Ask Peter: Has the US Overcommitted Itself to the Ukraine War?

More than a few countries out there couldn’t walk and chew gum at the same time…but the US isn’t one of them. Today’s question in the ‘Ask Peter Series’ looks at whether or not the US has stretched itself too thin in Ukraine to deal with another major conflict.

Yes, the US has given the Ukrainians a couple of shiny new toys, but most of the stuff has been obsolete hand-me-downs. And how often do you get to test your new weapon systems in a real-world setting? So the only thing in the mix that throws up any red flags for me is the cluster munitions (and those were going to be retired soon anyways).

This war hasn’t impacted US military preparedness, and if China wanted to try its luck, they’d get an ass-whoopin’ compliments of Uncle Sam. The big piece here is that the people doing the walking and chewing the gum are entirely different. If anything, our involvement in Ukraine has been a proof of concept for how the US will fight the wars of the future.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everyone. Peter Zeihan here coming to you from an incredibly green Colorado. We’ve gotten double our annual precipitation before we even hit April, but hasn’t stopped yet. Today, as part of the ask period to your series, we’re going to talk about chewing gum and walking at the same time. The concern is that in supplying weapons to the Ukrainians, the United States might be stretching its bandwidth to be able to deal with a major conflict like, say, with China.

The punch line is, no, this is not something I’m worried about at all. For the simple reason that the people would be doing the gum chewing and the walking or different people, any sort of military conflict that the Americans are going to get involved with, with the Russians are going to be primarily on land first and foremost in Ukraine itself.

That’s an army job. And any conflict that soon involved the Chinese is going to be on the high seas. That’s the Navy’s and to a lesser degree, Marines job. So the United States is perfectly capable of fighting two wars if they’re very different sorts of wars. So I’m not worried there. Number one. Number two, nothing has happened with the Ukraine war yet that has really hit American military preparedness.

So let’s get this first. From the weapons point of view, it’s already been given most of the weapons system, almost all the weapons systems that the United States has provided to the Ukrainians are things that the United States you know, most of the stuff that the American right it to the Ukrainians are things that the U.S. military hasn’t used itself since at least the 1990s and in most cases further back.

This is Army surplus that has to technologically be high the military uses. And so really, the Ukrainians are just going through our hand-me-downs now. We would have given these things to the allies. That’s what we did at the end of the Cold War, for example. But most of the military’s in Europe have been downsizing or skipping a generation.

What we’ll do is left all this stuff like Hummers going around and warehouses. So with a couple of notable exceptions, these are not things that the U.S. uses at all, the notable exceptions. There are currently two Patriot batteries operate in Ukraine that is very close to the top of an aircraft that the United States has right now. I would argue that even though taking those out of American service might be at the strategic issue for the U.S. a little bit.

It’s worth it because we’re getting real time experience with U.S. technology and third party hands against top of the line Russian equipment, most notably the Kinzel cruise missiles. And we now know for certain that even without American personnel operating them, the Patriots don’t done that. The Russians have that was a great bit of information that we didn’t have before.

The other thing is, are three shells. Now, the United States has not been engaged in a massive war to Vietnam. Even when you look at the Gulf Wars, they were very short little events. And so we haven’t had to use artillery in volume for a very long period of time in the United States, which means that our production of artillery shells has been pared to the bone and we are going through we the Ukraine is going through more artillery shells in a month and the United States can produce in a year.

And Europe is even further behind when it comes to munitions. So that has prompted the United States to get Canadians weapons systems that we are in the process of phasing out. And most notably, that is the cluster munitions that you may have seen in the news recently. Now, a cluster munition is one single piece of explosive. There are dozens or hundreds of little but spread over an area.

The Ukrainians have been on the receiving end of these weapons since the beginning of the war. Russians have preferred to use the cluster munitions whenever they’re targeting a city. They’ll use them when they go in and get things like tanks and so there’s already hundreds of thousands, if not tens of millions of these little bomblets, some of which haven’t exploded, scattered across all of eastern and southern Ukraine, aren’t brought up.

The kids aren’t thrilled. But from the Ukraine interview, gimme, gimme, gimme, gimme, gimme. Because anywhere they can get and I believe they’re going to use cluster munitions on their population centers. That’s the job for the Russians anyway. These are weapons that are for is it’s a little distasteful. And the United States Army was in the process of them out anyway.

So again, this kind of falls into the category of surplus stuff, even if it’s not quite kind of there anyway. Bottom line, U.S. military preparedness really hasn’t been affected by this war to this point. If anything, it’s proving to be a useful proof of concept for how the U.S. is likely to fight wars in the future. In the aftermath of the war on terror in Iraq and Afghanistan.

There is no political support in the United States for a mass deployment for anything except for top level national defense. That’s not seen as an issue right now. No one’s dumb enough to attack the United States directly. At least I don’t think that’s going to happen. Which means that U.S. strategic policy is going to be operating through third parties and or using special forces.

And so with Ukraine, where we have a motivated third party who was very willing to be an ally except in equipment, and we’re finding out how well that works and getting some expertize and figuring out what to do better the next time around. So all in all, in a weird sort of way, you can kind of thank the Russians for getting the United States to where it needs to go, both getting rid of its what and learning how to fight for the next century.

Alright. That’s it. Bye..

The Greatest Reindustrialization Process in US History

Today’s windy video comes to you from just below the Continental Divide.

You know those little ‘Made in China’ stickers on everything you can buy in the US? Well, don’t be surprised when those all say ‘Made in America’ in a few years as the US carries out the greatest reindustrialization process ever…and if you thought the United States’ industrial buildout during WWII was wild…buckle up.

There’s a lot at play here, but we’ll touch on the legacy factors first. The US arguably has the world’s most highly skilled labor force, but we’re hyper-focused on the value-added stuff and outsource the rest. This arrangement can’t last much longer, but the shale revolution and petrochemical production have primed us for all the reshoring coming down the line.

Recently, COVID showed the US (and the world) that our supply chains weren’t as great as we thought. Now we’re having to reshore everything and turn over the power system, driving construction levels and spending through the roof. And the Inflation Reduction Act has helped provide the funding and regulatory structure to make it all happen.

Although inflation will be up there for a while (surprise, you can’t double your industrial plant without that happening), we’re on a solid trajectory to establish a fully regionalized supply chain. And if the US wants to have any sense of security down the line, we’ll just have to suck it up for a bit.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey, everyone. Peter Zeihan here. Coming to you from Heart Lake, above Boulder, Colorado. Just below the continental divide, which is where I’ll be for the next few days. I suppose some day. Then, before I left, I could do a few videos and this first one is going to be on construction spending in the United States. I know some of you like and I get it.

But remember that we are in the midst of the greatest industrialization process in the United States history, building an industrial infrastructure and factories and refineries and pipelines and roads and all that faster than we did during World War Two. There’s a lot of things in play here, so let me start with kind of the legacy factors, and then we will go into the more the issues of the now.

So first legacies. The United States has the most highly skilled labor force in the world by a significant margin. There are a few countries like Singapore where the overall educational level might be higher. But, you know, Singapore is a country of 5 million people. The US is a country of 330 million. If I didn’t say the German to the French, which might have a little bit more productivity per hour than the United States, you know, we’re talking about the labor force in the United States four or five, six times as much.

And that means there’s not a lot that the United States can’t do far puts its mind to it. Now, historically, since 1945 and especially since 1991, what the U.S. has done is focus on the really, really, really high value added. We basically shipped all of our underwear manufacturing overseas, first to Mexico and then to China and India and instead we designed computers, we designed space station, designed microchips.

Not a lot of the manufacturing happens here because to be perfectly blunt, that’s not sufficiently high value added for the skill set of the American workforce. So that’s always been in the background. Second, the shale revolution courtesy of the shale revolution, the United States is glutted with natural gas, which is not merely a power fuel. It’s also used as an input for chemical components, which then go into all other types of manufacturing, whether or not you’re looking to do electrical work or diapers or anything in between.

The shale revolution made us net independent of natural gas roughly ten years ago. Net oil independent a little bit after we had a few hiccups because of COVID, but we’re back to being that independent in all the factors that matter again. And one of the first things that the shale revolution encouraged the United States to do in terms of industrial build out what we’re fighting, the chemicals and so we now are the world’s largest producer of all the precursor materials that go into all petrochemicals everywhere in the world.

And now we’re using those materials to do the next stage of heavy manufacturing. So this kind of the first big phase of this industrial spending issue isn’t necessarily for building power lines. It’s for building the stuff that allows us to build the stuff. Now on to the more current issues, too big things. First, COVID. We discovered that our international supply chains perhaps weren’t as reliable as we thought they were.

And between China’s centrality and all things manufacturing and China’s own COVID lockdown, we found out that if we wanted stuff, we had to build it ourselves. So we did. And during COVID, we saw total industrial construction spending double above the 50 year average. More recently, in the last two years, we had the Inflation Reduction Act passed by the Biden administration, which has nothing to do with inflation.

There’s more going on here than just aspects of a Green New Deal. It’s turning over the power system and reshoring the production line for everything in the power system. It includes everything that we did with NAFTA and after to you know, I should say a third thing, because after two is a big piece of this, too. But anyway, the I.R.A. put roughly $1,000,000,000 into the system to build out what we need in order to meet the requirements.

And that has doubled the construction spending again. So we were already at record levels three years ago. We’ve now doubled the record and this is going on from there. Now, this does mean we’re going to have some more inflation in the short in the mid-term, because there’s no way you double the size of the industrial plant without that.

But once we get to the back side of this a few years from now, we will have a supply chain system that is local, that is employed by locals, that serves local customers and uses less energy and less water, and has fewer steps and is largely immune to international shocks. This is a really good story. At every step.

We just have to suck up a little bit more inflation while we’re doing the work. Alright. That’s it. I’m going to go put on some gloves, but.

Real Estate: The Three-Headed Dragon Plaguing NYC

New York is a service-based economy, and anytime you have a system like that, cost of living becomes an issue. While the finance bros working 80-hour weeks might be able to afford NYC prices, there’s a three-headed dragon wreaking havoc on everyone else…real estate.

The first head is the demographic problem, which comes naturally with being part of the fastest-aging region in the US. Many of these lifelong New Yorkers are aging into retirement, and it doesn’t make sense to stay there anymore. So we are amid a mass exodus of lifelong NYC service workers.

The second head was/is COVID. Once people realized they could work remotely and live a more spacious life outside the city, many didn’t want to crawl back into their studio apartments. Yes, NYC has made a more robust recovery than San Francisco, but it’s still not quite back to how it was. The government is taking quite a hit for each person that never returned to the city.

This dragon’s third and worst head is international fear and its impact on rent prices. As economies across the globe enter a state of flux, there’s nothing quite like parking your assets in a 50th-floor penthouse apartment in NYC (even better if you never step foot in it). For people who actually want to live in the city (like my social media manager), that means crazy rent prices and low inventory.

Does this mean that NYC is done? Of course not. For many, this probably sounds like the status quo for the world’s financial capital. However, the business models for the private sector and the government will have to change if NYC wants to thrive for years to come.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Everybody. Peter Zion here coming to you from New York’s Central Park. New York is a city, obviously, where there’s not a lot of manufacturing or agriculture because there hasn’t been greenfield potential here in over a century. It’s a services economy with finance, of course, being the biggest and baddest. But in any system that is based on services, cost of living becomes a critical issue because these are all very highly value added jobs, but people still have to live there. And the people who serve the services economy and serve the people who serve the services economy still need a place to live as well. So living costs are a big issue with real estate probably being at the top of the list. And in that, New York is facing a triple challenge.

The first is demographics. The American Northeast is the oldest and fastest aging part of the country. And as more people move into retirement, a lot of folks who have lived here all their lives to serve the services are discovering it’s kind of out of their pay grade. So we’re seeing a significant amount of relocation of older folks to warmer climes. Of course not everyone can afford to up and leave a rental apartment in New York for a condo in Boca. So it’s disproportionately hitting people who are on the wealthier end of that scale. Well, the second big issue is COVID and more importantly, technology. When COVID hit and everything shut down and the office went away temporarily, New Yorkers in many cases decided to decamp to other places. Some moved to upstate. Some moved to the south. Some moved to Florida. Because if you could just wire in for work, then you didn’t need to be paying a new York rent or New York taxes in many cases. And now that COVID is over, those technologies have only improved. And a lot of people are resisting coming back. Now, New York has not had as much of a problem getting people to move back to, say, San Francisco. But it’s still had a disproportionate hit on the economy overall, specifically. You’re talking about people moving into places like Jackson Hole or Charleston and maybe commuting in once or twice a month. And that’s a very different real estate picture on this side of the equation, because any money that you can use to buy a condo in New York, you’re going to be able to get, you know, a mansion in South Carolina. And since roughly 8% of the population of New York pays 90% of the taxes, every person who relocates is a real fiscal hit to the government here. But the third one is probably the most important because even with people moving out, we’re still seeing rental costs here in New York be stable to positive. The third big factor is international fear. The more problems we see in Europe and especially in China, the more people who try to get their money out and get it into a place with rule of law where you might actually be able to buy a physical asset with real estate being the number one for most consumers. And so you get these these ridiculous needle buildings in New York that not a lot of New Yorkers live in. Most of these have been bought out by foreigners who may not even have an intention of ever looking at the floor, much less moving in simply as a way to park their assets. And so we’re getting these huge distortions in a lot of property markets around the country, with New York being at the top of that list where foreigners have come in and bought up property, especially at the higher end, just to park on it. And that’s made it more difficult for everyone else to find a place or even find someone to build a place because the hot money is going to something like this that is not really of use to solving the real estate or the living cost problems of the city.

Alright. Does this mean that New York’s done? Of course not. It’s still the world financial capital, but it does mean that the business model for both the private sector and the government is going to have to change in order for the city to thrive in the future.

Alright. That’s it for me. You all take care.

Ask Peter: What’s the Deal with Manchin’s Gas Pipeline?

Democrat Joe Manchin managed to sneak a few clauses into the debt ceiling extension deal for the completion of his Mountain Valley Pipeline. Environmentalists are pissed, and fossil fuel lovers gave Machin a double thumbs up. So who’s right and who’s wrong?

For those who think wind and solar are the future and there’s no use case for fossil fuels, you might want to check the math. For wind and solar to be viable, they need a complimentary energy source…and natural gas is the best option.

For those natural gas lovers who think green energy can only work with massive subsidies, your math needs some checking too. In the right geographies, solar and wind are the cheapest energy option on an hour-by-hour basis.

While the Mountain Valley Pipeline might seem to benefit only one side of the aisle, Manchin moved us one step closer to the inevitable future of American energy. It’s not green. It’s not fossil fuels. It’s both. And I’m okay with that.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zeihan coming to you from the ever increasingly foggy Docman Trail. This is the next in our Ask Peter series that was born out of my airline delay. Today, the question is about Joe Manchin, the Republican excuse me, the Democrat, from West Virginia, who has managed to insert a couple of clauses into the deal with the White House to extend the debt ceiling. Specifically, it’s something that it mentioned has been after a while, which is permitting and federal approval to get a new pipeline built through West Virginia to ship natural gas. Environmentalists hate it because it’s natural gas, pro fossil fuel folks obviously think it’s okay. The truth is that everyone’s right and everyone’s wrong. So let me kind of lay out what it means.

Let’s start with the green side. For those of you who think that solar and wind is the future of energy and that any sort of fossil fuel is just antithetical to that future. You’re clearly very bad at math. Just think of every day in your life when the sun goes down. Solar. No longer works. And while you can’t use batteries a little bit, the United States right now has less than a couple of minutes of battery storage and there is not enough lithium on the planet for the United States to get to 4 hours of battery storage. And we don’t have a battery chemistry that would allow us to go not just through the night, but through the winter and through periods where there’s usually not a lot of sun, which, if you live in the American Northeast, is the vast majority of the year. So you need a complementary power source that can work with solar and wind. And the best way to do that is with natural gas. You basically use solar when it’s available and you have a combined cycle natural gas plant that can spin up in 10 to 15 minutes whenever it gets cloudy or whenever the sun goes down, you know, every day for the foreseeable future, until we have a better, better technology or better solar or probably better wind is what would get there first. This is just where we’re going to go. So if you want to build solar and wind without a complementary system, you’re then basically forcing anyone who needs emergency power to use a diesel generator. And as we’ve seen in the case of Germany, they have used Lignite coal as the backup. And you can’t spin that up and down in ten or 15 minutes. You have to leave that on the whole time. So despite $2 trillion in green tech build out, Germany’s carbon emissions have actually gone up. So, you know, there’s a problem.

Now, for those of you on the fossil fuel side who say that intermittency of solar and wind means it’s not a viable power source and it can only exist with subsidies. You’re not very good with math either. Solar and wind in the right geographies are now the cheapest way of generating power on an hour by hour basis. Now, hour by hour being the key word there, there’s something that some folks like to use called the levelized cost of operation, meaning that you average the cost out over the 24 hour, three, 24 hour day three in a 65 day year period. That’s really not a great measure, because when the sun stops shining, the power goes down to zero. You still need it. And that’s not reflected in the levelized cost, or at least not sufficiently, in my opinion, because, you know, when you don’t have power and you need power, you will pay whatever you have to do to get power. There are parts of the country that can do more of one or the other. So if you’re in the American Northeast, which is neither sunny nor windy, you know, fossil fuels are going to be a much bigger part of your power mix going forward than it can be in the rest of the world. However, if you’re in the southwest, you’re in a place that has great sun, and if you were the Southwest overlaps with the Great Plains, you’ve great, great sun and wind. And that means ultimately more and more and more things like what Manchin is after. Keep in mind the pipeline he was so much in love with the way he wants to get this done is not just a one off approval for a pipeline across a state line; he wants that for all energy infrastructure. And obviously the green zealots think this only means pipes, but it also means power lines, because if we’re going to move to a cleaner, greener future, we have to be able to move electric ones from where they can be generated with solar and wind to where we actually live. And since the single largest concentration of population is on the American Northeast coast, and that’s where none of the green power comes from, we’re ultimately going to have to run this in by wire from other places. So we need more and more transmission, more than we need something like batteries right now, at least with today’s technology.

So the future of American electricity isn’t green, but it’s also not fossil fuels. It’s both. I’m okay with that.

Mr. Modi Goes to Washington

Prime Minister Modi is stateside and prepping for his address to Congress and state dinner. While a summit with Modi may have been inevitable (as he’s the leader of the most populous country and up-and-coming power), we need to look at India’s relationship with the rest of the world to see what might come of this meeting.

Given India’s fractious decision-making system – with most decisions occurring at the state and local levels – operating as a “country” is out of the question. India is only interested in things that impact India, so relationships and allies won’t work. The Soviets established ties back in the day, but that relationship is functionally over.

India has other factors that have inhibited its ability to form strategic relationships (or contributed to its ability to remain independent). Geographic barriers have helped keep others out, but also prevent India from projecting power. India is near the Persian Gulf, so they don’t need to worry about an energy crisis. They have decent demographics and plenty of time before any problems would arise. The collapse of China will send India into an industrial boom where they will be able to manage everything in-house.

All of these factors have enabled India to become a globally significant economy without being globally wired. Now the question remains…do I see anything meaningful coming out of this meeting? No, but a conversation about the future is better than nothing.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

CLICK HERE TO SUPPORT MEDSHARE’S EFFORTS GLOBALLY

TRANSCIPT

Hey everybody. Peter Zeihan here. Iit is the 21st of June. Well, here’s Loki. Today we’re talking about India. Look, he’s from India. Bengal. Anyway, Prime Minister Modi is in Washington right now. And by the time you see this on Thursday, he’ll be getting ready for his address to Congress as well as official state dinner.

There was some debate in Biden world about whether this is going to happen because in the past, Prime Minister Modi, especially before he was prime minister, hasn’t been a particularly nice guy. A little on the corrupt side, a lot of the popular side is willing to use religious divisions in order to further his political agenda, which is, you know, relatively distasteful from the American point of view and a lot of other points of view. Many would argue the Indian point of view anyway. He is still the leader of the most populous country in the world and an up and coming power.

So obviously there was going to be a summit. The question whether he would be welcomed as warmly as he has. A few things we need to talk about India, the Indians and the relationship with the wider world and the United States in particular. First and most obviously, the Biden administration has a few things that it wants from the Indian administration, that it would like more cooperation on things like the Ukraine war and sanctioning Russia.

They would like more cooperation on things like tech sanctions and in general, the diplomatic isolation of China. And the Biden administration is going to get none of that. The key thing to remember about India is that India looks out for India’s own best interests. And while every country does that to some degree, the big difference between India and everyone else is that India is not really a country.

It’s more like the Holy Roman Empire, where there is technically a central government, but almost all decisions that matter are made at the state and local level. And so while Modi is nominally the leader of this, and that does give him significant power and influence, he is only the most powerful of several dozen personalities across the Indian system who have decision making power.

And so the capacity of India to act like a state in the way that we think of that with France and China and Japan and the United States and the rest is very, very weak. Second, because of this internal, fractious, ever shifting coalition in competition, India, first and foremost concerned about how do things in the world impact India and makes it very, very difficult for the Indians to identify with any other power in terms of friendship or family or alliance or in sometimes even partnership.

So unless they see someone on the outside that is backing them and to the hilt for absolutely every little thing they care about, they’re going to call the relationship at best complicated and cold. It’s a very myopic way of looking at the world. But India has a very peculiar geography. It’s basically locked off from the rest of the world by a series of geographic and geopolitical barriers.

There are mountains and deserts and oceans and jungles and jungle, mountain and jungle deserts that general deserts. Sorry, desert mountains that separated them from everyone. And that’s not even all of it, because in a lot of these border territories, you’ve got hostile powers, whether it’s Pakistan, Bangladesh, Myanmar or, of course, China. So the ability of India to interact with the rest of the world has always been circumscribed.

And unless you are willing to back India on everything that involves their immediate neighborhood, without question, they’re going to view you with a bit of suspicion. This is one of the reasons why the Soviets during the Cold War were able to make India into a bit of a partner because they had no interests in Southeast Asia. So they just backed who ever happened to be the biggest power India, against everyone else.

And so the Indians developed a bit of a shine on all things Moscow, which has persisted long after the communist system has ended. What this means for the United States is India cannot ever be family. It can never be an ally, it can never be a friend, but it can be a partner from time to time. But because the Indians view everything through the very short sighted lens of national interest, they don’t have anyone who will watch their back.

The Russians have proven they’re not a reliable partner and the Indians are backing away from their defense cooperation with them, because the Indians now realize that the money that they’ve spent has been wasted, that the Russians can’t maintain their own output. They’re actually asking for some of the components back in order to support the war in Ukraine and at the high end works like the Brahmos cruise missile.

That’s just not going to happen at all. And so the Indians, you know, they’re not dumb. They’re short sighted. There’s a difference. And eventually you get to a certain point where they realize now they would only be putting good money after bad. And that means the Russian partnership, if that’s the right term, is now functionally over as well.

India is also not going to help the United States in boxing in the Chinese because they have a hard time seeing past their own nose. And anything that reeks of American leadership, which, you know, obviously would be in play here is something the Indians are going to reflexively recoil against. Now, does this mean that I think India is doomed?

No. Far from it. A couple of big things to keep in mind. Number one, geography works both ways. India has a hard time projecting out other powers, have a hard time projecting in, especially on land for naval powers like the United States and Japan. That’s less true. And that’s one of the reasons why this quad idea exists, because Japan, Australia, the United States and India can cooperate to a degree on naval issues that affect the Indian Ocean Basin because Japan, Australia, the United States don’t have strong interests in the Indian Ocean Basin, especially now that the war on terror has been closed down.

There was a period for the last 20 years where Indian American relations were not hostile but problematic because the United States had to be up to its hips in all things Pakistan in order to get military supplies to its operation in Afghanistan. Now that that’s over, the Indians and the Americans can commiserate about how much they dislike all things Pakistani, and that’s done wonders for their relationship.

Second, India is the first major country after you leave the Persian Gulf, which means that no matter what happens with global commerce or global energy, India is the first in line and it will never really have an energy crisis compared to what’s shaping up for the rest of the world. That’s amazing. Third, India’s demographic structure, while not perfect, is night and day different from the country they love to compare themselves to?

And that is China. New data out of China in just the last few weeks indicates the demographic profiles of Harvard. Worse than even I thought. The Chinese are now publicly admitting they have about half as many five year olds as ten year olds. So you carry that forward with some of the other problems that dividing reified with their own demographic strategy.

And it looks like whatever I was thinking was going to happen, which was already pretty atrocious, may have already happened. And we’re looking at a complete hollowing out. Now, India started to industrialize in a big way 35 years ago, and so the birth rate has dropped. But at current rates of birth rate decline, India will not find itself in a Chinese style situation for another 60 to 70 years, and that’s a long time for things to go right.

So India does have a demographic dividend to go along. A young adults that had fewer children in the past, that generally spells an opportunity for a 20 to a 30 year consumption driven growth opportunity. That’s not without risk. But on the mechanics of it, the next couple of decades look great. And then the fourth, as the Chinese face problems, a lot of the manufactured goods that the world has been importing from the Chinese system are going to go away.

Now, that means if countries still want stuff, they to have to build out their own networks to build that stuff themselves. If that applies to India just as much as everywhere else. So we should expect to see a 2 to 3 decade industrial boom in the Indian space as well. Now it will be different from what’s happening in Mexico because remember India has no allies, no friends and very few partners, and those partners are erratic.

So the sort of manufacturing synergies that Canada, the United States and Mexico and to a lesser degree Central American Columbia can generate. India has to do it all itself. And that means it’ll be more expensive, more time consuming and slower to happen and use more labor, be less productive, less efficient at the end of the day, have lower quality product.

But in a fractured world, India will have something that a lot of countries won’t. It’ll still have stuff. And in that sort of world, India looks good. They are perfectly capable, the Indians, of running an economy that is globally significant without being one that is globally wired. So for Biden, do I think anything of substance is going to come out of this summit?

No. The geography of India, the politics of India, the ideology in India probably precludes that. But that doesn’t mean that the relationship has to be hostile. And if there’s going to be a major power in a different hemisphere, in a strategically interesting area, you should at least have a conversation. And so think of that as what’s going on with the Biden administration right now.

Not a plan for the future, a conversation about it. We could do a lot worse. All right. That’s it. Take care.

A Chinese Listening Post in Cuba: What It Means for the US

The news of a “new” Chinese listening post in Cuba sparks the question: why is Cuba so important to the US? No, we’re not talking about cigars. We’re talking about Cuba’s role in American strategic planning.

With control of the Florida Straits and the Straits of Yucatán, Cuba commands access to the Gulf of Mexico. For those who need a refresher, the gulf is critical to American power, capital generation, agriculture, and energy, second only to the Mississippi system. Hence the whole Cuban Missile Crisis back in the day.

Now I’m not worried about China playing any significant role in Cuba because they’ve had this post for years and China cannot command power at a distance. However, this doesn’t mean things won’t get interesting with Cuba. There are only a few ways that I could see this playing out.

Option one is the diplomatic route of bringing Cuba into the North American family or even NAFTA. Option two is the military route, which would involve America’s favorite pastime of overthrowing the government and/or occupation. OR Cuba and the US can meet somewhere in the middle and play a good ole fashion game of economic warfare.

In all reality, the US will probably just wait this out…unless a real threat to American security decides to try its luck.

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TRANSCIPT

Hey, everyone. Peter Zeihan here. Coming to you from the slightly less smoky Okanagan. Today we’re going to talk a little bit about Cuba. Specifically, there is news recently that the Chinese are maintaining a new listening post. That’s pretty much bullshit. It’s been there for years. In fact, the Biden administration came out a few days after the initial report said, yeah, it’s been there at least since 2019. Probably been there a little bit earlier.

Now, Cuba will always figure hot and heavy in American strategic planning because it controls the Straits of Florida in the Yucatan Straits, which command access to the Gulf of Mexico. And if, for whatever reason, the Greater Mississippi system could not trade with the rest of the world, that is the core of American power, capital generation and agriculture and energy. So kind of a big deal. And this is the reason why JFK almost got us into a nuclear war over the Cuban missile crisis back in the sixties because the Soviets were militarizing Cuba. Cuba itself certainly doesn’t have the military capacity to challenge the United States or to close the straits. But it could be a base for a hostile power from another hemisphere.

Of course, the conversation now is whether or not the Chinese are in that role. Not yet and probably not ever. The Chinese don’t have the ability to project power that sort of distance without, ironically, American assistance. So the only Chinese military base abroad, anywhere in the world is in Djibouti and it is only able to function there because the Americans basically indirectly help out with logistics and naval patrol.

So I’m not worried about that right now. That doesn’t mean that things with Cuba aren’t going to get interesting in the post-Cold War environment with the Russians no longer a significant factor in Havana. The question has been how long can Cuba last in this sort of environment? And there’s really two big paths that this could go. Number one is a diplomatic solution to the embargo and relations between the two. This is something that Barack Obama attempted sloppily and sophomorically, and ultimately was shot down by Congress. But the idea of bringing Cuba into the North American family, perhaps even into NAFTA, makes a lot of sense because the workers in Cuba are probably about a third as productive as Americans, but they work for 1/10 the cost. So it’d be a really good complement to what the Mexicans really need to industrialize more of their system right now. It would be a huge value add. Not to mention the boosts in agriculture and tourism. So some sort of negotiated deal makes a lot of sense, but we’d probably need a better negotiating team than what we had under Obama. But is literally every other president we’ve ever had. So, you know, don’t rule it out. It’s a political question on both sides. There just has to be willingness to work on it again. The second option is a more direct military option, which would include overthrowing the government or occupying it. And we’ve done that in the past, too, although not recently at the moment that is off the table. It would take a lot more provocation from the Cubans than hosting a listening post. They would have to actually accept more advanced military assistance and have a base. And the Chinese are simply not the power to do that. And the Russians no longer have the capacity either. So it would only happen if the United States president just woke up one day and said, you know what, let’s conquer Cuba. I don’t find that likely. And then between those two extremes, you get economic warfare. One of the things that we’ve discovered in a system that is as dysfunctional politically and economically as Cuba is, there are a lot of weak points. Probably the single biggest one is food. And that’s one of the reasons why when we had that proto deal with the Obama administration, that the United States used its agricultural surpluses as a way to induce the Cubans into making concessions. And it worked. The other one would be energy. The Cubans get almost all of their fuels from Venezuela. And so if you have a break in the Venezuelan system, all of a sudden the Cubans are high and dry and without fuel, diesel or power. So there’s a lot of ways that the Cuban system can kind of collapse under its own weight.

And as with everything with the United States, there is a belief in Washington accurately that we can outwait this problem. And unless we have some sort of acute challenge to American security, that’s just kind of the safest thing to do. It’s probably a good bet, but that doesn’t mean it’s going to last forever.

Alright, everyone, take care. See you next time.

North American Fires Cause a Smoky Start to Summer in the US

Let’s just say that our old friend Smokey Bear wouldn’t be too happy with the Canadians this past week. And these fires are likely only the beginning of a very long summer of low air quality.

We’re getting hit with the trifecta right now. Wildfires (which are as essential a part of BC’s natural ecosystem management as they are to California’s chaparral) in Northern Alberta and Eastern BC, fires (which happen very rarely) in Quebec and the Maritime provinces, and agricultural fires (yearly slash and burns) in Mexico. These are all large enough to cover a vast swath of the US with smoke individually; adding insult to injury, the smoke from multiple fires is overlapping at different elevations.

So can any of this be attributed to climate change? I’m going to say yes…because it’s only June. Some of these fires started in MAY. Barring an unprecedented wet summer, we’ll be dealing with this for months to come.

It may be time to upgrade those filtration systems if you haven’t already.

Prefer to read the transcript of the video? Click here

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TRANSCIPT

Hey everybody. Peter Zeihan here coming to you from cloudy Colorado. Today we’re going to talk about this horrible smoke that is hitting most of the country. Basically, if you are east of the front range, you’ll experience it in some way with particularly dense clusters in places like the American Northeast. I hate to say it, folks, but this is just going to be the beginning of a very, very, very long summer of low air quality.

We’ve got three things happening at the same time that have never happened together before. The first, which is something that happens every few years, is we’ve got forest fires in northern Alberta and northeastern British Columbia, which is generating a significant amount of smoke that is currently hitting the Great Plains in the Midwest. Second, and this is something that happens very rarely. We’re getting extensive fires in both Quebec and in Canada’s maritime provinces, which is generating most of the smoke that is hitting the American northeast. And then third, something we get every year is we’re at that part of the season where the Mexicans are doing a slash and burn preparation for certain types of fields. So we’ve got more smoke coming up from the south, which is primarily hitting Texas right now.

Anyway, all three of these are big enough that they have the potential to have a huge swath of coverage for the continent. And in a lot of cases, we’re seeing overlapping layers. Now, smoke and fire should not automatically translate into poor air quality because it really matters what the elevation is oftentimes. A few days after the smoke leaves the source of the fire, it drifts up. And when it does that, it still makes your skies kind of crappy. But you’re not dealing with those PMI issues because we’ve got three different sources in three different geographies. We’re getting smoke at multiple elevations, which is making it more of a problem. So really, all we’re waiting now for is for the Californians to have smoke, but luckily they have had the wettest year on record so far. So the chances of me going backpacking in Yosemite this year are very low. There’s still 40 feet of snow on the ground at high elevation. And so they’re probably going to have a relatively wet and therefore not fire filled summer.

For those of you who are concerned about climate change, is that part of this? I’m going to have to say yes for the simple reason that it’s only June and the Albertan and the Quebec fires, you know, started in May. We’ve never had wildfires on this scale this early in the season, which means barring some really atypical summer precipitation in the Great White North, we’re going to be dealing with this smoke and these fires all through June and July and August and September until we get snow. We learned that over and over and over again with the California fires. You basically have to wait for Christmas for this stuff to get put out completely. So if you haven’t put a filtering system for your home back in your Amazon cart, now might be the time. If you’re living in an apartment or you don’t have a traditional HVAC system. There are a number of models of standalone air filters. You might want to consider investing in those because this is going to be kind of a crappy summer if you are east of the front range. I can see the smoke from my neighborhood, but luckily the mountains are providing enough of a bulwark that I’m okay here. Of course I am going to Canada here in a few hours and then all bets are off.

Alright. That’s it for me. You guys take care. Stay safe.

How Will Donald Trump’s New Indictment(s) Impact the Election?

If reading the headlines gave you some major déjà vu…welcome to the club. Trump is getting hit with a series of new indictments, but will it impact the election?

For those who love their red hats, Trump can do no wrong. If you try to tell them otherwise, it’s either a plot or a conspiracy theory. And regardless, you can run for president from the comfort of your prison cell…so he’ll be alright.

But none of this matters anyways. Biden will take the independent vote since Trump threatened to take away their voice, allowing Biden to run (or slowly and carefully walk) off with the election.

As long as these two spring chickens can keep clucking until the election, we’re looking at a 2020 rematch with the same results. So you get a double dose of déjà vu today.

Prefer to read the transcript of the video? Click here

If you want a refresher on my original 2024 election prediction, watch this video first.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TRANSCIPT

Hey everybody. Peter Zeihan here coming to you from the world’s best 4th of July fireworks overlook. That’s the Denver skyline there behind me. Today, we’re going to talk about all of the new indictments of Donald Trump. A lot of people have written in, asking what sort of impact this is going to have on the election. And the short answer is not a bit.

Just to give you a quick review of how I see things going. Donald Trump is so solid with his base that he’s going to get the nomination. There’s no way around that. And Joe Biden has been the – what’s the best way to put this – Independents have thrown in for the Democrats. The independents think that the Democratic positions in the administration are really hurting them economically, but they’re so opposed to what the MAGA Republicans want to do with the general election because it would gut their ability to have any influence on the country at all. So their hearts are definitely against the Democrats, but they’re voting for them in number. And in that sort of situation, you’ve got 10% of the population who are the swing voters who all of a sudden are not. And that means we might even see Biden win places like Texas that only lost by a few percentage points last time around. It’s going to be wiped out anyway. This isn’t going to change that.

The indictments are not going to change that. First of all, there’s many coming. We’ve got the espionage one’s related to the documents. The issue that is different here between what Trump did and what everybody else who seems to be leaking these documents did is, number one, most of these are top tier security, national security issues.

Number two, they were unsecured. Number three, Trump was actually sharing with them with people. So, you know, I’m no national security lawyer, but that strikes me as a fairly open and shut case, which is why we’re seeing so many counts and it’s moving so quickly. Second, Eastman, what’s up? What was his first name? Can’t remember. Anyway, he was one of Trump’s lawyers back during the January six stuff, and he’s the guy who came up with the legal theories that have been proven wildly inaccurate in order to overturn the election. He is now in the process of getting disbarred. And if you look at the list of people who are testifying as part of that, there are people who were all close to the administration who haven’t spoken yet. So there’s probably some interesting bombshells, especially from Eastman himself, that are going to throw some more indictments, Trump’s way. But that doesn’t really matter. You can run for president from prison. There’s an open question about if you win, what happens? Let’s just say that the security issues would be complicated, but that doesn’t matter for Trump’s base. MAGA Republicans assume that anything that reflects badly on Trump is a plot or maybe even something to boast about. And Trump is now at the point where he’s so ensconced as a leader of a cult of personality that he could live stream the abortion of his trans lover and he would still get the nomination. Remember, in the Republican system, first past the post wins. You need one more vote than the other guy. And as soon as we had four people in the race with him, that meant that he couldn’t lose. And now we’ve got like eight or nine. In fact, Pence declaring for president the deal because it means that if you’re an evangelical and you want to take a moral stance, you know, you’ll vote for Pence. And that’s only going to be a few single digit of percentages, which means that the MAGA vote is going to be that much more potent for Trump. We’re in a position now where he if he gets 20% of the votes, he’s automatically the nomination. He’s probably gonna get twice that. So that doesn’t change at all.

And then on the other end, it doesn’t change at all. Because if you have a somebody or indictment or God forbid, a convicted felon running for president, that is going to sour for all moderates in the country, not to mention everyone who normally would try to stay on the sidelines. So we were already looking at a pretty big washout of Trump versus Biden. Round two. This just makes it that much more extreme.

Now, of course, this is all dependent upon two things. Number one, Joe Biden has to live until the election, not a non risk. And number two, Donald Trump has to live until the election. People like to point out that if Biden wins, he’ll be the oldest president we’ve ever had. And that is true. But if Trump wins, he will be the oldest elected president we’ve ever had. So, you know, we’re not exactly choosing between some spring chickens here.

Alright. That’s it for me. You guys take care.

Taiwan and the US Reach a Trade Deal

In mid-May, the US Trade Representative established a trade initiative with Taiwan. While this isn’t a full-blown trade deal, it represents the shift in US policy towards recognizing Taiwan as an independent country.

Taiwan is already an important trade partner for the US, so the economic rationale is there. You can also throw a check next to strategic reasoning, as keeping Taiwan out of Beijing’s grasp means access to critical military positioning for the US.

You can probably guess how the mainland feels about all this…but does that mean an invasion will happen? Unfortunately, I could see this going either way. It would be hard to imagine a world where Xi considers an attack a good idea, but who knows what will happen if everyone keeps drinking the CCP-Propaganda-Kool-Aid?

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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Australia Strikes a Greentech Deal with the US

There’s one massive hole we’ll need to fill if the green movement will ever work in the US…mineral resources. Thankfully we just struck a deal with our Aussie allies, who happen to have many of the key minerals and resources we need.

This deal will enable the Australians to contribute mineral resources to the American greentech industry in a way that will allow them to benefit from the incentives and subsidies in the Inflation Reduction Act (IRA).

While Australia is a significant producer of many necessary Greentech resources, it’s not a one-stop shop for everything. They’re also great at producing the raw ore, but the value add component isn’t their thing. Thanks to subsidies from the IRA, there will be an opportunity to bring value-add capabilities to the Outback.

But what about all the other US allies? Will they be able to tap into this deal? We must remember that there is an inner circle and an outer circle of allies…for now, only the inner circle gets to play.

Prefer to read the transcript of the video? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:
 
First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.
 
Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.
 
And then there’s you.
 
Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

CLICK HERE TO SUPPORT MEDSHARE’S UKRAINE FUND

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TRANSCIPT

Hey Peter Zeihan here coming to you from chilly Phoenix, where it’s a balmy 102 at ten in the morning. I don’t know how people do it. It’s only May. Anyway, back on May 20th or 21st, you’re gonna see this a few days later. The Americans strike a deal with the Australians that will allow the Australians to contribute their mineral resources to the American greentech industry in a way that they will benefit from the incentives and the subsidies that are part of the Inflation Reduction Act.

There’s a real hullabaloo of late about which countries can get access and which can’t, and Australia is a tight ally. It’s part of the inner circle and most importantly it has a preexisting free trade agreement with the United States. And so they are the source of roughly half of the world’s lithium. And they are a significant producer of rare earths and zinc and copper as well. So this definitely scratches a lot of it, just not all of them. They don’t do molybdenum, they don’t do silver or they don’t do a huge amount of bauxite, although they have some. No chromium. So, you know, it’s not like this is a one stop shop for everything The United States needs, but it’s a real big step in the right direction.

Kind of two follow on thoughts from here.Number one, while the Australians are great at producing the raw ore. They do very little value add themselves and one of the things that the IRA is attempting to do is to build up a parallel supply chain that’s independent from China for processing of these raw materials into metals and then on into intermediate products. Australia is a logical place for a lot of that. I mean, yes, Labor costs are high relative to other places in the world, but since the minerals are right there and the energy is cheap, especially if you want to do stuff with solar in the freaking outback, there’s a lot of upward potential. They just need the investment and a decision that they want to move up the value added chain and the IRA will probably help with that, now you’ll have some American Australian fusion projects that are located on both sides of the Pacific. The second thing are the countries that may be able to join the Australians in kind of this inner circle. The United States has a handful of free trade agreements. Obviously the most famous one is NAFTA, and obviously they already qualify for these incentives. But the U.S. also has trade deals with the Koreans and the Japanese and in the world to come. These are countries that are involved in manufacturing. They’re going to do one more and more processing in the value add for things like battery chassis themselves. And so it still needs to be negotiated, but it’s starting from a very strong position and we should expect those to join.

Who’s not going to join is the European Union. Getting a free trade deal with the European Union has always been something that on both sides of the Atlantic has been flirted with, but it’s never really gone anywhere. A lot of the European countries, most notably the French, are highly protectionist, and the idea of exposing themselves to the American market at all is just not something they are even willing to consider. But more importantly, Europe is in demographic collapse and they’ve simply run out of people who are under age 40, the folks who normally do the consumption. So the United States no longer has any sort of economic rationale for an economic partnership over the long term with Europe, because it would just mean that Europe would be product dumping on the Americans. Similar situation for Korea and Japan, but there’s a big strategic argument that these are allies that have to be kept close as part of maintaining a presence in the Asian theater. In the case of Europe, in many cases, it’s a little bit more of a problem than it’s worth. And while there are independent European powers like the Brits or maybe the Swedes or in the Poles, that may be worth it. If it’s all part of a network of the EU, then the cost is simply too high. So there’s definitely an inner circle and an outer circle among the allies. And when it comes to greentech, only the inner circle can play. Alright, that’s it. Everyone take care.