The Russians supposedly have been ranting of late that the last round of Russian/OPEC oil output cuts in 2019 simply provided more market share for American shale to fill. That’s totally what happened.
Anywho, the Saudis made the reason for their moves crystal clear late March 8, saying they would compete for market share at every point they can reach where the Russians currently sell their oil, with the intent of underbidding any Russian offers. Saudi Arabia is nearly unique in that it can turn production on and off on a three-month time scale. Most other countries can’t, and certainly not the Russians. In fact, the only oil production zone in the world that can adjust faster than Saudi Arabia is…the American shale patch, where new wells can come online in under six weeks, and where depletion rates are measured in months rather than years.
We’re already scraping the $30 a barrel level. That’s the number where about two-thirds of U.S. shale operators find themselves crying themselves to sleep at night. Even worse (or better based on your point of view), oil prices are likely to remain lower for longer.
The first reason is the most obvious:
Courtesy of the spreading coronavirus epidemic, best guess is nearly half of the Chinese workforce is still off-line this week, and much of China’s industrial plant remains shut-down due to quarantine efforts – most notably in the industrial heartlands of the Yangtze Valley and the Pearl River Delta. China is undoubtedly going to suffer a real recession this year, which will absolutely impact manufacturing supply chains as well as the supply of consumer products globally in the second and third quarters. Chinese oil demand has probably dropped about 2 million barrels per day.
Avoiding additional widespread infections throughout the rest of China is probably statistically impossible at this point, and it is spreading globally like, well, a virus. Iran, Italy, Switzerland and South Korea have robust epidemics that have erupted in just the past two weeks. Follow-on epidemics are all but certain in France, Germany, the United States, Canada and, well, nearly everywhere else later this month and into April. The virus tends to hit less harshly than a cold in 6 out of 7 cases and is not particularly lethal if you are under age 70 and otherwise healthy, so CALM DOWN, but for everyone’s sake follow normal sanity about exposure and hygiene. Following sanity means less movement and travel and interaction and since oil is the fuel of transport, that means less oil gets used. Everywhere.
The second reason is more…colorful. Riyadh and Moscow have rarely gotten along, with their biggest big blow-up occurring at the instigation of none other than Ronald Reagan. In the mid-1980s the Saudis expanded oil output in order to wreck the overextended finances of the Soviet Union. It was part of a collage of factors which heralded the Soviet collapse. With the Russians increasingly active in Iran and Syria and Iraq and Afghanistan, the Saudis have plenty of reasons to dust off an old tool and whap the Russians on the face.
The third reason is more…personal. With the Americans stepping back from the world, the Saudis are finding themselves facing off against the Iranians without the American buffer between them. The Trump administration’s anti-Iranian sanctions are strangling the Iranian economy, an economy that survives on oil exports. Shrinking what little income Iran is still getting via a price war isn’t a dumb move.
The fourth reason is simple economics. Saudi Arabia is annoyed not simply by Iran and Russia, but other oil producers which range from Venezuela to Ecuador to Libya to Nigeria to Angola to Norway to Azerbaijan to Kazakhstan to…American shale. Saudi Arabia has lower production costs than them all. Anything that takes the snuff out of the competition is something that’ll make the Saudis smile. Of all of these, U.S. shale will bounce back fastest, but there will be a lot of bankruptcies and consolidation between here and there. Other countries will face outcomes far more painful.
The final reason is less about economics and local strategy and more about resetting Saudi Arabia’s position in the world. The Syrian Civil War is in its final chapter. The Iranians and Russians are on the winning side…while the Saudis are on the losing side. If Russian-Saudi relations are already deteriorating, it doesn’t take much of a push for the Saudis to remind the Russians (and everyone else) that there is another field of competition – one in which the Saudis excel and the Russians (and everyone else) do not.
The New York Times dropped a fun piece last week asserting a coalition of like-minded national security and intelligence professionals are neck-deep in an offensive cyber operation against the Russian electricity system. The article suggests the hacking was meant to provide a cudgel to beat Russia with should it intervene in American elections again. The real kicker was the assertion made by a host of anonymous sources that not only was U.S. President Donald Trump unaware of the operation, but that the sources were afraid to tell him for fear the White House would shut the operation down.
There’s a bit of peeling required for this particular onion:
Computerization didn’t happen all at once. At first computers were multi-billion-dollar monuments of circuitry that only major governments could afford, to be used “simply” to compute complicated math (ergo the term computer). They certainly weren’t hooked into civilian infrastructure. Besides, there was nothing to “hook” into. Pre-1980s tech was analogue and manual, not digital and automatic.
Fast forward to the 1980s and this changed rapidly. The marriage of now-more-attainable computers to telephony brought us modems long before it brought us smartphones. That linkage enabled the first computer networks to snake through the worlds of finance, media, energy, academia and manufacturing. As computers became ubiquitous, the possibility of extreme damage being inflicted upon the average American citizen expanded exponentially.
A new policy was required for this new era.
The president at the time was Ronald Reagan. His executive guidance was threefold:
First, the U.S. government would provide no cyber protection to any part of the civilian system. Individual firms and citizens were wholly responsible for protecting their computer systems from outside threats.
Second, the U.S. government would maintain an absolutely massive hacker corps with standing orders to hack everything and put malware and backdoors into every imaginable foreign system.
Third, the U.S. would deign to identify precisely where its red lines were.
These three points explain why it is so simple for Nigerians to defraud your grandmother, why the Russians could interfere in the U.S. elections with ease, and why everyone is so afraid to go after the really important stuff: infrastructure in the United States. In essence, America’s cyber policy is a lot like the rest of its armed forces: you can poke and prod the exposed flanks of the behemoth and you might or might not get swiped at for your trouble, but if you ever do something that really draws its attention, well… you’d better have a great bunker.
In the event the U.S. ever did decide to cut loose, it would have a remarkably shitty quarter. The lack of cyberdefense would ensure that power grids would fail, vulnerable city bureaucracies would be left helpless, and all the businesses that forgot to update their Windows operating system from last decade’s would find they no longer have computers. In other words, it would hurt. But whoever the U.S. was going to war with would find themselves facing off against nearly four decades of surveillance, planning, and preparation by skilled, vengeful nerds. In the best-case scenario (for the targets), they would regress a century as everything from power to water to communications to shipping simply seized up, never coming on-line again until a complete computer-free overhaul was completed.
The Reagan administration’s guidance on cyber sat broadly unchanged for the next four presidents. Offensive cyber was used rarely and the U.S. refuses to discuss it. It is only under Donald Trump that some shifts have occurred. In Trump’s early months as executive the U.S. government leaked it had done something I find hilarious:
It didn’t simply identify the specific Russian agents who had interfered in the United States’ 2016 presidential elections, it sent cease-and-desist letters to those agents at their home addresses complete with enough personal touches to drive home to the Russian hackers that the U.S. government knew more about their personal lives than the Russian government itself.
What all this makes clear is that the U.S. realized it had undersold itself and underutilized its tools, which is quite literally the last thing you want to do with a deterrent. But times are changing and so, it appears, the pace of operations is picking up.
These operations involve extremely detailed pre-operational surveillance and planning so that when the time comes, the real break-in can happen easily. It creates options. The operation can go farther and, as the Times claims happened here, an implant ready to hurt critical infrastructure can be left at the ready. It’s a line that until recently the Americans claimed they did not cross except in exceptional cases.
The problem, of course, is that none of this, right up until the attack occurs, is public. Which makes deterrence more than a little bit of a problem.
So let’s look at that Times article again:
Is the U.S. hacking the Russian power grid? Certainly. The U.S. has been hacking the Russian power grid since before Gorbachev.
Is there a conspiracy within the U.S. government against Donald Trump? Certainly not. Anyone hacking the Russian power system is simply doing their job as demanded by Reagan and HW Bush and Clinton and W Bush and Obama… and Trump. It’s about planning and, if the Times is right, prepositioning assets. Not executing a broad-scale attack.
Is Trump aware that the Russian power grid is being hacked by American agents? Of course. Everything that matters in Russia is being hacked by American agents. Ditto for China. And Iran. And a follow-on list of countries so long I’m not going to go into because of the hate mail it would generate.
Does the national security establishment dislike Trump? Well duh. Trump is upending seven decades of tradition. That’s awkward even on a good day.
As to the issue with the Times article, however, I’m going to call bullshit. If an anonymous source is concerned the president will shut down his favorite top-secret anti-Russian program, blabbing about his favorite top-secret program to the Times — which makes its bones publishing everything in a public forum — would indicate that said agent isn’t all that bright.
In fact, the only people this article seems to be alerting are the Russians. But as the author pointed out, the government raised no national security concerns about the article. That suggests this is all about sending the Russians a message.
The context of that message is one I can only guess at, but I must underline repeatedly that the United States is not on the verge of shutting off the lights in Russia. There is an enormous difference between hacking something like the Russian power system to install malware and activating said malware. The former is rude… and a normal part of state policy. The latter would crash air traffic control and shut down mass transit and darken hospitals. It would kill a lot of people and be a flat-out act of war.
It also isn’t going to happen without a change in strategic relations far more radical than anything Donald Trump has brought to the table to date.
But the Americans now have drawn a line in the sand, publicly. The question is who is going to cross it.
