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Disunited Nations: The Scramble for Power in an Ungoverned World | Peter Zeihan February 25th, 2020

INTRODUCTION

Peter Zeihan is a geopolitical strategist, which is a fancy way of saying he helps people understand how the world works. Peter combines an expert understanding of demography, economics, energy, politics, technology, and security to help clients best prepare for an uncertain future. Over the course of his career, Peter has worked for the US State Department in Australia, the DC think tank community, and helped develop the analytical models for Stratfor, one of the world’s premier private intelligence companies. Peter founded his own firm — Zeihan on Geopolitics — in 2012 in order to provide a select group of clients with direct, custom analytical products. Today those clients represent a vast array of sectors including energy majors, financial institutions, business associations, agricultural interests, universities and the U.S. military. With a keen eye toward what will drive tomorrow’s headlines, his irreverent approach transforms topics that are normally dense and heavy into accessible, relevant takeaways for audiences of all types. Peter is a critically-acclaimed author whose first two books — The Accidental Superpower and The Absent Superpower — have been recommended by Mitt Romney, Fareed Zakaria and Ian Bremmer. His forthcoming third title, Disunited Nations: The Scramble for Power in an Ungoverned World will be available in March 2020.

WHY DO I CARE?

In his book “Disunited Nations,” Peter Zeihan outlines a future in which America has withdrawn from the world stage. According to Peter, the international world order that America helped bring about after the end of WWII and through the fall of the USSR has been in a slow-motion collapse since the Clinton administration. There’s nothing remarkable or controversial about Zeihan’s diagnosis. What is unique is the specificity and breadth with which he describes the world that will come after the end of the Order (the term Peter uses to refer to the American led global order).

For the rest of this section, I’m going to stop qualifying statements of opinion (Peter’s or mine), because much of what I have to say is not in much dispute. Where I believe that debate exists, I will make the point to separate opinions from facts:

“Disunited Nations” according to Zeihan, is about what happens when major powers decide they are better off competing instead of cooperating. It is a book about what happens when the global Order isn’t just falling apart but when many leaders feel their country will be

Thinking the future will look more like the year 2000 than the year 1900 has negative effects in almost every sphere of our lives. — Peter Zeihan

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better off tearing it down.” It looks at the rise of Trump and leaders like him. It thinks through Saudi Arabia and Iran’s competition to rule (or misrule) the Middle East. It looks at how we match farmers to hungry mouths, minerals to manufacturing, oil to gas tanks. Through these stories, two big ideas are kept in mind at all times: (1) Geography might not be destiny, but it is damn close. Most of us consistently misread economies and conflicts because we don’t take geography into account. For decades we’ve seen the world’s deep economic connections as a great strength; they are turning into weakness before our very eyes. The prosperity and security that people around the world experience today is a function of the Order. When it goes, so go those benefits. (2) “Disunited Nations is being published now in 2020, not a few years from now, because the world has run out of time. That moment of transition when the Order will come crashing down is almost upon us,” according to Peter. “The American alliance didn’t so much end history as freeze it in place…The W Bush administration abused the allies, the Obama administration ignored the allies, and the Trump administration insulted the allies. And so, America’s list of allies has shrunk from nearly everyone to the potentially useful to the obviously useful to the obviously loyal to those with little choice. In a world without America, the questions become: who will still benefit from some lingering connection to the Americans? And who can go it alone? … In a world without stability, the questions become: Who was most dependent upon the world that was and so will fall? And who was most restrained by the old Order and so will soar?”

“The security concerns of the past two decades were largely limited to terrorism, but the tools necessary to counter terror are radically different from those needed to protect agricultural supply chains. Fewer door-to-door searches, more sail-beyond-the-horizon navies. In a world of different scarcities and different tools, the questions become: Where will trade patterns hold and where will they collapse? Which ones are worth fighting over? Which tools will be brought to bear? Are we on the verge of a mess of overlapping and interlocking naval competitions for something as basic as the right to eat?” … “What do countries need to survive in a scrambled world? Who will shoot to get what they need? And who gets shot at?”

“It’ll be less like the messiness of the early 2000s or the raw potential of the 1950s, and more a disastrous combination of the battle royales and displacements of the 1870s against the economic

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backdrop of the 1930s. It will suck. A mad scramble for the scraps of the era just ending. Compared with the safety and wealth of the past several decades, it may seem like the literal end of the world. But the end of an era isn’t the same as the end of history. Something new is coming. Something that, historically speaking, is far more “normal” than anything the Americans created. Just keep in mind that “normal” is far from synonymous with “comfortable,” much less “favorable.”

“I’m going to argue that thinking the future will look more like the year 2000 than the year 1900 has

negative effects in almost every sphere of our lives. On a grand scale, many of us are betting on the wrong horses. France will lead the new Europe, not German. We should be worried about Saudi Arabia, not Iran. We should be thinking about how to remedy mass starvation in China, not counter their economic and military clout. … The United States will retain—by far—more power than any player, past or present.”

THE EMERGENCE OF “THE ORDER”

According to Peter, national success requires achieving both continuity and economies of scale. For most of human history, nations that can achieve both become empires. Indeed, for thousands of years, empire was the norm. That is, until technology become so efficient that wars between empires tore the world to shreds. Two technologies in particular—Deepwater navigation and industrialization—enabled all the empires to engage one another everywhere at the same time. The resulting ultimate, inevitable, catastrophic, system-ending conflict was the most deadly, destructive war in history. We know it more commonly as the Second World War. It set the stage for something fundamentally new. When it was over, the Americans went from having the world’s simplest geography in terms of security and wealth, to occupying—and needing to protect—its most complex. At the war’s end, the United States floated what was indisputably the most powerful navy in history, while simultaneously the assets of nearly all other historical naval powers—the Japanese, Russian, French, German, Dutch, and Italian—were busy serving as the foundation for new reefs. The single exception of significance, the British Navy, was reduced to acting as an American adjunct.

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The American proposition to its potential allies under the new Order was simple enough: Side with us against the Soviets and we will use our military might to protect you, our economic might to subsidize you, and provide you with everything every empire through history has ever fought for. All free of charge. For the first time in history, geography was put on hold. The United States guaranteed the safety and security of not only its allies, but the imports, exports, and supply lines of everyone.

One of the most surprising facts of this period in American history is that despite being the primary guarantors of this new political and economic Order, Americans were not its primary beneficiaries. Instead, the Americans in their splendid isolation more or less kept their continent-size economy to themselves. As a result, the United States today remains the least integrated major economy on earth. This cannot be said for most of the rest of the world’s nations, least of all China.

(1) The regions that have benefited most from the Order’s security and structure are the regions

that either produce or consume the world’s internationally traded crude oil (the former Soviet Union and the Persian Gulf are the producers, while Europe and Northeast Asia are the consumers). (2) A close second for topics of concern are foodstuffs. Without the Order, much of the global gains in health, nutrition, and calorie intake melt away. (3) Not to be outdone, most of the world’s raw materials—whether iron ore or bauxite or lithium or copper—are produced on one continent, processed on another, and consumed yet somewhere else. Even minor interruptions to global shipping will collapse the availability of the base materials upon which modern life has been built. In Europe, this will all take a neo-imperial form as the former imperial powers will have little choice but to venture back into the lands of their old empires to secure resources. In east Asia, a sprawling, multi-sided conflict for control of sea lanes is more likely. The Persian Gulf is likely to be on the receiving end of both efforts even before local strategic competitions contribute their own fuel to the building fire. It all leads to more or less the same place, according to Zeihan: the beginning of the fourth age, a global Disorder in a world without American over-watch.

Signs the Order Wasn’t as Stable as We Thought — Q: What were the events that highlighted

American disenchantment with the Bretton Woods Order in the beginning of the 21st century? Q:

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Why are they important? (Chinese fighter jet collision with EP-3 spy plane, 9/11 attacks, & 2002 launch of the Euro)

The Biggest Beneficiaries of the Order — Q: What are the regions that have benefited most from the Order’s security and structure?

WHAT IT TAKES TO RULE THE WORLD: THE AMERICAN & BRITISH MODELS

1. Ensure Physical Security for All 2. Ensure Maritime Security for All 3. Offer Unfettered Market Access

4. Floating a Global Currency

How Does China Stack Up? — Q: How does any would-be competitor, say China, look when you run them through the above four checkpoints?

HOW TO BE A SUCCESSFUL COUNTRY

Territorial Viability — The important components that make a territory viable and defendable are a function of some of the following: Internal Water Transport, Plains, Temperate Climate Zones,

Coastlines, & Frontiers. Q: What are some examples of countries with a good mix of these and countries with a poor mix of them? Q: How does a country like China stack-up here?

Agricultural Capacity — When it comes to issues of national survival and expansion, not all crops are created equal. Bedrock nutrition products provide calories and protein and can be stored for at least a year. The chief row crops from which most people get most of their calories—wheat, rice, corn, and soy—top the list. Also included are pulses and legumes and tubers—everything from potatoes and yams to lentils and chickpeas. What these critical foods have in common is that they grow best on flatlands in temperate climes to keep output-per-acre high and cost-per-output low. These simple requirements eliminate well over three-quarters of the world’s land area from serious contention as

1. An Unassailable Strategic Position

2. A Potent, Flexible Navy

3. A Massive Technological Advantage

4. Floating a Global Currency

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breadbaskets. The American Midwest is the largest chunk of high-quality, temperate zone, arable agriculture on the planet. In any given year, the Americans typically grow about 35% more calories than they consume. China does not have anything like this type of bounty. (1) China’s margin of error starts razor thin, and not only because its lands are below subpar. One downside of china’s massive population is that the country has less farmland per person than Saudi Arabia. (2) As China’s population urbanized under the Order, much of country’s good(ish) farmland was paved over, pushing Chinese farmers farther inland into ever more marginal territories, which require more and more inputs to produce the same amount of foodstuffs. When the Chinese financial system cracks, not only with China face a subprime-style crisis in every economic sector simultaneously, but it will also face famine—even if nothing goes wrong externally. (3) It appears China has sufficient oil and natural gas production to maintain domestic production of its fertilizer and fuel needs for its agricultural sector. However, in a constrained import environment—such as problems in the Middle East—the Chinese will have to choose what they will let go of. Electricity? Motor fuels? Fertilizer? (4) China is the world’s largest importer of important foodstuffs like rice, barley, daily, beef, pork, fresh berries, and frozen fish by the tonnage. The importation of those foodstuffs becomes much more difficult and variable in a multipolar world without America patrolling the sea-lanes.

Demographic Structure — As of 1800, over 80 percent of Americans and Europeans lived on the farm. Now less than 2 percent of them do. The ratio of children, to adults, to mature adults, to elders

has gone from a perennial 4:3:2:1 to 1:2:2:1. Q: What are some of the countries with the best demographics. Q: What are some of the countries with the worst demographics? Q: How does this impact their viability (both in terms of economic output, financially, politically, and culturally)?

Energy Access — The sources of energy have changed over the last two-hundred years, but the need for energy has only grown as populations have roughly quintupled in size since the beginning of the 20th century. The rules based international order has allowed countries that need energy to source from those that have the capacity to produce it and/or refine it. In a world tending towards disorder, this is going to become a problem, and there are a few fixes that Zeihan highlights. (1) The first has to do with the ugly sister of the fossil fuel family: coal. This is the simplest, but also dirtiest solution that comes with both environmental and political costs. (2) The second deals with non-conventional, technologically advanced ways of extracting oil and natural-gas deposits (e.g. shale). (3) The third encompasses what we typically think of as “green energy,” though Peter seems to focus on wind and

solar, not nuclear. Q: How important is energy access? Q: Where does it rank among other resources? Q: What are the options for some of the different countries? Q: How big of a role will “green energy” play and who can do it best? Q: Why did you not write about nuclear? Q: How difficult will it be to source energy for countries that are short it and how big of a driver will this be for global conflict?

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CHINA’S REPORT CARD

According to Zeihan, when it comes to checking the boxes of “what makes a successful country,” China “fails on all counts.” Strategically, the First Island Chain is the real Great Wall, only it boxes China in rather than protecting it. Demographically, China is in a state of not-so-slow-motion collapse. China’s import-sourced, export-oriented economic model does not work without outside support and absolute security of the seas, yet China does not control end markets, resource sourcing, or even approaches to its ports. China cannot feed itself without imported material, either foodstuffs directly or the inputs required for China to grow and raise its own. China’s internal politics and financial system are borderline explosive even in the best of times. It is powerless to defend or maintain the Order upon which its economic existence and political cohesion is predicated. This analysis leads Peter to conclude that “China will suffer a cataclysmic flameout every bit as impressive as its rise to power.” The only question is when.

Borders — Vast empty to the west, jungles to the south, nuclear powers to the north and southwest, and superior maritime powers to the est. China doesn’t so much secure its borders as manage them the best it can. Q: What are the challenges that China faces with its boarders? Q: How has this problem manifested historically?

Resources — China didn’t get really serious about industrializing until the 1907s, so its local resources were all tapped more or less at once. That served China well … until now. China is on the verge of running out—of everything. Q: What is the relationship between China’s resource needs and its ability to source them, both domestically and through supply chains that it either controls or that it can secure independently? Q: How will this impact the country and its governing party (the CCP) political in the next decade or two?

Demography — Breakneck urbanization combined with Maoist population controls gutted the Chinese birthrate for decades. The one bright spot is that China’s demographics are not the worst in the world. Yet… Q: How bad are China’s demographics when compared to Germany or Japan? Q: How bad are they in the context of their specific growth model, their internal debt numbers, and their energy and consumption needs?

Military Might — China is BIG, and its military is modernizing quickly, but that doesn’t mean its military is well suited to the challenges of the day. Or tomorrow. Q: What challenges does China’s military face? Q: Where is it better suited and where does it fall short? (e.g. blue water navy)

Diplomatic Relations — Only Russia has worse relations with its neighbors. When the Order ends, everything that has made China successful will end with it and no one will reach out with a helping hand. Q: What type of relationships and good will has China cultivated with its neighbors, as well as with oil and gas producing partners in the Gulf?

Outlook — Q: What is your overall outlook for China?

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JAPAN’S REPORT CARD

Zeihan’s outlook for the future of Japan seems to be based mainly on the country sporting what is arguably the second most capable navy in the world, coupled with the cultural DNA of a great maritime power able to yield it effectively in the coming disorder. Fears of the emergence of a new Japanese empire are not unwarranted, but there are reasons to view it as a very distant concern, according to Zeihan. While contemporary Japan’s technological advantage over its new partners is towering, none of the nations the Japanese will interface with are preindustrial, so there will be no absolute rollovers. Nor can Japan’s aged and aging demography support the sort of large expeditionary army required to bring the region to heel in a manner that still enables large-scale resource extraction. Simply put, the Japanese need local buy-in. It’s easier and better to secure that with trade and money and tech than bullets and bombs and troops. Just because no one can replace or replicate the American’s global Order doesn’t mean that a potent regional power couldn’t make a less holistic version of in its own neighborhood. It’s also important to note that few countries on Earth have as positive a relationship with all sides of the Persian Gulf as Japan does. Regardless of how China’s fall and Japan’s rise manifest, the Japanese still must ensure sanctity of supply, both for themselves as well as for anyone they wish to be in their orbit. Without the United States protecting these important supply chains, the Persian Gulf is about to become a Japanese problem.

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Borders — Japan’s island geography provides covetable standoff distance from the region’s major land power, China. But the archipelagic nature of Japan has made intraregional connectivity costly and difficult. Q: How important is Japan’s geography in relation to every other part of this report card and how does it factor into your outlook for the island nation?

Resources — The most resource-poor of the world’s major powers, Japan is also located at the very end of several major supply lines. The Japanese import nearly all their energy. No potent navy, no modernized Japan. Q: Can you tell us what Japan’s resource needs are relative to what it can produce for itself? Q: Does this lack of resources partly account for its aggressive imperial posture over the centuries? Q: Does this highlight just how transformational a powerful navy can be?

Demography — It’s not just the monarchy of Japan that’s the world’s oldest. Japan’s population is also aging, with 28 percent over age sixty-five. Q: How bad are Japan’s demographics? Q: Would you consider them to be the worst in the world? Q: How can a country with such bad demographics become a regional hegemon? Q: How will the country’s demography change and what will make up for it in the meanwhile? (e.g. technology)

Military Might — On paper, Japan doesn’t have a military. In reality, they are close training partners with the United States military and possess the most capable indigenous navy in Asia, arguably the second best in the world. Q: Just how powerful is Japan’s navy? Q: What is their military status or capability?

Economy — Japan was once one of the most globally exposed industrial economies, but Japan has been in the rare position of having the capital to face its challenges head-on. The Japanese have invested heavily in automation to offset a shrinking labor pool and have moved much of their supply chains offshore. Q: If Japan’s supply chains are located mainly off-shore, doesn’t this put them in a vulnerable position? Q: How important is automation to Japan’s future and will the end of the Order combined with the country’s horrible demographics only accelerate their investments in this area?

Outlook — Q: What is your overall outlook for Japan?

RUSSIA’S REPORT CARD

Zeihan’s outlook for Russia seems to be informed largely by its poor demography and indefensible and unnavigable terrain. In his estimation, the country’s rise over the last couple of decades can be largely accounted for by a surge in oil prices, which dominated the first half of the 21st century and Putin playing a bad hand brilliantly in the second half.

Borders — Russia’s borders are long and impossible to defend, prompting the Russians to endlessly expand outward until they hit significant geographic or military resistance. Q: How have Russia’s borders and frontiers played a prominent role in carving out the country’s historical, national, and cultural progression? Q: How

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will Russia’s boarder geography define its future? (e.g. where will it feel most insecure and therefore move towards) Q: How will Russia’s internal geography impact the country’s economic future?

Resources — Russia is a huge producer of oil and natural gas, and its vast geographies sustain massive mining and even more massive grain production. Much of this activity is seasonal; most Russian territory vacillates between frozen and swampy. Q: Russia huge huge oil and gas reserves, but how will its geography impact its ability to provide those resources to itself and the world in a way that remains cost-competitive? Q: What raw materials will Russia be sort of that it will need to source from others?

Demography — The horrific Soviet legacy and the post-Soviet birth-rate collapse have fused with skyrocketing mortality fueled by alcoholism, heart disease, violence, tuberculosis, and HIV. Russia is suffering through a complete, multivector, unstoppable demographic collapse. Q: How bad are Russia’s demographics? Q: What are both the economic, as well as the political (changing make-up of the population) consequences of this?

Military Might — Russia still invests heavily in defense, though much of that hardware is showing its age. Soviet-era submarines and aircraft carriers that habitually catches fire, but impressive tanks and aircraft and the world’s largest nuclear arsenal—Russia’s kit may be old, but it still packs a punch. Q: Given the age of much of Russia’s military hardware, what is the practical benefit of or use for its military? Q: How can Russia generate a return on its military investment in the decades to come? Q: How will its military be put to use?

Economy — Sanctions and an overreliance on commodity exports have made Russia struggle since the Soviet fall, but Russian geography never supported a successful, industrialized economy. Q: How bad is Russia’s economy? Q: Where is their hope for the country’s future beyond raw material exports in a world where trade breaks down?

Outlook — Q: What is your overall outlook for Russia? Q: What are the biggest risks/challenges facing the country?

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GERMANY’S REPORT CARD

Unlike Russia’s chronic problems, which lead back to its terrible geography, Germany’s issues stem from the opposite: from an economic point of view, Germany’s geography is too good. Germany’s river-footprints grant it the best economic access of any territory in Europe—arguably of any territory in the world. The problem for Germany is that its lands are traditionally both Europe’s richest lands and their most separated. The lands at Germany’s edges are its core territories, and historically, more consolidated European powers have had an easy time taking what they want from the Germans. Contemporary Germany’s biggest problem, however, is not its geography but its demographics. With the exception of the Lebensraum era and a brief baby-boom between 1955-1965, German reproductive rates have been edging down for sixteen decades and are now far past terminal. The nearly childless German Baby Boomer generation enters mass retirement in the 2020’s, cursing contemporary Germany with a collapse in productive capacity, a collapse in tax receipts, a collapse in consumption, and an explosion of state outlays for pensions and health care. There is never a good time to have a terminal demography, but contemporary European economic trends argue for now being among the worst. Germany has been heavily reliant on exports in order to fuel its income growth. Its relatively high savings rate has been a source of cheap financing for European neighbors, which has put the country’s (and the continent’s) banking system in a place of impairment. This is not a good time for any of Europe’s members, and most certainly not for its single largest creditor.

With the American abdication of responsibility for European security, the dream of a united Europe dies with it. Europe is a region of military pygmies who face pressing military challenges. A region suffering demographic implosion, unable to absorb immigrants. A region peppered with xenophobes who cannot control their borders. A region rumbling with environmentalists who cannot generate green power. A region facing a banking crisis that lacks the means of even defining the problem, much less rectifying it. A region that has largely outsourced its relationships with its nearest neighbors of significance—Turkey and Russia—to the departing Americans. A region whose most coherent economic, financial, and military power—the United Kingdom—has left. Europe now faces simultaneous, interlocking crises: currency, finance, banking, monetary policy, supply chains, inequality, migration, oil, natural gas, electricity, demographics, consumption, exports, imports, Libya, Syria, Turkey, Russia. For Germany, the specter of conflict with Russia will loom large once again. Whether it takes the form of collaboration or confrontation on any given day, in their death throes Berlin and Moscow will only have eyes for each other and those unfortunate enough to be caught in the line of their gaze. According to Zeihan, such a grand strategic distraction is a wondrous opportunity for many, but for none more than the country that will define Europe for the next century: France.

Borders — There are few significant buffers between Germany and its western, eastern, and northern neighbors. Q: Why do you say that Germany’s geography is “too good?” Q: What is it about its river systems and its borderlands that give it such economic advantages, but which also make it so highly coveted by its neighbors and difficult to defend against invasion?

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Resources — The greatest concentration of wealth-generating navigable internal waterways in the world, the most efficient manufacturing and production systems in the world, and the best trained labor force in the world. But jack for actual physical resources. Q: What are Germany’s resource needs in its current economic form, where does it source those resources from, and how will those resource needs drive its foreign policy and alliance structure in the decades to come?

Demography — One of the grayest and fastest graying populations in the world, Germany’s population is too old to consume the goods its industrial sector produces, creating a dependency on exports. Q: How will Germany’s demographics impact it economically, financially, and politically in the years to come? Q: Can we expect to see the rise of more right-wing, populist, or even fascist governments?

Military Might — Germany makes excellent tanks, diesel submarines, and electronic surveillance equipment. Unfortunately for Germany (but not Poland or Belgium or anyone else), decades of reliance on NATO and being hamstrung by the Second World War and the Cold War have left it a paper panzer. Q: What is the state of Germany’s military and military culture? Q: What can we expect in terms of a reconstitution of its military, how will that be perceived by its neighbors, and what impact will the remilitarization of Germany have?

Economy — The entire German economy is predicated on leveraging its manufacturing sector to push high-quality exported goods to a globalized consumer base. In a post-Order world this will not work at all. Q: What happens to the German export-led-growth model in a world where trade breaks down?

Outlook — Q: What is your overall outlook for the German model in the decades to come?

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FRANCE’S REPORT CARD

France never fully took to the global Order, never really taking advantage of the economic opportunities afforded to it (e.g. specialization and total reliance on America for security and multi-lateral negotiations). Without that same Order, the current French economic model is one of the few systems that will still work. In that sense, France is emerging as the only significant European power with a sustainable domestic system and no strategic entanglements, leaving it free to shape Europe in its own image—and perhaps do the same in lands beyond.

Borders — France is the sole country on the Northern European Plain to have meaningful geographic boundaries: the Pyrenees, the Alps, the North and Mediterranean Seas, and the Belgian Gap. Q: What advantages does France’s geography present it in a disorderly world?

Resources — The French have almost as good a riverine transport network as Germany, but it is in agriculture where France truly shines. The variety of microclimates makes France a world-class agricultural producer and exporter. Q: What are France’s resource needs and how does its position as an agricultural producer and exporter help? Q: Where can France expect to sell its exports while being able to secure trade between its partners? (France’s rational for CAP looks prescient)

Demography — The French boast the healthiest demography of industrialized Europe, but unassimilated immigration from sub-Saharan Africa and the Arab world is a growing issue that will soon reach critical mass. Q: What are the pros and cons of France’s demographic makeup? Q: Is there a multi-cultural mess brewing in the country and how is this going to impact France’s ability

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to operate an effective foreign policy if it is dealing with disunion at home? Q: What does this mean politically in terms of the types of parties we can expect to emerge?

Military Might — Paris learned its lessons during the World Wars, primarily to trust no one. The French maintain a military independent of NATO, an economy separate from the EU, and their very own nuclear deterrent. Q: What is the state of France’s military? Q: How strong and modern are its land, sea, air, and cyber capabilities? Q: Where and in the service of what can we expect them to deploy them effectively? Q: Where will these forces be less effective or not be able to deter other state actors like Turkey?

Economy — France is a significant producer of both agricultural and industrial goods, making it perhaps the most difficult EU member to negotiate trade deals with. While not an industrial producer on par with Germany (who is?), the French can make or grow most anything they need at home. Q: What makes France’s economy so well-suited for the coming disorder? Q: How will France’s economy look in a decade or two?

Outlook — Q: Is this finally France’s time to rule Europe?

IRAN’S REPORT CARD

The Iranians have won the Middle East in large part because of American security commitments there. Now with the Americans leaving, it would seem the Iranians just have some mopping up to do before consolidating themselves as the regional superpower. That is, unless the Saudi’s have something to say about it…

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Borders — Iran is an arid, mountainous country surrounded by deserts and even more mountains. Invading Iran is therefore damnably difficult, but the same things that protect Iran also tend to stymie expansion. Q: What makes Iran’s geography so defensible, while also making it difficult for the country to expand its boarders’ outwards?

Resources — Iran’s mountains hold mining potential, but for over a century it’s been all about an overdependence on oil, oil, oil. Q: What opportunities are afforded to Iran on account of its abundant oil reserves? Q: How much of the value chain from the earliest stages of production to delivery does Iran control, and how does that impact its ability to capitalize on its oil bounty? Q: What are Iran’s other resource needs and how will it try and source them? Q: Does the country have the capacity to feed its citizenry from within its own agricultural production?

Demography — Iran’s population is the largest in the Persian Gulf region, but a crash in birthrates after the Revolution makes Iranians much older than their peer Gulf Arab populations. Q: What impact will Iran’s demographics have on its quest to dominate the region as a hegemon?

Military Might — Iran has not one but two armies. Both are fiercely loyal to the country’s ruling elite, outfitted with primarily reworked Soviet materiel, and are as likely to fire on domestic agitators as external armies. Q: How strong is Iran’s military relative to other regional players, including Turkey? Q: How effective can Iran be in protecting its critical infrastructure and immediate seaways?

Economy — Oil exports form the country’s export basis, distantly followed by low-grade industrial and agricultural products such as cheap steel, dates, pistachios, and carpets. All are subject to one of the strongest sanctions’ regimes in history. The economy is struggling. Q: How does Iran’s economy look/perform in a disorderly world?

Outlook — Q: How does Iran fair in a world where it has finally gotten what it wants (expulsion of the American Satin)?

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SAUDI ARABIA’S REPORT CARD

The Saudi’s may arguably be the greatest beneficiaries of the Global Order. The country’s royal family cannot risk having a normal military or a professional class for fear of overthrow. It must import vast amounts of labor on temporary contracts to run its economy, applying liberal doses of violence to the unskilled and a steady stream of bribes to the skilled to keep its foreign workers in line. There are only two reasons why anyone in the contemporary age deals with the Saudis: oil and a façade of civility. The murder of Jamal Khashoggi in October 2018 put a stake through the second one. Still, oil is a powerful currency in any world, but especially one where it becomes more expensive to source. Saudi Arabia will try and use this valuable resource to try and find a new sponsor to guarantee its security. Turkey is one option, but the Saudis view the Turks as less a savior and more a problem on the horizon. This leaves Israel as the second, and perhaps much more reliable option. But Israel cannot replace the Americans, which. Means that the Saudi’s will have to do more to build up their own defense capabilities. Most importantly, perhaps, the Saudi’s don’t care if they win the Middle East so long as Iran loses it. The bulk of the Saudi national defense strategy is to avoid having to fight a real war but instead to burn down civilization anywhere Iranian power touches, working from the reasonable understanding that an Iran under siege from all points is one that cannot march across the desert to confront the House of Saud. The most likely outcome is a sort of horrific stalemate, as the foundations of civilization throughout the Middle East burn away, leading to outbreaks of famine, civil collapse, vast refugee flows, and unprecedented depopulation—most notably in Afghanistan, Iraq, Jordan, Lebanon, Syria, and Yemen. It will be very loud and very messy, yet with the whole region either on fire or smoldering, the region as a whole becomes surprisingly undynamic. Saudi Arabia and Iran will only have eyes for each other for some time to come, which means neither is the real power broker.

Borders — Vast expanses of sand, some scraggly mountains, and shallow local seas … but mostly just the sand. Moving tanks or soldiers or supplies in and out of most of the Arabian Peninsula is extremely difficult. Q: What is Saudi Arabia’s geography like and how can it be used to their benefit?

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Resources — Oil. Jihad. Sand. Q: We know that Saudi Arabia is one of the world’s largest and lowest cost oil producers, but what might most people miss about where or how that resource might be vulnerable?

Demography — Like much of the Persian Gulf, the explosion of oil income in the latter half of the twentieth century enabled mass subsidies and a flood of foreign workers to do all the work, freeing the Saudis to reproduce in air conditioning. During the past two decades, however, the economy has stalled somewhat, taking birthrates down with it. Q: Saudi Arabia’s demographics aren’t really a problem, but what about its reliance on foreign labor? Q: Is this an issue?

Military Might — Saudi Arabia is one of the largest buyers of military equipment in the world, but much of it is operated by veterans of foreign militaries such as those of Pakistan and Egypt. Q: How problematic is it for Saudi Arabia that it relies on foreigners for so much, including in order to operate its military? Q: How might the Saudi military be deployed in the coming decades and how capable is it?

Economy — Oil sales make up seventy percent of state revenues. Q: Is there any plan at all to move Saudi Arabia away from oil or is this a country whose geography is so pitiful that once the oil runs out, so will the people?

Outlook — Q: How will Saudi Arabia fair in a world where America is no longer its security guarantor?

TURKEY’S REPORT CARD

With the exception of the United States and Argentina, there is no country that Zeihan seems more bullish on than Turkey. That said, Turkey also seems to have the most complicated trajectory of any of the country’s that will do well in the coming disorder. We could see a reconstitution of the Ottoman Empire (albeit under different conditions and boundaries) or we could see Turkey become embroiled in a deteriorating security environment on its eastern boarders with the conflagration of

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the Middle East. The choices for Turkey are numerous. It can move northwest into Bulgaria and Romania, while also biting into parts of Greek Komotini. It can go north, through the Black Sea into Ukraine and the surrounding caucuses. It can turn southeastward towards Iraq and Syria. It can make a play for the eastern Mediterranean, turning the Aegean islands of Greece into a maritime buffer against any western (France, perhaps?) challengers. Lastly, it can go for broke and try and make a play for Eastern Anatolia and the Azerbaijani regions of Iran. As a citizen of Greece, I’m very concerned about any forays by Turkey into the eastern Mediterranean. The ideal scenario, for anyone who shares my concerns, would be to see Turkey get bogged down in Syria for the foreseeable future.

Borders — Turkey itself is a mountainous peninsula that typifies an ugly house in a gorgeous

neighborhood: Turkey bridges Europe and Asia, the Mediterranean and the Middle East, Russia and the West. Q: What advantages and disadvantages has Turkey’s geography granted it in Ottoman days as an imperial juggernaut? Q: Where does it feel most emboldened and where is it most vulnerable?

Resources — Bad coal, the best agricultural lands in the Middle East, but above all else the ability to control maritime trade between the Mediterranean and the Black Sea, and land trade between Europe and southwestern Asia. Q: What are Turkey’s most important resources and how can it best protect and exploit them?

Demography — Turkey has a stable, relatively young population. Great for consumption-led growth and a future capital-and-trade-driven move up the value chain. Also good for political protests. Q: How much of a boon is Turkey’s demographic profile?

Military Might — Turkey has the most capable army in Europe and the Middle East. Despite the military’s recent political weakening under the imposition of civilian authority, it retains plenty of pep to deal with any immediate neighbors. Q: How powerful is the Turkish military when compared to its European and Arabian neighbors, including its Persian competitor, Iran? Q: How effective can the Greek air force be in stemming off a Turkish invasion or annexation of its Aegean theater? Q:

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Will France or Russia find it in their interests to assist Greece with weapons and other diplomatic and military support?

Economy — The Turkish economy has languished in recent years under extremely inexpert political intrusion into the country’s economic systems, but the country’s position and population structure make it a growing manufacturing hub as well as the bright spot for the region’s future. Q: What is the future of Turkey’s economy? Q: How might its economy or economic make-up change in a disorderly world?

Outlook — Q: What is the future of Turkey and how will its ambitions shape the policies and lives of its neighbors?

ARGENTINA’S REPORT CARD

Argentina is one of my most favorite countries on the planet. I spent three weeks touring it from Buenos Aires all the way down to Ushuaia, with a stop in Patagonia to do a bit of trekking on Perito Moreno. Its landscape is magisterial, and Zeihan devotes a large amount of his chapter on it. In his estimation, there are one of two scenarios that could play out for the Argentines. In option one, Argentina’s new government’s policies stick, and Buenos Aires unwinds many of the crippling impacts of Peronism. In such a circumstance, Argentina’s underlying features shine through, and it becomes a continental—a global—success story in a decade or two. In option two, Peronism returns, and the Argentine economy once again goes statist and inefficient and self-destructive. Investment would lag, and general degradation would return. But even then, Argentina has a near-perfect demographic profile which is rare. It has resource wealth, which is rare. It has a dreamy geography, which is exceedingly rare. Most of all, the Argentines simply have a lot more hands-on experience operating in a world ruled by dysfunction and populism and conflict than anyone else. Argentina might not shine, but it would still look better than nearly every other country in the world.

Borders — Argentina enjoys some of the most secure geography on the planet. The Andes to the west, and the Atlantic to the east, the only thing coming for Argentina are the Argentines themselves. Q: What is so “dreamy,” as you put it, about the geography and topography of Argentina?

Resources — Argentina boasts a near-dizzying array of mineral and agricultural wealth. It is a leading producer of beef, grain, soy, silver, copper, wine, oil, and natural gas. Q: Can you help us understand just how resource rich Argentina is? Q: What will it take for Argentina to reasonably exploit this bounty? Q: What sort of capital investment will the country need and where can it get that capital from? Q: Is the country fully self-sufficient? Q: What can we expect in terms of the exploitation of its shale oil and gas deposits?

Demography — Unlike neighboring Brazil, Argentina enjoys a relatively young and healthy demographic profile (mass subsidies make babies). Q: What does Argentina’s demography look like, both in terms of its age but also its racial and ethnographic make-up? Q: How big of a problem is wealth and income disparity in Argentina relative to its neighbors?

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Military Might — A history of coups, mismanagement, and deliberate demilitarization makes the argentine military a bit of a joke. But Argentina’s safe frontiers and lackluster local competitors make military might unnecessary. Q: What accounts for the country’s strong sense of national identity and how does that compare to its neighbors?

Economy — Argentina’s economy is a textbook example, literally, of how political decisions can stymie even near-perfect geographic advantages. A unique, indigenous mix of nationalist-socialist-fascist policies have resulted in waves of massive inflation, capital flight, sovereign debt defaults … and yet, Argentina’s future remains bright. Q: Can you give me the best and worst case scenarios for what Argentina’s economy will look and feel like for someone who lives in BA in the year 2040?

Outlook — Q: Compared to Turkey, France, the United States, and Japan, where does Argentina fall on the list of countries you are bullish on?

BRAZIL’S REPORT CARD

Brazil faces neither the broadscale collapse of China nor the demographic implosion of Russia nor the economic and security catastrophe awaiting Germany. Brazil will look and feel and act different, and most of those differences will not be for the better, but this isn’t the end of history for the Brazilians. (1) The Brazilian system has gotten better, particularly in agriculture. (2) Brazil isn’t in the Eastern Hemisphere but instead safely inside America’s Monroe Doctrine. (3) While the cheap, easily securable financing that enabled Brazil to become a qualified success under the Order is gone, that is not the same thing as saying that no financing will be available.

Borders — Jungles and mountains largely insulate Brazil from its neighbors, few of which pose any significant military threat. Brazil’s real barrier is a break in elevation between its interior and its own coast, which separates Brazil’s production zones from its primary population centers and ports.

Resources — Minerals, coal, offshore oil and natural gas, and with enough investment, huge agricultural lands. Q: What are the challenges to agriculture in Brazil?

Demography — Brazil’s is the second-largest population in the Western Hemisphere, but it’s aging several times faster than that of the United States, Europe, or even East Asia.

Military Might — Brazil. Makes its own mid-grade fighter jets, but the Brazilian army h as had more experience storming drug dens and running local police forces than waging wars.

Economy — With the second-largest economy in the Western hemisphere, Brazil is a major agricultural exporter that also produces aircraft, automobiles, textiles, steel, and a swathe of low-end to medium-value value-added goods.

Outlook — Brazil owes its existence to globalization and the Order. Without the foreign capital to fuel its infrastructure and agricultural sector, without safe transport to send its beef and soy to customers around the world, Brazil will struggle to maintain its economy on its own.

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THE FUTURE OF AMERICAN POLITICS & FOREIGN POLICY

In the pre-Order days, US foreign policy was not bipartisan. It would flip back and forth between various flavors of engagement and disengagement. And the parties themselves were hardly recognizable by today’s standards. This is in no small part a function of the American constitution. America’s political parties are both stable and weak. Whereas in parliamentary systems, parties form governing coalitions, in America’s winner-take-all system, the political jockeying of factions to form coalitions happens within the party framework. In this sense, political realities are one step removed from the electoral process. Party chieftains must read the political tealeaves and realign themselves and their candidates to reflect the changing sentiments of the electorate so as to absorb a majority of votes in any coming election. In 2016, we saw what happens when a party (in this case, the Republicans) fail to anticipate the winds of change. The party was hijacked and burned at the stake by a political agnostic populist who used his celebrity and wealth to go directly over the party bosses and get himself elected President of the United States. It was a rude wakeup call for many Republicans, but they got the message. The same seems to be happening now to the Democrat party with the rise of Bernie Sanders, who may be on his way towards winning the Democrat nomination after an impressive showing in Nevada.

Populist Republicans — The populists’ position on social programs alienates the fiscal conservatives. Their views on national security policy infuriate the military and intelligence communities. Their immigration goals split the evangelical community down the center. And their thinking about finance and regulations has banished the business community into the wilderness. With the exception of pro-life voters, the old Republican coalition is completely shattered beyond repair. Q: What was the Republican coalition pre-Trump, what is it now, and how did it fall apart?

From Rainbows to Thunderstorms — Democrats have discovered that gaining power is more challenging than they anticipated. Part of the failure is an incomplete reading of the demographic trends. The racial breakdown of the Californian demography exists only in Cali. In the American South, Midwest, and Northeast, the racial breakdown is about as opposite of California’s as is possible. America is becoming more ethnically diverse, but outside of California it is proceeding at such a slow pace the Democrats’ strategy will not have a chance to prove correct for decades to come. But it’s even worse than that. The country’s most politically liberal region, the northeast, is strongly majority-white and will remain so for the rest of the twenty-first century. It is also the country’s most rapidly ageing area, and older people tend to vote more conservatively. Another big piece of the failed Democratic strategy has to do with the pace of urbanization. Because the United States has so much cheap, high-quality land, it is the least urbanized of the world’s modern states relative to the land that can be used for something. Rural voters and voters in towns with fewer than fifty thousand people—roughly 30 percent of the American population—tend to be more socially conservative but not politically mobilized. In the age of social media, for the first time they were truly mobilized, and the surge in their voting participation most certainly moved the political

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needle. Q: What was the democrat coalition before Sanders and how is it falling apart? Q: What have the Democrats missed when thinking about the country in black and white terms?

Political Reorganizations — Q: What will the Democratic and Republican Parties look like in ten years’ time?

Unwinding the War on Terror — Q: Is the US presence and engagement in the Middle East going to be the first big policy shift we are going to see? (i.e. is disengagement with the Middle East and an abandonment of the War on Terror going to be the first big change we see in American foreign policy in this decade?) Q: What is the fallout going to be from this disengagement (e.g. Iran, Saudi Arabia, Turkey, Asian and European oil consumers)?

Dollar Diplomacy & Carpetbagging — While the United States’ need of and tolerance for the rest of the world is thin, what interest there is concentrates heavily into a very slim slice of the American population: business leaders (particularly in exportable/transportable sectors of agriculture, finance, and tech). Q: In a world where the permanent, foreign policy establishment gets eroded by the growing power of an electorate disinterested in international affairs, what role do the business leaders of yesteryear (reconstruction) play in a new sort of “dollar diplomacy” abroad? Q: Do business leaders become the de facto carpetbagging representatives of American foreign policy?

King Dollar — The dollar has held a position of privilege in the post-WWII Bretton Woods Order. Q: What will happen to the dollar in a world of disorder?

Awash in Capital Inflows — Q: If America’s economy and political system only looks more, not less attractive in this new world, what does this mean for inflows of financial and intellectual capital in the years to come?

Central Bank Cooperation — Q: In a world that more closely resembles the mid-to-late 1800’s than the mid-to-late 1900’s, what happens to central bank cooperation? Q: How does this impact

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foreign countries and their ability to access cheap dollar financing? Q: If the Fed no longer fears contagions like those to which we have become accustomed in this financially integrated global banking system, how will other countries and their domestic banking systems adjust?

Coalitions of the Future — In the Cold War era, coalitions were really just allies of either the United States of the Soviet Union. In the years shortly after the Cold War ended, you were either part of the American led order or a rogue state. Q: In a disorderly world, what can we expect to see in terms of alignments and coalitions? Q: How fluid will these coalitions be and what will determine who allies with who?

Climate Change — Q: How have you taken climate change into account when making geographic and territorial assessments? Q: Could climate change “change the game” by turning some countries into geographic basket cases? Q: Why didn’t you cover this?

Nuclear Risks — I heard someone at the recent Munich Security Conference say that the world is more at risk today of some kind of nuclear attack than it was at the height of the cold war. Q: How do nuclear weapons come into the picture in a multipolar world?

China Rethink? — Q: Is it even in China’s interests to seek regional hegemony or may it reverse this policy in light of what we have discussed?

Splinternet — Q: Are we going to see a splinternet between different regional blocks, not just the US and China? (Huawei and 5G)

Coronavirus — Q: Is the Coronavirus accelerating the disorder?

Investor Angst — Q: What does all of this mean for investors? Q: Does this mean that people should look for more opportunities in countries like the US, Argentina, Turkey, etc., and fewer in countries like Germany or Brazil?

Books — Q: What books can you recommend to our listeners?