The End of Cost

In the past five weeks the United States has thrown $3 trillion in new government spending at coronavirus-related bailouts, relief and economic stimulus. In total the US has already spent more on coronavirus-related actions than the rest of the world combined, tripled. Strangest of all, not one dime of it is backed up by new government revenue streams; every bit is deficit spending.

Nor is the United States likely to overly suffer from the expansion of its debt burden. Of that $3 trillion in new spending, the Federal Reserve’s total purchases of US debt is “only” $1.3 trillion. The rest of the debt bulk has been absorbed by other investors, mostly foreign investors. Such is the scare globally that many are eager to get a zero rate of return on an American government asset rather than risk their money at home.

Nor is the United States even remotely done. At least another $1.5 trillion is on deck for May, with another batch likely during the summer. None of this includes any of the monetary policy actions from the Federal Reserve, nor does it include likely inducements for American firms to relocate from China to literally anywhere else.

The feeling in the United States is that coronavirus is not only a crisis, but it is the type of crisis which necessitates heretofore unprecedented government action. And since government action isn’t free, everyone is willing to go along with big price tags. This feeling is strikingly bipartisan. In the first two week of the coronavirus crisis, Congress passed more legislation of substance than in the previous ten years. I’m not suggesting for a moment that American politics have entered a kumbaya moment, but instead that the very concept that price means anything has passed into myth. And if my broad forecasts for the future of Europe and China hold true, it will stay there for years to come.

There’s a political side to this willingness to throw a bottomless pot of money at the problem as well.

America’s political parties are in flux. Factions rise and fall in the hierarchies, and sometimes drop out of party structures or vanish altogether. Sometimes, leadership can move such transitions along much faster. In the case of America’s fiscal conservatives, Trump’s transformation of the Republican Party into his personal vehicle excised the fiscal conservatives (along with the business conservatives and national security conservatives) from the Republican coalition altogether. It is entirely reasonable to expect the fiscal conservatives to eventually find a new home, but for now the brake that they have institutionally imposed upon government spending is simply not present.
 
Which makes the next few years a time for big-ticket ideas. There are plenty of them bouncing around in the American political space. Many are near-and-dear to the Left, who at their core see the government as a change-agent which has the right and duty to uproot and remake society. Yet these days the Right is hardly aghast at big spending either. After all, America’s biggest (pre-COVID) budget deficits happened under the Trump administration. Let’s take a look at the most likely culprits:
 
Infrastructure spending:
 
This one is not only a perennial favorite, but its time has finally come. Typically, hang ups have included pork barrel politics, general ideological clashes over the nature and goals of this or that piece of infrastructure, state v federal decision-making authority and fund sourcing. But mostly it has been about cost. If you disagree with someone’s infrastructure plan on any non-cost point, you can always oppose it as being “wasteful”. That argument just vanished. And since everyone agrees in general that infrastructure spending is good (it’s just the other guys’ specific ideas that are kooky) expect a lot of it in the not-so-distant future.
 
Updating America’s interstate road, rail and water infrastructure would run a cool $3 trillion. A nationwide 5G effort would add another trillion. And that doesn’t even touch municipal infrastructure which could easily add another $2 trillion.
 
Universal basic income:
 
The concept of UBI is that government should provide every citizen with a monthly or weekly payment for “basic” expenses such as rent and food and power. As the argument goes, as automation erases more and more job categories, some sort of universal payout is the least disruptive and cheapest-to-administer method of wealth redistribution.
 
Many criticize the very concept because it would denigrate the work ethic. Others like the fact that it would introduce a sharp class distinction between earners who pay taxes and a loafing class that simply subsists (many of these folk in this second camp assume – probably correctly – that over time UBI would introduce different tiers of political rights, with those who do not pay into the system losing full voting rights).
 
One of the biggest reasons no one has really tried UBI is that it is expensive to attempt, and no one knows if it’ll work because no one has ever really tried it at scale. Well, as part of the coronavirus stimulus and bailout packages, most citizens received a $1200 check and anyone on unemployment gets another $600 per week on top of their standard benefits (meaning many on unemployment are now making more than they did while working). More cash payments are all but certain for the next couple of months, and an extension of unemployment benefits are pretty much baked in as well.
 
Functionally, the United States is trying UBI out right now. A few months from now we’ll finally have a real-world, at-scale example of how UBI works. And if it works well, expect a massive push to implement it on a permanent basis.
 
Defense expansion:
 
I’ve always found the process of deciding defense spending fascinating. Even in the days after the Sept 11 attacks, it was ridiculous to think that Islamic terror posed a more existential threat to the United States than the Soviet nuclear arsenal. And yet US defense spending today – with the Global War on Terror largely wound down – is higher than it ever was during the Cold War. Defense specialists are bracing for what they see as the inevitable spending drawdown. I simply don’t think it is going to happen.
 
Today the annual budget of the Defense Department is just shy of $750 billion, plus another $52 billion for Homeland Security and $63 billion for the intelligence agencies. If there is going to be a budget reduction, it will come from American forces being fully brought home. Although, honestly, closing America’s overseas bases means future deployments likely will cost more because the military will need to launch from the homeland rather from a foreign footprint closer to the action.
 
A partial solution to that imbroglio? Don’t cut funding at all. In fact, invest in more long-range deployment capacity.
 
Universal health care:
 
America’s health care system is the world’s most expensive, but from the quality of the care provided (not to mention the system more or less falling on its face during COVID) you wouldn’t guess it. The smart conversation would be how to institute real health care reform (as opposed to Obamacare which simply introduced health care payment reform), but that unfortunately isn’t the conversation that’s starting.
 
Instead, the passion from politicians such as Bernie Sanders is for free health care for all, based on the Medicare model, which is by far the least efficient, lowest quality, most expensive option possible. Leaving aside both the financial estimates of the Sanders crowd and their detractors, most independent estimates put the cost for Medicare for All at least $2 trillion. Per year. Normally, such proposals would founder on the rocks of cost. Not anymore.
 
Green New Deal:
 
Contrary to much rhetoric (which I guess is the case with all these ideas), the GND is less a well thought out plan and more an ideological grab bag of Green/socialist concepts. That has been enough of a deal killer to turn most moderate Democrats against it, as well as those within the Green movement who think that math needs to be part of the discussion (which would include me). Bottom line? There really isn’t a real plan yet, but with Americans shifting into a price-as-myth mindset, I bet there will be one soon.
 
Any meaningful GND would need to require the near-complete overhaul of nearly every economic sector ranging from automotive to construction to power to agriculture to raw materials. We haven’t even invented many of the technologies that would be required, which, at present, makes any brass-tacks budget proposal impossible. But suffice to say if it could be done for $10 trillion, that would be really, really cheap.
 
It doesn’t take much imagination to foresee a potential political alignment in Congress to dump a few supertankers of twenties on this or that Green-friendly policy. At a minimum, I expect much increased subsidies for this or that greentech, even if (especially if) they haven’t yet proven to be market ready.
 
Industry bailouts:
 
While I expect much of the country to be returned to work by mid-July, there is much about the coronavirus we do not yet know. For example, if it turns out that everyone who gets it can be re-infected a few weeks down the road, then the fundamental structure of the American economy will have to adapt to a fundamentally new reality. Such changes in circumstance will not impact all sectors or firms equally, generating scads of winners and losers. Without financial assistance, some sectors will shrivel and firms within those sectors will simply die.
 
But with a bottomless supply of funding available? Not so much.
 
Some of these are pretty obvious. Just off the top of my head, tourism, aerospace, child-care, education and restaurants look particularly endangered. The question is where to draw the line.
 
Consider air travel. Of course, we’ll bail out the airlines. What about airports? What about aircraft manufacturers like Boeing, or aircraft maintenance firms? Do we bail out all their hundreds of component manufacturers as well? What if key components are manufactured in other countries? Are those firms rescued? Normally, the fear of not knowing when to stop establishes a natural firebreak on bailouts. But that fear is rooted in the fear of cost. That fear no longer applies.
 
State and municipal bailouts:
 
Most American states have balanced budget amendments, and most gain their income from sales and income taxes which have pretty much gone to shit during the coronavirus crisis. Add in that many have wildly out-of-control pension funding issues and many states faced financial catastrophe before COVID. With COVID its more like financial Armageddon.

So far Congress has only extended the states and cities very limited assistance, with Senate Majority Leader Mitch McConnel (R-Ky) dead-set against any sort of broad-based bailout program. It isn’t simply about ideology. Some states are actually doing ok (all things considered), so rewarding states who have failed to reform their systems does bring up issues of fairness and moral hazard.
 
But the fact remains that the single biggest reason not to do some sort of federal bailout – cost – just doesn’t mean as much as it used to. (It is also worth mentioning that the sort of financial power and flexibility which enables the federal government to spend as much as it wants does not extend to the states and municipalities. They are not sovereign powers with their own currencies.) Some sort of federal fund designed to provide at least bridge funding is probably inevitable.
 
All these possible programs have multiple policy, strategic and cultural implications.

  • If the federal government bails out a firm, does the government take shares? If the bailouts are big enough and last long enough does that mean the US government becomes the majority owner? We have a word for that: nationalization. Can you nationalize a city? A state?
  • An America that doesn’t right-size its military for a new era, and expands its budget to make it very easy to reach out and slug someone, is a country that is perfectly willing to level any country anywhere for nearly any reason.
  • Massive infrastructure programs are not simply about building roads and bridges, they are designed to rewire economies for decades (my adopted home state of Colorado has a 100-year infrastructure plan). Decisions made now will guide the country’s development, literally for generations. There will be winners and losers.
  • An America on UBI is one that faces a wide array of utopian and dystopian futures. Consult Andrew Yang for the utopian, and the sci-fi series The Expanse for a good example of the other one.

There are those who would argue that none of these – let alone a few, much less all of these – would ever creak past the shrieks and performative rage of the Senate’s erstwhile fiscal hawks.
 
Ha! There are few things politicians of any political stripe care about more than getting reelected. And as the Trumplicans’ central rally cry – a booming national economy – crumbles, you can be sure that if not Senate Majority Leader Mitch McConnell, then President Trump’s survival instincts are going to go into overdrive.
 
Trump’s populist tendencies coupled with the very real economic pain being felt across broad swathes of the American electorate provides the current administration with an obvious path forward to electoral success: absolutely massive social spending.

If you enjoy our newsletters, please consider showing your appreciation through a donation to Feeding America if you are able to do so. One of the biggest problems the country 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.

DONATE TO FEEDING AMERICA

US COVID-19 Testing Data, April 27

Let’s start with the headline good news. Since our last update on April 19, it appears the COVID-19 epidemic may have plateaued in the United States with direct COVID-caused deaths peaking on April 21 at just under 2700 cases.
 
Of course, there are a boatload of caveats:

  1. While COVID-attributed deaths are falling, the number of confirmed cases is higher than ever. This could mean deaths are about to pick up again (which would be bad). Or, it could mean we are detecting more cases even though the actual number of cases has already peaked (which would be great). Or, this might simply be yet another trough-peak disconnect as we have seen before (which would be…frustrating). We really don’t know, and the only way to know is to do more testing. A lot more testing.
     
  2. Speaking of which, the US is still nowhere near where it needs to be for testing levels if the goal is to avoid secondary epidemics. We really need at least one million daily tests, with those tests generating results within an hour or two. Without such testing in place contact tracing is impossible, which means the only means of combatting additional epidemics would be additional shutdowns.
     
  3. There is nothing within the data at present that is what we could call “clean”. There is no single set of data gathering guidelines among the states, or even within individual states. This is pretty typical of the United States in general; most data is collected not at the national level, but by the states. And it is especially true during an emergency when the emphasis is on saving lives as opposed to making sure spreadsheets line up.
     
  4. Just because national death figures have stabilized and are falling doesn’t mean such is occurring everywhere. Different cities and states were exposed to COVID at different times, and different demographic patterns shape the epidemic in different ways. Densely populated New York may well be through the worst *fingers crossed*, but my far more rural home state of Iowa is clearly nowhere near its own peak.
     

Take the example of my hometown of Marshalltown. The local hospital (which lacks ICU capacity) fears it is about to be Italy-style overwhelmed. The hospital takes cases from throughout central Iowa – a region which includes the now-closed meatpacking plant in nearby Tama, as well as Marshalltown’s own (which remains open). In beef and pork meatpacking, social distancing at work is more or less impossible. Such facilities rank right up there with cruise ships and jails for COVID intensity. Cases linked to Marshalltown’s meatpacking facility are responsible for most of the fear at the hospital. I have yet to hear anyone use the word “triage” but I worry it is coming.
 
But even here the case data reflects not only differences in statistical management, but in the nature of anti-coronavirus policies at the state and local levels.
 
Compare Iowa’s experience to that of our arch-nemesis, Minnesota.
 
Minnesota has about half-again the population of Iowa, and as one might expect, total testing in Minnesota is about half-again the total testing level of Iowa. But that is where the similarity between the hardworking, morally upstanding people of Iowa and the turgid pile of frigid confusion that is Minnesota ends.
 
Despite its smaller population, Iowa has half-again more COVID-19 cases than Minnesota. I’ve little doubt that this is due to Iowa still having no stay-at-home orders from the governor as well as the fact that Iowa hosts the country’s densest cluster of meatpacking facilities.  
 
But despite Iowa’s much larger overall caseload, the state has also suffered fewer than half the deaths from COVID as Minnesota. Over ¾ of Iowa’s positive cases are in people aged 65 and younger, an age group that is highly likely to survive the virus. Minnesota’s cases are skewed into older age groups, making death more likely.
 
Bottom line? For a country of the size and diversity and complexity of the United States, there is no single road forward to reopening. Nor to secondary epidemics. Nor to aftereffects. We cannot project New York’s experience onto anyone. And we certainly don’t want to project Minnesota’s.

A Note From Peter

If you enjoy our newsletters, please consider showing your appreciation through a donation to Feeding America if you are able to do so. One of the biggest problems the country 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.

DONATE TO FEEDING AMERICA

Join Peter Zeihan and Melissa Taylor April 30th for an in-depth discussion and presentation on the impact of COVID-19 on global agricultural production and the stability of the world’s food supply.

REGISTER HERE

Future planned invents include:

  • Transport and Supply Chains
  • Manufacturing
  • Industrial Commodities

US Meatpacking Bends to Coronavirus Pressure

Let’s get the bad news out of the way first.
 
Meatpacking is a messy business almost custom-designed to generate coronavirus outbreaks among the staff. When a cow or hog is brought into the slaughter facility, it is slit, hung, bled-out and then has its skin and organs removed, all in 30 minutes. Since the typical cow weighs a half a ton, it is the ultimate team effort. No social distancing here.
 
Later on the carcass is broken down into pieces for restaurants, supermarkets with other parts sent on to processing into things like sausages and ground beef. Social distancing is at least possible at these stages, but establishing that all-important six foot bubble means fewer people on the line. That means lower throughput, which means less meat.
 
Best guess? Roughly 10-15% of the country’s beef processing and 25% of its pork processing is currently offline. We should expect that any plant shutdowns will last at least until the staff recovers. For most young, healthy folks, that’s about three weeks.
 
There’s also not a lot of spare capacity to ramp things up once these plants reopen. Most plants run two shifts, six days a week. And since most of the labor is migrant, expanding the staff isn’t something that can be done in a few days (or weeks) – especially if a substantial percentage of the staff is out with coronavirus. The issue is amplified in states that have no social distancing guidelines and, as you can see from the map, there is significant overlap.

Now the good(ish) news:
 
Purging a facility of COVID-19 is pretty straightforward. It just requires removing the vectors (i.e. the staff) from the facility and doing a scrubdown. Meatpacking plants regularly close every week or three for top-to-bottom cleaning and sterilization, so this is baked into normal operations.
 
Nor can you get coronavirus from meat that came through any of the impacted facilities. Most beef and pork is in a chiller for a few days (more than enough time to kill the virus). Multiple sterilization stages are used throughout the slaughter and packing processes (all of which would kill the virus). And then once the meat makes it to your house, you cook it (also, more than enough to kill the virus).
 
Finally, there will not be a shortage of animal inputs for the meatpackers. America’s ranchers had been steadily increasing their herds for years, both to serve Americans who had been enjoying a ten-year economic expansion, as well as to serve export markets recently opened up by the Trump administration. The ranchers’ problem is too many animals right now (too many to the point that some pork producers are euthanizing and burying hogs because they cannot get them to a slaughterhouse). The issue is not a shortage of animals; the issue is the bottleneck at the slaughter/meatpacking stage of the supply chain.

A Note From Peter

The last few weeks have been rough on all of us. As of March 1, the vast majority of our income here at Zeihan on Geopolitics came from us putting Peter on a jet and sending him to rub elbows with large groups of people. As I’m sure you’ve guessed, that business line has gone to zero.
 
Some of our subscribers have realized that, and so have suggested that ZoG provide a means of enabling readers to “tip” us in the manner similar to many other podcast and newsletter and bloggers. In essence if you like the newsletter, you can kick us whatever bit of cash you feel is appropriate.
 
Starting today we are implementing that program, but we don’t want the funds to come to ZoG. There are many, many people out there who are in a far worse position than the ZoG team who ultimately cuts its teeth on disruption and chaos. We’ll be fine. Others are not so fortunate. So we ask that should you wish to chip in, that you do so via Feeding America. FA is a charitable organization that seeks out foods from farmers, processors and retailers, and delivers it to people in need. Nationwide.
 
One of the biggest problems the country 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.

DONATE TO FEEDING AMERICA


Join Peter Zeihan and Melissa Taylor April 30th for an in-depth discussion and presentation on the impact of COVID-19 on global agricultural production and the stability of the world’s food supply.

REGISTER HERE

Future planned invents include:

  • Transport and Supply Chains
  • Manufacturing
  • Industrial Commodities

The Geopolitics of American Fear

Today, I’m not going to go through all the country-by-country details of the ongoing coronavirus pandemic. My team and I are working diligently – franticly – to assimilate a huge amount of ever-changing information. As soon as we have some preliminary conclusions, we will share them. But for now we just don’t have enough hard data.
 
That will change soon.
 
This coming week (March 23-28) the South Koreans will be in the fifth week of their epidemic. To be blunt it is what I’ve been waiting for. The “typical” coronavirus experience for someone who requires hospitalization and survives is about 25 days end-to-end; five weeks is about what we need to get some good data.
 
Why the Koreans? The South Koreans are technically minded, they have a top-notch health care system, they are culturally wired for quick responses, their first instinct isn’t to lie about everything, and they believe in math. They will soon provide the world with the best and most holistic information about all aspects of the virus. If coronavirus had first erupted in South Korea, I have zero doubt it would have been contained, squashed, and we’d not be discussing it at all, much less living under self-imposed quarantine.
 
Until I have that information, however, I think our time is best served discussing the ongoing panic. In particular, the (I’m not sure this is quite the right word) positive aspects of the panic. There is more to American panic than toilet paper shortages.
 
The American geography is by far the best on the planet. The Greater Midwest is the largest chunk of temperate zone, high-quality arable land in the world, and it is overlain by the world’s largest internal navigable waterway network. Development and industrialization is the cheapest there of anywhere in the world. Barren deserts, rugged mountains, dense forests, giant lakes and ocean moats make for a nigh invasion-proof homeland. For five generations the United States experienced greater development, rising standards of living, easy financial access, minimal health concerns, rising economic growth, all in an environment of almost perfect security.
 
This has many, many outcomes. Three are worth highlighting:
 
First, considering its riches, its low development costs and its security, the U.S. economy is geographically set up for massive success. It isn’t about policy or governance or ideology. It is about place. That cannot be copied. The American system has exited every decade in a stronger position than it was in when it entered, including the decade periods of the Great Depression and Great Recession. It came thru the 1920s Spanish flu epidemic (a far more deadly pathogen than coronavirus) just fine. It will come through this one.
 
Second, the United States isn’t very good at national governance. When geography takes care of all the big issues, there is little need for a large, overarching, competent, national government. And it shows. The U.S. isn’t Germany or Korea, countries that live in geographic pressure cookers and so governance has to be top notch to ensure survival. This isn’t Russia which is paranoid for good reason and so must excel at intelligence operations. This isn’t Brazil where the terrain and climate are hostile to development and so excellence at infrastructure policy is essential. America’s lack of federal competence means that when there is a crisis it all comes down to the personality, skill and contacts of the person at the top. America’s initial reaction to the coronavirus isn’t its first failure of presidential leadership. But America’s sublime geography means the country will survive this failure to have others down the road.

Third, Americans are cocky. When your national founding myth is one of achievement with minimal adversity, it is eaaaaaaaaaaaaaaaaasy to become convinced you are the Chosen People and life is simply about navigating oneself from success to success. Of course, I think we all realize this isn’t how things actually work. From time to time something or someone punches you in the face. And when that happens to Americans, we absolutely, positively, lose our shit.

Americans have no sense of proportion. The same thing that gives us our can-do optimism and arrogance means that when we face unexpected challenge we fear the covenant with God has been broken and doom doesn’t so much beckon, but instead will crash down upon us presently. And so we panic. We overreact. But we overreact with the power of the world’s largest and most stable and most technologically advanced economy. We overreact with the strength of a continent. We overreact with the world’s most powerful long-range military, a military that absolutely controls all global waterways. And in doing so we reshape the world. Not on purpose, but simply as a side effect of our panic.

American history of all eras is rich with examples of such manic-depressive behavior. Some “recent” ones:

  • The Pearl Harbor panic fostered the deepwater dominance strategy, culminating in a Navy more powerful than all other players combined.
  • The Sputnik panic brought us a root-to-branch overhaul of the educational system and industrial plant.
  • The Vietnam depression married tech to military strategy and brought us JDAMs, cruise missiles, the Internet and cell phones.
  • The 1979 and 1983 oil shocks led directly to deepwater oil production and the shale revolution.

Our allies understand this. Winston Churchill famously noted that “Americans will always do the right thing, after exhausting all the alternatives.” So do our rivals: a common Russian phrase during the Cold War was “Americans feel that if it is worth doing, it is worth overdoing.”

Americans have not felt a panic since the September 11 attacks. It has been two decades since we were scared. We are due. I always assumed the next fear-response would be because of something that some dumbass country did to the United States, thinking the Americans were over the hill. Then the full force of the United States military and economy would crash down upon it and wipe it from memory.

Apparently, viruses can trigger America’s fear-response too.

In the past 96 hours the United States has gone from functionally zero actions against coronavirus to among the world’s most invasive. And unlike other countries – China comes to mind – who have only instituted constraints on specific areas where there are known coronavirus outbreaks, the Americans have instituted their restrictions nationwide. America now hosts the largest population in the world under lockdown.

The speed and depth of the change is something only Americans can culturally manage, and this is only the beginning.

The scale of resource application that is about to occur is nothing less than historically unprecedented, rivaled only by American actions in previous fear-response incidences.

  • The Federal Reserve’s new bond-buying program to support the markets? Its only analogue is what the same Federal Reserve did back during the 2008 Financial crisis, but this time it was done in a day instead of a month.
  • The industrial plant’s re-tooling to make medical supplies? Completely unprecedented…unless you compare it to America’s post-Sputnik industrial overhaul.
  • Want to see something really impressive? Watch the process for crafting, manufacturing and distributing the coronavirus vaccine. The US just started human trials on March 16. That’s a solid two months faster than any such trials, ever. (And if that were not enough, in the heart of the crisis the US government is attempting to wholesale purchase the German firm furthest along in generating the German anti-coronavirus vaccine. Needless to say, in Germany this is perceived as a total dick move.)

Americans are capable of incredible ideological, economic, technological, logistical, military, and cultural leaps when the panic sets in. The coronavirus crisis is by no means anywhere close to being over, but the switch has been flipped. Now comes mobilization.

These are “merely” things the United States is doing at home. With a few weeks (maybe days?) the Americans are going to do what they’ve done during every other fear-response. Apply (perhaps unfairly) that fear to all aspects of all of their international relationships.

The timing of this particular fear-response gives it far greater weight than those that have come before.

The global system as we know it – the system that has enabled everything from global manufactures trade to global energy trade to the existence of the European Union to the rise of China – is an American creation, designed for the Cold War. That system was the payment to our allies to side with us against the Soviet Union. That system ceased serving American strategic interests at the Cold War’s end, and in the days before coronavirus it was coming to an end. Coronavirus has sped things up, severing most of the remaining ties that bind the world together. No one else has the military capacity to ensure freedom of the seas, nor the demographic consumptive capacity to fuel global commerce. Since their economy is largely self-contained, the Americans really don’t care if the system collapses.

And that was before the coronavirus-induced fear response.

In this environment, other nations need to be extremely careful, lest they court American wrath. America has a near-infinite capacity to act, a near-immunity to blowback, and a near-zero concern for consequences. It isn’t clear to me that there is yet recognition of this fact in the wider world.

Russia’s continual use of military aircraft to needle the North American air defense envelope during an American fear-response is monumentally stupid. I lack the vocabulary to communicate how fantastically foolish it is for Chinese state media to spread conspiracy theories that the US Army originated coronavirus and dropped it into Wuhan. Even Europeans whining that the Trump administration acted too hastily in enacting travel restrictions on flights between Europe and the United States wasn’t perhaps the right time to take issue with American policy.

Yes, all-in-all it has been a crappy couple of weeks, and we should just bake into our expectations that the next three months won’t be even remotely fun. But honestly the real news is that we are now – right now – suspended in a deep-breath moment between eras of history, and the world’s only superpower is absolutely terrified.

My new book Disunited Nations: The Scramble for Power in an Ungoverned World published March 3. It is about the shape of a global Disorder when the Americans go home.

READ THE INTRODUCTION TO DISUNITED NATIONS

The Cutting Room Files, Part 8: American Politics

I try to avoid US domestic politics in most of my work. In part because domestic politics are a loud and busy space, and it is easy to have your work get lost in the noise and rage. In part because – especially at the primary level – it is mostly fluff that doesn’t move the national needle.

Continue reading

The Cutting Room Files, Part 2: The Future of Mexico

[mk_mini_callout]
Read the other installments in this series:
 
The CRF Files, Introduction
CRF Files, Part I: The Future of Korea
The Cutting Room Files, Part 3: The Future of Canada
The Cutting Room Files, Part 4: The Future of Japan
The Cutting Room Files, Part 5: The Future of the United Kingdom
The Cutting Room Files, Part 6: The Future of China
The Cutting Room Files, Part 7: Europe
The Cutting Room Files, Part 8: American Politics

by Peter Zeihan and Michael N. Nayebi-Oskoui

This piece is part of the Cutting Room Files, portions of the upcoming Disunited Nations text that were cut for length. Disunited Nations is available for pre-Order now on  Amazon.com, Harper Collins, and IndieBound.

American-Mexican relations have been…colorful of late. American President Donald Trump has threatened Mexico with a rising tariff system that would constitute the greatest tariff effort in dollar terms by Americans in their history. Mexican President Andres Manuel Lopez Obrador (AMLO) is pushing a change to tax law that would more or less treat businesspeople like money launderers which would throw trade relations into the freezer. Threats and counterthreats on migration and trade and law enforcement and energy and water rights have ratcheted up to near-crisis levels.
 
This is actually… really good. Ever since Mexican independence in the early 19th century, American-Mexican relations have oscillated between cold-shoulders and American invasions. Today, really for the first time in both countries’ histories, the Americans and Mexicans are not talking past one another, but instead speaking with each other. The process is loud and messy, yes, but it is actually a conversation. The United States and Mexico are working out deals, making functional compromises, and finding common ground. What’s been happening the past two years are the sorts of interactions one would expect between two countries who find themselves increasingly intermingled both economically and demographically. We all fight most vociferously with our families.
 
That hardly means it is all well thought out. One of the most frustrating things about working in the geopolitical forecasting space is that sometimes luck plays a role, and that has most certainly been the case of late.
 
Consider the individuals helming both countries.
 
In the United States, Donald Trump rose to power on a wave unapologetic nativism, which expressly included a harsh campaign against Mexico on economic, political, security and racist grounds. On the other side of the border is AMLO, a guy who combined Trump’s disdain of foreigners, Elizabeth Warren’s enthusiasm for dressing down corporate interests, Ted Cruz’s penchant for blind obedience to ideological dogma, a Clinton-esque love-affair with political corruption, and Bernie Sanders’ pathological refusal to engage in basic mathematics. It’s difficult to imagine a set-up that would be less constructive to functional bilateral relations.
 
And yet, here we are, with the Americans and Mexicans enjoying the most positive bilateral relationship ever.
 
The unexpected outcome largely has to do with an olive branch from AMLO. After his election in mid-2018, but before his inauguration in late-2018, AMLO apparently had an epiphany. He realized that if he and Trump engaged in a binational pissing contest over who was more populist, the bad blood would consume his entire presidency. As he had put together a laundry list of tasks to remake Mexico in his own image, that simply would not do. So he reached out to both his predecessor and Trump, and indicated that if they could complete the renegotiation of NAFTA2 before he took office, he would not seek to reopen talks and would ensure the new deal would be ratified in a timely manner.
 
AMLO has since proven to be a man of his word. Mexican ratification occurred on June 19 of this year.
 
While there are obviously portions of NAFTA2 the Mexicans are less than enthused about and the new deal will disrupt a great many industrial patterns across the length and breadth of Mexico, for the most part the new deal is as much a win for Mexico as it is for the United States.
 
Among the Trump administration’s biggest goals in the NAFTA renegotiations was to make sure goods that benefitted from the low tariffs of the NAFTA system were mostly produced inside of it. These “rules of origin” quotas were increased and ensure that a certain percentage of the product’s value was produced within Mexico, Canada, and the United States rather than outside of it. As Mexican manufacturing capacity is both less expensive and more efficient than most manufacturing in both China and Canada, Mexico will certainly pick up a disproportionate share of whatever relocates to the North American market. Add in the general breakdown of the global Order, and Mexico’s now-even-more-privileged access to the American market, and Mexico’s economic future looks brighter and brighter.
 
Merchandise trade is only one of several aspects of a tightening, more constructive, relationship between the two North American powers.
 

  • One of the many aspects of America’s shale revolution is an accidental, incidental oversupply of natural gas prices in the U.S. market. American natural gas prices are now the lowest (unsubsidized) in the world, and a dozen major pipeline networks have been laid down to connect that supply to Mexican demand. All the pipes are now completed and soon about half of the electricity consumed in Mexico will be sourced from American natural gas.
  • One of AMLO’s less-functional plans is an overhaul of Mexico’s state energy monopoly Pemex, a company so badly run and a process so ill-conceived that it would probably be better for Mexico to burn the entire company to the ground, shoot everyone involved, and start over from scratch. The more dysfunctional Pemex is, the less able Pemex will be able to meet Mexico’s growing energy needs… and so the more reliable a customer Mexico is for American energy product exports.
  • Mexico has rapidly developed since the implementation of the first NAFTA accords back in the early 1990s. That has shifted millions of Mexicans off subsistence farms and into urban environments, even as the standard of living of the average Mexican has surged. Less agricultural production plus more disposable income makes Mexico a premier destination for American agricultural products. In particular, when Mexicans get a bit of extra scratch, the first food product they reach for is beef – American beef.
  • Higher living standards within Mexico have gutted immigration from Mexico to the United States – it has been negative for ten straight years. That gives both countries a vested political interest in regulating Central American migration through Mexico to the United States. One of the dirty secrets of the immigration debate in North America is that Mexicans are even more opposed to Central American migration than Americans. Trump has provided the Mexicans with the perfect excuse to crack down on the through-migration, while enabling the Mexican government to rack up a public relations win.
  • While Mexican migration to the United States peaked years ago, past migration has made Americans of Mexican extraction the second-largest minority in the United States. Even if the economic mingling were not occurring – and it has already surpassed that of any other American co-mingling in history – the demographic co-mingling easily puts Mexican cultural influences in third place behind German and British culture.

 
Taken together, Mexico is now America’s second-largest partner in energy, trade, agriculture and security, and is on the cusp of taking the top spot in all categories.
 
So… that’s the good news.
 
Understanding the bad news requires a bit of a step back.
 
Roughly a decade ago Mexican and American authorities were tracking hundreds of small groups involved in moving cocaine and marijuana through Mexico to America’s southern border. Just as mountainous regions help fracture regions among several competing countries, Mexico’s mountainous geography meant no single drug trafficking organization (DTO) could command all that much territory. A small DTO might control a single stretch of highway, or a single city or a local shake-down racket. Violence between these groups and Mexican law enforcement was horrific, but that carnage was nothing compared the violence among the various drug trafficking groups as they battled to expand their role in the drug trade or defend their patches from one another. In that environment, Mexico’s murder rate soared.

But even then, not all DTOs were created equal because not all DTO leaders were created equal. Today’s story involves a 5’ 6” dude by the name of Joaquín Guzmán, aka El Chapo (which roughly translates as “shorty”), who ran his drug group less like the Sopranos or a street gang, and more like a Korean chaebol.
 
Under his hand, the Sinaloa alliance focused on three general themes:
 

  • First, the bread and butter of drug smuggling to the United States. Violence within the alliance was snuffed out, while the sort of petty violence – assaults, rapes and robberies – that characterized other DTOs was frowned upon. Regular Mexican citizens living in Sinaloa territory were not terrorized by the cartel, so they tended to not resist its efforts.
  • Second, experimentation with new business lines that would enable the Sinaloa to deepen and expand its business. Cocaine never went out of fashion, but the cartel also commercialized heroin and methamphetamines. Selling counterfeit pills to profit from Americans’ opiate addition was an easy add. Cash-heavy businesses found favor as a means of assisting in the drug-money-laundering effort: limes, beef, avocados, real estate, tourism. More business lines mean more and more stable profits.
  • Third, oblique cooperation with the Mexican government to help weaken the competition. Officially, the Sinaloa would provide the Mexican government with scads of intel on their competitors’ operations. Unofficially, the Mexican government would turn a blind eye to the Sinaloa’s operations because Mexico City could only prosecute raids on so many targets at a time. The Gulf and Zeta cartels tended to suffer the most from this de facto alliance.

 
El Chapo’s strategies were so successful the Sinaloa grew to become the most powerful organized crime group not simply in Mexico, but the world. As the Sinaloa alliance expanded and deepened, violence among its constituent components plummeted. After all, they were all on the same side, and El Chapo did not tolerate infighting. Mexico’s murder rate fell.

But nothing happens in a vacuum. Sinaloa’s success meant it also became the most powerful organized crime group in the United States, which earned El Chapo a spot at the top of the Obama administration’s most-wanted list. A joint American-Mexican effort resulted in his arrest in 2014. El Chapo promptly escaped… and was re-arrested in 2015. Mexico extradited him to the United States in 2017, where following his conviction on… lots of charges he is now serving multiple life sentences in an American prison.

Without the business-minded El Chapo to ride herd on the Sinaloa alliance, the relative peace of the Sinaloa era quickly collapsed as the DTO’s various factions fought for control. The biggest and baddest of those factions is known as the Jalisco Cartel Nuevo Generacion, a group run by the Sinaloa’s former enforcers. Whereas the Sinaloa expanded by collaboration and diversification, the Jalisco expands by brute violence.

Four things come from this.

First, the Jalisco is not the Sinaloa v2.0. The Jalisco’s leader – Nemesio Oseguera Cervantes aka El Mencho – first instinct is to kill everyone in every room he enters. He absolutely lacks El Chapo’s charisma and management skills. The Jalisco is expanding, particularly in challenging its former patron, the Sinaloa, but it is most certainly not on course to dominate the drug trade.

Second, between the Sinaloa’s fall and the Jalisco’s rise, Mexico’s murder rate is once against setting record after record. El Mencho has also – repeatedly – broken the cartels’ unwritten rule that one does not engage in open violence in tourist areas.

Third, the Sinaloa is not dead and still supplies the majority of drugs that enter the United States. After a year of chaos and breakdown, elements of El Chapo’s family – most notably his sons – have seized control over what was left of the alliance and thrown up substantial roadblocks to El Mencho’s bloody expansion. Los Chapitos may not be the leaders their father was, but they have proven far from incompetent.

To give an idea of just how potent the Sinaloa remains, consider the events of last week. A government raid October 17 on a suspected sniper in the city of Culiacán accidentally captured one of los Chapitos. Shocked by their unexpected haul, the government stammered a bit. Shocked by the loss of one of their own, the entire Sinaloa alliance descended upon the city in a tsunami of carnage, forcing the unprepared government to release El Chapo’s son. In northwest Mexico, the Sinaloa remains the de facto government. The old man would undoubtedly be proud.

Which brings us to the fourth and arguably most important outcome. El Chapo’s business diversification efforts combined with the breakdown in the “peaceful” nature of the Sinaloa’s management strategy combined with the rapidly deepening economic integration between the American and Mexican markets means that the cartels are now becoming part of the North American economic picture and they are bringing their violence levels with them.

At present this expansion has not penetrated manufacturing – that’s an industry that’s simply too high value-add and too finance-heavy for easy links with DTOs. But nearly everything else is game: transport, trucking, energy, agriculture, construction, tourism, real estate. All these sectors and more now have DTO threads woven throughout, particularly in the Sinaloa heartland of northwest Mexico. And it doesn’t take a big leap to link these Mexican sectors with their American peers. First landfall of Mexican DTOs in these veins will be U.S. regions just across the border from Sinaloa strongholds: Tucson, Phoenix, El Paso, San Diego, Los Angeles and the California Central Valley.

It is worth remembering that while the collapse of the global Order has consequences for everyone, and in many cases those consequences will be the determining factor in a country’s future, regional and local factors don’t simple fade away. Countries’ local geographies and local economic trends and local histories remain relevant. Global shifts are likely to favor Mexico more than any other country, but it can still get tripped up on issues closer to home.

And the same goes for the third NAFTA partner…

Goodbye to the Middle East

This day was always going to happen.

On October 7, U.S. President Donald Trump announced a partial withdrawal of U.S. forces from Syria. Soon after, Turkish forces began moving south across the border to strike Kurdish forces which had been until extremely recently under American protection. Two days later the partial American withdrawal was upgraded to a full evacuation of all forces.

Wailing and gnashing of teeth across the American political spectrum quickly erupted, with many condemning the tactical and political aspects of the president’s decision. I’m of mixed minds:

On the one hand, the Kurds – whether in Syria or Iraq – have been America’s only reliable regional allies since America’s first major confrontation with Iraq back in the early 1990s. When we have asked, they have answered. Every single time. In many cases U.S. forces didn’t even do the heavy lifting, but instead relegated themselves to providing intelligence and materiel support. Without the Kurds’ assistance the overthrow of Saddam Hussein would have been far nastier affair, post-Saddam Iraq would have been far less stable, the defanging of ISIS and the destruction of the ISIS caliphate would not have happened. In Syria in specific, the Kurds habitually provided at least five times the forces the Americans did.

On the other hand, the United States was always going to leave Syria. If the Americans were unwilling to commit 100,000 troops to the overthrow of Syria’s Assad government and its subsequent forcible reconstruction, then there was little reason to become involved in a decades-long, grinding multi-sided civil war.

The primary reason American forces remain in Syria at this point is to limit Iranian penetration. That battle was lost six years ago when then-President Obama allowed the Syrian government to cross Obama’s own red line on the use of chemical weapons against Syrian civilians. Obama made it crystal clear that any U.S. military action would be small scale, focused on Special Operations Forces, and largely dedicated to backing up the Syrian Kurds. Whether under Obama or Trump, an American withdrawal has always been inevitable. It’s just taken seven years of Syrian-Russian-Iranian victories on the battlefield and the large-scale dismemberment of the ISIS Caliphate to make it imminent.

Aside from the Iranian vector, American national and strategic interests in Syria are utterly nonexistent. Syria – even backed up by Iran – is a military pigmy that Israel could easily shatter. If Jerusalem really wanted to, it could roll into Damascus in a long weekend. (Sticking around, of course, would be a barrel of shiv-wielding monkeys.) American interests in Lebanon are less than American interests in Syria. Jordan has been a de facto Israeli client state for years. And that is quite literally all she wrote.

The far more important fact – comfortable or uncomfortable depending upon your view – is that the evolving American view of Syria is really little more than a microcosm of an evolving American view of the Middle East writ large. American troop deployments throughout the region have been plunging for a decade and are now down to about one-tenth of their peak. America now has more troops in Afghanistan than the rest of the region combined, and that deployment is well on its way to a complete phase out. CENTCOM HQ in Qatar will almost certainly be closed soon (you don’t need a forward command center if there’s nothing to command). The Iraq advisory force is leaving. Kuwait, once the launchpad for multiple wars, has been reduced to lilypad status. The Turks are certain to eject U.S. forces from the Incirlik base within a year.

Within two years the total regional deployment figure will be in the low-to-mid single digits of thousands, at most one-fifth of what is there today.

That sounds shocking and, considering it wasn’t that long ago that the Americans had a quarter-million troops in-region, it kind of is. But take a step back and look – really look – at the region, and it actually isn’t all that mind blowing.
 
Iraq is falling apart. Mass unrest is now entering its third week and if it continues along its current trajectory it risks bringing down the government. That isn’t “bring down the government” European-style which would mean new elections, but instead “bring down the government” in the post-Arab Spring style, which means an extended period of mass chaos, violence, and very likely a return to some degree of civil war. While it is true that Iraq has experienced cyclical public unrest since 2015, never has the regional climate been more tenuous, with Iran, Turkey, and Saudi Arabia openly involved in regional conflicts – meaning the normal balancing act between Iraq’s Shi’ites, Kurds and Sunnis (and their foreign backers) is over. Stabilizing this mess would require the Americans (re)injecting 100,000 troops. Far more likely, the Americans will remove the five-ish thousand troops which remain, taking the last thin reed of stability with them.
 
Iran is the regional bugaboo that most Americans fear. Since the end of the Clinton Administration American policy has held quixotic goals: we want the Iranian government gone, but we don’t want to use U.S. forces to do it. Under Clinton that meant the dual containment. Under W Bush it meant a forward blocking position in Iraq. Under Obama it meant trying to set up a regional balance of power. Under Trump it means economic sanctions backed by exactly zero military force.
 
None of it has worked. None of it was ever going to work. The Shia clergy is the Iranian political elite, giving the Iranians the deepest bench of political leadership in the region. You’d literally have to kill 10,000 mullahs to induce a shift. Nor is Iran revolution-prone. The first task of the country’s infantry-heavy military is to occupy Iran to ensure domestic unity. There are solid reasons why Iran’s 2009 “Green Revolution” was over in under a month.
 
Nor is knocking Iran off feasible. Iran is a mountain nation, granting it a defensibility which partially obviates the sort of air and tank warfare for which the Americans are renown. Moreover, Iran’s population in 2019 is over triple that of Iraq in 2003. Overthrowing the government would necessitate a force over twice as powerful as the one that took down Saddam’s Iraq, followed by an occupation force three times as large. No thank you. The U.S. military and public has exactly zero interest in putting 400,000 troops back into the Middle East to fight another grinding war of occupation.
 
What about America’s “allies”?

The Persian Gulf

Qatar is the perfect example of a friends-like-these ally. In per capita terms it is almost certainly the top financial supporter of Islamic terror groups in the world (I say almost certainly since Qatar doesn’t disclose their terror accounting). On the nicer end Qatar fundees include the Muslim Brotherhood and Hamas, ramping up to more knifey groups like al Qaeda and ISIS. Doha also has a nuanced-to-positive relationship with Iran for various reasons, not the least of which is its gas wealth stems from the shared North Dome/South Pars gas field. Qatar has hosted the operational headquarters for most U.S. warfighting in the region for the past two decades despite being a place that is in part responsible for the Americans needing to do the warfighting in the first place.
 
That’s nothing compared to Saudi Arabia. A half century from now when today’s headlines are parsed for the history books, the world will remember Saudi Arabia’s current de facto leader – Crown Prince Mohammad bin Salman (MBS) – as one of the evilest individuals in modern history.
 
The sheer volume of public support, money, arms and ideological cover given to religiously-tinted fighters – that’s jihadis or terrorists based on your politics – by various Saudi citizens and royals alike has boomed in step with the Kingdom’s regional ambitions. (Qataris have been implicated in plenty of terrorist financing schemes, but fewer than a relative handful have taken up arms themselves; 9/11 shows that the same cannot be said for Saudis.) Saudi Arabia habitually backs the most extreme, violent interpretation of Islam and regularly exports it far and wide at the end of a gun or leading wave of an explosion.
 
MBS has taken things further. Once he realized the Americans were serious about leaving the region, he shifted tact and instead of simply seeking destabilization of his enemies, he now seeks to burn down the pillars of civilization across the entire field of competition. Much of the Sunni Islamic extremism in Syria can be laid at his feet, as can much of the ongoing violence and chaos in Iraq and Afghanistan. Nor are MBS’ actions limited to the battlefield. About a year ago on MBS’ orders, a hit squad suffocated and dismembered a Washington Post columnist in Istanbul, transported his remains to the Saudi consul general’s house where they were incinerated in a custom-built “barbeque pit” just before the consul hosted a massive party that utilized the same pit to help degrade any lingering forensic evidence.
 
MBS is not a friend, nor is Saudi Arabia an ally. America used to have to put up with this sort of activity from the Saudis during the Cold War because without Saudi oil, the global trading system would have collapsed and taken the American alliance network with it. Courtesy of America’s shale revolution, those days are over.
 
Rhetoric aside, even President Trump doesn’t see the bilateral relationship as all that close. Last month the Iranians launched a drone and missile attack on Saudi energy facilities, taking some 5 million barrels of daily output offline. Under normal circumstances that would have prompted massive American military retaliation. Instead, Trump’s response to MBS’ call for assistance was something along the lines of, “sorry, I have a fundraiser.” For those of you who think oil is a globalized commodity and so the U.S. remains vulnerable to price swings, think again. The president has preexisting authority to limit U.S. crude exports. Should global prices get too crazy, an executive order can keep U.S. shale output at home, splitting the North American energy market off from the global market. The Saudi headache is now optional.
 
Even Israel isn’t what it once was. Within the next decade the country’s mostly-Palestinian Muslim population will become the majority, although about 90 percent of them have no political rights in the Israeli system. The two-state process that sought to generate a country for the Palestinians has been dead for years and we have already seen the Israelis implement a very successful separation plan more than a bit reminiscent of South Africa’s Apartheid.
 
In fact, Israeli ultranationalists in private conversations even welcome the comparison to Apartheid, because they think Apartheid was gentler than what modern Israel has achieved. Under Apartheid, the black South Africans could travel to white-controlled zones for work. Under the Israeli program the Palestinians languish behind 35-foot-tall concrete walls in what are little more than open air prisons with the Israelis controlling Palestinian access to power, food and water. As the thinking goes, who cares if this radicalizes the Palestinians if they are radicalized on the other side of a wall. Arguably, places like Tunisia or Pakistan are now “more equal” democracies than Israel. (Ugh, I’m going to get so much hate mail for these last two paragraphs.)
 
Turkey and the United States have been pulling apart for three decades. In a world where Soviet containment is the end-all be-all, the alliance was everything. Remove the Soviet threat, however, and the Turks have interests in the Balkans, Caucasus, Persia, Mesopotamia and the Levant that have next to nothing to do with American interests. Turkey is reasserting itself as a major regional power, and since the American military position in places like northern Iraq and Syria are largely dependent upon supply routes through Turkey, there is no long-term American strategic position in these regions without express Turkish assistance. That assistance has been removed, so the Americans – regardless of domestic policy preferences – have no choice but to leave.
 
That just leaves the Kurds, a mostly mountain people. That makes them a fractious bunch whose fractured leadership has traditionally been willing to fight to the last Kurd to determine who is in command, while enabling more homogenous ethno-sectarian groups on all sides to easily demonize them, oppress them, and play them off one another. They are the largest ethno-sectarian group in the world without a country, and their entire land-locked population is split among Turkey, Iraq, Iran and Syria. For those familiar with West Virginia, Switzerland or Chechnya, squabbling oppressed mountain people make great fighters, and since they lack a country they have little to lose by allying with, well, anyone. No wonder the Americans depended on them so much.
 
But the Kurdish dream of independence was never going to be more than a dream. Landlocked and partitioned, the only way a real Kurdistan could emerge would be if one of the four countries which house Kurds actively sponsor it. That’s just not in the cards. The Kurds are a lost cause; They were never more than an ally of the moment.
 
They are hardly the only ally of the moment the Americans have abandoned. At the end of the Vietnam War the Americans left the Hmong – another fractious mountain people who allied with the Americans – in the lurch. Their massacre at the hands of the Vietnamese is the stuff of legend. Something similar is about to happen to the Syrian Kurds at the hands of the Turks. The biggest difference between the two groups is there are too many Kurds to resettle them to Minnesota.

So why all the noise back in the United States? Aren’t the Americans exhausted with the Middle East? Shouldn’t they be celebrating?
 
In part it is because the extreme unpopularity of Donald Trump means any decision he makes is going to be parsed for negative sound bites, and there is no end of hypocrisy in play. My personal favorite are the former Obama team talking heads hitting the airwaves who only now find Syria’s murder and mayhem worthy of American military action.
 
In part it is because abandoning an ally is bad form, particularly if you think the U.S. should play a role in preventing genocide, promoting human rights, stymieing traditional rivals, or keeping a hand on the throat of the global economy. Even if you think none of this is the U.S.’ business, you’ve got to admit a lot of stuff happens in the region, and having a finger in the pot does prove useful from time to time. In the grand scheme of things, 2000 troops in Syria isn’t that big of a deal.
 
A deeper (and IMO far more substantive) issue is the fate of America’s national security professionals. Trump initially liked the generals because of their “yes sir” and “can do” attitudes. After all, civilian supremacy means the president is in charge, you do what you are told and if you have a problem with the president’s policy you don’t undermine him, you leave. Well, two years on, pretty much all of them have left.
 
The break has become so extreme that Trump now considers national security-minded Republicans to be greater ideological foes than the Democrats. One of the big outcomes of the 2018 mid-term elections was the wholesale ejection of that faction from Congress as well as from the Republican Party leadership itself. For many of this group, Syria is the prefect example of poor leadership: Trump’s policy not only betrays a loyal ally, it abdicates an American role throughout an entire region. We can debate the pros and cons of that abdication, but for folks in the military, intelligence and diplomatic communities this is a step that unwinds a half-century of painstaking military, intelligence and diplomatic efforts paid for with untold resources and blood. You don’t have to view the world their way to understand why they’re pissed.
 
That doesn’t change the simple fact that if not for the seemingly bottomless volume of TrumpDrama in America these days, most Americans would probably be sighing in relief right now. If the Americans really don’t have an interest in maintaining a global Order, then the Middle East is barren of American national interests and it can now firmly be someone else’s problem. It isn’t nice. It isn’t responsible. It won’t be pretty. But that doesn’t mean it isn’t true.
 
Of course the road from here to there is neither straight nor level. There are still plenty of land-mines to dodge:

  • The evacuation of U.S. forces has been ordered, but it has not been completed. That evacuation has to proceed through the Turkish advance and through Turkey. Things are already looking dicey. Shortly after the initial withdrawal order some Turkish forces apparently (intentionally) dropped some artillery near remaining American outposts, forcing the remaining Americans to scramble lest they find themselves in a shooting war with the Turks. The U.S.-Turkish alliance is over, but based on how events unfold in the next couple of weeks a U.S.-Turkish hostility may emerge.
  • The Kurds of Iraq and Syria are both armed and trained and experienced and on the edge of statehood. Just because they (especially the Syrian Kurds) are doomed to fail does not mean they are doomed to fail today. How they fight back and/or seek alignment with Syria and/or Iran and/or Russia will determine the region’s next set of battle lines. This matters the most for the Turks. The Turks are out of practice, having not fought a meaningful military campaign since World War I. If they perform badly it will reshape their regional ambitions. If they perform well there are lots of regional players – Armenia, Russia, Iran and Saudi Arabia come to mind – who will be extremely worried.
  • Of those, by far the most important one is Russia. Like American forces, Russian forces can really only operate in Syria with Turkish acquiescence. With the Americans gone and the Turks ramping up, it’s probably the Russians’ turn to GTFO of the region. If they don’t, a direct Turkish-Russian clash that leaves the Russians on the wrong side of all their backup will ensue. The climbdown and/or massacre would be globally humiliating.
  • One smallish bit of good news is that the ISIS Caliphate is definitely gone, and the ISIS militant movement is broken and on the run. Many have opined that without the American-Kurdish alliance ISIS in any form would have never been defeated. That is true. But that’s not the same as saying that ISIS is doomed to rebound. Historically, the territory that comprises eastern Syria and western Iraq – the ISIS heartland – has been on the bleeding edge of useless. Rain doesn’t happen and the only crops grown are those in the Euphrates floodplain. In most places that band is less than 20 miles across. Civilizing this region is wildly expensive, and so the powers of the region tend to ignore it…until some wackadoo group like ISIS starts causing problems. Then one of the region’s powers invades and burns everything to the ground. From 2003 until 2018 the region’s powers were non-functional: Iraq and Syria had civil wars, while Turkey was gun-shy. The fact that the ISIS Caliphate lasted as long as it did was testament to how abnormal the region had become. Well, Turkey is now invading. It will burn everything to the ground. The atrocities the world is about to pin on the Turks mean we are returning to something a lot more normal.
  • Europe is… screwed. It is one thing to have to deal with a prickly Turkey who stays at home. It is quite another to have Europe’s largest land army deploying in force in a way that most Europeans have publicly condemned. With the exception of the French, no European power has the capacity of independent power projection to the region. And now Turkey is publicly threatening to herd millions of Syrian refugees to Europe’s doorstep unless the Europeans shut up about Turkey’s new military campaign. After the United States, Turkey ties with Russia for being Europe’s most important partner. Expect those ties to burn in the months to come.
  • Finally, there’s Saudi Arabia. In the aftermath of the Iranian attack on Saudi oil facilities, the Saudis have paid the Americans to deploy 3,000 troops to the Kingdom. Two things from this: First, sooner or later the Americans will internalize just how messed up the Saudis are and will evacuate everything at once, precipitating a whole new regional crisis. Second, the Americans going pseudo-mercenary is about to be the new normal. If you cannot provide something shiny to bait the Americans into your region (cash is shiny), then you are on your own. That development will reverberate far beyond the Persian Gulf region.

The American Retreat, Part II: Soldiers of Fortune

Read the other installments in this series:
 
The American Retreat, Part I: Oil
The American Retreat, Part III: the Korean Peninsula

by Peter Zeihan and Melissa Taylor

President Donald Trump has a knack for making Prime Ministers and Presidents hope to remain unnoticed. It’s a stunning ability given that national leaders aren’t exactly wallflowers. The past few days have seen a flurry of news releases indicating the Trump administration has turned its focus to Japanese Prime Minister Shinzō Abe. Specifically, the DC community is abuzz with leaks out of the White House that Trump is considering abrogating the American-Japanese security alliance. Trump has long made his displeasure with the alliance public, noting (correctly) that the treaty calls upon the United States to come to Japan’s defense but not vice versa. 

Yet the reason for the one-sided relationship isn’t random. Japanese actions during World War II include such atrocities as the enslavement of Korea, the rape of Nanking, the Bataan Death March. Add in the sort of ultra-nationalism that could generate the industrialized suicide attacks of the kamikaze and the Americans of the late 1940s had zero problem forcing the Japanese – formally – to give up the right to wage war at all. 

The Japanese loved that. And to understand why not having an independent security policy can be a good thing, we need to take a step back. 

The littoral waters of the East Asian Rim are different from the great wide opens of the global ocean. The South China Sea, East China Sea and Sea of Japan are starkly contained with the Asian landmass on one side and a line of archipelagos on the other. The topographies of the lands they border are defined by internal barriers, mostly mountains, that not only factionalize the great regional ethnicities of the Japanese, Koreans, Philippines, Indonesians, and Chinese from themselves, but also from one another. Such separations made pre-industrial integration within, much less among, these groups paltry. 

The mid-19th Century, however, was a turning point. Deep sea ships and military technology had improved to the point that the Europeans and Americans could pop over for a quick forced port opening party and be back home before anyone got too rowdy. The Opium Wars and the arrival of Commodore Mathew Perry of the US Navy were parallel events that had widely disparate impacts in China and Japan. While China continued to disintegrate politically and would largely continue to disintegrate right up into the mid-20th century, Japan ultimately unified under the Meiji Reformation and set about to adopt as many of the outsiders’ technologies as possible in order to industrialize in its own right.

Yet Japan had zero of the resources necessary to drive that industrialization, so from the beginning industrializing Japan had no choice but to be an empire. Those same disconnected geographies bracketed by those same isolated seas never had a chance. Japan’s naval acumen – now backed by firearms and steam ships – quickly dominated those seas and shortly thereafter all the coasts of East Asia.

The Japanese were not kind rulers. The Empire’s need for resource extraction all but required the slave labor of its conquered subjects. With a sense of dark irony that was apparently lost on its founders, the Greater East Asia Co-Prosperity Sphere became the vehicle for Japanese imperial expansion. 

Japan’s defeat at America’s hands in 1945 ended the raping and pillaging, but it would be the grossest understatement to say that mistrust remains. The Japanese knew that without their empire they could not be industrialized, and without industrialization they could not be unified. They believed their defeat would be their end. 

But the Americans tend to surprise. Instead of officiating the end of Japan, the Americans offered to pay the Japanese to be on America’s side in the Cold War. The Americans would protect all global shipping and open their market to their allies. Everything the Japanese fought for in the war would be granted for free. All the Japanese had to do was join the Americans against the Soviets.

This confluence of American strategic needs and East Asia’s regional geography led to the greatest trade expansion in history. Instead of trade being a highly militarized affair, trade routes became fragile, spindly things spread out over the world. But there are few locations where that fragility is as clear as the series of seas that connect the East Asian powerhouses. These same seas that before enabled first outside powers and later the Japanese to dominate East Asia are now the roads to prosperity. Ports and inland infrastructure began the long arduous process of connecting nearly half of the global population and making their labor accessible to the wider world. For all intents and purposes, the region has the most prosperous, economically advantageous “inland” waterway of anywhere in the world. It didn’t matter that no one in the East Asian littoral liked or trusted the Japanese. The Americans kept the peace, and the peace enabled growth that paid for a lot. 

The system lasted for decades, until the Americans won the Cold War and got… bored.

Trump’s musings on the nature of Japanese alliance are not a cry in the wilderness, but the manifestation of disenchantment with the world from across the entire American political spectrum. The tenor and specifics of Trump’s foreign policies may change with his successor, but the general thrust of disengagement has been building since 1992. 

One way or another, the Americans are leaving Asia, and not simply because of a change in strategic vision. There is also the issue of capability:

During the Cold War the Americans boasted a 500 or 600 ship navy with 6 or 7 supercarrier groups. That’s the sort of force required to control the global oceans and still have enough punch to hit a tough target here or there on any continent of Washington’s choosing. Now, however, the US Navy is “only” 300 ships, but with 11 supercarrier groups. This is a Navy that can project force anywhere in the world with stunning efficiency. It is a military that was designed to show up on your doorstep with a tank, Bugs Bunny style. It is the most powerful military the world has ever seen. What it lacks, however, are the large number of small ships required to provide the necessary global coverage to protect all maritime commerce. It is a Navy operationalized not for continuity, but instead for disruption. Not for Order, but for Disorder. 

Bluntly stated, the Americans are getting out of the global management business. The Japanese cannot help but take notice.

Those littoral seas that have become some of the richest zones on the planet? Screwed. It is the American security commitment that makes all of it possible. At best the Americans will sail away and leave the region to its own devices, and history has zero favorable anecdotes as to how the locals can make it work. At worst the Americans will start a few dumpster fires as their often-shifting mood dictates.

Yet for Japan, therein lies a once-in-a-century opportunity.

Of the East Asian states, Japan is the only one (aside from North Korea) that is notdependent upon international stability for its functioning; the Japanese long ago de-sourced the portions of their industrial based linked to exports to the countries that purchase their products. Japan is the only Asian country with a true blue-water navy. Japan is the only Asian country with a power sector that uses diversified imports rather than being focused on a single imported fuel. Japan is the only Asian country that faces no strategic complications in importing or exporting to the Western Hemisphere. Japan’s population may be aging rapidly, but not as rapidly as either South Korea or China, and unlike its neighbors, Japan already has twenty years of experience in countering aging populations with technological patches.

Everyone in Asia faces challenges as the world’s economic and strategic norms disintegrate, but for Northeast Asia, Japan’s challenges are the least extreme and Japan’s capabilities are the most advanced.

And there is one other itty-bitty advantage the Japanese have. At least for now, the Americans like the Japanese. Especially Donald Trump.

When Abe made his first trip to visit Trump he did all the right things. He showered Trump with praise, brought him gold-plated golf clubs, allowed himself to be soundly defeated over the course of 18 holes. Japan’s combination of relative insulation from the rising global chaos and a positive relationship with the global superpower provides Tokyo with an opportunity most countries do not have. The possibility of purchasing the American largess that once was available for free.

Put simply, if the Americans are going to remain constructively engaged in East Asia, it will be because they are being compensated appropriately. America has the ships, Uber has the business model. The Americans are happy to pick up the slack with the right surge pricing in a strained geopolitical environment. The United States has done this before, choosing to be the last minute relief in the European wars of the 20th Century – first with Cash-Carry, second with Lend-Lease, and finally with the Army – and in the process going from a net debtor with a so-so navy to the undisputed financial, military, and economic powerhouse. It turned out to be a pretty sound business plan.

And as coincidence would have it, the next country on America’s trade renegotiation list is none other than Japan. Think of what is about to happen like the global Order in reverse. Instead of Americans paying everyone to be on America’s side in an American security fight, Japan has to pay America to keep America involved in Japan’s security fight. As such we don’t expect the trade talks to be all that onerous.

Japan’s security needs trump its economic needs. So far, Abe has gone to great lengths to stay on Trump’s good side. He has largely acquiesced to the demands of the administration, which include steel and aluminum tariffs and a series of oh so fun looking buddy montages between Trump and Abe. We know that Japan will stomach a lot because from the Japanese point of view the talks aren’t actually about trade. That means the Americans will largely get their way on the economic issues they care about most – agriculture, automotive, energy and currency policy to be specific.

As to what’s next, that’s a bit of a crap shoot.

East Asia has been engaged in a building arms race since the 1980s, and with the Americans abrogating protection of global oil shipments, the lifeblood of the entire East Asian littoral is now in danger.

What’s that saying? Oh yeah… wars have been fought for less.

In the pre-industrial period that littoral’s layout kept the locals apart, but naval tech has come a long way since 1800. Now, with the proverbial cruise missile out of the bag, the shared littoral area puts all the region’s competitors within easy reach of one another. Even mildly threatening behavior looks a lot like an existential threat. Because it is. It takes little imagination to see how a combination of fear, national pride, strategic maneuvering, and economic desperation will push Japan and China (and others) into conflict.

The American Retreat, Part I: Oil

Read the other installments in this series:
 
The American Retreat, Part II: Soldiers of Fortune
The American Retreat, Part III: the Korean Peninsula

I’m going to do something I loathe and quote something I read on Twitter June 24. In a pair of posts U.S. President Donald Trump asserted:

Diction and statistical issues aside, these tweets comprise the 92 most important words used by anyone in the past three decades. Trump just made clear the days of America protecting global shipping – particularly of oil shipping in the Middle East – are over.

There is an easy argument to be made that the United States’ shale revolution will make the United States a net exporter of crude oil in the current calendar year, but to understand just how critical that is for the Americans we must first pick apart just how horrible that is for everyone else.

Let’s talk importance:

In the pre-Order world if you couldn’t obtain fossil fuels yourself, first coal and later oil, you failed to industrialize. Your manufacturing would at most be a step above cottage industries, so no mass education and no consumer goods (aka peasantry and mass poverty). Lack of fuel condemned you to having an at-best rudimentary transport system meaning your cities were very small, only able to exist in regions that could grow their own food (aka high living costs and low quality of life).

The handful of locations that could secure fossil fuels – either by producing it locally or by seizing it from others – could advance into something we today recognize to broadly mean “civilization,” which includes among other things homes that don’t leak and gadgets and full bellies.

This all changed in the late 1940s. After World War II the Americans created a global Order – a mix of security and trade guarantees which they used as a bribe to induce others to join their side in the Cold War against the Soviet Union. With global security now a thing, oil could be shipped safely and at volume without military escort, meaning that countries that didn’t have a military capable of escorting could now access fossil fuels. BAM! Civilization goes global.

Remove the Order, remove global oil markets, and civilization itself goes into screaming reverse in any location that lacks either the ability to produce oil locally, or the ability to venture forth and secure someone else’s.

Let’s talk vulnerability:

Crude tankers are huge. A modern supertanker can shuttle around oil weighing more than four Nimitz-class aircraft carriers. They are so big expressly because of the Order.

Pre-Order, merchant shipping used small, fast vessels because they needed to be able to scatter and hopefully outrun predators whether those predators wore eyepatches or naval uniforms. The Order ended such predation under the watchful eye of the U.S. Navy. Instead of commercial advantage coming as a result of speed and distributed risk, it instead came from efficiencies and economies of scale. Ships evolved to became slower to save on fuel costs, and bigger to get more bang for the buck. Today’s oil tankers are the slowest and biggest of them all and are nearly 50 times the size of some of the biggest cargo ships of the WWII era.

A similar logic holds with ports: size generates economies of scale. In addition, as ships have gotten larger, ports had to expand to match – a city with a small dock simply cannot handle a ship that is longer than the Empire State building is tall. Bigger, slower ships forced fewer, larger ports. Disrupt anything within the system and the damage quickly becomes extreme.

Between oil’s criticality to and ubiquitousness in modern life, oil is by far the most commonly traded product on Earth comprising some 18% of all maritime shipping traffic (by volume). About a third of all waterborne crude and product shipments originate in the Persian Gulf.

Let’s talk stickiness:

There are no shortages of politicians out there who agitate for relocating manufacturing capacity to their countries, provinces or cities. Making a speech is one thing, but actually building industrial plant and infrastructure is another. It costs billions and takes years for large industrial shifts, and even then there is no guarantee that a new industrial park will prove economically viable.

But at least manufacturing can be relocated. Commodity production cannot. Either you have it or you don’t, and the Persian Gulf has the greatest concentrations and volumes of easily-produced conventional crude oil on the planet. It can never not matter.

There’s also the impossibility of substitution.

Simply put, greentech isn’t ready. Most advances in greentech have to do with electricity generation, and since so few countries burn oil for electricity greentech’s impact upon oil markets has been negligible. As a rule greentech is shit for transport. High cost combined with insufficient energy density makes electric cars little more than a niche sector for early adopters, with Tesla’s recent sales figures crash indicating that market may already be saturated.

Even if the medium for most modern batteries – lithium – was sufficiently energy-dense to provide a viable long-term improvement in capacity (it isn’t), the stuff still needs to be mined and processed and fabricated into battery assemblies. Each step along the value-chain is so energy- and transport-intensive that very little of it can even be attempted without fossil-fuel-based energy for processing and transport across the world. As counterintuitive as it sounds, we need more carbon-heavy fuels to get to a lighter-carbon world. And that means coal and oil. A lot of oil.

There’s also the issue of lifespan. Most vehicles put on the roads since 1990 have a long lifespan to the point that even if every passenger vehicle sold from now on was an EV, we’d not see an end to oil in passenger transport for another two decades. Even then, even if every passenger vehicle and light truck were an EV right now, that would only make a dent in global oil demand. About 2/5ths of oil is used for transporting people and heating. The rest is much more difficult to do away with. Another 1/3rd is used for air transport, industry, and other modes that require far more range or power than electric engines can manage. And another 1/5th isn’t going anywhere ever, as it is what makes petrochemicals as varied as paints, plastics and pesticides possible.

(None of which means greentech won’t eventually solve the petroleum problem, but all of which means technology needs another couple decades to give it a go – and even that assumes the capital and educational structures around the world which have made the Digital Revolution possible hold steady at their current historical highs.)

Let’s talk protection:

At the end of World War II every nation of consequence aside from the United Kingdom had lost its navy. The United States in essence inherited the global ocean. America’s creation of the Order gave everyone aside from the Soviets a vested economic interest in not floating a new one. Fast forward to today and the American Navy is over ten times as powerful as the combined blue water fleets of every other country combined. Putting that force disconnect at the service of the global commons is what makes the Order work, and what makes global energy shipments and markets possible.

The world’s second- through sixth-most powerful navies in terms of long-range power projection are (roughly in order) Japan, the United Kingdom, France, China, and Russia. Of these only Russia need not sail forth for oil, as it has plenty of its own. France and the United Kingdom can secure what they need from the North Sea and North and West Africa. China has only 30  combat-capable surface ships of size that can effectively operate over 1000 miles from shore; unfortunately (for the Chinese) Southern China is a cool 5800 or so miles distant from the Persian Gulf. Only India – keeper of the world’s seventh-strongest navy – is even remotely proximate.

End result? Today’s oil markets comprise the greatest concentration of risk in themost critical economic sector at the most vulnerable part of the global system and no one can do anything about it if the Americans leave.

And that’s just the beginning.

By the way, for more on oil’s role in a world without American strategic oversight, I’m happy to refer you to my 2016 book, The Absent Superpower: the Shale Revolution and a World Without America. 

To Hack Or Not To Hack

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.