United States Archives - Zeihan on Geopolitics

Project Vault Doesn’t Solve the Mineral Problem

Photo of rare earth minerals: praseodymium, cerium, lanthanum, neodymium, samarium, and gadolinium. Photo by Wikimedia: https://en.wikipedia.org/wiki/Rare-earth_element#/media/File:Rareearthoxides.jpg

Project Vault, the Trump administration’s initiative to stockpile critical minerals, is just a small step in the right direction. Sure, buying mineral-rich waste helps the U.S. build reserves, but it’s a classic case of giving the man a fish vs. teaching him how to fish.

If the U.S. really wanted to reduce its reliance on China and prepare for a world where access to critical minerals is scarcer, building out its own refining capacity should be the first step. And after that, the U.S. should begin strengthening relations with other countries that could help with supply issues in the meantime.

Hey all, Peter Zeihan here, coming to you from Colorado. Today we’re taking a question from the Patreon crowd. Specifically, what do I think of Project Vault? Now, Project Vault is something that was set up by the Trump administration back in February with a couple billion dollars to purchase things like rare materials. Rare earths is the term that always gets tossed around, and it’s in there, but it’s just one of many getting the mining tailings that are rich in these materials and bringing back to the United States and building a stockpile $2 billion for that, which is a lot for basically what is mine waste.

It’s an interesting step, and I’m not saying it’s not an unnecessary one. I’m actually kind of glad this happened, but it really doesn’t deal with the core problem. Key things to remember is that most of the materials that we need for the digital age, things like rare earths, for example, or gallium, are byproducts of other materials processing. So for example, you have a silver mine, you extract the silver.

The waste is rich in things like rare earths, or you are doing aluminum smelting. And one of the byproducts is material that is rich in gallium. So getting those materials into the United States and concentration. Great idea. It’s only step one and not even the smart step. The smart step would just be to build the processing. The problem with the world faces right now is 70% on average of critical materials processing is done in China.

And so basically what the US government is doing right now is buying waste product from Chinese processing and bringing it here, and it’s a step in the right direction. But, you know, honestly, just build the processing, because if we get into a position where the Chinese cut off supply or there’s other some sort of supply disruption, you then have to build the processing anyway, or ship those tailings back to China to be processed.

I mean, even building a reserve of the finished product, the refined metals, does it really take us to far down the road because it’s still being done in China? Until you build that processing, the rest of it doesn’t really matter in terms of sourcing the raw materials. That’s really not that hard. And as we’ve seen with Project Fault, it is already filling up.

But if you want to build a Chinese free system, there are three countries that you really need to focus on because they’ve got robust mining sectors. Number one Canada. So maybe stop calling it the 51st state. Number two Australia. And so maybe stop saying they’re not racist enough to be our friends. And number three is Brazil. And relations with Brazilians are probably at the worst since at least the 1970s.

Right now, bottom line is, without a little bit of diplomacy to secure some of these things, the rest of it’s kind of a rounding error and just continues with the Chinese dependance that supposedly we want to break so badly. So yes, baby, step in the right direction. Maybe we take some bigger ones soon.

The End of U.S. Strategic Petroleum Reserve

The U.S. Strategic Petroleum Reserve (SPR) was created in the 70s as a safeguard against major disruptions in oil imports. Well, those 700 million barrels were never used for its intended purpose.

As the U.S. became one of the world’s largest producers and exporters, the SPR was retasked. It’s been used a few dozen times by various presidents to influence oil prices and stabilize markets. But it was never made for that. The geologic makeup of the SPR caverns means that each time a drawdown occurs, the structures are weakened.

Hey all, Peter Zeihan here, coming to you from Colorado. Today I wanted to talk about the American Strategic Petroleum Reserve. There’s been a lot of reports in the news that it’s nearing the end of its life, and it’s starting to break down, and there is some concern there. But let me explain why it was created the way it was, and how that’s inappropriate for the way we’ve actually used it.

So it started back in the 1970s in the aftermath of the first Arab oil embargo. Congress legislated the creation of the reserve to hold 700 million barrels of crude, which, you know, we use about 20 million barrels a day. So that’s a couple of months of import cover, even in the worst case scenario. The thing is, over the course of the 80s and the 90s, when we saw our demand going up and our ability to produce go down, it became even more important.

So we eventually filled it up pretty close to the max. But then we got into the 2000, we had the shale oil revolution, and by the time we got into the 2010s, the United States was a significant net exporter, and today we’re the world’s largest exporter of refined product. So how does the SPR fit into that? Well, not great. And part of it is geologic of all things.

See, unlike most countries’ oil reserves which are held on the surface in tanks, which is corrosive to the tanks and the equipment and the crude starts to separate unless you stir it. So there’s a high maintenance cost. We don’t do it that way in the United States, down on the Gulf Coast, we have a unique geological feature, nearly unique, called salt domes, where you just have these massive salt caverns down below and salt and oil don’t mix. So it’s a really great barrier for keeping oil contained. So what we do is we drill down into the salt dome and we inject water, and that water dissolves some of the salt and makes the cavern bigger. Then we put another pipe in there, and we pump in the crude. And oil is lighter than water. So it rises to the top of the salt dome. And all you have to do in order to regulate the level of the oil is to pump in water, which pushes some crude out or pump in more crude, which pushes the water out because your pipes are there at different levels, tapping different things.

Anyway, it’s a really clever thing and the maintenance cost is next to zero, but it has been a half century. And equipment does wear down, and especially since we’re not using it the way it was designed. You see, we designed it for big drawdowns in cases of a global and especially a national emergency, when we knew we were going to need hundreds of millions of barrels because we assumed that the Middle East was going to go offline and we were the world’s largest oil importer.

Well, we never really used the system in that way. And every time you do a drawdown, big or small, you basically are putting more water into the cavern, which is dissolving more salt, which is overall weakening the overall system. So these caverns were only designed to be used five times total for big drawdowns. We’ve never really had a giant drawdown of that scale. What we’ve had are three dozen little drawdowns, which keeps putting water in and out, in and out and dissolving more and more salt. And we’ve now reached the point where the salt gnomes are starting to show signs of damage. And if we did a rapid drawdown again today, we’d probably have several of them break. So we’re at the end of the lifespan of the SPR and without significant re-engineering, which I’m not even sure is possible since so many of the pieces are geologic rather than mechanical.

We’re probably going to be seeing the end of the reserve in the not too distant future unless we find new salt domes, establish a new system, or do what everybody else does and does those expensive above ground tanks. So we really are losing that tool. Now, this is not a disaster. Again, the United States is the world’s largest exporter of refined product and now the second largest exporter of raw crude. It’s not like this is something that we’ve needed, but it gives you an idea of where the break is, because this was designed for a national emergency for a country that was a major importer. Instead, in those three dozen drawdowns. Presidents not just Trump, also Biden, also Obama, Also W, use them to regulate oil markets and to try to influence prices. And that’s why there’s been 37 discrete drawdowns rather than the big five that the system was designed for. So we’ve gotten to the same place repeated usage is functionally ending the salt domes useful life span. But now we have a situation where we have to get all that crude out of there and put it on the market or store it some other way, because we’re simply not going to be able to maintain it in its current form.

So either we have a new multibillion dollar project authorized by Congress to establish an entirely new reserve, or the United States has to do something else in order to regulate markets. That’s not something the United States government, historically speaking, has been a very good at. I think if you look back on the history of these 37 disbursements, you can argue that they didn’t do a good job of it either. But this tool is just about done.

Trade War Revival: Trump, Canada, and Tariffs

US and Canada Flags overlaid and flat | Licensed by Envato Elements

Crippling one of the world’s most deeply integrated manufacturing systems probably isn’t a great idea, but here we are again.

Trump has ensured that the trade war between Canada and the U.S. is alive and well, following the announcement of another series of tariffs. The U.S. isn’t just shooting itself in the foot; it’s shooting all of its closest friends’ feet in the process…

Hey, all. Peter Zeihan here, coming to you from Colorado. And the news is that between the 21st and the 22nd, at midnight, the United States kicked in 50% tariffs on a suite of Canadian goods, basically ensuring that the trade war between the Trump administration and Canada is alive and well. What this is what this isn’t first. What this isn’t.

These weren’t NAFTA talks. Bilateral talks with Canadians on NAFTA, much less tri-level talks with the Mexicans have yet to begin. So the world’s deepest economic integration, the most successful supply chains humanity has ever put together are still in limbo. And now with the United States throwing a 50% tariff on top of that and saying flat out there are no plans for future negotiations. This really is getting into a no man’s land when it comes to the future of North American manufacturing. Keep in mind that the United States needs to at least double the size of its industrial plant simply to have access to the products it’s going to lose as the global really kicks in, especially in China. And doing that without our North American partners means we actually have to increase our industrial plant by the volume of theirs as well.

At the same time, the Trump administration keeps changing policies. We’ve now had over 8500 tariff changes. This new batch adds a couple more hundred to that. And so no one who wants to invest in North American, and especially U.S. manufacturing, is going to do so because the rules of the game keep changing and they don’t even know who they can approach for partners.

So one of the things that we’ve seen during the Trump administration is that industrial construction spending has dropped every single month of this administration, but one where there was a slight uptick, I think earlier in this year. This is certainly going to exacerbate that plan, because we’re now at the point where the business communities trust in the Trump administration has basically evaporated completely, and they will not start investing in new plant until such time as they know what the real rules of the game are. That will be on the other side of negotiations with Canada, on the other side of negotiations on whatever the next NAFTA is. And at this point, none of that has even started yet. So, if you were looking for the realization of the United States under the Trump administration, we now have 18 months of data indicating that we’ve gone screaming in the opposite direction. And we’re actually farther away from clarity now than we were in January of 2025. This is unambiguously horrible news for the U.S. economy long term, because it’s raising the very real possibility that not only will we not have the replacement product supply chains in place when the globalization really hits hard in the next couple of years, but we won’t even be able to be functional with where we were two years ago. And the industries that are hit hardest by that by far are agriculture, because their primary customers are Canada and Mexico, and automotive manufacturing because the average part that is in an American crafted vehicle crosses the border 5 or 6 times overall in in its manufacture going to Mexico and Canada. And anything going to Canada is now facing potentially compounding tariffs. And if you happen to be headquartered in Detroit and producing cars in Michigan or the northern tier of the Midwest, you’re talking about parts crossing maybe seven times. This is this is bad. Anyway. You look at it.

One more thing. I’m going backpacking in Yosemite for the next few weeks and the next phase of this. I will not be here to talk with you about. In September, the Canadians have already promised that they’re going to announce reciprocal tariffs designed to pressure the Trump administration specifically. It is unclear what those tariffs will be on. In the past, when countries try to target political decision making, they go after things that are politically sensitive, specifically in areas that really matter to the political policymaker. I don’t know what that’s going to look like at present, but I have a real big doubt that it’s going to work. Trump has made it very clear over the last year that it doesn’t matter who he thinks his constituents are. He’s willing to do whatever he thinks his version of math supports. So, for example, the beef industry has been absolutely screaming for the last few weeks as Trump has been opening up their market to foreign imports and or an attempt to lower prices. So actually suppressing long term supply in the United States in order to give him a short term boost in preparation for the midterms. And none other than, say, the National Cattlemen’s Association has just been screaming bloody murder about how damaging that is for them in the country midterm. You’re seeing this across almost every economic sector. So the idea that that strategy is going to work is very unlikely. Second thing is the Canadians, if they do decide to target things like the manufacturing sector, that would really reverberate in places like Michigan and swing states. Two things to keep in mind. Number one. Trump’s a lame duck already. He doesn’t care about presidential elections, so that’s unlikely to work. And then second, three quarters of Canada’s exports come to the United States. Anything that they do that is real, that will cause structural damage in the United States is actually going to hurt them more.

Relocate or Move On from the Middle East

Raised Relief Map View of the Middle East | Licensed by Envato Elements

Following the dumpster fire that was the Iran war, the U.S. is contemplating how and where to redeploy forces to the Middle East.

Iran has demonstrated an increasingly capable drone arsenal, striking U.S. facilities across the region. So, can the U.S. just plop a couple bases in Jordan or Israel’s Negev Desert and call it a day?

Not exactly. The U.S. relies on the Patriot systems to shoot down Iranian drones, but there’s a scale problem. Iran can pump out thousands of drones in the time it takes the U.S. to make a dozen or so Patriots. That means that without creating a new interceptor, the U.S. is only buying itself a little time by moving its bases further away; eventually, even these new bases will fall within Iran’s range.

Hey, everybody. Peter Zeihan here, coming to you from Banff, Canada in Alberta. Today we’re going to talk about the American in progress plans to redeploy its forces throughout the Middle East. One of the many things that we saw as a result of the Iran war is that the Iranians now have a limited number of precision weapons. As we’ve been watching the Ukraine war, we’ve seen the accuracy in the reach of drone warfare extending incrementally ever since February, which is the same window that the Iran war happened in. And what we now have are a new type of drone that I call memory drones, where you can program in a limited decision tree, and when the drone gets to the general vicinity of its target, the pilot releases it and the drone looks at its targeting criteria, selects a target itself, and then goes in. And since the decision was made on board, it can’t be jammed at that point. It can only be shot down. And most of the damage that we have seen to U.S. military facilities in places like Kuwait and the UAE and Saudi Arabia were by these drones. And it’s not just that they hit the United States. They hit with extreme precision hitting, whether it was a barracks or a radar dome.

Anyway, bottom line is that the United States lacks a good defense for these systems. The Patriots are absolutely the preeminent system that the Americans have for shooting down those drones, and they’ll definitely do that. But the United States can only build about a dozen of those things a week. Whereas the Iranians can assemble several thousand drones per week. The math was always going to be against the US’s favor. So the discussion now is to where to move these facilities and the two countries that keep coming up over and over and over again are Jordan and Israel, where you’d probably put them in the Negev desert. And the theory is, you would put them outside of Iran’s range.

But no, there are multiple versions of the drones that the Iranians are using. But what we’ve seen in the Ukraine war is that the range gets incrementally longer every single day. The Ukrainians are now regularly striking targets that are over a thousand miles away from the Ukrainian space. And in the case of Iran, they’re nowhere near that long. But they’ve certainly breached 600. And 600 miles range can bring those Iranian drones all the way to the Mediterranean, hit anywhere in Israel already. So if the American goal is to have a close in military facility in the Persian Gulf region or the Middle East in general that can threaten Iran. The interceptor problem has to be solved. It isn’t an issue of distance. Iran has already demonstrated has robust capability of hitting anything in the region all the way to Israel, all the way to the Red sea, all the way to Yemen. Moving the bases isn’t going to change anything, except for maybe buy just a few months while the Iranians tick up their drone range just a little bit. And that’s all it would take, just a little bit. So no, this isn’t a good solution. So we’re probably going to be seeing a broad scale American withdrawal from the region unless and until the interceptor problem can be solved. And it will not be solved with Patriots.

A Post-American Alliance for the Middle East

Pakistan, Turkey, and Saudi Arabia are entertaining a NATO-style mutual defense pact. While this alliance might not be practical at this moment, it’s a much different conversation in the long run.

Hey, all. Peter Zeihan here, coming to you from Colorado. It is the 10th of August. And the new news is that over the weekend, representatives of Pakistan, Turkey and Saudi Arabia met in Mecca and basically tried to build the local equivalent of NATO, complete with a joint defense clause where an attack on one of them is an attack on all of them.

Obviously, Iran is the boogeyman in the room at the moment. So let’s talk about how this at this moment in time, is kind of silly, but if you look forward a few years actually makes a lot of sense. So first the silly. Saudi Arabia obviously has been heavily involved in the war with Iran and has had any number of his physical assets for oil production, transport and refining attacked. And it’s been partially flanked by the Houthis, which are basically an Iranian proxy. So there is no part of Saudi Arabia that is safe from the drone and missile attacks the Iranians have been lobbying these last six. The idea that they would want a security pact with a country that’s not the United States makes a lot of sense, because the United States started this war, prosecuted this war without any consultation with the Saudis, and now looks to be getting bored with the war and is likely to just leave. And Saudi Arabia has to figure out how to live with that.

On the other hand, you’ve got Pakistan and Turkey, which, while they don’t necessarily have friendly relations with Iran all the time. They don’t consider it a hostile state in the traditional sense. Yes, they’ve got some security issues. There are ethnic Kurds living in the border region between Turkey and Iran, and both sides try to stir up problems for the other one on the other side of the border. And the Baluchis are the problem on the border between Iran and Pakistan and basically the same math flows. But Iran and Pakistan don’t nearly have the kind of death grip on relations that the Saudis have. And anything from the Iranian point of view that gets anyone else collaborating with or with the United States is generally not a good thing.

The Iranians are a lot like the Russians, in that they may have a lot of power, but they’re certainly not able to dictate a solution. So keeping everybody else broken up makes sense. And this agreement certainly doesn’t work for that. But keep in mind that the other countries have other things going on that the others want nothing to do with.

So Iran is the issue of the moment. But, you know, if you’re in Pakistan, your only issue that matters is India and the Turks and the Saudis want nothing to do with a fight with India. And if you’re in Turkey, you’re either wrestling diplomatically and economically in culture with the Europeans or you’re getting ready for a fight with the Russians. And that is something the Saudis and the Pakistanis want nothing to do with either. So at this moment in history, the idea that this is a tripartite alliance where one of them will bleed for the other two is honestly kind of silly. And the Iranians have already kind of called it that. But if you step back a little bit and take the longer view, the picture changes.

Regardless of why the United States is removing itself from a lot of the Eastern Hemisphere. You can make the argument that I’ve been making for some time that for reasons of demographics and geopolitics, the U.S. is entering a more retrenched phase. You can look at what the Trump administration has done is basically spent most of our long range weapons making it almost impossible for us to fight a real war in the Eastern Hemisphere now.

Regardless of the cause, the United States’ position is the determinant of what happens in the Persian Gulf, is fading very, very rapidly and will probably collapse before the end of this administration, if not the end of this year. That reorders everything. One of the big things that people have forgotten about when they talk about globalization is it allows any local power to project economic and cultural influence on a global basis.

And if you’re a non minor power, like, say, Turkey or Pakistan or Saudi Arabia, that can have an outsized impact on everything. But if you remove the United States in its security guarantor position and its ability to keep the sea lanes safe for everybody, all of a sudden all of these secondary powers have to take care of their own neighborhood. And that forces a reshuffling of priorities domestically and internationally. And so if you look at these three countries, all three of them are Sunni. So there’s that’s a religious extraction of Islam. So there’s already a degree of a cultural link. Saudi Arabia is the world’s largest oil exporter. Turkey and Pakistan are importers. And if you look at the other places where these places might get their energy from, Pakistan might be able to get some from Southeast Asia. But in a deglobalizing world almost all of that crude can be consumed locally. The Turks can get crude from, say, Turkey. But as the Ukraine war continues to heat up in a globalized world, it’s only going to get hotter. All of a sudden that becomes less viable to.

So these three countries in the mid-term are going to be seeing closer and closer security and economic integration anyway. And the idea that today they are laying the groundwork for something that might actually resemble an alliance down the line. Well, we’re now going from pie in the sky to kind of common sense. It won’t work this year, probably won’t work next year, but by the time we get to 2030, we’re going to be in a very different environment, both in the Middle East specifically and in the wider world. And it’s interesting to see countries that have capability, like Pakistan, like Turkey, largest army and NATO like Saudi Arabia, already starting to prepare for a postAmerican world.

Why Bypassing Hormuz is a Pipe Dream

So, you want to bypass the Strait of Hormuz, huh? Good luck finding a replacement route or pipeline that matches the 20 to 22 million barrels of oil that used to transit daily.

The UAE and Saudi Arabia have pipelines capable of transporting roughly 1.6 and 7 million barrels per day, respectively. Despite being the best alternatives, they come with long expansion timelines or vulnerability to strikes. There are a few other routes that pass through Syria and Turkey, but those are either too risky or too small.

Hey, everybody. Peter Zeihan here. Coming to you from Colorado. And today we’re going to talk about the bypass options for the Strait of Hormuz. Started. Hormuz, of course, is one of the world’s most important waterways. It is the gateway that tankers use to enter and exit the Persian Gulf. The Persian Gulf produces for export roughly 20 to 22 million barrels per day of oil and products, and under normal circumstances, almost all of that flows through the Strait of Hormuz aren’t really great options.

Otherwise, Iran is all mountainous. You’re not going to go that way. Iraq is a sectarian disaster and it has no other waterway access. It would have to go north through Turkey, which is mountainous. Saudi Arabia is a desert kingdom which is huge, and so crossing its distances are problematic. The Kuwaitis and the Qatari have no options at all.

And that just leaves the United Arab Emirates, which at least does border the other side of the Strait of Hormuz. But it has to go up and over some complicated geography. Anyway, there are four options that people are talking about, three of which exist in some way. So number one, you’ve got the pipeline that starts in the United Arab Emirates on the Persian Gulf and goes up and over some of that complex geography down to the port of Fujairah, carries about 1.6 million barrels per day.

The Emirates have fast tracked expansions. They hope to have another 300,000 of capacity sometime later this year, and then maybe they even will double it over time by laying a parallel track. It’s expensive, especially building it fast, but that doesn’t mean it can’t happen. And the Emirati certainly realized that unless they get another option, they’re kind of hostage.

Anything that happens between or among Israel, the United States and Iran. Number two, the big one, the Petro line. This is a line that starts in the eastern provinces of Saudi Arabia and their major oil producing region, and just shoots west, straight across the desert until it hits the Red sea at a place called Yanbu. they started construction on this during the Reagan administration.

Everyone in this area has been worried about the Strait of Hormuz for a very long time, and it’s operational has been for a couple of decades. In fact, over the last ten years, the Saudis have incrementally increased its capacity from 4 million barrels a day to 7 And they had never really tested it. So until this conflict, we were still thinking it was at four.

They have proven that with 30 to 45 days notice, they can ramp it up to seven, which from an engineering point of view is pretty impressive. There’s now talk of laying another parallel pipe and maybe increasing this by another two or even 3 million barrels per day over the next few years. There’s two problems with that. Number one, of course, is this is a big project over a large period of distance.

And then second, just getting to Yanbu is only half the problem. The Saudis have built a number of refineries up and down the Red sea coast that are not connected by pipeline. And so the old strategy was to take tankers from the Persian Gulf, Salem, all the way around the Arabian Peninsula, going through Hormuz, through Bob Deb off the coast of Yemen, and then supplying these refineries by sea, which I always thought was remarkably stupid.

Anyway, at the moment, the plans aren’t for these pipelines to support these other refineries, just to get it to the coast to open up some maritime options. Option three is for Iraq. Iraq has two different while producing zones. It’s got one in the which is the big one in the Shia Arab zone. And it’s got one in the north in the Kurdish Right now, all of the crew that comes out of the southern fields is exported by water through a couple of offshore loading platforms. They have. And all of that has basically been reduced to zero by the conflict. So the idea is you have a Western line that goes out to a city called Banias in Syria.

This pipeline technically exists, but it was shut down in the 1950s and has never been turned back on. And so if this route is going to be explored, all of that equipment has to be 100% replaced. And you’re talking about a project conservatively is going to run $8 billion. 20 might be a better guess. And it’s not clear that the Iraqis have the financial wherewithal or the engineering skill to do this themselves.

So you’re talking about bringing in companies from the outside and having to pay them, and that means it’s not going to happen this year or next year or this decade, and maybe not next decade. This would be a big project. In addition to the fact that about 40% of the route is going to be going through Syria, which until recently has been in a brutal, decade long civil war, and we’re just kind of counting the moments until the second phase of that civil war starts up.

Not to mention that Banias on the coast is a different sectarian group than the majority of Syria. So it’s going to go through the Kurdish zone, and then it’s going to go through the Arab zone, and then it’s going to go through the Alawite zone. I wouldn’t invest in that if it were up to me personally. Final option also kind of exists.

It’s the northern route that goes from Kirkuk, which is the oil capital. The Kurdish zone north into Turkey takes a dog leg going straight west to the Mediterranean port of Chian. And Chian is kind of in that elbow of the Mediterranean, where Turkey almost meets Syria. That pipeline has been operating for the last ten years at about half a million barrels per day.

It was built to spec back in the 80s at 1.6 million barrels per day. But disputes between the Turks and the Kurds, much less the Turks and the Arabs in Baghdad, have meant that it’s always operating at a lower capacity. It’s not clear if it can handle that 1.6 anymore. Anyway, there’s problems with all of these pipelines. It takes a while to build them.

They’re expensive. The Emiratis are showing that they can be fast tracked, but the Emirati one is probably the simplest over all. But the bigger problem is it doesn’t really solve the issue. I mean, yes, you can bypass Hormuz. And yes, that is important. But keep in mind the weapons systems we’ve seen deployed around the world in just the last six months.

In the case of the Ukrainians, they’re now regularly striking industrial targets across Russia that are a thousand miles and more from Ukrainian territory. The Iranian weapon systems are not nearly as complicated, but they’re still striking things that are 500 miles away without a problem. And most of the infrastructure that we’re talking about here is within that 500 mile range.

And so the Iranians can just program in what they want to strike, whether it’s a pumping station, part of the pipe itself, the loading facility, the tankers, a cluster of the loading facilities and go to town. Specifically, they’ve already hit Fujairah, the Emirati option, and Yanbu the Saudi option. And to think that they can’t hit any of these spots with today’s technology, much less the technology they will command when this construction is finished is just silly.

Really. The only option for a bypass pipeline that might, might, might be resistant or immune to what the Iranians can do today, much less tomorrow, is the Turkish option, because the Iranians do not want to pick a fight with a superior local military power like Turkey. So that is really the only thing that works. But that one of the three that are operational is by far the smallest of the three.

The petrol line is not a solution, the pipeline is not a solution. And honestly, anything that’s going to depend upon Syria instability is probably not an option. That just leaves the Chian pipe, which at the moment is maxed out theoretically at 1.6 million barrels per day. Operationally probably half that. And if the decision was made to double, triple or more of that, you’re talking about a project that’s in the tens of billions of dollars because eastern Turkey is not flat.

So none of these really work. They’re going to generate a lot of talk. The Trump administration already has their fingerprints all over them. Like this is going to be a quick and easy fix. It is not you can take that to the bank.

How to Solve the Cocaine Problem

Photo of man in gloves opening cocaine package

It would appear that my suggestion for everyone to stop doing cocaine hasn’t solved the problem, so let’s look at some of the solutions others have proposed.

What about domestic cocaine production? The U.S. doesn’t have the extremely specific tropical growing conditions necessary for coca plants. What about legalizing cocaine? Healthcare costs and reduced worker productivity would likely outweigh any savings from reduced law enforcement or tax revenue.

Hey all, Peter Zeihan here, coming to you from Colorado. Today, we are taking a question from the Patreon page. And he says, you keep telling people to not use cocaine. True. But people are going to keep using it. Probably true. So wouldn’t it be better for us to just domesticate it and take advantage of the addiction? Like, oh wow, that’s dark. Let’s start about the the practical restrictions on having a cocaine trade in the United States.

And we’ll talk about it. It’s a bad idea in general okay. Cocaine is an incredibly finicky plant. It demands subtropical to tropical temperatures year round, is one of the least frost tolerant plants on the planet. Even a light frost will kill the entire plant completely. Won’t come back. It also needs water. Lots of water, at least a meter, preferably two meters of water a year.

And it can’t have a dry season. So tropical rain year round. But it also hates being wet, so you have to have acidic soils that are very, very well drained. You put those combinations together and you basically have two options. Number one, the Andes, where the mountains prevent the water from sticking around, but at a relatively low elevation, typically about 3000ft maybe.

So you get the water to drain itself, but you’re low enough that you never have to worry about frost. Now, if you industrialize this production, you could put it in other tropical zones that are lower altitude, that are flatter. But then you have to basically engineer your fields so that they drain, but again, can’t be tropical dry season like say, a lot of Brazil. It has to be fully tropical all year long. No dry season. And that means you’re basically looking at the Andean crest. Or if you want to industrialize, maybe places like Southeast Asia specifically, maybe Indonesia.

The United States has nothing like that. Even in Florida we get frost from time to time. And so the entire crop would die anywhere further north just would not work. There is just not enough water and not enough reliability. Okay, so from a technical point of view, wouldn’t work. From another point of view, every study I’ve ever seen has always shown that whatever gains we might get by legalizing cocaine in terms of lower costs of law enforcement and maybe higher income from taxes, is going to be wiped from higher care costs and higher worker absentee rates.

So economically, there’s no case. Environmentally there’s no case. The simplest answer is just not do cocaine. If you’re looking for a horribly destructive drug that we can domesticate production of your answer is fentanyl. It is made from precursor materials that come out of almost any possible chemical company in the United States, is the world’s largest chemical producer, and you can make it in a garage. So if your goal is to have something that destroys your body and mind and you want to grow it domestically, fentanyl is your answer. But just in case it was not clear, don’t do fentanyl either.

The Future of Drone Tech: Ukraine’s Innovation

Camo clad man flying a drone outdoors | License by Envato Elements

The U.S. has finally secured its first contract to manufacture Ukrainian-designed drones, but don’t go celebrating quite yet.

The F10 drone that will be produced is a small FPV quadcopter built entirely from non-Chinese components. This is a big step for the U.S., but it’s not nearly the crème de la crème of Ukrainian tech.

The facility where these drones will be made is yet to be built, so even this initial order of 2,000 drones will take several years to complete. Regardless, this is a step in the right direction that will hopefully lead to further cooperation down the road.

Hey all. Peter Zeihan here. Coming to you from Colorado. Today is the 1st of July and the news is good news. We have our first contract granted by the Department of Defense to have a US manufacturer produce Ukrainian drones under license. There’s not a lot of information out at this point. It’s all super secret, but I’ll share what I know and give you a couple of guesses based on what we know what that means.

So step one, the American company involved is called Ukrainian Defense Drones. Catchy name. And the Ukrainian company on the other side is called F drones. F drones is one of the big boys in Ukraine for producing ever more innovative policies and doctrines and designs and getting them to the front their F7 drone from last year, 2025, yeah, was basically voted the drone of the year for how good it was against emplacements and vehicles.

The new drone that the United States is going to be producing is called the F10. We know it’s 100% non-Chinese parts, and aside from that, we just know that the ten means it’s ten inches across, which means it’s a quadcopter and it is a first person drone. So you’re going to have a dude with a controller relatively close to the front line that suggests from its size that it has some range limitations, probably only 25 to 40km, and it probably can only carry a warhead that’s 3 or 4 kilos.

That’s probably not enough to take out a tank, but more than enough to wreck the day of, say, an artillery crew and go after personnel or trucks. That’s the good news. The bad news is there’s no sign at the moment that the F10 is one of the drones that has the terminal guidance that the Ukrainians have been starting to introduce across the front and across the entire drone fleet this past year. Those are the things that load a decision into the drone, so that when it gets over its target area, it can actually look around and pick a target for itself. And once it does that, it can’t be jammed. Now, this is just a contract. It’s part of the American program to try to get 200,000 drones in active service before the end of 2027, just next year.

But this is going to be a late bloomer in that, because the facility that has been tagged to build these drones in Ohio hasn’t begun construction yet. We only got go ahead for the construction last week, and they’re not expecting to finish construction until December of 2029. So three and a half years from now, and then they’ll start building out the first packet of drones.

And they’ve only ordered 2000 of them and at a rate of, say, 650 to $700. You know, these just aren’t particularly sophisticated drones, which is fine. The key thing is that for the first time, we have a direct contract from DoD for Ukrainian equipment, which is something we’ve been desperately to get in this country. I would argue, even though all of our Western allies and Middle Eastern allies are way ahead of us on this front, because they know they can’t rely on American hardware, there’s a lot of things can still go wrong.

For example, the reason we don’t have a contract until now is that Donald Trump personally despises President Zelensky of Ukraine. And it’s entirely possible at this moment that Trump is unaware that this contract even exists. And as soon as he finds out, he may well squash it. But hopefully it is the first of several thousand contracts to come that it would allow the United States to take advantage of the war zone in Ukraine, to help test an entirely new set of weapon systems and take advantage of the Ukrainian skill sets, which were by far the most advanced in the world when it comes to the designing and the use and the development of doctrine for these new types of hardware. Early days. Once this facility is constructed, it’s supposed to be producing a wide variety of defense equipment, of which Ukrainian drones are just one tiny little piece. So it’s a step in the right direction regardless. And I just hope that’s a small step all around a very long path of tighter partnership.

That’s probably just wishful thinking from me, but at least we have the first step.

Why Nobody Came to Help the U.S. in Iran

Toy Tank Atop Iranian Currency and Flag | Licensed by Envato Elements: https://app.envato.com/search/photos/3abc94ac-73db-4912-ae0d-3e507dd11191?itemType=photos&term=iran+war

Despite the large rolodex of U.S. allies, nobody has pulled up to the Persian Gulf to support the U.S. There are several reasons for this, though.

Part of the post-WWII deal was that the U.S. would provide global maritime protection, so nobody else had to; as a result, few powers could help out, even if they wanted to (like Japan, the UK, and France). It doesn’t help that the U.S. launched this operation without consulting anybody, but even if they had, most allies wouldn’t touch a Persian Gulf conflict with a ten-foot pole.

Hey everybody. Peter Zeihan here coming to you from Colorado. Today we’re taking a question from the Patreon crowd, specifically considering how dependent countries like to Pan and the countries of Europe are upon energy imports, specifically from the Persian Gulf. How come they haven’t been helping out with the conflict? Well, let’s look at it. First of all, not a lot of countries maintain naval forces that are capable of rapid projection.

You basically have them on a degree of standby until something big happens and then everything has to be spun up. So, for example, unless you’re the United States very special case, everybody’s navies are pretty much limited to coastal patrol. So if you do have a long range ship, it’s probably just sitting in dock until it’s needed. And then it’s going to take a few weeks to a few months to get it ready to go.

That’s one. Number two. The deal that we struck with everybody at the end of World War two was that we will patrol the global oceans and keep the ceilings open for everyone. If in exchange, you allow us to control your security policies. And part of us controlling your security policies is we don’t want you to have any long range power projection, because if you have a long range power projection, you’re going to use your long range power projection.

You might use it in ways that we don’t want. So with the exception of Japan, which is an island nation and has the second largest navy in the world, and the United Kingdom, which has a bit of an imperial hangover, the only other country in the world that maintains really any long range capability that’s independent is France, and that specifically.

So it has an independent capacity. So really we’re talking here about three countries. No one else could have even helped if they had wanted to. Which brings us to number three a burden sharing intelligence, sharing whatever you want to call it on February 11th. Netanyahu, Benjamin Netanyahu, the prime minister of Israel, came to the white House, made a pitch to Trump for the United States and Israel to jointly attack Iran.

He said the war would be over in four days. We can kill the leadership because you know where they are. There will be a revolution. They’ll probably rename the capital to Trump Obelisk, and you will go down as the bravest and most capable American president in history, and you will do something that all the cowards before you refused to do.

And Trump looked around the room and everyone who knew something about foreign policy, for example, Secretary of State Rubio and the Joint Chiefs of Staff Dean Cain said, Mr. President, this is an horrible idea. We’ve been hearing some version of this for 30 years, specifically from Netanyahu, who has tried to convince multiple American presidents to fight his war.

For him, the math never checks out. The Strait of Hormuz will be wrecked. But, Mr. President, it’s your call. And then the people who knew nothing about foreign policy, notably Pete Hegseth at defense, said, do it.

The carrier sailed later that day. So normally when the United States goes to war, we compare intelligence with our allies. That never happened this time. And we now know, even from within the white House four months later, that there wasn’t any intelligence. This was just a pitch deck from Netanyahu, who has been chomping at the bit to get the United States to fight his war for a long time.

So normally we’d like consult with NATO, especially with the Japanese and the Brits, and we’d arrange for a coalition to put at least a veneer of internationalism on top of whatever it was that we felt we needed to do. None of that happened. So the war began a couple of weeks later. Just just the amount of time that it took to sail to get there.

And then about in week four of the war, when the Trump administration realized it wasn’t going well, which was difficult because DoD was only showing him like strike footage, because any time they tried to give him an accurate assessment of how this was not going well, he’d kick him out of the room. Well, by four weeks on, it was starting to come at him from all angles that it wasn’t going well.

And that is when he started yelling at the allies to send forces. But as I’ve mentioned, no one else has forces to send, and the few that might certainly in a hot situation are not going to be sending things through Suez. So even if like, say, the French and the Brits had snapped to at that instant, unlikely they would have needed a month or two to get their forces ready to deploy, and it would have been over another month before they would have actually arrived.

And in the meantime, you know, Iran went the way Iran did. And we’re now in a situation where we get final point is that nobody outside of Trump and Netanyahu wanted this war in the first place. We now know unequivocally that Iran’s drones are more than capable of taking out every piece of physical infrastructure throughout the Persian Gulf, which can trigger a global energy induced depression.

We now know that their monitoring of the entirety of the Strait of Hormuz is strong enough that they can even take occasional shots at ships that are hugging Omani waters on the southern side of the strait. And really, even with the US Navy concentrated on the Strait of Hormuz in the Persian Gulf, there’s not a lot it can do, because if those ships stay still, then they become targets to.

So we’re in this never ending negotiation where negotiations aren’t actually happening. Because this is just horrible. Normally when you’re having a real negotiation, you have your headliners who do the real talks and what are called technical folks do the technical talks so that when the headliners show up, there are only real things to discuss.

Well, Trump has shut the Department of State to the side and refuses to deal with that at all. Even that’s where most of the policy experts are.

He made Secretary of State Rubio be in charge of all that because he doesn’t like Rubio either. So all you Rubio fans who think that he might be the successor to MAGA, think again. He also doesn’t like the National Security Council. That does kind of have all the deep thinking as opposed to the diplomacy.

Not so it could be more efficient in the way that Kissinger did it, but to shove it all to the side. So there were no negotiations with the allies on the front end, and there’s no technical talks happening with the Iranians on the back end. So the last time that Trump’s preferred negotiators, Jared Kushner and Steve Whitcomb, went to Doha this past week, they got to Doha and the Iranians like, yeah, not this week.

We have technical talks to do. And so there’s still nothing happening. There have been no technical talks since this whole thing started in February. Anyway. If you’re an ally and you’re looking at this, you’re like, why would I develop a military capability that the United States has until now, said I should not have in order to use it to prosecute a war that hurts my economy.

And then we are at the mercy of a diplomatic situation that doesn’t have diplomats. So, yeah, no, the allies haven’t done anything here that is untoward. We’re just in a bit of a trap caused by a man who refuses to surround himself with anyone but sycophants and is very, very easy to manipulate so long as you’re willing to lie to him, which is not what a good ally does.

All right, that’s it for me. Until next time.

The U.S. and Ukraine Make a Drone Deal