On 14 December 2022 Peter Zeihan gave a presentation at Iowa state university. Peter is a geopolitical strategist who briefs US Government agencies. This is a summary of his excellent presentation which can be seen on YouTube.
A strategic look at the Ukraine war
Roughly speaking, everybody in Russia lives in a strip from the top right - central Siberia (not many people) to the dark orange (most populated) area in central Europe.
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| Russian population distribution |
In this next map of Russia : Blue at the top is subarctic tundra no one lives there, the green wheatbelt overlays nicely with the well populated areas in the first map. Yellow is desert no one lives there. The red squiggle areas are natural barriers such as the Caspian sea and mountains.
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| Russia economy and climate |
The wheatbelt is generally poor quality land - the least productive wheat in the world due to weather - summers hot and dry or winter cold dry and windy. One wheat crop per year. Russian state income has never been sufficient to be able to afford a road network. Things have to move at scale by rail .
Invading Russia
Peter Zeihan says that Russia has been invaded many times. Every time that foreigners have made it to the green area, the Russians have never been able to drive them back. It is the weather that defeated enemies. So the only way Russians ever discovered that they can survive is to expand out in to the vulnerable areas and plug gaps shown as blue arrows. They controlled all these gaps until the soviet period ended. Since that time, Vladamir Putin's foreign policy has been about re- establishing that forward defensive perimeter.
So we have seen a series of wars by Russia: including...........
- Kazakhstan intervention
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| Reuters Kazak war report |
- Donbas War
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| Russia Donbas war from 2014 |
- Crimea annexed
- Russia Georgia war -
In the analysis given by Peter Zeihan, Putin is only about half way done. The question he says, has never been "will Russia stop before it has all of Ukraine?". Ukraine doesn't control the gaps. Ukraine is actually on the way to the gaps in Russia's defensive line. The question is how long will it take Russia to reposition after they have conquered Ukraine and go to the next line of countries which include Poland, Romania, Estonia, Lithuania and Latvia.
Now lets look at the areas occupied by Russia
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| Al Jazeera State of the war sep 2022 |
Russia has 3 times the borders and only half the population of USA. Zeihan's opinion is that the war was always going to happen because if the Russians don't forward position then they will die.
Nukes and the Russian military
In the first week of the Ukraine war people might recall a giant convoy of Russian Military vehicles coming from Belarus heading South to Kiev. On 4th day of the war the convoy stopped because they ran out of fuel. On day 7 the soldiers walked back to Belarus because they had no food. Nato observers thought Russia had forgotten how to fight a war. But for the Russians this is a battle for their existential survival which means nukes are on the table. This means that if a direct fight develops between Russia and Nato then there will be a nuclear exchange. So the decision was made very early in the war that the Russian military had to be destroyed here and now, forever, but without a single Nato soldier.
Kill on sight
The policy of the USA / Nato became that anything off the list of conventional weapons that the Ukrainian army can operate they can have. Nato has expanded the list by training Ukrainian troops in the use of more Nato weapons. At the same time , the Russians realised that Ukrainians are fighting back, and civilians are not welcoming them as liberators. So, Russia has dusted off an old strategy of destroying everything that stands in their path as they slowly advance. Civilians then flee, and anyone who stays and appears to be of fighting age will be killed on sight. Best guess is that 250,000 civillians have been killed and 1million (mostly children) shipped to Siberia.
Around Sept 2022, Ukraine recaptured the Northern city of Izium. They also captured more equipment in 36hrs than they had started the war with some 7months previously. The Russians started the war with 3000 transport trucks and they are now down to under 800. They have therefore been confiscating city buses in the Russian Federation to move artillery shells around the front.
Starve them out of Crimea
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| Crimean Canal |
In their history, Russia has not stopped fighting until losses amount to about half million men. Death toll at the moment is about 80 - 90,000. Ukraine, is destroying all supply trucks, and cut the rail connection, and at Kherson , they now have control of the sole water supply for Crimea. This puts 80% of food crops production in Crimea offline for 2023. There are 3 million ethnic Russians in Crimea and one way to win the war is by creating famine.
Economic situation
In his YouTube video at tape time 19min55secs Peter Zeihan looks at exports of Russia , Belarus, and Ukraine.
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| Exports |
- Aluminium: Russia gets Aluminium ore (bauxite) from Ireland and Australia (not for much longer!), and processes it for export.
- Titanium from Ukraine . Primary customer for these metals is Airbus Consortium which makes aviation parts in countries across Europe and UK. UK makes the wings and the engines for Airbus. UK wanted a free trade deal with USA and in return USA wanted UK to ditch Airbus and go with Boeing.
- Neon - used for semiconductor and microchip fabrication on computers and electronics around the world. Unfortunately, the Ukraine neon plants are craters in the ground. 80% of the world's supply of neon already gone.
- Potash and fertilizer nightmare - Russia is the single largest producer of potash and fertilizer as well as the largest producer of wheat. Already exports are down 33% . Much of the infrastructure is decades old and liable to break down. Zeihan expects ALL of the supply to go away. Read this nightmare
International shipping transport
Ships need Insurance to navigate through constrained waterways in to places like the Baltic Sea (North Russia) , or the Black Sea (South Russia) and to use ports. Main insurance is provided by the US, UK and Japan and they have all withdrawn insurance cover for Russian owned or flagged vessels. The map shows oil pipelines (green) and gas pipelines (red). So this causes obvious problems for Russia.
As a response the Russians have set up their own insurance . Also, supertankers cannot reach Russian Ports and so there is a raft of Chinese supertankers in international waters off Portugal with a shuttle service of smaller ships for oil and gas. this is a dangerous and risky process.
One issue is that Russian ships have to travel past many unfriendly countries to get to the chinese raft. There is an increased likelihood of any one of them messing with a Russian ship to put a spanner in the Russian works. it is half billion dollar payout for a wrecked supertanker .
If ships stop taking crude oil from Russian ports then pressure builds in the pipeline all the way back to the Siberian permafrost. It will freeze and expand and destroy the pipe. last time this happened it took western tech 10yrs to fix it.
Germany risks industrial collapse inside 24months
Germany has a fixed and inflexible infrastructure with 40% of its gas coming from Russia until in Oct 2022 someone blew it up. The gas and oil supported their petrochemical electrical and manufacturing industries. They have replaced the missing gas volume with marginal suppliers . So far it is lucky for them a mild winter and also reserves are currently full. But gas prices are 6 times what they were the day the war started and won't go down unless there is a new mainline supplier (nearest is Nigeria!).
Peter Zeihan says that German industry is shutting down: No longer forging steel, no longer making fertiliser, not smelting aluminum. They have already cut automotive industry by a third. Chemical company BASF is moving it's major industrial plant to Louisiana USA. At this rate the German industrial model will collapse inside 24months. Buy your BMW now - it'll be the last model!
China
BP in Eastern Siberia supplied 1.5million barrels to China. That has gone. The system of raft of ships off Portugal is not expected to last. China can only make low quality microchips and imports many high tech tools. US expertise has now gone along with tools & equipment. No tech for social monitoring, or for AI, or for the great firewall. With one executive order Biden killed the Chinese dream.
In china, all authority rests with Xi jinping. Chinese population has less protection to Covid due to severe imposed lockdowns. As a nation they are older and less healthy than rich western countries. Zeihan says don't rely on China for anything.
Finance and demographics
The magic happens around age 50yrs. Kids gone. Mortgage being paid down. Money invested in pensions or whatever. This money makes the investing world function. many are the wealthiest that they will ever be. Usually there are loads of children coming up behind you and a graph of ages / population looks like a pyramid. Usually rural farmer type people have more children as there is space and children provide free labour. If you live in a city with a small apartment then having a lot of children is more expensive and more difficult. The Nigerian graph is a typical of pre industrial populations of the past 4000yrs of recorded history.
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| Nigerian population pyramid |
Before 1945, if you had iron, coal, oil, and food you could expand an empire. If you didn't control those things you were most likely a colony. After 1945 the USA created globalisation and it's navy patrolled the world so that everyone could trade. All countries started to industrialise together (although not from same starting point)and people moved into cities and so had less kids.
Now, the so called "baby boomers" born around 1960 are the single biggest financial group ever , and there is a mass retirement and they are liquidating their funds all at the same time. because of this factor, the cost of capital is expected to go up by a factor of x5. Cost of labour will rise to as there will be fewer young workers. Peter Zeihan looks at other countries and sees a bleak demographic near future for China , Japan and Germany.
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| Bleak demographic outlook |
Energy
If you invest in fossil fuels, it takes 3 to 8 yrs to break even, and 5 - 15 to get payback. So around 2014, investors began taking more notice of Net Zero by 2040, and Environmental policies and started to think they wouldn't get a return on their money.
Till 2009 shale gas was very cheap in USA. Extremely high prices in Europe are likely for a decade.
With thanks to Peter Zeihan for his always interesting YouTube channel.