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| Pub. Date | Title | Duration | |
|---|---|---|---|
| 19 Nov 2024 | EP85 The Next Oil Frontier: Suriname's Path to Wealth or Woe | 00:17:12 | |
Summary: In this episode, we provide a detailed analysis of Suriname's economic and political landscape, focusing specifically on its potential as a major oil producer. We explore Suriname's oil and gas sector, particularly Block 58, highlighting the discoveries made by TotalEnergies and APA Corporation. We discuss the country's infrastructure, legal framework, and potential challenges such as corruption, political instability, and the risk of the resource curse. We also explore Suriname's socioeconomic conditions, including its demographics, poverty rate, and the brain drain it is experiencing. Finally, we assess how the country can effectively manage its oil wealth to avoid the pitfalls of resource-rich nations and leverage its newfound potential for sustainable development. Questions to consider as you read/listen: 1. How will Suriname's oil wealth affect its economic growth and social development? 2. What are the main challenges Suriname faces in managing its newfound oil wealth? 3.How can Suriname leverage its oil resources to advance its position in the global value chain? Long format: The Next Oil Frontier: Suriname's Path to Wealth or Woe
By Justin James McShane In Episode 80, we examined the future of Guyana. https://www.geopoliticsunplugged.com/audio/ep80-the-future-of-guyana/ IN 15 November 2024, OilPrice.com published “Suriname Poised to Follow Guyana's Footsteps as Major Oil Producer” https://oilprice.com/Energy/Crude-Oil/Suriname-Poised-to-Follow-Guyanas-Footsteps-as-Major-Oil-Producer.html#google_vignette and that begs us to likewise examine Surinam to see if and how their future differs from that of Guyana.
TL;DR: Suriname, thanks to major offshore oil discoveries in the Guyana-Suriname Basin, has the potential to transform its economy, similar to neighboring Guyana. The country faces challenges like underdeveloped infrastructure, political instability, corruption, and the risk of the "resource curse" (economic and social stagnation despite resource wealth). Its oil and gas sector could significantly boost GDP and government revenue, with production expected to reach 200,000 barrels per day by 2028.
To avoid pitfalls and maximize benefits, Suriname must invest in infrastructure, education, and governance reforms while creating a clear plan for managing oil revenues, such as a sovereign wealth fund. If managed well, oil wealth could modernize the country and elevate its position in the global economy; otherwise, it risks falling into the same traps that have hindered other resource-rich nations.
Introduction: Suriname stands at the cusp of significant transformation, poised to follow in the footsteps of its neighbor Guyana as a burgeoning oil producer. With major offshore oil discoveries in the Guyana-Suriname Basin, the country has a unique opportunity to harness its natural resources for economic development. Yet, like many resource-rich nations, Suriname faces a host of challenges, including infrastructure limitations, political stability concerns, and the potential pitfalls of the resource curse. By examining Suriname’s demographics, economic trends, and burgeoning oil and gas sector, we can evaluate whether it is indeed on the verge of an economic takeoff akin to Guyana or whether it will chart a different path shaped by its own unique circumstances.
INFORMATION Thanks to major oil discoveries Suriname has the POTENTIAL of developing itself into a more modern country. However, it does have significant headwinds. While it will not become a regional power player, it will likely join the ranks of relevant countries in the hemisphere. Surinam is the most forested country in the world. The IMF expects Suriname's economy to grow by 3% in 2024, with inflation falling below 14%. The country is also recovering from the recession caused by COVID-19. Suriname is one of the smallest countries in South America, but it has one of the most ethnically diverse populations in the region. Its economy is dependent on its natural resources, most notably bauxite, of which it is one of the top producers in the world.
WHERE IS SURINAME AND WHAT ARE ITS BASIC STATISTICS? Suriname is located in the northern part of South America, on the northeastern Atlantic coast. Suramine’s neighbors include: the Atlantic Ocean to the north, French Guiana to the east, Guyana to the west and Brazil to the south. Suriname is the smallest sovereign state in South America, with a land area of just under 165,000 square kilometers. The capital and largest city is Paramaribo, which is located on the north coast. Suriname is a tropical country with a diverse geography that includes rainforests, savanna, coastal swamps, and two mountain ranges. About 67% of Suriname's population lives in Paramaribo, the capital city. This means that roughly two-fifths of the country's population live in Paramaribo and its surrounding area. Most of Suriname's population lives in the north of the country, along the 386 km long coastal plain. The least populated county is Sipaliwini, which is located in the interior of the country. About two-thirds of Suriname's population lives in urban areas. Suriname is one of the least densely populated countries in the world. Source: Wikipedia under WikiCommons
As of 2023, Suriname's population is 628,886. Suriname's ethnic groups include Hindustani, Maroon, Creole, Javanese, and mixed. Suriname’s official language is Dutch. Dutch is spoken as a mother tongue by about 60% of the Surinamers, while most others speak it as a second or third language. The other languages used in Surmise include Sranan Tongo which is an English-based creole language that is widely used as a lingua franca; Hindi which is a dialect of Bhojpuri spoken by descendants of British Asian contract workers; Javanese which is spoken by descendants of Javanese (Indonesian) contract workers and Urdu which is a prestige language for Muslims in Suriname.
The Dutch established a colony in Suriname in 1667, and Dutch became the language of communication between the Dutch, African slaves, and the Native Surinamese. Suriname gained independence from the Netherlands in 1975, but it remains close to the Netherlands in terms of culture, economics, and diplomacy.
POVERTY According to the 2022 Suriname Poverty and Equity Assessment, the poverty rate in Suriname is 17.5%. This is based on the World Bank's upper-middle-income threshold of $6.85 per day in 2017 PPP. The assessment also found that 1.1% of the population live in extreme poverty, earning less than $2.15 per day. In 2021, 2.9% of the population was multidimensionally poor (which is a way to measure poverty that considers a range of factors beyond income, such as access to education, healthcare, and basic needs), and 4% were vulnerable to it. The Gini index, a metric for global inequality, shows that the Caribbean has high inequality compared to other upper-middle income countries. The poor have lower employment rates, with only about 40% of the poor aged 15 and older employed. The country's tumultuous political history is what a lot of scholars attribute as the root cause of persistent poverty in conjunction with over reliance on the mining industry, which is vulnerable to market shocks and contributes to 85% of exports. Compared to Guyana, Suriname has a lower poverty rate, with estimates suggesting around 26% of Suriname's population lives in poverty compared to 43% in Guyana; meaning, while both countries face poverty challenges, Suriname is performing better in this regard based on available data.
NEET RATE There isn't much information about the NEET rates in Suriname. However, we can look at labor force participation rates compared to other countries to glean some information about this area of global concern. BRAIN DRAIN Suriname is experiencing a brain drain. In 2020, 273,200 people left Suriname. Suriname is losing skilled workers and prospective students, especially in healthcare. Research by Beine et al. (2008) and Dulam & Franses (2011) suggests that Suriname is experiencing a net outflow of highly skilled migrants. Family migration is a primary reason for leaving Suriname. For example, between 2002 and 2011, over 9,000 Suriname-born migrants moved to the Netherlands for family reunification.
DEMOGRAPHIC CONCERNS The proper way to look at whether or not a country is in demographic decline is to look at three variables: Total Fertility Rate (TFR), infant mortality rate and life expectancy. Ideally, you want a TFR is above the minimum replacement rate which is 2.1. You want a low mortality rate because having a high TFR but also a high infant mortality rate, then you will be in demographic decline. Thinking very myopically and morbidly, you do not want a long life expectancy because you will have a lot of non-working/non-producing folks that need to be supported. Suriname's total fertility rate (TFR) was 2.322 children per woman in 2022 which is above the replacement rate of 2.1. This TFR has been stable around these numbers for over a decade. When we compare it to others we can see that Suriname’s TFR is above most if not all of the fully industrialized world. It is on par but slightly lower than Guyana. Life expectancy is lower in Suriname than its cohorts which is bad from the individual and family connection perspective but is beneficial from a purely economic demographic point of view as the old generally are net “takers” of resources in their old age.
Infant mortality rates are dropping in Suriname which bodes well for their future population needs. INFRASTRUCTURE Suriname's infrastructure is focused in the capital city of Paramaribo, and frankly the country needs to improve it to support economic growth. Most of Suriname's infrastructure is in Paramaribo, which is the center of the country's roads, railways, bridges, imports, and exports. The main modes of travel and transporting goods are water, railway, and flight. Many roads and airport runways are unpaved. Suriname has around 28,000 miles of roads, most of which are unpaved. Roughly 19.16% of roads in Suriname are unpaved. The country has two main roads, the Northern East-West Link and the Southern East-West Link. Approximately 40% of paved roads in Suriname are in poor condition. Approximately 40% of unpaved roads are inaccessible during the wet season. Suriname's bridges are being improved with the construction of new bridges and the replacement of ferries with bridges. The Jules Wijdenbosch Bridge is a two-lane bridge that connects Paramaribo to Meerzorg and is part of the East-West Link. It's the only major bridge in Suriname along with the Coppename Bridge. The Coppename Bridge connects Jenny to Boskamp. Bailey bridges span the Coppename and Nickerie Rivers near Bitagron and Kamp 52. The Corentyne River Bridge is a project being undertaken by the governments of Guyana and Suriname. The border bridge will be built using a Public-Private Partnership arrangement. Suriname is developing a deep-water port (Port of Nickerie) and anSpecial Economic Zone. A mega deep-water facility being built by Phoenix Development Company, N.V. Havenbeheer, and Van Oord Dredging and Marine Contractors B.V. The port will include an oil jetty, a shorebase facility, and a multipurpose terminal. The design will integrate green energy, sustainable transport, and nature-based solutions. The Port of Nickerie in Suriname is expected to be completed in 2025. The first phases of the project were finished in the second quarter of 2023, and the Dutch maritime company Van Oord will continue to dredge the seabed for final completion. Suriname's rail infrastructure is limited and primarily concentrated in the capital city of Paramaribo. It has 166 km of single track. Other tracks exist but are not in use. The Telecommunications Company Suriname (Telesur) is the only provider of fixed-line and broadband services in Suriname. The fixed-line infrastructure is reliable in the coastal region, but poor in the interior. Suriname is connected to other countries by submarine cables, including the Suriname-Guyana Submarine Cable System and the Americas II fiber optic submarine communications cable. The mobile telecom market is much larger than the landline market, and Suriname is ranked 7th in the world for mobile telecommunications. The main players in the mobile market are Telesur and Digicel. Telesur runs a 450 MHz CDMA network, 900 MHz and 1800 MHz GSM, and a 2100 MHz 3G HSDPA network. Digicel is another local operator that offers reliable coverage, even in remote areas. In 2024, the 3G network coverage is estimated to be 95.76%. Suriname's mobile penetration is much higher than the regional average. This is because many Surinamese people have multiple phones from different providers. In 2024, the median mobile internet connection speed in Suriname was 48.37 Mbps. Reliable broadband internet connection can be found in the capital but not in the interior regions. Suriname's Online Service Index is 0.29, which is well below the regional average of 0.59 for Latin America and the Caribbean. In 2022, 69.1% of the population in Suriname used social media. In 2024, Suriname is projected to have 98.13% of its population with access to drinking water, 99.17% with access to electricity, and 90.23% with access to basic sanitation.
ECONOMY Suriname's economy is based on its natural resources. Mining accounts for nearly half of the public sector's revenue, and gold makes up more than three quarters of total exports. Its main exports surround bauxite, gold and petroleum. The Aluminium Company of America began mining bauxite in Suriname in 1916, and it became the country's main export. Gold mining is a significant part of Suriname's economy, and large-scale operations are run by China's ZiJin Rosebel Goldmines and Newmont. However, gold mining is controversial due to its impact on Indigenous people and child labor. Crude oil is a growing major export (more in its own section). Other exports from Suriname include: alumina, precious metal scraps, refined petroleum, rough wood, and bananas. Suriname's mining industry accounts for about 85% of its exports and 25% of government revenues. The country's main trade partners are the United States, the United Arab Emirates, Switzerland, Liechtenstein, Trinidad and Tobago, the Netherlands, Belgium, and China. Suriname generally encourages local and foreign investment, and has no sector-specific laws that discriminate against foreign investors. Suriname's top import countries are the United States, the Netherlands, Trinidad, China, and Japan. Its top export countries are the United Arab Emirates, Switzerland, Trinidad and Tobago, Belgium, and the Netherlands.
GDP In 2023, Suriname's nominal GDP was $3.5 billion. In 2023, Suriname's GDP per capita was $5,454. This is lower than the global average of $10,589. Statistia forecasts that Suriname's GDP will increase by 22.36% between 2024 and 2029, reaching $5.98 billion. Trading Economics expects Suriname's GDP per capita to reach $7,410 by the end of 2024, and trend around $7,618 in 2025 and $7,846 in 2026. Suriname's GDP and GDP per capita are expected to significantly grow due to the recent discovery of large offshore oil and gas reserves, with forecasts predicting a substantial economic boost once production begins, likely around 2028, leading to a significant increase in government revenue and investment in the country, potentially transforming Suriname's economy.
UNEMPLOYMENT As of December 2023, the unemployment rate in Suriname is 8.00%. Here are some other recent unemployment rates for Suriname: 2022: 8.23%; 2021: 8.46%; 2020: 8.73%; 2019: 7.54% There are significant issues involving child labor and related abuses particularly in the gold mining sector in Suriname.
EDUCATION LEVEL AND NUMBER OF UNIVERSITIES The average number of years of schooling in Suriname is 3.8 years, which is lower than the global average of 8.7 years. This places Suriname 144th out of 150 countries in the world. More than 90% of children attend primary school, which is known as the "basisschool". The primary net enrollment rate is 98% and the primary completion rate is 100%. In 2021, 51.9% of girls and 31% of boys completed lower secondary school.
Suriname has one university, Anton de Kom University of Suriname, and several other higher education institutions. There are five teacher training colleges in Suriname. There are five higher professional institutes in Suriname. Suriname has 54 LBO schools, which are technical trade schools.
This education and skilled labor rate is a very strong headwind that Suriname faces in its development.
LABOR FORCE Suriname's skilled labor force is growing in importance as the country works to strengthen its economy and support new industries. In 2023, Suriname's labor force was estimated to be 250,000 people. In 2023, the labor force participation rate for women was 44.7% and 64.1% for men. 43.5% of the labor force has primary education as their highest level of education. However, 30.2% of the labor market demands people with a university degree or vocational training, which is higher than the 9.4% of the labor force with that level of education.
THE OIL AND GAS SECTOR Suriname's oil and gas sector began with initial exploration in the late 1920s, where oil seepages were reported, but the first commercially viable discovery only occurred in the 1960s when Shell found oil onshore, though it was deemed non-commercial at the time. The state-owned company, Staatsolie, later developed the Tambaredjo field in 1982, marking the start of significant oil production in the country, primarily focused on onshore operations until recent offshore discoveries. While initial exploration focused onshore, recent years have seen increased interest in offshore exploration, with significant discoveries made in the Guyana-Suriname Basin. Recent offshore discoveries have raised Suriname's profile as a potential oil producer, with several international companies actively exploring blocks in the region.
After years of speculation fueled by significant oil discoveries in Guyana, Suriname's offshore Block 58 has become central to its oil ambitions. TotalEnergies entered Block 58 in December 2019 by acquiring a 50% working interest from Apache Corporation. This acquisition included operatorship of the block. At that time, TotalEnergies paid a bonus of $100 million for the stake, plus their share of past exploration costs. After acquiring the interest, TotalEnergies, alongside Apache (now APA Corporation) both holding a 50% interest in Block 58 own the area free and clear of any legal disputes like the one that has embroiled Guyana. TotalEnergies and APA embarked on an exploration campaign. They made several significant discoveries in Block 58 from 2020 to 2022, namely Maka Central, Sapakara West, Kwaskwasi, Keskesi East, and Krabdagu. This phase of exploration involved substantial investment in drilling and testing wells to assess the block's potential.
Despite early optimism, concerns arose over the reservoir quality, the number of dry wells, and a high gas-to-oil ratio. Between 2020 and 2022, several discoveries were made, including Maka Central, Sapakara West, Kwaskwasi, Keskesi East, and Krabdagu. These discoveries raised expectations for substantial oil reserves similar to those found in neighboring Guyana. A notable dry hole was drilled at the Keskesi South-1 location. This well, although intended as an appraisal well, found non-commercial quantities of hydrocarbons. It was drilled about 6.2 km from the Keskesi East-1 discovery well. The lack of suitable reservoir-quality sands in the Campania target at this location led to its abandonment, highlighting the geological complexity of the area. The Bonboni-1 well, drilled in the northern portion of Block 58, encountered only water-bearing reservoirs in the primary Maastrichtian and Campanian objectives, despite being near known discoveries in the Maka-Kwaskwasi-Sapakara-Keskesi trend. This result was disappointing as it did not extend the known oil-bearing zones. These issues led TotalEnergies to delay the final investment decision until the problems were addressed.
TotalEnergies has made a significant commitment by investing $10.5 billion in the development of this block, named the GranMorgu project. This decision marks a pivotal step towards Suriname's oil production boom.
Suriname currently produces about 16,000 barrels per day from minor onshore operations, but with Block 58's development, production is expected to surge past 200,000 barrels per day by 2028. This increase could significantly boost Suriname's GDP, similar to what Guyana experienced post-oil production commencement. The oil boom is anticipated to lift Suriname out of poverty, with the GDP potentially mirroring Guyana's tripling between 2019 and 2022 due to oil revenues.
Suriname has implemented a favorable regulatory framework for oil operations, offering production sharing contracts with terms up to 30 years and a royalty rate of 6.25%, which is relatively low, attracting more investment into its offshore oil sector. There's speculation that by 2035, Suriname could be producing up to 650,000 barrels per day, making the Guyana-Suriname Basin a significant contributor to global oil supply growth. This development comes amidst global pressures to reduce carbon emissions, yet the economic benefits are seen as outweighing these concerns in the short term.
Source: TotalEnergies
The estimates for the amount of oil in Suriname's Block 58 have varied over time due to ongoing exploration and appraisal activities. Morgan Stanley's modeling in 2020 suggested that Block 58 could contain around 6.5 billion barrels of oil equivalent (boe), which would be developed across seven phases. TotalEnergies and APA's Recent 2023 Assessment (2023) appraisal of the Sapakara South and Krabdagu fields, which are part of Block 58, confirmed recoverable resources close to 700 million barrels of oil after drilling and testing three wells in August 2023. This figure specifically relates to these two fields but does not represent the total potential of Block 58. For the development plan named "GranMorgu", which primarily focuses on the Krabdagu and Sapakara oil discoveries, the gross estimated recoverable resources were cited as more than 750 million barrels of oil. This project covers the area where the appraisal drilling provided the above figures. The total oil in Block 58 might exceed these figures when considering other discoveries or prospects within the block. Initial optimism suggested potential reserves could be in the billions of barrels, similar to the estimates for the broader Guyana-Suriname Basin. However, actual recoverable reserves are more conservatively estimated now due to the complexities encountered during appraisal, such as high gas-to-oil ratios or less optimal reservoir quality in some areas.
It's important to note that these numbers can change with further exploration and development. The figures mentioned relate to recoverable reserves, which are not the same as total oil in place. Recoverable reserves are what can economically and technically be extracted with current technology. The actual oil in place could be significantly higher, but recovery rates vary, and not all oil in place is recoverable.
Therefore, while Block 58 has been confirmed to hold significant oil, the precise total amount of oil that can be economically extracted might still be subject to further evaluation as development progresses.
How does Block 58’s 6.5 billion barrels of oil stack up to other fields? The Stabroek block, operated by ExxonMobil, has discovered over 11 billion barrels of recoverable oil and gas resources, making it one of the largest offshore oil finds in the world in recent years. One of the largest oil fields in the world, Kazakhstan’s Kashagan field recoverable reserves are estimated at around 13 billion barrels of oil equivalent. While the North Sea has many smaller fields, the larger ones like Ekofisk or Statfjord each have recoverable reserves in the range of 1 to 3 billion barrels. Tengiz (Kazakhstan) is one of the deepest supergiant oil fields, with recoverable reserves exceeding 6 billion barrels. Fields like Lula (formerly known as Tupi) in the Santos Basin offshore Brazil have recoverable reserves estimated at around 6.5 billion barrels.
In terms of production capacity comparison among fields, we can look at that as a means of comparison too. The production capacity planned for the GranMorgu development (Block 58 in Suriname) is 220,000 barrels per day (b/d). At the Stabroek Block (Guyana) current fields like Liza Destiny and Liza Unity produce around 220,000 b/d each, with plans for further developments increasing this capacity significantly. Saudi Aramco's offshore fields like Manifa produce over 900,000 b/d, and Ghawar, the world's largest oil field, produces at a much higher rate, though it consists of multiple zones. When at full capacity, Kashagan (Kazakhstan) aims to produce around 370,000 b/d, but this has been subject to delays and operational challenges. The FPSOs in the pre-salt fields, like P-75 in Búzios (Brazil), can produce up to 180,000 b/d, with some platforms designed for much higher capacities as part of Brazil's push to become one of the top oil producers globally.
While Block 58 in Suriname holds significant oil reserves and has a planned production capacity that's substantial on its own, it falls into the category of large fields but is not among the absolute largest in terms of either recoverable reserves or current production capacity when compared globally. Block 58's recoverable reserves are considerable but are dwarfed by supergiant fields like those in the Middle East, or even some of the newer major finds like Stabroek. Its planned production capacity is robust, especially for a new development in a region previously less known for major oil production, but it's below the output of many of the world's largest fields but is comparable to Guyana.
GOVERNMENT REVENUE FROM OIL AND GAS Following the oil discoveries in its offshore blocks, Suriname has been considering the creation of a Sovereign Wealth Fund to manage the revenues from oil and gas. This concept was introduced in legislation passed by Suriname's National Assembly in May 2017. While not explicitly called a "trust," President Chandrikapersad Santokhi has referred to directing oil revenues into a "prosperity and stability fund." This fund would serve similar purposes to a Sovereign Wealth Fund by investing in sustainable sectors, education, health, and infrastructure while also saving for the future. The establishment of such a fund involves legislative action, setting up governance structures, and defining investment policies. As of late 2024, the specifics of how this fund operates, including its exact structure, governance, and investment strategy, might still be in development or refinement stages.
POLITICAL STABILITY Suriname's political stability can be assessed through various lenses, including its political history, current governance, economic conditions, and social factors. Suriname has experienced political instability in the past, notably during the 1980s when Desi Bouterse led a coup and established military rule. This period was marked by political assassinations, known as the "December murders," for which Bouterse was later convicted in 2019. After military rule, Suriname transitioned back to democracy in 1987 with a new constitution. However, political instability persisted with coups and attempted coups, particularly in the late 1980s and early 1990s. The 2020 elections saw a peaceful transition of power when former police chief Chandrikapersad Santokhi was elected president, defeating Bouterse. This transition was noted for being free and fair, indicating an improvement in democratic processes. Suriname operates with a multi-party system where coalition governments are common, which can lead to political instability if coalitions fracture, but also reflect a form of political inclusivity. Suriname is ethnically diverse, and while this diversity can enrich political life, it has also historically contributed to political tensions, especially in elections where parties often align along ethnic lines.
CORRUPTION Corruption in Suriname is a notable issue that permeates various sectors of society, affecting governance, the economy, and public trust. There are consistent reports of corruption in public procurement, where contracts are often awarded based on political connections rather than merit or competitive bidding. This includes infrastructure projects, government service contracts, and the allocation of mining and timber concessions. While the judiciary has shown signs of independence, especially in significant cases like the conviction of former President Desi Bouterse, corruption within the legal system remains a concern. Bribery for favorable judicial decisions has been reported. Political patronage systems are deeply entrenched, with positions in government and state companies often filled based on political allegiance rather than competence. This practice significantly contributes to corruption. Suriname has laws in place to combat corruption, like the Anti-Corruption Law passed in 2017, but enforcement has been inconsistent. The law aims to criminalize corruption, set up a National Anti-Corruption Commission, and mandate asset declarations by public officials. The government under President Santokhi has expressed intentions to tackle corruption more aggressively, including promises to establish an Anti-Corruption Commission and to investigate past corruption cases. However, progress has been slow, and implementation challenges persist. The political will to fight corruption can vary with changes in government, and there have been instances where high-profile corruption cases were not pursued vigorously, suggesting a lack of consistent commitment. According to Transparency International's Corruption Perceptions Index (CPI). In 2023, Suriname scored 40 out of 100, indicating a moderate level of perceived public sector corruption. This score has fluctuated over the years, suggesting ongoing issues with corruption control.
Suriname serves as a transit country for cocaine produced in Colombia, Peru, and Bolivia, destined primarily for Europe but also for the United States and West Africa. Its location makes it an attractive route for drug traffickers. The country's geography, with vast areas of dense jungle and a relatively low population density, provides cover for drug production, storage, and trafficking activities. Small planes often fly drugs into Suriname from neighboring countries, utilizing numerous airstrips, many of which are unmonitored. Drugs are also smuggled via sea routes, either directly to Europe or via West Africa. The use of fishing boats, pleasure yachts, and even submarines has been documented. Traffickers use the porous borders with Guyana, French Guiana, and Brazil for land-based drug smuggling.
HOW TO EXAMINE INVESTING IN FOREIGN CAPITAL PROJECTS or FDI Here are some of my bigger take aways:
Whenever you are going to make a capital investment in a foreign market as especially when it involves property, you’d do well to consider several things: respect for the rule of law for private property ownership and stability of the regime. Primarily, one looks for how long entrenched and how well developed the legal system is with respect to private property ownership and especially foreign ownership of property. You are also, of course, concerned about taxation. Finally, NIMBY related issues should be considered. Here is what I found: RESPECT FOR PROPERTY RIGHTS Foreigners are legally allowed to own property in Suriname, but they must first obtain a residence permit. This requirement can complicate the process but does not inherently restrict ownership rights once obtained. Suriname's Civil Code and other related laws provide for the protection of property rights, including those of foreigners. The legal system allows for property disputes to be resolved through courts, although the judicial system has faced criticism regarding efficiency and corruption.
Suriname primarily uses Production Sharing Contracts (PSC) for its oil and gas exploration and production activities. These contracts define the terms under which foreign companies can explore, develop, and produce hydrocarbons in Suriname. All hydrocarbons are owned by the state, but the PSC allows the contractor (usually a foreign company) to recover costs and share in the profits from the hydrocarbons produced. The PSC specify rights to explore, develop, and produce, as well as obligations regarding taxation, environmental protection, and local content.
The Petroleum Law of 1990 governs the exploration and exploitation of hydrocarbons in Suriname. This law and subsequent amendments provide the legal basis for foreign companies to operate, ensuring they have rights to the hydrocarbons they find and produce under the terms of their contracts with Staatsolie (the state oil company) or the government directly. Suriname has signed bilateral investment treaties with several countries, which includes provisions for the protection of investments in the oil and gas sector, although these treaties focus more broadly on investment rather than specifically on hydrocarbons.
Suriname states that it has adopted an "open door" approach for bidding on oil and gas exploration blocks, signaling an intent to attract foreign investment by providing access to its resources. The government has tried to offer fiscal stability to investors to ensure that changes in tax or other fiscal policies do not adversely affect existing investments, although this stability can sometimes be tested by political or economic shifts.
While there have been no major publicized disputes specifically related to foreign oil and gas rights in Suriname, the general business environment includes arbitration. PSCs usually contain arbitration clauses for resolving disputes, which respects the international standard practice for handling such issues outside of local courts if needed. Suriname is a supporting country for the Extractive Industries Transparency Initiative (EITI), which suggests a commitment to improving transparency and governance in the oil, gas, and mining sectors, which indirectly supports respect for foreign investor rights by ensuring accountability.
TAXATION The taxation of oil and gas in Suriname involves several key elements, structured to ensure that the state benefits from its natural resources while also providing an investment-friendly environment for foreign companies. Here's an overview based on the available information and common practices. Typically, a royalty is levied on the production of oil or gas. In Suriname, under PSCs, royalties are usually set at a rate around 6.25% of the gross production value. This rate can be adjusted based on specific contract terms or amendments in the law. Companies are allowed to recover their operating and capital expenditures from a certain percentage of the produced hydrocarbons before profit oil is shared. The cost recovery ceiling in Suriname has been known to be around 75%, meaning companies can recover up to 75% of their costs before profit sharing. After cost recovery, the remaining hydrocarbons (profit oil) are split between the state (or Staatsolie) and the contractor. The split can vary based on production levels, the rate of return (R-Factor), or other contractual terms but is designed to increase the state's share as profitability increases. Corporation Tax: The standard corporate income tax rate in Suriname is 36% for profits from oil and gas activities. However, under the PSC framework, there might be provisions where the tax is handled differently, often through the profit oil mechanism where the government takes its share in kind, thus effectively taxing the company's profit.
Capital Gains Tax: Suriname has no specific capital gains tax.
Withholding Taxes: There's a withholding tax on dividends, which might be applicable to profits distributed by oil and gas companies to their shareholders, although specifics can vary based on double taxation agreements or fiscal stability clauses in PSCs. The specific rate can vary based on the tax treaty between Suriname and the country where the shareholder resides
VAT: Goods and services related to oil and gas exploration and production are subject to VAT. Suriname has implemented VAT at a rate of 10%, but this can change, and there might be exemptions or zero-rating for certain transactions.
Import Duties: Companies engaged in oil and gas exploration and production might benefit from exemptions or reduced rates on import duties for equipment and materials needed for their operations. These are usually negotiated within the PSC to encourage investment.
Wage Tax and National Insurance: Suriname uses a progressive tax system for wage income, meaning the tax rate increases as income increases. However, exact brackets and rates can change with legislative updates. ◦ Employees in Suriname contribute to social security through payroll deductions. This system includes Old Age Pension (AOV) which are contributions for retirement benefits; and General Widows and Orphans Insurance (AWW) which are benefits in case of death of a family breadwinner. Typically, there's a flat rate or a rate based on income up to a ceiling. For instance, previously, this might have been around 3% to 5% of salary, but these figures can vary. Employers also contribute to these funds, generally at a higher rate than employees, to support the social security system.
OIL AND GAS INFRASTURCTURE Suriname's offshore oil and gas infrastructure, particularly in relation to the developments in Block 58, is still in the early stages of development. Exploration activities in Suriname's offshore blocks, like Block 58, have involved the use of mobile offshore drilling units (MODUs). These rigs are not permanent but are moved in for exploration and appraisal drilling. For instance, rigs like the Maersk Valiant have been used for drilling operations. Extensive 2D and 3D seismic surveys have been conducted to map the subsurface geology, identify potential reservoirs, and plan drilling locations. This is a crucial part of the infrastructure setup for any offshore oil exploration. TotalEnergies has announced plans to develop the GranMorgu project with an Floating Production, Storage, and Offloading (FPSO) Vessel for the Sapakara and Krabdagu discoveries. It will act as a production platform, storage facility, and offloading point for oil, eliminating the need for pipelines to shore in the initial phase. The development includes plans for subsea wells connected to the FPSO via subsea production systems. This involves Subsea Trees and Manifolds for controlling the flow of oil and gas from the well to the surface and Subsea Pipelines which are short pipelines or flow lines from the wells to the FPSO. Onshore logistics bases are being developed or enhanced to support offshore operations. These bases handle the logistics for personnel, equipment, supplies, and maintenance services. As outlined above, there have been discussions about and definitive actions in developing facilities in Port Nickerie for oil and gas operations.
While not physical infrastructure, the development of local content through training programs for Surinamese nationals in oil and gas operations is crucial. This includes setting up facilities for technical training and education to ensure local participation in the industry. Staatsolie has developed programs like the NATIN (National Training Institute) Oil & Gas Program, aimed at providing Surinamese students with specific knowledge and skills in the oil and gas industry. This includes theoretical education in oil-related disciplines, practical experience, and focuses on increasing local capacity. Over the years, a number of local service companies have emerged that provide services ranging from logistics to maintenance for oil operations. While they might not have the depth of experience found in countries with longer oil histories, they are gaining expertise as the sector grows. While there is very limited experience in onshore operations, the offshore sector, particularly deepwater, presents new challenges where local expertise is very much less developed compared to international counterparts.
NIMBY AND ENVIRONMENTAL ACTIVISM There have not been widely noted, high-profile, or sustained protests or movements specifically targeting the development of Block 58 in Suriname in the mainstream international media or detailed reports.
GLOBAL VALUE CHAIN If one is a structuralist in terms of economic development and adheres to Rostow's five stages of economic growth, then clearly Guyana is in the “take off stage” as it meets all of the conditions for take-off but certainly is not in the drive to maturity, maturity or age of mass consumption stages yet.
Right now Surinam sits at the second lowest stage of the Global Value Chain (GVC) as a pure raw commodity exporter. To move up the GVC to the next level which is manufacturing and/or processed/refined commodity exporter is through the well known process of focusing on and providing:
Improving coordination Governments must create a clear vision and ensure the private sector is involved and capital is deployed in an efficient and controlled manner. What activities will be incentivized through reduced taxation, grants, preferential loans and the like and what activities will be “punished” through strict regulation and/or taxation needs to be very clearly defined and outlined.
Attracting investment Opening borders and attracting foreign direct investment (FDI) will help countries enter GVCs and advance up the GVC ladder.
Improving infrastructure Countries must invest in modernizing communications, roads, railways, and ports.
Reducing border delays Small steps like speeding up customs can help countries transition from commodity exports to basic manufacturing.
Upgrading processes and products Countries can improve efficiency by adopting better technology, or upgrade the quality of their products by using higher quality materials or through the use of domestic design.
Investing in education and training Countries must invest in education and vocational training to complement their GVC strategies.
Comment: In fairness to Suriname, this entire oil and gas sector is very new to them. With the potential of overnight change of fortune in their country as seen in Guyana, it would be wise for them to plan how they plan to reinvest their oil and gas revenues to move up the GVC from mere pure commodity exporter to manufacturing or commodity refiner. As if today, there is no defined and unified vision as whether or not these funds will be segregated into a trust and if they are how and on what ordered priority they are to be used. This is an immediate need otherwise the country will likely default to the old “resource curse” situation. The "resource curse" is a paradoxical situation where countries rich in natural resources, like oil, gas, minerals, or timber, experience less economic growth and development compared to countries with fewer natural resources. This phenomenon suggests that instead of being a blessing, abundant natural resources can lead to detrimental economic, social, and political outcomes. Inflation, rent-seeking, volatility in revenue, conflict, worsening of economic inequities, a dependence culture as well as even more corruption are potential outcomes without such a vision.
Conclusion: Suriname’s newfound potential oil wealth holds the promise of transformative economic growth, potentially lifting it from its status as a small commodity exporter to a significant player in the global energy market. However, realizing this potential requires strategic investment in infrastructure, governance reforms, and a clear vision for the future. The country’s ability to rise above the resource curse and leverage its oil revenues for sustainable development will determine whether Suriname can emulate Guyana’s recent successes and do better than it or become a cautionary tale which seems to be the path that Guyana is on. With prudent management, Suriname can not only strengthen its economy but also secure a more prosperous and equitable future for its people. The journey ahead is fraught with challenges, but it also presents an unprecedented opportunity for growth and modernization.
SOURCES:
https://hdr.undp.org/sites/default/files/Country-Profiles/MPI/SUR.pdf
https://www.unicef.org/media/117041/file/Guyana-and-Suriname-2021-COAR.pdf
https://repub.eur.nl/pub/78065/EI2015-03.pdf
https://repub.eur.nl/pub/78065/EI2015-03.pdf
https://fred.stlouisfed.org/series/SPDYNTFRTINSUR
https://www.discover-suriname.com/business-opportunities/infrastructure
https://www.phoenix-develop.com/post/suriname-deep-water-port-special-economic-zone
https://www.dredgingtoday.com/2023/07/13/van-oord-part-of-the-massive-nickerie-port-project/
https://portofnickerie.com/en/
https://oilnow.gy/featured/dutch-maritime-giant-now-part-of-massive-suriname-port-project/
https://www.statista.com/statistics/728432/unemployment-rate-in-suriname/
https://www.dol.gov/agencies/ilab/resources/reports/child-labor/suriname
https://eitisuriname.org/wp-content/uploads/2019/04/seiti-factsheet-nl.pdf
https://www.nsenergybusiness.com/projects/block-58-development-offshore-suriname/
https://oilnow.gy/tag/block-58/
https://jpt.spe.org/totalenergies-drills-dry-hole-offshore-suriname
https://apacorp.com/portfolio/suriname/
https://oilprice.com/Energy/Crude-Oil/Big-Oil-Sees-Major-Potential-In-Suriname.html
https://oilprice.com/Energy/Crude-Oil/Can-Suriname-Replicate-Guyanas-Oil-Boom.html
https://oilprice.com/Energy/Oil-Prices/How-Important-Is-The-Suriname-Oil-Discovery.html
https://www.youtube.com/watch?v=RtRBzNlflZs
https://www.uscg.mil/Mariners/National-Pollution-Funds-Center/about_npfc/osltf/
https://www.ganintegrity.com/country-profiles/suriname/
https://insightcrime.org/news/trials-suriname-new-president/
https://theglobalamericans.org/2021/03/surinames-corruption-and-money-laundering-challenges/
https://www.transparency.org/en/countries/suriname
https://tradingeconomics.com/suriname/corruption-rank
https://www.statista.com/statistics/811543/suriname-corruption-perception-index/
https://www.globalsecurity.org/military/world/caribbean/sr-corruption.htm
https://www.state.gov/reports/2022-country-reports-on-human-rights-practices/suriname/
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| 22 Oct 2024 | EP17: Will Europe make its own nuclear weapons? | 00:12:01 | |
Summary: In this episode we explore the possibility of European countries developing their own nuclear weapons, prompted by Ukrainian President Zelensky's recent comments about the need for nuclear deterrence. We discuss the process of uranium enrichment, a crucial step in nuclear weapon production, highlighting the key role of centrifuges in achieving the necessary level of enrichment. We examine the various companies involved in centrifuge production and the availability of designs from Pakistani scientist A.Q. Khan. We delve into the different methods of delivering nuclear weapons, from simple bombs to more complex intercontinental ballistic missiles. We conclude by speculating on the potential scenarios for European nuclear weapons development, considering the possibility of both cooperative and clandestine acquisition of enrichment technology. Questions to consider as you read/listen:
Long format: Will Europe develop an endogenous nuclear weapon production capability? What countries in Europe have nuclear reactors? How easy is it to make a nuclear weapon?
At the European Council summit in Brussels on Thursday October 17, 2024, Ukrainian President Zelensky said: "Which of these major nuclear powers suffered? All of them? No. Ukraine (did). Who gave up nuclear weapons? All of them? No. Ukraine. Who is fighting today? Ukraine. Either Ukraine will have nuclear weapons and that will be our protection or we should have some sort of alliance. Apart from NATO, today we do not know any effective alliances." This has spurred a lot of discussion about the future of nuclear weapons in Europe. What European countries have a nuclear reactor? France, Belgium, Bulgaria, Czechia, Finland, Germany hungry, the Netherlands, Romania, Slovenia, Slovakia, Spain, and Sweden Source:
How do you make highly enriched uranium (HEU) from low enrichment uranium (LEU)?
Most commercial reactors use LEU with a concentration of about 3-5% U-235 as fuel. This is why having a nuclear reactor is pretty much a bare minimum entry point for making a nuclear weapon.
LEU needs to be enriched to 90% for it to be considered weapons grade uranium. As a general rule, higher levels of enrichment mean that less uranium is required to produce a weapon. That means warheads can be smaller and lighter, enabling missiles to cover greater distances and aircraft to deliver more weapons.
A nuclear bomb requires about 25 kilograms (55 pounds) of uranium enriched to 90% to 93% U-235.
Once a country can enrich uranium, it can produce enough HEU for a nuclear weapon within months.
It's relatively easier and quicker to enrich LEU to 90 percent needed for weapons-grade uranium than start whole cloth from nothing from natural uranium. Once a country can enrich uranium at all, its breakout time is often just months.
Natural uranium contains 0.7% of the U-235 isotope. The remaining 99.3% is mostly the U-238 isotope which does not contribute directly to the fission process (though it does so indirectly by the formation of fissile isotopes of plutonium). Isotope separation is a physical process to concentrate (‘enrich’) one isotope relative to others. Most reactors are light water reactors (of two types – PWR and BWR) and require uranium to be enriched from 0.7% to 3-5% U-235 in their fuel. This is normal low-enriched uranium (LEU). There is some interest in taking enrichment levels to about 7%, and even close to 20% for certain special power reactor fuels, as high-assay LEU (HALEU).
Centrifugation is the only enrichment process used today. In both gaseous diffusion and centrifuge processes, UF6 gas is used as the feed material. Molecules of UF6 with U-235 atoms are about one percent lighter than the rest, and this difference in mass is the basis of both processes. Isotope separation is a physical process.
The gas is fed into a series of vacuum tubes, each containing a rotor 3 to 5 metres tall and 20 cm diameter. USEC's American Centrifuges are more than 12 m tall and 40-50 cm diameter. The Russian centrifuges are less than one metre tall. Chinese ones are larger, but shorter than Urenco's.
The enriched gas forms part of the feed for the next stages while the depleted UF6 gas goes back to the previous stage. Eventually enriched and depleted uranium are drawn from the cascade at the desired assays.
To obtain efficient separation of the two isotopes, centrifuges rotate at very high speeds, with the outer wall of the spinning cylinder moving at between 400 and 500 metres per second to give a million times the acceleration of gravity.
The output of a centrifuge is measured in “separative work units” (SWU) per year. SWU reflect the effort needed to separate the two uranium isotopes in the enrichment process. A centrifuge with a higher SWU per year can enrich greater quantities of uranium to higher levels in shorter periods of time than a less efficient centrifuge.
Centrifuge stages normally consist of a large number of centrifuges in parallel. Such stages are then arranged in cascade similarly to those for diffusion.
Not a lot of companies in the world make these special purpose centrifuges as you can imagine.
-Centrus Energy (US) -Louisiana Energy Services (US) -American Centrifuge Manufacturing, LLC (ACM) (US) -Urenco (US in the future) -Orano (France) -Rosatom (Russia)
However, and most depressing overall perhaps, is that Pakistani scientist AQ Khan has made designs on how to make various grade SWU centrifuges (IR-1 through IR-9) readily available to anyone in the world. (That’s how Iran is able to make its centrifuges without importing them). All one needs is:
(This operation of cascading operations is what Stuxnet exploited)
Beyond the challenges listed above and ignoring for the safe of brevity the actual
The next question is the method of delivery. Dropping a bomb is easy presuming it is stable and small enough and you have a big enough bomber to deliver it.
Delivering a bomb aboard a missile rather than simply dropping it from the air entails mastering both ballistics — all the calculations involved in getting the warhead to its target — and the miniaturization of the nuclear charge so that it can be mounted on the warhead. Not as easy but easily I should think within the expertise of this short list of nations.
An intercontinental ballistic missile (ICBM) that requires a guidance and stability control system to direct it thousands of miles accurately without breaking apart is another level. Is that needed now in Europe? Probably not.
So can Europe start to make its own nuclear weapons? Those countries that have nuclear plants, sure. But the choke point maybe the centrifuges to try to import them. In the alternative thanks to AQ Khan these countries can make their own internally.
Is it going to be a breakout (where the US collaboratively sells the centrifuges to them) or a sneakout (where the centrifuges are not sold to them but instead they domestically make them perhaps secretly) event? That’ll be interesting to see.
Sources:
https://education.cfr.org/learn/reading/how-do-countries-create-nuclear-weapons
https://iranprimer.usip.org/blog/2021/nov/22/explainer-controversy-over-iran’s-centrifuges Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 13 Nov 2024 | EP78:The Arctic A New Frontier for Geopolitical Competition | 00:19:37 | |
Summary: In this episode, we discuss the growing geopolitical significance of the Arctic due to climate change. Melting ice is opening up new shipping routes and revealing valuable resources, attracting the interest of nations like Russia, the United States, and Canada. This competition, however, is tempered by existing frameworks like the Arctic Council and the Ilulissat Declaration, which promote cooperation. We also explores the potential for economic growth through resource extraction and the development of new shipping routes, including the Northern Sea Route and the Northwest Passage, known collectively as the Polar Silk Road. The article ultimately raises concerns about potential conflict arising from competing claims and military expansion while emphasizing the need for international cooperation in managing the evolving Arctic landscape. Questions to consider as you read/listen:
Long format: The Arctic: A New Frontier for Geopolitical Competition By Justin James McShane Today we look at the increasing interest in the Arctic due to climate change revealing new resource opportunities and shipping routes. We will discuss the territorial claims by Russia, the U.S., Canada, and other nations, and the potential for conflict or cooperation. TL;DR: Climate change is melting the Arctic, opening up valuable resources and new shipping routes, making it a hotbed for geopolitical competition. Russia, the U.S., Canada, and others are staking territorial claims, leading to both potential conflict and cooperation. Key organizations like the Arctic Council and agreements like the Ilulissat Declaration promote peaceful cooperation, but the rush for oil, gas, and strategic military bases could strain these frameworks. The stakes are high for global security, environmental sustainability, and economic gains in this evolving Arctic landscape. BACKGROUND From a remote, ice-bound frontier to a region of strategic importance due to climate change the arctic is now a new geopolitical space of growing importance. Global warming is melting the Arctic ice, opening up sea lanes and making previously inaccessible resources viable for extraction. The amount of Arctic sea ice that survives the summer melt season has been declining rapidly. From 1979–2023, the amount of Arctic sea ice has decreased by 13% per decade. The oldest and thickest ice in the Arctic has declined by 95% over the past 30 years. Models project that for every 2°F of warming, the Arctic sea ice will decrease by about 15% annually and 25% in the summer. If emissions continue to rise, the Arctic could be ice-free in the summer by 2040. WHAT INSTITUTIONS AND TREATIES CURRENTLY EXIST The Arctic Council: The Arctic Council has eight permanent member states: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States. The Council has negotiated three legally binding agreements among the Arctic states, including agreements on search and rescue, oil pollution preparedness and response, and scientific cooperation. The Council has produced landmark studies, including the Arctic Climate Impact Assessment and the Arctic Marine Shipping Assessment. Ilulissat Declaration: The Ilulissat Declaration is a framework for cooperation between the five Arctic coastal states to address the challenges of climate change, resource development, and other issues in the Arctic Ocean. The declaration outlines principles for cooperation on legal arrangements, research, and managing natural resources. It also emphasizes the importance of international law, including the law of the sea, in governing the Arctic Ocean. Canada, Denmark, Norway, the Russian Federation, and the United States are signatories. The Ilulissat Declaration was adopted in 2008 in response to concerns about military conflict in the Arctic after Russia planted a flag there in 2007. The declaration was a preemptive act to reinforce order and stability in the region, and to head off calls for an Arctic Treaty that would dilute the influence of the coastal states. WHAT IS AT STAKE? Untapped resources: There is untapped and unclaimed wealth that now due to climate change and arctic ice melting may be economically viable to extract. According to the U.S. Geological Survey, the Arctic is estimated to hold around 90 billion barrels of undiscovered oil, representing roughly 13% of the world's untapped conventional oil reserves, alongside approximately 30% of the world's undiscovered conventional natural gas reserves; additionally, the Arctic is believed to contain significant mineral deposits including diamonds, phosphate, iron ore, and potentially large, commercially viable fisheries due to climate change impacting ice cover. With melting ice, Arctic fisheries are projected to expand significantly, potentially leading to increased fishing activity. Despite the vast resource potential, extracting resources from the Arctic is complex due to harsh weather conditions and challenging ice environments, making development costly. Overlapping claims: There are overlapping claims by Russia, the United States, Canada, Norway, and Denmark (via Greenland) over extended continental shelves. The primary overlapping claim among Russia, the United States, Canada, Norway, and Denmark (via Greenland) regarding extended continental shelves is over the Lomonosov Ridge, an underwater mountain range in the Arctic Ocean, which each country claims as an extension of their continental shelf, leading to significant overlaps in their territorial claims in the central Arctic region. Each country has submitted claims to the United Nations Commission on the Limits of the Continental Shelf (CLCS) regarding their extended continental shelf boundaries, including the disputed areas. The overlapping claims raise concerns about potential disputes over access to resources like oil and gas in the Arctic region. Military Base Expansions/Additions A staggering 53% of the Arctic coastline belongs to Russia. Since 2005, Russia has reopened tens of Arctic Soviet-era military bases quietly. Wrangel Island, Cape Schmidt, Temp Air base and Kotelny Island developments are right across the Bering Strait from Alaska. As of February 2023, Russia had six bases, 14 airfields, 16 deep-water ports, and 14 icebreakers built. All of this gives evidence that Russia sees the Arctic as a priority including its self named Arctic Zone of the Russian Federation (AZRF). By contrast the US has only Eareckson Air Station in the strict definition of the Arctic. Candid has Nanisivik Naval Facility which is a Canadian Forces naval facility on Baffin Island, Nunavut. There are also Canadian Forces bases in the Northwest Territories and Nunavut. Demark has the Danish Joint Arctic Command (JACO) is headquartered in Nuuk, Greenland and Pituffik Space Force Base (formerly Thule Air Base). Norway is in the midst of spinning up an arctic base for long range drones in Andøya. Within the Arctic Circle are the Norwegian military bases of Bardufoss, Setermoen and Osmarka. All of these are being developed in conjunction with the US. THE NEW SILK ROAD (THE POLAR SILK ROAD)-ARCTIC SHIPPING ROUTES The Northern Sea Route is a shipping lane that connects Europe and Asia through the Arctic Ocean, north of Russia. It can reduce travel distance by up to 50% compared to the Suez or Panama Canal. The Northwest Passage which is a water route that connects the Atlantic and Pacific oceans through the islands of northern Canada. It can reduce travel distance by up to 32% compared to the traditional route through the Panama Canal. The Polar Silk Road is estimated to be between $4,000 billion and $26,000 billion. This is more than double China's GDP at its highest estimate. China has already invested over $90 billion in infrastructure, assets, and other projects in the Arctic. In a high-end climate change scenario, they could be open for shipping by the 2070s. Low end estimates say as soon as 2030. CONCLUSION In conclusion, the Arctic has transformed from a frozen expanse into a geopolitical arena filled with immense strategic and economic significance. Climate change continues to reveal untapped resources and new maritime pathways, turning the region into a frontier for potential conflict and competition among world powers. Territorial claims, resource extraction, and military developments are reshaping the Arctic, with Russia, the United States, Canada, and other nations vying for influence and access. Existing frameworks, like the Arctic Council and the Ilulissat Declaration, aim to foster cooperation and stability, yet the intensifying competition underscores the limits of current governance structures in addressing emerging challenges. As these countries push the boundaries of territorial claims and military reach, the potential for collaboration remains uncertain. The decisions made today will shape the Arctic’s future, with far-reaching implications for global geopolitics, environmental stewardship, and economic development. SOURCES: https://arctic-council.org/news/reflections-on-the-past-and-future-of-the-arctic-council/ https://arcticportal.org/images/stories/pdf/Ilulissat-declaration.pdf https://www.econstor.eu/bitstream/10419/256061/1/2008C18.pdf https://www.oceaneconomics.org/NOEP/Arctic/extractive/ https://polarjournal.ch/en/2023/02/21/russias-claim-to-north-pole-territory-officially-confirmed/ https://seapowermagazine.org/navy-admirals-detail-russian-arctic-build-up/ https://www.thearcticinstitute.org/russias-arctic-military-posture-context-war-against-ukraine/ https://hakaimagazine.com/videos-visuals/in-graphic-detail-the-polar-silk-route/ https://www.sciencedirect.com/science/article/pii/S0308597X23001744 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 28 Oct 2024 | EP43: Update on Geothermal Power Plants: Fervo Energy’s Project Red, Project Cape and FORGE | 00:27:02 | |
Summary: In this episode, we analyze Fervo Energy's recent advancements in enhanced geothermal systems (EGS) technology as part of geothermal power plants. The company's Project Red and Project Cape aim to generate electricity by harnessing deep geothermal heat using hydraulic fracturing techniques. While EGS has the potential to provide constant, baseload power, it faces challenges like low energy density, high water usage, and limited scalability. Despite these challenges, Fervo has achieved significant breakthroughs in drilling efficiency and production, demonstrating the potential for EGS to become a more commercially viable renewable energy source. We examine the advantages and drawbacks of EGS, comparing its performance with other renewable and non-renewable energy sources, ultimately highlighting the need for further research and development to determine its viability in a broader energy policy context. Questions to consider as you read/listen:
Long format: Update on Geothermal Power Plants: Fervo Energy’s Project Red, Project Cape and FORGE On September 10, 2024 at the Houston Enegery and Climate Startup Week, Fervo energy hosted its 2nd annual Technology Day, and just 2 days ago (October 24, 2024) press embargo for the presentations elapsed thereby permitting the slide ware and white papers to be published. There was some new information, most of it quite promising. It begs an update. The most important of which is this one. https://eartharxiv.org/repository/view/7665/ TL/DR Fervo Energy’s Projects Red and Cape use enhanced geothermal systems (EGS), which leverage hydraulic fracturing techniques to produce geothermal energy. EGS plants circulate water into deep, hot rock to create steam, driving turbines to generate consistent, emissions-free electricity. Fervo’s drilling innovations have significantly cut drilling time and costs, with Project Cape achieving 12 MW peak output. Advantages:
Challenges:
Fervo’s advancements are promising. At least preliminarily, it appears the ESG GTPP is “king” among the renewables. But it’s uncertain if EGS GTPP will meet broader energy needs and will become truly commerical. BACKGROUND Fervo Energy's Project Red and Project Cape Geothermal Production Plant (GTPP) that use hydraulic fracturing horizontal drilling techniques. When the shale methods of unconventional drilling is used in Geothermal is called Enhanced Geothermal Systems (EGS). THE TECHNOLOGY Just as a quick reminder and oversimplified EGS systems inject high-pressure water into the ground to reopen fractures in hot rock, creating a reservoir. That reservoir is heated by the naturally occurring hot rock at that depth and in that location. This heat is generated due to the radioactive decay of various materials and continuous formation processes within the Earth’s structure. It is then circulated with the resultant steam brought back to the surface to drive steam turbines. The turning of the steam turbines creates electricity. The steam is then, of course, cooled back into water and reinjected back into the system for reuse. It, unlike other renewables like wind or solar (PV) is not an intermittent and can in theory run constantly. Therefore, it is a base load energy source. In terms of the two domains of environmental concern, green house gases and water use, here is how ESG GYPP stack up. ESG GTPP is also technically emissions free. However, the other environmental concern, referring to water, is an issue. It does take a lot of water as you can imagine. During geothermal plant construction, water is mainly required for the construction of the production and injection wells. Estimated construction water use for both hydrothermal systems and EGS are less than 0.1 gal/MWh. Then, during operations, water is required for cooling processes (e.g., wet, dry, and hybrid). During plant operation, non-cooling-related consumptive water use was estimated and was found to be in the range of 0.001–0.12 gal/kWh. This water use is related to maintenance activities and other domestic uses. EGS has additional water requirements for simulation techniques, where a fluid which is often water is injected into the geothermal reservoir and circulated between injection and production wells to produce power. Some of this water is lost (1%–10%) as the reservoirs are not confined, and thus additional water is required to maintain system efficiency. Water Consumption (gallons per MWh) Process Geothermal Technology Meldrum et al. (2013) (Median Estimates) Sullivan et al. (2013) (Average Estimates) Plant Construction EGS N/A 13 Hydrothermal-flash N/A 1 Hydrothermal-binary N/A 1 Plant Operations Binary: Hybrid Cooling 460 N/A Binary: Dry Cooling 290 270 Flash 11 10 EGS: Dry Cooling 510 510 For visual learners I offer these two YouTube videos and this diagram: https://youtu.be/4S3aiMxfwhY?si=fYFlxcM_Kz3kK9Ky https://youtu.be/3GbEOrzZUBU?si=SN8go_nOlMeKm46Q FERVO ENERGY SITES Fervo has claim to have successfully drilled several horizontals. Specifically, at Project Cape fourteen wells have been drilled, and three of them have been stimulated. Meanwhile at Project Red one vertical and two horizontal wells were drilled. This drilling in and of itself isn't technically difficult using polycrystalline diamond compact (PDC) drill bits, but it is a unique use of the unconventional well drilling technology. Further, according to Servo’s press releases it “has consistently reduced drilling times and costs in horizontal, high-temperature, deep granite drilling. Though Cape wells are hotter and over 2,100 feet deeper than Project Red wells, Fervo drilled its fastest Cape well in just 21 days, a 70% reduction in drilling time from Fervo’s first horizontal well drilled at Project Red in 2022. This increase in drilling efficiency has translated into significant cost reductions, with drilling costs across the first four horizontal wells at Cape falling from $9.4 million to $4.8 million per well.” What is also claimed is that these EGS power plants do not go down as far as a typical shale well and instead is about half the depth. Less depth means less cost. That is a good thing. It has resulted in what Fervo has stated in its press release as follows: "Fervo performed a 30 day well test, the results of which established Project Red as the most productive enhanced geothermal system in history." Sounds amazing, right? Well, let’s look at the data. A 30-day production test was performed at the Project Cape three-well pad in July and August 2024. The first production well at the Cape site achieved a peak output of over 12 MW and a sustained output of 8-10 MW. The power capacity density is 9.1 MW per km3, 5-10 times larger than previous estimates for EGS technology. BUT WHAT DOES THIS MEAN IN ALL PRACTICAL EFFECT? Here are some comparisons: The average capacity of a newly installed wind turbine in the U.S. in 2023 was 3.4 MW. However, extremely large wind farms can produce over 700 MW. The size of solar photovoltaic (PV) power plants can range from less than 1 MW to over 2,000 MW. The Department of Energy (DOE) defines large hydropower plants as those with a capacity of more than 30 MW. Small hydropower plants generate between 100 kilowatts and 10 MW, while micro hydropower plants have a capacity of up to 100 kilowatts. Biomass power plants are generally larger than 15 MW, but can range from less than 1 MW to over 50 MW. A typical natural gas-fired power plant can produce anywhere from 20MW to over 1,000MW, depending on its size and design, with larger, combined-cycle plants generating closer to 1,000MW and smaller plants producing around 20MW; a common range for a single unit within a plant is between 200MW and 500MW. Coal-fired power plants can produce anywhere from 3,000 to 6,700 megawatts (MW). A small nuclear plant with one generator can produce 476 MW, while a large plant with multiple generators can produce 3,825 MW. In summary, while EGS geothermal plants have a peak output of 12 MW and a sustained range of 8-10 MW, they are relatively modest in scale compared to other types of non renewable power plants. However, their constant baseload power generation, independent of weather or time of day, gives them an advantage over wind and solar, which are intermittent. This leads us to understand that ESG GTPP may very well be the king of the renewables. This preliminary data is promising. (But there is the issue of water which we will address later). BUT THERE IS GOOD There are a lot of good things to consider. First this is not full production at the site instead it was a select number of horizontals stimulated. If it is all cranked up will it meet its projected goals? Time will tell. Not well noted but I think is very good is the fact that in this 30 day test at Project Cape as well as at Project Red there has been no reports of pressure issues or thermal decline. One of the early concerns in ESG and GTPP was that there was the potential for declining reservoir pressure due to extraction of hot water and steam without proper reinjection. Further with the pressure issue was fears that there was a potential for induced seismicity caused by injecting high-pressure fluids into deep rock formations to create fractures and extract heat, which can trigger small earthquakes if not carefully managed, potentially leading to instability in the reservoir and surrounding areas; this is a major concern for the widespread adoption of EGS technology. The pressure issues seem to not be an issue which is good. Further, "thermal decline" refers to the gradual decrease in the temperature of the geothermal reservoir over time, which leads to a reduction in the amount of heat available to generate electricity, essentially impacting the plant's power output and efficiency; this decline can occur due to factors like excessive fluid extraction, poor reinjection practices, and the natural cooling of the reservoir rock. This concern also was absent these results which is another great result for the technology. WHERE DOES ESG GTPP FIT INTO LOGICAL ENERGY POLICY? Now I have to be a little bit of a Debbie Downer. One of the major drawbacks of geothermal are the big five considerations that I write about all the time. As I write when we look at logical and unemotional energy policy we can to a degree reduce all of our goals (but for the priority/value judgement involved with environmental issues) into 5 statistics as they are quantifiable: (1) energy density, (2) power density, (3) energy return on investment, (4) capacity factor and (5) cold start up times. -ESG GTPP energy density: 4.186 MJ/kg (which is the lowest on our chart of power plant designs, even lower than phytomass and dry firewood) -ESG GTPP power density: 2.88 which puts is at among the highest of the renewable categories, but is an order of magnitude lower than other baseload power plants such as natural gas (482.1), nuclear (240.8) and anthracite (180.9) -ESG GTPP EROI: unknown but traditional geothermal is at 9 which is less than wind, higher than PV, but no where near piped natural gas fired power plant or any form of hydroelectric or nuclear -ESG GTPP Capacity factor: 71% which is leagues better than wind (34.6%) and PV (24.6%), better than natural gas fired power plants (54.4%) but less than nuclear (92.7%) -ESG GTPP cold start up time: 2-4 hours which is bottom of the pack with coal (6-48 hours) and nuclear (12 hours) and way less than natural gas fired power plants (several minutes to 6 hours) and wind, hydroelectric and solar (10 minutes) Finally, there are scalability issues. ESG and GTPP won’t work everywhere. They are location restricted. The most suitable locations are those with deep, hot rock formations with sufficient permeability to allow for fluid circulation, often found in areas with volcanic activity or tectonic plate boundaries. Current enhanced geothermal systems (EGS) are limited to brittle rock although Fervo is trying to deal with this limitation. In the United States, the best geographic areas that these conditions are thought to be met are California, Nevada, Utah, and Oregon. A significant amount of land area that is suitable for ESG GTPP is with Bureau of Land Management Land. Some research is starting to research of West Virginia and Pennsylvania may be suitable as well. It’s too early to see if ESG and GTPP will be the “fix” that everyone is looking for. Time will tell. Sources: Power Density: A Key to Understanding Energy Sources and Uses (MIT Press) by Vaclav Smil https://pangea.stanford.edu/ERE/db/GeoConf/papers/SGW/2024/Xing2.pdf https://pangea.stanford.edu/ERE/db/GeoConf/papers/SGW/2023/Xing.pdf https://pangea.stanford.edu/ERE/pdf/IGAstandard/SGW/2014/Shiozawa.pdf https://eartharxiv.org/repository/view/7665/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Nov 2024 | EP89: Winners and Losers: The Global South's Future in the Era of Nearshoring | 00:12:31 | |
Summary: In this episode, we discuss the concept of the "Global South," which encompasses countries outside of Europe and North America, often characterized by lower income and development. We explore the potential impact of reshoring and nearshoring on these countries, examining the opportunities and challenges they face. Some Global South countries are well-positioned to benefit from these trends due to factors like proximity to major markets, a skilled workforce, and government incentives. However, other countries, hindered by political instability, infrastructure deficiencies, and economic turmoil, may struggle to attract investment. We argue that the future of the Global South depends on its ability to leverage its demographic and resource advantages, while simultaneously addressing structural issues to ensure a central role in the evolving global economic order. Questions to consider as you read/listen:
Long format: Winners and Losers: The Global South's Future in the Era of Nearshoring By Justin James McShane TL;DR: The Global South refers to countries outside Europe and North America, often characterized by lower income, high population growth, and underdevelopment, but increasingly contributing to global economic growth. While some countries like Mexico, Vietnam, and India are positioned to benefit from trends like reshoring and nearshoring, others, such as South Sudan, Haiti, and Venezuela, face barriers like political instability and poor infrastructure. Countries with strategic locations, growing populations, and improving industries stand to gain, while those hindered by internal challenges risk being left behind. The Global South's future depends on leveraging demographic and resource advantages while addressing structural issues to play a key role in the global economic shift. What is the Global South and its future in the face of restoring and nearshoring? Introduction Although the term may be going out of style, the term "Global South" encapsulates a dynamic and diverse group of nations that lie outside the traditional Western economic and geopolitical spheres of influence, including much of Africa, Asia, Latin America, and Oceania. Historically associated with underdevelopment and marginalization, the Global South is undergoing a transformation, marked by demographic shifts, economic growth, and increasing geopolitical relevance. As global supply chain dynamics evolve through reshoring and nearshoring, opportunities and challenges emerge for these nations. This paper explores the current landscape of the Global South and its future role in global trade, focusing on how nations within this grouping stand to gain—or lose—from the trend toward manufacturing relocation closer to primary markets. Information The Global South is a term used to describe the countries outside of Europe and North America, which are often low-income and marginalized. It includes countries in Africa, Asia (excluding Israel, Japan, and South Korea), Latin America and Oceania (excluding Australia and New Zealand). The term was first used in 1969 by political activist Carl Oglesby, and gained momentum after the breakup of the Soviet Union in 1991. The term is used to group countries with common positions on global issues, and to describe global divisions. It's based on a mix of political, economic, and geopolitical commonalities. These countries are generally thought of as less developed. As a rough generality, they feature lower incomes, high levels of poverty, high population growth rates, inadequate housing, limited educational opportunities, deficient health systems and poor infrastructure in cities. The four largest economies in the Global South are China, India, Indonesia and Brazil. Other notable economies include Argentina, Mexico and Chile. Features of the Global South Countries within the Global South, particularly in Asia, are experiencing significant economic growth. They now contribute a substantial portion of global GDP growth, with some projections indicating that by 2030, several of the largest economies will be from the Global South (e.g., China, India, Indonesia). This shift in economic power is altering global trade dynamics and financial flows. The Global South has a large, young, and growing population. This demographic advantage provides a vast labor force, a growing consumer market, and an increasing influence in global issues due to sheer numbers. Many countries in the Global South are rich in natural resources, including minerals, oil, and agricultural products, which are crucial for global industries, especially in the context of transitioning to green energy and sustainable agriculture. There is an increasing trend of South-South cooperation where countries in the Global South collaborate directly, bypassing traditional North-South dependencies. This includes trade, technology transfer, and cultural exchanges which empower these nations to have a more significant say in global affairs. Many Global South countries are expressing dissatisfaction with policies from the Global North, especially regarding issues like climate change responsibilities, trade rules, and geopolitical alignments. This has led to a strategic distancing or alignment with non-Western powers like China and Russia, which present themselves as alternatives to Western hegemony. China and the Global South China aims to expand its market access. The Global South represents a vast consumer base with growing middle classes, which is particularly attractive for Chinese exports. Many Global South countries are rich in natural resources essential for China's industrial needs. Securing access to metals, minerals, oil, gas, and agricultural products is a key driver for Chinese investments. Through the BRI, China seeks to create a network of trade and infrastructure routes connecting Asia with Africa and Europe via land and sea. This initiative not only facilitates trade but also enhances China's geopolitical influence. China promotes its development model, dubbed the "China Model" or "Beijing Consensus," as an alternative to Western liberal capitalism. This model emphasizes state-led development, infrastructure investment, and less focus on political liberalization, which appeals to many Global South governments. China's involvement sometimes includes providing security assistance, which can be seen in anti-piracy operations off the coast of Africa or military base development in countries like Djibouti. Some critics refer to China's lending practices as "debt-trap diplomacy," where countries are given loans for infrastructure projects, potentially leading to strategic advantages or influence over debtor nations, although this perspective is debated. China has built strategic partnerships with countries in the Global South through forums like the Forum on China-Africa Cooperation (FOCAC), which foster economic, political, and cultural ties. US and the Global South The United States' engagement with the Global South is a nuanced topic, and while there are areas where the U.S. appears less engaged compared to other global powers like China, it's not entirely accurate to categorize the U.S. as disengaged. The U.S. maintains diplomatic relations with nearly all countries in the Global South. It engages through various bilateral and multilateral platforms, including the United Nations, G20, and regional organizations like ASEAN, OAS, and the African Union. Trade with the Global South is significant for the U.S. For example, trade with Latin America and the Caribbean is substantial, and Africa has been identified as a region of strategic importance for future economic partnerships. Initiatives like the African Growth and Opportunity Act (AGOA) aim to facilitate trade. The U.S. remains one of the largest providers of foreign aid to developing countries, through agencies like USAID (U.S. Agency for International Development). Programs focus on health, education, agricultural development, and governance, aiming to promote stability and economic growth. The U.S. has extensive military and security cooperation with countries in the Global South, including joint exercises, training, equipment sales, and counter-terrorism initiatives. This is evident in regions like Africa through operations like AFRICOM. Some argue that the U.S. has not kept pace with China's rapid expansion of economic and infrastructural influence in Africa and parts of Southeast Asia and Latin America. Public opinion in many Global South countries shows mixed feelings about U.S. engagement. While some view the U.S. as an essential partner, others see it as part of an old order that does not address current global realities or their specific needs. Reshoring and Nearshoring in the Global South Reshoring and nearshoring, where companies move production back to their home countries or to neighboring countries, respectively, can have several impacts on the Global South. Some Global South countries might benefit from increased foreign direct investment as companies look for alternative locations closer to their primary markets. Countries like Mexico, Vietnam, and parts of Eastern Europe have already seen benefits from this trend. If nearshoring leads to a spread of manufacturing away from traditional powerhouses like China, it could provide an opportunity for other Global South countries to diversify their economies, reducing dependency on single industries or markets. With companies setting up more advanced manufacturing facilities closer to home or in nearshore locations, there might be a transfer of technology and skills to the workforce in these regions, potentially leading to higher value-added industries. To attract foreign direct investment, countries will improve infrastructure and education, which can have long-term benefits for the local economy beyond just manufacturing. The countries in the global south who would benefit from resorting and nearshoring Several countries in the Global South are positioned to potentially benefit from reshoring and nearshoring due to a mix of geographical, economic, political, and infrastructural advantages. The clear potential winner in North America is Mexico. Proximity to the U.S., part of the USMCA (United States-Mexico-Canada Agreement), a large and skilled workforce, and existing manufacturing infrastructure make Mexico a top candidate for nearshoring. It has already seen an increase in manufacturing projects from both automotive and electronics sectors moving from Asia will help Mexico benefit from nearshoring. In Latin America, Costa Rica, Brazil and Chile are likely “winners” despite their demographic issues. Costa Rica has a strong focus on high-tech and medical device manufacturing, stable political environment, and high-quality human capital. Brazil has a very large internal market with natural resources in abundance. Infrastructure, bureaucracy and logistics are its main challenges other than demographic decline. Chile is also ready to benefit from nearshoring as will as it is known for its economic stability, business-friendly environment, and improvements in infrastructure, making it attractive for certain industries looking to diversify supply chains. In Southeast Asia, the clear potential beneficiary from nearshoring will be Vietnam. Vietnam has competitive labor costs, government incentives for manufacturing, a growing middle class for domestic consumption, and strategic location. It's becoming a significant manufacturing hub for electronics. Vietnam labor costs significantly less than China labor costs. In 2024, the average hourly labor cost in Vietnam is around $2.99 compared to $6.50 in China, making Vietnam the cheaper option for manufacturing labor. Also ready to benefit from reshoring is Malaysia, Thailand and Indonesia. Malaysia has a well-developed infrastructure, political stability, and an established manufacturing base, particularly in the electronics sector. Thailand is also attractive because it is strong already in automotive and electronics manufacturing, has good logistics and infrastructure, and is part of ASEAN which facilitates regional trade. Indonesia has a large labor force, significant domestic market, and government efforts to attract manufacturing with incentives. In South Asia, India is king. India has a large, skilled labor pool, government initiatives like "Make in India", improvements in infrastructure, and a burgeoning tech sector. It's looking to diversify beyond IT services into manufacturing. Companies like Apple are considering moving its operations to India. In Africa, Ethiopia and South Africa are the likely “winners” of nearshoring. Ethiopia has very low labor costs. The government is making a major push towards industrialization and is heavily investing in industrial parks. South Africa has violence and income distribution related issues but it has advanced manufacturing capabilities, particularly in automotive, and is a gateway to broader Africa. The countries in the global south who will not benefit from resorting and nearshoring There are some countries in the Global South that will not do well in reshoring and nearshoring. This is due to demographic decline issues, proximity to major markets, infrastructure deficits and political and economic instabilities. In Africa, Burundi, political instability, internal conflict, and poor infrastructure make it less attractive for foreign direct investment. The Central African Republic (CAR) features ongoing conflict, lack of stability, and minimal infrastructure development. Eritrea has highly restrictive economic policies, limited infrastructure, and focuses on military rather than economic development. South Sudan is embroiled in a constant state of civil war with economic instability, and almost non-existent industrial base. In South and Central Asia, Afghanistan has well known and diverse ongoing security issues, political instability issues, and underdeveloped infrastructure . All of these deter investment. Yemen is a failed state that is in a state of civil war with economic collapse, and a large humanitarian crisis that overshadow any potential for industrial growth. Plus, the Houthi rebels have turned away shipping in the Red Sea and has destroyed the image of the country as anything other than a rouge and dangerous stateless state. In Latin America and the Caribbean, Venezuela is a disaster. It features an economic crisis with political instability, hyperinflation, and is under international sanctions which greatly limit its attractiveness for new industrial investments even in the oil and gas sector. Haiti has been rocked recently by large scale political instability, natural disasters, extreme poverty, and lack of infrastructure. Argentina Some folks point to the demographics and the geography as a potential “winner” in the Global South. However, when one looks at the data, we see some significant headwinds outside of demographics that makes Argentina not as attractive for direct foreign investment. Argentina has experienced significant economic volatility, including high inflation rates, currency devaluations, and frequent changes in economic policy. Argentina's geographical location is not as advantageous for nearshoring to the U.S. as Mexico, given the distance. However, this doesn't preclude it from benefiting from trade within South America or from potential reshoring activities by European or other South American companies. Argentina has a significant domestic market which can be an attraction for some businesses looking to nearshore for market access rather than just production for export. But the economic policies, including protectionism at times, can deter foreign investment. The unpredictability of government policies, including sudden changes in foreign exchange controls and import barriers, can make it challenging for businesses to plan long-term investments. While labor costs are relatively competitive, labor laws and regulations can sometimes be seen as restrictive, which might influence companies' decisions on where to invest. Without significant reforms, continued economic instability might prevent it from fully participating in or benefiting from these global trends, potentially positioning it more as a bystander unless it carves out a niche in specific industries. Hyperinflation scares business. Full Stop. Conclusion The future of the Global South in the context of reshoring and nearshoring is a complex interplay of economic potential, geopolitical positioning, and structural readiness. While countries such as Mexico, Vietnam, and India appear poised to benefit significantly from these trends, others, constrained by instability or inadequate infrastructure, may struggle to capitalize on the shifting global supply chain. The rising importance of the Global South underscores its growing influence on the global economy, with some nations emerging as critical hubs of production and innovation. To maximize these opportunities, targeted investments in infrastructure, education, and governance will be essential. Ultimately, the trajectory of the Global South will depend on its ability to leverage its demographic and resource advantages to carve out a central role in the evolving global economic order. Sources: https://www.chathamhouse.org/publications/the-world-today/2024-02/measuring-power-global-south https://globalsouthstudies.as.virginia.edu/what-is-global-south https://commonslibrary.parliament.uk/what-is-the-global-south/ https://ip-quarterly.com/en/global-south-problematic-term https://foreignpolicy.com/2023/12/09/global-south-definition-meaning-countries-development/ https://www.dlri.co.jp/english/report_en/202304MI.html https://www.atlanticcouncil.org/event/china-in-the-global-south/ https://thediplomat.com/2024/01/how-china-defines-the-global-south/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 15 Nov 2024 | EP80: The Future of Guyana | 00:11:31 | |
Summary: In this episode, we examine the potential for growth in Guyana due to its recent oil discoveries. While the country's economic prospects appear promising, it faces various challenges, including poverty, emigration of skilled workers, limited infrastructure, and political instability. We explore the social and economic indicators for Guyana, its oil and gas sector, its taxation system, and its potential for investment. Ultimately, we argue that Guyana's future depends on its ability to effectively manage these issues and leverage its oil revenues responsibly to become a relevant player on the global stage. Questions to consider as you read/listen: 1. What are the most significant challenges that Guyana faces in its quest to manage its newfound wealth responsibly? 2. How will Guyana's growing oil and gas sector impact the country's economic, social, and environmental landscapes in the years to come? 3. What are the key strategies Guyana must implement to successfully transition from a raw commodity exporter to a more diversified and value-added nation? Long format: The Future of Guyana TL;DR Guyana has vast potential for growth thanks to major oil discoveries, which could help it become more modern and relevant globally. However, the country faces significant challenges like high poverty, brain drain, limited infrastructure, and political instability. Success depends on effectively managing these issues and leveraging oil revenues responsibly. If Guyana can do this, it may secure a stronger economic future and serve as a model for other small, resource-rich countries. Introduction Guyana, a small yet resource-rich nation on the northeastern coast of South America, stands at a critical juncture in its development. Following a series of major oil discoveries, the country now possesses an extraordinary potential to transform its economy and improve the quality of life for its citizens. However, this newfound wealth comes with its own set of challenges, ranging from a high poverty rate and emigration of skilled professionals to infrastructural limitations and political stability concerns. These factors will play a decisive role in shaping whether Guyana can leverage its resources to overcome poverty, curb the brain drain, and expand its influence within the hemisphere. This report delves into the many facets of Guyana’s evolving landscape, exploring its economic outlook, demographic profile, and infrastructure needs. INFORMATION Thanks to major oil discoveries Guyana has the POTENTIAL of developing itself into a more modern country. However, it does have significant headwinds. While it will not become a regional power player, it will likely join the ranks of relevant countries in the hemisphere. THE WORLD BANK HAS WRITTEN “The country is expected to remain one of the fastest growing economies with double-digit growth rates in 2023 and 2024 as additional oil fields start operation.” WHERE IS GUYANA AND ITS BASIC STATISTICS? Guyana is a country in the northeast of South America, on the Atlantic Ocean coast. Suriname to the east, Brazil to the south and southwest, and Venezuela to the west. It has 215,000 square kilometers, making it the third-smallest sovereign state in mainland South America. Its population of approximately 800,000 largely live along the northern coast. The interior is steppe, jungle and plains with mountains. Guyana is known for its many rivers, which is how it got its name, meaning "land of many waters". It's also home to Kaieteur Falls, the world's largest single-drop waterfall. English is the official language of Guyana which is interestingly the only South American country where English as the official language. Historically, it was part of the British Empire gaining its independence in 1966. They drive on the left. POVERTY Poverty is a significant issue in Guyana, with a high poverty rate and limited access to basic services in rural areas. Guyana's poverty rate is high, with the World Bank estimating that 48% of the population live in poverty. The Inter-American Development Bank (IDB) reported that in 2017, 41.2% of the population lived on less than $5.50 per day. NEET RATE In 2019, Guyana's NEET (not in education, employment, or training) rate for youth was 45.66%. NEET is the percentage of young people in a given age group who are not in education, employment, or training. For comparison purposes, in Latin America in 2023, 25.9% of young women were NEET, compared to 13.5% of young men BRAIN DRAIN Guyana's brain drain is the emigration of skilled and educated professionals from the country, which has had a significant impact on the country's ability to develop. Guyana has one of the highest emigration rates in the world, with over 55% of its citizens living abroad. More than 80% of Guyanese with a tertiary education have left the country. This is a significant issue for the future. DEMOGRAPHIC CONCERNS The proper way to look at whether or not a country is in demographic decline is to look at three variables: Total Fertility Rate (TFR), infant mortality rate and life expectancy. Ideally, you want a TFR is above the minimum replacement rate which is 2.1. You want a low mortality rate because having a high TFR but also a high infant mortality rate, then you will be in demographic decline. Thinking very myopically and morbidly, you do not want a long life expectancy because you will have a lot of non-working/non-producing folks that need to be supported. The 2022 Total Fertility Rate (TFR) for Guyana is at 2.37 which is above the required 2.1 replacement rate to avoid demographic decline. However, it has declined a lot since the 1960s where it was 6.0. And when we look at Guyanese TFR versus other countries, we see the following: The infant mortality rate is shrinking well and is comparative to other developed countries as shown below: INFRASTRUCTURE Guyana's infrastructure is experiencing significant growth, but there are still challenges, particularly in rural areas. Guyana's digital infrastructure is limited, especially in rural areas. The country's terrain makes it difficult to deploy the necessary infrastructure for universal broadband access. Satellite internet providers are expected to play a key role in connecting rural communities. The coastal main road system is not continuous, and there are gaps where rivers intersect. People and goods move across these gaps by ferry, the Demerara Harbour Bridge, and the Berbice Bridge. Guyana is experiencing a construction boom, but there are several challenges. These include a shortage of skilled labor, regulatory challenges, corruption, and bureaucratic red tape. China is very heavily involved in this construction boom. Guyana is a formal part of the Chinese Belt and Road Initiative. ECONOMY The Guyanese economy is dominated by oil and gas. It will be discussed in its own section. Guyana's economy is heavily dependent on exporting six commodities: sugar, gold, bauxite, shrimp, timber, and rice. These commodities make up nearly 60% of the country's GDP. Mineral fuels, oils, and distillation products make up 54% of Guyana's total exports. Railway, tramway locomotives, rolling stock, and equipment make up 30% of Guyana's total exports. Non-traditional exports include value-added wood products, seafood, light manufacturing, garments and textiles, tourism, horticultural products and agro-processing, wood, ceramic and woven handicrafts, information and communications technology, and processed foods. Major export products: Crude Petroleum 85.9% ($15.9B), Gold 7.36% ($1.36B), Rice 2.32% ($429M), Aluminium Ore 1.04% ($192M), and Hard Liquor 0.65% ($120M). (2022) Export partners: US$18.5 billion; Panama 31.6%, Netherlands 15.5%, United States 12.8%, United Arab Emirates 6.39%, and Italy 6.35%. (2022) GDP Guyana's GDP in 2022 was $14.48 billion, and its GDP per capita was $16,777. In 2022, Guyana's GDP growth rate was 57.80%. In 2022, Guyana's real GDP was $4,608,724,292. Guyana's economy has experienced a period of double-digit GDP growth since the discovery of large offshore oil deposits in 2019. UNEMPLOYMENT As of 2023, Guyana's unemployment rate was 12.43%. This is the percentage of the labor force that is unemployed but available and looking for work. In 2023, Guyana's youth unemployment rate was 25.87%. This is the percentage of the labor force aged 15–24 that is unemployed but available and looking for work. IN 2020 it was 15.7%, in 2021 14.93% and 2022 12.43.% EDUCATION LEVEL AND NUMBER OF UNIVERSITIES Guyana's average education level is 9 years of schooling. A child who starts school at age 4 can expect to complete 12.2 years of school by age 18. In 2022, Guyana's literacy rate was 90.03%. In 2019, 4.469% of the population over 25 had at least a bachelor's degree or equivalent. Only 2% of children of the official primary school age are out of school. There are at least 11 universities and colleges in Guyana and 8 post secondary education trade schools. LABOR FORCE Guyana's workforce is made up of people ages 15 and older who are employed or looking for work in the production of goods and services. The workforce is diverse, with a relatively young population and a narrowing gender gap. The majority of workers are employed in the private sector, with a significant number working in the not-for-profit sector. In 2023, the labor force participation rate was 62.5% for men and 39.6% for women. This is higher than the labor force participation rate in high income countries. Guyana's education system has improved, leading to a more skilled workforce. However, there is a shortage of specialized skills in technical and vocational areas. THE OIL AND GAS SECTOR The future prospects of Guyanese oil and gas is pretty impressive. In 2021, most of the oil was sold to Asian countries, including China and India, while shipments to Europe accounted for around 16% of the total. In 2022, that dynamic has radically changed. While Asian buyers remain important, Europe has assumed the lion’s share of buying of Guyanese crude. From January to early September, it is estimated that cargoes to Europe, average 110,000 bpd, account for 49% of the Caribbean country’s oil exports. In 2023, Guyana produced around 142.9 million barrels of oil, or approximately 391,000 barrels per day. This is five times more than the amount of oil produced in 2020. Guyana's oil production in 2024 is estimated to be around 228 million barrels. This is a significant increase from 2023, when Guyana produced 68.7 million barrels in the same period. Exxon plans to increase its crude oil production by 18,000 b/d from the Unity platform. So it is booming. But there are issues brewing and overflowing. There are several issues and arbitration in the oil and gas industry in Guyana, including: Chevron and ExxonMobil's dispute over Hess Chevron and ExxonMobil are involved in arbitration over a disputed stake in a Guyana oil field: Background: Chevron proposed a $53 billion takeover of Hess Corporation, which owns a 30% stake in the Guyana oil project. ExxonMobil, which operates the field with a 45% stake, claims a right of first refusal on Hess's stake. ExxonMobil is concerned that the merger could be a way to transfer assets, which would give ExxonMobil the right to buy out Hess's share. Arbitration: An arbitration hearing has been scheduled for May 2025. The companies are confident that the arbitration will confirm that a right of first refusal does not apply to the merger. China National Offshore Oil Corporation (CNOOC) is involved in arbitration over the Stabroek oilfield in Guyana in connection with a proposed merger between Chevron and Hess. CNOOC and ExxonMobil, which own 25% and 45% of the Stabroek block, respectively, are disputing the terms of their joint operating agreement. They claim a right of first refusal to Hess's stake in the block, which is a key part of the merger. CNOOC filed an arbitration application on March 15, 2024, and ExxonMobil and CNOOC merged their arbitration claims into a single case on March 26, 2024. The arbitration threatens to delay or even derail the merger, which was originally scheduled to close by October 2024. Chevron and Hess have agreed to extend the timeline by a year if the arbitration continues. NATIONAL RESOURCE FUND In 2019, Guyana created a Natural Resource Fund to help manage its wealth. The fund's resources are deposited in a bank in New York, and the parliament approves annual transfers to the national budget. It is funded by revenue from oil, gas, and mineral extraction, including: profit oil, royalties, and income tax or corporate income tax. The NRF is managed by the Ministry of Finance, which provides the Bank of Guyana with an Investment Mandate. The Bank of Guyana then manages the fund's operations. POLITICAL STABILITY Guyana has a history where political stability was challenged by ethnic divisions between the Afro-Guyanese and Indo-Guyanese communities, which has largely shaped the political landscape. The 1992 elections marked a shift towards more democratic governance with international oversight, but stability has been tested by election disputes in subsequent years. The 2020 elections in Guyana were highly contentious, leading to a significant political crisis due to allegations of electoral fraud. However, international pressure, legal proceedings, and recounts eventually led to the acceptance of the results by the major political parties, indicating a resilience in the democratic process despite initial turmoil. Guyana's World Bank Political Stability and Absence of Violence/Terrorism estimate for 2022 was around 0.02706, which suggests a relatively neutral stance in terms of stability, with a percentile rank improving to 58.02%. Political parties in Guyana are still largely organized along ethnic lines, which can lead to social and political tension, although recent political engagements have shown some signs of thawing. CORRUPTION Guyana has an average score of 40 and is ranked 87 out of 180 countries for the fourth consecutive year on the Corruption Perceptions Index. Leading the regional rankings are Uruguay and Canada, each with a score of 74, followed by the United States with 69. In Venezuela (14), Haiti (17) and Nicaragua (19), the countries with the lowest scores, it is difficult to draw a line between public institutions and criminal activities. There's a noted public perception of corruption, which impacts political stability. The government's handling of oil wealth and anti-corruption measures will be crucial for future stability. HOW TO EXAMINE INVESTING IN FOREIGN CAPITAL PROJECTS or FDI Here are some of my bigger take aways: Whenever you are going to make a capital investment in a foreign market as especially when it involves property, you’d do well to consider several things: respect for the rule of law for private property ownership and stability of the regime. Primarily, one looks for how long entrenched and how well developed the legal system is with respect to private property ownership and especially foreign ownership of property. You are also, of course, concerned about taxation. Finally, NIMBY related issues should be considered. Here is what I found:
In summary, Guyana's constitution protects the right of foreigners to own property and land in the country. However, the property rights system in Guyana is complex and can be convoluted. Guyana’s property rights framework comprises two distinct registries—the Deeds Registry and the Land Registry—with differing legal bases, leading to bureaucratic inefficiency, lack of transparency, and public mistrust. This system complicates property ownership transfers and deters foreign investment due to lengthy procedures and unreliable documentation. Foreign and domestic banks avoid mortgages in the traditional sense, viewing property-based loans as reputational consumer loans due to unreliable registry records and costly foreclosure processes. This undermines the potential for using property as collateral in financing, which is critical for capital-intensive sectors like oil and gas. The Local Content Act (adopted in 2021) and the Investment Act of 2004 further fortifies this protection for investments and stipulates non-discrimination between foreign and domestic investors. In Guyana, the Local Content Act (LCA) of 2021 prioritizes the use of Guyanese goods, services, and workforce within the oil and gas sector, essentially forcing foreign companies operating in the industry to partner with local businesses and build local capacity, while the Investment Act of 2004 provides a broader framework for attracting foreign investment, ensuring that both local and foreign companies have a legal environment to operate within, although the LCA sets specific requirements for oil and gas operations to prioritize local participation. Companies operating in the oil and gas sector must submit local content plans outlining how they will meet the stipulated quotas, potentially impacting contract awards based on their commitment to local content. Key to me is that The Investment Act provides legal protections and guarantees to foreign investors, aiming to attract international companies to Guyana's oil and gas sector while still ensuring local participation through the LCA. According to Guyana's Investment Act, foreign investors are protected by guarantees such as the right to freely repatriate profits and dividends, non-discriminatory treatment compared to domestic investors, the ability to employ foreign personnel when necessary, and the right to seek international arbitration in case of disputes such as International Centre for Settlement of Investment Disputes (ICSID). <<<As an aside, the Guayanize government is very aggressive in trying to get oil and gas folks to “co-invest” in other industries. Like they will not leave you alone about it. The Government of Guyana is providing incentives for investments in sectors like agriculture, business support services, healthcare, information technology, manufacturing, and energy, particularly in remote areas. These incentives are administered through the Guyana Office for Investment (GOINVEST). >>>> TAXATION Entities engaged in petroleum activities would normally be taxed at a rate of 25% corporation tax as a non-commercial company. Other entities are taxed more or less as outlined here: https://www.grantthornton.aw/contentassets/e2c0e51bfb8f487b909dbc5420db05d3/tax_guyana-oil--gas-2022.pdf Briefly… Corporation Tax: Companies in the petroleum sector are taxed at 25% as non-commercial entities, with a dual rate (25% and 40%) applied for those involved in both commercial and non-commercial activities. Quarterly advance taxes are mandatory, and audited financial statements are required for filing. Expenses for income production are deductible, and losses can be carried forward indefinitely. Capital Gains Tax: A 20% rate applies to gains from asset disposal held over a year, with losses available for offset for up to 24 years. Withholding Taxes: Payments to non-residents, including dividends, interest, royalties, and rents, are generally taxed at 20%. Treaties with Canada, the UK, and CARICOM allow for reduced rates in certain scenarios. VAT: A 20% VAT applies to most goods and services, while essential items and exports are exempt. VAT registration is mandatory for taxable activities exceeding GYD 15,000,000 (about $70,000 USD) annually. Import Duties: Range from 5-150%, with exemptions available for specific cases, like temporary imports. Wage Tax and National Insurance: Employers must withhold income tax and contribute to National Insurance. Employee income up to GYD 1,800,000 is taxed at 28%, and amounts beyond that at 40%. Property Tax: Rates vary based on property valuation, starting from 0.5% for values exceeding GYD 40,000,000 ($190,000 USD). INFRASTURCTURE This is from my personal observations from when I went there. The country has a low percentage of paved roads, and the road network is aging and needs to be expanded. The main shipping port is congested, which affects imports, exports, and consumers. Guyana has frequent and unpredictable electrical outages, and I am told high electricity costs. Internet and telecommunications at the level that we take for granted here in the US is few and far between. There is a complete lack of a deepwater port, massively outdated infrastructure and a near total lack of road safety features. NIMBY While Guyana does not have a large or widely established environmental lobby, there is a growing movement of citizens and activists actively campaigning against the development of oil and gas, particularly focused on challenging ExxonMobil's operations and pushing for stricter environmental regulations, highlighting the work of lawyers like Melinda Janki who are leading legal battles against oil drilling in the country. This can be considered a developing environmental lobby against oil and gas development in Guyana, but it has not gathered too much steam and the money being generated is real and accounts for over 50% of the country’s budget. GLOBAL VALUE CHAIN If one is a structuralist in terms of economic development and adheres to Rostow's five stages of economic growth, then clearly Guyana is in the “take off stage” as it meets all of the conditions for take-off but certainly is not in the drive to maturity, maturity or age of mass consumption stages yet. Right now Guyana sits at the second lowest stage of the Global Value Chain (GVC) as a pure raw commodity exporter. To move up the GVC to the next level which is manufacturing and/or processed/refined commodity exporter is through the well known process of focusing on and providing: Improving coordination Governments must create a clear vision and ensure the private sector is involved and capital is deployed in an efficient and controlled manner. What activities will be incentivized through reduced taxation, grants, preferential loans and the like and what activities will be “punished” through strict regulation and/or taxation needs to be very clearly defined and outlined. Attracting investment Opening borders and attracting foreign direct investment (FDI) will help countries enter GVCs and advance up the GVC ladder. Improving infrastructure Countries must invest in modernizing communications, roads, railways, and ports. Reducing border delays Small steps like speeding up customs can help countries transition from commodity exports to basic manufacturing. Upgrading processes and products Countries can improve efficiency by adopting better technology, or upgrade the quality of their products by using higher quality materials or through the use of domestic design. Investing in education and training Countries must invest in education and vocational training to complement their GVC strategies. Comment: What appears to be lacking is the first essential element: a unified vision. By self-admission, the government seems to be focused on attracting FDI which it does very well in the oil and gas sector, but not so well outside of that sector. It is making a major priority that one can see in infrastructure. Over the course of a year one can truly see the wide scale construction of roads and bridges, even the port is being improved, the electrical grid and basic as well as advanced electricity delivery has improved much and telecommunication and internet availability and quality (speed of data transfer) has improved a lot. Starlink has been invaluable although it is expensive for the average Guyanan. The average Guyanan in Georgetown (the capital) can be seen with a cell phone certainly and even the poor are seen largely with cell phones in hand in Georgetown. The two main carriers are Digicel and GT&T mobile. They have areas of 5G coverage even. Outside of Georgetown, there is no cell phone coverage. But also, in fairness, there’s not a lot of people outside of Georgetown and the coastal north. A satellite phone is your only option outside of the Georgetown area. When asked about a vision, officials in the government focus on infrastructure and FDI in oil and gas. When prompted to discuss moving towards thoughts of manufacturing or processed/refined commodity exporter activities, the attitude seems to be best summed up as “we’ll get there”. But one must openly ask if there is no vision beyond the immediate construction related tasks how one can expect to advance beyond being merely a raw commodity exporter? Conclusion In sum, Guyana's future hinges on its ability to navigate the complex interplay between rapid economic growth and the structural issues that have long hindered its progress. With its impressive GDP growth, driven by the booming oil and gas sector, Guyana could be on the cusp of becoming a more prosperous and modern nation. Yet, realizing this potential will require strong governance, substantial investment in education and infrastructure, and effective management of natural resources. If Guyana can address its developmental and social challenges, it may set a precedent for other small, resource-rich nations aspiring to leverage newfound wealth for national growth and stability. Guyana’s journey will be one to watch as it strives to become a relevant player on the global stage. Sources: https://webimages.iadb.org/publications/english/document/Guyana-Property-Rights-Study.pdf https://www.state.gov/reports/2023-investment-climate-statements/guyana/ https://home.fau.edu/peralta/web/facs/braindrain.pdf https://greenfdc.org/countries-of-the-belt-and-road-initiative-bri/ https://guyanainvest.gov.gy/becoming-an-exporter/ https://www.statista.com/statistics/1392310/gross-domestic-product-gdp-by-fiscal-year-guyana/ https://www.statista.com/statistics/808521/unemployment-rate-in-guyana/ https://www.worldeconomics.com/Indicator-Data/ESG/Social/Mean-Years-of-Schooling/ https://www.macrotrends.net/global-metrics/countries/GUY/guyana/literacy-rate https://statisticsguyana.gov.gy/wp-content/uploads/2020/07/GLFS_Bulletin_2019.pdf Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP09: Do Necons or Active measures define the defund Ukraine movement? | 00:03:22 | |
Summary: In this episode we explore the potential motivations behind the "defund Ukraine" movement. We posit two primary scenarios: Scenario 1 attributes the movement to an organic backlash against the post-9/11 US neoconservative agenda and its perceived failures, like the Iraq War. Scenario 2 suggests the movement is a product of successful Russian "active measures," a covert propaganda campaign aimed at destabilizing foreign opponents through misinformation and manipulation. We invite further exploration of these possibilities, highlighting the importance of discerning whether the movement is a genuine response to US foreign policy or a result of Russian influence. Questions to consider as you read/listen:
Long format: Necons and Active measures define Ukraine This may kick up a hornet’s nest or it may not, but here it goes…. If I had a bet, the outcome of the election won’t decide IF the US becomes more isolationist, but rather to what degree. The neocon days of democracy spreading, being world police and the like seems to me to have pretty much spun out of energy. The wholesale seizure of policy by the neocons after 9/11 has come and it seems gone except for some entrenched isolated parts of the bureaucracy. It’s interesting to contemplate if the current anti-Ukraine or defund Ukraine movement is an organic reaction to the neocon movement post 9/11 or if it is successful Russian active measures exercise as some suggest. Just a thought. Is it the former or the latter or a combination of the both? I guess my main focus I’m trying to discern is whether or not the defund Ukraine message is either: Scenario 1: an organic, referring to one that has come about natively (without outside influence), as a reaction to internal stimuli mostly likely as an abrupt reaction to the US neocon revolution (Bernard Lewis, Lulu Schwartz, Richard and Daniel Pipes, David Horowitz, and Robert Kagan as executed by Bush Jr, Paul Wolfowitz, Elliott Abrams, Richard Perle, Paul Bremer, and Douglas Feith and as some suggest Cheney, Armitage and Rumsfeld) post 9-11 and questions and the experience of the invasion of Iraq Or Scenario 2: It is a successful Russian active measures event. Active measures referring to an actor’s covert propaganda campaign that is used to destabilize a foreign opponent through misinformation to affect the news cycle or social media echo chambers or recruitment of unwitting protagonists of a cause that the unwitting person leans towards and messages them until they sway fully and actively in the desired direction (useful idiots)? Suggested additional reading: Thomas Rid’s Active Measures: The Secret History of Disinformation and Political Warfare Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 07 Nov 2024 | EP68: Think Building a Cutting-Edge Chip Factory is Easy? Think Again. Here's the Dirty Truth Behind Clean Rooms | 00:14:33 | |
Summary: In this episode, we discuss the critical role of cleanrooms in semiconductor manufacturing, emphasizing the need for stringent control over particles, temperature, humidity, and chemicals to prevent contamination. We outline the standards including ISO 14644-1 and ISO 14644-2 standards for cleanroom classification and maintenance, explaining how laminar airflow, HEPA/ULPA filtration, and meticulous personnel practices ensure a contamination-free environment. We further delves into the construction and maintenance of ISO Class 5 or better cleanrooms, outlining essential components like modular panels, sealed windows, pressurization, and high air change rates. We highlight the importance of routine monitoring, cleaning protocols, personnel training, and scheduled maintenance in preserving the cleanroom environment and ensuring the successful production of high-quality semiconductors. It really is not that easy to start up from scratch and designing, building and maintaining a clean room is just one part of the complexity of modern advanced semiconductor fabrication. Questions to consider as you read/listen:
Long format: Think Building a Cutting-Edge Chip Factory is Easy? Think Again. Here's the Dirty Truth Behind Clean Rooms The news is full of countries stating that they are going to make semiconductors and fabricate them. Whether it is India or UAE or Germany or Italy or Vietnam. It is really not that simple. So you want to make a cutting edge chip fabrication plant from scratch with no native experience? Good luck. Just one level of difficulty is in designing, constructing and maintaining a clean room. INTRODUCTION Cutting-edge semiconductor plants need clean rooms to prevent contamination during the production of microchips, which are incredibly sensitive to particles and impurities. Even a single dust particle or microscopic contaminant can cause defects in semiconductor chips, rendering them unusable or significantly reducing their performance and reliability. Here’s why clean rooms are essential: Particle Control: Semiconductor chips are made using processes that involve etching and layering at microscopic scales. Particles much smaller than a human hair can interfere with these processes, leading to malfunctions. Clean rooms keep airborne particles to a minimum to avoid contamination. Temperature and Humidity Regulation: Semiconductor manufacturing is extremely sensitive to changes in temperature and humidity, which can affect chemical reactions and the precision of lithography (the process of patterning circuits on chips). Clean rooms maintain strict environmental control to ensure consistent quality. Chemical Control: Many materials and chemicals used in semiconductor production are reactive. Clean rooms limit contaminants, including gases and ions, which could react with these chemicals and ruin the chips. Precision in Lithography: Advanced semiconductor chips are made at extremely small scales, with features as small as a few nanometers. For lithography to be precise, the environment needs to be tightly controlled, and vibrations must be minimized. Clean rooms help to provide these conditions. Yield Improvement: The production of semiconductor chips is complex, and defects are costly. Clean rooms help maximize the yield of usable chips per wafer by reducing defects, which is crucial given the high costs associated with semiconductor manufacturing. Clean rooms are classified by the number of particles they allow per cubic meter, with semiconductor fabs often requiring Class 1 or even stricter classifications, meaning they permit as few as one particle per cubic meter of air. These conditions are fundamental for producing the advanced technology found in modern electronics, where even minor defects are unacceptable. THE STANDARDS ISO 14644-1 and ISO 14644-2 are critical standards for defining and maintaining cleanroom environments, especially for industries like semiconductor manufacturing, where air purity is paramount to avoid contamination. ISO 14644-1: Classification of Air Cleanliness by Particle Concentration ISO 14644-1 provides criteria for classifying the cleanliness of air in cleanrooms by measuring particle concentration. Semiconductor facilities commonly require an ISO Class 5 or lower environment, demanding stringent control of airborne particles, especially since microscopic contaminants can severely impact microchip functionality. For ISO Class 5, a cleanroom must have a maximum of 3,520 particles per cubic meter at a size of 0.5 microns or larger. This level of cleanliness ensures that the semiconductor manufacturing process remains largely free of particulates that could damage the delicate circuitry and photolithography patterns on silicon wafers. ISO 14644-2: Monitoring and Compliance Verification ISO 14644-2 complements ISO 14644-1 by providing guidelines for monitoring, verifying, and maintaining the cleanliness of the cleanroom environment over time. This standard specifies the testing frequency and protocols necessary to confirm continued compliance with the established cleanliness class, based on particle concentrations. For semiconductor cleanrooms, this monitoring process is critical due to the sensitivity of microelectronics to particulate contamination. Laminar Airflow in Semiconductor Cleanrooms Laminar airflow is essential in semiconductor cleanrooms to maintain cleanliness by ensuring a consistent, unidirectional flow of air, typically moving vertically from the ceiling to the floor. High-efficiency particulate air (HEPA) filters or ultra-low penetration air (ULPA) filters are often used to filter incoming air, ensuring only clean, particle-free air reaches sensitive areas. This airflow system helps sweep away contaminants generated by personnel or equipment, preventing particles from settling on wafers and equipment. Monitoring and Control Monitoring the cleanroom involves continuous particle counting and environmental control to detect deviations from cleanliness standards. Advanced monitoring systems are used to detect particle concentration, humidity, and temperature. Semiconductor cleanrooms often have real-time particle counters, which are strategically placed to alert personnel to any increase in particle concentration immediately. This ongoing monitoring is vital for maintaining compliance with ISO standards and detecting any potential contamination risks promptly. Cleanroom Suits and Personnel Training Personnel working in semiconductor cleanrooms wear specialized cleanroom suits, which cover their entire body, including gloves, masks, and sometimes face shields. These garments are designed to contain human-generated particles such as skin flakes, hair, and other contaminants. The suits are made from materials that do not generate lint or static and are typically reusable after decontamination. Proper training of personnel is another critical aspect of maintaining an ISO Class 5 environment. Staff must be trained on correct gowning procedures, handling of cleanroom equipment, and movement techniques within the cleanroom. Even minimal movement can disturb airflow and release contaminants, so personnel are trained to minimize unnecessary motion. They also learn protocols for entering and exiting the cleanroom to prevent cross-contamination from external areas. Constructing and maintaining ISO Class 5 or better cleanrooms for semiconductor manufacturing requires careful design and rigorous protocols to control particulate contamination. Here’s a breakdown of the key components and practices:
Maintenance of ISO Class 5 or Better Cleanrooms
Through these construction and maintenance practices, ISO Class 5 cleanrooms are built and preserved to meet the stringent cleanliness standards needed for semiconductor manufacturing. Conclusion ISO 14644-1 and ISO 14644-2 establish the standards and protocols for cleanroom classification, monitoring, and compliance verification, ensuring that semiconductor facilities can achieve and maintain the required level of air cleanliness. Laminar airflow, continuous monitoring, cleanroom suits, and personnel training are all integral to meeting these stringent standards and preventing contamination, which is critical to the high-precision semiconductor manufacturing process. Sources: Cleanrooms for Semiconductor Fabrication Plants: A Comprehensive Guide to Design, Construction, and Operation by Charles Nehme Clean Room Design Minimizing Contamination Through Proper Design By Bengt Ljungqvist, Berit Reinmuller Cleanroom Technology: Fundamentals of Design, Testing and Operation by William Whyte Jr. Semiconductor Microchips and Fabrication: A Practical Guide to Theory and Manufacturing 1st Edition by Yaguang Lian Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 04 Nov 2024 | EP55: Why don’t we have super robots that do all of our dirty work for us yet… | 00:06:49 | |
Summary: In this episode we explore the challenges of creating super robots that can perform human tasks, focusing specifically on the area of computer vision. We rely on Kai Fu-Lee’s book “AI 2040” to explain that computer vision involves teaching computers to "see" not just by capturing images, but by understanding what they see. This process encompasses several levels of complexity, ranging from basic image processing to scene comprehension. We highlight that humans effortlessly apply knowledge of the world to their vision, but teaching this to a computer is a major challenge addressed by innovative technologies like convolutional neural networks. Questions to consider as you read/listen: 1. What are the major challenges in developing robots that can perform complex tasks? 2. How does computer vision contribute to the development of intelligent robots? 3. What are the key differences between human vision and computer vision? Long format: One of the most difficult aspects of getting robots to “work” is the interface of dexterity and “seeing” (computer vision). Computer vision (CV) is a sub branch of AI that focuses on the problem of teaching computers to see. The word “see” here does not mean just the act of acquiring a video or image, but also making sense of what a computer sees. Computer vision includes a following capabilities, increasing complexity: Image capturing and processing—use cameras and other sensors to capture real-world 3D scenes in a video. Each video is composed of a sequence of images, and each image is a two-dimensional array of numbers representing the color, where each number is a “pixel.” Object detection and image segmentation—divide the image into prominent regions and find where the objects are. Object recognition—recognizes the object (for example, a dog), and also understands the details (German Shepherd, dark brown, and so on). Object tracking—follows moving objects in consecutive images or video. Gesture and movement recognition—recognize movements, like a dance move in an Xbox game. Scene understanding—understands a full scene, including subtle relationships, like a hungry dog looking at a bone. When we humans “see“ we are actually applying our accumulated knowledge of the world – everything we’ve learned in our lives about perspective, geometry, common sense, and what we have seen previously. These come naturally to us, but are very difficult to teach a computer. This is a quite fine use of AI: the invention of convolutional neural networks (CNN). Source: AI 2040 by Kai Fu-Lee Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP 33: Content Moderation, information Industrial Complex | 00:04:42 | |
Summary: In this episode we examine the rapid growth of the content moderation industry, comparing it to the military industrial complex. We highlight the high profit margins generated by content moderation services, which have minimal production costs. We speculate on the potential geopolitical impacts of this industry's expansion, particularly in relation to information control, globalization, and international relations. Questions to consider as you read/listen:
Long format: Content Moderation, information Industrial Complex I am increasing becoming aware of the information/censorship industrial complex. Not so much from the censorship or restrictions on free speech and “what, if anything, we should ‘do’ about the spread of misinformation and other active measures types of campaigns”. I’m focusing more on the money and its growth. The global content moderation services market size was estimated at USD 9.67 billion in 2023 and is expected to grow at a CAGR of 13.4% from 2024 to 2030. USD 13 billion in 2024 to USD 40.37 billion by 2032. This is just math and facts. I’m placing no judgement on it’s necessity or usefulness. It is big big big money. And the beautiful thing about it is that it is very very very high margin. Unlike the military industrial complex (MIC) where in the MIC it actually makes bullets and rifles and artillery shells and missiles and planes that have hard costs, content moderation has no hard costs. If Brazil-like efforts spread to the EU, the projections above in terms of the information/censorship industrial complex will easily double. It is big big money. The military industrial complex is old money. The information industrial complex is new money and much much more powerful. From a demographic and geopolitical point of view, what are we seeing now with the dawning of the information/censorship industrial complex. If it continues to grow and if Brazil-like efforts against X continue to be the norm, what can we expect the impact on geopolitics to be? How does this shape or impact our unprecedented re-shoring of manufacturing? How does accelerate or decelerate the fall of China? How does this accelerate or decelerate de-globalization? How does it impact traditional alliances such as NATO? How does it impact Ukraine? Just what are the ripples? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP12: Does it make sense for US taxpayer money to go to “fix”’ the Lobito Atlantic Railway (LAR) Benguela railway corridor? | 00:10:16 | |
Summary: In this episode we explore the economic feasibility of investing US taxpayer money to improve the Lobito Atlantic Railway (LAR) in Angola, aiming to facilitate the transportation of cobalt, lithium, rare earth metals, and copper from the Democratic Republic of Congo (DRC), Zambia, and Angola to the Atlantic port of Lobito for eventual US consumption. We raise concerns about the feasibility of this project due to the significant Chinese presence in cobalt mining and processing in the DRC, with Chinese companies controlling a large majority of cobalt production and refining. Additionally, we question the impact of the project on US consumption given that most non-Chinese cobalt refineries are located far from the proposed Atlantic port, suggesting that the investment might not significantly increase US access to these critical minerals. Questions to consider as you read/listen:
Long format:
Does it make sense for US taxpayer money to go to “fix”’ the Lobito Atlantic Railway (LAR) Benguela railway corridor? I wish to look at this project strictly from an apolitical fact-based economic perspective. Good old fashioned ROI. I freely acknowledge that $250m is on the scale of US government backed investment is minor/small, but as I understand the hypothesis of this project, it still makes me scratch my head leading me to ask myself “what am I missing?” As I gather the hypothesis behind this investment is: By “fixing” or enhancing the Lobito Atlantic Railway (LAR) for train-based shipping along the Benguela railway corridor, it will allow for the practical possibility of shipping cobalt, lithium, rare earth metals and copper from primarily the DRC as well as Zambia and Angola to the Atlantic port of Lobito. Further in producing this capacity or expanding it with “opening” of the west African Atlantic port of Lobito will make these materials more practically available for eventual US consumption. If I have stated the hypothesis correctly then we can evaluate it, right? In doing so I discovered this: If you want to really oversimplify cobalt mining in this region, it can be divided into traditional mining and artisanal miners (miners who are not officially employed by a mining company and use their own resources to mine and often do not mine on their own land). While it is not known precisely the percentage between the two, according to multiple sources, artisanal mining in the Democratic Republic of Congo (DRC) accounts for roughly 10-20% (one study says up to 30%) of the country's total cobalt production, meaning a not insignificant portion of cobalt mining in the DRC is done by artisanal miners. Why does this matter? Who controls the physical removal of the resource from the ground controls to a large degree where it goes. Yes, there are supply and demand influences, but the law of capture matters. Who controls the physical removal of cobalt in the DRC, for example? Chinese companies own or have stakes in 15 of the 19 cobalt mines in the DRC. This would be the traditional mining operations. This gives China control over 80% of the DRC's cobalt output in and of itself. When you add into it the high penetration of Chinese citizens or small outfits as intermediaries between artisanal miners to the eventual export referring to the fact that in a lot of neighborhoods the miners who extract ore go to Chinese individuals or small outfits, called Négociants, to sell the ore and then those first level intermediaries then sell to larger area intermediaries (depots) that are also largely Chinese, then upwards to eventual export. Although there are no great technical papers on how many steps along the way exist from artesian extraction to export, according to the Fair Cobalt Alliance from anecdote that it may be as few as four to as much as a dozen. According to their limited case studies and anecdote, each step was Chinese or largely Chinese. These intermediaries and aggregators get a vote on where the cobalt goes. Will it be influenced by supply and demand pricing, sure but to what degree? In terms of our hypothesis stated above, does the law of capture referring to the Chinese penetration falsify our hypothesis? I don’t know but it sure has potential to falsify our hypothesis, I think. But we can go one level deeper in our analysis, I suggest. As stated above I stated part of the hypothesis as “… Further in producing this capacity or expanding it with “opening” of the west African Atlantic port of Lobito will make these materials more practically available for eventual US consumption.”
Opening a port to the Atlantic when a supermajority of cobalt refining is in China does what in practical reality? Beats me. Perhaps the thought is that by opening the POSSIBILITY of an Atlantic export that the non-Chinese refiners to the east of DRC (Atlantic side of West Africa) could grow. That’s a theory. Let’s look….
Here are some major cobalt processing plants outside of China:
So of the list above not many of them are to the east of the DRC benefiting an Atlantic sea port on the West of Africa. The major three outside of China are in Finland (north), Indonesia (west) and Madagascar (west) which combine to provided 17% of the world’s cobalt refining. In 2023, Finland accounted for 8.8% of the world's refined cobalt production. The other ones outside of China, Finland, Indonesia and Madagascar are much smaller in scope.
All of that leads me to the question that if the major non-Chinese cobalt refineries are not to the east of the DRC where a port on the western side of Africa with the Atlantic would help, does opening a port to the east of the DRC on the western side of Africa with the Atlantic actually do anything? Recall Finland (north), Indonesia (west) and Madagascar (west).
I suppose a theory might be that we (the US) would stand up its own domestic cobalt refineries. Again, being practical, I just don’t see the US allowing (heavy regulations and environmental concerns) or finding margins (due to high labor costs, cost of capital, and that cobalt is a volatile commodity in the market) for standing up our own cobalt refining. The Westin Elements project is very unique and the Ohio Nth Cycle project looks at recycling not true ore refining.
This is a long-winded way of me asking “what am I missing?”
Sources:
https://www.iied.org/formalising-artisanal-cobalt-mining-drc-much-work-remains
https://www.iied.org/formalising-artisanal-cobalt-mining-drc-much-work-remains
Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 21 Oct 2024 | EP02 Where are we going to get the energy folks? | 00:12:22 | |
Summary: In this episode, we explore the growing energy demands facing the United States, highlighting three key contributors: reshoring manufacturing, the AI/Chip war, and the transition from high-density to low-density energy sources. We discuss how reshoring efforts are driving significant infrastructure development as well as new manufacturing facilities, requiring substantial energy consumption. The AI/Chip war, characterized by a surge in computing power and semiconductor fabrication, also demands substantial energy. Furthermore, the shift towards intermittent energy sources like wind and solar presents challenges due to their lower energy density and intermittency. We conclude by emphasizing the growing energy needs and the potential dangers of a mismatch between increasing demand and the transition to less reliable and less dense energy sources.
Questions to consider as you read/listen:
Long format:
In January 1848, historian, philosopher and statesman Alexis de Tocqueville addressed the French parliament regarding unease in Paris: “I believe that we are at this moment sleeping on a volcano.“
I fear that we, the US, are sitting on top of a volcano. The volcano is a confluence of three separate and distinct priorities that are competing for one finite thing: energy/power.
The three competing interests are: reshoring, AI/CHIP war and political desire to move from high density sources of power to low density intermittent sources of power.
RESHORING
Currently, we are in a period of rapid and truly unprecedented growth in America because we have made a decision to reshore our manufacturing and to try to be less dependent upon far-flung supply chains involving countries that we prefer not to involved with. This decoupling and reshoring to bring back manufacturing to the US requires a lot of build-out. As of February 2024, annual investment in new manufacturing facilities hit nearly $225 billion dollars, a record high even after adjusting for inflation.
But there is more because of the truly amazing infrastructure rebuilding we are underway with in America as well. That of course takes a lot of energy/power too. Just a quick look at one small subset of the scope of this buildout can be seen in that spending on new road construction will reach approximately 153 billion U.S. dollars by 2027. This does not include any other or exiting infrastructure just new roads.
The era of flat power demand is over. According to FERC filings in 2023, grid planners forecast peak demand to increase to 4.7% over the next five years with many analysts calling this a gross underestimate. (https://gridstrategiesllc.com/wp-content/uploads/2023/12/National-Load-Growth-Report-2023.pdf) This an 81% jump over the previous forecast. Staggering. A lot of it has to do with construction and buildout.
AI/CHIP WAR
By 2030, AI is expected to represent 3.5 percent of the global electricity consumption, and 9 percent of electricity generation in the United States (a sharp increase from the country’s current rate of around 3.5 percent – already a hefty amount). Put together, electric vehicles and AI are on track to add 290 terawatt hours of electricity demand to the United States energy grid by the end of the decade according to projections by Rystad Energy.
Yet even those who all “see” and agree on this have no concept at all how much energy AI sucks up or sure act like they don’t.
For example, Microsoft and OpenAI are planning on building a $100 billion data center, according to reports. Initial reporting suggests it may require five gigawatts of power, or roughly the equivalent of five nuclear reactors. Five! That’s just one project at the dawn of this race. Right now, in Chantilly, VA the AI center used by our government and contractors already takes up 2% of the entire US grid’s worth of energy. 2% already!
The amount of energy that chip fabrication takes is likewise astonishing. The world's leading semiconductor manufacturer, TSMC, consumes more electricity than some U.S. states. Taiwan already faces its own electricity challenges because of semiconductor manufacturing. Experts predict the island’s reserve capacity may dip below the recommended 10% emergency margin the government says is necessary. We can use that as a model as we are trying to rival or replace them by building our own fab sites here in the US. All in all, Taiwan Semiconductor Manufacturing Company (TSMC) consumed nearly 25,000 gigawatt-hours of energy in 2023, which was a 10.4% increase from 2022. TSMC is one of Taiwan's largest consumers of power, accounting for about 9% of the island's electricity.
AI chip fabrication and AI use, that is a lot of energy.
SWITCH FROM HIGH DENSITY RICH SOURCES OF POWER TO LOW DENSITY INTERMITTENT SOURCES OF POWER
A beautiful book on this that is a real eye opener that will explain these concepts and provide all that you need to know on energy and power density and why it matters is Power Density: A Key to Understanding Energy Sources and Uses (MIT Press) by Vaclav Smil. I CANNOT recommend this book highly enough. After you are done reading all of Peter Zeihan’s books first, of course.
Simplified significantly, higher energy/power density means more energy stored in a smaller space or more power generated in a smaller physical area.
Power density is calculated by dividing the total power output by the volume it occupies.
Approximate power densities (in MJ/kg):
Why does switching from high density rich sources of power to low density intermittent sources of power matter?
Intermittents (wind and solar), as politically popular as they are, are not the solution as they are truly intermittent energy sources and what people don’t understand is the concept of energy (power) density, transmission, availability, start-up time, consistency, un-subsidized cost of energy per MJ, and energy loss from conversion/transmission and basic physical restrictions of where it works versus where it’s needed. But it is our political decision in the US. Less power density, intermittency coupled with an overwhelming need for more and more power is a formula for disaster.
BOTTOM LINE
With these three competing interests, where are we getting the energy folks? How do we keep our current standard of living, re-shore, grow and “win” the AI race and transform to lower energy density?
Sources:
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| 29 Oct 2024 | Episode 46: Critical Raw Materials Act (CRMA) why you should care | 00:10:37 | |
Summary: The European Union’s Critical Raw Materials Act (CRMA) is a legislative initiative aimed at securing the EU's access to critical raw materials. The Act seeks to strengthen domestic supply chains, reduce reliance on single suppliers (particularly China), and promote sustainable mining, processing, and recycling within Europe. By facilitating access to existing EU funds and prioritizing “Strategic Projects”, the CRMA aims to increase the EU’s self-sufficiency and reduce supply chain risks associated with critical raw materials, which are essential for advanced technologies like electric vehicles, renewable energy, and defense. However, the Act’s impact is uncertain due to high costs and infrastructure needs, and its potential to affect global supply chains, impacting the cost and availability of these technologies for consumers and industries worldwide, remains to be seen. Questions to consider as you read/listen:
Long format: Critical Raw Materials Act (CRMA) why you should care A lot of focus and attention is placed on the US CHIPS Act and the IRA and rightfully so. One additional and somewhat related EU act that should be likewise known is The European Union's Critical Raw Materials Act (CRMA). TL;DR: European Union’s Critical Raw Materials Act (CRMA) The CRMA aims to secure the EU’s access to critical raw materials by strengthening its supply chains, reducing dependency on single suppliers (especially China), and promoting sustainable mining, processing, and recycling within Europe. This includes “Strategic Projects” with streamlined permitting and funding access to develop essential materials like lithium, cobalt, and rare earths for technologies such as EVs, renewable energy, and defense. Unlike the U.S. CHIPS Act and IRA, the CRMA doesn’t offer direct funding; instead, it facilitates access to existing EU funds. While aiming to bolster the EU’s self-sufficiency and reduce supply chain risks, the Act’s impact is uncertain due to high costs and infrastructure needs. Americans should care because it could affect global supply, possibly impacting the cost and availability of critical technology components worldwide. CRMA The European Union's Critical Raw Materials Act (CRMA) is a legislative initiative designed to secure the EU's access to critical raw materials by strengthening its domestic supply chains, reducing reliance on single suppliers, and promoting sustainable practices, aiming to mitigate risks of supply disruptions in key industries like cleantech and digital technologies by increasing extraction, processing, and recycling capacities within the EU while diversifying import sources. The Act seeks to identify “Strategic Projects" with streamlined permitting and access to finance to build domestic capabilities to reduce the influence outside of the EU and China. The Act identifies specific raw materials considered "critical" due to their high economic importance and potential supply chain vulnerabilities, such as rare earth elements, lithium, cobalt, and graphite. According to the European Union Critical Raw Materials Act, "critical raw materials" are raw materials considered highly important to the EU economy but with a high risk of supply disruption, while "strategic raw materials" are a subset of critical raw materials that hold additional strategic importance due to their use in advanced technologies like green energy, digitalization, defense, and space applications; essentially, strategic raw materials are considered even more critical for the EU's security and technological advancement. The CRMA aims to diversify the EU's sourcing of critical raw materials by reducing dependence on single third countries and encouraging partnerships with multiple suppliers. In other words, trying to China-proof themselves. The Act incentivizes the development of mining and processing capacities within the EU to increase domestic extraction and processing of critical raw materials. A key aspect of the CRMA is to enhance recycling and reuse of critical raw materials to improve circularity within the value chain. Americans should care about the European Union's Critical Raw Materials Act because it could significantly impact the global supply chain for essential minerals used in critical technologies like electric vehicles, renewable energy systems, and electronics, potentially affecting the cost and availability of these products for American consumers and industries, particularly if the EU prioritizes securing its own supply chains at the expense of other markets due to concerns over reliance on single suppliers, like China, for critical raw materials like lithium, cobalt, and rare earths. The effectiveness of this Act is unknown and not yet at all certain. Building domestic mining and processing capacity in the EU can be costly and time-consuming, requiring significant investment and infrastructure development. One of the “holes” of the Act is the lack of direct government funding. This may curb its effectiveness. Unlike the CHIPS and IRA Acts, the European Union Critical Raw Materials Act (CRMA) does not provide direct funding itself, but instead facilitates access to existing EU funds like the Recovery and Resilience Facility, Just Transition Fund, European Regional Development Fund, Innovation Fund, and InvestEU to support "Strategic Projects" which are critical raw material projects deemed of high strategic importance, enabling them to receive streamlined permitting and potential financial assistance through these funds; essentially, the Act creates a framework for prioritizing and expediting funding for key projects in the critical raw materials sector rather than directly allocating new funds itself. Sources:
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| 23 Oct 2024 | EP 29: How much oil and natural gas does US have... | 00:18:27 | |
Summary: The sources provide an assessment of the United States' oil and natural gas reserves, suggesting that the country has abundant resources. The Institute for Energy Research (IER) estimates the U.S. has 1.66 trillion barrels of technically recoverable oil, which is enough to fuel transportation for over 500 years at current consumption rates. Additionally, the IER estimates that the U.S. holds 4.03 quadrillion cubic feet of technically recoverable natural gas, sufficient to meet current demand for over 130 years. The sources highlight the substantial increase in these estimates compared to previous studies, indicating a growing understanding of the U.S.'s potential for oil and gas production. Questions to consider as you read/listen:
Long format: How much oil and natural gas does US have…. We are very very good. Very. Did I say very. (Main source technical article: https://www.instituteforenergyresearch.org/fossil-fuels/2024-north-american-energy-inventory/?amp=1) Quoting from one of the industry’s best sources: Total technically recoverable resources of oil in the U.S. amount to 1.66 trillion barrels. That’s according to a new report from the Institute for Energy Research (IER), which was sent to Rigzone recently, which noted that, at current rates of consumption, that’s enough oil for 227 years. If the oil is devoted exclusively to gasoline production, it is enough gasoline to fuel the transportation sector for 539 years at 2023 usage levels, the report stated. The 1.66 trillion barrel figure is 15 percent higher than the estimate of technically recoverable oil from IER’s 2011 report, and more than 5.6 times the proved reserves of Saudi Arabia, the study outlined. Total technically recoverable resources of natural gas in the U.S. amount to 4.03 quadrillion cubic feet, according to the report, which stated that, at the current consumption rate, that’s enough natural gas for the next 130 years. The 4.03 quadrillion cubic feet figure is a 47 percent increase in the estimate of technically recoverable natural gas since IER’s 2011 report, the study highlighted. The report also pointed out that the U.S. has over 65 quadrillion cubic feet of in place natural gas resources. “If just half of that amount becomes recoverable, the U.S. has over 1,000 years of natural gas supply at 2022 consumption rate,” the report noted. Source: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 19 Nov 2024 | EP84: Libya’s ‘Stable Instability’: What’s Keeping the Peace—and What Could Break It? Implications for the Oil and Gas Sector and Foreign Direct Investment | 00:14:48 | |
Summary: In this episode, we discuss the ongoing political and military instability in Libya, which has persisted since the fall of Muammar Gaddafi in 2011. The country is divided between two rival governments, each vying for control of resources and political power. This division has led to frequent shutdowns of the oil and gas sector, a crucial source of income for Libya, and has deterred foreign direct investment. While there have been temporary resolutions to some conflicts, the underlying issues of mistrust and fragmentation remain, making Libya's future uncertain. We explore the impact of this instability on the global energy market and regional security, highlighting the international community's concern for Libya's fragile peace. Questions to consider as you read/listen:
Long format: Libya’s ‘Stable Instability’: What’s Keeping the Peace—and What Could Break It? Implications for the Oil and Gas Sector and Foreign Direct Investment TL;DR Libya remains caught in a cycle of “stable instability,” with two rival governments—the UN-backed Government of National Unity (GNU) in Tripoli and the eastern administration led by Khalifa Haftar—competing for control. The country’s deep divisions, failure to hold elections, and reliance on fragmented militias perpetuate political and military tensions. Foreign powers play a dual role, both preventing full-scale conflict and exacerbating instability by supporting competing factions. Libya’s oil and gas sector, crucial to its economy, is both a blessing and a curse, frequently disrupted by political disputes. While recent deals, like resolving the 2024 oil shutdown, have temporarily eased tensions, these solutions fail to address long-term challenges. Foreign investment is cautiously returning, but instability and the risk of sudden shutdowns remain deterrents. Globally, Libya’s instability affects energy markets and regional security. Without significant reforms, reconciliation, and unified governance, Libya risks descending back into conflict, making its fragile peace a critical concern for both Libyans and the international community. Introduction Libya’s modern history is a testament to the paradox of “stable instability.” Despite years of ceasefires, political agreements, and foreign interventions, the country remains deeply divided, teetering on the edge of renewed conflict. Since the fall of Muammar Gaddafi in 2011, Libya has been locked in a cycle of power struggles, civil wars, and failed attempts at national reconciliation. Its dual government system—the UN-backed Government of National Unity (GNU) in Tripoli and the eastern administration led by Khalifa Haftar—exemplifies the fragmentation that prevents sustainable peace and governance. This paper delves into the complexities of Libya’s ongoing instability, examining its political dynamics, the interplay of internal and external actors, and the critical role of its oil and gas sector. It explores the tensions between rival governments, the factors that fuel divisions, and the temporary measures that stave off outright collapse. While Libya’s challenges are immense, its stability—or lack thereof—has significant implications for regional and global security, energy markets, and international relations. Understanding Libya’s precarious balance is essential for grasping the broader implications of its fragile peace. Information Libya’s stability is that it is stable in its instability. Libya's political landscape remains volatile, characterized by a division between two main rival governments: the Government of National Unity (GNU) in Tripoli, backed by the United Nations, and the House of Representatives in the east, supported by Khalifa Haftar and his Libyan National Army (LNA). Libya has been split since 2014, with each government controlling different parts of the country, which inherently increases the risk of conflict. There have been very reports of significant troop movements on posts on X and on telegram, especially by forces affiliated with Khalifa Haftar, indicating potential preparations for military action. This was highlighted by posts suggesting deployments for a possible new war. Recently, there have been small-scale clashes, like those between militias in Tripoli, which, while not necessarily escalating into full civil war, illustrate the fragility of peace and the ever-present threat of violence. The balance of foreign powers, like Turkey and Russia, has been mentioned as a factor preventing full-scale conflict due to their influence over different factions. However, this also means that international dynamics could either stabilize or destabilize the situation especially as Russia becomes increasingly occupied with events in the Ukraine. The failure to hold national elections and the continued division between governmental bodies indicate a lack of progress towards national reconciliation, fueling ongoing tensions. Given these points, while there's a ceasefire in place since 2020, the political and military developments suggest that Libya remains at risk of sliding back into conflict or civil war. The current risk factors include: persistent division between rival political and military factions; military mobilizations and readiness and counter mobilizations; and the influence of external powers, which might have their interests best served by instability. The current mitigating factors against civil war include: international calls for restraint and ceasefire agreements; and the economic incentive of oil production, which both sides have an interest in maintaining. Therefore, while there's no definitive action indicating an immediate return to civil war, the underlying conditions suggest that Libya could indeed revert to conflict if the current political stalemate continues without resolution or if significant provocations occur. The Future of Libya’s Government Stability Libya's path to a stable government remains fraught with obstacles, defined by its ongoing political fragmentation and rivalry between the western Government of National Unity (GNU) in Tripoli and the eastern administration associated with General Khalifa Haftar. The fall of Muammar Gaddafi in 2011 created a power vacuum, leading to over a decade of instability, marked by civil wars, international interventions, and fragmented governance. The GNU, recognized by the United Nations, struggles to maintain authority even in its own territories, as it depends on a coalition of militias that often prioritize local interests over national unity. Meanwhile, the eastern government, centered in Benghazi and led by Haftar’s Libyan National Army (LNA), controls key oil facilities and substantial swaths of territory but lacks international legitimacy. International actors, particularly the United Nations, have prioritized national elections as the solution to Libya's instability. However, logistical and political challenges—such as disputes over the electoral framework, candidates' eligibility, and security concerns—continue to delay this critical step. Moreover, Libya's inability to unify its military under a single command structure exacerbates the security situation, making any political progress tenuous. Differences Between the Tripoli and Eastern Governments The divide between Libya’s two governments reflects deep-rooted disagreements over governance, resource distribution, and political legitimacy. Tripoli’s Government of National Unity (GNU) is led by Abdul Hamid Dbeibah. The GNU is internationally recognized and claims jurisdiction over all of Libya, though it effectively governs the western region. The GNU controls the Central Bank of Libya, which handles oil revenues. This control has been a contentious point with the eastern administration. Security in the west is maintained by a coalition of militias, which, while loyal to Tripoli, often act independently, undermining central authority. The Eastern Government (Benghazi-Based) is backed by Haftar’s LNA, the eastern administration holds power in eastern Libya and parts of the south. It lacks international recognition but compensates with control over vital oil export terminals. This administration often accuses the GNU of mismanaging oil revenues and marginalizing eastern Libya. The conflict between these governments has created a dual power structure, with each side vying for control over Libya’s vast resources and political future. Tensions Between Benghazi and Tripoli The rivalry between Tripoli and Benghazi is a defining characteristic of Libya’s instability. At its core, the tension revolves around resource control, governance, and military dominance. Libya's oil wealth is both a blessing and a curse. While Tripoli manages revenues through the Central Bank, Benghazi wields control over oilfields and export terminals. This division has led to periodic shutdowns as each side attempts to leverage its position. The LNA and western militias have engaged in repeated skirmishes, further destabilizing the country. Haftar’s failed assault on Tripoli in 2019 deepened the animosity between the factions. Both governments claim legitimacy, with little willingness to compromise. This rivalry undermines efforts to establish a unified national government. These tensions perpetuate a cycle of instability, where progress in one area, such as oil production, is often offset by setbacks in governance or security. Reduction of Tensions During the 2024 Oil Shutdown In late 2024, Libya faced another crisis as the eastern government halted oil production over a dispute concerning the leadership of the Central Bank of Libya. The month-long shutdown affected major oilfields like Sharara and El Feel, disrupting the flow of approximately 350,000 barrels per day to the Zawiya refinery. This disruption not only cost Libya millions in lost revenue but also threatened global energy markets. The shutdown ended in October 2024 after both factions agreed to address the Central Bank issue. A unified Central Bank governor was appointed, temporarily easing tensions. This agreement allowed oilfields to reopen and production to resume, stabilizing the country’s economy. However, this resolution was more of a tactical ceasefire than a long-term solution, as the underlying issues of mistrust and political fragmentation remain unresolved. The Return of Foreign Direct Investment (FDI) in the Oil and Gas Sector Libya’s oil and gas sector is beginning to attract foreign investment after years of decline. Recent developments highlight a cautious yet renewed interest from international energy companies. Italy’s Eni and BP resumed onshore drilling in October 2024, marking their first operations in Libya in over a decade. This move signals confidence in Libya’s potential despite its ongoing challenges. France’s TotalEnergies has not been as full throttle a return to Libya as Eni. Posts from X suggest that there's interest from Emirati firms. For instance, there was a mention of the National Oil Corporation (NOC) presenting a new offer to the Emirati energy company "Trasta" regarding the Ras Lanuf refinery. This indicates ongoing negotiation or exploration of potential investment, though it's more about potential rather than confirmed investment. Foreign investors are drawn to Libya’s vast oil reserves, low production costs, and strategic location near European markets. These factors make Libya one of the most resource-rich countries in Africa. While the return of FDI is encouraging, companies remain wary of the risks associated with Libya’s instability, including sudden shutdowns, infrastructure sabotage, and regulatory uncertainty. Impact of Instability on FDI in the Oil and Gas Sector Instability remains a significant deterrent to investment in Libya’s energy sector. Frequent protests, abductions, and armed clashes disrupt operations and threaten the safety of personnel. Oil facilities have repeatedly been shut down due to political disputes, creating an unreliable business environment. Years of conflict have left much of Libya’s oil infrastructure in disrepair to a degree, requiring substantial investment for repairs and upgrades. The absence of a unified government complicates legal frameworks, making it difficult for foreign companies to navigate contracts and compliance issues. These challenges deter long-term investment, limiting Libya’s ability to fully capitalize on its energy resources. Global Implications of Libyan Instability Libya’s instability has far-reaching consequences for global energy markets. Libya holds Africa’s largest proven oil reserves. Disruptions in its oil exports, such as the 2024 shutdown, can contribute to global price volatility. But the more recent shutdown in 2024 did not impact the market at all from a price perspective. The global oil market is highly interconnected with numerous suppliers. If Libyan oil were to be shut down, other oil-producing countries could potentially increase their production to compensate for the shortfall. Countries like Saudi Arabia, Iraq, the UAE, and others within OPEC+, or non-OPEC countries like the U.S. and Russia, have the capacity to adjust their output to stabilize prices and supply, though they might not always choose to do so due to various economic or geopolitical reasons. Even if there's no direct oil supply issue for the U.S., a shutdown in Libya might temporarily increase oil prices globally due to perceived supply tightness. Europe relies heavily on Libyan oil, with Italy, Spain, and Germany among the largest importers. Instability in Libya directly impacts energy security in these countries. Prolonged instability in Libya creates opportunities for extremist groups to operate, posing threats to regional and global security. Libya’s stability is thus not only a national issue but also a global one, with implications for energy markets, geopolitics, and economic stability. Libya’s Major Trading Partners in Oil and Gas Libya’s oil exports primarily target European markets are:
Libya’s role as a key supplier to Europe underscores the importance of its stability to the global energy market. Impact on the USA of a Possible Libyan Oil Shutdown A shutdown of Libyan oil production would likely have a minimal direct impact on the United States for several reasons. Libya's contribution to the global oil market, while significant to its economy, is relatively small on a global scale. The U.S. imports very little oil directly from Libya. Before Libya's civil unrest in the 2010s, it supplied about 1%-2% of U.S. oil imports, and this figure has likely decreased further with the diversification of U.S. import sources and increased domestic production. Over the past decade, the U.S. has significantly increased its own oil production, particularly from shale oil in regions like the Permian Basin. This surge has led to the U.S. becoming a net exporter of oil, reducing its reliance on imports from unstable regions like Libya. As of recent years, the U.S. has been more focused on exporting its surplus crude oil and refined products rather than relying heavily on imports. The U.S. maintains a Strategic Petroleum Reserve, which can be tapped in case of significant supply disruptions. Although the SPR levels have been drawn down in recent years, it still represents a buffer against short-term supply shocks. The U.S. has diversified its sources of oil imports, relying on countries like Canada, Mexico, Saudi Arabia, and others, which reduces the impact of any single country's supply disruption. This diversification strategy helps in mitigating risks associated with geopolitical instability in any one region. The U.S. has robust refining capabilities and can source crude from various grades and regions worldwide. If Libyan sweet crude were unavailable, U.S. refineries could adjust by sourcing similar crude grades from other regions or by modifying their operations to handle different crude types. Conclusion Libya’s continued instability underscores the challenges of navigating a fractured political landscape in a country rich in resources yet plagued by division. The duality of its governance—split between the Government of National Unity in Tripoli and the eastern administration led by Khalifa Haftar—has entrenched mistrust and stymied efforts at national reconciliation. While ceasefires and temporary agreements, such as the 2024 resolution of the oil shutdown, provide moments of reprieve, they fail to address the root causes of division and conflict. The influence of external actors, both stabilizing and destabilizing, complicates the situation further. International calls for elections and unity are often undermined by competing interests, leaving Libya vulnerable to external manipulation and internal collapse. The oil and gas sector, a cornerstone of Libya’s economy, reflects this instability, attracting cautious foreign investment but remaining susceptible to political disputes and sabotage. Without a unified government, a clear electoral framework, and a commitment from both domestic and international stakeholders to prioritize national stability over factional gains, Libya risks sliding back into open conflict. Its challenges serve as a stark reminder of how unresolved political fragmentation can perpetuate cycles of violence and undermine opportunities for sustainable development. Libya’s stability, precarious as it is, remains crucial not only for its people but for global energy markets and regional security. Addressing the country’s deep-seated issues will require sustained diplomatic efforts, robust institutional reforms, and a commitment to ensuring that its vast resources benefit all Libyans, rather than fueling further division. SOURCES https://press.un.org/en/2024/sc15592.doc.htm https://press.un.org/en/2024/sc15795.doc.htm https://news.un.org/en/story/2024/05/1149716 https://www.cfr.org/global-conflict-tracker/conflict/civil-war-libya https://carnegieendowment.org/posts/2019/05/the-conflict-in-libya?lang=en https://www.reuters.com/world/africa/whats-behind-libyas-oil-shutdown-2024-08-28/ https://www.bloomberg.com/news/articles/2024-10-03/libya-to-restart-oil-production-ending-crisis https://www.sciencedirect.com/science/article/pii/S2211467X20301322 https://www.sciencedirect.com/science/article/abs/pii/S0176268023000903 https://www.state.gov/reports/2023-investment-climate-statements/libya/ https://www.gisreportsonline.com/r/libyas-uphill-struggle-to-attract-oil-investment/ https://www.thenationalnews.com/business/economy/2024/09/03/libya-central-bank/ https://www.ispionline.it/en/publication/libyas-stable-instability-173851 https://www.usip.org/publications/2011/03/oil-and-turmoil-libya
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| 29 Oct 2024 | Episode 47: The 269-269 Scenario | 00:11:12 | |
Summary: In this episode, we discuss the potential for a 269-269 tie in the Electoral College during the US presidential election. It explains how the 12th Amendment mandates that the House of Representatives would then choose the President, with each state delegation receiving one vote. We analyze the current composition of the House and Senate to assess which party would likely have the advantage in such a scenario, ultimately concluding that the outcome is uncertain and depends heavily on the results of the upcoming Congressional elections. Questions to consider as you read/listen:
Long format: The 269-269 scenario In one week from now the United States turns to the ballot box to select various elected officials including members of Congress, some US Senators and the President of the United States. As we all know the President of the United States is selected by the Electoral College. Under this system, rather than a direct popular vote, each state is assigned a certain number of electors (equal to its total number of Senators and Representatives in Congress). When voters in a state cast their ballots for president, they’re actually voting for a slate of electors pledged to a candidate. The candidate who wins the majority of votes in a state typically gets all its electoral votes (except in Maine and Nebraska, which split them). A candidate needs a majority of the 538 total electoral votes to win the presidency (270 or more). There are a total of 538 electoral votes in the Electoral College. A candidate needs at least 270 of these votes to win the U.S. presidency. But as one can see by math because the total number of Electoral College votes is an even number, then the result in theory could be 269-269. A tie. The 12th Amendment was adopted to examine this outcome and codify what happens in the event of an Elector Collage tie. Here is the relevant text as it exists (don’t worry we will make it plain after the legal gobblydegook). The exact text: “and if no person have such majority, then from the persons having the highest numbers not exceeding three on the list of those voted for as President, the House of Representatives shall choose immediately, by ballot, the President. But in choosing the President, the votes shall be taken by states, the representation from each state having one vote; a quorum for this purpose shall consist of a member or members from two-thirds of the states, and a majority of all the states shall be necessary to a choice. [And if the House of Representatives shall not choose a President whenever the right of choice shall devolve upon them, before the fourth day of March next following, then the Vice-President shall act as President, as in case of the death or other constitutional disability of the President.–]” Stated more plainly, if there’s an Electoral College tie, meaning each candidate receives exactly 269 electoral votes, the 12th Amendment specifies that the election for president moves to the House of Representatives. In this process:
So let’s use math and look at the current composition of the House other see what would happen in the case of the 269-269 tie. If the current House were to vote (meaning that there was no 2024 election for Congress and every Congress member remained and if every member of Congress followed party lines and voted for the President of their party), the result would be the Republican candidate would get 26 votes, the Democrat candidate would get 22 votes and two states would be tied as they have the same exact number of Democratic members of Congress and the same exact number of Republican members of Congress (those two states are Minnesota and North Carolina). This is the fourth column of my chart. The current Republican candidate would win given all of these assumptions. Now, obviously with this Congressional election some seats will be won by one party and lost by the other. But in the aggregate, will flipping one or two seats change the outcome of a state’s delegation enough to flip the one vote that the state has to the entire other party? In my analysis, I looked at the “balance of the parties” to look at the number of Democrat versus Republican Congress members. If that balance of the parties were within 2 Congress folks, I designated that the state was “too close to call” and therefore could go either way under the one vote per state rule. I figured that it was unlikely that in a state that 3 seats would flip. A line has to be drawn somewhere and that’s where I drew the line. Under this scenario, the math shows 25 solid Republican states, 17 solid Democrat states and 8 too close to call. Under this scenario, the Republican candidate would have to pick up one of the “too close to call” states to win, but the Democratic candidate would need to pick up ALL of the “too close to call states” just to tie. A tie would do no good to that Democratic candidate unless there would an entire state that would show attrition and come over to the Democratic candidate before March 4th. If it is tied and goes past March 4th, the Senate would have picked the Vice President and the Vice President would then be President. Let’s look similarly how the Senate would most likely vote. Again, applying similar logic as we did with the House of Representatives, this is the math as far as current composition of the US Senate. Recall they also get one vote per state too. As of right now there are 20 states where both Senators are Republican. There are 23 states where both Senators are Democrat. There are 3 states that have one Democrat Senator and one Republican Senator (a tie). And that leaves 5 states that have independents. I labeled the states with the independents as unknown. However, one can look at those 5 states with independents to see which of the two parties that other Senator is and imperfectly infer which way it “leans” perhaps. When one does that it reveals that there are 3 states leaning Republican and 1 leaning Democrat. When we do this, under the current composition, there is no clear winner. However with 23 votes, the path for the Democratic candidate by math alone is a little bit easier. (N.B., I did not have time or interest to research which way each independent Senator tends to vote or which US Senators are vulnerable or safe— so sorry. But I figured that if there were two of one party, then there is no way that both flip because of staggered terms. I therefore recognize that there could be more ties too. I also did not care to delve into the polls and discover what the possible outcome might be of a given race. This is just a thought exercise if a really deep whatif.) Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP13: Industrial cyber infrastructure vulnerabilities | 00:11:50 | |
Summary: In this episode, we discuss the vulnerabilities of the US industrial cyber infrastructure, particularly the power grid, water management, and communications systems. We highlight how outdated technology, weak security practices, and a lack of sufficient separation between operational and IT networks as contributing factors to these vulnerabilities. While there are agencies like CISA working to address these issues, we discuss that more needs to be done to prevent attacks, rather than simply responding to them after they occur. We explore the need for better cybersecurity measures to protect critical infrastructure from exploitation, especially from foreign actors.
Questions to consider as you read/listen:
Long format: Industrial cyber infrastructure vulnerabilities There is a very large issue here in the US that is fairly well known in the national intelligence and even private corporate security corridors which is the US’s industrial cyber infrastructure vulnerabilities including but not limited to the power grid, water management, internet, communications, and industrial control system. To me, it seems like we have a lot of congressional hearings and a lot of workshops and a lot of speeches and a lot of blue ribbon panel commissions ADMIRING the problem. But that seems to me to be all that we are doing largely. Admiring the problem. Not solving it. Many industrial control systems (ICS) use legacy protocols and hardware with limited security features, making them susceptible to exploitation. Weak passwords, lack of multi-factor authentication, and inadequate user management practices can enable unauthorized access to critical systems allow for “brute force” attacks into critical areas. And this is thought at least as of now to be the way that the Chinese accessed these telecoms. In previous attacks attributed to Salt Typhoon/Ghost Emperor, the threat actor used a custom backdoor called SparrowDoor, customized versions of the Mimikatz tool for extracting authentication data, and a Windows kernel-mode rootkit Demodex. (https://www.theregister.com/2024/10/07/verizon_att_lumen_salt_typhoon/ and https://www.bleepingcomputer.com/news/security/atandt-verizon-reportedly-hacked-to-target-us-govt-wiretapping-platform/#:~:text=In%20previous%20attacks%20attributed%20to,Windows%20kernel%2Dmode%20rootkit%20Demodex and https://www.channelfutures.com/security/salt-typhoon-hacks-att-verizon-lumen ) Insufficient separation between operational technology (OT) networks and IT networks can allow attackers to move laterally from one system to another. Inadequate logging and intrusion detection capabilities can hinder the ability to identify and respond to malicious activity. A lack of meaningful SCADA. I read about the Cybersecurity and Infrastructure Security Agency (CISA). They have issued guidelines and best practices and there has been some limited legislation like the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) which mandates reporting of cyber incidents by critical infrastructure entities, allowing for faster response and threat analysis. I read about the DOE’s Energy Threat Analysis Center. And that’s all fine and good to report AFTER an incident and autopsy it, but what is better perhaps is to look at prevention. Are we ever going to get past the point of issuing white papers and reports and past the point of needing to do autopsies and actually look at the health of the proverbial patient and try to do things that avoid the need for an autopsy?
https://www.esecurityplanet.com/cloud/industrial-control-systems-cyber-security/
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| 08 Nov 2024 | EP72: Memory Wars: Why DRAM and HBM Must Be the Next Front in AI Export Restrictions: How Memory Tech Could Shape China’s Superpower Ambitions | 00:12:41 | |
Summary: In this episode, we argues that to effectively limit China's ambitions in AI, export control policies need to broaden their focus beyond integrated circuits to include DRAM and HBM memory technologies with greater specificity. We emphasize that these memory technologies are critical for AI systems' performance, and without restrictions on them, efforts to contain Chinese advancements in AI could be ineffective. We explore the importance of DRAM and HBM in AI development, the current state of these technologies, and the challenges facing their future development. Finally, we highlight the major players in the DRAM and HBM market, including the export restrictions implemented by different countries, and calls for a more comprehensive approach to control the export of these critical technologies. Questions to consider as you read/listen:
Long format: Memory Wars: Why DRAM and HBM Must Be the Next Front in AI Export Restrictions: How Memory Tech Could Shape China’s Superpower Ambitions (One sentence thesis: To effectively limit China's announced desire to be THE global leader for AI technology and its application, export control policies must broaden their focus beyond integrated circuits to equally prioritize DRAM and HBM memory technologies, as these are critical components in high-performance AI systems) By Justin James McShane. TL;DR: While export controls on integrated circuits (ICs) are crucial to limit China’s announced intention to develop into THE global leader for AI technology and its application, DRAM and HBM memory technologies are just as vital. These memory components drive AI performance, and without robust restrictions on them, efforts to contain Chinese ambitions in AI could fall short. Policymakers from the US, Japan, South Korea and Taiwan should prioritize DRAM and HBM export controls alongside ICs to create a more comprehensive strategy in safeguarding AI-related technology leadership. Background Reported today (8 November 2024) in DigiTimes Asia was an article about the HBM3E “wars”. (https://www.digitimes.com/news/a20241108PD211/micron-hbm-competition-samsung-hbm3e.html ) The article points to the previous dominance of South Korea’s Samsung Electronics and SK Hynix in this technology but notes that Micron Technology (US) is coming on strong due in part to CHIPS Act subsidy based spending. Micron's HBM3E is considered to be more power and thermally efficient than its competitors. Micron's HBM3E 12-high capacity is 50% higher than the current HBM3E 8-high, which allows larger AI models to run on a single processor. Micron is looking to expand its market share through HBM3E installations and early HBM4 work. However, SK Hynix began volume production of the world's first 12-Layer HBM3E. SK Hynix claims to be 8.8 times more efficient than Samsung and Micron in HBM production. It is a fun “battle” to watch as the pace of innovation is quite high paced. Introduction: As artificial intelligence (AI) rapidly transforms global industries, the technologies driving its evolution demand careful scrutiny, particularly concerning national security and economic competitiveness. Integrated circuits (ICs), often at the heart of AI systems, have garnered considerable focus in efforts to regulate China’s access to advanced computing capabilities. However, dynamic random-access memory (DRAM) and high-bandwidth memory (HBM) are equally critical to the infrastructure powering these systems. This oversight could limit the effectiveness of export controls. This article argues that curbing China's ambitions in AI requires prioritizing and equating DRAM and HBM restrictions alongside IC regulations. By exploring the current landscape of DRAM and HBM technology, this piece highlights the vital need to inventory existing restrictions on these technologies and calls for further, more comprehensive actions if the policy goals of curbing Chinese ambitions in AI are to be realized. Why does this matter? There has been a lot of attention placed on artificial intelligence (AI). And with that attention most of the conversation focuses on the subject of integrated circuits, otherwise known as semiconductors or simply chips. A lot of focus goes on these little important physical units, the chips and for good reason as they are the fundamental building blocks of AI. With this article, I wish to go to a deeper level of beyond the building blocks to the house itself which is DRAM (pronounced D-RAM) technology. DRAM technology in the context of AI DRAM (dynamic random access memory) is a type of memory that is critical for artificial intelligence (AI) applications and is in high demand. DRAM is a type of RAM (random access memory) that stores data and program code in computers. It's a volatile memory, meaning it only saves data while the device is powered on. DRAM is used in many devices, including PCs, laptops, smartphones, and tablets. AI applications require high-performance computing (HPC) systems to process large amounts of data and complex computations. DRAM is a key component of data processing, and AI servers need six times the amount of DRAM as standard servers. High Bandwidth Memory (HBM) is a type of DRAM that uses stacked chips to achieve high-speed data transfer and low power consumption. HBM is used in AI applications, graphics cards, and supercomputers. The increasing use of AI is driving demand for memory and storage. This is expected to lead to more DRAM capacity expansion in laptops and servers. High Bandwidth Memory (HBM) explained High Bandwidth Memory (HBM) is a computer memory technology that offers high data speeds and low power consumption. It's used in high-performance computing applications, AI, and other areas where fast data access is required. HBM uses 3D stacking to pack more memory chips into a smaller space, which reduces the distance data needs to travel between the memory and processor. HBM's high bandwidth and low latency architecture makes it a good choice for AI applications that require large amounts of memory. It also has a small form factor compared to Dynamic Random Access Memory Dual In-Line Memory Module (DRAM DIMMs) where the computer memory that contains one or more DRAM chips is on a printed circuit board (PCB) that are commonly used in desktops, laptops and servers. The different levels of High Bandwidth Memory (HBM) chips are:
The current best state of the art for DRAM AI technology As of today, the state-of-the-art DRAM technology is considered to be the "1α" (1-alpha) manufacturing process, which offers significant improvements in bit density, power efficiency, and performance, currently being produced by companies like Micron. This represents the most advanced DRAM process technology available, pushing the boundaries of scaling and density within the current DRAM architecture. The Key aspects of the current state-of-the-art DRAM include:
The challenges for future DRAM technology There are physical limitation issues. As transistors become smaller, maintaining sufficient cell capacitance and signal integrity becomes increasingly difficult. There are power consumption issues. Balancing performance with power consumption as scaling progresses is not going to be easy. There are manufacturing complexity issues. The increasing complexity of 3D stacking and advanced manufacturing techniques. DRAM assembly details DRAM is assembled in a number of steps that include: thinning of the wafer, attaching the wafer to an adhesive backing, dicing the wafer into individual dimes using a diamond edge saw, picking the individual dies from the after, placing the dies on the circuit board, connecting the sold gold wire to connect each chip to the circuit board and encapsulating each die into a protective plastic package. DRAM/PCB equipment Key equipment used in PCB assembly includes: solder paste printing machines, solder paste inspection (SPI) machines, pick-and-place machines, reflow soldering machines, wave soldering machines, glue dispensing machines, and automated optical inspection (AOI) machines, all used to precisely apply solder paste, place components on the board, and inspect for defects throughout the assembly process. DRAM design and assembly work flow A CAD department maps out each layer of the PCB. The assembly starts after the CAD design is submitted. The manufacturing process begins with Surface-Mount Technology (SMT). The screen printer is the first step for the loaded components. After solder is placed, an automated inspection occurs, then surface mounting of resistors, capacitors, and components like DRAM chips. These PCBs are then passed through the reflow oven, where the solder is cured by high temperature cycles. After reflow, the products undergo a final inspection. Next, products go through the labeling system, important to tag the product part number and provide security features. For modules to work, though, they have to go through Automatic Serial Presence Detect (AutoSPD), which programs them to be identifiable and accessible by computers. Some products at this point undergo functional testing then further assembly for heatspreaders. It is then tested in real world conditions and visually inspected. The major players in DRAM technology in AI The major companies in the global DRAM technology market for AI are in listed order of highest marketshare: Samsung Electronics (South Korea), SK Hynix (South Korea), and Micron Technology (USA). These three companies collectively hold the majority of the market share, making it highly concentrated. Collectively, these three companies hold 90% of the global marketshare. China has several companies that produce DRAM chips such as ChangXin Memory Technologies (CXMT), Fujian Jinhua Integrated Circuit (JHICC) (part of China’s Made in China 2025 program) and Tsinghua Unigroup. However, none of these currently make HBM chips at scale but they are ramping up efforts to do so. Without HBM DRAM chips, you don’t have AI chips. HBM DRAM technology and export restrictions In 2022, the US Department of Commerce , Bureau of Industry and Security banned export of any DRAM memory chips of 18nm half-pitch or less. The US is reportedly considering tightening restrictions to capture all HBM2, HBM3 and HBM3E chips as well as the tools required to make them. Japanese restrictions primarily target the equipment needed to manufacture high-performance DRAM chips with smaller node sizes and not older generation DRAMs. Japanese companies like Nikon, Tokyo Electron, and Screen Holdings are subject to these export controls, as they produce key semiconductor manufacturing equipment (SME) I could not find specific references to confirm that Taiwan has similar restrictions or that they do not have similar restrictions. I found some suggestions that it may be controlled as a Strategic High-Tech Commodities (SHTC) and under the “catch-all” control measure. South Korea is reportedly considering export restrictions on DRAM chips. Just as I previously wrote when I highlighted that despite pressure from the US that South Korea stands alone as the only integrated chip fabricator that does not have export restrictions at all, South Korea is concerned about its impact on its economy if these proposed restrictions were to go in place as China is its major trade partner. The US government has granted Samsung Electronics and SK Hynix an indefinite waiver on restrictions to export advanced chip-making equipment to China. This waiver is expected to help the two companies maintain their competitive advantage in China's semiconductor supply chain. Conclusion: In conclusion, as the competitive race to lead AI advancements accelerates, it is essential for global leaders to recognize that export controls on integrated circuits alone may be insufficient to curb Chinese ambitions. DRAM and HBM memory technologies are integral to AI functionality, making them as critical to monitor and restrict. Given the growing strategic value of these memory technologies, coordinated, robust restrictions are imperative to preserve economic stability, national security, and the upper hand in AI development. Moving forward, international policymakers from the US, Japan, Taiwan and South Korea must extend the scope of export controls to include DRAM and HBM more specifically, creating a robust framework that effectively responds to the complexities of modern technological competition if the goal is to curb Chinese ambitions of dominance in AI. Sources https://www.atpinc.com/blog/what-is-ai-artificial-intelligence-ai-servers-memory https://www.techtarget.com/searchstorage/definition/DRAM https://www.atpinc.com/blog/what-is-ai-artificial-intelligence-ai-servers-memory https://www.ibm.com/topics/dimm https://www.youtube.com/watch?v=M-wNC3Z3ZX4&t=125 https://www.youtube.com/watch?v=VzolYf9b0LM https://www.candorind.com/our-company/pcb-equipment-list/ https://www.seeedstudio.com/blog/2019/07/10/9-must-know-pcb-assembly-pcba-equipment/ https://www.venture-mfg.com/pcb-assembly-equipments/ https://www.fortunebusinessinsights.com/dram-market-109251 https://www.asiafinancial.com/chinese-firms-close-in-on-high-end-ai-memory-chips-coup
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| 29 Oct 2024 | EP48: Après Erdoğan, le déluge? What comes after Erdoğan? | 00:20:58 | |
Summary: In this episode, we analyze the potential implications of Turkish President Recep Tayyip Erdoğan's departure from office in 2028. We examine the possible successors to Erdoğan's leadership, the future of the ruling Justice and Development Party (AKP), and the broader political and economic impacts on Türkiye. We discuss the potential changes in Türkiye’s foreign relations with countries like Israel, Saudi Arabia, and Egypt, along with the country's future role in the global landscape. We explore how a change in leadership could affect Türkiye’s relationship with Western powers like the United States and the European Union, and how the country's future direction depends on the outcome of the upcoming elections. Questions to consider as you read/listen:
Long format: Après Erdoğan, le déluge? What comes after Erdoğan? TL;DR President Erdoğan, Türkiye’s longest-serving leader, announced that the 2024 elections would be his last, setting up a pivotal shift in Türkiye’s future. His departure leaves open questions about the AKP’s continued dominance and the emergence of a successor. Key opposition figures include Ekrem İmamoğlu, who leads in Istanbul, and Kemal Kilicdaroglu, a coalition-backed secular candidate. The AKP’s potential successor, Selcuk Bayraktar, lacks political experience, casting uncertainty over the party’s direction. Economically, the AKP faces challenges due to high inflation and eroding public confidence, while ideologically, it must balance conservative values with growing demands for change. Internationally, Türkiye’s relations with Israel, Saudi Arabia, Egypt, and the West could shift significantly if an opposition leader assumes power, potentially softening Türkiye’s Islamist stance and enhancing diplomatic ties. If Erdoğan’s influence remains strong, however, Türkiye may continue its independent, nationalist approach, maintaining current regional complexities and selective Western engagement. Introduction President Recep Tayyip Erdoğan who is 70 years old is Türkiye’s longest-serving leader, having served in that position since 2014. He previously served as the 25th prime minister from 2003 to 2014 as part of the Justice and Development Party (AKP), which he co-founded in 2001. In March 2024, he announced publicly that his current term in office would be his last. This begs the questions:
Erdoğan has shaped Türkiye’s political landscape over two decades, transitioning the country from secularism to an Islamist-leaning governance. This paper examines what may come after Erdoğan’s departure, exploring potential successors, the future of the AKP, and the broader political implications for Türkiye. Erdoğan’s Legacy: Consolidation of Power and Shifting Alliances Erdoğan’s tenure began as Istanbul’s mayor in the 1990s, and he later served as prime minister in 2003 when the role held primary executive authority. His ascendance to the presidency in 2014, followed by a 2017 referendum shifting Türkiye from a parliamentary system to a presidential one, effectively solidified his grip on power. Under Erdoğan, Türkiye has undergone significant ideological transformation, moving from its secular Kemalist roots toward a governance model that emphasizes religious values and nationalism. This ideological shift led to substantial changes in Türkiye’s foreign and domestic policies. Notably, Erdoğan’s administration, which initially showed openness toward former allies like Israel, experienced a significant rift with the country. The resurgence of tensions during the October 2023 Israel-Hamas conflict illustrates Erdoğan’s continued commitment to his Islamist-leaning foreign policy. His authoritarian approach domestically has involved restrictions on the press, civil society, and the judiciary, consolidating power within the executive branch. However, these policies have not been without consequence; Türkiye now faces widespread economic issues, with inflation at record levels and a public demanding change. The upcoming departure of Erdoğan therefore represents a turning point in Türkiye politics. The Uncertain Future of the AKP Across analyses, a consensus emerges that Erdoğan’s departure will significantly impact the AKP and Türkiye’s political landscape. His statement that this election was his last in office reflects a degree of confidence that the AKP will retain power post-Erdoğan. He has implied that the March 2024 local elections will offer a “blessing” and a “transfer of confidence” to his successors within the party. This language suggests that Erdoğan’s intent is for a seamless transition of leadership within the AKP, maintaining continuity in the party’s control and influence over Türkiye’s political system. But things did not go according to Erdoğan’s plan with the March 2024 elections. This recent Turkish elections highlight a potential turning point as the opposition gained momentum against Erdoğan and his ruling AKP party. Led by Ekrem İmamoğlu, the opposition CHP has not only maintained control in major cities like Istanbul, Ankara, and Izmir but has also won several traditionally AKP-controlled municipalities, signaling Erdoğan's weakening grip on power. İmamoğlu's significant win in Istanbul, despite Erdoğan’s heavy campaigning and media support for the AKP, establishes him as a formidable opponent and potential future presidential candidate. The AKP’s inability to recover in urban areas, coupled with Türkiye’s struggling economy and high inflation, suggests that Erdoğan and his party may be losing public favor. Despite Erdoğan’s strategic use of media and judiciary power, his repeated defeats by İmamoğlu raise the possibility of a post-AKP Turkey. However, İmamoğlu’s political future remains uncertain due to ongoing legal challenges which could block him from running against Erdoğan in the 2028 presidential race. These issues center on allegations of insulting public officials during a 2019 speech following his initial victory in Istanbul’s mayoral race. The legal dispute underscores the broader challenge of judicial independence in Turkey, as critics argue that the judiciary may be used as a tool to sideline political rivals to Erdoğan and the ruling AKP. İmamoğlu faces a potential ban from politics if an appeals court upholds a previous ruling against him, stemming from a charge of “insulting public officials.” In Turkey, such legal convictions can result in restrictions on holding public office, which would prevent İmamoğlu from running for president. While İmamoğlu has appealed the ruling, the process’s outcome is uncertain, and any political ban would effectively remove a leading opposition figure. Nonetheless, Turkey's shifting political landscape shows Erdoğan facing a stronger, revitalized opposition. However, Erdoğan’s absence will create a leadership vacuum, posing questions about who will rise to fill it. The AKP’s core constituency, approximately 40% of the Turkish electorate, remains loyal, largely due to Erdoğan’s emphasis on conservative and nationalist values, but this base alone may not be sufficient to sustain the party’s dominance. The rise of secular opposition and factionalism within Turkish politics underscores that the AKP must retain its ideological coherence and political unity to survive without its long-time leader. Analysts agree that the AKP faces internal challenges in sustaining Erdoğan’s policies while potentially adapting to Türkiye’s changing economic and social climate. The Viability of Successors and the Prospects of Continued AKP Dominance While there is broad agreement on the importance of Erdoğan’s legacy, there is debate over the viability of potential successors and whether the AKP will retain its influence in Turkish politics. Several successors are speculated to inherit Erdoğan’s mantle, yet none possesses the same charismatic authority. Ekrem İmamoğlu: A Strong Opposition Candidate Ekrem İmamoğlu, Istanbul’s current mayor and a member of the secularist Republican People’s Party (CHP), has emerged as one of Erdoğan’s most formidable challengers. His decisive victories in Istanbul, including a recent re-election, have made him a popular figure, even among moderate conservatives. His governance style emphasizes inclusiveness, a stark contrast to Erdoğan’s more authoritarian approach, and his populist tactics allow him to appeal across ideological divides within Türkiye’s opposition. Analysts see İmamoğlu as a likely presidential candidate for 2028, with the potential to lead Türkiye toward a more secular, democratic governance model, yet his popularity does not guarantee victory. İmamoğlu’s secular rhetoric and association with Atatürk—a secular icon in Türkiye—could alienate religious conservatives and limit his appeal among Erdoğan’s core base. However, as noted above, his political future certainly is in jeopardy due to court decisions. Kemal Kilicdaroglu: The CHP Leader and Coalition Candidate Kemal Kilicdaroglu, leader of the CHP and the Nation Alliance coalition’s presidential candidate, contrasts Erdoğan in both style and substance. Known for his integrity and secular principles, Kilicdaroglu brings a “calmer” vision for Türkiye’s future, promising to address corruption, restore the parliamentary system, and prioritize human rights. Kilicdaroglu’s backing from a coalition that includes six political parties marks a significant milestone in Turkish politics, as the opposition parties have set aside ideological differences to collectively oppose Erdoğan. Despite this coalition, Kilicdaroglu’s lack of charisma compared to Erdoğan has been criticized, potentially making it difficult for him to gain widespread appeal across Turkey’s conservative-leaning electorate. Analysts believe that Kilicdaroglu may succeed in establishing institutional reforms if elected but may struggle to maintain long-term support due to his perceived lack of dynamism. Selcuk Bayraktar: A Potential Successor from Within the AKP Among those within Erdoğan’s circle, his son-in-law Selcuk Bayraktar has garnered attention as a potential successor. Bayraktar’s reputation as a defense technology innovator, particularly with the Bayraktar drones, has earned him national and international recognition. While Bayraktar’s conservative values align with Erdoğan’s, his limited political experience and association with Erdoğan’s family could hinder his ability to rally independent support. Bayraktar’s stance on foreign policy, particularly his hardline position on Israel, suggests continuity with Erdoğan’s Islamist agenda, yet his viability as a political leader is uncertain. Key Challenges for a Post-Erdoğan AKP The AKP, facing an economy strained by inflation and a skeptical electorate, must navigate several challenges if it is to retain power in the post-Erdoğan era. Analysts highlight the following areas of concern:
What the immediate internal future looks like Türkiye’s post-Erdoğan future presents a dynamic and uncertain political landscape. While Erdoğan has asserted that the AKP will continue to dominate Turkish politics, his departure leaves open critical questions about the country’s direction. The challenges for his successors include overcoming entrenched economic issues, managing ideological divides, and recalibrating foreign relations. Ekrem İmamoğlu and Kemal Kilicdaroglu emerge as leading opposition candidates, advocating for a secular and democratic Türkiye that contrasts sharply with Erdoğan’s Islamist governance. Within the AKP, figures like Selcuk Bayraktar represent continuity with Erdoğan’s legacy, though his political experience remains limited. For Türkiye, the period after Erdoğan’s departure will likely involve an ideological tug-of-war, a potential shift in foreign relations, and a reevaluation of its position within the global landscape. The departure of Erdoğan signals the end of an era marked by centralization, populism, and religious conservatism. In his absence, the AKP’s future will hinge on whether it can adapt to Türkiye’s evolving political and economic landscape, a challenge that may redefine Türkiye’s governance and influence its democratic stability for years to come. What the immediate external future looks like Ekrem İmamoğlu’s potential disqualification from the presidential race could have a broad impact on Türkiye’s foreign relations, particularly with Israel, Saudi Arabia, and Egypt, as well as Türkiye’s future role on the global stage. As a leading figure in Turkey’s secular opposition, İmamoğlu represents a break from President Erdoğan’s Islamist-leaning foreign policy. If he or another opposition leader were to rise to power, Türkiye’s diplomatic posture could shift significantly. Conversely, if Erdoğan’s influence persists or another figure from the AKP or a similarly aligned successor takes power, Türkiye is likely to maintain its current foreign policy orientation. Here’s how these dynamics could play out: Türkiye-Israel Relations Türkiye’s relationship with Israel has fluctuated sharply under Erdoğan, who has often criticized Israel, particularly over Palestinian issues, and maintained close ties with Hamas. While recent attempts were made to improve relations, the October 2023 Israel-Hamas conflict saw Erdoğan revert to strong anti-Israel rhetoric, once again straining diplomatic ties.
Turkey’s Relations with Saudi Arabia and Egypt Erdoğan’s foreign policy also impacted relations with other key regional players, notably Saudi Arabia and Egypt. Türkiye’s support for the Muslim Brotherhood and its opposition to Saudi-Egyptian policies on issues like Qatar and Libya have led to years of tension. Recent diplomatic overtures have brought some improvement, but fundamental ideological divides remain.
Türkiye’s Future Place in the World Türkiye’s role on the global stage has shifted under Erdoğan from a Western-aligned secular state to a regional power pursuing independent, often contentious policies that prioritize Turkish sovereignty and nationalism. Türkiye’s relations with the EU, the United States, and NATO have become increasingly complex as Erdoğan’s policies have sometimes conflicted with Western priorities, including relations with Russia and regional security concerns.
Conclusion Türkiye’s future global role will be shaped significantly by the outcome of its internal political dynamics. If İmamoğlu or a secular opposition figure takes power, Türkiye could pivot toward a more Western-friendly and diplomatically balanced approach, potentially easing regional tensions and strengthening international partnerships. However, if Erdoğan’s influence persists through a successor, Turkey may continue to prioritize an independent, nationalist approach, which could limit deeper cooperation with Western allies and maintain regional complexities in its relationships with Israel, Saudi Arabia, and Egypt. The outcome of Türkiye’s political transition will therefore play a crucial role in defining its future influence and alliances on the global stage. Sources: https://www.fpri.org/article/2023/06/the-question-of-erdogans-succession/ https://foreignpolicy.com/2024/04/04/turkey-local-elections-erdogan-akp-imamoglu/ https://theconversation.com/whats-next-for-turkey-after-local-elections-put-erdogan-on-notice-227430
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| 21 Nov 2024 | EP88: Did Russia really launch an ICBM into Ukraine? If so, what is the significance? | 00:12:35 | |
Summary: Multiple news sources report conflicting information regarding a missile strike on Dnipro, Ukraine. Ukrainian officials claim Russia launched an intercontinental ballistic missile (ICBM), a claim disputed by unnamed Western officials who suggest it was an intermediate-range ballistic missile (IRBM) instead. The lack of confirmation from Russia adds to the uncertainty. The potential implications of using an ICBM, even with a conventional warhead, are significant, raising concerns about escalation and the redrawing of lines between conventional and nuclear warfare. The incident highlights the difficulties in verifying real-time military actions during conflict. Questions to consider as you read/listen:
Long format: Did Russia really launch an ICBM into Ukraine? If so, what is the significance? As of the time of this publication Thursday, 21 November, 2024 at 1102 am Eastern time, the claim that Russia launched an Intercontinental Ballistic Missile (ICBM) into Ukraine has been disputed. Here's the current understanding based on available information. Ukrainian officials and President Volodymyr Zelenskyy initially stated that Russia launched an ICBM at Dnipro, suggesting it was the first use of such a weapon in the conflict. They described the missile's characteristics as matching those of an ICBM. Ukrainian President Volodymyr Zelenskyy mentioned that the missile's speed and altitude were indicative of an ICBM. This suggests that the missile's flight characteristics, observed through radar or other tracking systems, matched the known capabilities of ICBMs, which are designed to reach very high speeds and altitudes to re-enter the atmosphere at high velocity. The Ukrainian Air Force stated that the missile was launched from the Astrakhan region in Russia. The distance from Astrakhan to Dnipro fits within the range capabilities of an ICBM, although it's noted that such a range would be unusually short for an ICBM's typical use. There have been mentions of visual evidence like videos and images shared on social media platforms, purportedly showing the missile in flight or its impact. While not definitive proof on their own, these could contribute to the narrative of an ICBM launch if the characteristics displayed align with known ICBM behavior, such as multiple reentry vehicles or warheads separating in flight. Although not directly cited as evidence for an ICBM, the nature of the damage and the attack's scale might be interpreted as consistent with what an ICBM could achieve, although this is speculative and less conclusive without detailed forensic analysis. A Western official who was not named, as reported by sources like ABC News and NBC News, has contradicted this claim, stating it was not an ICBM but an experimental intermediate-range ballistic missile (IRBM) that was used. This missile, while still significant, does not qualify as an ICBM due to its range capabilities. ICBMs are designed for intercontinental ranges, typically over 5,500 kilometers. The distance from Astrakhan to Dnipro is around 600 miles (approximately 965 kilometers), which is significantly less than what an ICBM would usually be used for. The officials might have access to flight data which showed the missile's path and velocity did not match what would be expected from an ICBM launch aimed at an intercontinental target. An ICBM would typically achieve much higher altitudes and speeds for its intended range. Satellite data could have been used to track the missile's trajectory, showing it was not an ICBM due to the flight path and altitude profile. The Russian Defense Ministry has not confirmed the launch of an ICBM, and Kremlin spokesperson Dmitry Peskov referred questions about the missile strike to the Defense Ministry without providing further details. There was an incident where Maria Zakharova, the Russian Foreign Ministry's spokeswoman, was instructed during a live briefing not to comment on the ballistic missile strike in Dnipro, as observed by posts on X. This indicates an intention to avoid direct commentary on the specifics of the attack from official sources. Given these points, while Ukraine asserts an ICBM was used, this claim is not universally accepted or confirmed by Western intelligence sources, which suggest a different classification of missile was employed. Therefore, as of now, it is not conclusively confirmed that Russia launched an ICBM into Ukraine. This situation highlights the complexity of verifying military actions in real-time during conflicts, where information can be preliminary or subject to interpretation. But it’s worth examining what if… Historical Context and Implications: The reported use of an Intercontinental Ballistic Missile (ICBM) by Russia in an attack against Ukraine is indeed a significant escalation, marking a pivotal moment in military history where such long-range strategic weapons have been employed in an active conflict. The unprecedented use of an Intercontinental Ballistic Missile (ICBM) in warfare, if confirmed, would mark a significant departure from the traditional roles these missiles have played. ICBMs were developed during the Cold War primarily as part of nuclear deterrence strategies. Their role was to provide a retaliatory strike capability in the event of a nuclear attack, ensuring Mutually Assured Destruction (MAD). Their deployment was always seen in the light of global strategic balance rather than tactical battlefield use. Until now, ICBMs have never been used in actual combat. Tests and launches have occurred, but always as demonstrations of capability or for space launches (e.g., the Soviet R-7, which launched Sputnik and Vostok spacecraft). ICBMs are designed to strike targets thousands of kilometers away, typically large, fixed installations like cities or military bases. Their use has been conceptualized for strategic, not tactical, purposes due to their range, cost, and the political ramifications of their deployment. The destructive power of an ICBM, especially if it carries multiple warheads (MIRVs), is far beyond what is necessary or practical for most battlefield operations. ICBMs aren’t designed for precision strikes on tactical targets. Their guidance systems are meant for large area coverage. The psychological impact might be the intended use here, more so than the physical destruction, as it would signal an escalation of the conflict to a potentially nuclear level. Deploying an ICBM in this manner could set a dangerous precedent, potentially normalizing their use in conventional warfare, thus blurring the lines between conventional and nuclear forces. ICBMs are extremely expensive and resource-intensive. Using one in a tactical operation would not only be economically inefficient but also deplete valuable strategic assets. Type of Missile Reported to Have Launched The reported type of missile used was the RS-26 Rubezh. It is a solid-fuel propulsion missile and a range of approximately 5,800 kilometers. This missile, while classified as an ICBM, can also be viewed as an intermediate-range ballistic missile depending on its payload configuration. RS-26 missile Launch Origin and Trajectory: The missile was allegedly launched from Russia’s Astrakhan region, which lies on the Caspian Sea, targeting Dnipro, in Ukraine. This trajectory underscores the long-range capabilities of ICBMs, typically designed to travel thousands of kilometers but used here in a relatively shorter range engagement, which is unusual for an ICBM. Strategic Messaging and Nuclear Escalation: The launch, if confirmed, could serve as a stark reminder to both Ukraine and its Western allies of Russia's nuclear capabilities. By employing an ICBM, Russia might be signaling its readiness to escalate to nuclear options if provoked, especially in light of recent Ukrainian use of Western-supplied long-range missiles against targets in Russia. This action might also be interpreted as Russia testing international reactions, or as an attempt to deter further escalation by demonstrating its capacity for a nuclear response, albeit with a conventional payload this time. International Protocols and Precedent: There's concern over whether the U.S. was informed prior to the launch, as per Cold War era protocols which require notification of ICBM launches. The absence of such notification could suggest a shift in Russian policy towards more aggressive posturing, potentially aligning with nations like North Korea, which does not typically provide warnings. Global Reaction and Future Implications: This incident has raised alarms about the stability of international norms regarding nuclear weapon use and missile launches. It could prompt a reevaluation of security policies, especially in how nations communicate military actions that could be perceived as nuclear threats. The global community, particularly nuclear powers, must now reconsider the frameworks of communication and deterrence to prevent escalation, possibly leading to new dialogues or treaties aimed at reaffirming these protocols. In summary, Russia's reported use of an ICBM with a conventional payload against Ukraine not only escalates the ongoing conflict but also poses broader questions about the integrity of international agreements meant to prevent nuclear miscalculation. This act, if confirmed, could redefine the rules of engagement in modern warfare, pushing the world closer to revisiting Cold War-era tensions where the threat of nuclear escalation was ever-present. Sources: https://www.rferl.org/a/russia-icbm-test-launches/32733341.html https://www.nbcnews.com/news/world/russia-launched-icbm-ukraine-war-putin-rcna181131 https://www.kyivpost.com/post/42599 https://apnews.com/article/russia-ukraine-icbm-attackddnipro-38b0faf6eed2cef98bdbc9be18f58244 https://www.politico.eu/article/russia-launches-intercontinental-ballistic-missile-at-ukraine/ https://www.ndtv.com/world-news/russia-launches-icbm-at-ukraine-for-the-first-time-says-kyiv-7071206 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP07: Comments on France commissioning a new nuclear aircraft carrier and the essential need for becoming a blue water navy | 00:05:23 | |
Summary: In this episode, we discuss France's recent commissioning of a new nuclear aircraft carrier and how it signifies its commitment to remaining a blue-water navy, a powerful naval force capable of operating across vast distances. This move comes as the world experiences a shift away from full-scale globalization and a return to reshoring industries. A blue-water navy is critical for projecting military power, influencing global maritime affairs, and safeguarding vital sea lanes. France's investment in this new carrier underscores its ambition to remain a major player on the international stage. Questions to consider as you read/listen:
Long format: France commissions a new nuclear aircraft carrier and the essential need for becoming a blue water navy In the news today (October 18, 2024 was the announcement that France had commissioned a new nuclear aircraft carrier to replace the aging Charles de Gaulle. What does this mean and why is it noteworthy? A blue-water navy is a naval force that can deploy ships across the open ocean and support them from a distance. The term refers to the ships themselves, as well as the sailors who operate them. A blue-water navy has several characteristics, including: Force protection: The ability to protect against threats from underwater, surface, and aerial warfare Logistic reach: The ability to sustain a presence at long range with alliances made to long distant foreign ports that will allow for restocking of consumable resources at a reasonable cost. Replenishment at sea: The ability to conduct replenishment while at sea Submarine protection: The ability to protect against enemy submarines, either with its own submarines or other means. In contrast, "green water" refers to coastal waters, ports, and harbors, and "brown water" refers to navigable rivers and their estuaries. Currently worldwide, the only true blue water navies are the US, France and Japan. There is debate over the UK with a lot of folks pointing to the lack of reliable operating aircraft carriers and its historical loss of naval capabilities as making it less than a full blue water navy. China, Russia and India clearly have aspirations to be true blue water navies but are not there yet. A Bluewater navy is important for a country because it allows them to project military power far from their home shores, enabling them to influence global maritime affairs, protect vital sea lanes, deter potential adversaries, and respond to crises in distant regions, essentially establishing them as a significant player on the international stage. A strong Bluewater navy can control vital sea lanes, safeguarding trade routes and ensuring the free flow of goods. It is the free passage safely of the seas that made globalization possible and profitable for everyone. As we the world continues to decouple and there continues to be a retreat from full scale globalization, having a true blue water navy becomes essential. With today’s announcement of commissioning a new nuclear aircraft carrier, France continues to show its commitment to this key future orientated necessity as the world continues to decouple and nations reshore industry and manufacturing with the retreat from full globalization.
Sources: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 08 Nov 2024 | Episode 70: The New Star Wars: Can China Survive the Semiconductor Squeeze? A New Modern Cold War (An opinion piece) | 00:12:37 | |
Summary: In this episode, we argue that China's reliance on imported semiconductors and AI technology creates a vulnerability that could ultimately lead to its downfall, similar to how the Soviet Union was weakened by technological advances. In the episode, we opine how the US and its allies, specifically Taiwan, Japan, (South Korea) and the Netherlands, have a powerful opportunity to strategically limit China's access to these critical technologies, which could effectively cripple its economic and to a degree its advanced ISR related military capabilities. We conclude by questioning whether the global community is prepared for the potential consequences of China's decline, including the need to absorb its manufacturing output and navigate the geopolitical shift. Questions to consider as you read/listen:
Long format: The New Star Wars: Can China Survive the Semiconductor Squeeze? A New Modern Cold War (An opinion piece) By Justin James McShane Disclaimer: The views expressed in this piece are solely my own, based on my observations and interpretation of the current global landscape. I am not a policy maker, or a policy influencer—just an informed individual sharing my perspective. While I strive to present factual information, much of what follows is my personal opinion on the challenges and opportunities presented by China’s position in the world. Please keep in mind that this is not a prediction of what will happen, but rather a suggestion for what might be done. I welcome your thoughts and interpretations, as this issue impacts us all. WHAT SHOULD BE DONE ABOUT CHINA? Let me be frank. I don't know when China or even if China is going to collapse. A lot of very learned geopolitical subject matter experts have opined that there is going to be a collapse of China primarily due to demographic pressures. I do think that there are a lot of strain on the system (demographics, unemployment, economy, deflationary pressures, overproduction, environmental, political and on and on). In my humble opinion, the US Department of Commerce in conjunction with Taiwan, Japan, and the Netherlands have a good strategy. Unfortunately, at the present South Korea has not joined that. Here is why I think it is a good strategy. Again, in my opinion, the semiconductor chip race and AI is the battle for the future. It is water wars important in my opinion. The country or countries that stay on top of this technology and at the least delay the technology to its adversaries is the way to stay on top of the global value chain. Period. Full stop. Again, this is my opinion. Again, in my opinion the Chinese have shown a total lack of fair play with other countries and international norms of (fair) trade. Their overcapacity (dumping) is Exhibit A. But an important and less known issue is the efforts by the Chinese United Front that I wrote about days ago. It is like Russian active measures but much more covert and includes sanctioned large scale industrial and commercial espionage and at times sabotage. A lot of folks look to the end of the USSR and what accelerated it as a model perhaps. When doing so and examining what pushing the life support that the USSR was on to its final end, some point to increased defense spending, but in my belief it was technology--the spread of integrated information sharing systems and the beginning of mass use of computers at the individual level and information sharing via them and most especially the threat of the SDI (Star Wars). If SDI could be built, then it would be a destabilizing technology for sure. Although Gobachev claims at the time and in later interviews that he was never afraid of SDI because he thought the technology was beyond the US's current capabilities (which was true), he sure acted in accord with it being a concern. Gorbachev responded to Reagan’s first letter, again voicing his concern over SDI. He emphasized that “space-strike weapons…possess the capability of being used both for defensive and offensive aims.” All leading Gorbachev to present “an unprecedented program to completely eliminate nuclear weapons” in three stages by the year 2000. China, in my opinion, has values, priorities and goals that are incompatible with ours at the core. I have read Made in China 2025 and it is remarkable. It is brilliant, and well thought out but it reveals the incompatibility for all who care to read it. While the trade wars that already exist are pressure the BIGGEST source of pressure that will cause China to "fall" are semiconductors/AI, in my opinion. People, I think, fail to understand the scope of semiconductors (let alone AI). Virtually 100% of the world's electronics contain semiconductor chips. Currently, the Chinese are restricted by available equipment to make anything less than 28nm node chips at scale if they are not allowed to import. [See my post about how they possible could make down to 3nm but how horribly inefficient and what a low yield with unacceptably high rejection rate it would be] If they are not allowed to import, they have zero AI chips. Zero. Just to help us all personalize what the world would be like if you were restricted to only 28nm node chips, here is an example: 5G networks require chips that are smaller than 28 nanometers (nm). There goes all of our cell phones. Every single one. Further, an iPhone 8 used a 10nm node size chip. An iPhone 6 used a 20nm chip. Most modern high end cars use under 28nm chips. Interestingly enough most military systems that filed deployed (aircraft, hypersonic missiles, etc) are not based upon low nm node sized chips, but high-level computers such as those used in ISR and AI based computing certainly requires under 28 nm systems. Semiconductors and AI are China's Achilles Heel. They need them but they have utterly failed to develop a domestic China based ability to make any at scale below 28nm when the current state of the art is 2nm (an iPhone 16 has a 3nm chip) and also in AI. They make zero AI chips. They import them all. This is our modern Star Wars and we (Taiwan, The Netherlands, South Korea and Japan) generally control all of the cutting edge of it. If we continue to push this and get SK on board in terms of global export bans on the chips and related technologies China as we know it disappears instead of waiting for demographic decline outcomes. The only question (much like with the case about the Soviet Union) is what comes next? Is what came after the Soviet Union better or worse? Is what comes after China better or worse? There is also timing. If China ceases to function, I don’t know if we Americans (and our alleys) are prepared today to absorb it all in terms of manufacturing and industrial output as our re-shoring efforts aren’t complete. Are we ready for the pivot to elsewhere? So, what comes next? Dunno And is this the right time? Dunno What do y’all think? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP 31: Counterattacking North Korea with nukes: the reality | 00:04:18 | |
Summary: In this episode we discuss the potential consequences of a nuclear attack on North Korea, highlighting the dangers of fallout and the international implications. We examine the reality of US retaliation options, emphasizing the significant risks posed by nuclear fallout to neighboring countries, particularly China and South Korea. We explore the concept of "zero tolerance" for nuclear proliferation, questioning its practicality and exploring the various measures that could be employed to prevent it, ranging from technology restrictions to military intervention. Questions to consider as you read/listen:
Long format: Counterattacking North Korea with nukes: the reality What can’t be lost in a doomsday scenario of a NK nuclear spasm is that in reality the US retaliation options are very limited in reality. Here is why: Depending upon the yield of the nuclear weapon, how high up in the atmosphere it is detonated and winds, at a distance of 20-25 miles downwind, a lethal radiation dose (600 rads) would be accumulated by a person who did not find shelter within 25 minutes after the time the fallout began. At a distance of 40-45 miles, a person would have at most 3 hours after the fallout began to find shelter. Here, it's important to stress that even if the nuclear event doesn't happen in your immediate area—even if it's hundreds of miles away—the fallout could still potentially reach you in a day or less. Why does this matter? China If we think for one nanosecond that China is just going to sit idly by when we nuke NK into oblivion and just tolerate nuclear fallout on their land and to their people no matter how minimal and not lose its mind???? Then we are crazy. On the other side there’s SK an alley and irradiating their land is not going to be popular and never mind our 28,500 troops and approximately 48,000 US Citizens. So in reality nuking the hermit kingdom back is very very dangerous. Sources: https://www.epa.gov/radtown/radioactive-fallout-nuclear-weapons-testing I am in with folks who say there should be a “zero tolerance” for nuclear proliferation. Nuclear proliferation especially into states or actors who do not play by generally accepted international standards of behavior is to be avoided. When folks advocate "zero tolerance" what does that look like? Are we talking ITAR like restrictions on the technology involved in uranium enrichment such as photoexcitation equipment/technology, and gaseous diffusion and gas centrifugation equipment? This we already do. But in a global market, there are other spaces to get these items from. Do we drop bombs on foreign manufacturers of these technologies if they continue to export these items? Do we occupy all uranium mines? Do we pressure countries to close their existing nuclear facilities so that enriched uranium or plutonium cannot be as easily made? Do we bomb them if they do not close? What about targeted assassinations of folks like Abdul Qadeer Khan or other scientists? Do we put boots on the ground in this zero-tolerance stance for NK or Iran or others to stop them? What in practical reality does zero tolerance mean in reality? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | Episode 20: We can shoot down nuclear weapons, right? | 00:12:34 | |
Summary: In this episode we debunk common misconceptions about the ability to intercept nuclear missiles. We explain that recalling or aborting a launched ICBM or SLBM is impossible, and that shooting them down in flight is unreliable due to the complexity of their flight phases and the effectiveness of countermeasures. We also highlight the challenges of intercepting tactical nuclear weapons, particularly those with hypersonic capabilities, due to their short range, low altitude, and high speed, making detection and tracking extremely difficult. Questions to consider as you read/listen:
Long format: But we can shoot down nuclear missiles, right? Some myth busting. Myth #1: You can recall, redirect, abort or self destruct a nuclear ICBM or SLBM. Truth: No you can’t recall or abort a nuclear ICBM or SLBM once it has been launched. I’m sorry Spies Like Us the great movie that it is lied to you. (sources: https://spectrum.ieee.org/nuclear-war#:~:text=Today%20the%20delivery%20of%20a,they%20are%20on%20their%20way and https://www.ucsusa.org/sites/default/files/attach/2015/01/Hair-Trigger%2520FAQ.pdf) Myth #2: You can shoot down ICBMs or SLBMs in flight: Truth: Not reliably. In order to understand this as a problem, you have to appreciate the basic nature of ballistic weapons. The three phases of flight for an ICBM are: boost phase, midcourse phase, and terminal phase. The boost phase is the initial phase where the missile's engines fire to accelerate it to the necessary velocity to reach its target. Typically at altitudes between 150 and 400 kilometers (93 to 249 miles). The midcourse phase is once the engines shut off, the missile continues its trajectory through space, typically at a high altitude, with no propulsion. Reaching apogee (highest point) at around 1,200 kilometers (750 miles) altitude. The terminal phase is the final phase where the missile re-enters the atmosphere and descends towards its target. Begins re-entry into the atmosphere at around 100 kilometers (62 miles) altitude. The Holy Grail in anti-ballistic missile defense against ICBMs is to intercept during the boost phase (Boost Phase Intercept-BCI). The boost phase, is ICBMs most vulnerable and easiest to target during this early stage of flight when its rocket engines are still firing. In the boost phase the target is a large, hot booster that is moving more slowly. BPI also eliminates the problems of dealing with multiple warheads or submunitions or decoys. In the next phase the mid course phase, modern nuclear ICBMs place the nuclear warhead in a metal-skinned balloon surrounded by dozens of similar decoy balloons would thoroughly disguise it to radar and to the seeker on the homing kill vehicle of the interceptor missile. Plus, it is where multiple independently targetable reentry vehicles (MIRV) are deployed. Currently the best strategy is to concentrate on intercepting at the midcourse phase because BCI is not capable due to deployment issues and intercept times and the OODA loop. Intercepting in the terminal phase is not a great strategy. The terminal phase is very short, with an intercept time of less than 30 seconds. The MIRVs or the single warhead are small and are moving incredibly fast. Over 15,000 mph. And if the intercept happens during the terminal phase there will be a release of nuclear materials whose damage/consequence depends on the altitude and conditions. So it’s not optimal. There are several advantages of a midcourse intercept and why it is attractive. The boost phase lasts about 3-5 minutes. The midcourse phase lasts longest, under 20 minutes. As such, it offers more opportunities to intercept the missile. If the first intercept attempt fails, more shots can be taken. There terminal phase is under 2 minutes. When there is a ICBM launch, within 5 minutes, the US Missile Defense Agency in Fort Belvoir, MD is provided data to try to engage the Ground-Based Midcourse Defense System (GMD) and in the case of a Pacific or Arctic transit using the SBX. launching from US Army Space and Missile Defense Command in Fort Greeley, Alaska. The GMD has been a resounding disappointment. The GMD system has a 55% success rate in very highly-scripted tests, but has missed in the last six tries. The US Army has tacitly admitted defeat, I think, in that there are only 44 ground-based missile interceptors housed at two military bases (Fort Greeley, Alaska has 40 and Vandenberg Space Force Base, California has 4), not hundreds or thousands. It is a three-stage solid rocket booster to fly out of Earth's atmosphere at near-hypersonic speeds. At one time, the kill component of the kill was in space and was a kinetic event involving the Raytheon Exoatmospheric Kill Vehicle (EKV) which had very large difficulties (it was off course by a lot) The successor replacement is the Redesigned Kill Vehicle (RKV) which may be deployed in 2025. As great as the THAAD system is, it has not been found to be conclusively effective to intercept ICBMs. Its very technology is for short, medium and intermediate range ballistic missiles and not true ICBMs. The THAAD interceptor reportedly “carries no warhead” and relies on physically striking its target to defeat it. It is a kinetic killer which has not been proven to be optimal against ICBMs, see the above. Sources: https://armscontrolcenter.org/issues/missile-defense/gmd-frequently-asked-questions/
The US isn’t the only folks trying to work on this. The other ones of note include:
The Russian A-135 anti-ballistic missile system which is deployed around Moscow was originally armed with nuclear warheads, but were updated in 2017 to use non-nuclear kinetic interceptors. Russia is very guarded about its efficacy. To date in the public record is one and only one successful test of an intercept. But what are the details? Did it in fact intercept a ICBM or just launch. Unknown.
Source: https://missilethreat.csis.org/tag/a-135/ and https://tass.com/defense/1228071 and https://sputnikglobe.com/20201126/russian-military-successfully-tests-new-anti-ballistic-missile-1081278309.html )
The Israeli Arrow 3 system is touted as being capable of intercepting ICBMs during their spaceflight portion of their trajectory (midcourse phase). It is also a potential anti-satellite weapon. It has intercepted some of Iran’s exoatmospheric missiles (which are long-range ballistic missiles), but these are not ICBMs at ICBM altitudes and speeds.
The Indian Prithvi Defence Vehicle Mark 2 has completed developmental trials and is awaiting government clearance for deployment. Other than opaque claims that it has been tested multiple times over years, the exact efficacy of this system against a true ICBM appears to be not of public record. All of the public record tests were not for ICBMs and not during the midcourse phase.
Sources: https://www.usiofindia.org/publication-journal/Evolution-of-India-Ballistic-Missile-Defence-Program-Prospects-and-Challenges.html#:~:text=India's%20BMD%20shield%20is%20basically,the%20enemy%20missile's%20launch%20trajectory and https://www.ndtv.com/india-news/interceptor-missile-test-fired-successfully-449178
Myth #3: Shooting down a tactical nuclear weapon is possible. Truth: The very basis of a non ballistic tactical nuclear weapon especially a hypersonic one is as follows:
1. very short range (300 miles or way less) deployment
2. At incredibly at very low altitude (cruise) (30–90 meters (100–300 feet AGL)
3. at very fast speeds (hypersonic) )(greater than 3000 mph and Mach number M greater than five, M > 5)
Number one and three make the maximum flight time at 3000mph and at the max 300 miles that’s 6 minutes max.
Flying at 30–90 meters (100–300 feet AGL) makes detection exceedingly difficult to detect and track. In fact they require very special radar to POSSIBLY detect them.
All resulting in no apogee as its non ballistic in nature meaning no boost phase, no midcourse phase, and no terminal phase therefore defying all current means of interception which are non existent in boost phase, less than 50% successful in the midcourse and generally most successful in boost (provided not too many or going too fast).
So the opportunity to observe is very short and unlikely and therefore your OODA loop is non existent.
So yes it’s a cat and mouse but the cat is by far the winner and there’s
Source:
https://www.popsci.com/technology/cruise-missile-defense/
https://archive.ll.mit.edu/publications/journal/pdf/vol12_no2/12_2detectcruisemissile.pdf
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| 23 Oct 2024 | EP 32: Demographics important but not everything | 00:06:36 | |
Summary: In this episode, we discus the importance of demographics, particularly fertility rates, in shaping the future of countries. We present data showing a dramatic decline in global fertility rates, leading to population decline in most parts of the world. However, despite this trend, we present that demographics are not the sole determinant of a country's future success. We highlight the importance of a country's position in the Global Value Chain (GVC) as an additional factor in determining future economic strength, suggesting that maintaining a strong position in the GVC may be as critical as achieving high birth rates. Questions to consider as you read/listen:
Long format: Demographics important but not everything There is within doubt a very large and irreversible demographic decline in the world in general. This is a problem. I have fully drunk the Peter Zeihan kool aid that demographics are important. However, they aren’t everything. Consider this. By 2100, only six of 204 countries and territories (Samoa, Somalia, Tonga, Niger, Chad, and Tajikistan) are expected to have fertility rates exceeding 2.1 births per female. In 13 countries, including Bhutan, Bangladesh, Nepal, and Saudi Arabia, rates are even predicted to fall below one child per female. The Total Fertility Rate (TFR) in Western Europe is predicted to be 1.44 in 2050, dropping to 1.37 in 2100, with Israel, Iceland, Denmark, France, and Germany expected to have the highest fertility rates at between 2.09 and 1.40 at the end of the century. Rates are projected to be much lower across the rest of Europe and parts of Asia. Most of the world is transitioning into natural population decline (when the number of deaths exceeds the number of livebirths); just 26 countries are still projected to be growing in population in 2100 as livebirths continue to outnumber deaths, including Angola, Zambia, and Uganda. Source: But those 16 countries don’t make Peter Zeihan’s top 5 future winners (“Now, the shortlist of countries that could function without the Americans, Japan's far away the top of the list. Turkey makes the top four. France does really well, so does Argentina.”) It is interesting to me to contemplate the chicken or the egg. Is it more important to stay on top of the Global Value Chain (GVC) or mind replacement rates and demographics? If a proverbial gun was put to your head and you had to choose demographic “win” of replacement rate above say 3 versus being on top of the GVC, which would you choose and why? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP10: Is there a future in US domestic mining for cobalt and lithium versus global mining for them? | 00:08:37 | |
Summary: In this episode we explore the economic viability of domestic cobalt and lithium mining in the United States compared to global mining operations, particularly in Australia and the Democratic Republic of Congo (DRC). We explore how domestic mining is unlikely to be competitive due to higher costs, regulatory hurdles, and potential environmental concerns. Furthermore, we point out the ethical implications of cobalt mining in the DRC, where child labor and low wages are rampant. While the Inflation Reduction Act (IRA) seeks to incentivize domestic mining with subsidies, we examine why there should be skepticism about their effectiveness. We discuss how without significant policy changes and technological advancements, domestic US cobalt and lithium mining will struggle to compete with lower-cost, albeit ethically problematic, global mining operations.
Questions to consider as you read/listen:
Long format:
Is there a future in US domestic mining for cobalt and lithium versus global mining for them? Lithium carbonate mining measured in LCE in Australia is way way way less per ton than the same unit costs in the USA. It only truly becomes economically viable to mine these domestic discoveries if they are heavily subsidized which is value judgement or political judgment. The IRA seeks to do this to a degree. Will it work? Dunno. Lithium is perhaps the best case for it. Cobalt perhaps the worst case for it working. Australia could produce lithium hydroxide at approximately $6,600 per ton of LCE (assuming integration with lithium mining), compared with $10,400 per ton of LCE for China. Indeed, South Korea and Canada, the closest countries to Australia from a cost perspective, still have costs approximately 24 to 51 percent higher than Australia’s. China Analysts estimate that processing a ton of LCE from lepidolite in China costs around 80,000 to 120,000 yuan ($11,120), while processing the same volume from brine deposits and spodumene costs around 40,000 yuan and 60,000 yuan, respectively. Although projection of costs for production LCE/ton in the US is to a degree opaque because of IRA subsidies and that we don’t have a long history of lithium mining in the US, there are hard cost estimates in some published accounts but very few soft cost estimates such as overcoming NIMBY objections such as run into at Thacker Pass. Regulatory compliance issues with EPA and state environmental protection agencies too. Labor and mining labor certainly costs more here than in China. There’s also the investor risk of capital investment into brine water use or recirculation issues that the federal or state government might suddenly clamp down on. Lithium perhaps has the highest margin and therefore the best potential to attract investment. Contrast lithium with cobalt mining in the US. Just look at what happened with Jervois Global's Idaho Cobalt Operations. When price dropped to $25 or so the company decided to shutter. Further, for example, a report by the US Bureau of Mines estimated the capital cost of a hypothetical copper-cobalt processing plant (with a capacity of 10,000 tons per day) to be around $700 million, and operating costs at $44 per ton processed. This is a 1991 report so it doesn’t include IRA based subsidies or more recent technology accomplishments but it is of note. Whereas in the DRC with Artisanal miners, the cost is very very very low. No regulations. Just labor. Of the 255,000 Congolese mining for cobalt, 40,000 are children, some as young as six years. Much of the work is informal small-scale mining in which laborers earn less than $2 per day while using their own tools, primarily their hands. The margins are astronomically high. So until there is a political decision to make DRC cobalt something like Blood Diamonds which might slightly skew the market or a sudden decision by DRC to nationalize cobalt (which would be utterly practically unenforceable I think), I don’t foresee a viable subsidy free, market based reason for future US cobalt mining with current technology and more or less abundance of cobalt in DRC for cheap. My Sources:
Cobalt Red: How the Blood of the Congo Powers Our Lives by Siddharth Kara Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 18 Nov 2024 | EP83 Chancay Port in Peru: The New Frontline in the US-China Global Trade Wars: How the Port Could Bypass the Panama Canal—and Challenge U.S. Trade | 00:16:36 | |
Summary: In this episode, we examine the opening of the Chancay Port in Peru, a state-of-the-art shipping terminal built by China as part of its Belt and Road Initiative. The port is designed to enhance trade between South America and Asia, bypassing the Panama Canal and reducing shipping times. While this development promises economic growth and job opportunities for Peru, it also increases China's influence in the region and challenges U.S. trade dominance. We explore the potential economic, geopolitical, and strategic implications of this new port, analyzing its impact on trade routes, global competition, and regional dependencies.
Questions to consider as you read/listen: 1. What are the key economic and geopolitical implications of the Chancay Port's construction and operation? 2. How might the Chancay Port impact US trade interests and what are the potential economic and strategic consequences for the US? 3. What are the long-term implications of the Chancay Port for global trade dynamics and the balance of power between the US and China?
Long format: Chancay Port in Peru: The New Frontline in the US-China Global Trade Wars: How the Port Could Bypass the Panama Canal—and Challenge U.S. Trade By Justin James McShane TL;DR: Chancay Port in Peru, opened on November 15, 2024, is a state-of-the-art shipping terminal designed to enhance trade between South America and Asia. Built by China’s Cosco Shipping and Peru’s Volcan Mining Company, the port is part of China’s Belt and Road Initiative and can handle 1.5 million TEUs annually. It reduces shipping times to Asia by 10 days, boosting South American export competitiveness and positioning Peru as a major logistics hub. While Chancay offers economic growth and job opportunities for Peru, it also increases China’s influence in Latin America and challenges U.S. trade dominance. The port’s success could reshape global trade routes, but it also raises concerns about Chinese influence, regional dependencies, and geopolitical shifts. The long-term implications will depend on how stakeholders address these challenges and opportunities. Introductory: The opening of Chancay Port in Peru on November 15, 2024, represents a pivotal development in the global shipping industry. Strategically positioned along the Pacific coast, just 60 kilometers north of Lima, this state-of-the-art facility has the potential to redefine trade routes between South America and Asia. As a joint venture between China’s Cosco Shipping and Peru’s Volcan Mining Company, Chancay Port symbolizes more than just infrastructure. It is a critical link in China’s Belt and Road Initiative and a bold statement about the future of global trade. This paper explores the significance of Chancay Port in three key dimensions. First, we will examine its technical capabilities and design, which allow it to accommodate the world’s largest container ships and rival major global ports in efficiency and scale. Second, we will analyze its economic and geopolitical implications, particularly its role in fostering direct trade routes between South America and Asia, bypassing traditional hubs like the Panama Canal. Finally, we will consider its broader impact on U.S. trade interests, exploring potential shifts in competitive dynamics and strategic responses. Chancay Port is not just a Peruvian project. Some argue it is a transformative force in the world economy. As trade patterns evolve and geopolitical alliances shift with reshoring and decoupling, understanding the role of this port is essential for assessing the future of international commerce and geopolitics. This paper provides a comprehensive analysis of Chancay Port’s role in shaping this new era of connectivity and competition. Information: Chancay Port is a major shipping terminal in Chancay, Peru, that opened on 15 November 2024. Located about 60 kilometers north of Lima, on the edge of Peru's coastal desert, we can find the port. It is now 17.8 meters deep. It was built by the Chinese company Cosco Shipping in association with the Peruvian company Volcan. It is owned by China Cosco Shipping Ports and Peru Volcan Mining Company. It is operated by Chancay Port Terminals. It can accept up to 1.5 million twenty-foot equivalent unit intermodal containers and 6 million tons of cargo annually. It has an ability to accommodate very large container ships that can carry up to 18,000 TEUs. It is part of the Belt and Road Initiative, the port is intended to reduce shipping times between China and Peru, and to become a hub for Chinese containerized exports in South America. The port is touted as South America's first green and smart port. In comparison Balboa port (Panama) handles around 3.8 million TEU annually, making it one of the busiest in the Americas due to its canal connectivity. Port of Manzanillo, Mexico manages around 2.4 million TEU annually. Port of Los Angeles/Long Beach, USA handles over 16 million TEU, making them the busiest ports in the Western Hemisphere. Yangshan Port, Shanghai, China moves about 49 million TEU per year, making it the world's busiest container port. Chancay Port in Peru and Its Importance to China: Chancay Port benefits from its location in the Pacific Ocean, offering direct access to Asian markets without the need for transshipment points like the Panama Canal. This reduces shipping times significantly, which is critical for perishable goods and just-in-time manufacturing. By reducing shipping times by about 10 days to Asia, Chancay is poised to become a major hub for exporting South American commodities, particularly to China. This efficiency leads to lower transportation costs, which could make South American products more competitive internationally. Beyond the port itself, plans include developing an economic zone around Chancay. This zone would facilitate processing, manufacturing, and logistics activities, potentially turning the area into a significant industrial hub. Such development would not only enhance trade but also foster local economic growth by attracting investments. The port's operations are expected to generate significant revenue and create thousands of jobs directly and indirectly. For Peru, this could mean a substantial increase in GDP contribution from trade and logistics. By establishing a direct route, China reduces its dependency on potentially congested routes like the Panama Canal, thereby ensuring more stable supply chains. The Chancay Port underscores China's increasing influence in Latin America, not just economically but potentially in terms of soft power, as infrastructure projects like this foster goodwill and economic ties. Chancay is envisioned as part of a new maritime silk road that connects Latin America directly with Asia. This corridor not only serves immediate economic needs but also aligns with China's long-term vision of a global trade network where it holds significant sway. The Maritime Silk Road (MSR) is a development strategy by China to connect the country to trading hubs around the world. It's a key part of China's Belt and Road Initiative (BRI), a larger plan to improve infrastructure and connectivity across Asia, Africa, and Europe. The success of Chancay could lead to more infrastructure projects in the region, creating an integrated network that enhances China's strategic presence. In summary, Chancay Port represents more than just infrastructure; it's a symbol of China's deepening economic ties with Latin America, a strategic move to secure and diversify its supply chains, and an opportunity for Peru to significantly enhance its global trade position. However, its success will depend on managing economic, environmental, and social challenges effectively. Impact on USA: The Chancay Port in Peru, while primarily beneficial to China and Peru, could potentially impact the USA in several ways. The port could divert trade routes traditionally involving the U.S. For instance, goods from South America destined for Asia might bypass U.S. ports, reducing the volume of cargo handled by American ports and consequently affecting port-related industries. The efficiency and reduced shipping times provided by Chancay could make South American goods more competitive in Asian markets. This shift might hurt U.S. exporters who compete in the same markets, particularly in agriculture and certain commodities where South America has a strong presence. By facilitating easier access to South American resources, China could strengthen its economic ties with the region, potentially at the expense of U.S. economic influence. This might affect the U.S.'s strategic economic partnerships in Latin America. The U.S. has historically considered Latin America within its sphere of influence. China's investment in ports like Chancay introduces a new player with significant economic power, potentially shifting regional dynamics and diminishing U.S. dominance. There's an underlying concern that infrastructure like Chancay could be used for geopolitical leverage. Although primarily commercial, the strategic location of such ports could potentially support military or intelligence operations in the future, although currently, there's no indication of such activities. The U.S. might feel compelled to increase its infrastructure investments in Latin America or at home to maintain or regain economic leverage, which could divert resources from other domestic or international priorities. U.S. companies might find themselves in a position where they need to compete more aggressively with Chinese investments in Latin America, possibly leading to a bidding war for influence or projects, which could inflate costs or alter U.S. foreign investment strategies. The direct route from South America to Asia via Chancay might encourage companies to restructure their supply chains, potentially excluding U.S. ports from certain trade routes. This could lead to logistical challenges or increased costs for U.S. businesses relying on these imports or exports. If Chancay or similar projects operate under less stringent environmental or labor regulations, this could pressure U.S. companies to lower their standards to remain competitive, potentially impacting the U.S.'s commitment to environmental or labor policies. However, it's important to note: The global economy benefits from efficient trade routes, and while Chancay might hurt certain U.S. interests, it also contributes to the broader efficiency of global trade, which indirectly can benefit the U.S. consumer through lower prices and increased product availability. The impact is not necessarily a zero-sum game where China's gain is directly the U.S.'s loss, but it does introduce new variables into the complex equation of international trade and geopolitics, requiring strategic responses from the U.S. to maintain its competitive edge and influence. The math and the realities But let’s also remove some of the Henny Penny. Let’s look at realistic scenarios to discover the overall “damage” this port may bring to US maritime interests. Estimating the exact monetary impact of Chancay Port on U.S. trade involves numerous variables and assumptions, making it quite speculative. However, we can outline potential areas where U.S. trade might incur costs or losses: If we assume a small percentage of South American cargo that would transit through U.S. ports now uses Chancay for direct shipping to Asia, the financial impact could be substantial. For example, if U.S. Pacific ports handle about 20 million TEU annually, and let's conservatively estimate that 1% of this volume might shift due to Chancay Port. 1% of 20 million TEU = 200,000 TEU. Assuming an average revenue per TEU of about $200 (for handling, storage, and other services), this would mean: 200,000 TEU * $200 = $40 million in potential lost revenue per year. The U.S. exported about $143 billion in agricultural products in 2022. If South American products become more competitive in Asia due to reduced shipping costs, a 1% loss in market share could translate to: $1.43 billion in lost export value. This number could be higher if the competition affects more sensitive markets or if the percentage loss is greater. U.S. companies might need to lower prices or pay for faster shipping options to remain competitive, which could increase their costs. If we estimate this at an additional 0.5% of the value of goods shipped to Asia and for simplicity, let's say U.S. exports to Asia are worth around $300 billion (this figure varies year by year), then 0.5% of $300 billion = $1.5 billion in additional costs. The U.S. might respond with investments in infrastructure or subsidies to support its ports or exporters. If the U.S. decides to invest an extra $1 billion annually in port enhancements or trade incentives as a reaction to Chancay, this would be an additional cost. Long-term economic influence is harder to quantify but could involve billions over time in terms of lost opportunities for U.S. companies in South America if China's influence grows substantially. Total Hypothetical Cost: - Port Revenue Loss: $40 million per year - Market Share Loss: $1.43 billion per year - Additional Export Costs: $1.5 billion per year - Strategic Investment: $1 billion per year Adding these up, we might look at an annual cost or loss to U.S. trade in the range of approximately $3.97 billion. However: This is an extremely rough estimate with many assumptions. The actual percentage of cargo diversion might be different. Market share might not decrease linearly. Costs could be offset by efficiencies or new trade agreements. The strategic investment could vary widely. Moreover, while this represents potential costs or losses, the actual impact could be mitigated by U.S. trade policies, new trade deals, or innovations in logistics and trade that adapt to the new dynamics created by Chancay Port. Additionally, the U.S. might find new ways to leverage this situation for its benefit or adapt its trade strategy to focus on different markets or goods. In terms of the grand scheme of U.S. shipping, the potential loss of income due to the operations of Chancay Port, while significant for specific sectors or ports, might not be considered a massive deal in the context of the entire U.S. economy or even just the shipping industry at large. Conclusion: The opening of Chancay Port marks a potential critical turning point in the global maritime industry, potentially creating new opportunities while challenging existing trade dynamics. By establishing a direct link between South America and Asia, this cutting-edge facility reduces shipping times, lowers transportation costs, and enhances the competitiveness of South American exports in global markets. For Peru, the port signifies a leap forward in economic development, job creation, and trade facilitation, potentially transforming the region into a major industrial and logistics hub. However, the implications of Chancay Port extend far beyond its immediate economic benefits. It is a cornerstone of China’s Belt and Road Initiative, exemplifying the country’s growing influence in Latin America and its strategic efforts to secure global trade routes. This development has introduced a new layer of complexity to U.S. economic and geopolitical interests, challenging American dominance in the region and reshaping traditional trade routes. While Chancay Port presents significant opportunities for efficiency and connectivity, it also raises critical questions about Chinese influence, regional equity, and long-term economic dependencies. As global trade continues to evolve, the port serves as a reminder that infrastructure investments are not merely commercial endeavors—they are instruments of power, influence, and transformation. Ultimately, the success of Chancay Port will depend on the ability of stakeholders to navigate these opportunities and challenges responsibly. Whether it becomes a beacon of prosperity or a flashpoint for geopolitical tension will shape not only the future of trade in the Americas but also the broader dynamics of global commerce in the decades to come. Sources: https://www.aiddata.org/blog/chancay-port-opens-as-chinas-gateway-to-south-america https://www.washingtonpost.com/world/2024/11/14/china-peru-port-latin-america/ https://apnews.com/article/china-peru-port-poverty-latin-america-1e06904f76cca1d7aaf19bca8bd24d93 https://www.nbcnews.com/news/amp/rcna180289 https://www.barrons.com/amp/news/peru-s-chancay-china-s-megaport-of-entry-to-south-america-5671f310 https://maritime-executive.com/editorials/port-of-chancay-creates-new-competition-in-latin-america Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP03 SiC technology and WolfSpeed: Why should you care? | 00:13:34 | |
Summary: In this episode we discuss Wolfspeed, a company that manufactures silicon carbide (SiC) semiconductors, has secured $750 million in funding from the US CHIPS Act and an additional $750 million from an investment group. SiC is a type of wide bandgap (WBG) semiconductor that offers significant advantages over traditional silicon semiconductors. These advantages include higher efficiency, better heat dissipation, and the ability to operate at higher voltages. This makes SiC ideal for use in power electronics applications, such as electric vehicles and AI chips. The funding will allow Wolfspeed to expand its silicon carbide manufacturing in the United States, potentially leading to further advances in these areas. Questions to Consider while reading/listening: 1. What are the key benefits of silicon carbide (SiC) in semiconductor technology, particularly in relation to advanced AI chips and electric vehicles? 2. How does the US CHIPS and Science Act support the development and deployment of SiC-based semiconductor technologies, and what are the potential economic and geopolitical implications? 3. What are the challenges and opportunities facing the SiC semiconductor industry, and how is the industry evolving to meet these challenges?
Long Form: SiC Wolfspeed announces $750m in proposed funding from US CHIPS Act plus $750m from investment group What happened… (quoted from article source below) Wolfspeed has signed a non-binding preliminary memorandum of terms (PMT) for up to $750m in proposed direct funding under the US CHIPS and Science Act. Wolfspeed expects to receive $1bn of cash tax refunds from the advanced manufacturing tax credit under the CHIPS and Science Act (section 48D), giving the company, in total, access to up to $2.5bn of expected capital to support the expansion of silicon carbide manufacturing in the USA. End quote Why does this funding matter? Wolfspeed makes silicon carbide (SiC). SiC is a type of Wide Band Gap (WBG) technology that some say is the future of semiconductors. Technically, SiC is a robust, hexagonal structure chemical compound offering wide band-gap semiconductor properties. What the f does that mean? Silicon carbide (SiC) is a compound semiconductor material made of silicon and carbon, crucial for AI and semiconductors due to its exceptional properties like high thermal conductivity, wide bandgap, and ability to operate under extreme temperatures, making it ideal for power electronics applications where high efficiency and heat dissipation are critical, especially in advanced AI chips requiring significant processing power. The wide bandage property allows SiC to operate at higher voltages with lower leakage current, resulting in improved energy efficiency. SiC’s WBG feature has a 3x improvement over the traditional silicon performance. As AI chips demand increasingly powerful processing capabilities, SiC semiconductors are being explored to enhance power efficiency and enable denser chip designs, leading to better performance in AI applications. A 10 to 15 percent greater range for electric vehicles can be achieved by SiC semiconductors because they convert energy more efficiently. As a result, car manufacturers can install smaller batteries in their electric vehicles. This is a win-win for the manufacturers and could provide a boost to the industry. It sure seems very promising and more evidence that we (US taxpayers) are going all in on the “chip war”. <<<<As a total geek aside, the process to make SiC is wild. SiC is a complex material to create because it requires a controlled environment that's about half the temperature of the sun using an Acheson Graphite electric resistance Furnace (AGF). AGF is a furnace that uses graphite rods and direct electric current to produce products through a process called graphitization. The furnace works by passing an electric current through graphite rods that are surrounded by a mixture of sand, carbon, and salt. The heat generated by the current transforms the mixture into a cylinder of silicon carbide (SiC) around the graphite electrode. It's also the second hardest material known to man. Very cool to this geek. The energy consumption to do this is not insignificant >>>> Sources: https://www.semiconductor-today.com/news_items/2024/oct/wolfspeed-151024.shtml
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| 22 Oct 2024 | EP14: The health of the Russian LNG sanctions | 00:12:04 | |
Summary: In this episode we explain the challenges facing Russia in exporting liquefied natural gas (LNG) due to international sanctions. These sanctions have targeted Russian LNG vessels, particularly ice-class tankers crucial for transporting LNG from Arctic regions. The sanctions also make it difficult for Russia to find buyers and insurance for its LNG. While Russia has the ability to produce LNG, the lack of suitable shipping vessels and the low price of LNG in Asia make it hard for them to profit from their exports. This situation has resulted in stranded LNG tankers with unsold cargoes. Questions to consider as you read/listen:
Long format: The health of the Russian LNG sanctions Yes LNG requires by its first letter for it to be liquid. To do so,it requires for it to be at about -260° Fahrenheit (-162 C) for shipping and storage. The volume of natural gas in its liquid state is about 600 times smaller than its volume in its gaseous state. There is around a 6% loss along the way on the ship due to “boil-off gas" (BOG) where a small portion of the LNG evaporates into vapor because of heat gain from the surrounding environment, resulting in a loss of natural gas during shipping; this loss is typically around 0.1-0.15% of the total cargo per day depending on the ship's design and insulation quality. Generally simplified in the industry to not more than 6% of total. Turning natural gas into a liquid is technical and requires quite a bit of energy. But it is actually well within even the capabilities of the native Russian intelligencia (which has been in decline for decades) and they do have that capability. Recall, Russia was the fourth largest LNG global exporter pre-ban. It has been in the LNG game so to speak for a while comparatively. Yamal LNG has arguably been the most successful LNG project in the world during the last decade. But the continued fears of conscription into the war in Ukraine is undoubtedly exerting pressure on this workforce. Where the difficulty in LNG and the kink in the proverbial hose is actually in the shipping not the liquidation. (As an aside, regasification-that is turning it safely from liquid back into gas without large loss-is a lot less technical and takes tremendously less energy to accomplish). And in particular the inventory of ice class LNG vessels. LNG vessels are very very unique. To drive home this point, as of February 2024, the global liquefied natural gas (LNG) carrier fleet had 701 active vessels. This includes 47 operational FSRUs and 10 FSUs. Russia doesn’t only need access to these unique beasts but also access to a subset where are ice class LNG. Why? Well these Russian LNGs are in areas that are ice except for a few weeks/months out of the year. A fleet of 15 Arc7 ice-class tankers are being built to transport liquified natural gas from Russia's Arctic LNG 2 project. The tankers are being built at the Zvezda Shipbuilding Complex and are scheduled for delivery between 2023 and 2025. To date, my best information is that at most less than a handful work. The 14th EU Sanctions package really went over the kink in the hose: the ships. It also specifically named and included both Arctic LNG 2 and Murmansk LNG and made crystal clear it is prohibited to purchase, import or transfer of LNG classified under CN code 2711 11 00 originating in or exported from Russia, through LNG terminals in the EU that are not connected to the interconnected natural gas system (key is “not connected to the interconnected natural gas system” part). The former facility being the one that India announced it would not use. The 14th package really focused on making sure non Russian LNG vessels and non Russian ice class LNGs are not available. The insurance and reinsurance in particular is their means beyond just simply banning the ships. Similar as what was tried with Russian crude. Russia has bought, borrowed and stolen a ghost fleet of largely uninsured crude tanks but good luck trying that with the unique beasts that are LNG vessels and wow good luck with ice class LNG vessels. When there’s an inventory of something less than 10k crude oil tankers, one can do that. But when the inventory is 700 or so or max 15, that strategy is hard By all reports there has been a total flight of high-end skilled labor and intellectuals in the Russian crude sector. The primary mover is fears over being drafted for the war in Ukraine. Further, there has been a massive reduction in graduation rate in the sector. In 2022, 816,000 students graduated from energy-related university programs, which is a 13% decrease from 2018. There have been moments when both crude oil tankers and very recently LNG tankers have been adrift at sea with no ports or destinations. Just four days ago was this nugget of a headline: http://gasprocessingnews.com/news/2024/10/four-tankers-still-at-sea-with-unsold-cargoes-from-russias-arctic-lng-2/ Here’s a historical one on crude tankers afloat with no port.
So can they produce more? Maybe. Possibly. Can they drill more? Probably. If they do will it help their bottom line? Probably not. A tanker adrift with no customer is a financial nightmare.
Sources:
https://www.econnectenergy.com/articles/how-does-regasification-of-lng-work
https://www.sciencedirect.com/science/article/abs/pii/S1364032118306828
Just to amplify my point (and if I dare say @patreoner’s point) as to crude.
The Crude Oil Urals Spot price today is 66.44. WTI is currently trading at 72.32 as I type at 0722 Eastern Time. Very large delta there.
Now to my point as to LGN. Perhaps @patreoner is right it’s about, but my thesis is the same: price.
The price for India whether it be ADNOC, Deepak Fertilisers and Petrochemicals-Equinor deal, Qatar, or Russia does not have anywhere near that type of delta. The price for LGN in Asia is pretty low now historically, just like Henry Hub is in the US.
India's primary suppliers of LNG include:
Qatar: India's largest supplier for five years, with 10.92 MT of shipments in 2023
United States: India's second largest supplier in 2023
United Arab Emirates: Supplied 2.85 MT of LNG in 2023
The price of LNG in Asia has been relatively low, averaging $35 per million Btu in 2022. In 2023, the price fell to $14, and then to around $11 earlier in 2024. It is hovering now in the band of $10-12. So it’s low.
Why upset the LNG apple cart over a non-existent delta?
https://www.investing.com/commodities/crude-oil-urals-spot-futures#
https://www.investing.com/commodities/crude-oil-streaming-chart
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| 06 Nov 2024 | EP65: The South Korean Loophole: Is China’s Access to Advanced Technology Wide Open? | 00:10:09 | |
Summary: In this episode, we examine the growing tension between the US and South Korea regarding export controls on semiconductor technology to China. Despite international efforts to restrict China's access to advanced technology, South Korea's dependence on the Chinese market and lack of comprehensive export controls present a significant loophole. This loophole, fueled by South Korea's key role in the global semiconductor industry, weakens the effectiveness of export restrictions, potentially enabling China to obtain restricted technology through indirect channels. We emphasize the urgency of closing this loophole to ensure the efficacy of global efforts to safeguard advanced technology. Questions to consider as you read/listen:
Long format: The South Korean Loophole: Is China’s Access to Advanced Technology Wide Open? Introduction As global powers increase restrictions on semiconductor and technology exports to safeguard critical advancements from unauthorized access, Japan, the Netherlands, the USA and Taiwan have implemented rigorous export controls aligned with U.S. policies aimed at limiting China’s access to cutting-edge semiconductor technology. However, a significant gap in these measures lies in the lack of similar restrictions in South Korea. Given South Korea’s central role in the semiconductor industry and its proximity to China, this absence of export controls represents a critical vulnerability in the broader strategy to curb China’s acquisition of sensitive technology. Without coordinated measures from South Korea, there exists a substantial risk of these technological safeguards being circumvented, potentially undermining the collective efforts of other nations. INFORMATION South Korea is considering export controls on semiconductor technology, in response to the US's request to limit the export of certain equipment and technologies to China: Equipment and technology The US is asking South Korea to limit the export of equipment and technologies used to make advanced logic chips and DRAM memory chips. This includes logic chips more advanced than 14-nanometer, and DRAM memory chips beyond 18 nanometer. The South Korean government is concerned that export control measures on China could negatively impact the competitiveness of the South Korean semiconductor industry. China is South Korea's biggest trading partner, and South Korea relies on China for trade. But as of right now, there are no laws or regulations preventing export. It is up to the individual companies. The South Korean government says it is in favor of multi county talks aimed towards export curbs but does not seem to be independently committed to act. This is a very large loophole for China. If the other countries, namely USA, the Netherlands, Japan and Taiwan are looking for their export controls to be effective rather than just hurt their companies bottom line, South Korean involvement isn’t just preferred. It is necessary. In October 2023, the South Korean government announced that its semiconductor manufacturers, Samsung and SK Hynix, have secured waivers from U.S. export curbs. The waivers do not have a definite end date. South Korea is a major player in the global semiconductor industry, with companies like Samsung and SK Hynix operating in China. However, China is South Korea's biggest trading partner, accounting for roughly half of South Korean semiconductor sales. South Korea is also a key ally of the US, and their security alliance is a cornerstone of their relations. CONCLUSION The absence of stringent export controls in South Korea creates a large and concerning loophole in the international effort to limit China’s access to advanced semiconductor technology. While Japan, the U.S., the Netherlands and Taiwan have tightened restrictions to protect sensitive technology, South Korea’s openness to China weakens this protective stance, potentially allowing restricted technology to enter the Chinese market through indirect channels. For the global strategy against unauthorized technology transfer to succeed, cohesive export controls from key players like South Korea will be essential. Closing this gap is critical to ensuring the effectiveness of semiconductor and technology curbs in an increasingly competitive and security-conscious global landscape. Sources: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 07 Nov 2024 | EP67: The Lithium Gold Rush: Can the American Smackdown Formation Transform the U.S. from Lithium Dependence to Lithium Independence? | 00:14:21 | |
Summary: In this episode, we explore the potential of the Smackdown Formation in Arkansas as a source of lithium, particularly for battery production. The discovery of significant lithium deposits within the formation has sparked interest in Direct Lithium Extraction (DLE) technology, a faster and more efficient process compared to traditional methods. While Standard/Equinor's project utilizing repurposed bromide wells shows potential cost savings, we highlight the volatility of the lithium market, including historical price drops and uncertain demand as a concern. This market instability presents substantial risk for investors, potentially impacting the financial viability of the project despite its promising technological advancements. Questions to consider as you read/listen:
Long format: The Lithium Gold Rush: Can the American Smackdown Formation Transform the U.S. from Lithium Dependence to Lithium Independence? SMACKDOWN FORMATION Smackover Formation is an extensive, porous, and permeable limestone aquifer that hosts vast volumes of mineral rich brine. According to reports that broke on October 24, 2024 machine learning (AI) was used to examine data to discover that within that brine is believed to be a large volume of lithium. Samples from Arkansas were analyzed by the USGS Brine Research Instrumentation and Experimental lab in Reston, VA, and then compared with data from historic samples within the USGS Produced Waters Database of water from hydrocarbon production. The machine learning model was then used to combine lithium concentrations in brines with geological data to create maps that predict total lithium concentrations across the region, even in areas lacking lithium samples. Lithium is used in batteries. The U.S. relies on imports for more than 25% of its lithium. The USGS estimates there is enough lithium brought to the surface in the oil and brine waste streams in southern Arkansas to cover current estimated U.S. lithium consumption. The low-end estimate of 5 million tons of lithium present in Smackover brines is also equivalent to more than nine times the International Energy Agency’s projection of global lithium demand for electric vehicles in 2030. THE TECHNOLOGY BEING USED AND MEANS OF PRODUCTION Standard/Equinor and ExxonMobile are the two main outfits that will be exploring and producing lithium at this field. They both use the same exact technology. They are both using Direct Lithium Extraction (DLE) technology. It is a process that very loosely is like fracking which is my somewhat area of expertise. Direct lithium extraction (DLE) often involves drilling wells into lithium-rich saltwater reservoirs, which can range in depth but are typically between 300 and 2,000 meters underground. This depth is crucial to reach the brine layers that contain sufficient lithium concentrations. The extraction wells are usually drilled vertically, although some advanced methods may include horizontal or directional drilling to increase contact with brine-rich areas and improve lithium recovery rates. Once the brine is brought to the surface, it goes through a series of steps to selectively pull out lithium using specialized materials or filters, often relying on ion-exchange or adsorption technology. No additional water is typically introduced into the well in direct lithium extraction (DLE). Fracking chemicals are generally not used in DLE. DLE doesn’t rely on fracturing the rock to release lithium, unlike hydraulic fracturing (fracking) used in oil and gas extraction. Instead, it simply involves pumping the naturally occurring lithium-rich brine up to the surface through wells, where lithium is then extracted through chemical processes. While the specifics can vary depending on the company or technology, the general process includes the following steps: Brine Pumping and Pre-Treatment: The lithium-rich brine is pumped from the underground reservoir to the surface. Sometimes, it undergoes initial filtration to remove larger particles and impurities, such as sand or debris. Lithium Adsorption/Absorption: The brine is then passed through a series of filters, membranes, or specialized materials designed to attract and hold lithium ions. Common materials used in this step include lithium-specific adsorbents, which can selectively trap lithium while letting other minerals and salts pass through. These adsorbents are often lithium-selective resins or materials like manganese oxide or aluminum-based composites. Elution (Lithium Release): Once the lithium is captured on the adsorbent, a chemical wash (usually a mild acid or a proprietary solution) is applied to release the lithium from the adsorbent material. This wash produces a concentrated lithium solution, sometimes called a "lithium eluate." Purification: The lithium-rich solution is then further purified to remove any remaining impurities or unwanted ions, such as calcium, magnesium, or potassium, which may be present in the brine. This is typically done through additional filtration or precipitation steps. Conversion to Lithium Compounds: The purified lithium solution can then be processed into a commercially usable lithium compound, often lithium carbonate or lithium hydroxide, which are commonly used in batteries. This final step typically involves precipitation reactions or crystallization to produce the desired lithium product. Reinjection of Brine: After lithium extraction, the remaining brine, now with much lower lithium content, is reinjected back into the reservoir. This helps to reduce environmental impact by maintaining local groundwater levels and minimizing waste. Each of these steps is designed to maximize lithium recovery while using less water and space than traditional methods. The specific materials and chemical processes in each step are often proprietary and can vary depending on the technology provider. DLE does not require drying for months. DLE is a faster and more efficient alternative to traditional lithium extraction methods (Chile), which can take months to years. DLE can extract lithium from brine in hours or days. I really didn’t get that deep into whether or not the pre-existing extraction wells could be repurposed without significant cost other than taking Standard’s say so. I would have gone there next or eventually I suppose. But in all truth I got gun shy with the 80% and also thoughts of possible softening of demand and what if both ExxonMobile and Standard pump out this much on top of Australia and Argentina and Chile. It’s not a mature enough or stable enough market for my liking. Your mileage may, of course, vary. Whether it is a pre existing hole that can be repurposed doesn’t impact the means or technology between the two projects. THE ECONOMICS OF THE STANDARD/EQUINOR PROJECT I chose to examine the Standard/Equinor proposed exploration and production as they have made public their investment prospectus. Like all prospectus, they need to be read with some suspicion as it is definitely an advertisement to invest. In my past experience, such things need to be not only read critically but also with notions of increasing costs, adding time to time tables for delays and finally reducing yield projections. Standard/Equinor have a potential advantage over ExxonMobile as their project calls for repurposing existing well infrastructure used in bromide extraction now for lithium extraction. This is potentially a large start p cost savings to the tune of between $2.5 to $7 million in well drilling and initial production costs. In theory, former bromide wells could potentially be repurposed for direct lithium extraction (DLE), depending on the specific geological and chemical characteristics of the brine in those wells. Bromide and lithium are often found in similar types of brine reservoirs at similar depths, so existing bromide wells might have infrastructure and access to brine sources that could contain lithium, making them candidates for DLE with some adjustments. Bromide wells already have the necessary infrastructure, such as pumps, pipes, and well casings, which could be adapted for lithium extraction. However, the equipment might require upgrades to accommodate the specific needs of DLE technology, such as specialized filtration and extraction systems. Any repurposing of wells would need to meet environmental regulations for DLE, which differ from bromide extraction. Regulations may cover reinjection practices, groundwater management, and waste disposal. Nevertheless with all things being equal, the initial costs of extraction will be less for Standard/Equinor than ExxonMobil. THE SPECIFICS OF THE STANDARD/EQUINOR PROSPECTUS The South West Arkansas Project Pre-Feasibility Study (PFS) by Standard Lithium and Equinor presents an investment overview and analysis for Standard Lithium Ltd.'s and Equinor’s project provides the relevant information. The following key investment aspects and assumptions have been outlined: Project Scope and Ownership: Standard Lithium holds the rights to extract lithium from brine under an option agreement with TETRA Technologies Inc., with a 10-year exploratory period. The project targets lithium-rich brine within the Smackover Formation, covering an area of approximately 36,839 acres. The study expands upon a 2021 Preliminary Economic Assessment, offering updated methods and extraction plans to produce lithium hydroxide, primarily for battery applications. Production Capacity and Methodology: Target production is 30,000 tonnes per annum (tpa) of battery-grade lithium hydroxide, with potential to increase to 35,000 tpa. The resource extraction involves a network of brine supply and injection wells, leveraging a refined flowsheet based on Direct Lithium Extraction (DLE) technology. Brine from wells will be processed and reinjected to maintain aquifer pressure. Economic Viability and Cost Estimates: Capital Expenditure (CAPEX): Estimated at $1.3 billion, including contingency, primarily for the well field, pipelines, DLE units, and processing facilities. Operating Expenditure (OPEX): Estimated at $5,229 per tonne of lithium hydroxide, with electricity and reagent costs as major components. Revenue and Profitability: The study assumes a lithium hydroxide price of $30,000/tonne, yielding strong financial projections: Net Present Value (NPV): $3.09 billion after-tax, based on an 8% discount rate. Internal Rate of Return (IRR): 32.8% after-tax. Assumptions and Risks: Market Price Stability: A flat rate of $30,000 per tonne for lithium hydroxide over the project life. Regulatory Compliance: The assumption of future royalty rates aligned with Arkansas regulations. Technical Feasibility: Continuous operation and optimization of the DLE process, with ongoing development to minimize reagent costs and manage waste. Resource Sustainability: Long-term viability of lithium concentration and production rates based on well data and geological modeling. Sensitivity to CAPEX/OPEX Fluctuations: Economic sensitivity analysis indicates the project remains viable even under adverse CAPEX, OPEX, and pricing scenarios. The PFS confirms the South West Arkansas Project’s investment potential, supporting its transition to further feasibility assessments and regulatory steps for future production if conditions precedent are met. WHY I WAS AND AM A PASS… The breakeven price for lithium hydroxide extraction in the South West Arkansas Project can be derived from the operating cost estimates. The all-in operating cost is approximately $5,229 per tonne of lithium hydroxide for the base case production scenario of 30,000 tonnes per year. This cost represents the minimum price at which the project would break even, excluding additional financial considerations like CAPEX recovery, taxes, and any unforeseen royalties not included in this analysis. Thus, the breakeven price is approximately $5,229 per tonne of lithium hydroxide for operational sustainability. As of September 4, 2024, the spot price for lithium hydroxide was $10,550 per metric ton. So it seems to make sense in the current market. The estimated cost to produce lithium hydroxide per tonne for the South West Arkansas Project, based on the provided figures, is broken down as follows: All-in Operating Cost: $5,229 per tonne of lithium hydroxide, which includes: Workforce Costs: $371 per tonne Electrical Power: $1,291 per tonne Reagents and Consumables: $1,158 per tonne Natural Gas: $15 per tonne Maintenance, Waste Disposal, Miscellaneous Costs: $1,073 per tonne Indirect Operational Costs: $168 per tonne Royalties: $741 per tonne Sustaining Capital: $415 per tonne This cost structure covers all essential operational expenditures needed to produce one tonne of battery-quality lithium hydroxide. Looking outside of the US to see the competition. Australia can and does produce lithium hydroxide at approximately $6,600 per ton of LCE (assuming integration with lithium mining), compared with $10,400 per ton of LCE for China. Indeed, South Korea and Canada, the closest countries to Australia from a cost perspective, still have costs approximately 24 to 51 percent higher than Australia’s. But one has to examine history of the market as a whole and its strength… In 2023, lithium hydroxide and lithium carbonate prices fell by more than 80% after reaching record highs in 2022. Yikes. That right there scared me off. If all of the sudden China rolls back its overproduction of NEVs and the American market softens on them, then might that be a problem? Will simply producing as much as they outline above crater the price too? Too risky for my blood. I wish Exxon and the others well. They can take a loss leader every day of the week. I prefer not to. CONCLUSION In conclusion, the economic viability of the Smackdown Formation's lithium extraction project, while promising on paper, presents substantial risks that temper its attractiveness as an investment. The formation holds vast lithium resources that, if fully utilized, could supply a significant portion of U.S. lithium demand, with advanced DLE technology offering an efficient and environmentally conscious extraction method. Standard/Equinor's project shows potential advantages in cost savings by repurposing bromide wells, which could reduce initial infrastructure expenditures and further enhance feasibility. However, the project remains vulnerable to significant market volatility. Historical trends in lithium pricing, including the sharp price drops in recent years, raise concerns about future profitability. If global lithium supply increases due to production from Arkansas alongside other leading regions such as Australia, Argentina, and Chile, a price decline could undermine revenue forecasts. Additionally, while current projections estimate competitive production costs, unforeseen CAPEX or OPEX increases, regulatory changes, or shifts in market demand could also impact profitability. While major players like ExxonMobil may have the resources to absorb potential market fluctuations, the risks associated with lithium's price instability and uncertain demand growth render this project too speculative for some investors. For those seeking a stable return, the Smackdown Formation’s project may be best approached with caution, given the current state of the lithium market and its sensitivity to global supply-demand dynamics. My Sources: https://www.newsweek.com/enormous-reserve-hidden-treasure-found-under-arkansas-1972840 https://corporate.exxonmobil.com/what-we-do/delivering-industrial-solutions/lithium#Whyitmatters https://news.pontemanalytics.com/p/lay-the-smack-down Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 18 Nov 2024 | EP82: The Dragon Takes Flight: China's Growing Naval Air Power | 00:12:11 | |
Summary: In this episode we examine the rapid development of China's naval aviation capabilities, specifically its aircraft carrier program. We discuss China's progress in building carrier-based aircraft, training pilots, and acquiring the necessary technology to operate a powerful fleet. We acknowledge the significant challenges China faces in catching up to the experience and technology of the US Navy but highlight China's determination to develop a globally capable blue-water navy. We analyze the advancements in China's carrier program, from the initial refurbished Soviet-era vessel to the more advanced, domestically built carriers, and discuss the implications of these developments for regional and global power dynamics. Questions to consider as you read/listen: 1. What are China's current naval aviation capabilities and how do they compare to those of other global powers? 2. How has China's aircraft carrier program evolved, and what are its future goals and challenges? 3.How is China's development of naval aviation impacting the global maritime balance of power? Long format: The Dragon Takes Flight: China's Growing Naval Air Power On 14 November 2024, NationalInterest.org published “Evidence Is Building China Wants a Nuclear Powered Aircraft Carrier” And friend of the website and podcast Dan Moreman asked a question and made several very good comments that inspired this episode. TL;DR: Traditional notions that the Chinese navy cannot takeoff and land aircraft reliably is outdated information. While nowhere near the operational quality or pace of the US Navy, China's naval aviation capabilities have significantly advanced over the recent years, moving from one-time basic operations to now launching and landing aircraft on carriers with increasing sophistication. With new, more advanced carriers like the Fujian and improved pilot training, China aims to protect its maritime interests, project power, and challenge U.S. naval dominance in the South China Sea and beyond. However, again, its capabilities still lag behind the U.S. Navy due to limited operational experience and ongoing challenges. China's long-term goal is to build a globally capable blue-water navy, with plans to expand its carrier fleet, including potential nuclear-powered vessels. Introduction: China's rapid advancements in naval aviation have reshaped global perceptions of its military capabilities, particularly its aircraft carrier program. Once criticized for its inability to reliably take off and land aircraft on carriers, China has made significant progress, transforming its naval aviation into a cornerstone of its maritime strategy. This development underscores China's intent to protect vital sea lanes, assert its dominance in contested regions like the South China Sea, and challenge the established global naval order. By leveraging technology, strategic planning, and foreign expertise, China has embarked on an ambitious journey to establish itself as a formidable naval power. Information The old adage was that China can’t takeoff or land on aircraft carriers, why are they even building them. And this was certainly the case in the past. However, current evidence has prompted a re-examination of this pre-existing notion. China considers developing naval aviation crucial to protect its maritime interests, project power beyond its coastline, secure vital sea lanes, and assert its status as a major global power, particularly in the contested South China Sea, by enabling operations far from its shores and potentially challenging the dominance of the U.S. Navy in the region; essentially allowing them to deter or respond to potential threats at sea with a robust air component based on naval vessels. Aircraft carriers and naval aviation give China the ability to deploy military force further from its mainland, influencing regional dynamics and potentially deterring adversaries. A strong naval aviation force can safeguard critical trade routes and energy supplies by monitoring and defending against potential threats at sea. Building a powerful naval force, including carrier-based aviation, is often seen as a symbol of national strength and global influence. It is temping to compare Chinese capabilities against the US Navy. But perhaps that is unfair given that the US Navy has been operating naval aviation for over 100 years. Nevertheless, it is important to do the comparison. China can reliably take off and land aircraft on its aircraft carriers, although compared to the US Navy, their capabilities are still considered limited, with challenges in complex weather conditions, pilot training, and overall carrier operations, particularly when it comes to high sortie rates and advanced combat scenarios; their newer carriers are improving this capability with the addition of catapult launch systems. While China has successfully conducted carrier operations with aircraft like the J-15 fighter on their carriers like the Liaoning, their overall experience and proficiency are still considered less developed than the US Navy. Earlier Chinese carriers used a ski-jump design for takeoffs, which restricts the types and weight of aircraft that can operate from them. China is building newer carriers like the Type 003 class with electromagnetic catapults, significantly enhancing their launch capabilities and allowing for heavier aircraft. Pilot training for carrier operations is a major area where China needs improvement, including night landings and operations in rough weather. China's aircraft carrier program has progressed significantly over the past decade. The Liaoning (Type 001), a refurbished Soviet-era vessel, was commissioned in 2012 and serves as a training platform to develop carrier operation skills. It uses a ski-jump for aircraft launches, limiting the payload of aircraft. The Shandong (Type 002), China's first domestically built carrier, entered service in 2019, featuring improvements over its predecessor. It also was built carrier with a similar ski-jump configuration to the Liaoning. The most recent addition, the Fujian, launched in 2022, is equipped with advanced electromagnetic catapult systems (EMALS), enabling the launch of heavier and more diverse aircraft (CATOBAR - Catapult Assisted Take-Off But Arrested Recovery). This technological advancement positions the Fujian comparably to the most advanced conventionally powered carriers globally. The operational tempo of China's aircraft carriers is expected to increase with the commissioning of the Fujian, which will allow the PLAN's carrier strike groups to deploy more frequently. The Fujian is expected to enter service in late 2024 or 2026. The Fujian's electromagnetic catapults allow it to launch heavier aircraft, including those with anti-surface and land-attack weapons. The Fujian can also launch larger airborne early warning and control (AEW&C) aircraft, such as the KJ-600, similar to the US Navy’s E-2 Hawkeye. The current primary carrier-borne fighter is the J-15 Flying Shark, with variants like the J-15D focusing on electronic warfare, showing China's intent to enhance its naval air combat capabilities. There's also progress on the J-35, a new fighter jet designed for carrier operations, which would complement or eventually replace the J-15 series. (The carriers also host Z-20) helicopters which is a medium utility helicopter with a potential doe anti-submarine warfare roles. In November 2024, China's People's Liberation Army Navy (PLAN) conducted its first dual-aircraft carrier operation in the South China Sea. The operation involved the PLAN's two active carriers, the Liaoning and Shandong, and at least 11 other vessels. The operation demonstrated the PLAN's growing air wing and its ability to operate farther from the Chinese coast. Developing proficient carrier-based pilots is a critical component of China's naval strategy. The People's Liberation Army Navy (PLAN) has focused on training pilots capable of operating from carriers, a complex skill set requiring extensive practice. Notably, China has sought to accelerate this process by recruiting former Western military pilots to impart advanced carrier operation techniques. This approach aims to bridge the experience gap and enhance the proficiency of Chinese pilots in carrier-based operations. China has learned naval aviation skills from many sources. The Soviet design of the Liaoning provided China with a foundational understanding of aircraft carrier operations and helped them adapt Soviet-style naval aviation for their own use. China adapted the Sukhoi Su-33 fighter design to create the Shenyang J-15, a carrier-capable aircraft tailored for the Liaoning and Shandong carriers. China has a fairly robust training cadre involving land-based simulators before transitioning to carrier-based operations. The People's Liberation Army Navy (PLAN) established dedicated naval aviation academies to train pilots in takeoffs, landings, and combat operations specific to aircraft carriers. Reports indicate that China has recruited retired military aviators, including British and other Western carrier-trained pilots, to fast-track their learning curve. These experts have provided valuable insights into advanced operational techniques and carrier air wing integration. Former civilian instructors and private contractors were allegedly employed to teach fundamental and advanced techniques related to naval aviation. China closely observed the operations of U.S. and other foreign carriers during joint exercises, deployments, and conflicts. Chinese vessels have followed U.S. carrier strike groups during their regional deployments to study their formation, logistics, and operations. Finally, there are open source materials such as hours and hours of YouTube videos that give tactics and training methods of carrier operation and even carrier based piloting available. Despite these advancements, China faces challenges in matching the operational capabilities of established naval powers like the United States. The U.S. Navy's extensive experience and larger fleet provide a significant advantage in carrier operations. China's relatively nascent carrier program must overcome a steep learning curve to achieve comparable operational proficiency. Looking ahead, China plans to expand its carrier fleet, with reports indicating the construction of additional carriers, including potential nuclear-powered vessels. This expansion aligns with China's broader objective to develop a blue-water navy capable of sustained operations across the globe, thereby enhancing its strategic influence in international waters. Conclusion: While China's naval aviation capabilities have advanced considerably, they remain in their formative stages compared to established naval powers like the United States. The challenges of operational proficiency, pilot training, and carrier technology persist, but China’s commitment to overcoming these hurdles is evident in its investments and strategic planning. With the launch of newer, more advanced carriers and a focus on training proficient carrier-based pilots, China is steadily building a blue-water navy capable of projecting power globally. As the People's Liberation Army Navy (PLAN) continues to develop, its trajectory will significantly influence the balance of power in the maritime domain, signaling the dawn of a new era in naval competition. SOURCES: https://www.globaltimes.cn/page/202405/1311543.shtml https://defenseopinion.com/chinas-long-march-toward-aircraft-carrier-capability/597/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP05: Moldova and Russia: Why should you care | 00:10:36 | |
Summary: In this episode, we examine the possibility that if Russia had its way, would it move beyond Ukraine to conquer other countries, focusing on Moldova. We focus our discussion on similarities between the pre-text to the Ukraine invasions and Transnistria, a region that broke away from Moldova with Russian support, as a potential target, citing a recent appeal from pro-Russian separatists in the region for Moscow's protection. We draw parallels between this appeal and similar requests from Ukraine that preceded Russia's annexation of Crimea in 2014 and parts of the Donbas in 2022, suggesting a potential pattern of Russian aggression. We discuss the Russian ops and tactics used against Moldova and its vulnerability to Russian information warfare and what Russia perceives as an existential threat which is Moldova moving towards European integration. Questions to consider as you read/listen:
Long format: Moldova and Russia I have long been following closely Russian actions and ops in Moldova as a way to gauge whether or not there is any validity to the thought that Russia will or will not be simply satisfied with conquering Ukraine. In other words, will they stop? I am not a smart man, but I can use pattern recognition, right? Transnistria was a region that broke away from Moldova around 30 years ago with Russia’s support. In February, pro-Russian separatist leaders of Transnistria issued an appeal to Moscow for protection. That echoed similar ‘appeals’ from inside Ukraine which set in motion the illegal Russian annexations of its territories: the Crimean Peninsula in 2014, and the Luhansk and Donetsk regions in 2022. Again, pattern recognition, right? As far as data points in trying to figure that out the whole "will they stop" issue, I offer the following articles that I liked for consideration:
https://www.fpri.org/article/2024/10/russias-information-war-in-moldova/
https://www.chathamhouse.org/2024/03/moldova-new-battleground-russias-war Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 25 Nov 2024 | EP91: From Baltic Sabotage to Taiwan’s Lifelines: Is China Testing Its Next Move? | 00:12:54 | |
Summary: In this episode, we investigate the suspected sabotage of undersea data cables in the Baltic Sea, allegedly by the Chinese bulk carrier Yi Peng 3. Analysis of the incident, focusing on the ship's unusual movements and AIS malfunctions, suggests deliberate actions. The incident is framed within a broader context of China's potential strategies regarding Taiwan, where similar undersea cables are crucial for communication and economic activity. Concerns are raised about China potentially testing covert sabotage tactics as a form of "gray zone" warfare, and the vulnerability of Taiwan's infrastructure is highlighted. The potential consequences of severing Taiwan's undersea cables, including significant economic and military disruption, are also explored. Questions to consider as you read/listen:
Long format: From Baltic Sabotage to Taiwan’s Lifelines: Is China Testing Its Next Move? By Justin James McShane TL;DR: A Chinese bulk carrier, Yi Peng 3, is suspected of deliberately cutting two critical undersea data cables in the Baltic Sea. Evidence from ship movements, AIS (Automatic Identification System) malfunctions, and interactions with a Danish warship suggests the incident may have been intentional rather than accidental. The video from What is Going on With Shipping? explores how these actions align with potential Chinese strategic interests, such as testing covert sabotage tactics in preparation for possible operations around Taiwan, where undersea cables are vital. The Baltic incident serves as a case study in "gray-zone" activities, emphasizing the global need to secure vital communication infrastructure against such threats. Introduction: The YouTube video from What is Going on With Shipping? is a must-watch for anyone interested in global maritime security and the increasingly complex geopolitical dynamics surrounding undersea cable infrastructure. This video provides an in-depth analysis of the alleged sabotage of undersea data cables in the Baltic Sea by the Chinese bulk carrier Yi Peng 3. The cables in question, which connected critical European nations, were severed in what appears to be a deliberate act. Through meticulous examination of ship behavior, including AIS shutoff/malfunctions, unusual speed patterns, and interactions with military vessels, the video builds a compelling case for further scrutiny. The insights provided highlight not only the potential motivations behind such actions but also their implications for global infrastructure security, especially in light of similar vulnerabilities in areas like Taiwan. I highly, highly recommend this YouTube video from What is Going on With Shipping?
https://www.youtube.com/watch?v=yiGuJyrELEk Background The Chinese Bulk Carrier Yi Peng 3 was accused of cutting two undersea fiber-optic data telecommunication cables in the Baltic Sea. These cables were:
The C-Lion1 breakage point and the BCS East-West Interlink are 97–105 kilometers or 60–65 miles apart from each other Discussion about YouTube video from What is Going on With Shipping? The analysis presented in the YouTube video employs a comprehensive data-driven approach to elucidate the events surrounding the incident. The depth of the ship, as highlighted by the analysis, significantly diminishes the plausibility of anchor dragging being a legitimate cause, as typically offered as an excuse. Moreover, the vessel's disappearance, specifically the deactivation or malfunction of its Automatic Identification System (AIS) for a period of 7.5 hours, raises substantial concerns. The AIS, a critical maritime navigation safety system, broadcasts essential information such as the ship's position, which is vital for collision avoidance and navigation safety. Furthermore, the analysis points out an unusual reduction in the ship's speed prior to the AIS going offline, suggesting a deliberate slowing down which could facilitate covert activities. This deceleration, followed by an abrupt increase in speed, might indicate an attempt to mask illicit actions by quickly resuming a normal travel pace, thereby suggesting potential "monkey business" during the period of reduced speed. The video also discusses the ship's peculiar behavior upon the sighting of a Danish warship: it stopped, drifted, then altered its course away from the warship. This could imply that the ship was either attempting to recover or adjust something it was dragging, or alternatively, trying to create time to either dispose of evidence or deliberate on its next actions. Such behavior, in a legal context, might be interpreted as indicative of consciousness of guilt. The convergence of these anomalous activities in the vicinity of the two separate cable severance sites presents a compelling case for further investigation. The alignment of these events in such a manner, especially at the locations of cable disruptions, suggests more than mere coincidence and warrants a detailed examination in a formal investigative or legal setting. Further, as I note above the two points where the sea cables were severed is about 97–105 kilometers or 60–65 miles apart from each other which is a very long period to accidentally have your anchor out in such deep waters. The Mystery: The only major question to me is why would China do this and why these particular lines. I have written before in EP11: Is China going to invade Taiwan? https://www.geopoliticsunplugged.com/audio/episode-11-is-china-going-to-invade-taiwan/ that for various reasons that China is unlikely to assault directly and invade Taiwan. If anything, it is most likely to attempt to blockade the island. And perhaps maybe sever its communications such as its undersea cables. Taiwan does have underwater cables that are similar to those that were cut in the Baltic Sea. These cables are vital for Taiwan's connectivity, both domestically within its island groups and internationally. Here's some context. First, Taiwan is an island. No kidding, right? Therefore undersea cables for communication and internet are vital. Taiwan has several domestic submarine cables connecting the main island to its outlying islands like the Matsu Islands and Kinmen. For instance, incidents where these cables have been severed or damaged have occurred, notably involving Chinese vessels in the Matsu area, leading to significant internet disruptions. These cables are crucial for local communication and commerce. Taiwan is also well-connected internationally through numerous undersea cables. These cables link Taiwan with major internet hubs in Asia, the United States, and even Europe, ensuring high-speed data transfer for international communications, business, and technology sectors, including its semiconductor industry. Some of the more notable examples include the APCN2 (Asia Pacific Cable Network 2) which connects Taiwan to Japan, Korea, China, Hong Kong, Singapore, Malaysia, and the Philippines. The EAC-C2C (EA Cables - City to City) which is part of this extensive network that stretches across Southeast Asia and connects to the US. The TPE (Trans-Pacific Express) links Taiwan, South Korea, China, and the US. The SEA-US connects Taiwan to the US via Guam and the Philippines. The vulnerability of these cables has been highlighted by incidents where they've been accidentally or possibly intentionally damaged. The case with the Matsu Islands, where internet connectivity was severed by Chinese vessels, underscores the strategic importance and fragility of these connections. This has led to discussions in Taiwan about the need to protect these vital communication links, potentially through satellite backups or more secure cable routes. These cables are not just for civilian use; they are essential for Taiwan's economic activity, particularly in the tech sector, and for national security, as communication lines are crucial in times of both peace and potential conflict. The strategic importance of Taiwan's undersea cables mirrors the global significance of similar cables, like those in the Baltic Sea, where disruptions can have wide-reaching effects on communications and economic activities. There have been multiple instances where undersea cables connecting Taiwan to its outlying Matsu Islands were cut or damaged, with suspicions often pointing towards Chinese vessels. These incidents have occurred several times over the past few years, with one report mentioning 27 cuts in five years up to 2023. Could this cable cutting in a far off place with non-critical information disruption be a probing activity by the Chinese? Yes, the incidents involving Chinese vessels in the Baltic Sea could indeed serve as a strategic probe for several reasons related to potential future actions against Taiwan. First, it could be an attempt to see if the Danish maritime activities could prevent and/or locate after the fact the perpetrator ship to discover if the use of commercial shipping for sabotage activities would work as a clandestine activity. By observing how quickly European nations, NATO, or other global actors respond to infrastructure damage, China can gauge the response efficiency, which would be crucial information if contemplating similar actions towards Taiwan. This includes both the physical repair time and the diplomatic or military responses. The process of repairing undersea cables involves revealing technical details about the infrastructure, the capabilities of repair vessels, and the technology used to locate and fix the damage. This intelligence could be used to plan more effective disruptions in the future.Such incidents test how international law is applied in cases of sabotage or accidental damage to international infrastructure. It also shows how countries might leverage international forums or bilateral negotiations to address such threats. Observing the economic fallout from cable disruptions in Europe can help China understand the potential economic leverage or chaos that could be caused by similar actions around Taiwan. This includes the impact on stock markets, trade, and communication. The military responses, if any, to these incidents, like increased naval patrols or joint exercises, would provide insights into how NATO or other alliances might react in a Taiwan Strait scenario. The public perception in Europe and the global media's response can inform China about how such actions might affect international opinion or galvanize support against or in favor of Taiwan in a crisis. This form of "gray zone" activity allows a nation to push boundaries without crossing into overt warfare, providing valuable data for future strategic planning. However, while these incidents might inform China's broader strategic calculus, any direct comparison or application to the Taiwan situation would need to account for the unique geopolitical, military, and economic factors surrounding Taiwan, including its strategic importance in the semiconductor industry and the U.S.'s explicit interest in ensuring Taiwan's security. By conducting these operations, China might be gauging the threshold of international tolerance for such actions, testing the resilience of international infrastructure and assessing the effectiveness of their own deniability or the effectiveness of international investigations into such incidents. This information could be crucial for China's strategic planners in deciding whether attempts to isolate Taiwan through infrastructure disruption would be feasible, effective, and how to manage potential global backlash. Strategic Modeling for a Taiwan Blockade: A blockade of Taiwan might involve severing or threatening these cables to isolate the island. Understanding how nations react to such disruptions can inform China's planning for whether such actions would effectively coerce Taiwan or lead to international intervention. The psychological warfare aspect of showing that one can disrupt vital infrastructure at will could be a tactic to intimidate or pressure Taiwan and its allies. By analyzing the costs (operational, diplomatic, economic) versus the strategic gains from such actions in the Baltic Sea, China could estimate what similar actions might yield in the Taiwan Strait, including the potential for escalation. One can imagine a scenario where Chinese flagged ships which are abundant around Taiwan could be used like the Chinese Bulk Carrier Yi Peng 3 in the Baltic to sever or try to sever all of the cables to and from Taiwan. General Timeline for Repair It all depends. It depends on the severity of the cut, where it is (how deep or rough the waters are) and the availability of the specialized crews and materials needed to repair the damage. However, as a general rule, overall, from start to finish, repairing an undersea cable can take anywhere from a week to several months, with an average of about 30 days being commonly cited for straightforward repairs. There are distinct stages of the repair: mobilization and forensic analysis, location and recovery, repair and testing and reinstatement. It can take from a few days to a couple of weeks to mobilize a repair ship. It can also take several weeks to do a forensic analysis to try to discover the root cause of the damage. Finding and retrieving the cable can take several days, especially if it's in deep water. The actual splicing and repair work might take from a few hours to a couple of days. After repair, the cable needs to be tested, which can take additional time. In Taiwan, particularly with the incidents involving the Matsu Islands, the repair timeline has been documented.Taiwan has faced challenges due to the limited number of cable ships available for repair work. For instance, after the February 2023 incident where both cables connecting Matsu to Taiwan were cut, it took until late April for repairs to begin, indicating a delay of about two months. Once the repair ship arrives, the actual repair process can still take several weeks due to the complexity of the task, the need for precise splicing, and ensuring the repair is robust against the marine environment. Also the seas in and around Taiwan are notoriously rough during certain times of the year. The Taiwan Strait, also known as the Formosa Strait, experiences rough seas particularly during the cold season, which spans from November to April. This period is marked by frequent storms, which pose significant dangers for shipping. For instance, a storm in November 2007 led to the sinking of four ships due to wind speeds exceeding 115 km/h and wave heights reaching up to 4 meters. Additionally, the strait lies in Taiwan's strategic location and the importance of its internet connectivity, especially for its tech industry, mean there's an urgency to expedite repairs. However, Taiwan must rely on international cable repair ships, which can lead to delays if these ships are already committed elsewhere. There have been calls for Taiwan to develop its own cable repair capabilities to reduce dependency on foreign ships, which could potentially speed up repair times in the future. In the case of total severance of Taiwan cables: If all of Taiwan's undersea cables were to be severed, the consequences would be far-reaching and multifaceted. The immediate effects would be devastating to Taiwan. Taiwan would be cut off from direct internet communication with the rest of the world. This would affect all digital communications, including emails, video calls, financial transactions, and cloud services. Many businesses, especially tech companies and those reliant on cloud computing, would face immediate disruptions. Taiwan's semiconductor industry, which is critical globally, would be severely impacted, potentially causing a ripple effect across global technology manufacturing. Taiwan's stock exchange could see significant disruptions or might have to halt trading due to inability to connect with global markets. International shipping and logistics would be affected, as many systems rely on real-time data and communication. The military would lose direct communication lines with allies, complicating any strategic coordination or response to threats. Satellite communications could remain functional but are typically slower, less secure, and have lower bandwidth compared to fiber optic cables. Internal communication within Taiwan would also be impacted if the severed cables included those linking different parts of the island or its outlying areas, though local networks might still function. The medium to long-term effects are difficult to fully comprehend as it depends on whether an invasion or a blockade happens as oil would be unlikely that China would simply sever the cables and then walk away. But it useful to consider it anyway. Taiwan would have to rely heavily on satellite communications, which are not as robust, secure, or high-capacity as undersea cables. This might lead to overcrowding on existing satellite services and could slow down communications significantly. Taiwan's role in the global supply chain, especially in semiconductors, would disrupt numerous industries worldwide, potentially leading to a global tech slowdown until connectivity is restored. There would be economic losses due to halted business operations, inability to trade electronically, and disruption in financial markets. Recovery would depend on how quickly cables could be repaired, and the global economy could face a temporary shock. If possible, data traffic might be rerouted through neighboring countries with intact cable infrastructure, but this depends on the capacity of these alternatives and could lead to geopolitical tensions or negotiations. Emergency services could face challenges if they rely on internet-based systems for coordination, although critical services might have backup satellite or radio systems. A sense of isolation or vulnerability might affect the populace and could be leveraged in psychological warfare or influence operations. Such an event would likely escalate tensions with China, as it would be seen as an act of aggression or an attempt to isolate Taiwan, possibly prompting stronger international responses or military posturing by the U.S. and its allies. There would likely be an immediate push to reinforce or diversify communication infrastructure, possibly through satellite technology, more robust domestic networks, or new cable projects. Taiwan might seek more international cooperation for protection of its infrastructure, and this could affect its diplomatic relations, potentially leading to new alliances or trade agreements focused on infrastructure security. Repairing all undersea cables would take considerable time, resources, and international cooperation, given the complexity and the need for specialized ships and equipment. The recovery would involve not just physical repairs but also restoring confidence in Taiwan's digital infrastructure. The scenario of all cables being severed would represent a critical infrastructure attack with significant strategic, economic, and societal impacts, pushing Taiwan towards emergency measures and possibly accelerating discussions on infrastructure security. Conclusion: The alleged sabotage of undersea cables in the Baltic Sea by the Yi Peng 3 raises critical questions about the fragility of global communication networks and the potential for gray-zone tactics in modern geopolitics. This incident is not just a regional concern but serves as a warning for other strategically vulnerable regions, like Taiwan, where undersea cables are essential for both civilian and military communication. By presenting a detailed, evidence-based account, the video underscores the urgent need for international cooperation to safeguard critical infrastructure. It also sheds light on the broader strategic motivations that might drive such covert actions, offering a stark reminder of the interplay between infrastructure security and global power dynamics. #Geopolitics #GlobalSecurity #MaritimeSecurity #China #Taiwan #UnderseaCables #CriticalInfrastructure #CableSabotage #InternetInfrastructure #DigitalSecurity #BalticSea #TaiwanStrait #AsiaPacific #Europe #GrayZoneWarfare #HybridWarfare #NavalOperations #StrategicPlanning #CyberSecurity #SemiconductorIndustry #TechSupplyChain #GlobalConnectivity #DataSecurity Sources: https://youtu.be/yiGuJyrELEk?si=v7TgMyo5Oqm1uukK https://www.newsweek.com/baltic-cable-sabotage-nato-1988689 https://splash247.com/chinese-bulk-carrier-top-suspect-in-latest-european-cable-outage/ https://www.ft.com/content/383516a5-02db-46cf-8caa-a7b26a0a1bb2 https://apnews.com/article/matsu-taiwan-internet-cables-cut-china-65f10f5f73a346fa788436366d7a7c70 https://www.reuters.com/investigates/special-report/us-china-tech-cables/ https://www.newsweek.com/baltic-cable-sabotage-nato-1988689 https://www.businessinsider.com/sweden-probes-chinese-ship-severed-baltic-sea-cables-report-2024-11 https://www.wbur.org/onpoint/2023/05/22/undersea-cables-china-espionage-fiber-optic-ocean https://thediplomat.com/2024/07/why-taiwan-needs-to-secure-its-undersea-cables/ https://www.onesteppower.com/post/subsea-cable-repair https://foreignpolicy.com/2023/02/21/matsu-islands-internet-cables-china-taiwan/ https://www.taipeitimes.com/News/editorials/archives/2023/02/22/2003794809 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 06 Nov 2024 | EP61: The Power of Influence: How China’s United Front Seeks Control Abroad | 00:14:40 | |
Summary: In this episode we examine the Chinese Communist Party's (CCP) United Front Work Department (UFWD), detailing its methods for influencing foreign governments and undermining democracies. The UFWD seeks to advance CCP interests through various tactics, including media manipulation, academic partnerships, economic coercion, and political influence. We compare and contrast the UFWD's approach with Russia's Active Measures campaign, highlighting their similarities in seeking to weaken democracies and their differences in methods and objectives. We stresses the need for democracies to recognize and address the UFWD's influence operations to protect their institutions and societal cohesion. Questions to consider as you read/listen: 1. How does the Chinese United Front differ from Russian active measures tactics? 2. What are the main targets and tactics of the Chinese United Front’s influence campaign 3. What are the implications of the Chinese United Front for democratic societies and how can they mitigate its influence? Long format: The Power of Influence: How China’s United Front Seeks Control Abroad We all have probably heard of Russia’s Active Measures campaign and tactics but have you heard of the Chinese United Front which is similar but different. This paper introduces the Chinese United Front to the reader explaining its goals and why the reader should care. (One sentence thesis: This paper examines the Chinese Communist Party’s United Front Work Department (UFWD), its global strategies for influence and control, and the urgent need for democracies to understand, monitor, and counteract its tactics to protect social cohesion and institutional integrity.) TL;DR: China’s United Front Work Department (UFWD) and Russia’s active measures both seek to undermine democracies by shaping public opinion and leveraging diaspora communities, but they differ in method: Russia’s tactics are aggressive and disruptive, using disinformation and cyber-attacks to create chaos, while China’s UFWD employs a more subtle, long-term approach, embedding influence through economic dependencies, elite relationships, and cultural partnerships. Russia’s goal is often immediate destabilization, whereas China’s is building sustained influence and loyalty abroad, requiring democracies to adopt unique countermeasures for each. INTRODUCTION A report on 4 November 2024 from Radio Free Asia which reads “Evidence is mounting of clandestine Chinese influence operations in the heart of America. Just in the last few months, a former aide to the governor of New York state and her husband were arrested for alleged illicit activities promoting the interests of China; a Chinese democracy activist was arrested and accused of spying for China; and a historian was convicted of being an agent for Beijing.” prompted this deep dive. 1. What is the Chinese United Front The United Front Work Department (UFWD) is a core component of the Chinese Communist Party (CCP) tasked with influence and intelligence operations. It works to advance Chinese interests both domestically and internationally through multi-dimensional influence tactics spanning political, social, and economic spheres. Operating in conjunction with China’s Foreign Ministry and intelligence agencies, the UFWD’s approach integrates soft power, coercion, and espionage to foster global conditions favorable to CCP policies. 2. What was its Historical Purpose Historically, United Front work focused on consolidating domestic support for the CCP by unifying diverse groups within China. The UFWD initially concentrated on managing political dissent and garnering support among minority groups, intellectuals, and the business community. The CCP’s early use of the United Front reflects a domestic strategy designed to bolster internal control and align various social and political entities with CCP goals. 3. What is its Current Purpose Today, the United Front’s mission has expanded significantly under Xi Jinping to include an international dimension. It is tasked with shaping perceptions, influencing policymakers abroad, and advancing CCP objectives globally. The UFWD’s primary goals include promoting the CCP’s narrative, gathering intelligence, and projecting CCP-friendly perspectives. United Front work is considered essential to achieving China’s “Great Rejuvenation” under the CCP’s ideological vision and is increasingly directed toward supporting China’s economic and geopolitical dominance worldwide. 4. How is it Organized The UFWD operates under the CCP’s Central Committee, extending its reach through provincial and local United Front offices. This decentralized network coordinates with various government ministries, private entities, and academic institutions aligned with CCP interests. Chinese embassies, consulates, Confucius Institutes, Chinese Students and Scholars Associations (CSSAs), and other overseas Chinese organizations are also embedded in United Front work. This wide-reaching structure reflects the UFWD’s expansive role within the CCP, spanning both domestic and international spheres to facilitate cohesive, multi-layered influence campaigns. 5. What are its Goals Abroad and How Does it Try to Promote its Goals Abroad Abroad, the United Front aims to reshape international opinion, counter negative perceptions of the CCP, and advance pro-China policies. Its tactics include but are not limited to: Media Influence: Using Chinese-language media, civic groups, and partnerships to control narratives. Academic Partnerships: Engaging with Confucius Institutes and CSSAs to shape educational discourse. Political Influence: Building relationships with foreign political figures and contributing to campaigns. Economic Coercion: Leveraging economic power to incentivize or pressure foreign entities to support CCP-friendly policies. Here is a list of organizations per Wikipedia and its sources that are Chinese United Front organizations or influenced: In 2020, Newsweek identified nearly 600 united front organizations in the United States and 384 in the United Kingdom as of 2023. Organizations managed by or affiliated with the United Front Work Department: All-China Federation of Industry and Commerce Center for China and Globalization; China Council for the Promotion of Peaceful National Reunification; China News Service; Chinese People's Association for Friendship with Foreign Countries; and Chinese Students and Scholars Association. Religious organizations formerly managed by the State Administration for Religious Affairs: Buddhist Association of China; Chinese Taoist Association; Islamic Association of China; Three-Self Patriotic Movement; Catholic Patriotic Association; and National Ethnic Affairs Commission. Other United Front organizations: China Council for the Promotion of International Trade (Ministry of Commerce); China International Culture Exchange Center (Ministry of State Security); and Institute for China-America Studies. 6. What are its Current Targets Abroad The UFWD specifically targets eleven distinct groups for co-optation and influence, including but not limited to:
7. How Does it Advance its Goal to Seed Discord Abroad and Why is it a Goal of the United Front The United Front seeks to weaken Western societies by exploiting internal divisions, which it views as a means of reducing these societies’ capacity to counter CCP influence. This strategy, called “sowing discord,” leverages social media campaigns, alliances with fringe political groups, and strategic use of foreign media to amplify divisive narratives. While not as aggressive as similar Russian tactics, CCP efforts focus on undermining societal cohesion in democratic nations, diverting attention from Chinese influence efforts and decreasing resistance to CCP policies. 8. What are its Intellectual Property Theft and Academic Influence Goals and Operations Academic institutions are a primary target of the UFWD for both influence and intellectual property theft: Confucius Institutes and CSSAs: Used to influence campus discourse, monitor Chinese students, and promote CCP-aligned views. Academic Partnerships: Facilitate IP theft through collaborative research, pressuring researchers to share sensitive information. 9. What are its Political Influence and Economic Coercion Goals and Operations In the political sphere, the UFWD establishes connections with foreign politicians and decision-makers, aiming to create favorable policies or reduce criticism on issues such as human rights. In terms of economic coercion, the UFWD exploits dependencies created by Chinese investments in foreign markets. Businesses with significant Chinese market stakes face pressure to adopt CCP-friendly stances, particularly in sectors where China has made substantial investments. The CCP also recruits elite intermediaries, such as business leaders or former officials, who leverage their positions to advocate for CCP-aligned policies. 10. What are Some Examples of its Influence Operations Outside of China Recent examples include but are not limited to: Illegal Chinese Police Stations: A UFWD-linked association in New York City operated a covert Chinese police station, conducting surveillance on Chinese nationals. The FBI raided this station in 2022. Alliance for China’s Peaceful Reunification: This UFWD-backed organization in the U.S. has organized protests supporting CCP stances, such as the 2023 protests against Taiwanese President Tsai Ing-wen’s U.S. transit. 11. Why Should Chinese Citizens Care About the United Front For Chinese citizens, United Front work represents a tool of internal repression and control that extends overseas. The UFWD often exerts pressure on Chinese nationals abroad, sometimes threatening family members in China to coerce desired behaviors. This highlights the CCP’s willingness to use Chinese citizens, even those abroad, as instruments of its foreign policy, raising concerns about freedom, privacy, and safety among overseas Chinese communities. 12. Why Should Non-Chinese Care About the United Front Non-Chinese citizens should be aware of the UFWD because its operations pose a direct challenge to democratic freedoms, national security, and institutional independence. Through covert influence campaigns, economic coercion, and targeted intellectual property theft, the United Front actively undermines the sovereignty of other nations. Recognizing the UFWD’s activities and taking preventative actions are essential steps for protecting democratic institutions and maintaining resilience against authoritarian influence from the CCP. IN COMPARISON TO RUSSIAN ACTIVE MEASURES TACTICS Both China’s United Front Work Department (UFWD) and Russia’s active measures tactics aim to extend influence and shape global perceptions to serve their respective authoritarian regimes, yet they differ significantly in approach, style, and focus. Similarities:
Differences:
In sum, while both the UFWD and Russian active measures are tools of authoritarian influence, Russia’s approach is often more combative and disruptive, aiming to destabilize, whereas China’s United Front is more nuanced and long-term, seeking to integrate influence subtly and build loyalty within foreign institutions. Together, these distinctions highlight the need for democratic societies to adopt tailored strategies to counter each nation’s unique approach to influence. OVERALL CONCLUSION Understanding China’s United Front Work Department (UFWD) is essential for non-Chinese citizens and countries as its influence strategies pose significant challenges to democratic institutions, social cohesion, and national sovereignty worldwide. The UFWD operates with a multi-faceted approach, embedding influence within political, academic, business, and media environments to further the Chinese Communist Party’s (CCP) objectives. Through targeted influence and often covert coercion, it seeks to shape foreign narratives, deter criticism, and ultimately erode the foundations of open societies. The UFWD’s “sowing discord” strategy aims to amplify societal divisions in democratic nations, weakening their ability to respond effectively to Chinese influence. By exploiting existing tensions and fostering disunity, the UFWD distracts from its own agenda while weakening the resilience of target nations. Recognizing these tactics and understanding the broader goals of the United Front is vital for developing effective countermeasures. To protect democratic values and maintain institutional independence, countries must enhance monitoring and transparency efforts within their own borders. Increased vigilance toward foreign influence operations, stricter regulations on political and academic funding, and greater public awareness are all crucial in mitigating the UFWD’s divisive goals. By proactively addressing the CCP’s influence operations, democratic nations can preserve their social cohesion, defend against authoritarian encroachment, and ensure that their policies reflect the will of their citizens rather than the interests of a foreign power. Sources: https://africacenter.org/spotlight/china-united-front-africa/ https://foreignpolicy.com/2023/10/03/china-united-front-ccp-religion-sports-influence-operations/ https://vsquare.org/china-ccp-united-front-influence-hungary/ https://www.aspistrategist.org.au/how-chinas-united-front-system-works-overseas/ https://2017-2021.state.gov/chinas-coercive-tactics-abroad/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 14 Nov 2024 | EP79:The Four Pillars of AI Processing Analyzing CPUs, GPUs, FPGAs, and ASICs | 00:12:46 | |
In this episode, we discuss the various types of chips used in Artificial Intelligence (AI), focusing on GPUs, CPUs, FPGAs, and ASICs. Each chip type has its own strengths and weaknesses: GPUs excel at processing power for complex tasks, CPUs are becoming less relevant as AI advances, FPGAs offer versatility and efficiency for custom applications, and ASICs specialize in specific AI tasks with high performance and energy efficiency. We conclude by highlighting the geopolitical implications of AI chips, including their impact on economic competitiveness, tech sovereignty, defense and intelligence sectors, innovation, and energy efficiency. Questions to consider as you read/listen:
Long format: Four types of chips used in AI There are essentially four different silicon options that can be used for the training and development of artificial intelligence technology: GPUs, CPUs, FPGAs, and ASICs. GPUs A GPU chip, or Graphics Processing Unit chip, is an electronic circuit that performs mathematical calculations at high speeds to handle graphics-related work. These are the type of “gammer chips” that PZ mentioned. GPUs have many smaller, more specialized cores that work together to divide processing tasks across many cores simultaneously. This design allows GPUs to perform the same operation on multiple data values in parallel, increasing their processing efficiency. Within GPUs, there are three subsets generally framed as: Integrated GPUs: Built into a PC's motherboard, allowing laptops to be thin, lightweight, and power-efficient Mobile GPUs: Found in larger laptops, these chips are less bulky than a full desktop-style GPU but offer better graphics performance than a CPU's built-in graphics power High-end GPUs: Can sell for tens of thousands of dollars Importantly, there are other types of chips used in AI these days. CPUs A central processing unit (CPU) is a general-purpose chip that can be used for some AI tasks, but it's becoming less useful as AI advances. CPUs are designed to handle sequential tasks, like running operating systems and managing applications. They can also be used for pre-processing data, initial data analysis, and orchestrating overall system operations. However, CPUs are less specialized than other chips, and their processing power tends to decline quickly compared to more specialized chips. FPGAs A Field Programmable Gate Array (FPGA) chip is a reprogrammable integrated circuit that can be used to accelerate artificial intelligence (AI) applications. An FPGA is a flexible computer component that can be reconfigured to meet specific needs after manufacturing. The circuitry inside an FPGA is not hard etched, unlike in graphics processing units (GPUs) or application-specific integrated circuits (ASICs). FPGAs are valued in AI for their versatility, power efficiency, and adaptability. They can be used to build neural networks from scratch and optimize applications for specific needs. FPGAs are particularly useful for real-time processing and prototyping new projects. FPGAs offer a number of benefits, including: reduced latency (FPGAs can provide low latency and deterministic latency (DL)); speed to market (FPGAs can help speed time to market by reducing the need to develop and release new hardware) and cost savings (FPGAs can help reduce costs by reducing the complexities of developing application-specific integrated circuits (ASICs)). ASICs ASIC stands for Application-Specific Integrated Circuit, and it's a type of computer chip that's custom-designed to perform a specific task, such as artificial intelligence (AI). ASICs are digital or analog circuits that are custom-built to perform a specific function. They're not reconfigurable and can't contain additional instructions. ASICs are often used in industry, intelligence agencies, space programs, and defense systems. They're also used in AI to create accelerator chips that are designed to support specific applications. ASICs offer similar computing ability to FPGAs, but they're not reprogrammable. Because their circuitry is optimized for a specific task, they often outperform general-purpose processors or other AI chips. ASICs are designed early in the process to address specific needs. The two primary ASIC design methods are gate-array and full-custom. November 2024 Inventory of major AI chip designers and fabricators Which one is better? It depends. FPGAs are best used for custom, low-latency applications that require customization for specific deep learning tasks, such as bespoke AI applications. FPGAs are also well suited for tasks that value energy efficiency over processing speeds. Higher-powered GPUs, on the other hand, are generally preferred for heavier tasks like training and running large, complex models. The GPUs superior processing power makes it better suited for effectively managing larger datasets. CPUs are fading off into the sunset. CPUs do offer some initial pricing advantages. When training small neural networks with a limited dataset, a CPU can be used, but the trade-off will be time. The CPU-based system will run much more slowly than an FPGA or GPU-based system. Another benefit of the CPU-based application will be power consumption. Compared to a GPU configuration, the CPU will deliver better energy efficiency. The primary advantage of using ASICs (Application-Specific Integrated Circuits) in AI chips is their superior performance and energy efficiency for specific AI tasks, as they are custom-designed to excel at a particular workload, like neural network processing, resulting in significantly faster execution compared to general-purpose processors while consuming less power; making them ideal for applications with well-defined AI requirements, particularly in edge computing scenarios where power consumption is critical. CONCLUSION Understanding what these chips are, how they are best used and the related issues are important in geopolitics. AI chips impact economic competitiveness. Advanced chip design and fabrication are crucial for countries aiming to lead in AI and tech innovation. Nations with robust AI chip industries can boost their economic power and maintain competitive advantages. For instance, the U.S., China, Taiwan, Japan and South Korea are major players in chip manufacturing, and access to AI chip technologies has become a priority to maintain economic influence. AI chips impact tech sovereignty and trade relations. Given the strategic importance of AI chips, countries have become more protective of their semiconductor industries, as seen with the U.S.-China trade tensions. Export controls, such as those restricting high-end GPUs and ASICs, are designed to prevent rival nations from acquiring advanced AI capabilities that could threaten national security or economic interests. AI chips impact defense and intelligence sectors. High-performance AI chips, especially ASICs and FPGAs, are increasingly critical in military applications for their processing power, low latency, and energy efficiency. Countries investing in custom AI chips for intelligence gathering, autonomous systems, and real-time decision-making gain substantial defense advantages. This has led to competition to secure supply chains, develop local industries, and ensure that military applications do not rely on foreign chip manufacturers. AI chips impact innovation and alliances. Nations are fostering alliances to secure the resources and intellectual property needed for chip innovation. For instance, alliances like the Quad (involving the U.S., Japan, Australia, and India) focus on semiconductor supply chains as part of their strategy to counterbalance China's influence. Additionally, governments are investing in research and development to ensure that their tech ecosystems can support sustainable chip innovation, essential for long-term leadership in AI. AI chips impact energy efficiency and environmental concerns. As countries work to balance energy policies and meet sustainability targets, the energy efficiency of AI chips, like those of FPGAs and ASICs, plays into larger energy strategies. Countries with a lead in energy-efficient AI chips may position themselves as leaders in sustainable technology, reinforcing their influence in international environmental and technology forums. Sources: https://www.baesystems.com/en-us/definition/what-are-asics Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP 28: BRICS viability and SWIFT | 00:10:15 | |
Summary: The source criticizes the BRICS (Brazil, Russia, India, China, and South Africa) alliance, arguing that despite its goals of challenging Western financial institutions like the World Bank and IMF, its members are too diverse in their economic philosophies to achieve a unified vision. The source emphasizes the crucial role of the SWIFT (Society for Worldwide Interbank Financial Telecommunications) network in facilitating international financial transactions and argues that without a viable alternative to SWIFT, BRICS initiatives like BRICS Pay and BRICS Bridge, which are still in their theoretical stages, are unlikely to be successful. The source describes SWIFT as a vital part of the global payment system, enabling secure communication for international money transfers and facilitating global economic activity. Questions to consider as you read/listen:
Long format:
BRICS viability and SWIFT Right now from October 22 thought October 24, 2024, BRICS countries are holding their conference in Kazan in the Russian Federation Whenever I hear about BRICS, I cannot help but scroll. Here’s why. For those who may not know (and apologies for those that do) BRICS is an acronym for Brazil, Russia, India, China, and South Africa. BRICS was created to “counterbalance the influence of Western-dominated institutions like the World Bank and the International Monetary Fund (IMF).” Those 5 countries are culturally very very different countries with entirely different views of capitalism and the role of the state and how currency or economics should be managed. For them to come to consensus other than “we should do something” is well a bit outside my wildest optimism. One could stop there, but I don’t because I want to be fair. But let’s suspend our disbelief for a moment and suppose that they will come to a consensus of how this new thing ought to work and what it should look like. They still have a major problem in that there is no alternative to the SWIFT system. Until they have developed one that exists in reality and is appealing to the rest of the rest of the world or even each other, I will scroll when I see BRICS. For those who do not know, the Society for Worldwide Interbank Financial Telecommunications (SWIFT) is a secure messaging network that banks and other financial institutions use to send and receive information, primarily for international money transfers. SWIFT is a vital part of the global payments system, but it doesn't hold funds, issue or manage accounts, or settle transactions. SWIFT is a member-owned cooperative that allows banks to send and receive encrypted messages about international transactions. Today, SWIFT is used by more than 11,000 banking institutions in over 200 countries. SWIFT helps banks comply with international regulations and regulators use it to track illicit activities. SWIFT has been used in international sanctions, such as US sanctions against Iran. It is how we make global and even within country transfers happen. Without it, the system does not work. To put it mildly, without the SWIFT system, the global economy would likely be significantly disrupted, with international transactions becoming much more complex, time-consuming, and expensive, essentially resembling a world where cross-border payments are significantly hampered, potentially causing economic instability due to the lack of a standardized communication system for banks to facilitate transactions across borders; it would be akin to trying to operate without the internet in the financial world, making it extremely difficult for businesses and individuals to move money internationally with ease and security. I understand that some folks within or without BRICS have supposed alternatives like BRICS Pay or BRICS Bridge of a Distributed Ledger Technology, but it is not even in prototype let alone available let alone widely accepted. BRICS pay is a theoretical blockchain-based system that aims to make trade between BRICS nations seamless and allow real-time transactions. BRICS Pay could enable members to use a specific currency amassed in one country to trade with another. BRICS Bridge is a payment and settlement platform that would allow member states to transfer money directly. The system would be based on three currencies: the digital ruble, Chinese yuan, and Brazilian real. Again in theory. No prototype. So BRICS=scroll in my book…. for now Source: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 08 Nov 2024 | Episode 69: Light-Speed AI: Why China’s Taichi Chip Should Put the U.S. on High Alert | 00:17:32 | |
Summary: In this article, we focus on the Taichi photonic computer chip, a novel AI chip developed in China that leverages light for data processing. This technology could significantly advance China's AI and semiconductor industries, potentially surpassing Western dominance. The chip's energy efficiency and speed are highlighted as major breakthroughs, outperforming current electronic chips by orders of magnitude. We explore the implications of this technological leap, specifically focusing on the potential need for expanded export controls to prevent China from gaining a monopoly in these crucial fields. We also examines the challenges of mass production, including the reliance on various systems and the lack of standardized processing techniques. Restricting exports and carefully regulating access to the core components of this technology may be necessary to prevent China from achieving its self-declared intention of dominance in AI and semiconductor industries—an ambition that has clear economic and strategic ramifications. Questions to consider as you read/listen:
Long format: Light-Speed AI: Why China’s Taichi Chip Should Put the U.S. on High Alert (One sentence thesis: The Taichi photonic computer chip, a breakthrough AI technology developed in China, poses a strategic challenge to Western dominance in semiconductors, signaling an urgent need for expanded export controls to prevent China’s potential technological and geopolitical ascendancy.) TL;DR: The Taichi photonic computer chip is a high-speed, energy-efficient AI chip developed in China that uses light instead of electricity to process data. This chip could give China a major edge in AI and semiconductor technology. To prevent China from gaining dominance in these critical fields, the US, Japan, and Taiwan (and South Korea which has no export restrictions now) should consider expanding export controls to include photonic technology and its components. Introduction The Taichi photonic computer chip represents a potential revolutionary advancement in the field of artificial intelligence (AI) and photonics. Developed in China, this cutting-edge technology leverages the speed of light to process complex computations and train artificial general intelligence (AGI) models with unprecedented efficiency. As a potential game-changer in AI and semiconductor technology, the Taichi chip is highly efficient, boasting performance metrics that far exceed the capabilities of traditional electronic chips. It is not yet ready for commercial application and commercial production at scale, but it is coming. With China spearheading this development, the West must consider the geopolitical implications of such technological advancements. Restricting exports and carefully regulating access to the core components of this technology may be necessary to prevent China from achieving its self declared intention of dominance in AI and semiconductor industries—an ambition that has clear economic and strategic ramifications. What is a Taichi photonic computer chip? The Taichi photonic computer chip is a large-scale AI chip that uses light to perform calculations and train artificial general intelligence (AGI) models. It is novel and emerging technology. It is being developed in China natively. The Taichi chip uses light-based processing to perform AI tasks, such as processing, transmitting, and reconstructing images. It's designed to be used in high-efficiency AGI applications. Who discovered it and who is developing it? Taichi builds upon an earlier photonic chip called the optical parallel computational array (OPCA) developed by the same Tsinghua team. The Taichi chip was developed by a team of engineers lead by Professor Lu Fang and Professor Qinghai Tai from Tsinghua University and the Beijing National Research Center for Information Science and Technology. How does it work? Unlike traditional electronic circuits, Taichi utilizes integrated photonic circuits, harnessing the speed of light for processing information. The Taichi chip uses two types of light-based processing: diffraction and interference. Diffraction scatters light signals into channels that combine to solve a problem. Interference combines light waves, which can either boost or inhibit each other. These photons power tiny on-board electrical switches that turn on or off when voltage is applied. Specifically, it uses a fully reconfigurable Mach-Zehnder interferometer (MZI) arrays. Mach-Zehnder interferometers are devices that utilize the interference of light waves to perform operations like splitting, combining, and modulating optical signals. How is it made? It uses a chiplet-based construction. The chiplets in the Taichi photonic computer chip work by performing calculations in parallel and then integrating the results to reach a solution. The Taichi chip is made up of multiple chiplets, which are integrated circuits that each carry out a specific function. Chiplets are smaller, specialized dies that are interconnected within a single package. This design allows for greater flexibility, efficiency, and scalability in chip design. In a simple Photonic integrated circuit (PIC) design, light from a laser source would be coupled into a waveguide, then pass through a modulator where the signal is encoded by adjusting the light's phase based on the electrical input. This modulated light would then travel through further waveguides to reach the desired destination on the chip. Other components of the PIC include but are not limited to lasers, optical amplifiers, photodetectors, couplers, splitters, filters, multiplexers, demultiplexers, switches, and various types of optical resonators. All Photonic integrated circuits (PICs) are generally made in the same way with some notable exceptions that are beyond the scope of this article. The process is similar to how electronic integrated circuits are made: coat the wafer, create a mask, project the pattern (lithography), develop the photoresist and etch and deposit the materials. It uses Thin-film lithium niobate (TFLN). Thin-film lithium niobate (TFLN) is a crystalline material that's used in integrated photonic devices. It's made by bonding a thin layer of lithium niobate to a substrate like silicon dioxide or sapphire. It is used in components like modulators, and waveguides.
What are its performance characteristics? As light travels much faster than electrical signals, this allows for potentially much faster computations, which could accelerate AI model training and inference times The researchers claim that it outperforms current smart chips by two to three orders of magnitude. The Taichi chip is over 100 times more energy efficient than previous photonic chips. It's also able to process images at nanosecond speeds, which is around a million times faster than current methods. Researchers claim that this product is roughly 100 times more energy efficient and 10 times more area efficient than previous other optical neural networks. The researchers claim that it is much more energy efficient than the current commercial AI chips on the market. They claim, for example, that it is 1000 times more energy efficient than Nvidia’s high performance H100 GPU chip. 160 tera-operations per second per watt (TOPS/W) energy efficiency. The Taichi chiplet has shown its impressive abilities through some remarkable accomplishments. For instance, it was able to accurately classify items into 1000 different categories with an accuracy of 91.89%. Compared to existing photonic neural network chips, Taichi offers a twofold improvement in energy efficiency while maintaining comparable computing accuracy. How can this change the AI market? Is it ready? As Elon Musk likes to say, ideas are cheap, manufacturing is expensive. Integrating Taichi with existing AI infrastructure and software could present technical hurdles. But, it is a technology to watch. For instance, Taiwan Semiconductor Manufacturing Company (TSMC) has assembled a team of about 200 researchers focused on ultra-high-speed silicon photonic chips and is collaborating with Broadcom and Nvidia. This is especially so as we are reaching the limits of physics when it comes to traditional semiconductors (Moore’s Law). The chip's architecture allows for modular scaling, enabling the creation of more powerful AI systems by combining multiple Taichi chiplets to handle complex tasks that might be beyond the capabilities of current chips. As it is currently in research and development it is not ready for commercial mass production as of today, although some PICs are being produced commercially just not the Taichi photonic computer chip. Although the Taichi chip is compact and energy-efficient, it relies on many other systems, such as a laser source and high-speed data coupling. These other systems are far more bulky than a single chip, taking up almost a whole table. There are also process and manufacturing related issues to work out. For example, photonic materials like thin-film lithium niobate lack standardized processing techniques, Currently, no country has the capability to harness this technology for mass production beyond proof of concept and limited prototypes. Will this frustrate US, Dutch, Japanese and Taiwanese export controls? In the 14th Five-Year Plan, a section on strengthening the power of the country’s strategic technology includes photonics in a list of technologies for which national labs should be built (State Council, March 13, 2021). Xi loves the technology. Some in the industry claim that this process will allow China to entirely bypass US microchip restrictions. https://wccftech.com/china-claims-a-breakthrough-in-silicon-photonics-as-it-tries-to-circumvent-us-export-controls-on-euv-lithography/ The lithography devices needed are not the cutting edge EUVs or NAEUVs but ones that can work at about 32nm node side. Recall China does have domestic internal capacity and technical knowledge to make DUVs at the 28n m level. If the US and the others want to frustrate China’s quest for semiconductor and AI dominance, it would be wise to include this technology and its component parts to a ban. Conclusion In an era where AI and semiconductor advancements are pivotal to national and economic security, the Taichi photonic computer chip exemplifies both the promise and peril of rapid technological innovation. As China progresses in developing this light-based AI processing technology, it challenges the traditional semiconductor strongholds of the US, Japan, and Taiwan. To safeguard their interests and curb China's ambitions, these countries must look to expand export controls to include photonic chips and their associated components. The Taichi chip serves as a reminder of the importance of strategic foresight in technology regulation, especially as we edge closer to an AI-driven future. Sources: https://techxplore.com/news/2024-04-taichi-large-scale-diffractive-hybrid.html https://techxplore.com/news/2024-04-taichi-large-scale-diffractive-hybrid.html https://www.ee.tsinghua.edu.cn/en/info/1076/1572.htm https://www.youtube.com/watch?v=uGFJuzMPwC0 https://www.science.org/doi/10.1126/science.adl1203 https://www.gov.cn/xinwen/2021-03/13/content_5592681.htm https://thebossmagazine.com/photonic-chips-ai-energy/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 05 Nov 2024 | EP58: Palantir: an amazing applied AI company you probably never heard of, but should know | 00:24:15 | |
Summary: In this episode we explore the various software platforms and services offered by Palantir Technologies, a company specializing in data analytics and artificial intelligence (AI). Palantir's platforms, such as Foundry, Gotham, Apollo, and AIP, are designed to help organizations analyze data, make informed decisions, and improve operational efficiency. These platforms have applications across diverse industries, including healthcare, finance, energy, transportation, and defense. We highlight Palantir's involvement in government projects, particularly with intelligence and defense agencies, as well as its growing presence in commercial markets. We also detail some of Palantir's lesser-known products like TITAN, MetaConstellation, and Maven, which showcase the company's innovative use of AI in areas like battlefield analysis and satellite imagery interpretation. Questions to consider as you read/listen: 1. What is Palantir's core business and how does it use AI to achieve its goals? 2. How does Palantir's technology impact various sectors, including government and commercial industries? 3. What are the key strengths and weaknesses of Palantir's various platforms, and how do they contribute to the company's overall mission? Long format: Palantir: an amazing applied AI company you probably never heard of, but should know Palantir is a US-based technology company that provides software platforms and services to help organizations analyze data securely. It’s most public and consumer facing part of its business is in data analytics and especially in using AI to analyze big data. It has a few private corporate clients but its major base of business is every single three letter agency in the US and many you have never heard of as well. Its commercial side use is growing quite a bit. Commercial revenue surged by 27% year-over-year to $229 million, surpassing the 16% growth in government revenue to $335 million Those who are familiar with the company are probably most versed in their well known projects including: Palantir Foundry, Palantir Gotham, Palantir Apollo, and Palantir Artificial Intelligence Platform (AIP). FOUNDRY Palantir Foundry is a data management platform that helps businesses make data-driven decisions. Foundry can connect and synchronize data from various sources, including structured, unstructured, streaming, and IoT data. Foundry's AI and machine learning capabilities can be used for a variety of purposes, such as building safer cars, securing supply chains, and accelerating cancer research. Foundry helps teams automate decision-making by providing a unified platform for data, analytics, and business teams. There are many commercial users of this platform including United Airlines, CVS, AIG, Jacobs, Sonnedix, PG&E, Southern California Edison (SCE), Skywise, Trafigura, Athinia™, NCATS, Concordance Healthcare Solutions, and Castrol. It is also widely used in the oil and gas industry. The UK’s National Healthcare System (NHS) is a customer as well. US agencies that use or have used Foundry include HHS, CDC, FEMA, DOD, NIH, and FDA. GOTHAM Palantir Gotham is a software platform that helps users make decisions globally by integrating and visualizing data from various sources. Gotham can integrate and visualize data and models of any type or volume. Gotham can autonomously task sensors like drones and satellites. Palantir Gotham is used by intelligence and defense agencies, and has been used for a variety of purposes, including:
The CIA, FBI, NSA, and Department of Defense use Palantir Gotham for counterterrorism, cyber operations, and defense logistics. Some private companies, such as Barbaricum, Iron EagleX Inc., Intuitive Research & Technology Corporation, and Oak Ridge National Laboratory, also use Palantir Gotham. APOLLO Palantir Apollo is a software as a system (SaaS) platform that helps users manage, deploy, monitor, and secure software across various environments. Apollo can deploy software across multiple environments, including air-gapped environments, and manage releases. Apollo can automatically monitor for vulnerabilities and help users balance security controls with agility. Apollo can automatically orchestrate software upgrades and changes across environments. Apollo can allow users to roll back software. Apollo can automatically remediate issues with releases by blocking bad releases from being rolled out. Apollo can help speed up the release of products by over 25X and cut DevSecOps costs by 50%. This platform has its most customers. On the commercial side, some notable clients include: Morgan Stanley, Merck KGaA, Airbus, Wejo, Lilium, PG&E and Fiat Chrysler Automobiles. Government agencies use Apollo as well. ARTIFICIAL INTELLIGENCE PLATORM Most exciting to me is Palantir's Artificial Intelligence Platform (AIP) is a workspace for building AI apps, agents, and actions. It enables real-time decision-making by integrating AI with operations. It takes a company or agencies existing data and uses AI to make sense of it and then allow for human interaction to query to discover the best and most optimal path forward. AIP is used by organizations in government and commerce for a variety of applications, including public health and battery production. AIP is a traceable and auditable system, built to capture a full audit trail to ensure trust and accountability in responsible human-machine teaming. In essence, Palantir AIP is a comprehensive tool that makes it easier for organizations to leverage AI, improve efficiency, and make better decisions based on data-driven insights. It is used by AARP, Charter Steel, Cleveland Clinic, Cone Health, EdgeScale AI, Foxtrot + Aniko, Fujitsu, Jacobs, Kinder Morgan, NorthWind, Parexel, Tampa General Hospital, Trios Health, and Sompo Japan and even the fast food chain Wendy’s. These capabilities of AIP are very useful for agencies such as the NSA, NRO, Central Intelligence Agency (CIA) and military intelligence agencies that collect a lot of non public data and are awash in data. It provides a means to organize, distill and interrogate this form of big data. OTHER PRIDUCTS Some of its lesser known products include The Tactical Intelligence Targeting Access Node (TITAN) is a ground station system developed by Palantir Technologies that uses artificial intelligence (AI) and machine learning (ML) to help the U.S. Army collect, process, and share intelligence data. Physically it is contained within a truck. The Advanced model will have complete features installed in larger tactical trucks like the M1083. Conversely, the Basic version will be fitted onto Joint Light Tactical Vehicles and will have no direct space downlink. TITAN is the Army's next-generation Intelligence, Surveillance, and Reconnaissance ground station. TITAN can access sensors from space, the air, and the ground to gather data. TITAN can access sensors from space, the air, and the ground to gather data. TITSN is used to shorten the OODA loop on the battlefield. The first prototype was delivered in August 2024. Palantir MetaConstellation is a software program that uses satellite technology to help decision-makers on Earth. It uses Palantir's Edge AI technology to help with tasks. MetaConstellation can help users answer time-sensitive questions across the planet, such as:
Palantir’s MetaConstellation software, which uses AI to analyze satellite imagery, open-source data, drone footage, and reports from the ground to present commanders with military options, is “responsible for most of the targeting in Ukraine,” according to Alex Karp who is the CEO of Palantair. Palantir Skykit is a self-contained intelligence center that allows users to perform operations and process intelligence in areas with unreliable communications, power, and networking. It's designed to help users gain an advantage over adversaries in extreme, hostile, and adverse environments. Skykit is small enough to be carried or attached to a light truck or small boat. Skykit has its own secure satellite communications. Skykit is powered by Palantir's MetaConstellation and Sensor Inference Platform (SIP) software. Skykit uses computer vision algorithms that send detections directly to the base station. It too is being extensively used in Ukraine. Palantir Metropolis was originally Palantir Finance. This one has been a commercial disappointment. It analyzes commercial, proprietary and public data sets and discovers trends, relationships and anomalies, including predictive analytics. The Maven Smart System is a prototype AI-powered battlefield analyzer developed by Palantir Technologies for the US Army. The system combines data from various sources into a single interface to help intelligence analysts identify military points of interest more quickly. The Maven Smart System is a key part of the National Geospatial-Intelligence Agency's Maven AI framework. The system helps with battlespace awareness, global integration, contested logistics, joint fires, and targeting workflows. The system can integrate data from various sources, including social media. The system can provide analysts with near-real-time data that can be used to validate against the commander's objective. The Maven Smart System is expected to be integrated into the US military's Combined Joint All-Domain Command and Control (CJADC2). The system could help commanders make better and faster decisions. It was recently deployed to the recovery efforts for Hurricane Helene. Palantir Government Web Services (PGWS) is a program that offers tools to help defense tech innovators build, manage, and ship solutions. PGWS provides access to Palantir's technology, which has been developed over 20 years, to government tech innovators. Palantir FedStart is a SaaS offering for companies and startups looking to deploy software to the federal government. The Ontology Software Development Kit (OSDK) is a tool that allows users to build custom SDKs for their business. It's a data service that integrates business logic, actions, and data into a model that centralizes business knowledge. The Electromagnetic Battle Management - Joint Decision Support (EMBM-J DS) Prototype is a web-based application that will help the Department of Defense (DoD) with Joint Electromagnetic Spectrum Operations (JEMSO). Electromagnetic Battle Management (EMBM) is a military term that refers to the coordination and use of the electromagnetic spectrum in battle operations. The prototype will automate key planning processes for the electromagnetic spectrum. Palantir Technologies Inc. has signed a partnership agreement with the Ministry of Economy of Ukraine which will pave the way for the roll-out of a digitally led demining approach backed by Palantir’s AI-enabled software. CONCLUSION In conclusion, Palantir stands out as a powerhouse in applied AI, operating in the critical spaces where data, security, and decision-making converge. With robust platforms like Foundry, Gotham, Apollo, and AIP, it is revolutionizing data analysis and intelligence operations for both commercial enterprises and government agencies. Its impact extends from private sectors like healthcare, finance, and transportation to the highest echelons of government, supporting defense, intelligence, and public safety. Palantir’s contributions to AI and big data are both wide-ranging and impactful. Its platforms are used not only to analyze data but to make real-time, informed decisions in high-stakes situations—from securing national borders to supporting military operations. Tools like TITAN, MetaConstellation, and Maven showcase the company’s commitment to pushing technological boundaries, even as they remain largely under the radar for the general public. As Palantir continues to innovate and expand its reach into commercial markets, it’s clear that its technology will play a pivotal role in the future of AI-driven decision-making, making it a company to watch for anyone interested in the evolution of artificial intelligence, big data, and security in an interconnected world. Sources https://www.palantir.com/about/ https://m.youtube.com/watch?v=wA3EgtWrxLU&t=0 https://www.palantir.com/foundry-explained-get-demo/ https://unit8.com/resources/palantir-foundry-101-2/ https://www.palantir.com/platforms/gotham/ https://discovery.hgdata.com/product/palantir-gotham https://www.palantir.com/platforms/apollo/ https://www.palantir.com/platforms/apollo/product/ https://query.prod.cms.rt.microsoft.com/cms/api/am/binary/RW1p84L#:~:text=APOLLO%20OVERVIEW,APOLLO https://www.palantir.com/platforms/aip/ https://www.palantir.com/offerings/metaconstellation/ https://time.com/6691662/ai-ukraine-war-palantir/ https://www.palantir.com/offerings/skykit/ https://www.youtube.com/watch?v=F5a9aASy--c https://mil.in.ua/en/news/ukrainian-armed-force-use-skykit-palantir/ https://mil.in.ua/en/news/ukrainian-armed-force-use-skykit-palantir/ https://blog.palantir.com/announcing-palantir-government-web-services-9fa1cdbbc6fc https://www.palantir.com/offerings/government-web-services/ https://blog.palantir.com/introducing-palantir-fedstart-cd5995d0dfaa https://finance.yahoo.com/news/palantir-deliver-electromagnetic-battle-management-105900054.html Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP 36: How much of a plug and play is it for a coal fired power plant to be converted to a nuclear power plant | 00:14:36 | |
Summary: In this episode we discuss the feasibility of converting existing coal-fired power plants into nuclear power plants, specifically focusing on the use of Small Modular Reactors (SMRs). We examine the process of conversion, highlighting the necessary steps such as site assessment, decommissioning of coal infrastructure, reactor fabrication and installation, steam generation system adaptation, turbine and generator integration, cooling system development, electrical grid connection, waste management planning, and regulatory compliance. We acknowledge the challenges associated with conversion, including potential "Not In My Back Yard" (NIMBY) objections and the need to navigate different regulatory bodies. Questions to consider as you read/listen:
Long format: How much of a plug and play is it for a coal-fired power plant to be converted to a nuclear power plant?With recent discussions and interpretations of the Department of Energy’s new grant application process to look at Small Modular Reactors (SMRs) to the tune of $900 million. the question becomes how to best implement SMRs into our existing grid. Build new facilities or repurpose and retool existing Coal-fired Power Plants? We examine this now. Rather than getting bogged down in the “should” discussion whereby reasonable people disagree reasonably about whether the United States should move to nuclear energy as opposed to other energy sources, I wanted to take a moment to focus practical side of converting from old coal fired plants (CPP) to new SMR plants (mobile micro reactors). When Peter Zeihan first brought this up several months ago, I did a bit of a deep dive to see how close of a plug and play substitute this scenario could be. And this is what I discovered (for what it’s worth): Converting a coal power plant into a nuclear power plant involves a multi-step process including: site assessment, decommissioning existing coal infrastructure, building a new nuclear reactor, installing necessary cooling systems, integrating with the existing electrical grid, addressing regulatory requirements and overcoming Not In My Back Yard (NIMBY) objections, while potentially reusing some existing structures like the turbine hall and electrical transmission lines, depending on the design of the new nuclear reactor, particularly if it's a smaller, modular design. In short, it’s a process but yes a lot of stuff that would traditionally we just scrapped can be reclaimed and rededicated depending upon status. We do something similar and related already with converting coal-fire power plants (CPP) to natural gas power plants (NGPP). Almost 200 plants are either fully converted or are in process to be converted from CPP to NGPP. The biggest practical difference that cannot be stressed enough as we shall see about the switch from CPP to NGPP and that from CPP to NPP is the change in regulatory body oversight. SITE ASSESSMENT: In the conversion from coal-fired to nuclear (micro reactors) one of the key elements is access to water. If the micro reactor is water cooled that’s an issue. Not such a large issue if it is non-water-coooled like sodium, lead, or molten salts which most of the designs I talked about in my other long post are. DECOMMISSIONING OF THE COAL PLANT: This may already have been done or is in process, but if it is not, here are the steps oversimplified. Dismantle and remove existing coal combustion equipment, including boilers, coal handling systems, and flue gas desulfurization units, while managing hazardous materials like coal ash. The degree to which the government regulators will require a given site to remediate the flue gas desulfurization units and removal or processing of the legacy coal ash on site may make a given project uneconomic. The removed equipment will include at least the coal, coal-storage facilities, coal-handling equipment, coal dryers and crushers, gas filters, ash-handling equipment, sulfur scrubbers, exhaust towers, and any ponds used in operation. One study found that this step makes up approximately 75% of the original capital cost of the plant. NUCLEAR REACTOR FABRICATION/CONSTRUCTION AND INSTALLATION. This step seems fairly obvious including but not limited to building a control room, containment structure and installing the reactor core, fuel handling systems, and associated cooling systems. STEAM GENERATION SYSTEM: Adapt or modify the existing steam generation system to be compatible with the heat produced by the nuclear reactor. The ability of this repurposing depends on prior plant design and also how long the existing system had been operating. The longer it has been in operation the more likely wear and tear has made its repurposing impractical. TURBINE AND GENERATOR INTEGRATION: Utilize the existing turbine and generator infrastructure where possible, potentially requiring upgrades to accommodate the new steam conditions. Retaining the turbine would potentially save approximately 5.5% of the cost of the original plant. The ability of this repurposing depends on prior plant design and also how long the existing system had been operating. The longer it has been in operation the more likely wear and tear has made its repurposing impractical. COOLING SYSTEM DEVELOPMENT: Install appropriate cooling systems, such as cooling towers or once-through cooling systems, based on water availability and environmental considerations. ELECTRICAL GRID CONNECTION: Connect the new nuclear power plant to the existing electrical grid, leveraging the existing transmission lines from the coal plant. This is a major advantage of conversion from a legacy CCP to a new nuclear power plant (NPP). If the NPP’s power levels match those of the CPP, this should allow for minimal investment in the local grid. WASTE MANAGEMENT PLAN: Develop a plan for managing spent nuclear fuel, including storage and transportation to a disposal facility. And also there are potential issues with cleaning up the onsite legacy coal storage areas depending on how much coal remains. REGULATORY COMPLIANCE: Obtain all necessary permits and licenses from regulatory agencies, including site permitting, construction authorization, and operation licenses. Switching regulatory bodies is no joke. From the EPA for CPP to the the NRC with any nuclear power plant is a change in culture for sure. NIMBY CONCERNS: As we can see from the comments within our own community some folks have very log held and very heart felt beliefs on the subject of nuclear power. Will anti NPP folks be able to sufficiently organize and galvanize local thought to impact the project? That’s always a possibility. Just some research I did that might be useful. I look forward to Eric’s or others amplifications/corrections. I like to learn. Thanks for helping me learn, y’all. Sources: https://www.energy.gov/ne/articles/8-things-know-about-converting-coal-plants-nuclear-power https://inldigitallibrary.inl.gov/sites/sti/sti/Sort_54812.pdf https://www.pnnl.gov/sites/default/files/media/file/PNNL-SA-193632-CoaltoNuclear.pdf Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP04 Updates on AI, Semiconductors, future power demand and Quantum Computing | 00:09:44 | |
Summary: In this episode, we discuss the growing need for energy to support advancements in artificial intelligence (AI) and semiconductors. We expresses concern about the potential energy shortage that could arise as the U.S. increases its domestic production of semiconductors and AI technology. This is compounded by the ongoing transition to less energy-dense, intermittent renewable energy sources. We highlight quantum computing (QC) as a promising solution to reduce energy consumption in AI, emphasizing its potential to revolutionize machine learning and significantly increase computational efficiency. While QC technology is still in its early stages, we expresses optimism about its rapid development and potential to alleviate the energy challenge. Questions to consider as you read/listen: How will the increasing energy demands of AI and semiconductors impact the transition to renewable energy?
Long format:
Updates on AI, Semiconductors, future energy demands and Quantum Computing Over the last few days we have seen a positive uptake in all things having to do with reshoring America’s semiconductor and AI efforts. Between 1 the funding of WolfSpeed (see my earlier post yesterday on SiC technology) 2 continued big Ai user deals with nuclear (see my post last week on Microsoft and yesterday on Google) 3 the Spruce Pine facility not to be terminally destroyed We can add two more events 4 DOE announces the opening of applications for up to $900 million in funding to support the initial domestic deployment of Generation III+ (Gen III+) small modular reactor (SMR) technologies (https://www.energy.gov/articles/biden-harris-administration-announces-900-million-build-and-deploy-next-generation-nuclear#:~:text=WASHINGTON%2C%20D.C.%20%E2%80%94%20As%20part%20of,modular%20reactor%20(SMR)%20technologies) 5 And more advancements in the technology involved in the quest for quantum computing and the energy sector’s acknowledgment of how much energy AI will take and how investing in QC will potentially drive that down (up to 100 times more efficient). https://oilprice.com/Energy/Energy-General/Can-Quantum-Computing-Solve-AIs-Energy-Crisis.html According to this article and quoting from it… By 2030, AI is expected to represent 3.5 percent of the global electricity consumption, and 9 percent of electricity generation in the United States (a sharp increase from the country’s current rate of around 3.5 percent – already a hefty amount). Put together, electric vehicles and AI are on track to add 290 terawatt hours of electricity demand to the United States energy grid by the end of the decade according to projections by Rystad Energy. End quote It is refreshing to see folks start to wake up and realize that we are in a near emergent situation because where do we get all of our future energy from as AI and semiconductors and ancillary technology will gobble up and enormous amount of energy especially considering our growth and unprecedented reshoring efforts due to the US’s retreat from globalization and further massively complicated by our political commitment to move from power dense sources to intermittent very low energy/power density (yet clean) sources. Folks, we simply cannot continue on this path. There’s not enough energy. We have a very long way in QC but the pace of development is encouraging. For background Quantum Computers will be a great accelerator of AI, and quantum computing has the potential to revolutionize machine learning and solve problems that were once viewed as impossible. A quantum computer (QC) is a new computer architecture that uses quantum mechanics to perform certain kinds of computation much more efficiently than a classical computer can. Oversimplified, classical computers are based on “bits“. A bit is like a switch. It could be either zero (if off) or one (if on). Instead of bits, QC use quantum bits, or qubits, which are typically subatomic particles such as electrons or photons. Qubits follow principles of quantum mechanics regarding how atomic and subatomic particles behave, which include unusual properties that give them super processing capabilities. The first property is superposition, or the capability for each qubit to be in multiple states at any given time. This allows multiple qubits in superposition to process a vast number of outcomes simultaneously. If you ask AI on a classical computer to figure out how to win a game, very oversimplified and not entirely 100% accurate but close, it will try various moves and take them back in its “head” until it finds a winning path. But an AI built on QC will try all moves, extremely efficiently, holding uncertainty in its head, resulting in an exponential reduction of complexity. The second unusual properties that give them super processing capabilities and superiority over classical computers is entanglement, which means two qubits remain connected so the actions performed on one affect the other, even one separated by great distances. Thanks to entanglement every qubit added to a quantum machine EXPONENTIALLY increases its computer power. To double a $100 million classical super computer you’d have to spend another $100 million. To double your quantum computing, you just need to add one more qubit. <<<QC is very fragile in the sense that even slight vibrations, electrical interferences, temperature changes, or magnetic waves can cause super position to decay or even disappear. To make a workable and scalable QC, researchers have to invent new technologies and build unprecedented vacuum Chambers, super conductors, and super cooling refrigerators to minimize these losses in quantum coherence, or decoherence, caused by environment.>>> Because of these challenges, it is taking a long time for scientists to increase the number qubits in QC – from two in 1998 to 65 and 2020, which is still too few to do anything useful. However, even on a few dozen, some computing task can be accomplished with QC over 1 million times faster than classical computers. IBM’s roadmap shows the number of qubits more than doubling every year for the next three years. Finally to know, quantum computers are programmed differently from computers, algorithms will need to be invented, and new software tools will need to be built. As of today, quantum computing is considered to be in the "noisy intermediate-scale quantum (NISQ)" era, meaning that while significant progress has been made, current quantum computers are still prone to errors, relatively small in scale, and not yet capable of performing complex calculations without significant error correction, making them largely experimental and not yet ready for widespread practical applications. As of today, the state-of-the-art in qubit technology involves processors with several hundred qubits, with companies like IBM recently achieving over 400 qubits on their "Osprey" chip, but significant challenges remain in terms of error correction and scaling up to truly useful quantum computing applications, often requiring thousands of high-quality qubits to create a single reliable "logical qubit" through error correction techniques; further research is needed to address these limitations.
——//Opinion time//——- Again, in my opinion (and that’s all it is) and for what it is worth, this semiconductor/AI war is the conflict that must be won. We must reshore every component from silicon crucibles to fabrications of chips to design and production to lithography (very very tough nut to crack due to Dutch dominance) to then to actual use. We can’t be on the final stretch and run out of energy/power!!!! That is my fear. PZ beats the drum way way before it was popular that China was going to decline and is destined to have a supreme reversal of fortunes. I’m beating the drum of where are we getting the energy given our three competing interests (AI/Chips, general reshoring, moving to less energy dense intermittents). Events like WolfSpeed and SiC and QC give me hope that it’s not going to be as bad. All of these recent announcements and articles are very encouraging to me. To do otherwise than to do what we are doing makes it so America runs the risk of losing its position as top of the Global Value Chain (GVC) in my opinion.
Sources:
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| 22 Oct 2024 | EP06: North Korea gets a nuclear sub? Why you should care | 00:08:34 | |
Summary: In this episode we discuss North Korea's increasing nuclear capabilities, particularly the possibility of developing a nuclear-powered submarine. We provide information about North Korea's existing submarine fleet and the recent launch of the Hero Kim Kun Ok, a diesel-powered submarine equipped with missile capabilities. We focus on reports from South Korea, indicating that North Korea is constructing a new, larger submarine that may be nuclear-powered. We highlight the potential threat posed by North Korea's submarine program, as a nuclear-powered submarine would be more stealthy and could launch missiles with much shorter response times, creating a significant challenge for US defenses. Questions to consider as you read/listen:
Long format: Is North Korea developing a nuclear submarine? Per the article below, it is. First let’s look at the current state of their fleet, quoted directly from the article below: The fleet includes a large number of conventionally powered submarines, with estimates suggesting around 70 to 90 vessels. While many of these are older models, like the Soviet-era Romeo-class submarines, North Korea has been modifying and upgrading them for more advanced roles, including missile delivery. A key recent development is the unveiling of the Hero Kim Kun Ok submarine, which was launched in September 2023. This vessel represents a significant modification of the Romeo class, with the addition of a missile compartment designed to carry up to 10 missiles. Although termed a "tactical nuclear attack submarine" by North Korea, it is still diesel-powered, not nuclear-propelled. The Hero Kim Kun Ok is believed to be capable of launching both submarine-launched ballistic missiles (SLBMs) and potentially cruise missiles. ——-end quote——- A nuclear submarine has a significant advantage over a diesel-powered submarine in terms of its underwater endurance, allowing it to stay submerged for much longer periods without needing to surface for air, due to its nuclear reactor which provides virtually unlimited power compared to the limited battery capacity of a diesel submarine; this also enables greater speed and operational range at depth, making it far more stealthy and effective in combat situations. Higher speed. Prolonged loitering. Greater operational range. Stealthier. Quite a step up. What makes NK so scary is that every other nation lets each other know pre launch where, when and for what reason a launch will happen. For example, Russia will state date, time, where from and the reason such as a new communications satellite. NK does not let the world know when, where and for what reason it launches. Each launch detection is nailed biter. The math for the flight of a ICBM from NK to the US is 24 minutes. And as it works the way through the detection to decision time (Single Integrated Operational Plan) is as follows: -4/10 second after launch: SBIRS (Space-Based Infrared System) detection -1 to 3 seconds after launch: raw data to National Reconnaissance Office at the Buckley Space Force Base in Aurora, CO (Aerospace Data Facility or Space Delta 4) and DEFSMAC in Fort Meade, MD -6 seconds: alert to National Military Command Center in the Pentagon -15 seconds: Space Delta 4 informs NORAD, NORTHCOM and STRATCOM to seek secondary confirmation -20 seconds: Clear Space Force Station in Alaska use of Long Range Discrimination Radar to further analyze and confirm -30 seconds: Cheyenne Mountain Complex Missile Warning Center -60 seconds: US Strategic Command (STRATCOM) kicks into overdrive (STRATCOM is the most important but perhaps least publicly known aspect of the nuclear response ecosphere) -1m 30 seconds: NORAD uses Advanced Extremely High Frequency System to start connecting to various command and control centers -2 minutes: National Military Command Center is now fully “awake” -2 minutes 30 seconds: STRATCOM Global Operations Center is in full swing looking to establish the red clock and blue clock, Doomsday planes all spun up -2 minutes 45 seconds: still awaiting necessary confirmation by ground radar of an actual missile inbound. -3 minutes: confirmation by first ground radar and the trajectory confirmed inbound to US -3 minutes and 15 seconds: POTUS informed. POTUS has less than 6 minutes to go through use the biscuit, Permissive Action Link and nuclear football and make a choice of retaliation efforts. -the missile is still in boost phase until 5 minutes then it turns to midcourse -5 minutes: The US Missile Defense Agency in Fort Belvoir , MD is provided data to try to engage the Ground-Based Midcourse Defense System (despite popular belief it is very very hard to shoot down ICBMs) using the SBX launching from US Army Space and Missle Defense Command in Fort Greeley, Alaska
<<<A fantastic read is Nuclear War by Anne Jacobson>>> With SLBMs the decision to react time is significantly reduced. If for example if a North Korean sub with nuclear SLBMs were stationed 1000 km (621 miles) from our west coast, the flight time for the SLBM would be less than seven minutes to hit Washington DC. So all of the above long SIOP is totally frustrated. No decision time and no escape time. A true bolt out of the blue attack is more devastating and effective with a nuclear submarine and nuclear SLBM. Source:
Per the article “According to information published by Yonhap News Agency on August 8, 2024, the South Korean military has confirmed that North Korea has initiated the construction… On October 8th, officials revealed that analysis is underway to determine whether the vessel could potentially be nuclear-powered, a significant development given North Korea's past aspirations for such technology. According to reports, the new submarine is notably larger than the existing ones in North Korea's fleet.” As PZ himself says he finds SK military reports to not be generally wrong or exaggerated. Recall his recent discussion about SK military reports that NK has sent troops to Ukraine. I used a little transitive property logic there. Good for PZ is good for me. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 11 Nov 2024 | EP73: Iran’s Nuclear Crossroads: Will Regional Tensions Push Tehran Over the Edge to Nuclear Weapons? | 00:16:20 | |
Summary: In this episode, we discuss the increasing likelihood of Iran developing nuclear weapons. The article "Iranians Debate Whether It’s Time To Develop Nuclear Weapons" by Javad Heiran-Nia published by the Stimson Center outlines Iran’s internal debate on this topic, highlighting the growing support for nuclear armament fueled by regional tensions. We explore potential consequences, including a possible arms race in the Persian Gulf, increased security concerns for Israel, and the challenging of U.S. influence in the region. We analyze potential reactions from key players such as the Gulf countries, Israel, and the United States, revealing the complex geopolitical implications of Iran’s decision. Questions to consider as you read/listen:
Long format: Iran’s Nuclear Crossroads: Will Regional Tensions Push Tehran Over the Edge to Nuclear Weapons? By Justin James McShane A well written and well researched provocative piece published by the Stimson Center entitled “Iranians Debate Whether It’s Time To Develop Nuclear Weapons” by Javad Heiran-Nia published today 8 November 2024 provokes some comments. TL;DR: Iran is debating whether to pursue nuclear weapons or expand its missile range beyond a 2,000 km limit. This shift, highlighted by recent comments from Iranian leaders, reflects mounting internal support for nuclear armament amidst regional tensions. If Iran exits the NPT or changes its defense policy, it could trigger a Persian Gulf arms race, heighten security concerns for Israel, and challenge U.S. influence in the region. The global community is watching closely, as any decision could reshape the Middle Eastern security landscape. Introduction The question of whether Iran will develop nuclear weapons or extend its self-imposed 2,000-kilometer missile range cap is increasingly relevant amidst heightened regional tensions and evolving security dynamics. A recent article by Javad Heiran-Nia for the Stimson Center, titled “Iranians Debate Whether It’s Time To Develop Nuclear Weapons,” delves into this complex issue, offering insights into Iran’s internal debate and the potential implications for the broader Middle East. This discussion brings into focus not only Iran’s commitments under the Nuclear Non-Proliferation Treaty (NPT) but also how shifts in its defense doctrine could affect security from the Persian Gulf to the United States. INFORMATION The Treaty on the Non-Proliferation of Nuclear Weapons (NPT) is a pivotal international agreement aimed at preventing the spread of nuclear weapons, promoting peaceful uses of nuclear energy, and advancing nuclear disarmament. Established in 1968 and effective from 1970, the NPT has become a cornerstone of global nuclear non-proliferation efforts. Iran’s Participation in the NPT Iran was among the original signatories of the NPT in 1968 and ratified it in 1970, committing to abstain from developing or acquiring nuclear weapons. As a non-nuclear-weapon state under the treaty, Iran is obligated to allow International Atomic Energy Agency (IAEA) inspections to verify its compliance. Withdrawal Process from the NPT Article X of the NPT outlines the withdrawal procedure: A state may withdraw if it determines that extraordinary events related to the treaty’s subject matter have jeopardized its supreme interests. The withdrawing state must provide a three-month notice to all other treaty parties and the United Nations Security Council, including a statement of the extraordinary events it considers to have jeopardized its interests. This provision underscores the gravity of withdrawal, as it could significantly impact international security and non-proliferation norms. Statements by Alaeddin Boroujerdi and others a growing demand Alaeddin Boroujerdi, a prominent Iranian politician and former chairman of the Iranian Parliament’s National Security and Foreign Policy Commission, has addressed Iran’s stance on the NPT. In 2004, he stated that if the UN Security Council were to issue a resolution mandating the suspension of Iran’s uranium enrichment, the Iranian Parliament might consider suspending Iran’s NPT membership. More recently he has again stated to beat the drum towards nuclear weapons. if Israel “dares to damage Iran’s nuclear facilities, our level of deterrence will be different. We have no decision to produce a nuclear bomb, but if the existence of Iran is threatened, we will have to change our nuclear doctrine.” He is not alone former Iranian foreign minister, Kanal Kharrazi has said if Israel “dares to damage Iran’s nuclear facilities, our level of deterrence will be different. We have no decision to produce a nuclear bomb, but if the existence of Iran is threatened, we will have to change our nuclear doctrine.” On Oct. 18, nearly 40 members of parliament sent a letter to Iran’s Supreme National Security Council, its top security policymaking body, requesting that the council revise the defense doctrine of the Islamic Republic of Iran to permit development of nuclear weapons. The Tabnak news agency, which is affiliated with Mohsen Rezaei, a veteran former commander of the Islamic Revolutionary Guards Corps (IRGC), asked readers for their views. Of 66,000 people who responded, two-thirds were in favor. The Tehran Times newspaper affiliated with Ayatollah Khamenei wrote in a frontpage editorial on Oct. 8 entitled “Rising call for nukes” that more than 70 percent of the Iranian people want to get the atomic bomb. Significance of these datapoints Boroujerdi’s remarks are noteworthy due to his influential role in shaping Iran’s foreign and security policies. His statements reflect the perspectives of key Iranian policymakers and signal potential shifts in Iran’s nuclear policy, which could have substantial implications for regional and global security dynamics. Given Iran’s strategic position and the international community’s interest in nuclear non-proliferation, such statements warrant close attention from global stakeholders. Iran’s internal debate about pursuing nuclear weapons development has intensified against a backdrop of recent security incidents, including Israeli airstrikes on Iran-linked sites and increased regional pressure. While Iran has long maintained that its nuclear program is solely for peaceful purposes, voices within its government and military are now questioning if a nuclear deterrent could better secure national interests and act as a counterbalance to adversaries in the region, particularly Israel and the United States. Proponents of nuclear armament in Iran argue that a nuclear arsenal would serve as a strategic deterrent, making it less likely for other nations to act aggressively toward Iran. This viewpoint suggests that the recent conflicts and heightened hostility underscore Iran’s vulnerability and justify the need for stronger defensive capabilities, including nuclear weapons. On the other side of the debate, some Iranian officials are concerned that pursuing nuclear weapons could backfire. They warn that it might lead to international isolation, as well as sanctions from countries beyond the U.S., including Europe and neighboring states, which could destabilize Iran’s already challenged economy. There are also concerns about escalating a regional arms race, potentially prompting neighboring countries to pursue their own nuclear capabilities. The debate includes consideration of extending Iran’s missile range beyond the current self-imposed 2,000-kilometer limit. Some Iranian military leaders advocate this extension as a means of bolstering Iran’s defensive reach and ensuring that it can respond effectively to threats at greater distances, which would include targets further across the Middle East and potentially southern Europe. Others, however, are wary of the risks of expanded missile capability, which could provoke preemptive actions or sanctions from other nations and lead to greater instability in the region. In essence, the discussion within Iran represents a major shift in how some officials perceive the strategic benefits of a nuclear deterrent versus the diplomatic, economic, and security risks associated with nuclear weaponization. This internal debate is emblematic of Iran’s broader reassessment of its defense posture in light of recent threats and could significantly alter its future stance in regional and global security dynamics. The Aftermath of Leaving NPT If Iran were to develop nuclear weapons, the geopolitical repercussions would be significant, with direct implications for countries in the Persian Gulf, Israel, and the United States, each of which has distinct reasons for concern. In fact, simply announcing an intent to leave the NPT would likely create a sense of destabilization and perhaps a strong reaction. Persian Gulf Countries Persian Gulf countries, such as Saudi Arabia, the UAE, and Bahrain, would likely view an Iranian nuclear arsenal as a destabilizing force. Iran’s acquisition of nuclear weapons could initiate a regional arms race, with these Gulf states potentially seeking their own nuclear capabilities as a countermeasure. Although Saudi Arabia would most certainly wish to develop its own nuclear program, it does not have a nuclear power plant in the country and therefore is quite far behind (measured in many years) from developing a stand alone nuclear program that would ultimately yield domestically made nuclear weapons. However, the UAE does have a nuclear power plant. Therefore its path to producing its own home grown nuclear weapons is much easier only requiring advanced centrifuges that it could construct on its own because the designs and engineering specifications are unfortunately in the public domain due to AQ Khan. It could have nuclear weapons in months or a year if it entered into a crash program. Such a race would increase tensions and military expenditures across the region, possibly diverting resources from economic development and escalating security risks. Additionally, a nuclear-armed Iran could embolden its regional influence, intensifying concerns among Gulf nations regarding Iran’s support for proxy groups and its potential to exert more significant political and military sway over regional affairs. This situation would raise security stakes and foster an atmosphere of heightened distrust and instability. Israel For Israel, a nuclear-armed Iran is a critical security threat. Israel views Iran’s potential for nuclear weapons as an existential danger due to Iran’s hostile stance toward Israel and its support for anti-Israel groups like Hezbollah. With Iran possessing nuclear capabilities, Israel would likely feel compelled to enhance its own defense posture, potentially considering preemptive or preventive strikes to neutralize any nuclear threat before it fully materializes. This tension could lead to a cycle of escalations, risking direct military conflict between Iran and Israel. Furthermore, Israel might seek closer collaboration with other countries in the region and the West to counterbalance Iran, potentially realigning regional alliances and further polarizing the Middle East. The United States The United States response to Iranian withdrawal from the NPT in theory is pretty well known to all of the parties. The incoming president has made no secret of his pro-Israel stance and also his “maximum pressure” approach to Iran. Launched after the U.S. withdrew from the Joint Comprehensive Plan of Action (JCPOA) in 2018, the “maximum pressure” campaign involved a series of stringent economic sanctions, diplomatic isolation efforts, and increased military posturing in the region. The economic sanctions included a campaign re-imposed sanctions lifted under the JCPOA, targeting Iran’s key economic sectors, particularly its oil exports, which are a primary source of revenue. Secondary sanctions were applied, pressuring international companies and countries to cease business with Iran or face penalties, effectively cutting Iran off from much of the global financial system. Sanctions extended to Iran’s metals, shipping, and banking sectors, heavily constraining Iran’s economy and contributing to high inflation, currency devaluation, and significant economic hardship for the Iranian populace. The U.S. imposed sanctions on high-ranking Iranian officials, including members of the Islamic Revolutionary Guard Corps (IRGC), which the U.S. designated as a foreign terrorist organization. Sanctions extended to entities linked to Iran’s missile program and organizations the U.S. believed were involved in human rights abuses or regional destabilization activities, like Iran’s support for Hezbollah and other proxy groups. The U.S. increased its military presence in the Persian Gulf, deploying additional aircraft carriers, troops, and missile defense systems to deter any potential Iranian aggression. There were specific actions, such as the assassination of Qasem Soleimani, a top IRGC commander, in early 2020, which were justified as necessary for protecting U.S. interests and allies in the region. The U.S. engaged in extensive diplomatic efforts to rally allies and partners to take a tougher stance on Iran, though many European allies continued to support the JCPOA. Despite resistance from some allies, the U.S. pursued “snapback” sanctions under the JCPOA, seeking to reinstate UN sanctions on Iran, though this move was controversial and met with limited support globally. If this was Iranian life under the prior Trump administration, if Iran withdraws from the NPT, it is hard to believe that the actions against Iran become anything less and most likely would be far, far worse. The US, which has historically sought to limit nuclear proliferation, especially in volatile regions, would be deeply concerned about an Iranian nuclear capability. A nuclear-armed Iran could limit U.S. influence in the Middle East and complicate Washington’s ability to protect its allies, especially Israel and Gulf states, without risking nuclear escalation. Additionally, Iran’s nuclear development could undermine U.S. efforts at non-proliferation globally, setting a precedent that might encourage other nations to pursue nuclear weapons if they believe it strengthens their security. For the U.S., a nuclear Iran would likely mean reassessing its military presence and alliances in the region, possibly committing more resources to contain and counter Iran’s expanded influence. In summary, Iran’s development of nuclear weapons could dramatically shift the regional balance of power, prompting a security dilemma that affects not only Iran’s neighbors but also global actors with strategic interests in the Middle East. The potential for miscalculations and escalations would place all parties on high alert, making diplomatic solutions more challenging and the security environment significantly more precarious. CONCLUSION Iran’s potential steps toward nuclear capability and expanded missile reach represent a critical juncture that could alter the strategic balance across the Middle East and beyond. Should Iran withdraw from the NPT or further its nuclear ambitions, the resulting geopolitical ripple effects would be profound, raising concerns about a new arms race in the Persian Gulf, the security of Israel, and the future of U.S. influence in the region. As Tehran navigates its internal debates and weighs regional pressures, global stakeholders remain watchful, recognizing the stakes involved and the urgent need for careful diplomacy in preventing further escalation. Sources https://www.stimson.org/2024/iranians-debate-whether-its-time-to-develop-nuclear-weapons/ https://www.tehrantimes.com/news/504740/Rising-call-for-nukes Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 15 Nov 2024 | Episode 81: Reshoring Revolution: How Jobs Are Returning to the USA and Changing Global Trade | 00:13:24 | |
Summary: In this episode, we explore the growing trends of reshoring and nearshoring, which involve bringing manufacturing operations back to a company's home country or relocating them to nearby countries. These trends are fueled by a desire for supply chain resilience, reduced reliance on foreign suppliers, and economic incentives like the Inflation Reduction Act and the US-Mexico-Canada Agreement. We present compelling statistics demonstrating the increasing popularity of these strategies, highlighting the potential for significant job creation and economic growth. We also discuss the role of government support in encouraging these shifts and the impact of technological advancements, such as automation, on making domestic production more competitive. Questions to consider as you read/listen:
Long format:
Reshoring Revolution: How Jobs Are Returning to the USA and Changing Global Trade
By Justin James McShane
TL;DR Reshoring—bringing operations back home—and nearshoring—relocating them to nearby countries—are reshaping global supply chains. These trends are driven by the need for supply chain resilience, reduced dependency on foreign suppliers, and economic incentives like the Inflation Reduction Act (IRA) and US-Mexico-Canada Agreement (USMCA). Reshoring has brought nearly 2 million jobs back to the U.S. since 2010, with record-breaking growth in 2023. Nearshoring, especially in Mexico, is gaining momentum, offering lower costs and logistical advantages. Together, these shifts are creating a more regionalized, diversified, and secure trade environment, powered by automation, innovation, and government support. The statistics show that nearshoring and reshoring is not only happening and will accelerate in the near term and into the future.
INTRODUCTION Reshoring, the practice of bringing business operations back to their home country after having been outsourced abroad, represents a transformative shift in global supply chain dynamics. While often associated with manufacturing, reshoring increasingly encompasses service and industrial sectors, driven by the desire to reduce reliance on complex and vulnerable international supply chains. This movement aligns with broader trends of decoupling, where nations strive to strengthen domestic capabilities amidst geopolitical uncertainties and economic pressures. However, this trend has met resistance from proponents of globalization, whom I term "reshoring deniers." These individuals argue that interwoven global supply chains are irreplaceable and beneficial. This piece will explore the rising momentum of reshoring, its statistical underpinnings, and the government incentives driving this shift, as well as the closely related trend of nearshoring, which aims to bring operations closer to home while retaining certain economic advantages.
INFORMATION Restoring is the practice of transferring a business operation that was moved overseas (outsourced) back to the country from which it was originally relocated. This is mostly seen in the manufacturing sector but is not exclusive to it. It includes the service and industrial sects as well. Reshoring is a feature of decoupling whereby a country seeks to remove dependence on external supply chains and their complexities.
Some folks, in particular globalists who believe in interconnection between countries and intermeshed supply chains, deny that restoring is happen or that it is a “good” idea. I call them restoring deniers. Globalization is a historical process that describes the increasing connection between the world's economies, cultures, and populations. It's characterized by the movement of goods, services, capital, people, and ideas across borders. The term became more common in the 1980s due to technological advances that made it easier to conduct international transactions.
RESHORING FROM A STATISTICAL POINT OF VIEW Here are the facts and the sources. What are yours other than your own personal experience?
The rate of reshoring in the United States has been increasing, with a record number of jobs announced in the first half of 2023.
2022: Reshored jobs increased by 25% compared to 2021. 2023: The Reshoring Initiative reported 182,000 jobs announced in the first half of 2023, which is more than the 340,000 jobs announced in the same period in 2022. Cumulative jobs: Since 2010, nearly two million jobs have been brought back, which is about 40% of what was lost to offshoring.
The Chips and Science Act, the Inflation Reduction Act (IRA), Infrastructure Investment and Jobs Act (IIJA), and the Bipartisan Infrastructure Law have incentivized domestic production.
Kearney, a global management consulting firm, revealed in a survey that 96% of CEOs are now evaluating reshoring their operations, or have done so already.
THE INFLATION REDUCTION ACT INCENTIVIZES RESHORING The Inflation Reduction Act (IRA) incentivizes reshoring by US companies by providing significant tax credits and subsidies for domestic manufacturing of clean energy technologies, like electric vehicles, batteries, and solar panels, essentially making it more financially attractive for companies to produce these goods within the United States rather than overseas, thereby encouraging them to bring manufacturing back to the country (reshoring) to access these benefits. The IRA offers substantial tax credits specifically for companies that invest in domestic clean energy manufacturing, making it more cost-effective to produce these goods within the US. The incentives are designed to encourage the production of components within the US, not just the final assembled product, which helps to build a stronger domestic supply chain. By incentivizing domestic manufacturing, the IRA is expected to create new jobs in the clean energy sector across the country.
THE FUTURE FOR RESHORING In the future, reshoring is expected to continue gaining momentum, with companies increasingly bringing manufacturing back to their home countries, driven by factors like geopolitical tensions, advancements in automation, and a growing preference for locally produced goods, leading to a more balanced approach to global supply chains with a focus on regional manufacturing and diversification of risk rather than complete reliance on offshore production; this could involve "near-shoring" to nearby countries with favorable conditions, and will likely require government support through policies that incentivize domestic manufacturing and workforce development. Reshoring is likely to become more prevalent as companies prioritize supply chain resilience and seek to mitigate risks associated with global disruptions. Automation and advanced manufacturing technologies will play a crucial role in making domestic production cost-competitive, enabling reshoring in industries previously considered too expensive to bring back. Instead of solely focusing on bringing production entirely back to the home country, companies may adopt a "China plus one" strategy, where they manufacture in multiple regions to diversify their supply chains (nearshoring).
NEARSHORING Nearshoring is a business strategy that involves moving a company's operations from an offshore location to a nearby country or region, often to take advantage of lower labor costs, a similar time zone, and a shared culture. Nearshoring can help companies reduce lead times, improve quality control, and minimize supply chain disruptions. It can also help companies save money on labor, avoid language barriers, and tap into a global talent pool. Popular nearshoring destinations for US companies include Mexico, Canada, Central and South America, and the Caribbean. The trend of nearshoring has gained momentum in recent years, especially after supply chain disruptions during and after the pandemic. In late 2022, American manufacturers purchased more goods from nearshore countries than from China for the first time.
NEARSHORING STATISTICS In 2021, 92% of U.S. manufacturing executives considered nearshoring or reshoring, up from 78% the previous year. Of those, 47% had already nearshored, 29% planned to nearshore in the next three years, and 16% were considering reshoring. US buyers prefer nearshoring over domestic sourcing. Only 20% of US buyers reported increasing domestic sourcing in the past 12 months. A Deloitte 2024 survey found that 62% of manufacturers have started nearshoring or reshoring their production. Mexico has become the source of the most imports to the United States, surpassing China. In 2022, 52.5% of Mexico's imports of parts and accessories for motor vehicles came from the U.S.
USMCA INCENTIVIZES TO NEARSHORING BY US COMPANIES The United States-Mexico-Canada Agreement (USMCA) incentivizes nearshoring by US companies in several ways. The USMCA reduces trade barriers and simplifies customs clearance procedures. The USMCA encourages manufacturers to source components and raw materials from North America. This can help companies secure a reliable source of materials and avoid supply chain bottlenecks. The USMCA allows qualified products to be imported to the US from Mexico without incurring duties or taxes. Mexico has a de minimis tax-free threshold of US $50 and a tariff-free entry threshold of US $117. This frees a larger volume of trade from taxes, duties, and fees. The Mexican government expects U.S. nearshoring operations to grow the country’s economy by 3.5%. Manufacturing exports from Mexico are expected to grow from $455 billion in 2023 to $609 billion by 2028. From January to November 2023, Chinese goods accounted for 13.9 % of U.S. imports, while Mexican goods accounted for 15%. Sectors that benefit from the United States-Mexico-Canada Agreement (USMCA) are expected to grow by $38 billion in the next five years thanks to nearshoring.
CONCLUSION The reshoring and nearshoring movement reflects a fundamental recalibration of global supply chain strategies, underscoring the necessity for resilience and adaptability in a rapidly changing economic and geopolitical landscape. Supported by substantial government incentives, such as the Inflation Reduction Act and the United States-Mexico-Canada Agreement, reshoring and nearshoring initiatives are empowering companies to reduce risks, cut costs, and build stronger domestic and regional production networks. These strategies not only create jobs and stimulate economic growth but also signal a shift toward a more balanced global trade environment. As automation and advanced technologies continue to evolve, reshoring and nearshoring are poised to play central roles in redefining the future of global manufacturing and supply chain management, ensuring that nations can navigate uncertainties with greater stability and independence.
SOURCES:
https://reshorenow.org/content/pdf/Reshoring_Initiative_2023_Annual_Report.pdf
https://reshorenow.org/content/pdf/Reshoring_Initiative_2023_Annual_Report.pdf
https://blog.qima.com/traceability/nearshoring-reshoring-trends
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| 26 Nov 2024 | EP92: Beyond the Stars: The Geopolitics of the Commercial Space Revolution: SpaceX versus the World | 00:18:47 | |
Summary: In this episode, we offer a comprehensive analysis of the evolving commercial space industry, focusing on the key players and their geopolitical implications. We examine the historical shift from government-dominated space exploration to a competitive landscape featuring private companies like SpaceX, Blue Origin, and Rocket Lab, alongside state-backed entities such as China's space program and Arianespace. The analysis compares these entities' technological advancements, market strategies, and future prospects, highlighting the intensifying competition and its impact on global power dynamics. Particular attention is given to the rivalry between SpaceX and China, considering their technological capabilities, market strategies, and the broader geopolitical context of the NewSpace race. The overall assessment underscores the increasing significance of space dominance in the 21st century, influencing technology, economics, and national security. Questions to consider as you read/listen:
Long format: Beyond the Stars: The Geopolitics of the Commercial Space Revolution: SpaceX versus the World By Justin James McShane TL;DR: The space industry has shifted from government-exclusive programs to a competitive commercial arena involving private companies and state-backed entities. Key players like SpaceX, Skyroot Aerospace, Blue Origin, United Launch Alliance (ULA), Arianespace, Rocket Lab, Firefly Aerospace, and China's state space programs are shaping the global space landscape with advancements in technology and market strategies. This transformation carries profound geopolitical implications, influencing technology, economics, and defense. Highlights:
Geopolitical Stakes:
Future Outlook:
The commercial space race reshapes not only the industry but also global power dynamics, making space a key frontier for geopolitical strategy. Introduction: The commercial space sector is no longer an exclusive domain of government entities. Over the past few decades, this field has transformed into a bustling arena of private enterprises and international players, with profound implications for technology, economics, and geopolitics. From government-led programs in the Cold War era to today’s dynamic NewSpace Movement, this evolution underscores the increasing importance of space dominance in global strategy. This paper explores the key players in the commercial space race, including SpaceX, Skyroot Aerospace, Blue Origin, United Launch Alliance (ULA), Arianespace, Rocket Lab, Firefly Aerospace, and China's state-operated launch systems, offering a comparative analysis of their technological advancements, market strategies, and geopolitical impacts. The commercial space sector has seen significant growth and competition in recent years and has geopolitical impact. With several key players emerging as leaders in the field of space launch services, this sector cannot be ignored by geopolitical circles. Information and information technology is the new currency in the geopolitical world. And the country that dominates that sector with the high ground of space will reap oversized benefits in the near future and the long-term. This paper provides an in-depth comparison of SpaceX, Skyroot, Blue Origin, United Launch Alliance (ULA), Arianespace, Rocket Lab, Firefly Aerospace, and China's state-operated launch systems in terms of technology, market strategy, launch capabilities, and future prospects. Introduction: Initially, space exploration and launches were exclusively government endeavors. However, it has evolved into a commercial experience these days. It’s important to do a brief review of that history to set the proverbial table for our work here which will focus on the companies and their geopolitical impacts. 1950s - 1960s (The Cold War Era): Government Monopoly Space launches were primarily driven by the United States (NASA) and the Soviet Union for military and prestige purposes. The launch of Sputnik in 1957 by the USSR and the subsequent Apollo program by the USA epitomized this era. 1970s - 1980s: Very Early Commercialization: Communication Satellites Companies like Intelsat began using government launch services for commercial satellite launches, but the infrastructure was still government-owned. NASA's Space Shuttle was intended to reduce costs and increase access to space, but it was still a government project with some commercial payloads. 1990s: The Emergence of Private Sector Europe's Ariane rocket series started by Arianespace became one of the first successful commercial launch providers, although Arianespace is government supported. Sea Launch was a consortium that included private companies and government entities, aimed at providing commercial launch services from a mobile sea platform. 2000s - Present: Rise of Private Spaceflight The NewSpace Movement is a term broadly that describes the rise of private investment in space technology. Companies like SpaceX, founded by Elon Musk in 2002, and Blue Origin, by Jeff Bezos, began to develop reusable rocket technology to drastically reduce launch costs. SpaceX's Falcon series marked significant milestones, especially with Falcon 9's successful reusable first stage landings, significantly lowering the cost per launch. NASA's Commercial Orbital Transportation Services (COTS) and Commercial Resupply Services (CRS) programs allowed private companies like SpaceX and Orbital ATK (now Northrop Grumman Innovation Systems) to deliver cargo to the International Space Station, transitioning from government-led to public-private partnerships. Current Trends: Companies now not only launch their own satellites but also compete for contracts against government agencies. SpaceX, for example, now has a significant market share in commercial satellite launches. Private companies are now venturing into human spaceflight with missions like SpaceX's Crew Dragon for NASA astronauts, and planned tourist trips. The private sector's drive for innovation has led to significant advancements in launch technology, like reusability, which traditional government projects did not prioritize in the same way. This shift has democratized access to space, lowered costs, increased launch frequency, and introduced new business models like space tourism, satellite internet (Starlink by SpaceX), and private lunar missions. The role of governments has evolved from sole operators to regulators, customers, and sometimes partners in public-private initiatives. Company Profiles SpaceX (USA) Founded by Elon Musk in 2002 with the goal of reducing space transportation costs and enabling Mars colonization, SpaceX is a game changing company in the space sector. Some of its key technologies includes Falcon 9, Falcon Heavy, Starlink, and Starship. It dominates in the commercial launch marke tby featuring a significant reduction in launch costs through reusability. Technologically, SpaceX focuses on reusability. SpaceX has revolutionized space travel with the first successful reuse of orbital class rockets. This significantly reduces the cost of access to space. It’s Starship aims for full reusability, with both the booster and spacecraft designed to be reused multiple times, potentially making space travel as routine as air travel. Its focus on developing superior propulsion is an advantage. Its Merlin Engines and Raptor Engines are advanced rocket engines with high efficiency and reliability. The Raptor engine uses methane, which is considered more suitable for long-term space exploration due to its availability on Mars. It has also developed satellite internet capabilities with its Starlink which is a large constellation of satellites to provide global broadband internet coverage, showcasing advancements in small satellite design and mass production. It is not a publicly traded company. Therefore, revenue figures are merely estimates. It is estimated that SpaceX’s revenue was at $13.3 billion for FY24, showcasing significant growth due to both commercial launches and government contracts like NASA's cargo resupply missions to the ISS, and the deployment of its Starlink constellation. Based on recent discussions, SpaceX's valuation has been around $250 billion, indicating strong investor confidence in its future potential, particularly with Starlink and the Starship project. SpaceX benefits from a vertically integrated approach, reducing costs through in-house production and the reusability of the Falcon 9 and Falcon Heavy rockets. Skyroot Aerospace (India) This is India's private space sector entrant, focusing on cost-effective small satellite launches. It features the Vikram series of rockets, aiming for sub-orbital and orbital launches. It faces challenges but still has opportunities. It is competing in a crowded market with limited capital but leveraging India's growing space industry to its advantage. As a relatively new player, specific revenue figures are not currently disclosed. However, Skyroot is focusing on cost efficiency, leveraging lower operational costs in India. Skyroot focuses on developing cost-effective launch vehicles like the Vikram series, which could potentially lower the barrier to space for smaller nations or private entities. The company is developing engines using 3D printing technology, which can reduce manufacturing costs and time while increasing design flexibility. The company has raised funding through venture capital, focusing on developing its Vikram series rockets. This company is in the early-stage of its development with potential for growth in the small satellite launch market, particularly as India liberalizes its space sector. Blue Origin This is Jeff Bezos’ of Amazon venture. It is focused on establishing an industrial base in space. Its projects include New Shepard for suborbital flights, and New Glenn for orbital launches. The Blue Origin New Shepard is a suborbital rocket designed to land vertically and be reused. Its New Glenn is development. It will feature a reusable first stage, similar to SpaceX's approach. Blue Origin uses the BE-4 engine which is liquid oxygen and liquefied natural gas (methane), potentially more efficient and less corrosive than other rocket fuels. It's also being used by ULA for the Vulcan rocket. Blue Moon lander aims to provide commercial lunar landing services, indicating advancements in lunar exploration technology. Blue Origin claims it takes a long-term approach with emphasis on slow, steady technological development and reliability. Financial details are less public, but Blue Origin has significant backing from Jeff Bezos, which provides financial stability for its long-term projects. Jeff Bezos funds Blue Origin personally, and the company has received contracts from NASA, like the one for lunar lander development, which implies incoming revenue. Blue Origin focuses on a slow, steady build-up, investing heavily in new technology like the New Glenn rocket and the BE-4 engine, aiming for long-term profitability through innovation. United Launch Alliance (ULA) This a joint venture between Boeing and Lockheed Martin, formed to consolidate U.S. rocket launches. It has tried and trued rockets like the Atlas V, Delta IV, and the new Vulcan Centaur. United Launch Alliance (ULA) approach is one of reliability. The ULA's Atlas V and Delta IV have a long track record of high reliability, which is crucial for government and military launches. It’s Vulcan Centaur incorporates the BE-4 engine from Blue Origin, aiming for some level of reusability with the first stage while maintaining the ability to launch a wide range of payloads. It has a heavy reliance on U.S. government contracts, but is seeking to transition to compete in the commercial sector. As mentioned, ULA has traditionally relied heavily on government contracts, with a noted $5.6 billion in contracts over five years for national security launches. The future market strategy for ULA includes promoting and relying on the introduction of the Vulcan Centaur to reduce dependency on government contracts and compete with SpaceX. ULA's financial details are not as transparent, but its contracts with the Department of Defense provide a stable income stream. Arianespace (Europe) This company was the world's first commercial launch service provider. It has rockets like the Ariane 5, Ariane 6 (upcoming), Vega for smaller payloads. Arianespace’s Ariane 5 is known for its dual-launch capability, allowing Arianespace to offer competitive pricing for satellite launches. It’s Ariane 6 is under development which seeks to reduce costs and increase competitiveness, with a focus on modularity and cost efficiency. Arianespace leverages European technological development, often aligning with ESA projects, ensuring technological sovereignty for Europe in space access. It has been the sector’s go to company for geostationary launches, but it is facing increased competition. Arianespace's financials are integrated into Airbus's financial reports, making direct figures hard to isolate. However, it has a significant share in the commercial satellite launch market, though facing competition. Delays with Ariane 6 have potentially impacted revenue, leading to the purchase of launches from SpaceX for urgency and are a current challenge for the company. Rocket Lab (USA, lacunas out of New Zealand) This is a niche company currently specializing in small satellite launches with the Electron rocket. However, it is developing the Neutron rocket for larger payloads, aiming for reusability. Rocket Lab’s Electron is the world's first carbon composite rocket, designed specifically for small satellite launches, allowing frequent and dedicated launches. While the Electron is primarily expendable, Rocket Lab is working on recovering the first stage to make it reusable, potentially using helicopters for mid-air capture. Its Photon is a satellite bus that can be used for various missions, including deep space, showcasing versatility in small spacecraft technology. It achieved $450 million in FY24 revenue. It has a market cap of $9.5 billion. Experts suggest that this company will undergo aggressive growth and exhibits market confidence. Rocket Lab is expanding into satellite manufacturing alongside its launch services to diversify income. Firefly Aerospace (USA) This company unfortunately declared bankruptcy. It had a significant funding shortfall in 2016, was involved in a costly legal dispute with Virgin Galactic and had program delays all at the same time. However, after it reemerged after bankruptcy, focused on small and medium-lift rockets. It uses the Alpha launch vehicle for small satellites. It has developed collaborations for engine technology with companies like Northrop Grumman. Firefly Aerospace’s technological plan focuses around hybrid propulsion systems which combines solid fuel and liquid or gaseous oxidizer, potentially offering a safer and more environmentally friendly alternative. It is developing Blue Ghost, a lunar lander for NASA's CLPS program, indicating capabilities in advanced mission design outside of Earth's orbit. Specific revenue figures are not widely reported. Firefly is in the process of scaling up operations, with a notable contract for launching NASA payloads. It has raised significant venture capital and is exploring strategic options like potential sales, which could indicate both financial backing and strategic reevaluation. China's State System China Aerospace Science and Technology Corporation (CASC) has developed the Long March series, with significant launches annually. The Chinese regularly launch for military, scientific, and commercial launches. CASC operates at a massive scale. The ability to conduct numerous launches annually provides a technological advantage in terms of data collection, experience, and iterative design improvements. It’s Long March 8 is aimed for partial reusability, showing an attempt to catch up with Western reusability technology. It’s Long March 5 ("Fat Five" is capable of heavy-lift missions, which is crucial for deep space exploration and large satellite deployments. They are aiming for lunar and Mars missions. The financial operations of China's state space entities like CASC are part of broader state financials, making direct analysis challenging. The Chinese system involves and benefits from heavy state funding which supports extensive launch capabilities, focusing on both domestic and international market expansion through competitive pricing and technology development. Geopolitical Implications of the New Space Race The contemporary space race, characterized by a mix of state and private entities, has profound geopolitical implications. Space achievements continue to be a marker of technological prowess and national pride, influencing international relations and are matters of national prestige. Space assets enhance military capabilities through satellite surveillance, communication, and navigation, thereby affecting global power dynamics. The space industry's growth leads to new markets in satellite services, space tourism, and potentially, space mining, reshaping economic competition. The long far off but potential exploitation of celestial bodies for resources like water ice or rare minerals could lead to new forms of territorial claims or disputes. The race prompts questions about the adequacy of existing space treaties in regulating commercial activities, debris management, and space traffic control. Countries and companies often form strategic partnerships, which can lead to new international alignments or tensions, especially if key technologies become points of contention. Specific Geopolitical Roles of Companies: SpaceX: SpaceX's role in U.S. space strategy cannot be overstated. Its capabilities in satellite deployment (Starlink), and plans for Mars habitation, align with U.S. interests in maintaining space dominance. By providing internet access via Starlink, SpaceX has geopolitical implications in regions with limited internet freedom or during conflicts (e.g., Ukraine), potentially altering information flow and national security landscapes. Skyroot Aerospace: As part of India's burgeoning space sector, Skyroot represents India's ambition to become a leader in low-cost space launches, potentially altering the balance of power in space access. Skyroot's success could empower India's strategic goals in space, including enhancing its satellite surveillance capabilities and reducing dependency on foreign launches. Blue Origin: Blue Origin's focus on reusable technology and lunar landings (through partnerships like the Artemis program) supports U.S. space policy, but its long-term vision involves broader industrial development in space. Its activities could position the U.S. at the forefront of space commerce, affecting how nations perceive economic and strategic advantages in space. United Launch Alliance (ULA): ULA's contracts for launching military and intelligence satellites underscore its role in U.S. defense strategy, ensuring secure access to space for critical national security functions. Its transition to compete in the commercial market with the Vulcan rocket reflects shifts in U.S. policy towards fostering competitive space industries. Arianespace: Arianespace's operations are central to Europe's autonomous access to space, critical for the EU's independence in satellite communications, navigation (Galileo), and Earth observation (Copernicus). Its competitive positioning affects Europe's influence in space governance and technology export markets. Rocket Lab: Rocket Lab's operations in New Zealand bring geopolitical significance to a small nation, showcasing how even smaller countries can participate significantly in space activities. Its involvement in international satellite deployment affects global space traffic management and enhances New Zealand's strategic profile. Firefly Aerospace: As Firefly scales, it contributes to diversifying launch options, impacting the geopolitical landscape by potentially reducing the monopoly of larger players. Its partnerships, like with Northrop Grumman, show how smaller companies can still play a role in national space strategies. China's State System: China's state-run space programs are integral to its broader geopolitical strategy, aiming to rival the U.S. in space dominance, military capabilities, and influence over space governance. China's exclusion from certain international space collaborations due to political tensions has led it to form its own coalitions, like the ILRS with Russia, altering traditional space alliances. Each of these entities not only competes economically but also shapes the geopolitical environment through their technological advancements, strategic partnerships, and the policies of their home nations. Their activities in space are increasingly seen as extensions of terrestrial geopolitical ambitions, where control over space could translate into power dynamics on Earth. The future for these companies and the New Space Race: Near Term (Next 5-10 Years): SpaceX will remain the frontrunner in the near term due to their reusable rocket technology, particularly with the Falcon 9 and Falcon Heavy, has significantly lowered launch costs, making them the go-to for many commercial and governmental launches. The ongoing deployment of Starlink satellites not only provides a steady revenue stream but also positions SpaceX as a leader in global internet connectivity from space. While still in development, successful operational deployment of Starship could further cement SpaceX's dominance by drastically reducing the cost to orbit and enabling interplanetary travel. However, Blue Origin might start to close the gap with its New Glenn if successfully deployed with its reusable first stage could compete directly with Falcon 9 for heavy-lift missions. Blue Origin's involvement in NASA's Artemis program could increase its visibility and technological credibility. Long Term (Beyond 10 Years): Absent some sort of self-implosion event SpaceX is still likely to be a major player. If SpaceX achieves its goal of manned Mars missions, it would reinforce its position as a leader in space exploration. If Starship becomes operational and reusable at a high frequency, it could redefine the economics of space travel. Blue Origin also has a likely bright future if Bezos is still willing to fund it. With Jeff Bezos's financial backing and a long-term vision for space colonization, Blue Origin has the potential to innovate and possibly overtake in specific niches, especially if they can scale up operations with New Glenn and other projects. If they successfully transition to commercial launches with Vulcan and leverage their reliability, ULA could carve out a substantial portion of the market, though catching up to SpaceX's breadth of operations might be challenging. While smaller in scope, Rocket Lab's focus on small satellite launches and their forays into satellite manufacturing could make them a niche leader, potentially expanding if they scale up their launch capabilities. Will Any Catch Up to SpaceX? Blue Origin has the potential due to its substantial funding, technological development, and strategic partnerships (e.g., with NASA). However, SpaceX's lead in operational launches, reusable technology, and customer base gives it a significant head start. Rocket Lab could become a significant player in the small satellite market, but its growth into larger payloads will determine if it can match SpaceX's versatility. ULA might maintain strong government contracts but catching up commercially would require a significant shift in strategy and operational scale. Arianespace and Firefly Aerospace could grow, but their ability to compete with SpaceX on cost and frequency of launches remains uncertain, especially given SpaceX's current momentum. SpaceX's lead in reusability and engine technology is substantial. SpaceX benefits from a large number of launches, which allows for lower costs and more frequent optimizations. SpaceX's ability to manufacture most components in-house provides cost advantages and control over supply chains. While competitors are advancing, SpaceX has built an impressive lead through innovation, execution, and market strategy. However, the space industry is dynamic, and with sufficient innovation, investment, and strategic partnerships, other companies could narrow the gap or excel in specific segments. The key for competitors would be to find unique value propositions or niches where they can outpace SpaceX or offer services that SpaceX does not or cannot provide efficiently. China: China indeed has the potential to become a significant rival to SpaceX in satellite delivery due to several factors, but there are also challenges and nuances to consider. China's space program benefits from significant government funding and strategic prioritization, allowing for long-term planning and investment in infrastructure and technology. China has demonstrated the ability to conduct numerous launches annually, which provides experience, operational efficiency, and the capability to rapidly deploy satellites. Due to lower labor costs, government subsidies, and a different economic model, China can offer competitive pricing for launch services. China has made strides in developing its own space technologies, including heavy-lift rockets (like the Long March 5) and is exploring reusable rocket technology, which could eventually lower costs further. With projects like Guowang (National Network), China aims to deploy large satellite constellations for communication, navigation, and remote sensing, potentially rivaling Starlink in scope. While dominated by state entities, China's commercial space sector is growing, with private companies like iSpace, LandSpace, and others beginning to contribute to the launch capability. China could leverage partnerships with Belt and Road Initiative countries or other nations looking for non-Western options in space services. SpaceX's lead in reusable rocket technology gives it a significant cost advantage, which China is still working to match. Geopolitical tensions, especially with the U.S., can restrict China's access to some global markets for satellite launches, particularly for sensitive or military payloads. Private companies like SpaceX often move faster in terms of innovation due to less bureaucratic hurdles, though this is changing as China's private space sector grows. The regulatory environment in China for private space ventures is evolving but can still be restrictive compared to more open Western markets. Export controls and restrictions on technology transfer from the West can hinder China's ability to acquire some advanced technologies. Issues around intellectual property rights and the need for international collaboration in space might slow down China's progress in certain areas. While China can launch satellites, the performance, lifespan, and technology of these satellites need to match or exceed those of competitors like SpaceX, which has set a high bar with Starlink. In summary, China has the potential to rival SpaceX in satellite delivery, but it would require overcoming technological gaps, navigating geopolitical landscapes, and further developing its commercial space sector. While China's state-driven approach provides advantages in scale and resource allocation, the agility, innovation, and established market presence of SpaceX remain formidable barriers. However, given China's trajectory and commitment to space, a significant rivalry could indeed emerge over time. Why There's a Focus on SpaceX vs. China: Both SpaceX and China (through its state-run space programs) conduct the majority of orbital launches globally, showcasing their capacity to deliver payloads into space frequently. SpaceX represents the cutting edge of private space enterprise with reusable rockets and ambitious projects like Mars colonization. China, with its state-backed funding, is pushing forward with lunar missions, space stations (Tiangong), and plans for large satellite constellations. The space race between the U.S. and China mirrors broader geopolitical tensions, where space achievements are tied to national prestige and strategic military advantages. SpaceX has become a key player in the commercial satellite launch market, while China, with its state support, can offer competitive pricing for launches, appealing to both domestic and international clients. The Broader Picture: The space race is more multifaceted with various companies and countries contributing in different ways. While SpaceX and China might lead in certain metrics, the industry benefits from a diverse ecosystem where different players excel in specific areas. New entrants or those currently perceived as sidelines could leapfrog with disruptive technologies or business models, as seen in other high-tech industries. As the space market grows (e.g., space tourism, in-space manufacturing, asteroid mining), new opportunities will arise where current sidelines might become central players. Policies, regulations, and international relations will continue to shape who can compete where. For instance, if geopolitical tensions ease, China might have more access to Western markets, or vice versa. In essence, while SpaceX and China are currently at the forefront of certain aspects of space activities, the narrative of others being "on the sidelines" might overlook the nuanced roles these entities play in advancing space technology, serving niche markets, or preparing for future competition. The space sector is likely to see increased competition across various fronts, not just a bipolar contest. Conclusion: The ongoing evolution of the commercial space sector has redefined the global balance of technological innovation and economic competition. As private companies like SpaceX push the boundaries of reusable technology and accessibility, state-backed entities, particularly China, strive to assert their influence in space through ambitious initiatives. This modern space race is not merely an economic competition but a strategic battle for global leadership in information technology and defense. While SpaceX continues to lead the pack, the trajectories of emerging players and traditional powerhouses suggest a dynamic future where collaboration, competition, and innovation will shape the geopolitical landscape of space for decades to come. Sources: https://spacenews.com/blue-origin-spacex-ula-win-5-6-billion-in-pentagon-launch-contracts/ https://www.marketing91.com/spacex-competitors/ https://www.space.com/united-launch-alliance.html https://spaceimpulse.com/2024/07/31/ula-vs-spacex/ https://www.airandspaceforces.com/space-force-blue-origin-spacex-ula-launches/ https://qz.com/1949790/is-spacex-versus-china-the-only-space-race-that-matters https://spacenews.com/the-accidental-monopoly/ https://spaceimpulse.com/2023/11/10/small-rocket-companies/ https://bstrategyhub.com/spacex-competitors-alternatives/ https://theowp.org/reports/the-geopolitics-of-the-modern-space-race/ https://www.geostrategy.org.uk/research/the-role-of-space-power-in-geopolitical-competition/ https://www.rmg.co.uk/stories/topics/new-space-race-astropolitics-power-21st-century https://www.institutmontaigne.org/en/expressions/geopolitics-new-modern-space-race https://www.sciencedirect.com/science/article/abs/pii/S0265964606000245 https://www.britannica.com/explore/space/the-new-space-race/ https://www.ft.com/content/2aa56238-d924-4558-9190-753079cc469a https://www.cfr.org/backgrounder/space-exploration-and-us-competitiveness https://www.japantimes.co.jp/news/2023/10/08/world/science-health/global-space-race-moon/ https://geopoliticalfutures.com/the-risks-of-a-new-space-race/ https://www.calcalistech.com/ctechnews/article/ryjnpsiga https://millercenter.org/the-presidency/educational-resources/space-race https://spaceimpulse.com/2024/04/30/spacex-vs-blue-origin-a-detailed-comparison-in-2024/ https://spaceimpulse.com/2024/07/15/virgin-galactic-vs-blue-origin-a-detailed-comparison-in-2024/ https://spacecoastdaily.com/2021/05/advantages-of-suborbital-launch-vehicles/ https://www.makeuseof.com/spacex-virgin-galactic-blue-origin-differences/ https://www.newsweek.com/elon-musk-spacex-has-starlink-rival-china-1935001 https://www.nytimes.com/2024/10/30/us/politics/spacex-spy-satellites-elon-musk.html https://www.eurasiantimes.com/rivaling-spacex-china-sets-up-its-1st-high-orbit-satellite-internet/ https://spacenews.com/china-may-need-adjust-approach-toward-spacex/ https://www.newsweek.com/china-space-reusable-rocket-launch-second-test-1851646 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 24 Oct 2024 | EP39: Russia’s submersible LNG tanker plan | 00:11:46 | |
Summary: In this episode we discuss a proposed Russian project to transport liquefied natural gas (LNG) using nuclear-powered submarines. While some see this as an ambitious solution to Russia's challenges in shipping LNG, especially in icy waters, critics point out the country's lack of shipbuilding capacity and the complex engineering involved. This idea, first proposed in 2019, envisions a submarine more than twice the size of the largest existing submarine, powered by three reactors and capable of carrying 180,000 tons of LNG.
Questions to consider as you read/listen: 1. What are the technological challenges and potential implications of using nuclear-powered submarines to transport liquefied natural gas? 2. How does the proposed LNG-submarine project compare to existing submarine designs and the current state of Russian shipbuilding capacity 3. What are the geopolitical and economic motivations behind Russia's proposal to use nuclear-powered submarines for LNG ?
Long format: Submersible nuclear LNG tankers In the weird news department…. I think I found THE winner for today. I offer this: Russia Is Looking to Use Nuclear-Powered Subs to Transport LNG https://nationalinterest.org/blog/buzz/russia-looking-use-nuclear-powered-subs-transport-lng-213328 At first I thought this was a put on. But apparently this is being discussed. I guess the thinking is if you can’t buy or make Arc7 ice-class tanker or rally your existing ice breakers to clear a reliable path for the few LNG tankers you have, you either build some that no one on earth has attempted or repurpose your nuclear sub fleets to do it. How they will do it even in the short term, sure beats me. Above water LNG carriers are some of the most difficult vessels to build, and can take up to 30 months to construct. Add on nuclear propulsion and all the complexities with making a “good” submersible… ambitious. This is not simple crude transport, it requires for it to be at about -260° Fahrenheit (-162 C) for shipping and pressurized. I found some sources dating back to 2019 when this was first floated out (pun intended) and used google translator to get some additional details. The world’s largest submarine today is the Soviet-designed ballistic missile carrier of the Typhoon class which is 175 meters long and 23 meters wide. The proposed LNG-submarine would in others words be more than twice the size of the Typhoons. Unlike navy submarines, which have one or two reactors, the LNG-submarine would be powered by three reactors, providing 90 MW power to the propellers. It would carry 180,000 tons of liquified natural gas In a different publication, Aleksandr Nikitin, a nuclear expert that until 2022 chaired the St. Petersburg-based Environmental Right Centre Bellona said “Russia doesn’t even have basic shipbuilding capacities,” he argues and point to the fact that the country is short of abilities to build basic tankers and dry cargo ships. “In short, this is nonsense from Kovalchuk,” Nikitin says. But I guess all of that is a mere detail to the Russians. Sources:
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| 23 Oct 2024 | EP 30: The Jones Act: A time to reform | 00:16:34 | |
Summary: In this episode we present a debate surrounding the Jones Act, a US law requiring goods transported between US ports to be carried on US-built, owned, and crewed ships. We highlight arguments both for and against the law. Those arguing against the Jones Act claim it leads to higher transportation costs, inhibits economic development, and burdens the US economy, particularly in regions like Puerto Rico. Conversely, supporters argue the Jones Act bolsters the US maritime industry, supports jobs, and enhances national security by ensuring the availability of US-flagged vessels in times of crisis. We discuss the need for its repeal.
Questions to consider as you read/listen:
Long format: The Jones Act: A time to reform Peter Zeihan has been railing against the economic inefficiencies of the Jones Act since he’s been doing his videos and in several of his books. https://zeihan.com/the-jones-act-and-american-economic-development/ Besides his great books which are must reads, if you are interested in the economic inefficiencies of the Jones Act, here are some sources I liked reading. You might enjoy them too… (as always with all critical reading consider the source and look for any bias) https://www.hoover.org/research/how-jones-act-harms-america https://www.nber.org/digest/202402/jones-act-and-energy-prices I think it’s always important to at least consider “the other side”. Therefore, here are some resources to consider from those who argue the Jones Act is still “needed”: Have a great day everyone. What a great community. Great tribe we are building here. Cheers and high fives to us. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP25: Moldova and Georgia elections updated and Russian interference and joining the EU? Comments o other applicant candidates to the EU | 00:17:08 | |
Summary: Moldova and Georgia are both holding elections that will determine their future direction: closer to Russia or toward the European Union (EU). In this episode we highlight the upcoming Georgian election on October 26th and share the results of a recent Moldovan referendum, which showed 50.16% of voters supporting closer ties with the EU. We also discuss the nine current EU candidate countries, including Moldova and Georgia, and provides a link for further information on each country's path to EU membership. Questions to consider as you read/listen:
Long format: Moldova and Georgia elections updated and Russian interference and joining the EU? Just like Moldova, Georgia (the country not the state ha ha) has an election coming up that will help decide its path back towards Russia’s orbit or towards the EU. It’s good to keep an eye on this one too. October 26 is the election. Recommend reading: https://www.globalsecurity.org/military/library/news/2024/10/mil-241020-rferl02.htm ((The latest is that with 98.5 percent of the vote counted, some 50.16 percent of Moldovans votes "yes," to EU. Source: https://www.globalsecurity.org/military/library/news/2024/10/mil-241021-rferl01.htm )) I just looked this up and thought it might be interesting to share. The following countries are currently candidate countries for membership in the European Union (EU): Albania, Bosnia and Herzegovina, Georgia, Moldova, Montenegro, North Macedonia, Serbia, Türkiye, and Ukraine. More details for each candidate and its current path can be found here: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 24 Oct 2024 | EP37: Big data, data tracking, data flows and Chinese cashless system | 00:17:15 | |
Summary: In this episode, we discuss the increasing prominence of cashless societies, specifically focusing on China's rapid transition to a digital payment system. We highlight the use of mobile payment platforms like WeChat Pay and Alipay, the widespread adoption of QR code transactions, and the government's introduction of the digital yuan. Furthermore, the sources examine the implications of a cashless society for big data, emphasizing the collection and analysis of user data for both commercial and governmental purposes. We express concerns about the potential loss of privacy and the potential for manipulation in a fully cashless society.
Questions to consider as you read/listen:
Long format: Big data, data tracking, data flows and Chinese cashless system
There’s a new sentiment that says the new war front isn’t physical, but rather informational. The flow of data shapes the flow of money. Geoeconomics.
A simple example are Internet cables which are a tangible aspect of data geo-politics. Not as physical is the collection, aggregation and interpretation of big data. From national security projects such as Project Echelon to big data collection in the corporate world like today’s news brief article that highlights the DOJ efforts regarding data tracking and search engine matters by Google with big data (https://www.npr.org/2024/10/09/nx-s1-5146006/justice-department-sanctions-google-search-engine-lawsuit)
I thought on this.
I was reminded of stories regarding Chinese cashless system efforts.
China's cashless system is based on digital wallets, QR codes, and other technologies to enable a variety of transactions:
The most popular domestic Chinese payment methods are WeChat Pay and Alipay, which are owned by Tencent and Alibaba, respectively. These apps allow users to make purchases, transfer money, book transportation, and more. They use a variety of technologies, including QR codes, facial recognition, fingerprint scanning, and voice recognition.
China's domestic card network, which issues debit and credit cards, and provides EPOS machines for merchants. UnionPay cards are accepted at most ATMs and POS terminals, but foreign-issued cards may not be as widely accepted.
Some Chinese cities have rolled out facial recognition payment systems that allow users to pay for purchases by smiling.
How pervasive is it?
As of June 2023, over 943 million people in China use mobile payments, which is a 38.3% penetration rate.
Alipay and WeChat Pay are the most popular payment apps in China, with 92% and 85% of respondents preferring them, respectively.
QR codes are widely used for payments in China, with buyers either scanning the seller's QR code or displaying their own.
The government introduced the digital yuan to replace physical bank notes, in part due to the COVID-19 pandemic.
Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, influence us, persuade us, and even intimidate us.
Fully implemented, moving towards a cashless system will significantly increase the role of big data, as every digital transaction generates a vast amount of data about consumer behavior, spending patterns, and location, which can be analyzed and utilized by businesses and institutions to gain valuable insights and make informed decisions; this raises privacy concerns as well.
I haven’t fully settled on this other than it *may* be an issue. I’m noodling on it. Anyone else noodling on it or want to here?
Sources: https://www.forbes.com/sites/zennonkapron/2024/05/26/the-limits-of-cashless-payments-in-china/#
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| 28 Oct 2024 | EP 41: African Gold as a Russian means to help fund its fight in Ukraine | 00:26:29 | |
Summary: In this episode, we explore the Wagner Group, a Russian private military company, and its activities in Africa, specifically its involvement in gold mining and its role in supporting various African regimes. We expose how Wagner’s gold extraction operations in countries like the Central African Republic, Sudan, Mali and beyond provide a significant source of revenue for Russia, potentially contributing to its funding of the war in Ukraine. We also examine the impact of Wagner’s actions on local populations and the challenges faced by international organizations and governments in curtailing its operations. In addition to detailing the Wagner Group’s activities, we discuss various efforts made by Western nations, including the imposition of sanctions and the provision of military support to African countries, in an attempt to counter Wagner’s influence in the region. Questions to consider as you read/listen:
Long format: African Gold as a Russian means to help fund its fight in Ukraine In today’s episode and blog I want to focus on another source of Russia’s war economy that does not get as much publicity and attention as crude sanctions or LNG sanctions. See our other episodes for information on oil and LNG sanctions: About the lack of effectiveness of Russian oil sanctions: https://www.geopoliticsunplugged.com/audio/ep19-are-russian-crude-oil-sanctions-working/ About the success and effectiveness of Russian LNG and natural gas sanctions https://www.geopoliticsunplugged.com/audio/episode-14-the-health-of-the-russian-lng-sanctions/ Russia is getting a fairly significant amount of gold from Africa facilitated by the Wagner Group. That gives us quite a few questions.
WHO: The Wagner Group (Russian: Группа Вагнера, romanized: Gruppa Vagnera), officially known as PMC Wagner (ЧВК «Вагнер»), is a Russian state-funded private military company (PMC) controlled until 2023 by Yevgeny Prigozhin, a former close ally of Russia's president Vladimir Putin. You may remember Prigozhin swan song when he marched off the front lines of Ukraine with his troops towards Moscow. The steam went out. And… eventually Prigozhin’s steam went out by way of most likely an act of sabotage or bomb on a plane that he was on. Funny how that happens. His troops were in Belarus and now have been more or less fully re-assimilated into the Russian sphere of influence. WHAT: Wagner is active in countries with rich gold resources, and the group's operations extend beyond military support to include disinformation, suppression of political opposition, and silencing independent media. Here are some of their top actions: 1. Central African Republic (CAR): -Ndassima Gold Mine: Wagner has been granted exclusive rights to operate the Ndassima mine, the largest gold mine in the country. Wagner Group was granted exclusive rights to operate the Ndassima Gold Mine in the Central African Republic (CAR) as part of a broader arrangement in which the mercenary group supports the authoritarian regime of President Faustin-Archange Touadera. This agreement was part of a quid pro quo that involved Wagner providing military and security services in exchange for access to lucrative natural resource extraction opportunities, especially gold. -Human Rights Abuses: Wagner has displaced local miners, sometimes through violence, and is involved in brutal tactics, including attacks on civilians, to maintain its control. 2. Sudan: -Unreported Gold Market: Wagner controls major gold refining and smuggling operations. Russian military transport flights have been identified smuggling gold out of Sudan. -Key Activities: Wagner is the dominant buyer of unprocessed Sudanese gold and plays a major role in smuggling processed gold out of the country. It has reportedly moved nearly $2 billion in unreported gold out of Sudan annually. -Political Role: Wagner has supported military factions, including aiding the former dictator Omar al-Bashir in suppressing protests and working closely with the military since his removal. 3. Mali: -Military Support: Wagner is paid an estimated $10.8 million per month to support the ruling military junta led by Colonel Assimi Goïta. They are also involved in destabilizing rebel groups and suppressing democratic movements. -Mining: Wagner operates more indirectly in Mali’s gold industry, but it benefits financially from the country's reliance on Western gold mining companies, which pay substantial taxes to the junta. Wagner assists the junta in controlling the state and extracting revenues. -Expansion: Wagner is reportedly involved in building a new mega-refinery, which will handle gold produced by international companies. 4. Other Potential Operations: -Libya: Wagner has been involved in supporting military factions, particularly Khalifa Haftar’s forces. While Wagner's direct exploitation of gold in Libya is not well-documented, its strategic presence in southern Libya gives the group leverage over gold smuggling routes from Africa. Gold from Sudan, in particular, is often smuggled through Libya, taking advantage of the country's porous borders and weak governance in certain regions. Wagner's military operations have likely facilitated the safe passage of gold and other resources, indirectly benefiting the group's financial interests. -Madagascar: There are indications that Wagner may be expanding its influence. While gold mining in Madagascar is less industrialized compared to some African countries, there are extensive artisanal mining operations across the island. Wagner’s interest in Madagascar likely stems from its potential to exploit these resources, much like it has done in other African countries where it combines political support with resource extraction deals. -Burkina Faso and Democratic Republic of the Congo (DRC): There are reports suggesting Wagner’s potential interest in expanding operations in these resource-rich but unstable regions, though the extent of current operations remains unclear. Burkina Faso has well been a hot mess and is politically unstable with a series of coups or near coups. That type of instability is well suited for Wagner’s special brand of joy spreading. Burkina Faso is one of Africa’s largest gold producers, and the industry is vital to its economy. The country is home to several industrial gold mines as well as a large number of artisanal mining operations. Gold mining represents a significant revenue stream, making it an attractive target for Wagner's model of resource exploitation. The DRC is attractive to anyone as the country has vast deposits of gold, much of which is mined in the eastern regions, such as Ituri, South Kivu, and North Kivu provinces, which are also areas of ongoing conflict. Gold mining in the DRC is largely informal and involves a high degree of artisanal mining, making it difficult to regulate and susceptible to exploitation by armed groups. WHY DOES THIS MATTER? Since its invasion of Ukraine in 2022, Russia has made more than $2.5 billion from trade in African gold, according to the Blood Gold Report. To put this in perspective As of January/February 2024 reports, the best estimate is that military operations in Ukraine have cost Russia up to $211 billion and the country has lost $10 billion in canceled or paused arms sales. So this gold grab is paying for more than 10% of the war in Ukraine. Not bad. But that’s not the entire story is it? According to most estimates, every day of the war in Ukraine costs Russia $500 million to $1 billion. According to another February 2024 report, the war had cost Russia an expected $1.3 trillion in previously anticipated economic growth through 2026 and about 315,000 Russian troops. Russian central bank maintains an interest rate of 19%, while claiming that annual inflation is only 9.1%. These are published figures with a lot of economists saying the best case is to add at least another 3% to that. According to an October 2024 report, including all the hidden costs, Russia will probably spend about $190 billion, or 10% of GDP, on the war this year, and that figure presumably represents the peak, given the constraints imposed by Western financial sanctions. <<<As an aside, for comparison, Ukraine has held Russia in a stalemate by spending about $100 billion per year on the war – half from its own budget, and half in kind through arms donated from abroad. https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-tracker/ ) >>> WHAT IS BEING DONE ABOUT WAGNER AND RUSSIA IN AFRICA? Honestly, not terribly much that has a major impact. If you are an outlaw, rules don’t apply, right? The United States, European Union, and the United Kingdom have imposed targeted sanctions on Wagner Group, its key members, and associated companies. These sanctions aim to disrupt Wagner’s ability to operate by freezing assets, restricting their access to financial markets, and blocking any transactions with entities linked to the group. For example, the U.S. Department of the Treasury has sanctioned Wagner’s leaders and affiliated companies involved in resource extraction, including gold, diamonds, and other natural resources. Some Western governments, notably the U.K. and the U.S., have been considering designating Wagner as a terrorist organization. This designation would make it easier to prosecute Wagner operatives and impose stricter sanctions on individuals and companies associated with the group. While this effort has not yet fully materialized, it remains an ongoing topic of discussion, as designating Wagner as a terrorist group would significantly complicate its operations by restricting its financial transactions and making it illegal for any entities to provide support to Wagner. Some Western countries, particularly France and the United States, are increasing military and counterterrorism support to African nations to provide alternatives to Wagner’s security services. This includes training and equipping local forces in regions like the Sahel, where countries like Mali and Burkina Faso have turned to Wagner for help in fighting insurgencies. Sources: https://apnews.com/article/mali-wagner-mercenaries-russia-abuses-b03cf8fe6d9ddbbcdb2d012464944906 https://www.cfr.org/in-brief/what-russias-wagner-group-doing-africa https://www.state.gov/the-wagner-groups-atrocities-in-africa-lies-and-truth/ https://www.bbc.com/news/world-africa-68322230 https://www.brookings.edu/articles/whats-ahead-for-the-wagner-group-in-africa-and-the-middle-east/ https://crsreports.congress.gov/product/pdf/IF/IF12389 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 28 Oct 2024 | EP44: The Assent of Türkiye Cumhuriyeti (Turkey)? | 00:12:40 | |
Summary: In this episode, we examine Türkiye’s evolving military capabilities, particularly its naval and air forces. The sources discuss Türkiye’s development of new fighter jets and submarines, its ambitions to become a major naval power, and its recent decision to acquire a new domestically designed and manufactured aircraft carrier. We also discuss Türkiye’s current economic and political climate, highlighting factors that influence its military growth. We provide insight into Türkiye’s military modernization, focusing on its naval and air forces, and their implications for the region. Questions to consider as you read/listen: 1. What is the current state of Türkiye’s military modernization efforts, particularly concerning its naval and air capabilities? 2. How does Türkiye’s domestic population growth and demographic trends impact its national security posture and regional ambitions? 3. What are the major economic and political challenges facing Türkiye and how do these factors influence its military development and foreign policy decisions? Long format: The Assent of Türkiye Cumhuriyeti (Turkey)? With the news released on Saturday, October 26, 2024 that Türkiye is now developing its own fifth-generation stealth fighter, the TAI Kaan (also known as TF or MMU), aiming to rival advanced aircraft like the F-35, it makes sense to look at Türkiye again and see where it is militarily, demographically and finally economically. TL;DR: Türkiye's Military, Economic, and Demographic Overview Military: Türkiye, the second-largest NATO military, has advanced its defense industry significantly, highlighted by its development of the TAI Kaan stealth fighter. The air force ranks 9th globally, emphasizing unmanned drones and airspace defense. Its navy is ranked 10th, with a substantial submarine fleet and an aircraft carrier, and aims to transition to blue-water capability. The Turkish Army, with 401,500 personnel, operates globally and is modernizing its tank and artillery assets. Türkiye also boasts a highly regarded Special Forces unit. Demographics: Türkiye’s fertility rate (1.98) is below the replacement rate but higher than many developed countries, with a population median age of 34. It is in far better shape than a lot of countries. Economy: Türkiye’s $1.024 trillion economy is the 17th largest worldwide. While inflation and currency devaluation are concerns, the country’s strategic location, young workforce, and diversified economy support steady growth, though foreign investment and productivity challenges persist. MILITARY Türkiye has come a long way in a short amount of time in terms of its military capabilities and its military industrial complex. Here are some updated facts to consider.
TURKISH AIR FORCE Türkiye's air force is ranked ninth in the world, according to a 2023 list from Global Firepower. The Turkish Air Force has 34,600 personnel (2024) Turkish Air Force features:
The key operational characteristics of the Turkish Air Force include:
All of this leads many to conclude that Türkiye is one of the largest combat aircraft fleets within NATO, with a considerable ability to engage in international operations and missions across continents. Türkiye even has 3 modern reconnaissance satellites in space with high resolution optics. Türkiye anti aircraft anti missile capabilities are multi-layered, experienced and evolved. Türkiye has a variety of anti-aircraft and anti-missile capabilities, including:
TURKISH NAVY Türkiye is a fourth tier navy. It is not a blue water navy, but it is certainly coming along towards making that leap into the third tier and making it a blue water navy. The World Directory of Modern Military Warships (WDMMW) ranked Türkiye's navy 10th in the most recent global assessment. Here are some facts and figures: The Turkish navy has 45,000 active personnel and 55,000 reserve personnel The Turkish Navy has a large fleet of ships, including the biggest submarine fleet in the region. The Turkish Navy also has a variety of ships, including frigates and corvettes, and 60 maritime aircraft. Turkey's Navy and Coast Guard operate more than 300 ships. Türkiye has a 12-piece submarine fleet. They are all attack style submarines. They have one amphibious assault ship, 17 frigates, 10 corvettes , 26 offshore patrol craft, 18 fast attack craft, and many more including unmanned surface vehicles. Plans of a guided missile destroyer Türkiye has one aircraft carrier (TCG Anadolu) in service. The TCG Anadolu can accommodate helicopters, including the domestically produced T129 ATAK, and AH-1W Super Cobra attack helicopters and SH-70B utility helicopters. It also launches USVs. They have plans to build domestically another aircraft carrier. In February 2024, the Ministry of National Defense shared photos of the design for Turkey's future aircraft carrier. They also have more than 2,800 older M48 Pattons. TURKISH ARMY The Turkish Army has 401,500 members. The Turkish Army has a global footprint that includes military operations in northern Iraq and northern Syria, deployments in northern Cyprus, and exercises in the Mediterranean, Aegean, and Black Seas. At present, the primary main battle tanks of the Turkish Army are the Leopard 2A4 and the M60T. There are also around 400 Leopard 1 and 750 M60 Patton variants in service. They are on a building/spending spree to update and enhance their armor capabilities including South Korean K2 Blank Panther battle tanks. They have a domestically designed and produced main battle tank called the Altay. It has 2 current deployed with 1000 planned. They have well over 800 modern self-propelled artillery pieces as well as nearly 1000 towed artillery pieces. They have around 300 rocket artillery pieces. They also have a cadre of unmanned ground vehicles either on station or in development or pending delivery. Türkiye has six months of compulsory military service. TURKISH SPECIAL FORCES The Turkish Special Forces, officially called the "Special Forces Command," are a fairly highly trained, multi-purpose unit capable of performing specialized operations like direct action, reconnaissance, counter-terrorism, hostage rescue, and foreign internal defense. They are considered by some to be one of the top special forces units in the world, with a reported force size of around 14,000 personnel, organized into brigades with the capacity to scale operations depending on the mission requirements. TURKISH MILITARY INDUSTRIAL CAPABILITIES This has been a disappointment generally. The government of Türkiye has had to import a lot of arms and equipment from foreign partners. The lone bright spot has been on drone production. However, as noted above Türkiye has announced that it will begin to increase its ship building capabilities including attempting to build its own aircraft carrier domestically. In addition, the slow crawl of delivering a main battle tank of its own design and production has been frustrating to Türkiye. Türkiye is clearly trying to build its own domestic capabilities… and it needs to in order to make it to the next level. DEMOGRAPHICS In 2023, Türkiye’s total fertility rate (TFR) was 1.994 children per woman, which is below the replacement level of 2.1. This is a significant drop from 2001, when the TFR was 2.38. However, recently, reports have stated that current fertility rate for Turkey in 2024 is 1.980 births per woman. This is closer to the needed 2.1 replacement rate. The fertility rate for Turkey in 2023 was 1.994 births per woman, a 0.85% decline from 2022. The fertility rate for Turkey in 2022 was 2.011 births per woman, a 0.84% decline from 2021. So yes, they are below the replacement rate but not to the degree that Germany's total fertility rate (TFR) in 2024 is 1.35 children per woman or China's total fertility rate (TFR) in 2024 is estimated to be 1.55 children per woman or Taiwan at 1.11. In 2023, Türkiye’s population growth rate was 1.1‰, which is an all-time low. This is down from 7.1‰ in 2022 and 14.7‰ in 2018. In 2024, Türkiye’s age structure was estimated to be 21.7% for ages 0–14, 68.6% for ages 15–64, and 9.6% for ages 65 and over. The median age was estimated to be 34 years old which is much better than a lot of countries. ECONOMICS In brief, Türkiye’s economy is the 17th largest in the world, with a GDP of $1.024 trillion as of 2023. It is a member of the OECD and the G20. Turkey's economy grew 4.5% in 2023, down from 5.5% in 2022. Türkiye’s GDP growth in 2024 is projected to be between 3% and 3.5%. Türkiye’s biggest trade partners are the European Union (EU) (31.8%), China (12.4%), Russia (12.6%), the United States (2nd largest export partner), and Switzerland (5.5%). Türkiye’s economy is made up of a mix of modern industry, agriculture, and services, with the service sector being the largest contributor to GDP. It is located between Europe, Central Asia, and the Middle East, and is close to key export markets. It has a large internal domestic market with good rates of consumerism. Türkiye has a young population and an educated workforce. Türkiye has a highly developed technological infrastructure in transportation, telecommunications, and energy sectors. Türkiye has attracted $262 billion in foreign investment since 2003. In fall 2022, inflation reached 85.5%, the highest rate in two decades. A significant increase to the minimum wage in 2024 has contributed to the recent inflation. The Turkish lira has hit record low levels. The central bank's low-interest policy to stimulate borrowing and investment has led to a strong depreciation in the value of the lira. Türkiye is dependent on imported energy and intermediate goods. Türkiye has a high level of short-term private external debt and low level of gross international reserves. The Heritage Foundation's Index of Economic Freedom ranks Türkiye 102 out of more than 180 economies. Corruption in Turkey poses a significant challenge to its bid for European Union membership. According to Transparency International’s Corruption Perception Index, which ranks 180 countries based on perceived public sector corruption (from 0 as highly corrupt to 100 as very honest), Turkey’s score has steadily declined. Since the index adopted its current scale in 2012, Turkey’s score has dropped from a high of 50 in 2013 to a low of 34 in 2023, indicating a worsening perception of corruption. In 2023, Turkey ranked 115th globally, well below the average score of 43. Regionally, within Eastern Europe and Central Asia, Turkey’s score also trails behind the average of 35 and the region’s highest score of 53, emphasizing the need for improvement. Some have pointed to low productivity growth, weakening foreign direct investment, credit-driven growth performance, and Inefficient monetary policy as headwinds for Türkiye. CONCLUSION In conclusion, Türkiye’s ascent reflects a nation that has strategically invested in its defense, economic stability, and demographic resilience. With the unveiling of the TAI Kaan fighter jet, Türkiye signals its intent to join the global elite of military technology, bolstered by a robust armed forces structure that includes a potent navy and capable special forces. Economically, while challenges like inflation and currency depreciation persist, Türkiye’s advantageous location, young population, and industrial growth support its ambitions on the world stage. As Türkiye continues to expand its domestic capabilities and modernize its military infrastructure, it is positioning itself not only as a formidable regional power but as an influential player in both NATO and the broader geopolitical landscape. The road ahead will require balancing internal economic pressures with its ambition for military self-sufficiency and global stature, but Türkiye’s progress thus far suggests a commitment to overcoming these challenges. Sources: https://nationalinterest.org/blog/buzz/tai-tf-kaan-turkeys-new-stealth-fighter-born-213396 https://www.iiss.org/publications/the-military-balance/the-military-balance-2023 https://en.m.wikipedia.org/wiki/List_of_active_ships_of_the_Turkish_Naval_Forces https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/tuerkiye Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | Episode 8: Saudi Arabia as swing producer and Saudi Claims of Increase Production: Why you should care? | 00:11:12 | |
Summary: In this episode we analyze Saudi Arabia's recent announcement to increase oil production. We highlight how this decision seems to have been made without OPEC+ consensus, is a "punitive" move and how it may be interpreted as a move to try to discipline US shale producers, who have been overproducing oil. Is Saudi Arabia, frustrated by the US shale industry's lack of price coordination and inability to reach a $100 barrel price goal, attempting to lower prices to force American producers to curtail their production? We highlight the significant difference in break-even costs between US shale oil and Saudi Arabian oil, suggesting that Saudi Arabia is willing to take a hit to its own profitability to achieve its objective. Questions to consider as you read/listen:
Long format: Saudi Arabia as swing producer and Saudi Claims of Increase Production: Why you should care? Today (October 18) news reports abound with the announcement by Saudi Arabia to increase its production levels. For as far back as for all practical purposes, Saudi Arabia has been a “swing producer” of international crude. You can think the Shah of Iran for this. The Shah of Iran was a man that was known far and wide for his enjoyment of the fine things in life. The fine things in life are quite expensive. There was never a period of under production in his reign. If one wants to control the price of crude, one must control production. In 1982, Saudi Arabia fully embraced its reluctant role as swing producer. Prior to the shale revolution, and also the discovery of outside of the Middle East large deposits like those in the now being shuttered North Shore of the UK and in the now over producing American shale sector, OPEC and eventually OPEC+ were the dominant players in the crude market. It is only recently as measured by decades that oil prices were segmented into the dozens of individual spot prices that we now have today due to the diversity of global choice due to diverse production areas (and sweet versus sour choice) A swing producer is a supplier that can increase or decrease production of a commodity at a low cost, and can use this to influence prices and balance markets. Ever since the formation of OPEC, Saudi Arabia has reluctantly found itself in this role. Saudi Arabia is a swing producer because of its large oil reserves, its large share of global oil production, and its position as one the world's largest POTENTIAL petroleum exporter. Keyword is potential. Saudi Arabia's oil and gas sector accounts for about 50% of its GDP and 85% of its export earnings. If Saudi Arabia “takes one for the team” and underproduces while others don’t concomitantly reduce, it hurts. They feel it. Now I don’t hang out with MBS or Prince Abdulaziz bin Salman but I know through one degree of separation folks who do. This move to produce and produce punitively is being done so far without the “blessing” of OPEC+ as I understand it. I could be wrong but that’s my information. Those folks I know who know folks say that people (not necessarily MBS or the Prince) that the people who swim in that circle have been really fed up with a lot of things. The complete blow up of the normalization of relations with Israel. The internal hardening of factions. The Israel-Iran thing. And never being able to hit $100 barrel price goal. But most importantly, they are quite upset with US shale producers. This move by The Kingdom from “swing (producer) mode” to what is technically referred to as “punitive mode” where Saudi Arabia increases production to punish other producers and re-establish its position in the market is largely due to frustration not so much with its neighbors as it is with American shale. This is what I’m told anyway. As I see from reports and published production rates, the compliance by OPEC+ countries to the set agreed upon production limits is as good as it has ever been historically. And guess what? Even as a small time US NOWI, I agree with him. The US is overproducing. Why can’t America discipline themselves? God I would love it if we could. But meetings among companies to manipulate prices is strictly prohibited under US antitrust laws, meaning any coordinated effort to fix crude prices could face legal action from regulatory bodies like the Federal Trade Commission. The diverse nature of the shale industry with many independent players really hurts any non coordinated action. Recall, according to available data, major oil companies produce a relatively small percentage of US oil, with independent producers contributing significantly more; estimates suggest that major oil companies account for around 17% of total US oil production, with independent producers responsible for the remaining majority. Just ask Scott Sheffield how real this potential FTC and criminal case for colluding can be. (https://amp.cnn.com/cnn/2024/05/02/energy/oil-ceo-opec-scott-sheffield) PZ’s analysis of domestic (American) break even points is correct generally. I can give you the average break even points for my 9 wells. I have two others fully drilled but not fracked and therefore no free flow because of futures prices. The notion of break even point does not have a standard definition in the industry. It depends if you include the start up costs and how or whether you amortize them as laid out in the AFE (completion cost report) or not. It depends on if you amortize artificial lift. Do you include the very handsome tax write offs of tangible/intangible costs? The average break-even cost for US shale oil which is in my experience as low as $25-35-45 per barrel and on the upper end of that when it is a legacy or vertical well or if artificial lift is used. So it’s low. For comparison according to a May of 2023 report of the International Monetary Fund forecast the Saudi Arabia’s breakeven oil price at $80.90 per barrel. In 2023, the Russian budget assumed a breakeven price of $70.1 per barrel for Urals. In 2022, Bahrain's breakeven external oil price was $39.38 per barrel, and in 2024 it was projected to be $45.70 per barrel. In 2022, Iran's breakeven external oil price was $48.79 per barrel, and in 2024 it was projected to be $44.11 per barrel. In 2022, Iraq's breakeven external oil price was $75.68 per barrel, and in 2024 it was projected to be $76.54 per barrel. In 2022, Kazakhstan's breakeven external oil price was $65.78 per barrel, and in 2024 it was projected to be $96.18 per barrel. ( https://prosperitydata360.worldbank.org/en/indicator/IMF+MCDREO+PZPIOILBE_B_USD ) So Saudi Arabia is Walmarting the US shale play. Just like when Walmart comes into a small town, they are taking a hit to their profitability driving price down to the level where no reasonable NOWI or operator will drill a new site or where no reasonable NOWI or operator will invest in artificial lift. US shale is going to be getting a hair cut. Each horizontal well costs about $5m on the AFE to drill to free flow. It takes us 2 months or so to get the drilling rig on site once ordered depending on how much demand there is. From spudding to free flow is 2-3 months. But there’s also a period of time (weeks) to get the frac fluid out to get to volume production. So it’s not overnight. While yes the operating costs you get on the JIB after free flow does drop off, the rate of flow does too quite a bit. After about year 2 or so, it just sinks. Here’s a pretty good production chart: Don’t just take my word for it, here’s a good study to consider. https://www.energy-cg.com/economicsofshaleplays.html And it’s this precipitous drop off that causes us to use artificial lift products (the pump jacks y’all think of when think of an oil field is indicative of an older oil field that’s past free flow, Electric submersible pumps (ESPs), Progressive cavity pumps (PCPs), condensers, artificial gas lift like CO2 or water, etc). But no rational person will invest in artificial lift when the price is low. In my opinion (and that’s all it is an opinion) and for what it’s worth, this seemingly unilateral move is motivated to some degree to try to force discipline on the US shale market. Is it the prime motive? Dunno. Probably not. But is it a factor? Absolutely. The open question what actual impact will this have in the WTI futures market and what will people like me do? Right now, I hear words (and yes they have me thinking) but I look at the futures market and see it “only” down to $67.91 for July 2025 right now. https://www.marketwatch.com/investing/future/cl.1 Hedging or let it run? Dunno. Fun stuff. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 28 Oct 2024 | EP42: Russia’s Arctic LNG 2 project suspends operations indefinitely | 00:16:15 | |
Summary: In this episode, we discuss how the US led sanctions targeting Russia's Arctic LNG 2 project have significantly hindered its operations. The project, designed to boost Russia's global LNG market share, has faced challenges in securing buyers for its cargoes due to the sanctions, causing the project to temporarily halt production. The sanctions have also hampered construction of new trains and caused delays in equipment procurement, impacting the project's overall capacity. These difficulties underscore the broader challenges faced by Russian LNG projects under heightened sanctions, potentially reducing Russia's energy revenue and weakening its position in the global market. Questions to consider as you read/listen:
Long format: The latest success of Russian LNG sanctions: Russia’s Arctic LNG 2 project suspends operations indefinitely As any far of our podcast and website over at Geopolitics Unplugged will remember, we have extensively covered in Episode 19: Are Russian oil sanctions working (short answer no) at https://www.geopoliticsunplugged.com/audio/ep19-are-russian-crude-oil-sanctions-working/ and Episode 14: Are Russian LNG sanctions working? (Short answer yes) at https://www.geopoliticsunplugged.com/audio/episode-14-the-health-of-the-russian-lng-sanctions/ , we have been watching the effectiveness of the sanctions against Russia. On Friday, October 25, 2024, we got a big indication that the LNG portion of the sanctions are working. Russia's Arctic LNG 2 project, led by Novatek on the Gydan Peninsula, has halted its operations as U.S. sanctions make it increasingly difficult to find buyers for its cargoes. The project ceased production at its first liquefaction train (6.6 million tons per year) several weeks ago when storage tanks reached capacity, according to sources close to the project. As a result, it may be unable to resume production this winter. Compounding the issues, gas production feeding into the facility has decreased to minimal volumes, underscoring the project’s operational challenges under intensified sanctions pressure. After suspending production temporarily earlier in the year due to an inability to export LNG, Arctic LNG 2 resumed production in August. However, tankers that received shipments became targets of new sanctions by the Biden administration, which aims to reduce the economic benefits Russia derives from LNG sales. While U.S. sanctions avoid penalizing existing Russian LNG export facilities, the Arctic LNG 2 project has faced specific targeting to limit its new production volumes, a part of the broader U.S. strategy to limit Russia’s energy revenue following the 2022 invasion of Ukraine. Since August, Arctic LNG 2 loaded eight LNG cargoes, yet none have reached an end buyer. Technical issues have also disrupted operations. The facility's only active LNG train has been running at below 50% capacity due to malfunctions with a Baker Hughes LM9000 gas turbine, which has recently undergone repair. When reinstalled, the turbine should allow production at full capacity, though it remains uncertain whether Train 1 will restart given the ongoing storage limitations. Moreover, the project’s second train, slated to begin by year-end, may be delayed as storage tanks remain occupied. The second train, completed and stationed at the Arctic site, has not yet commenced operations due to the operational and logistical challenges posed by sanctions. Sanctions have also hampered construction of Arctic LNG 2's third train, initially planned for completion in 2026 but now postponed to 2028 due to equipment procurement issues. However, recent indications suggest that delays may be mitigated as hundreds of contractors from China’s Penglai Jutal Offshore Engineering Heavy Industries are expected to arrive at Russia’s Novatek Murmansk LNG construction center in January 2025 to assist with Train 3’s assembly. Despite these efforts, the project’s full potential is limited by logistical barriers, as Arctic LNG 2 has yet to receive all 21 ice-class tankers originally ordered to support the project’s three-train scheme, reducing its capacity for winter shipping. The project is 60% owned by Novatek, with stakes held by TotalEnergies (10%), China National Petroleum Corporation (10%), China National Offshore Oil Corporation (10%), and a Japanese consortium of Mitsui and Jogmec (10%). The facility was launched in December 2023 with high expectations to boost Russia’s global LNG market share from 8% to a targeted 20% by 2030. However, with Train 1 offline and no imminent restart, these ambitions are in jeopardy as sanctions complicate market access, tanker availability, and equipment procurement. The US administration’s strategic focus on Arctic LNG 2 aims to pressure Russia’s revenue streams specifically from new LNG ventures while permitting ongoing operations at other Russian LNG projects, such as the Yamal and Portovaya, to maintain broader energy market stability. As of late October, several LNG-laden tankers from Arctic LNG 2 are anchored, awaiting destinations amid buyer hesitation due to fears of secondary sanctions. This scenario reflects the broader logistical and market challenges faced by Russian LNG projects under heightened sanctions, with Arctic LNG 2 particularly impacted. Further fueling the effectiveness of the sanctions is that LNG prices globally are low. Recall, oil and gas revenues have accounted for 30–50% of Russia's federal budget over the past decade. https://www.bnnbloomberg.ca/investing/2024/10/25/russias-arctic-lng-2-plant-halts-amid-tightening-us-sanctions/https://oilprice.com/Latest-Energy-News/World-News/Russias-Arctic-LNG-2-Project-Put-on-Ice-With-No-Restart-Plans.html https://www.energyintel.com/00000192-c449-d095-afde-c4ef15550000 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | Episode 21: Has OPEC+ lost relevance | 00:04:46 | |
Summary: In this episode we discuss the potential decline of OPEC+ and its influence on the global oil market. We highlight the Saudi Arabian government's recent decision to unilaterally adjust production levels, questioning the OPEC+’s authority. We discuss the emergence of major oil discoveries outside of OPEC+ controlled regions, such as with American shale and in Guyana and Namibia, as a factor contributing to the group's diminishing control over global production. We ultimately suggest that while OPEC+ remains relevant, its influence and prestige have waned in the current volatile oil market. Questions to consider as you read/listen:
Long format: Has OPEC+ lost relevance? Saudi Arabia’s announcement on October 18, 2024 to unilaterally switch to punitive production without OPEC+’s blessing is a possibility. It’s also on a scale, right? How much are they going to produce over and beyond what they are doing now? How much pain will they endure to inflict pain, right? Right now it’s talk. MBS and the Prince are usually pretty good at follow through historically. One of my main take aways is that OPEC+ really is losing international relevance and prestige and may even totally fall apart, in my opinion. When you have major major discoveries outside of their zone of influence, not just talking American shale, but let’s not forget Guyana Stabroek Block, including the Liza, Payara, Snoek, Turbot, Ranger, and Hammerhead discoveries and major discoveries are located in deepwater regions, including off the coast of Namibia, and Brazil. They no longer control production. I’m not saying OPEC+ isn’t relevant but it certainly has lost some relevancy I would think. It’s a volatile market. The base case for me is frequently neither of the extremes not $500 oil or $20 oil. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 06 Nov 2024 | EP62: The Silicon Gatekeepers: Taiwan’s Technology Defense and Its Global Ripple Effect | 00:11:43 | |
Summary: In this episode we discuss Taiwan’s recent efforts to protect its vital technology sectors, particularly in semiconductors and advanced technologies. Taiwan has implemented stringent export restrictions under its National Security Act, aimed at preventing unauthorized transfer of key technologies, particularly to adversaries like China. We highlight the key role of the National Science and Technology Council (NSTC) and the list of “National Core Key Technologies” (NCKT) in safeguarding crucial innovations. These measures complement similar U.S. initiatives, creating a global defense against potential misuse of these technologies and ensuring a stable global supply chain. Questions to consider as you read/listen: 1. How does Taiwan’s technology defense strategy impact the global tech landscape? 2. What are the main goals and implications of Taiwan’s “National Core Key Technologies” list? 3. How does the collaboration between Taiwan and the U.S. shape the global tech security landscape? Long format: The Silicon Gatekeepers: Taiwan’s Technology Defense and Its Global Ripple Effect Today, 4 November 2024 it was announced that Taiwan added 10 new technologies to its growing list of National Core Key Technologies that prohibited from being exported. (One sentence thesis: Taiwan’s stringent technology export restrictions complement U.S. efforts by creating a fortified defense around critical innovations, ensuring that essential technologies remain secure from adversarial exploitation and reinforcing global tech security.) TL/DR: This paper examines Taiwan’s recent measures to protect its high-value technology sectors, focusing on its National Security Act, the role of the National Science and Technology Council, and the regulated list of “National Core Key Technologies.” (NCKT) These controls target critical areas such as advanced semiconductors, quantum cryptography, and defense tech, with frequent reviews to adapt to evolving threats. Violations carry severe penalties, underscoring Taiwan’s commitment to prevent unauthorized technology transfers. China, as a primary consumer and competitor in these sectors, is directly impacted, while the U.S. and other global allies benefit from Taiwan’s heightened security measures, which help stabilize the tech supply chain and safeguard international economic and security interests. Together, Taiwan’s and the U.S.’s export restrictions create a robust defense against the potential misuse of crucial innovations. I go into a deep dive on Taiwan’s efforts. INTRODUCTION In recent years, the United States has tightened export restrictions on advanced technologies to curb their potential misuse by adversarial nations, particularly through initiatives led by the Department of Commerce. These restrictions, aimed at safeguarding sensitive technology sectors such as semiconductors, AI, and cybersecurity, have set a new precedent for international tech security. However, Taiwan, a global leader in semiconductor production and advanced tech development, has independently implemented its own stringent measures to protect its national interests and core technologies. Taiwan’s complementary efforts—encompassing the National Security Act, export controls, and designated protection for critical sectors—play a vital role in securing a supply chain that supports industries worldwide. Together, U.S. and Taiwanese policies form a layered defense strategy, protecting cutting-edge innovations from potential exploitation and underscoring the importance of collaboration in technology security. This paper explores Taiwan’s unique role in the global tech landscape and examines why its protections are crucial for both regional stability and international economic security. 1. Taiwan’s National Security Act: Enactment and Purpose The National Security Act (NSA) of Taiwan was enacted and promulgated on July 1, 1987, with subsequent amendments to address evolving security concerns. Its primary purpose is to ensure national security and maintain societal stability by preventing activities that could compromise the nation’s safety, including espionage, unauthorized disclosure of state secrets, and actions that threaten public order. 2. Taiwanese National Science and Technology Council The National Science and Technology Council (NSTC) is Taiwan’s primary agency responsible for formulating and implementing national science and technology policies. Established in July 2022, the NSTC succeeded the Ministry of Science and Technology, aiming to enhance the nation’s technological development and innovation. It focuses on long-term talent cultivation, research development in critical sectors like semiconductors, and fostering international cooperation to strengthen Taiwan’s position in the global technology landscape. 3. Regulation for the Recognition of National Core Key Technologies The “Regulation for the Recognition of National Core Key Technologies” is a framework established by the NSTC to identify and protect technologies vital to Taiwan’s national security and industrial competitiveness. Implemented on April 26, 2023, this regulation outlines the criteria and procedures for designating specific technologies as “National Core Key Technologies” (NCKTs), ensuring they receive appropriate protection against unauthorized transfer or exploitation. 4. Covered Technology Sectors The regulation encompasses several critical technology sectors labelling them as NCKTs, including but not limited to: Semiconductors: Advanced integrated circuit (IC) manufacturing processes of 14nm and below, along with essential materials and equipment. Heterogeneous Integration and Packaging: Technologies such as wafer-level packaging and silicon photonics integration. Information and Communication Security: Chip security, post-quantum cryptography protection, and proactive network defense technologies. National Defense Technology: Technologies pertinent to national defense applications. Space Technology: Including satellite launch systems and related technologies. Agriculture: Advanced agricultural technologies critical to national interests. 5. Review Frequency of the List The NSTC reexamines the list every three months and considers public comments. 6. Last Revision and Its Outcome The most recent revision occurred or around 4 November 2024 with adding 10 new key technologies to the list. 7. Penalties for Violating Export Restrictions Violations involving the unauthorized transfer or exploitation of National Core Key Technologies are subject to stringent penalties under the amended National Security Act. Individuals found guilty of economic espionage related to these technologies may face imprisonment ranging from 5 to 12 years and fines between NT$5 million and NT$100 million. 8. Implications for China China has a vested interest in Taiwan’s technological advancements, particularly in sectors like semiconductors, where Taiwan holds a significant global market share. The stringent controls and protective measures implemented by Taiwan aim to prevent unauthorized access and transfer of critical technologies to foreign entities, including China. These measures could limit China’s ability to acquire advanced technologies through non-transparent means, thereby affecting its technological development and strategic objectives. 9. Global Significance, Including for the United States The protection of Taiwan’s critical technologies has broader implications for the global community, especially for countries like the United States. Taiwan plays a pivotal role in global supply chains, particularly in the semiconductor industry. Ensuring the security and integrity of Taiwan’s technological assets is crucial for maintaining global technological leadership, economic stability, and national security. Collaborative efforts to safeguard these technologies align with international interests in preventing the proliferation of advanced technologies to potentially adversarial nations. CONCLUSION Taiwan’s proactive measures to safeguard critical technologies are essential in the collective effort to secure global innovation and stability. By reinforcing export controls that align with U.S. Department of Commerce policies, Taiwan is creating a protective barrier against the unauthorized transfer of high-value technologies to adversarial nations. While these restrictions may impose immediate economic costs on Taiwanese companies by limiting exports to China, the long-term benefits—protecting Taiwan’s tech leadership, preserving U.S. security interests, and ensuring a stable global supply chain—far outweigh these losses. To maintain this delicate balance, it is crucial for the U.S. to continue encouraging Taiwan to not only uphold but expand these protections. Through diplomatic support, joint technology initiatives, and potential compensatory measures, the U.S. can help Taiwan navigate these challenges and foster a resilient alliance that upholds both nations’ technological and security interests amid growing global competition. Sources: https://www.digitimes.com/news/a20241104PD206/technology-taiwan-design-security-nstc.html https://www.taipeitimes.com/News/taiwan/archives/2024/11/02/2003826264 https://focustaiwan.tw/sci-tech/202312050018 Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 25 Oct 2024 | EP 40: Russia Provided Targeting Data for Houthi | 00:22:01 | |
Summary: In this episode we detail Russia's alleged provision of targeting data to the Houthi rebels in Yemen, enabling them to launch attacks on Western ships in the Red Sea. This assistance highlights Russia's efforts to undermine the U.S.-led global order and destabilize regions where its partners are engaged in conflicts with the U.S. and its allies. We also discuss the potential consequences of Russia's involvement, including the heightened risk of escalation and the potential for the Houthis to acquire more advanced weaponry. Questions to consider as you read/listen: 1. How has Russia’s support of the Houthis impacted the stability of the Middle East and global trade? 2. What are the implications of Russia’s growing military partnerships with Iran and North Korea for global security 3.What are the potential consequences of Russia’s involvement in the conflict between the Houthis and the United States and its allies? Long format: Russia Provided Targeting Data for Houthi Assault on Global Shipping Per the Wall Street Journal. Russia provided targeting data for Yemen’s Houthi rebels as they attacked Western ships in the Red Sea with missiles and drones earlier this year, helping the Iranian-backed group assault a major artery for global trade and further destabilizing the region. The Houthis, which began their attacks late last year over the Gaza war, eventually began using Russian satellite data as they expanded their strikes, said a person familiar with the matter and two European defense officials. The data was passed through members of Iran’s Islamic Revolutionary Guard Corps, who were embedded with the Houthis in Yemen, one of the people said. The assistance, which hasn’t been previously reported, shows how far Russian President Vladimir Putinis willing to go to undermine the U.S.-led Western economic and political order. Russia, in this case, supported the Iran-backed Houthis, which the U.S. designates as a terrorist group, as they carried out a series of attacks in one of the world’s most heavily traveled shipping routes. More broadly, Russia has sought to stoke instability from the Middle East to Asia to create problems for the U.S., analysts say. The widening conflict in the Middle East, triggered by last year’s Oct. 7 attack on Israel, has absorbed resources and attention at a time when Washington has sought to focus on the threatsfrom Russia and China. “For Russia, any flare up anywhere is good news, because it takes the world’s attention further away from Ukraine and the U.S. needs to commit resources—Patriot systems or artillery shells—and with the Middle East in play, it’s clear where the U.S. will choose,” said Alexander Gabuev, director of Carnegie Russia Eurasia Center, a think tank based in Berlin. A spokesman for the Russian government didn’t immediately respond to requests for comment. A Houthi spokesman declined to comment. Moscow has sought to build tighter military partnerships with autocracies, pulling Iran and North Korea deeper into its Ukraine war effort. The countries have provided ammunition, drones and missiles, and North Korea sent 3,000 troopsto train in Russia in recent weeks, according to U.S. and South Korean officials. The assistance gives battlefield help to Russia, which is running short on manpower and materiel, but it also serves Moscow’s strategic aims by destabilizing two regions where its partners are facing off against the U.S. and its allies. South Korea, a top U.S. ally in East Asia, has expressed increasing concern at the prospect that North Koreans could gain battlefield experience through their exposure to the Ukraine war. South Korea is one of the world’s fastest-growing weapons manufacturers, and Seoul has warned it would take measures in response, including potentially sending lethal aid to Ukraine. While South Korea has sent weapons to countries supporting Ukraine, it has declined to send arms directly. In the Middle East, the Russian assistance underscores a tectonic shift in its strategy. Putin has strengthened ties with Iran, while turning a cold shoulder to his longstanding relationship with Israel and Prime Minister Benjamin Netanyahu. Israel has engaged in a growing conflict with Iran and the militias it backs in the region, such as Hamas in Gaza, Hezbollah in Lebanon and the Houthis in Yemen. Putin has criticized the U.S. and Israel over the Gaza conflict. On Thursday, he said the region was on the brink of a full-scale war. The Houthis began launching their attacks in the Red Sea, where ships travel to and from the Suez Canal, late last year in protest against Israel’s ground invasion of Gaza, and continued them through the first months of this year. In total, the militants have attacked more than 100 ships since November 2023, sinking two and hijacking another. The attacks caused major disruptions to global trade, as shippers diverted vessels for a period south around the Cape of Good Hope, a longer and more expensive voyage. Almost 1-in-10 barrels of oil shipped every day worldwide transit through Bab al-Mandab, the strait that separates the Red Sea from the Indian Ocean. The tanker traffic through that route was 77% lower in August 2024 compared with October 2023, according to Windward, a maritime-intelligence company. The U.S. vowed to protect the international shipping lanes, and in December of last year launched a multinational naval coalition to escort ships traveling through the strait. By April, the U.S. had spent some $1 billion on munitions to knock out Houthi drones and missiles and protect shipping in the Red Sea. The U.S. has since gone further and earlier this month sent B-2 Spirit bombers to strike Houthi arsenals. The U.S. has been concerned that Russia could escalate the situation further by providing the Houthis with Russian antiship or antiair missiles that could threaten the U.S. military’s efforts to protect ships in the region, but there is so far no evidence that Russia has done so. Earlier this month, Russian arms dealer Viktor Bout, who had recently been released from a U.S. prison in a prisoner swap with Moscow was trying to broker the saleof about $10 million worth of automatic small arms to the Houthis, The Wall Street Journal has reported. It was unclear whether the sale had been initiated or blessed by the Kremlin. Since the Houthis started attacking vessels connected to Israel and its allies almost a year ago, most vessels undertaking the dangerous crossing near their territories have started switching off their radio signals, complicating efforts to track them. Once a vessel goes dark, its live movements can only be continuously accessed through high-quality satellite imaging. Commercially available satellite services tend to suffer gaps in coverage and delays in transmission. Tankers carrying Russian oil cargoes, including by Kremlin-connected Rosneft, have been attacked by the Houthis on several occasions. But these shipments are carried out through a so-called ghost fleetowned by shell companies to evade sanctions whose Russian connection is only known by a close circle of Russian oil officials and market players. ——/// My take on it is this is major revelation. If this assistance can be linked to the June 2023 Houthi attack where the Houthi’s launched a barrage of missiles that got with 200 meters of the multi billion dollar US aircraft carrier USS Dwight D Eisenhower and the Similar close calls were reported, including a January incident involving a missile that nearly struck the USS Gravely(DDG-107), this is pretty big. Now the administration did attack the Houthis by way of a B2 strike on hardened bunkers and missile facilities on October 16, 2024 Sources: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 06 Nov 2024 | EP60: Is Intel going to be a CHIPS Act success or failure? | 00:18:50 | |
Summary: In this episode, we examine Intel's role in the success of the CHIPS Act, focusing on its acquisition of advanced High NA EUV lithography machines from ASML, which are critical for producing smaller, more powerful microchips. We highlight the significance of this technology for advancing Moore's Law and its potential impact on various technological fields, including AI, IoT, and robotics. We also explore the financial implications of the CHIPS Act for Intel, noting the significant government funding it has received, and the potential for Intel to succeed in the chip fabrication market where companies like Samsung and TSMC have faced challenges. Ultimately, we suggest that Intel's success in utilizing these advanced machines will be key to determining the ultimate success of the CHIPS Act. Questions to consider as you read/listen: 1. What are the technological and economic implications of Intel's acquisition of ASML's High NA EUV lithography machines for the future of chip manufacturing? How does Intel's strategy of both designing and fabricating chips compare to its competitors, and what are the potential consequences of this approach for the industry? How will the US government's investment in Intel through the CHIPS Act affect the global semiconductor landscape and the future of semiconductor fabrication? Long format: Is Intel going to be a CHIPS Act success or failure? Without a doubt the Intel story is setting up to be a success story of the CHIPS Act. We are far from unfurling the “Mission Accomplished” sign. To me, the single biggest bit of news in Intel’s favor was someone there developing an amazing relationship with ASML. Intel was the first company to buy and assemble one of ASML's High Numerical Aperture (High NA) Extreme Ultraviolet (EUV) lithography machines. The machine is called the TWINSCAN EXE:5000. This next-generation lithography system will be key to advancing Moore's Law towards logic well under 2nm technology generation. What is High NA EUV Lithography? High NA EUV lithography is the latest advancement in creating smaller and more powerful features on microchips. Like its predecessor, the NXE system, it uses EUV (extreme ultraviolet) light to print tiny patterns on silicon wafers. The new High NA EXE platform allows for an even finer pattern, achieving an 8 nm critical dimension (CD), enabling transistors 1.7 times smaller and increasing transistor density by 2.9 times compared to NXE systems. Key Innovations in High NA EUV: 1. Enhanced Optics for Better Resolution: The system’s “NA” (numerical aperture) has been increased from 0.33 to 0.55. This provides better resolution but required larger mirrors. To manage this, the EXE system uses anamorphic optics, shrinking patterns by 4x in one direction and 8x in the other. This innovative design preserves reflectivity, letting chipmakers use standard-sized reticles. 2. Faster Stages for Increased Productivity: The EXE system has a smaller exposure field, which would normally slow down production, but it compensates with much faster wafer and reticle stages, enabling it to print over 185 wafers per hour. Aiming for 220 wafers per hour by 2025, this speed ensures High NA integration is cost-effective for chipmakers. 3. Simplified Manufacturing for Cost Efficiency: High NA EUV allows chipmakers to produce tiny features more efficiently, reducing the need for complex, defect-prone production workarounds. This results in faster, more reliable production of advanced chips. 4 Improved Chip Efficiency and Performance: The EXE system’s 8 nm resolution lets chipmakers fit more transistors on a chip, enhancing functionality and energy efficiency. This advancement will drive next-generation microchips for technologies like AI, IoT, and robotics. Impact of High NA EUV Lithography: With the EXE:5000 system, chipmakers can meet consumer demand for smaller, faster, and more efficient electronics. The first EXE:5000 chips will be used in 2 nm Logic chips, setting the stage for cutting-edge technology in various fields. THE COST TO TAXPAYERS And this set up hasn’t been cheap either… Back in March 2024, the Department of Commerce announced that Intel Corporation will receive $8.5 billion in direct funding from the CHIPS and Science Act, in addition to $11 billion in loans. I can’t think of a single company in the history of the United States that has received that much in taxpayer money in such a short amount of time. It’s an eggs all in one basket approach it seems both for the US government and for the company. Interestingly enough, as of October 25, 2024 has received $0 of the US government money. <<<<TSMC received $6.6 billion in CHIPs funding, while Samsung rounded out the top three with $6.4 billion from the US government.>>>> WILL THE STRATEGY WORK? Recall TSMC is not a chip designer. They are chip fabricators for the chip designers. That distinction and division of purpose is entirely how TSMC came to capture its market share. Samsung and Nikon and Rapidus are designers and fabricators. Therefore a lot of designers refused to move their fabrication to Samsung and Nikon and Rapidus because they didn’t want to fuel their chip design competition. This dual purpose company design led to lower market share for them. Intel, at least so far, has retained its intent to design and fabricate. We will see what the market will do ultimately with that. Will Intel succeed where Samsung, Nikon and Rapidus did not? Time will tell. Sources: https://www.intel.com/content/www/us/en/newsroom/resources/intel-high-na-euv.html https://www.intel.com/content/www/us/en/newsroom/news/us-chips-act-intel-direct-funding.html https://finance.yahoo.com/news/intel-ceo-frustrated-chips-act-173132913.html https://www.semiconductors.org/chips-incentives-awards/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 21 Nov 2024 | EP87: Is Globalism Dead, or Can China's BRI Revive It?: BRI vs. Reshoring: The Battle for the Future of Global Trade | 00:14:11 | |
Summary: In this episode, we explore the implications of China's Belt and Road Initiative (BRI) for the future of globalism. The BRI is a massive infrastructure project aimed at connecting Asia, Africa, Europe, and the Middle East through land and sea routes. The initiative aims to sustain and perhaps reshape globalism by creating new trade networks and fostering economic interdependence, particularly in the Global South. We examine both the potential benefits and challenges of the BRI, including its impact on global trade patterns, the role of debt dependency, and the possibility of a Sino-centric globalism. Ultimately, we suggest that the BRI could either save globalism by providing alternative economic networks or transform it into a new model centered around Chinese economic interests. We also go over the current and past BRI projects. Questions to consider as you read/listen:
Long format: Is Globalism Dead, or Can China's BRI Revive It?: BRI vs. Reshoring: The Battle for the Future of Global Trade By Justin James McShane TL;DR Globalism, the ideology supporting globalization, is under threat as nations shift toward reshoring and nearshoring. China's Belt and Road Initiative (BRI) is a massive infrastructure project aiming to connect continents and sustain global trade networks. With over 150 countries participating, the BRI fosters economic interdependence and offers an alternative to U.S.-led globalization. Critics argue it creates debt dependency and shifts power toward China, but its scale could reshape globalism into a Sino-centric model. The BRI’s success depends on balancing geopolitical ambitions with genuine economic integration. Whether it saves or transforms globalism remains a key debate for the future of global trade. Introduction The concept of globalism, a system advocating for free and open cross-border exchanges, has been central to the post-World War II economic order. However, recent trends such as reshoring and nearshoring are challenging its viability, raising questions about the future of globalization. Against this backdrop, China's Belt and Road Initiative (BRI) emerges as a significant player, potentially redefining global economic integration. This initiative, a monumental infrastructure project spanning continents, aims to sustain and perhaps reshape globalism by creating new trade networks and fostering economic interdependence. Could the BRI be the key to preserving globalism in an era of increasing isolationism and fragmented supply chains? This discussion explores the essence of globalism, the ambitions behind the BRI, its global impact, and its potential to counteract economic decoupling. Here we examine its major projects. GLOBALISM AND GLOBALIZATION Globalism is an ideology that supports globalization, while globalization is the process of cross-border exchanges. An ideology that advocates for the free movement of goods, services, capital, and people across borders. Globalists often support free trade, freedom of immigration, and global governance. However, the term can be politically loaded and is sometimes used by those who oppose globalization. The process of cross-border exchanges of products, services, people, information, and finance. Globalization can include both voluntary economic activities and involuntary geopolitical activities. Globalization has been the mainstay of the current post WWII economic global model. It is currently under threat or revision depending on your point of view by reshoring or nearshoring. BASIC BACKGROUND OF BRI: The Belt and Road Initiative (BRI) is a Chinese led and largely Chinese funded massive infrastructure project that aims to connect Asia, Africa, Europe, and the Middle East through a network of land and maritime routes. The BRI is a strategy to increase trade, improve regional integration, and stimulate economic growth. The BRI was proposed by President Xi Jinping in 2013 and is inspired by the ancient Silk Road trade routes that connected China to the Mediterranean. The BRI has been described as one of the most ambitious infrastructure projects ever undertaken. The BRI is made up of two parts generally The Silk Road Economic Belt which is a land route that connects China with Central Asia, Russia, Europe, and South and Southeast Asia and the 21st Century Maritime Silk Road which is a sea route that connects China with the Middle East, Eastern Africa, South and Southeast Asia, the South Pacific, and Europe. GLOBAL IMPACT OF THE BRI As of December 2023, 150 countries have signed documents to join China's Belt and Road Initiative (BRI), including China itself. Countries join the BRI by signing a Memorandum of Understanding (MoU) with China. Depending upon who does the counting, there are certainly more countries in the BRI then outside of the BRI. THE BIGGEST PROJECTS OF THE BRI: The Belt and Road Initiative (BRI) encompasses a vast array of infrastructure projects around the world. Here are some of the largest and most expensive projects associated with China's Belt and Road Initiative: 1 China-Pakistan Economic Corridor (CPEC) with an estimated cost at $62 billion is a corridor that involves a series of infrastructure projects including highways, railways like the ML-1 railway, energy projects, and the development of Gwadar Port. The Sukkur-Multan Motorway, part of CPEC, has been highlighted as one of the largest projects under this initiative. CPEC was initially envisioned as a 15-year project when it was formally launched in 2015, with the planned completion date set around 2030. However, this timeline encompasses various phases, and the completion of individual projects within CPEC varies. Many initial infrastructure and energy projects were either completed within the first few years or are in advanced stages of completion. This phase primarily focused on energy generation and key infrastructure like highways. Beyond the early projects, there are phases involving industrial cooperation, economic zone development, and further infrastructure enhancements like railway upgrades (e.g., ML-1), which are slated for completion over time, with some major projects like the railway upgradation facing delays or renegotiations. Security issues in regions like Balochistan, where Gwadar Port is located, continue to pose challenges to project timelines. Gwadar Port is operational, handling cargo, but it has not yet transformed into the bustling international trade hub it was envisioned to be. The port's development continues with plans for further expansion, including the creation of a free economic zone. 2 China-Europe Railway Express is not a single project but a network. It is impossible to put an exact price on this project. Notable routes include: From Chongqing or Chengdu to Duisburg, Germany; From Yiwu in China to Madrid, Spain, known as the Yiwu-Madrid line and From Xi'an to Rotterdam or Hamburg, among others. Specific railway projects under BRI, like the Budapest-Belgrade railway, have been priced around $2.89 billion, with the possibility of rising above $3 billion. This project has grown significantly in terms of routes and freight volume. This rail connection between China and Europe, part of the BRI, has seen over 77,000 trains operated by 2023, transporting goods worth billions. The infrastructure development along these routes involves substantial investment, though exact costs for the network as a whole are not typically consolidated into one figure due to its broad scope across multiple countries. It is potentially faster than shipping, but is not cheaper. 3 East Coast Rail Link (ECRL) in Malaysia with an initial estimated cost at $17 billion but revised to around $10 billion after renegotiations is rail project that aims to connect Malaysia's east coast with its west, significantly reducing travel time and boosting economic development in the less developed eastern regions. It is anticipated to be completed but December 2026 with rail service to begin operations in January 2027. It connects important ports like Port Klang with the East Coast, potentially altering trade routes by offering an alternative to the traditional maritime routes through Singapore. 4 Jakarta-Bandung High-Speed Railway with an estimated cost of over $6 billion is a high-speed rail project in Indonesia aims to connect the capital city Jakarta with Bandung. It's one of the flagship BRI projects in Southeast Asia, designed to cut travel time significantly between these two cities. The Jakarta-Bandung High-Speed Railway, also known as "Whoosh," began commercial operations on October 2, 2023. Therefore, as of now, the project is not only completed but has been operational for over a year. 5 Mombasa-Nairobi Standard Gauge Railway (SGR) in Kenya with an estimated cost of pproximately $5 billion for the initial phase is a railway connects the Kenyan port of Mombasa to the capital Nairobi, with plans to extend further into East Africa. It's part of a broader initiative to modernize transport infrastructure across Africa. Phase 1 (Mombasa to Nairobi) was completed and has been operational since May 31, 2017. Phase 2A (Nairobi to Naivasha) is an extension that was completed and opened in October 2019. For any new or upcoming phases or extensions of the SGR, like the Naivasha-Kisumu-Malaba section, there have been delays and financial negotiations. The SGR significantly enhances the capacity for freight transport, aiming to shift a large portion of cargo movement from road to rail, reducing road congestion and wear. The SGR is intended to be part of a larger railway network connecting not just Mombasa to Nairobi but also extending to neighboring countries like Uganda, Rwanda, and South Sudan, promoting regional trade and economic integration within the East African Community. The railway improves logistics at the Port of Mombasa by providing a more efficient way to move cargo inland, reducing port congestion and turnaround times for ships. 6 The Addis Ababa-Djibouti Railway with its approximate $4 billion cost is an electric railway that connects Ethiopia's capital, Addis Ababa, to the port city of Djibouti, providing landlocked Ethiopia with direct rail access to the sea. It is one of the largest BRI projects in Africa, enhancing regional trade and connectivity. It was completed and officially inaugurated for commercial operations on January 1, 2018. For Ethiopia, the railway provides an essential route to the sea, crucial for its import and export activities, reinforcing its economic strategy. Recall that China has a military base in Djibouti. 7 The Thailand-China High-Speed Railway with a total project cost that is expected to exceed $5 billion for the initial phase is a high-speed rail project aims to connect Bangkok with Nong Khai on the border with Laos, with plans to eventually reach Kunming in China through Laos. It's part of an effort to enhance connectivity within Southeast Asia and between Southeast Asia and China. Phase 1 (Bangkok to Nakhon Ratchasima), initially, the first phase was expected to be completed by 2026, with commercial operations starting then. However, due to delays, the latest information suggests that this phase might begin operations around 2027. The entire project from Bangkok to Nong Khai, which includes a second phase from Nakhon Ratchasima to Nong Khai, has been projected to be completed by 2028. This timeline reflects the Thai government's commitment to finish the line, though delays have been common due to various reasons including funding, land acquisition, and construction challenges. This is designed to be a segment of a broader network envisioned to connect China with Singapore, potentially extending through Laos, Thailand, Malaysia, and beyond. This connectivity aims at fostering regional economic integration. 8 The Chancay Megaport in Peru is well covered in our episode 83 https://www.geopoliticsunplugged.com/audio/ep83-chancay-port-in-peru-the-new-frontline-in-the-us-china-global-trade-wars-how-the-port-could-bypass-the-panama-canal-and-challenge-u-s-trade/ 9 The Karot Hydropower Project in Pakistan with costs around $1.7 billion is part of the CPEC (see above), this 720-megawatt hydropower project on the Jhelum River aims to provide sustainable energy to Pakistan. While not as large in investment as some infrastructure projects, its strategic importance in the energy sector makes it significant. The Karot Hydropower Project in Pakistan was successfully commissioned and started its commercial operations on June 29, 2022. The project operates on a Build-Own-Operate-Transfer (BOOT) basis, meaning after 30 years of operation by a Chinese-led consortium, ownership will transfer to the Pakistani government, ensuring long-term benefits for Pakistan. 10 The Port City Colombo in Sri Lanka was initially estimated at around $1.5 billion, but could be higher with ongoing expansions. This project involves reclaiming land from the sea to build a new city adjacent to Colombo. It includes residential, commercial, and leisure facilities, aiming to establish Colombo as a major financial hub in South Asia. The completion of The Port City Colombo in Sri Lanka is anticipated for 2041. The project aligns with China's Maritime Silk Road, aiming to secure sea routes crucial for trade. It is located near significant shipping lanes in the Indian Ocean, Sri Lanka's strategic location enhances China's maritime presence. The development of PCC and other projects in Sri Lanka can be seen as part of China's strategy to balance India's influence in the Indian Ocean region. Other significant BRI projects that are being considered include: China-Kyrgyzstan-Uzbekistan Railway, Kyzyl-Kala - Makanchi Railway (Kazakhstan), Jalalabad Road (Kyrgyzstan), Piraeus Port (Greece), Budapest-Belgrade Railway (Serbia and Hungary), Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor, Haifa Port (Israel). CAN THE BRI BE THOUGHT OF AS A WAY TO COUNTER TRUMP, ISOLATIONISM, RESHORING OR NEARSHORING? The Chinese Belt and Road Initiative (BRI) could indeed serve as a mechanism to sustain or potentially redefine globalism if the United States were to pursue significantly more decoupling, reshoring, or nearshoring of its industries and manufacturing. The current Chinese economy in its current form only works if globalism continues. If globalization is severed or if it collapses with continued global reshoring or nearshoring, China will survive but it will not likely be as strong as it is today. China sees the BRI initiative as a means to hedge its bets against these trends. A PUSH TO DOMESTIC CONSUMPTION-DRIVEN ECONOMY China has been transitioning towards a more domestic consumption-driven economy, which could theoretically insulate it somewhat from global trade disruptions. The Chinese government has emphasized policies like "Dual Circulation," aiming to enhance domestic economic cycles while still engaging with the global market. China has implemented policies like providing subsidies for consumer goods, encouraging trade-ins for old products, expanding access to social housing, promoting upgrades to home appliances, and investing in developing the service sector, all aimed at putting more spending power in the hands of Chinese consumers. There are certainly no quick fixes to this persistent issue. Unemployment, overproduction, consumer confidence, the housing inventory (real estate market dependence) and issues surrounding capital flight or attempts of that (high savings rates) are strong headwinds for the Chinese economy. All of this suggests an intention to continue economic growth even if global trade diminishes, by stimulating domestic demand. China already has a massive domestic market, which could provide a significant buffer against a decline in exports if it can effectively stimulate internal consumption. Recall, according to data from the World Bank, in 2023, approximately 16.22% of China's total exports went to the United States. The US was its single largest export partner by 2x. So while exports to the US are significant, it is not total. A PIVOT TO THE GLOBAL SOUTH If the US reshores or nearshores, China might face challenges with its export-driven manufacturing sector. However, China has been actively diversifying its trade partners, especially with countries in Southeast Asia, Africa, and through initiatives like the Belt and Road. China has moved manufacturing to other countries, including Southeast Asia, to take advantage of new infrastructure and to sell goods in untapped markets. The Chinese launched the “Going Out” strategy in 1999 to encourage Chinese enterprises to invest overseas. The Chinese also established the Asian Infrastructure Investment Bank (AIIV) as a multilateral financial instruction that invests in infrastructure projects across Eurasia. This diversification could mitigate some impacts of reduced trade with the US. China might boost economic ties with the Global South, potentially increasing its geopolitical and economic influence in these regions as a counterbalance to Western economic policies as evidenced by Xi’s recent sweep through the global south. IN SUM However, a significant reduction in globalization, particularly if it involves decoupling from the US, could lead to economic difficulties. China's economy has historically relied heavily on exports, and a sudden or significant drop in this sector could lead to overcapacity, unemployment, and economic slowdown unless domestic consumption ramps up sufficiently or new markets are effectively tapped. China's political stability has often been tied to its economic performance. A collapse in globalization might test this link, potentially leading to domestic unrest if economic conditions worsen significantly, although the Chinese government has robust mechanisms to manage such scenarios. In essence, even if globalization collapses and the US significantly reshores manufacturing, China is still likely to continue as a major economic power, but its economic growth could be significantly impacted, with a potential shift towards a more domestic-focused economy and a greater reliance on its large domestic market to sustain growth. However, the extent of this impact would depend on how quickly China can adapt to a changing global trade landscape and diversify its economy beyond exports. THE THOUGHT BEHIND BRI Generally BRI can be seen as a means to support globalism, but with a massive change in some of its features. It supports globalism in many ways. It provides alternative economic networks. If the US reduces its global economic engagement, the BRI can provide an alternative network of trade and investment. Countries that might lose US investment could turn to China for economic partnerships, thus maintaining a form of global economic integration. It provides for significant infrastructure development. By investing heavily in infrastructure across continents, China is creating physical and digital pathways for trade that aren't dependent on US economic policies. This could keep global trade flowing by providing new routes and hubs for commerce. It provides economic interdependence even without the US at the helm. The BRI fosters economic interdependence among participating countries, which might cushion against the effects of US withdrawal from some global economic activities. Countries involved in BRI projects could become more economically tied to China, thereby sustaining a form of globalism centered around Chinese economic interests. It continues global supply chains with China at the center. China's push to integrate more countries into its supply chain through BRI could offer a counterbalance to any US strategy aimed at reducing reliance on China. This could maintain the global nature of supply chains, albeit with different dominant players. BRI IS GLOABLISM WITH A CHINESE FOCUS Some argue that the BRI represents a different model of globalism, one that might not align with the liberal, rules-based international order historically championed by the US. It could be seen as promoting a version of globalism centered on state-led economics, infrastructure investment with political strings attached, and potentially less focus on democratic governance or environmental standards. The debt and dependency model is not at all like the current form of globalism. Critics of the BRI suggest that it might lead to debt dependency rather than genuine economic integration, where countries could find themselves heavily indebted to China, potentially influencing their foreign policy decisions in favor of Chinese interests. If the US decouples significantly, the global trade system might fragment rather than remain interconnected. The BRI might then be seen as creating a parallel global economic system rather than universally saving globalism as traditionally understood. The BRI is often viewed as part of China's broader geopolitical strategy to expand its influence, which includes economic, strategic, and political dimensions. This might not be about saving globalism per se but about reorienting it towards a Sino-centric model. IN SUM The Belt and Road Initiative could serve as a significant platform for maintaining global economic integration in the face of US economic withdrawal. However, the nature of this globalism would likely differ from the post-World War II order, potentially leading to a bifurcated or multi-polar economic world where different regions or blocs might operate under different economic philosophies and governance models. Whether this would "save" globalism in a form acceptable to all stakeholders remains a matter of debate, reflecting broader discussions on the future of global economic integration. CONCLUSION The Belt and Road Initiative reflects China's strategic response to shifts in global economic dynamics, positioning itself as a proponent of sustained globalization—albeit with a significant Sino-centric focus and a major shift in economic theory underlying. By building extensive trade routes and fostering economic partnerships, the BRI seeks to maintain global economic integration, even as Western nations embrace reshoring and nearshoring. While critics argue that the initiative may promote debt dependency and geopolitical leverage rather than equitable development, it undeniably creates an alternative framework for global trade. Whether the BRI "saves" globalism or redefines it in China's image, its implications for global economic order are profound. In an era of uncertainty, the BRI may serve as both a challenge and an opportunity, shaping the contours of a new multipolar economic world. SOURCES: https://www.chathamhouse.org/2021/09/what-chinas-belt-and-road-initiative-bri https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative https://www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative https://wits.worldbank.org/countrysnapshot/CHN https://www.dw.com/en/china-will-more-domestic-consumption-bolster-the-economy/a-66482160 https://thepeoplesmap.net/project/gwadar-port-and-free-zone/ https://www.globaltimes.cn/page/202207/1271659.shtml https://www.beltroad-initiative.com/bri-factsheet-series-construction-of-breakwaters-gwadar-port/ https://testbook.com/ias-preparation/gwadar-port https://www.dw.com/en/pakistans-gwadar-port-shows-chinas-belt-and-road-can-fail/a-68992914 https://www.beltroad-initiative.com/bri-factsheet-series-gwadar-east-bay-expressway/ https://www.dw.com/en/pakistans-gwadar-port-why-chinas-bri-flagship-is-stalling/a-68992914 https://www.railway-technology.com/projects/east-coast-rail-link-ecrl-project/ https://www.brimonitor.org/case-studies/east-coast-railway-link-ecrl/ https://www.railway-technology.com/projects/jakarta-to-bandung-high-speed-rail/ https://futuresoutheastasia.com/jakarta-bandung-high-speed-railway/ https://thediplomat.com/2023/11/the-jakarta-bandung-high-speed-railway-indonesias-lessons-learned/ https://www.railway-technology.com/projects/mombasa-nairobi-standard-gauge-railway-project/ https://thepeoplesmap.net/project/kenya-standard-gauge-railway-sgr/ https://www.gihub.org/connectivity-across-borders/case-studies/addis-ababa-djibouti-railway/ https://www.crecg.com/english/10059090/10059186/10060566/index.html https://www.railway-technology.com/projects/ethiopia-djibouti-railway-line-modernisation/ https://thepeoplesmap.net/project/addis-djibouti-railway/ https://www.globalconstructionreview.com/china-thailand-high-speed-railway-sees-entire-phas/ https://cpec.gov.pk/project-details/16 https://www.power-technology.com/projects/karot-hydropower-project-jhelum-river/ https://www.seetaoe.com/details/231183.html https://www.portcitycolombo.gov.lk/port-city-colombo https://www.orfonline.org/expert-speak/colombo-port-city-project https://global.chinadaily.com.cn/a/202209/28/WS6333be1aa310fd2b29e7a38b.html Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 21 Oct 2024 | EP01 What is the Global Value Chain and Why is it important to be on top | 00:06:00 | |
Summary:
In this episode, we discuss the concept of the Global Value Chain (GVC) and its importance in the global economy. We explain that the GVC refers to the different stages of production and distribution of a product, with the "top" of the chain representing activities like research and development, design, and marketing. We discuss and emphasize that these top-level or highest value add activities generate the highest value and control over the chain, often concentrated in developed economies. We explore the importance of AI chip technology in securing a country's position at the top of the GCV, as controlling this critical technology would grant significant economic and political power. But we also discuss and acknowledge the growing trend of economic decoupling, which could lead to the formation of regional value chains, potentially disrupting the traditional global model and ending the concept of the GVC and the concept of the top of the GVC.
Questions to consider as you read/listen:
Long format:
What do we mean by being at the top of the global value chain and why is it important?
The "top" of a global value chain refers to the stage where the highest value-added activities occur, typically involving advanced technology, research and development, design, marketing, and branding, usually concentrated in developed economies; it's important because it represents the most profitable and influential part of the production process, allowing countries and companies participating at this level to capture greater economic benefits and exert more control over the overall value chain.
“Winning” the AI chip war would secure a country's position at the top of the global value chain by giving them control over a critical technology that powers the future of many industries, including healthcare, finance, and defense, essentially allowing them to dictate the pace of innovation and influence the global economy through their access to the most advanced AI capabilities, while potentially limiting other nations' access to these technologies.
Sources:
The key words for me in the above is "global", and a global value chain is only guaranteed if there is a monopoly somewhere along the chain is where all global trade has to pass through a single step, otherwise we can by definition create completing "regional" value chains.
Applying the same logic to AI chips, we see that there is only a guaranteed global value chain if someone "wins" the chip war and corners the market.
But "global" is no longer the world we are living. Economic decoupling is the trend at present and AI will accelerate that, particularly in IT, but also across the top level of value chains. A lot of the reason companies/countries have remained at top so long is because it wasn't possible to replace them with low-cost alternatives, and a large amount of that is from the from the education of your workforce. AI is unique in its possibility of replacing a college degree, it's going to significantly reduce the barrier to entry that has traditionally existed; or at least it would if allowed run unchecked. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP23: Is Iran shifting away from Persian and Shia dominance mindset to Pan Arabism? | 00:04:39 | |
Summary: In this episode we explore the concept of Pan-Arabism, a political movement seeking to unify all Arab people into a single nation-state. We detail its origins, goals, and its connection to Arab nationalism, highlighting the movement's historical significance and its impact on regional politics. We also address the question of whether Iran, historically associated with not being an Arabs state but rather Persian and with Shia dominance, has shifted its focus towards Pan-Arabism in an attempt to exert greater influence across the region. The article from Mandate Brief analyzes the possible shift in Iranian policy, prompting reflection on their support for Sunni groups such as Hamas in Gaza. Questions to consider as you read/listen:
Long format: Iran shifts form Shia dominance theory to Pan Arabism Pan-Arabism is a political movement that seeks to unite all Arab people into a single nation-state. The movement originated in the late 19th century in the Arab regions of the Ottoman Empire and was most popular in the 1950s and 1960s. Pan-Arabism is based on the idea that Arabs are a single nation with a shared language, history, and destiny. The movement's goals include:
Pan-Arabism is closely linked to Arab nationalism, which is the idea that Arabs are a people with special bonds that justify political unification. The movement was driven by middle-class and bourgeois urban actors, and was sometimes used by the military to gain political control. In short, we have to understand that Iranians are not Arabs in the classic sense. Arabs trace their ancestry to the original inhabitants of tribes of Arabia from the Syrian Desert and Arabian Peninsula; Persians are a part of the Iranian inhabitants. Arabs speak Arabic; Persians speak Iranian languages such as Farsi and other dialects. As measured in the last year, has there been a shift of Iranian policy from a Shia dominance mindset to a pan Arabism (including I guess Persians) mindset in order to assert influence over the entire region? Does their very support of Sunni groups such as Hamas in Gaza signal this shift? This article attempts to parse it out and is a very interesting read: https://www.mandatebrief.com/article/from-pan-arabism-to-pan-islamism
Sources: https://www.us-iran.org/resources/2016/10/21/myth-vs-fact-persians-and-arabs
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| 07 Nov 2024 | EP66: China can’t make its own 5nm or 3nm chips under these export restrictions, can it? | 00:23:51 | |
Summary: In this episode, we explore China's struggles to independently produce advanced semiconductor chips, specifically 5nm and 3nm chips and the future to get there and lower. Despite claims of reaching 7nm, China primarily relies on outsourcing for this, and its domestic production is limited to 28nm at scale. The analysis highlights that China faces various obstacles, including a lack of access to crucial equipment like EUV lithography machines, underdeveloped silicon wafer production, limited EDA software availability, and insufficiently advanced cleanroom facilities. While China may theoretically achieve 5nm or 3nm production using workarounds like SAQP, this approach brings significant drawbacks, including high costs, low yields, and energy consumption, making it unlikely to be a viable solution. We discuss all of these things and more in this episode. Questions to consider as you read/listen:
Long format: China can’t make its own 5nm or 3nm chips under these export restrictions, can it? The answer is maybe. But it’ll take a lot here is why. TL;DR: China is far from making 5nm or 3nm chips at scale domestically due to export restrictions on advanced equipment like EUV lithography. While it can produce limited 7nm chips using inefficient workarounds (like SAQP) and perhaps lower to 5nm or 3nm, yields are low, and costs are extremely high. Core challenges include insufficient silicon wafer production, lack of key EDA design software, and underdeveloped cleanroom facilities. Essentially, without access to advanced tools and technology, China’s chip production is stalled at older nodes (mostly 28nm) and is unlikely to advance soon. Introduction The global race for advanced semiconductor technology has placed China at a critical juncture as it contends with strict export restrictions from Western countries. With these limitations, the question arises: can China successfully produce 5nm or even 3nm chips? While some experts and media reports suggest that China is “stuck” at the 7nm node, this narrative oversimplifies the complexities of China’s chip production capabilities. In reality, domestic fabrication is still in its infancy, and challenges across several stages of chip production hinder progress. In this analysis, we delve into China’s technological capabilities, exploring what it has achieved domestically and the significant hurdles it still faces in reaching advanced nodes independently. CURRENT TALKING POINTS NEED REFINING Right now, most of the world press and some self-designated subject matter experts say that China is “at 7nm chip [really node size] and is stuck there.” But that first claim that they are at 7nm is deceptive. China uses other fabricators to get to 7nm. It is not domestic fabrication. Here’s the real scoop in the charts that follow. As far as being stuck there, that requires a condition precedent that they are there. The data shows that for AI chips, they aren’t truly at 7nm node size on their own…. well not really as we will see. In truth and at scale, they are stuck at 28 nm. Shanghai Micro Electronics Equipment (SMEE) claims to have developed a 28 nm lithography machine, the SSA/800-10W. SMEE's current SSA600 series can use 90 nm, 110 nm, and 280 nm processes. There is an asterisks though. SMIC (a domestic Chinese company) has been able to produce 7 nm chips since 2021, using a technique called "multi-patterning" (more on this latter). But the rejection rate is very very very high and it certainly isn’t at scale. SMIC's 7nm chip production is limited and the yield rate is below 50%, which is well below the industry norm of 90%. SMIC's overall monthly wafer production capacity increased from 714,000 wafers in 2022 to 805,500 wafers in 2023. It is unknown how much of that is 7nm but the best guess in the industry is that due to high rejection rates, it is very low. Otherwise, China would be trumpeting the numbers as they tend to do. SMIC's 7nm chips are very costly, around 10 times the market price of a chip manufactured at TSMC's 7-nm node. So mostly broken, way undersupplied and way over budget. Not a lot of future there. For Chinese domestic production of AI chips per the chart above, for GPUs they are at best 28nm, for FPGAs they are at best 40nm, for ASICs they are at best 22nm. To get to 7nm at scale for AI chips they have to outsource and that is predominantly to TSMC. That TMSC door is closed. Taiwan is getting pretty darn aggressive in its written regulations to hurt China. CAN CHINA GET TO 5nm OR 3nm WITH WHAT IT HAS ON HAND? Recall getting below 7nm requires ASML EUV or NAEUV lithography systems generally. China has zero EUVs or NAEUVs. They do not even have the high-end older technology DUVs. They have zero of the TWINSCAN NXT:1970i and 1980i DUV immersion lithography systems. Now back on October 24, 2024, ASML’s CEO Christophe Fouquet stated that China MAY be able to produce 5nm chips or 3nm chips using an older technology DUV equipment. How can this be without EUVs or NAEUVs? China can potentially make 5nm chips by utilizing workarounds like "self-aligned quadruple patterning (SAQP)" technology on existing Deep Ultraviolet (DUV) lithography machines. Self-aligned quadruple patterning (SAQP) is a lithography technique that increases the density and performance of chips by creating IC patterns from larger pitched patterns on photomasks. SAQP is a spacer-based patterning approach that uses one lithography step and two spacer depositions to reduce lithography resolution by four times. What the heck does that mean? Self-aligned quadruple patterning (SAQP) is a manufacturing technique used to fit more components onto a computer chip, boosting its power and efficiency. Imagine it as a method to create very fine, precise lines needed for chip circuits, starting with a bigger, simpler pattern. In SAQP, only one “printing” step is needed, but the process cleverly adds layers around the initial pattern, almost like building up ridges around a stencil. By adding these layers in just the right way, SAQP divides the original pattern into four, resulting in a much finer design without requiring extra printing steps. This method allows chipmakers to achieve much higher detail than traditional methods, making it possible to produce powerful, compact chips for modern technology. SAQP is also known as a brute-force method because it involves pitch-splitting, which is the division of a pattern into two or three parts. The SAQP process uses repeated plasma deposition and etching steps to pattern fins. But if the 7nm process using this SAQP process is wasteful with low yields, has high production costs, uses a lot of energy and is not cost competitive compared to using EUV technology, then 5nm or 3nm DUV production using SAQP is going to be perhaps an order of magnitude worse. But doing the DUV-SAQP route is not easy because it requires technical labor resources (read humans) that China does not currently have. BUT THERE’S MORE Recall the lithography is only one part of the ecosystem. Some of the other parts that are worth noting include: First, there is silicon wafer production. Well-known companies in the production of silicon materials include Shin-Etsu Chemical and SUMCO in Japan, LG Chemical in South Korea, and Global Wafer in Taiwan, China. Although a certain number of companies in mainland China are doing research and development and production of silicon materials, their proportion is still too small. It can be said that the problem of silicon wafer production capacity in the chip manufacturing process is a big mountain on the road of domestic chip development. Second there is EDA tool software. Electronic Design Automation (EDA) is a specific category of hardware, software, services and processes that use computer-aided design to develop complex electronic systems like printed circuit boards, integrated circuits and microprocessors. The main areas where it can support design work include IC design, electronic circuit design, and PCB design. Currently, the leading EDA software providers globally are Synopsys, Cadence, and Mentor Graphics (now under Siemens), all based in the United States. These three major companies dominate the EDA market, controlling over 90% of the global share. China, however, remains a crucial growth market for these industry giants. Although there are EDA software companies in China, the most prominent one is BGI, which has inherited the early domestic Panda EDA system and has built substantial technological expertise. Despite this, the domestic EDA industry as a whole still faces challenges in achieving a complete process workflow, indicating a significant journey ahead. Without EDA software design, there is no way to design high-end chips. Third is having the correct environment (clean room). The cleanroom level needed for sub 7nm chips depends on the process, but it's usually ISO 4 (Class 10) or ISO 5 (Class 100). And that is a fascinating discussion for another day. Conclusion In summary, China’s path to producing 5nm or 3nm chips domestically is fraught with challenges. While workarounds like self-aligned quadruple patterning (SAQP) theoretically allow for the creation of smaller node sizes, the high costs, low yields, high energy costs, and lack of technical expertise present substantial obstacles. Furthermore, critical components such as silicon wafer production, EDA software, and advanced cleanroom facilities are still underdeveloped in China’s semiconductor ecosystem. Without access to cutting-edge EUV lithography and a robust infrastructure, China’s ambition for advanced chip production remains limited, at least for now. Sources: https://evertiq.com/design/55327 https://asiatimes.com/2024/04/china-to-make-5nm-chips-with-saqp-process/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 25 Nov 2024 | EP90: From Local Violence to Global Power: The Rise of Terrorist Geopolitics | 00:26:02 | |
Summary: The provided text offers a comprehensive analysis of terrorism's evolution from localized conflicts to a major geopolitical force. It traces the historical development of terrorist groups, examining their shifting ideologies and objectives, from nationalist movements to transnational jihadist organizations. The text details the significant geopolitical impact of terrorism, including its influence on international relations, security policies, and economic stability. Furthermore, it explores the economic implications of terrorism, including funding mechanisms and market influences. Finally, the text assesses the future of terrorist groups, considering technological advancements, shifting alliances, and the challenges to counter-terrorism strategies. Questions to consider as you read/listen:
Long format: From Local Violence to Global Power: The Rise of Terrorist Geopolitics TL;DR: Terrorist groups have evolved from localized threats into significant geopolitical actors, influencing global security, international relations, and economies. From nationalist movements to global jihadist organizations like ISIS and Al-Qaeda, these groups exploit weak governance, technology, and propaganda to expand their influence. Their actions result in policy shifts, increased surveillance, military interventions, and economic disruptions worldwide. Counter-terrorism efforts must address both immediate threats and the socio-political conditions that enable terrorism, requiring innovative strategies, international cooperation, and resilience in vulnerable regions. The future of terrorism is expected to increasingly involve advanced technologies, decentralized operations, and shifting alliances. Introduction Terrorism, broadly defined, involves the use of violence or threats to create fear, often for political, religious, or ideological purposes. This phenomenon is not new; its roots can be traced back to ancient times, but modern terrorism has evolved significantly, particularly since the late 19th century. Historical Evolution In the 19th century, the term "terrorism" was first used during the French Revolution to describe the state's actions against its citizens. However, with the rise of nationalism and anarchism, terrorism began to take on a new form where small, non-state groups used violence to challenge political systems. The assassination of Archduke Franz Ferdinand by Gavrilo Princip in 1914, sparking World War I, is an example of early terrorism impacting global politics. In the post World War II world, the decolonization period saw terrorism become a tool for anti-colonial struggles, where groups like the Irgun in Palestine or the Algerian National Liberation Front used violence to achieve independence. This period marked terrorism's shift from a domestic to an international issue due to the involvement of colonial powers. In the 1960s and into the 1980s, with the Cold War as a backdrop, terrorism became increasingly internationalized. Groups like the Irish Republican Army (IRA), Palestine Liberation Organization (PLO) and various left-wing European terrorist organizations gained prominence. The 1972 Munich Olympics massacre by Black September highlighted terrorism's ability to command global attention. The end of the Cold War led to a redefinition of terrorism. On October 23, 1983, with the Marine Barracks at the Beirut Airport, many scholars believe that that event marked the beginning modern terrorism as a global issue as opposed to a local or regional one.The 1993 World Trade Center bombing and the 1995 Oklahoma City bombing introduced the concept of “homegrown terrorism” or “domestic terrorism” or “self-radicalization.” However, the most significant shift occurred with the rise of religious extremism, particularly Islamic terrorism, culminating in the 9/11 attacks in 2001 by al-Qaeda and later by ISIS and through today with various groups around the world. The 9/11 attacks transformed the global perception of terrorism, making it a primary concern in international security. Geopolitical Impact: Post-9/11, terrorism became a focal point of international relations, leading to the creation of new alliances like the Global Coalition Against Daesh, changes in international law, and the justification for military interventions under the guise of the "War on Terror." Terrorists and terrorist groups leverage media and social media to maximize fear and influence, turning local acts into global spectacles. This has influenced how nations legislate, how they conduct foreign policy, and how terrorism is portrayed in media narratives. The global fight against terrorism has led to vast expenditures on security, intelligence, and military efforts, influencing economies, civil liberties, and societal structures worldwide. Efforts to combat terrorism have necessitated unprecedented levels of international cooperation, leading to treaties and organizations focused on counter-terrorism, like the UN's Global Counter-Terrorism Strategy. Terrorism's evolution from a local to an international concern reflects changes in global politics, technology, and communication, showing how local grievances can escalate into threats that challenge international peace and security. This phenomenon underscores the interconnectedness of modern geopolitics, where actions in one region can have ripple effects globally. Thesis Terrorist groups have evolved beyond mere local threats to become significant actors into major global geopolitics, influencing international relations, security policies, and economic stability. Historical Context The emergence of terrorist groups throughout history often ties back to political, social, and religious tensions. Here's a concise overview of some key movements in the 20th century and into the 21st century. The Irish Republican Army (IRA) emerged in the early 20th century, primarily as a response to British rule in Ireland. Its roots can be traced back to the Irish Volunteers, formed in 1913. The primary aim was to end British rule in Northern Ireland and achieve a united Ireland. Initially engaged in guerrilla warfare, especially during the Irish War of Independence (1919-1921), the IRA later focusing on bombings and assassinations in the latter half of the 20th century. Black September was formed after the conflict known as "Black September" in 1970, where Jordanian forces expelled the PLO from Jordan. Most infamously known for the Munich massacre during the 1972 Summer Olympics, where 11 Israeli athletes were killed The Black September movement was very active in the 1970’s and 1980’s. The organization sought revenge for the treatment of Palestinians and aimed to draw attention to their cause. The Palestine Liberation Organization (PLO) was officially established in 1964, with its militant faction, Fatah, becoming the dominant force. Its was initially aimed at the liberation of Palestine through armed struggle against Israel. Over time, the PLO shifted towards negotiation and diplomacy, especially after the Oslo Accords in the 1990s. Hezbollah was formed in the early 1980s during the Lebanese Civil War and Israel's invasion of Lebanon> itaimed to expel foreign (particularly Israeli) forces from Lebanon. The 1983 bombing of the U.S. Marine barracks in Beirut killed 241 American servicemen. This act was one of the deadliest attacks against the U.S. military before 9/11. It significantly influenced U.S. policy in Lebanon and was a defining moment for Hezbollah, showcasing their military capability and resolve. Moving forward in time, we arrive at Al-Qaeda founded by Osama bin Laden in the late 1980s, initially to support the Afghan mujahideen against the Soviets.It developed a global jihadist ideology, aiming to remove Western influence from Muslim countries and wished to establish a pan-Islamic caliphate. The September 11, 2001 attacks on the U.S., which propelled Al-Qaeda into international notoriety. Al-Qaeda is still around and is growing today. The Islamic State of Iraq and Syria (ISIS) emerged from Al-Qaeda in Iraq, particularly gaining strength after the withdrawal of U.S. troops from Iraq in 2011. Its objectives were to establish a caliphate across Sunni-majority parts of Iraq and Syria, with a brutal enforcement of its interpretation of Sharia law. It had rapid territorial expansion in 2014, in the vacuum left behind after US withdrawal from the region declaring a caliphate, which led to widespread international military intervention to curb its power. Each group's emergence reflects unique socio-political climates. The IRA was a product of Irish nationalism and resistance against British rule. Black September and the PLO were born from the Palestinian struggle for statehood and rights. Hezbollah's formation was intertwined with Lebanese sectarian conflicts and resistance to Israeli occupation. Al-Qaeda and ISIS both derive from Islamist ideologies but with different focuses on global versus regional control. These groups, through varying methods and ideologies, have all used terrorism as a strategy to achieve political, religious, or social objectives, highlighting how terrorism can be both a symptom and a tool of larger geopolitical and ideological conflicts. Evolution of aims: Terrorist organizations have evolved significantly over time, transitioning from primarily nationalistic or regionally focused entities to more ideologically driven and transnational movements. Many groups start with specific local or national grievances but gradually adopt broader ideological frameworks. This could be religious, political, or a mix of both, allowing them to appeal to a wider audience beyond their immediate locality. This shift often involves framing their struggle as part of a larger battle against perceived global injustices or enemies, like imperialism, capitalism, or religious oppression. The shift to a transnational focus often involves creating or joining networks that transcend national boundaries. This can be through alliances, ideological alignment, or shared training and operational support. Such networks help in resource sharing, mutual support in times of crackdown, and the spread of ideology. There's a move towards decentralized structures where central leadership might provide ideological guidance, but local cells or affiliates operate semi-independently. This makes the groups more resilient to leadership decapitation and allows for more localized operations that can adapt to specific regional contexts. One can think of it almost like franchising. Technological advancements have facilitated this transition. Encrypted messaging apps, dark web forums, and social media platforms allow for secure communication and broad dissemination of propaganda. Internet and social media have become powerful tools for recruitment, radicalization, and even the execution of lone-wolf attacks inspired by the group's ideology. Modern terrorist groups have adapted to use cryptocurrencies, online fraud, and crowdfunding for financing, moving away from more traditional methods like bank heists or ransom. The use of media has evolved from physical pamphlets to sophisticated digital content. High-quality videos, online magazines, and viral online campaigns help in not only recruitment but also in maintaining the narrative and morale among supporters and members. As counter-terrorism strategies become more sophisticated, these groups adapt by changing tactics from bombings and assassinations to cyber-attacks, kidnappings, or using drones, enhancing operational security practices to avoid surveillance and infiltration and even some members engage in legal political activities or community work to gain legitimacy and reduce suspicion, creating a dual existence. Some groups, such has Hezbollah and Sein Fein attempt to integrate into the legitimate recognized government structure. Others govern territories they control, offering services like justice, education, and health to win local support and portray themselves as viable alternatives to existing states. This governance aspect can also serve to legitimize their ideological claims. By linking local issues to global events or narratives (like the war on terror, global economic inequality, or climate change), terrorist groups can tap into a worldwide pool of sympathizers, thus globalizing their cause. This evolution reflects a strategic response to both internal dynamics (like ideological shifts within the group) and external pressures (like international counter-terrorism efforts). The adaptation is not only about survival but also about expanding influence, maintaining relevance, and leveraging global trends to sustain and grow their movements. Terrorist Groups as Geopolitical Players Terrorist groups in modern times, influence state actors both directly and indirectly. Here are some notable examples. Direct Impact: The USA PATRIOT Act was enacted in October 2001. This legislation was a direct response to the 9/11 attacks. It granted law enforcement expanded powers for surveillance, search and seizure, and detention, aimed at combating terrorism but raising concerns over civil liberties. The Department of Homeland Security (DHS) was created to coordinate a comprehensive national strategy to safeguard the country against terrorism and respond to any future attacks. This led to a massive restructuring of federal agencies involved in security, intelligence, and emergency response. It is now one of the biggest federal agencies in the United States. The Transportation Security Administration (TSA) was formed to improve security at airports, this agency introduced rigorous passenger screening and air cargo security measures, fundamentally changing the travel experience. The U.S. initiated the War on Terror, leading to invasions of Afghanistan (2001) and Iraq (2003), based on the perception of threats from Al-Qaeda and the belief in weapons of mass destruction in Iraq, respectively. This marked a significant shift in U.S. foreign policy. The U.S. adopted controversial interrogation methods, leading to debates and later policy shifts regarding torture and the legal treatment of detainees. European policy changes were also abundant. After terrorist attacks in Europe, there was a push towards updating and expanding the Schengen Information System to better track potential terrorists across the Schengen Area, affecting privacy and freedom of movement policies. In response to threats of terrorism, the EU implemented measures for collecting and processing passenger data for flights, which has influenced data protection and privacy laws including the Passenger Name Record (PNR) Directive: Following attacks like those in November 2015 in Paris, France implemented a state of emergency which allowed for enhanced police powers, including searches without warrants and restrictions on movement and assembly. This policy was extended several times before being replaced by permanent anti-terrorism legislation in 2017. In the United Kingdom, the Prevention of Terrorism Act 2005 was introduced and implemented control orders allowing the government to restrict the movements and activities of terrorism suspects without charging them, reflecting a shift towards preventive measures. The UK has seen an expansion in surveillance powers, with laws like the Investigatory Powers Act 2016, which were partly a response to terrorist threats. In Russia, the terrorist activities in Chechnya led to two military campaigns (1994-1996 and 1999-2009), influencing Russian policy towards heavy-handed security measures and significant restrictions on civil liberties in the region and beyond. As general trends, many countries have passed or expanded laws that increase state surveillance, allow for preventive detention, and extend police powers in the name of combating terrorism. It has lead to attempted enhanced border controls, visa restrictions, and international cooperation agreements have been implemented to prevent the movement of terrorists across borders. There's been an increase in military and intelligence sharing among nations, exemplified by coalitions against groups like ISIS. Due to the rise of cyber-terrorism, there's been a push towards more robust cybersecurity infrastructure and policies. These examples illustrate how terrorist activities can lead to a reevaluation of security, privacy, civil liberties, and foreign policy, often resulting in more stringent laws and measures aimed at preventing future attacks. However, these policy changes also spark debates about the balance between security and liberty. Indirect Impact: The fear of terrorism exerts a profound indirect influence on public opinion, thereby shaping government policies and international alliances in several ways. It shapes public opinion. Fear leads to an increased public demand for security. This often results in a heightened perception of the terrorist threat, sometimes disproportionate to the actual risk, influencing public opinion towards favoring stricter security measures. The media's extensive coverage of terrorist events can amplify fear, leading to a cycle where fear generates more media attention, which in turn increases public anxiety. This cycle can create a more security-conscious populace. Fear of terrorism can lead to social divisions, with some communities feeling targeted or stigmatized. This can affect social cohesion, prompting debates on integration, immigration, and multiculturalism. Fear often translates into public support for military interventions abroad, especially if the government frames these actions as necessary to prevent future attacks at home. There is a direct correlation regarding the influence on government policies and perceptions of terrorism. The age old debates and tension between security over liberty. Governments might implement policies that prioritize security at the expense of civil liberties. This includes surveillance laws, data retention, and policies that might infringe on privacy rights, as seen with laws like the PATRIOT Act in the U.S. Fear can lead to increased defense budgets, as the public might support greater investment in military and intelligence to combat the perceived threat. New or expanded laws aimed at counter-terrorism often follow terrorist attacks, which can include preemptive measures like surveillance, preventive detention, or restrictions on certain groups. There's often an intensified focus on border control, immigration policies, and visa regulations to prevent the entry of potential threats, sometimes leading to policies that are seen as discriminatory or overly restrictive. The fear of terrorism has led to the creation of international coalitions like the Global Coalition Against Daesh (ISIS), where countries collaborate on intelligence, military actions, and counter-terrorism strategies. Countries alter their foreign policies, either aligning with others to combat terrorism or distancing from nations perceived as state sponsors of terrorism. This can lead to new alliances or the strengthening of existing ones. There is an increase in intelligence-sharing agreements to combat terrorism, which can lead to new international partnerships or the enhancement of existing ones, but also raises concerns about privacy and sovereignty. The U.S. and other countries have established or expanded military bases in strategic locations to fight terrorism, influencing geopolitical dynamics and sometimes leading to tensions with host countries or regional players. The socio-political impact of terrorism is another indirect impact of terrorism on geopolitics. There is a sense of developing a surveillance society. The pervasive fear of terrorism can lead to a culture where surveillance becomes more accepted, potentially leading to a society where privacy is significantly eroded such as the closed circuit monitoring that is pervasive in UK cities. In some cases, fear can be used by governments to legitimize authoritarian practices, claiming they are necessary for national security. The fear of terrorism can impact economic policies, particularly in sectors like tourism, aviation, and international trade, influencing both domestic and foreign economic strategies. This indirect influence illustrates how the fear of terrorism can serve as a catalyst for significant policy shifts, international realignments, and changes in societal norms, often with long-term implications for civil liberties, international relations, and global security dynamics. Geopolitical Objectives: The geopolitical objectives of terrorists can be understood through several lenses, each providing insight into why these groups engage in acts of terrorism. Some terrorist organizations seek statehood or governance such as an establishment of a Caliphate. Perhaps the most direct example, ISIS sought to establish a physical caliphate across regions of Iraq and Syria. Their objective was not only to govern these territories but to create a state based on their interpretation of Islamic law, attracting fighters from around the world to join what they envisioned as a new Islamic state. ISIS took control of significant territories, implementing their governance, including taxation, public services, and even issuing passports. By providing governance, they aimed to gain legitimacy among local populations and the global Muslim community, presenting themselves as an alternative to existing states. Another example is Hezbollah. While initially focused on resistance against Israeli occupation, Hezbollah has also played a significant role in Lebanese politics, effectively functioning as a state within a state by providing social services, participating in elections, and wielding military power, thus achieving some level of quasi-governance. One of the major goals of terrorist organizations is destabilization and weakening state structures. Terrorist groups often target state stability to pursue their objectives. By creating chaos, they hope to exploit power vacuums, force policy changes, recruit and radicalize. Groups like Al-Shabaab in Somalia or Boko Haram in Nigeria use terrorism to destabilize governments, aiming to create environments where they can either take control or at least operate with less interference. By making governance difficult or too costly, they might compel states to negotiate or change policies, like withdrawing from certain areas or altering political systems. A destabilized state might increase public discontent, which these groups can capitalize on for recruitment or to incite further radicalization. Some terrorist organizations brazenly seek to overthrow existing internationally recognized governments. While Al-Qaeda has a global jihadist agenda, regional affiliates like Al-Qaeda in the Islamic Maghreb (AQIM) aim to destabilize governments in North Africa, seeking to replace secular governments with theocratic rule or governance more aligned with their interpretation of Islam and gain influence by demonstrating the state's inability to maintain security, they hope to garner local support or at least neutrality, positioning themselves as a viable alternative. Other terrorist organizations have an even more grand vision of international destabilization. Terrorist activities can aim to affect international alliances or policies by creating international incidents with attacks like those on foreign embassies or multinational forces can lead to international intervention or changes in foreign policy and by seeking to prompt overreaction by instigating fear, they might lead countries to overreact, potentially alienating allies or creating international friction as is arguably the case with Israel and Gaza/Hamas and Hezbollah/Lebanon. Some groups seek to purify areas from what they perceive as corrupting influences, whether they are secular, foreign, or from opposing Islamic sects. By creating or exacerbating conflict, groups can force population movements, aiming to alter demographics or reduce the power base of their enemies. Attacking infrastructure like oil facilities or economic targets can serve to undermine a nation's economy, indirectly pushing for political change. The objectives of terrorists in the geopolitical arena are often intertwined with ideological goals but are specifically directed towards altering the political landscape either through control, disruption, or the creation of conditions favorable to their ideology or group's survival and expansion. These aims can lead to the use of terrorism as a tool for political, social, or ideological change, influencing both local and international dynamics. Economic Impact: The economic impact of terrorism in a geopolitical context is multifaceted, influencing both direct economic activities and broader market dynamics. Funding streams for terrorist groups have become much more complicated in the recent years. Oil and natural resources have become increasing used as the main sources of funding for large terrorist groups. In areas they controlled, ISIS exploited oil fields, selling oil on black markets. This revenue stream not only funded their operations but also influenced oil prices and stability in the region, impacting global oil markets. Other groups might control or tax the extraction of minerals, gems, or timber, which can disrupt legitimate trade and fund ongoing conflicts or terrorist activities. Organizations like the Taliban in Afghanistan have been linked with the opium trade. This not only funds their operations but also affects global drug markets, leading to economic and health issues in consumer countries. Groups like Al-Qaeda in the Islamic Maghreb or Boko Haram have kidnapped foreigners for ransom, creating an informal economy of extortion that affects international companies' risk assessments and insurance costs. Some groups receive funding through charitable contributions (Zakat which is an obligatory almsgiving for Muslims who meet certain wealth criteria), often disguised as legitimate aid. This misuse can lead to international scrutiny and regulatory changes on charitable giving. Although less common due to international pressure, state sponsorship or tolerance of terrorist groups can indirectly subsidize terrorism, affecting international relations and economic sanctions. Modern terrorist groups have adapted to new technologies, using cybercrime for funding or employing cryptocurrencies for transactions that are harder to trace, impacting cybersecurity policies and financial regulations. Market Influence: Terrorism has a definitive chilling effect on the investment climate in the area and in particular Foreign Direct Investment (FDI). The risk of terrorism increases insurance costs for companies, especially in high-risk areas, which can affect international business operations and costs. High-profile terrorist attacks can lead to a significant drop in tourism. Countries like Egypt or Turkey have seen their tourism industries suffer post-attack, which affects not only local economies but also global travel markets. Aviation security costs rise, and passenger numbers can decrease due to fear of flying, impacting airlines and related industries like hospitality. Terrorist events often lead to immediate drops in stock markets due to uncertainty. Over time, persistent threats can lead to volatility or a long-term decline in market confidence. Attacks on infrastructure like oil pipelines or ports can cause fluctuations in commodity prices, affecting global markets. Specialized insurance products for terrorism have developed, influencing insurance market dynamics, with premiums reflecting perceived risks. Threats can disrupt supply chains, especially in regions prone to conflict or terrorism, leading to increased costs, delays, and sometimes shortages in global markets. Terrorism can lead to heightened geopolitical tensions, resulting in trade sanctions, embargoes, or rerouting of trade routes, all of which have economic repercussions. Countries affected by terrorism might see their currencies depreciate due to reduced economic stability, affecting trade balances and economic policy. Companies might shift operations or reduce presence in high-risk areas, impacting local economies and leading to shifts in global corporate strategy regarding risk management. The economic impacts of terrorism in this context are not just about direct costs like property damage or loss of life but also encompass the broader, often more insidious effects on global economics, trade, investment climates, and the behavior of markets and consumers. These impacts highlight how terrorism can serve as both a symptom and a catalyst for economic shifts at both local and international levels. Modern Case Studies: The Houthis (Middle East) Here's an analysis of the Houthis focusing on their geopolitical objectives and economic impacts. The Houthis (Ansar Allah) geopolitical objectives include control over Yemen. The Houthis aim to control Yemen, either as a whole or in significant parts, establishing their form of governance. They have effectively taken control of Sana'a and much of Northern Yemen since the late 2014 coup. They seek recognition as the legitimate government of Yemen, often opposing the internationally recognized government backed by Saudi Arabia. Their narrative often includes opposition to Western (particularly American and British) influence in the region and staunch opposition to Israel. This positions them within a broader geopolitical context of regional resistance against these powers. Their relationship with Iran is seen as a strategic move to gain military and financial support against their adversaries, aligning with Iran's broader strategy to expand its influence in the Middle East. There are also reports of Russia giving the Houthis targeting information for their Red Sea operations against international shipping. The Houthis have used attacks on shipping in the Red Sea to claim solidarity with Palestine, trying to leverage regional conflicts to gain international attention and support. In areas they control, the Houthis have imposed taxes on goods, fuel, and other resources. They also control key infrastructure like ports, which they use to generate revenue. There are allegations of involvement in smuggling, including drugs and weapons, which could serve as alternative funding sources. While not directly funding their military operations, foreign aid intended for humanitarian purposes in Yemen can sometimes indirectly benefit the Houthis by freeing up resources they would otherwise need for governance. They are also reported to receive ransom or protection racket like payoffs by certain shipping companies or countries to operate freely in the Red Sea area. Their missile and drone attacks on ships in the Red Sea have led to significant rerouting of maritime traffic, increasing shipping times and costs. This affects global trade routes, particularly impacting Egypt's revenue from the Suez Canal. Yemen's oil and gas sectors, critical for the country's economy, have been severely disrupted by the ongoing conflict, with the Houthis controlling or attacking oil infrastructure at times. Due to their actions and alliances, international sanctions have been placed on some Houthi leaders, and aid delivery has been complicated, exacerbating Yemen's humanitarian crisis. This indirectly affects the economy by limiting imports and economic aid. The Houthis have printed currency, leading to economic instability, including significant inflation in areas under their control. Their control over borders and ports has led to increased smuggling activities, affecting the legitimate economy and tax collection by the rival government. The conflict and instability have severely deterred investment in Yemen, both foreign and domestic, impacting potential economic recovery and development projects. The conflict has led to a dire humanitarian situation, with millions facing food insecurity, which is a direct economic consequence of the conflict, disrupting agricultural productivity and food distribution. The Houthis' activities reflect a complex interplay between their geopolitical aspirations and the economic ramifications of their strategies. Their control over territories and influence over key economic sectors like ports and taxation has significant implications not just for Yemen but for regional and global economic dynamics, particularly in the context of maritime trade. Here are modern case studies focusing on lesser-known terrorist groups across different regions: Case Study: Al-Mourabitoun (Mauritania, Mali, Burkina Faso, and Niger) Al-Mourabitoun, a group formed from an alliance between al-Mulathameen and MUJAO (Movement for Unity and Jihad in West Africa), aimed to create an Islamic state in the Sahel region. Their strategy involves destabilizing governments to exploit power vacuums. This group has engaged in kidnapping for ransom, particularly targeting foreigners. These operations not only fund their activities but also create an atmosphere of insecurity that affects investment and tourism. The threat of terrorism by such groups disrupts trade routes, especially in the Sahel, impacting the economic stability of the region by making logistics and trade more expensive and risky. Case Study: Islamic Movement of Uzbekistan (IMU) The IMU's goal has shifted over time from establishing an Islamic state in Uzbekistan to becoming part of the broader global jihad against perceived enemies. They've moved operations to regions like Afghanistan and Pakistan, seeking to leverage instability for their cause. Traditionally, the IMU has been involved in the drug trade from Afghanistan to Central Asia, contributing to the narcotics economy which destabilizes the region. Their activities have led to increased border security measures, affecting trade between Central Asian countries and beyond, and influencing the regional economic dynamics by fostering an environment of mistrust and fear. Case Study: Jamaah Ansharut Daulah (JAD, Indonesia) JAD, inspired by ISIS, seeks to establish a caliphate in Indonesia. They've engaged in smaller-scale attacks to destabilize the government and spread fear. JAD has been involved in various criminal activities for funding, though specifics are less documented. They might leverage local extortion or informal donations. Their activities, especially after high-profile attacks like the Surabaya bombings in 2018, have occasionally led to temporary drops in tourism, affecting the local economy. Case Study: Bangsamoro Islamic Freedom Fighters (BIFF, Philippines) BIFF aims for the independence of the Bangsamoro region, often clashing with both the Philippine military and the Moro Islamic Liberation Front (MILF), which has moved towards peace talks and political solutions. BIFF has been known to engage in extortion, taxing local businesses, and occasionally drug trafficking to fund their operations, which undermines local economic development. Their presence and activities have led to reduced investment as the conflict zones in Mindanao see reduced investment due to security concerns and disruption of agriculture by BIFF's control over areas affects farming, a significant economic activity, by either taxing or directly attacking agricultural infrastructure and significant tourism impact with the ongoing conflict deterring tourism in the region, which has potential as a tourist destination given its natural beauty. Case Study: Katiba Macina (Mali) Katiba Macina, also known as Macina Liberation Front, is part of Jama'at Nasr al-Islam wal Muslimin (JNIM), an Al-Qaeda-linked alliance in the Sahel. Their primary objective is to establish an Islamic state in the region, specifically targeting Mali. They aim to undermine central authority by launching attacks against the Malian government and foreign forces like the French Operation Barkhane, they seek to weaken state control and exploit ethnic and religious tensions and wish to govern locally in areas they control, they impose Sharia law, attempting to govern and gain legitimacy among local populations, especially the Fulani herders. They engage in kidnapping for ransom, cattle rustling, and likely benefit from the regional gold trade, which has become a significant source of funding for many armed groups in Mali. Their activities directly affect agricultural productivity with cattle rustling impacting the livelihoods of many in the agricultural sector, leading to food security issues, mining by the instability that they cause disrupting mining operations, particularly gold, affecting a key economic activity in Mali.The continuous insecurity deters both local and foreign investment, particularly in rural development projects. Case Study: Hizb ut-Tahrir (Central Asia, notably Uzbekistan and Kyrgyzstan) While not directly involved in violence, Hizb ut-Tahrir (HT) aims for the re-establishment of an Islamic caliphate. Their approach is more political and ideological, but their presence can still be destabilizing. HT's propagation of radical ideologies can lead to radicalization, potentially feeding into more violent groups. They seek to influence or replace secular governance with their interpretation of Islamic law, often through non-violent means but with the potential for inciting unrest. HT operates through donations and potentially through business ventures that align with their ideology, though less is known about their formal financial networks. Their activities can lead to social unrest or government crackdowns, creating an unstable environment for business. Governments might implement stricter controls or surveillance, affecting economic freedoms and international perceptions of investment risk. Case Study: Jemaah Islamiyah (JI) Splinter Groups (Southeast Asia, particularly Indonesia and Malaysia) While JI itself has weakened, splinter groups continue its legacy with aims to establish an Islamic State. These groups want to create an Islamic caliphate in Southeast Asia, often targeting symbols of Western influence and local governments. These splinter groups might engage in criminal activities like petty extortion or could rely on ideological donations. Their financial operations are less centralized and visible compared to larger organizations. Continued threats or actual attacks can severely impact tourism, especially in regions like Bali. Companies in affected areas might face higher security costs, influencing operational decisions and investment. Case Study: Abu Sayyaf Group (Philippines, particularly in the Sulu Archipelago and Basilan) Abu Sayyaf, while somewhat diminished, still operates with the aim to create an Islamic State. Specifically in the southern Philippines, their operations have often been more criminal than purely ideological. Known for piracy, kidnapping for ransom, and involvement in the drug trade, which directly competes with and undermines legal economic activities, Abu Sayyaf has devolved more into a criminal gang than its original aspirations some would argue. Their activities raise the cost of maritime security, affecting fishing and shipping in the region. Their presence leads to a climate of fear, reducing economic activity, particularly in tourism and local trade. The group's activities can lead to hesitations in providing international aid or investment due to security concerns. These groups, though not as globally recognized as others like ISIS or Al-Qaeda, still have profound effects on their local environments, pushing for geopolitical changes through violence or ideological influence while simultaneously impacting economic stability through their methods of funding and the fear they instill in communities and markets. Their operations highlight the complex interplay between ideology, economics, and state stability in regions affected by terrorism. The Future of Terrorist Groups in Geopolitics The future for terrorist groups is in many directions. Technology: As with all aspects of life technology will feature prominently. In the area of recruitment and radicalization, we can best bet that virtual communities beyond social media will allow terrorist groups to use virtual reality (VR) or augmented reality (AR) to create immersive environments for indoctrination. These platforms could simulate combat scenarios or ideological training camps or scenes of post jihad afterlife, making the experience more real and potentially more appealing to recruits. Using AI to tailor extremist content to individual users based on their online behavior, increasing the effectiveness of radicalization efforts will likely be a future that we will see shortly. The use of blockchain technology could facilitate decentralized recruitment networks, where anonymity is preserved, and group structures are less hierarchical, making infiltration more challenging. AR could be used for propaganda by overlaying messages or symbols onto real-world environments, accessible via smartphones, enhancing the reach and impact of their narratives. Leveraging AI for creating and spreading disinformation, including deepfake technology to impersonate influential figures or simulate false events to incite unrest or mislead public opinion might be an area of growth for these groups. While currently speculative, future operations might involve coordinated drone swarms for attacking or distracting from larger operations, providing a low-risk, high-impact method for attacks. Terrorists might exploit vulnerabilities in the Internet of Things (IoT) to conduct cyber attacks that disrupt utilities or gather intelligence, potentially leading to physical attacks. Shifting Alliances The expanded and increase use of terrorist groups as proxies by state actors could intensify, especially in conflicts where direct military engagement is undesirable. These groups might receive training, arms, or financial support in exchange for acting against mutual enemies. Groups might find common cause with other movements or states not necessarily sharing the same ideology but having overlapping interests, such as anti-Western sentiment or opposition to a particular government or policy. In regions with weak central governance, terrorist groups could play kingmaker roles, aligning with or against different factions within a state, influencing local politics or even forming temporary alliances with state forces against common threats. With climate change potentially leading to resource scarcity, terrorist groups might align with other entities to control or exploit resources like water, oil, or minerals, which can fund their activities or serve as bargaining chips in negotiations. Counter-Terrorism Strategies: We can predict that there will be a larger role for intelligence and data analytics. Enhanced with AI, predictive models could analyze patterns in data to anticipate terrorist activities before they occur, allowing for preemptive actions. Using AI and machine learning to map out and disrupt terrorist networks by identifying key nodes for communication, finance, or leadership. Development of robust cyber defense mechanisms that not only protect infrastructure but also engage in active defense, potentially including offensive cyber operations to neutralize online terrorist operations will be a likely outcome of the future. Counter-narratives using similar technological platforms to debunk myths, expose the realities of life under terrorist rule, or promote positive alternatives to radicalization might be featured prominently in the future. We might see strengthening local governance and civil society to provide alternatives to extremist groups, reducing their appeal in areas with governance vacuums. The creation of international agreements that define cyber warfare rules, ensuring that counter-terrorism cyber operations respect sovereignty while tackling transnational threats may come. Hybrid warfare approaches combining cyber operations with traditional military tactics to create a multi-dimensional approach to counter-terrorism will likely be on the rise. This could include non-lethal means like electromagnetic warfare to disable communications or weaponry. The future dynamics between terrorist groups and state actors will be shaped significantly by technology, shifting geopolitical landscapes, and evolving counter-terrorism strategies. This interplay will require a multi-faceted, adaptive approach, focusing on not just dismantling networks but also on understanding and mitigating the socio-political environments that foster terrorism. Will there be any breakout terrorist groups in the near future? Predicting whether any terrorist group will have a breakout moment similar to what ISIS achieved is complex, involving numerous factors ranging from ideological appeal, regional instability, state failure, to global responses. Here are several considerations: Like ISIS in Iraq and Syria, groups thrive in areas with weak governance or ongoing civil strife, where they can establish control, exploit resources, and gain local support or compliance. It seems as if to be a prerequisite for success. Therefore, it is incumbent upon the international community to monitor failed states to make sure that this will not become a fermentation pool for future terror groups. For a group to break out, its ideology needs to resonate not just locally but potentially on a global scale, attracting fighters and sympathizers from around the world. ISIS was adept at using media to project power and recruit. Future groups will have to leverage new technologies or platforms for similar effects. Control over valuable resources (like oil by ISIS) or innovative funding methods (e.g., cryptocurrencies, cybercrime) could fuel expansion. Overt or covert support from state actors can significantly enhance a group's capabilities, as seen historically with various factions. Current and potential candidates for a breakout moment:
Challenges to a Breakout: The global community has learned from the ISIS experience, potentially leading to quicker, more coordinated responses to emerging threats. The brutality of ISIS and similar groups often leads to local opposition, which can limit expansion or lead to their ousting. Increased surveillance capabilities might make it harder for groups to operate freely or expand without detection. The jihadi landscape is frankly crowded. New groups must compete with existing ideologies and established networks. While some groups might control resources, the modern economy's complexity makes self-sustaining states harder to establish without broader economic integration. While it's plausible that another group could have a breakout moment similar to ISIS, the landscape has changed. Counter-terrorism strategies are more sophisticated, and the international community might be less likely to underestimate a burgeoning threat. However, the unpredictability of political, social, and environmental changes means that such an event isn't impossible, especially if a combination of the above factors align favorably for a terrorist entity. Conclusion: In conclusion, the evolution of terrorism from localized acts of violence to significant geopolitical forces highlights its profound and far-reaching impact on international relations, state policies, and global security. Terrorist groups have adapted to modern technologies, shifting political landscapes, and globalized networks to sustain their operations and amplify their influence. Their ability to destabilize regions, challenge state sovereignty, and shape global policies underscores their role as non-state actors capable of reshaping geopolitics. As governments and international coalitions continue to confront this ever-evolving threat, the need for innovative counter-terrorism strategies, proactive governance, and global cooperation becomes increasingly paramount. Understanding the historical, economic, and ideological underpinnings of terrorism remains essential for addressing its root causes and mitigating its impact. By balancing security measures with civil liberties and fostering resilience in vulnerable regions, the global community can work toward a future where the influence of terrorism is significantly diminished. Sources: https://www.unodc.org/documents/e4j/18-04932_CT_Mod_01_ebook_FINALpdf.pdf https://academic.oup.com/edited-volume/40692/chapter/348396586 https://www.ojp.gov/pdffiles1/nij/grants/208551.pdf https://pace.coe.int/files/10914/html https://www.britannica.com/topic/terrorism https://www.coe.int/en/web/compass/war-and-terrorism https://theconversation.com/terrorism-a-very-brief-history-107538 https://press.un.org/en/2023/sc15396.doc.htm https://www.nato.int/cps/en/natohq/topics_77646.htm https://www.pbs.org/wgbh/pages/frontline/shows/target/etc/modern.html https://www.csis.org/analysis/escalating-terrorism-problem-united-states https://www.dni.gov/nctc/groups.html https://www.chds.us/ed/convergence-of-terrorism-transnational-criminal-organizations/ https://www.state.gov/reports/country-reports-on-terrorism-2022/ https://www.state.gov/state-sponsors-of-terrorism/ https://www.ojp.gov/pdffiles1/nij/grants/208551.pdf https://press.un.org/en/2023/sc15396.doc.htm https://journals.lib.unb.ca/index.php/JCS/article/download/14600/15669/19388 https://www.degruyter.com/document/doi/10.1515/peps-2020-0031/html?lang=en https://www.economicsobservatory.com/how-are-geopolitical-risks-affecting-the-world-economy https://www.investopedia.com/articles/markets/080216/top-5-ways-terrorism-impacts-economy.asp https://personal.utdallas.edu/~tms063000/website/Econ_Consequences_ms.pdf https://www.sciencedirect.com/science/article/abs/pii/S0313592617302035 https://scholar.smu.edu/cgi/viewcontent.cgi?article=2112&context=til https://ouci.dntb.gov.ua/en/works/9Gw2VR39/ https://www.adb.org/sites/default/files/publication/156752/adbi-dp113.pdf https://www.emerald.com/insight/publication/doi/10.1108/9781787699199 https://pmc.ncbi.nlm.nih.gov/articles/PMC9866971/ https://jqe.scu.ac.ir/article_17061.html?lang=en https://www.brookings.edu/articles/an-inflection-point-for-the-houthis/ https://arabcenterdc.org/resource/yemens-war-economy-a-key-factor-in-the-ongoing-conflict/ https://www.csis.org/analysis/global-economic-consequences-attacks-red-sea-shipping-lanes https://www.foreignaffairs.com/yemen/better-way-counter-houthis https://www.cfr.org/in-brief/how-houthi-attacks-red-sea-threaten-global-shipping https://www.brandeis.edu/crown/publications/crown-conversations/cc-19.html https://www.jstor.org/stable/26349853 https://thesoufancenter.org/intelbrief-2024-july-18/ https://ctc.westpoint.edu/comparing-counterterrorism-in-indonesia-and-the-philippines/ https://www.govinfo.gov/content/pkg/CHRG-107shrg89957/html/CHRG-107shrg89957.htm https://www.govinfo.gov/content/pkg/CHRG-107shrg89957/html/CHRG-107shrg89957.htm https://www.unodc.org/unodc/en/terrorism/expertise/combating-terrorist-financing.html Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 01 Nov 2024 | Episode 52: Reports of over 100 women commit mass suicide in Sudan's Al Jazirah | 00:14:12 | |
Summary: In this episode, we highlight the alarming prevalence of sexual violence against women in the Sahel region, particularly in Sudan. We detail the widespread use of rape as a weapon of war by way of example of the complaints against the Rapid Support Forces (RSF), a paramilitary group in Sudan. We cite numerous reports of gang rapes and other abuses, and even a mass suicide by women fearing rape during an attack. We point to the lack of international attention to this issue and call for action to address the rampant gender-based violence in the Sahel. Questions to consider as you read/listen:
Long format: Reports of over 100 women commit mass suicide in Sudan's Al Jazirah The Arab Spring all began with one man, Mohamed Bouazizi, and his suicide by self-immolation. He was a simple street vendor with no political power or background. His self-immolation was in response to the confiscation of his wares and the harassment and humiliation inflicted on him by a municipal official and their aides. The treatment of women in the Sahel region is particularly appalling with little public or international coverage. Now we have this report of 100 women or more committing suicide in one village rather than face the potential of rape when their village was attacked by the RSF. This has yet to be independently verified, but regardless of the truthfulness of these reports is this enough to bring attention to the issue? By all accounts, women in the Sahel face many challenges, including gender-based violence, limited access to education, and restricted participation in civic life. Women in the Sahel experience gender-based violence, including forced marriages, physical and sexual violence, and sexual exploitation. Rape is not uncommon. In fact, random gang rape is not infrequent. This is particularly so for those of a Masalt ethnicity. Masalit are generally darker-skinned non-Arabs. One of the groups frequently blamed for abuse and rape against women is the RSF. The RSF is a paramilitary group in Sudan. Sometimes they are referred to as the Janjaweed militia. They fought in the Darfur region in the 2000s. The International Criminal Court prosecutors have accused their commanders of genocide, war crimes and crimes against humanity. Since 2017, the RSF has been operating under the color of law as the Sudanese government has granted them the status of “regular force.” In a 2019 coup, the RSF leader, Mohamed Hamdan Dagalo, commonly known as “Hemedti”, or “Little Mohamad” was installed as vice chairman of the military-civilian council that would govern Sudan. And on the eve of democratic elections, the RSF along with others were involved in yet another coup with the army stopping the elections. The RSF is institutionalized in the Sudanese government. The random violent gang rapes and other abuses are not just limited to Sudan and the RSF. Reports are pervasive throughout the Sahel leading some human rights groups have said that rape in the Sahel has become an acceptable weapon of war. Sad. Sources: https://www.albawaba.com/node/over-100-women-commit-mass-suicide-1591038 https://www.youtube.com/watch?v=T9Voctv1u-o https://www.bbc.com/news/articles/c8xpqvz0e88o https://www.aljazeera.com/news/2023/4/16/sudan-unrest-what-is-the-rapid-support-forces https://www.reuters.com/investigates/special-report/sudan-politics-sexual-violence/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP15: Will the autonomous car kill the DUI defense industry? | 00:14:01 | |
Summary: In this episode we discuss the future of the DUI defense industry in light of the development of self-driving vehicles. We examine various aspects of the technology, including its current state, future development, legal implications, and consumer acceptance. We discuss that while the technology is still in its early stages and faces numerous challenges, its eventual implementation will likely lead to fewer traffic accidents and violations, potentially impacting the DUI defense industry. We explore the legal framework governing autonomous vehicles, emphasizing the potential challenges in defining "actual physical control" in Pennsylvania law as an example. We also analyze the economic feasibility of self-driving technology, considering the significant costs involved. Ultimately, we discuss that the future of the DUI defense industry will be significantly influenced by the pace of technological advancements, legal regulations, and consumer adoption of self-driving vehicles. Questions to consider as you read/listen:
Long format:
Will the autonomous car kill the DUI defense industry? By Justin James McShane Published: Dec 18, 2022
I have been asked to address the Boogie Man in the closet. Autonomous cars. The Henry Penny among the DUI defense industry believes that the dawning of the age of autonomous vehicles will the entire DUI defense community go away? Do you all have to suddenly become wills, trusts and estates lawyers? It is very easy to fall into the Henny Penny aspect of this because if these cars are on the road and they work, there goes all traffic accidents and all traffic stops. Perfect driving. Some have posited that when this age comes to be certainly the legislation will require the human who is in potential control of the vehicle not be impaired. But how does that get enforced? Without traffic accidents and traffic code violations, there are no reasons to stop the cars and discover if the person in actual physical control is incapable of safe driving. Given that the fleet age is 12 years. Does that mean that when these cars truly start rolling out, you have 12 years to find another choice of law sectors? I have been keenly in tune with the enabling legislation, NHTSA approvals and real-world results. There are three components of the question:
Current state of the technology Here is where the technology is now. I have friends such as Jacki Lee who has a Tesla and bought the “auto-pilot” technology.
At the current, self-driving cars do not work well. That’s just the bottom truth. They do best on highways. According to NHTSA, there are zero cars that are fully autonomous right now in consumer hands on the roads. Currently, states permit a limited number of “self-driving” vehicles to conduct testing, research, and pilot programs on public streets and NHTSA monitors their safety through its Standing General Order https://www.nhtsa.gov/node/103486.
The future of the technology Here are the NHTSA levels of autonomous vehicles…
· Level 1: An advanced driver assistance system (ADAS) aid the human driver with steering, braking or accelerating, though not simultaneously. An ADAS includes rearview cameras and features like a vibrating seat warning to alert drivers when they drift out of the traveling lane. · Level 2: An ADAS that can steer and either brake or accelerate simultaneously while the driver remains fully aware behind the wheel and continues to act as the driver. · Level 3: An automated driving system (ADS) can perform all driving tasks under certain circumstances, such as parking the car. In these circumstances, the human driver must be ready to retake control and is still required to be the main driver of the vehicle. · Level 4: An ADS can perform all driving tasks and monitor the driving environment in certain circumstances. In those circumstances, the ADS is reliable enough that the human driver needn't pay attention. · Level 5: The vehicle's ADS acts as a virtual chauffeur and does all the driving in all circumstances. The human occupants are passengers and are never expected to drive the vehicle.
According to them, we are only on level 2/3 on the consumer available level. They state that there are limited Level 4 vehicles in production, but they require a lot of testing. They say full Level 5 automation is 2025+. Here is more data to consider.
The above comes from statistia and the study was funded by Waymo so there is perhaps an optimistic bias. It is also important to note that this is all vehicles meaning test vehicles, fleet vehicles and business/consumer vehicles. Why is Level 5 so far off? Level 5 is so far off because actual trusted implementation of Level 5 in a stop and go environment (anything other than highways which are limited access meaning no pedestrians or random balls with random kids chasing them, generally no to low wildlife interruptions, generally straight with no cross traffic) is very very hard to model. The complexity of the chaos that is non-highway driving is unlimitedly complex.
The camera sensors are still far from perfect. Poor weather conditions such as rain, fog, or snow can prevent cameras from clearly seeing the obstacles in the roadway, which can increase the likelihood of accidents. Additionally, there are often situations where the images from the cameras simply aren’t good enough for a computer to make a good decision about what the car should do. For example, in situations where the colors of objects are very similar to the background or the contrast between them is low, the driving algorithms can fail. Radar (Radio Detection and Ranging) sensors make up a crucial contribution to the overall function of autonomous driving: they send out radio waves that detect objects and gauge their distance and speed in relation to the vehicle in real time. Both short- and long-range radar sensors are usually deployed all around the car and each one has their different functions. While short range (24 GHz) radar applications enable blind spot monitoring, the ideal lane-keeping assistance, and parking aids, the roles of the long range (77 GHz) radar sensors include automatic distance control and brake assistance. Unlike camera sensors, radar systems typically have no trouble at all when identifying objects during fog or rain. There are also a lot of false positives where things are sensed but do not in fact exist. The pedestrian recognition algorithm definitely needs a lot of improvement, seeing as the automotive radar sensors used in today’s vehicles only correctly identify between 90% and 95% of pedestrians, which is hardly enough to ensure safety on the road. As well, the still widely-used 2D radars are not able to determine accurately an object’s height, as the sensors only scan horizontally, which can cause a variety of problems when driving under bridges or road signs. A wider variety of 3D radar sensors are currently being developed in order to solve these issues. Lidar (Light Detection and Ranging) sensors work similar to radar systems, with the only difference being that they use lasers instead of radio waves. Apart from measuring the distances to various objects on the road, lidar allows creating 3D images of the detected objects and mapping the surroundings. Moreover, lidar can be configured to create a full 360-degree map around the vehicle rather than relying on a narrow field of view. These two advantages make autonomous vehicle manufacturers such as Google, Uber, and Toyota choose lidar systems. Moreover, lidar can be configured to create a full 360° map around the vehicle rather than simply relying on a narrow field of view. These two advantages have led autonomous vehicle manufacturers such as Google, Uber, and Toyota to choose lidar systems for their vehicles. Since rare earth metals are needed in order to produce adequate lidar sensors, these sensors are much more expensive than radar sensors used in autonomous vehicles. Yet another problem is that snow or fog can sometimes block lidar sensors and negatively affect their ability to detect objects in the road. Lidar also is reported to have problems at nighttime and inclimate weather.
Inputless cars a reality or a myth NHTSA right now says that left to be discussed and determined is whether at the time of Level 5 implementation whether vehicles with no input possibilities (pedals, gear shifts and wheel) will even be allowed. In my humble opinion, there will be no major manufacturers who are willing to accept 100% liability for any sort of crash by implementing inputless vehicles unless federal and state legislation is massively changed. Why would they? I don’t see NHTSA allowing for consumer vehicles to have no inputs. I think at least in the very beginning there will be a requirement that driver override at all times be possible.
Pennsylvania law intersection This is important because in Pennsylvania the crime requires the accused to “shall not drive, operate or be in actual physical control of the movement of any vehicle”. The SCOPA of PA has declined to really adopt a bright line rule for actual physical control and instead allows for an amorphous “totality of the circumstances”. Under the totality of the circumstances approach the factors to be considered include “the location of the vehicle, whether the engine was running and whether there was other evidence indicating that the defendant had driven the vehicle at some point prior to the arrival of police on the scene.” Commonwealth v. Byers, 437 Pa.Super. 502, 506, 650 A.2d 468, 469 (1994).
The results of this lack of bright line rule are just wide to make it meaningless. Here are some examples. Commonwealth v. Woodruff, 447 Pa.Super. *451 222, 668 A.2d 1158 (1995) (actual physical control found where defendant's car was on berm of the road fifty yards west of the store where he had purchased beer, the engine was running, the high beams were on and the car was protruding into traffic lanes); Commonwealth v. Trial, 438 Pa.Super. 209, 652 A.2d 338 (1994) (actual physical control found where defendant's car was diagonally across a roadway, defendant was in the car with his seatbelt on, the parking lights were on and the keys were in the ignition in the "on" position, although the engine was not running); Commonwealth v. Wilson, 442 Pa.Super. 521, 660 A.2d 105 (1995) (actual physical control found where defendant's car was down an embankment by the roadside, no keys were found, but the hood of the car was still warm on a winter night); Commonwealth v. Leib, 403 Pa.Super. 223, 588 A.2d 922, alloc. denied, 528 Pa. 642, 600 A.2d 194 (1991) (actual physical control found where defendant was asleep in the car in the middle of the road with the engine off); Commonwealth v. Bobotas, 403 Pa.Super. 136, 588 A.2d 518 (1991) (actual physical control found where defendant was parked in an alley on his way home with his engine running); Commonwealth v. Crum, 362 Pa.Super. 110, 523 A.2d 799 (1987) (actual physical control found where defendant was sleeping in his car on the side of the road with the engine and headlights on); Commonwealth v. Kloch, 230 Pa.Super. 563, 327 A.2d 375 (1974) (actual physical control found where defendant was asleep behind the wheel of a car parked along the side of the highway, protruding into a traffic lane with the engine and headlights on); Commonwealth, Dep't of Transp., Bureau of Traffic Safety v. Farner, 90 Pa. Commw. 201, 494 A.2d 513 (1985) (actual physical control found where defendant was behind the wheel in a traffic lane with the motor running and the brake lights activated); cf. Commonwealth v. Price, 416 Pa.Super. 23, 27, 610 A.2d 488, 490 (1992) (no actual physical control established where the defendant was sitting behind the wheel of a parked car; the engine was not running and the defendant had the keys in his hands).
As you can see from the above, as long as there is a capability of input, there will be DUI trials in PA. But you are saying to yourself “how will they legally stop the vehicle?” First, there are a host of technical non driving reasons to stop a car such as illegal tint, registration lapse, equipment issues, lighting issues, insurance lapse, false tipsters who claim bad driving or a drunk “behind the wheel” and even good old-fashioned BS like police saying “the car nearly hit a mailbox” thing. As long as there good faith mistake of fact reason then it is not necessarily illegal to stop the car.
Also given the current difficulties in non-highway driving of these vehicles, we have to stop and ask ourselves what type of driving behavior environment do DUIs come from? Non-highway (stop and go driving). We have very very few highway non accident DUIs. Most are in the stop and go environment.
Affordability of the technology As we can see with the current 40% increase in cost that the Lighting F150 has undergone in the vastly overrated EV orgasm that is in existence today, the perceived end goal of Level 5 meets reality of the pocketbook and just like with the EV F150 Lightning the average consumer will centime to weigh cost benefit analysis. At some point consumers will say “it’s a beautiful dream but it costs too much” which is the current folly of the F150 Lighting EV right now.
This is a very “bare bones” version. Others are more complex. The systems required for autonomous driving can cost well beyond $10,000, while the top sensor being used by Google and Uber costs up to $80,000.
The future state of autonomous vehicle technology is very very expensive as we can see. $80,000 on top of the price of the vehicle really prices most folks out of the market entirely. For fully autonomous, inputless vehicles there is an array of technology involved. For example, Google's self-driving car project, called Waymo, uses a mix of sensors, lidar (light detection and ranging -- a technology similar to RADAR) and cameras and combines all of the data those systems generate to identify everything around the vehicle and predict what those objects might do next. This happens in fractions of a second.
The following outlines how Google Waymo vehicles work: · The driver (or passenger) sets a destination. The car's software calculates a route. · A rotating, roof-mounted Lidar sensor monitors a 60-meter range around the car and creates a dynamic three-dimensional (3D) map of the car's current environment. · A sensor on the left rear wheel monitors sideways movement to detect the car's position relative to the 3D map. · Radar systems in the front and rear bumpers calculate distances to obstacles. · AI software in the car is connected to all the sensors and collects input from Google Street View and video cameras inside the car. · The AI simulates human perceptual and decision-making processes using deep learning and controls actions in driver control systems, such as steering and brakes. · The car's software consults Google Maps for advance notice of things like landmarks, traffic signs and lights. · An override function is available to enable a human to take control of the vehicle.
That’s literally a lot of moving parts.
The current state of the legislation and the regulations through DOT, NHTSA and PennDOT Look above for a lot of discussion on the law of all of this. Additionally, we should consider that in 2020, Gov. Tom Wolf signed into law a bill to permit the driverless testing and deployment of autonomous cars and trucks on Pennsylvania roadways. Pennsylvania law has prohibited vehicle operation on state roadways without a human driver behind the wheel inside the vehicle. There still is no overarching federal law that covers Level 5 vehicles at the federal level. So, there is a lot of work to do. The industry says the biggest thing that would help self-driving cars is if they could communicate with each other and objects around them, but that also may not happen any time soon. In the last days of the Trump administration, the FCC took away most of the radio spectrum that cars were planning to use. Unless that changes, experts say it will be much more difficult for cars to communicate.
Consumer adaptation
Here is the latest report on the willingness to adopt self-driving technology: https://motional.com/mobility-report?gclid=CjwKCAiAkfucBhBBEiwAFjbkr9BiSmXJkMYaz27OGA2GdAP-Pq094NP37_v3j_BVnYWiha-A-sihFBoCNB0QAvD_BwE
While younger folks are open to the technology and the general public increasingly so, willingness or comfort needs to meet the reality of technological capability and price. Hopefully this answers your question. No, you do not need to brush up on the Rule Against Perpetuities. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 05 Nov 2024 | EP57: Is China winning the Chip War | 00:18:06 | |
Summary: In this episode, we examine China's position in the global chip race, particularly for advanced AI chips. We detail China's struggles to produce chips smaller than 7 nanometers (nm) due to export restrictions on crucial lithography machines and the difficulty of catching up with leading manufacturers. We then delve into the different types of AI chips and the companies developing them, highlighting that while China has several companies making AI chips, many rely on foreign technology or are lagging in terms of nm size, indicating a dependency on foreign manufacturers and a disadvantage in the race for cutting-edge AI technology. Questions to consider as you read/listen: 1. What are the major factors hindering China's advancement in the global semiconductor and AI chip production 2. How do China's AI chip makers compare in terms of technology and production capacity to their global competitors? 3. What are the implications of China's current status in the chip war for the global technology landscape and future of artificial intelligence? Long format: Is China winning the chip war? No. Here are the facts: 1. China is producing in fabs (mainly at the Semiconductor Manufacturing International Corporation) 7nm chips but not at scale. They are doing nothing smaller than 7nm. The current state of the art is 3nm with Rapidus (Japan) saying it is over 80% complete making its 2nm fab that will produce at scale and then will move on to 1.4nm. 2. TSMC, Samsung and Japanese fabricators along with the US fabricator have agreed to export bans of chips of various sizes the smallest of which is 5nm and will likely be bans to anything under 7nm soon. 3. Semiconductor fabrication requires lithography machines to produce semiconductors. Above 7nm involves lithography technology called Deep Ultraviolet (DUV). DUV is made by ASML (Dutch), Nikon (Japan) and Cannon (Japan). China has no domestic DUV lithography machine production. To my knowledge with export licenses, DUVs can still be exported to China. In terms of lithography equipment, 90 nm-process lithography machines made by Shanghai Micro Electronics Equipment (SMEE) are the mature domestic product for mass production in China. The best China can do at present is the lithography machine for the 28 nm process. 4. To produce any chip under 7nm you need Extreme Ultraviolet (EUV) machines or you physically cannot “print” that small on a wafer. Only one company makes EUV. That is ASML of the Netherlands. The Dutch passed a law making it illegal to export EUV machines to China. ASML has agreed to comply. China has zero EUV machines in China. 5. Shanghai Micro Electronics Equipment Group (SMEE) is a Chinese state-owned enterprise that has filed a patent for EUV radiation generators and lithography equipment. However, experts say that SMEE still lags behind ASML and would need to overcome many restrictions to catch up. 6. Thanks to the Department of Commerce restrictions and agreement by the Dutch and Japanese, the parts and consumables and design for EUVs cannot be exported to China. That’s what leads PZ to say that the Chinese can’t get EUVs (and therefore cannot make under 7nm where it is now), can’t import the finished sub 5nm chips (without breaches or workarounds which will always happen), and can’t get the “stuff” needed to make the EUVs it needs to get below 7nm. The only real hope China has is that the Dutch put profits over politics as ASML took a huge valuation hit on October 15 and there is some talk in some quarters to rescind or alter the EIV export ban. Is China winning the AI production battle? What makes an AI chip? AI Chips have parallel processing capabilities. While general-purpose chips employ sequential processing, completing one calculation at a time, AI chips harness parallel processing, executing numerous calculations at once. There are various different type of AI chips. Graphics processing units (GPUs), field programmable gate arrays (FPGAs) and application-specific integrated circuits (ASICs) are all considered AI chips. GPUs GPUs are designed to handle graphics and video rendering, and are often used for image classification, autonomous driving, and Safe City. GPUs are good for tasks that can be broken down into smaller components and completed in parallel. FPGAs FPGAs are programmable silicon chips that can be configured for specific applications. They are often used for deep learning and big data analysis. FPGAs are flexible and can be reprogrammed to optimize for specific applications, which can reduce power consumption and latency. ASICs ASICs are custom-made chips designed for a specific purpose. They are often used for data inference, AI synthesis, and assisted driving. ASICs are optimized for speed, power, and size, but they are expensive and time-consuming to design and manufacture. Once an ASIC is designed, its functionality is fixed Here is a list of current AI chip makers: https://seo.ai/blog/ai-chip-makers As we can see above, there are a number of Chinese companies. But here is recent detailed inventory of production.
Of the above chart note the node which is the nm sized chip and the fab. The devil is in the details. Huawei A major player in the global chip design market, Huawei is working to develop AI chips locally. Huawei's Ass 910B chip was once considered the most competitive AI GPU designed in China. Huawei's second-generation AI chip, Ascend 920B,which was first seen in Chinese servers in 2022. It was made using TSMC's 7-nm process SMIC SMIC is one of China's best hopes for producing advanced AI chips, but it is still one to two generations behind in mature production. SMIC only began large-scale production of 14 nm chips in 2022, and its mature production remains with the 28 nm process, still one to two generations behind. Baidu Baidu designs its own chips for AI processes, including the Kunlun chip for servers and autonomous cars. They use Nvidia chips. Alibaba Alibaba's T-Head unit developed the Hanguang 800 AI inference chip, which is used to accelerate the recommendation system on its e-commerce platform. They use Nvidia chips. Biren Technology Biren Technology designs a general purpose GPU and has a software development platform to build applications on top of the hardware. Objectively, China isn’t winning the chip war and is in a corner. And in terms of producing ADVANCED cutting edge AI chips, they are either totally dependent on foreign fabs or they are inferior because they are high nm size platforms or both. Sources: https://www.ibm.com/think/topics/ai-chip https://builtin.com/articles/ai-chip Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP11: Is China going to invade Taiwan? | 00:04:15 | |
Summary: I this episode we examine clickbait legacy media drumbeat fear stroking of China invading Taiwan. In it we look at six main reasons. We discuss the logistical challenges of a large-scale land invasion, including the difficulties of transporting troops and supplies across the Taiwan Strait, the lack of deep-water ports in Taiwan, and the island's challenging terrain. Additionally, we discuss the risks posed by Taiwan's urban concentration, which would lead to difficult urban combat, and the relative transparency of the battlefield, making a large-scale invasion difficult to stage without detection. We conclude that an invasion would be a highly resource-intensive and risky undertaking, highlighting the complexities involved in such an operation. Questions to consider as you read/listen:
Long format: Is China going to invade Taiwan? This is why I think the reality of China invading Taiwan now is very low for 6 major reasons. China is saber rattling. 1 Logistics of a land invasion. The logistics of a large land invasion encompass the complex planning and execution of moving vast numbers of troops, equipment, supplies, and supporting infrastructure across a large distance, including managing transportation, fuel, food, medical care, communication systems, and securing vital supply lines, all while considering potential enemy disruptions to these critical elements; essentially, it's the "behind-the-scenes" operation that enables a military force to sustain combat operations on enemy territory. (https://madsciblog.tradoc.army.mil/486-the-hard-part-of-fighting-a-war-contested-logistics/#:~:text=Logistics%20in and https://www.dla.mil/About-DLA/News/News-Article-View/Article/682964/history-highlight-world-war-ii-logistics-lessons/#:~:text=DLA%20accomplishes%20this%20by%20engaging,work%20effectively%20during%20the%20war ) Think Desert Shield quite the buildup.
2 Getting there en masse. The amount of troops and logistical support needed requires a lot of naval resources. It would be total commitment for China. And even then this time of year the Straight of Formosa/ Straight of Taiwan is choppy at best and treacherous at worst. That would be thousands of ships. Multiple crossings taking hours in rough to bad seas all in all taking weeks. That’s very risky just from the point of view of the physical crossing but when you add in the Taiwanese antiship and other defensive measures… Taiwan and the US and Japan will not likely grant safe passage. 3 Lack of deep-water ports. Taiwan has a few but not enough DWP with enough capacity to allow for this. And maybe Taiwan just scuttles their own ports and hunkers down. I would.
4 Topographic challenges of the island. Pull out any topographic map of the island and you will see the issue abundantly. Look at where the capital is.
5 Urban concentration. Taiwan has 23 million people mostly concentrated in urban centers. Urban centers mean urban combat. Door to door. Not pretty for the invader.
6 The relative transparency of the battlefield. True sneak attacks of invading a land mass that has 23 million inhabitants involving as some estimates say not less than 400,000 to more than two million troops takes a long time to stage and won’t go unnoticed.
I can go on. As we all know, invading a country isn’t like on a video game. It is a resource intensive risky proposition.
For a more robust treatment I offer these: https://www.cfr.org/article/why-china-would-struggle-invade-taiwan
https://media.defense.gov/2023/Apr/24/2003205865/-1/-1/1/07-AMONSON%20%26%20EGLI_FEATURE%20IWD.PDF Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP22: European Sky Shield Initiative (ESSI) What you need to know | 00:13:53 | |
Summary: The European Sky Shield Initiative (ESSI) aims to create a unified air defense system for Europe, but faces several challenges. First, the initiative involves a diverse group of nations, some within and some outside of NATO and the EU, requiring complex system integration. Second, there are competing national interests and strategic cultures, as seen in Poland’s reluctance to join and France’s potential rival initiative. Third, the specialization dilemma requires smaller nations to rely on larger nations for coverage against long-range threats. Finally, ensuring interoperability between diverse systems presents a significant challenge, requiring accurate air pictures and complex operating doctrines. Questions to consider as you read/listen:
Long format: European Sky Shield Initiative (ESSI)
My big question is the integration aspect. How do we get all of these players to communicate and work smoothly? After all, we are talking quite a few players. Some in NATO some not. Some in the EU, some not. That’s a lot of systems to integrate. In October 2022, fifteen European states (Belgium, Bulgaria, the Czech Republic, Estonia, Finland, Germany, Hungary, Latvia, Lithuania, the Netherlands, Norway, Slovakia, Slovenia, Romania, the United Kingdom) signed a declaration to join the German-led initiative. In February 2024, the German government announced that Greece and Turkey would join the initiative. In February 2023, Denmark and Sweden joined the project.[9] In July 2023, neutral states Austria and Switzerland signed the declaration to join the initiative, raising questions about the future and practicalities of their policy of neutrality. As of today, France, Poland, Italy, and Spain did not make a decision to join the ESSI. This report gives some answers: https://csis-website-prod.s3.amazonaws.com/s3fs-public/2023-05/230519_Monaghan_European_SkyShield.pdf?VersionId=lqRTBNFTvHja1Qc3ThfdCfvL5B0GSChA From the report… The strategic cacophony problem occurs when domestic imperatives to develop national forces and defense industries work against cooperation. One example is Poland’s conspicuous absence from Sky Shield following a difficult period between Warsaw and Berlin, including a public spat over deployment of German Patriot systems to Poland, given Warsaw has recently committed to developing its own short- and medium-range GBAD systems in cooperation with the United Kingdom. The strategic fit problem relates to overcoming deep national differences in strategic culture, priorities, and so on. For Sky Shield, navigating both problems among 17 members will require strong leadership and creative solutions. An example is the potential for a competing French led initiative on Europe’s air defense announced by President Macron at the Munich Security Conference. This could be due to concerns about a north-south divide in European air defense, especially given the industrial expertise in southern European nations such as France, Spain, and Italy, or the sputtering “Franco-German engine.” As one assessment of Sky Shield puts the political challenge bluntly: “Important European partners, above all France and Italy, are currently unwilling to follow Germany’s lead. The lack of political unity shows that Germany’s proposal does not take European security interests sufficiently into account, has failed to convince partners, and leaves many questions unanswered on the strategic, military, industrial, and economic levels.” The specialization dilemma undermines reliance on others to deliver shared capability. For Sky Shield, specialization is unavoidable because not every nation in Europe can afford to develop and field an independent air defense system. For example, smaller nations that cannot afford to procure or operate complex systems must rely on others for coverage against long range missile threats. Conveniently, some specialization already exists through NATO’s Air Policing and Air Shielding mission The next challenge is interoperability between nations. This is especially demanding for integrated air and missile defense, which requires a common air picture that is extremely accurate and complex operating doctrine that requires high levels of training. This is why the Latvian state secretary Jānis Garisons suggested interoperability “might be the big challenge” for Sky Shield. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP 34: Autonomous cars: Why don’t we have self-driving cars yet? | 00:07:28 | |
Summary: In this episode, we discuss the challenges and current state of autonomous vehicle development, focusing on the role of advanced semiconductor chips. We explain the different levels of autonomous driving automation, from Level 0 (no automation) to Level 5 (full automation). We highlight the need for increasingly sophisticated chips with smaller nanometer (nm) sizes to power these advanced systems, especially for achieving Level 5 autonomy. While progress is being made, we note that standardized road conditions remain a significant obstacle to widespread deployment of fully autonomous vehicles. Questions to consider as you read/listen:
Long format: Autonomous cars: Why don’t we have self-driving cars yet? The current conventional nomenclature for autonomous vehicles is from the SAE. The six levels of autonomous car automation are: Level 0: No driving automation Level 1: Driver assistance Level 2: Partial driving automation Level 3: Conditional driving automation Level 4: High driving automation Level 5: Full driving automation It all depends on what level you want. As a general rule, the higher the level the lower the nm on the chip. That’s simplistic because there is a lot that goes into it beyond the chip such as hardware (LIDAR, radar, sensors, etc). But simplistically that is so. Most automotive semiconductors are based on nodes below 22 nm. However, some vehicle designs use leading-edge 7- and 10-nm semiconductor chips, and 5-nm designs are in development. The next generation of chips for autonomous driving systems will use technologies closer to the cutting edge, in the 1-5 nm range. China at best is at 7nm currently. They are developing but not yet deployed 5nm. As I have written all over this community with lots of words, I don’t see China cracking into the sub 5nm reality for some time. The current state of the art is 3nm with IBM at 2nm. No one is at 1nm but bold prediction at the 2025 conference I bet it will be revealed. The bane of the existence of the dream of automated cars is in non standardized road conditions and non uniform lane markers. There is a great story of how Elon Musk told his engineers that he demanded to drive in a fully automated Tesla from his house to his headquarters with zero human intervention. It was a demanding timeline. For almost all hours the engineers tried and tried and tried and failed….. until they decided to go outside the box, and repair and repaint all of the roadway between his house and the HQ. Problem solved. Elon’s demand accepted. It’s a good story but a better illustration of the issues with the goal of achieving level 5 cars that will function in the wild. China is a country that would repaint all of its roads and make it supremely uniform perhaps. Will the US? Dunno. I would not bank on it. Sources: https://digital.bnpmedia.com/publication/?i=667937&article_id=3726579&view=articleBrowser https://www.synopsys.com/blogs/chip-design/autonomous-driving-levels.html# https://www.synopsys.com/blogs/chip-design/autonomous-driving-levels.html# Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 30 Oct 2024 | EP49: Is a key part of the goal of the CHIPS act showing cracks? | 00:12:51 | |
Summary:
In this episode, we explore the potential consequences of the Dutch government's export controls on ASML, the sole manufacturer of EUV lithography machines, which are essential for producing the most advanced semiconductor chips. While these controls were intended to hinder China's progress in the chip industry, they have significantly impacted ASML's revenue, leading to concerns that they may be counterproductive. We highlight the intricate relationship between technology, politics, and economics in the global chip market, where the quest for dominance is intertwined with geopolitical considerations.
Questions to consider as you read/listen:
Long format:
Is a key part of the goal of the CHIPS act showing cracks?
Maybe.
Here’s why:
BACKGROUND Oversimplified, the US CHIPS Act was passed specifically with one main goal in mind, the wrestle back from the world our domestic ability to make start of the art semiconductor chips that will be a major part of the future economy and the key component of AI. This is part of the US’s decoupling and reshoring aims to reduce and return to America manufacturing and reduce our reliance on speed out supply chains (read as get us out of dependence of China).
It has long been my position that the person who wins the chip battle and the one who wins the race for AI will be the top of the global value chain.
Concurrent with the passage of the CHIPS Act which sought to fund the decoupling and restoring by a combination of unprecedentedly large direct taxpayer infusions of cash and also even larger tax credits, the US Commerce Department issued an exceptionally broad set of prohibitions on exports to China of semiconductor chips and other high-tech equipment.
The US was all in to trying to ban (or really delay) the tech that is necessary for chip design, fabrication and use from China.
This is where it gets interesting. The single most vulnerable point of pressure to forever stop China from getting to the top of the chip race is in lithography.
LITHOGRAPHY
Very much oversimplified, Lithography is a process that transfers circuit patterns onto a silicon wafer to create semiconductor devices like microchips and integrated circuits. The lithography process requires precise alignment and high-resolution lenses to create intricate circuit patterns. Different types of lithography systems are used for different layers of the wafer.
In semiconductor manufacturing, lithography is like high-precision "printing" for tiny circuits on a silicon wafer, which will eventually become a chip. Here's how it works in basic terms:
This process is repeated multiple times, adding layers until the full circuit structure is built up, with each layer helping to create the complex paths and components that make the chip work.
ASML There is only one company in the world that makes the highest level of lithography devices that must be used to make the state of the art semiconductor chips: ASML.
ASML (ASML Holding N.V.) is a Dutch multinational corporation that designs and manufactures lithography machines used to make computer chips:
ASML is a leading supplier of lithography technology to the semiconductor industry. Their machines use light to expose circuit patterns onto a semiconductor wafer, a process called photolithography. This allows chipmakers to increase the number of transistors on a silicon area, which results in faster, more powerful, and more energy efficient chips.
What they make ASML's products include:
You can only make 5nm chips or lower with EUV machines. You cannot use DUV machines other than get under 7nm. Commercially China makes 7nm chips right now. The state of the art is 3nm chips. However Rapidus (Japan) has announced that their 2nm commercial scale fab center is about 80% and that they will be tooling for 1.4nm chips shortly thereafter.
Again, it must be emphasized that currently only ASML makes EUV lithography systems.
The Dutch government January 2024 seemed to agree banning ASML from doing a lot of its preferred business in China.
The solution to stopping or delaying China in the chip war was simple. ASML doesn’t sell to China. Pats on the back and roll out the Mission Accomplished sign right?
October 15, 2024 CHANGES EVERYTHING
ASML accidentally released its third-quarter results a day early in error. And it wasn’t pretty. The company said it expects 2025 net sales of 30 billion euros and 35 billion euros ($32.7 billion and $38.1 billion), in the lower half of a range it had previously provided. Net bookings for the September quarter were 2.6 billion euros ($2.83 billion), the company said — well below the 5.6 billion euro LSEG consensus estimate. ASML’s share plunge saw the critical semiconductor firm lose 49.2 billion euros ($53.6 billion) in market capitalization in a single day. A lot of analysts blamed the Dutch export ban for the ASML stock drop and loss in valuation.
OUTCOME
According to news reports today (October 29, 2024) the Netherlands are rethinking the wisdom of export controls on China given that their best source of future relevancy in the semiconductor world took a very big hit.
Will money beat out politics? Time will tell.
https://www.bis.doc.gov/index.php/about-bis/newsroom/2082
https://www.asml.com/en/products/euv-lithography-systems
https://thediplomat.com/2024/10/the-fab-4-allies-are-pushing-back-on-us-export-controls-on-china/
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| 11 Nov 2024 | EP75: The Renewable Delusion: Why Transition Alone Won’t Power Tomorrow’s World | 00:16:44 | |
Summary: In this episode, we examine "The Renewable Delusion: Why Transition Alone Won’t Power Tomorrow’s World," which argues against a full-scale transition to renewable energy sources, claiming that such a shift is impractical for meeting the needs of megacities and modern life. Instead, the author advocates for a diversified energy strategy that prioritizes nuclear energy as the primary source, with natural gas serving as a backup. The author supports their claims by analyzing key metrics such as energy density, power density, energy return on investment, and cold start times, concluding that nuclear energy is superior to renewables in terms of efficiency, reliability, and scalability. Questions to consider as you read/listen:
Long format: The Renewable Delusion: Why Transition Alone Won’t Power Tomorrow’s World By Justin James McShane October 30, 2024 TL;DR: An effective energy policy should prioritize affordability, reliability, and minimal environmental impact. Key metrics like energy density, power density, EROI, and cold start times reveal that nuclear energy, due to its high density and efficiency, is the best option for meeting large-scale energy demands. Natural gas also offers flexibility and reliability, making it a viable backup when nuclear is not feasible. While renewables have their place, a total reliance or even majority reliance on them is impractical for sustaining megacities and modern life. A diversified approach—anchored in nuclear and natural gas, with renewable supplementation—best ensures a stable, sustainable energy future. Introduction: In a world increasingly focused on sustainable development and economic stability, determining the best path forward for energy policy demands a nuanced approach. Energy systems must be economically viable, environmentally sensitive, and capable of delivering reliable power on demand. The balancing act between these factors is challenging, particularly with growing calls for energy transition toward renewables. However, by analyzing key metrics such as energy density, power density, energy return on investment (EROI), capacity factor, and cold start times, we can begin to identify which energy sources best meet modern society's extensive demands. In examining these metrics, nuclear energy and natural gas emerge as essential components in creating an effective, diversified energy policy. This analysis delves into the attributes that make nuclear and natural gas energy sources crucial for supporting the continuous energy flow (base load) required for contemporary urban and industrial needs, while considering the limitations and benefits of renewable options like wind and solar. As we shall see an energy transition to entirely to renewables or even one where it is predominately renewables is not possible if we want to keep our mega cities and current lifestyle. Information: The goal of any energy system is to be affordable in order to drive economic development and improvements in quality of life, reliable so as to be available on demand in its various forms, most of all as uninterruptible electricity, and convenient to give consumers virtually effortless access to preferred household, industrial, and transport energies. Where environmental concerns sit in the weighing of the above is debatable but the above sentiments, I don’t think are reasonably debatable. In environmental terms, power density is about claiming space: land use intensity (m2/W) is its obvious inverse. But there are other intensities to consider, above all the intensity of water use (g H2O/J) and carbon intensity (g C/J), a marker of the human interference in the global biogeochemical carbon cycle that quantifies the emissions of CO2, the dominant anthropogenic greenhouse gas. How that is balanced is beyond the scope of this treatment. Importantly, we can to a degree reduce all of these goals stated above (but for the priority/value judgement involved with environmental issues) into 5 statistics as they are quantifiable: (1) energy density, (2) power density, (3) energy return on investment, (4) capacity factor and (5) cold start up times. Let’s look at each. ENERGY DENSITIES The heat value of a fuel is the amount of heat released during its combustion. Also referred to as energy or calorific value, heat value is a measure of a fuel's energy density and is expressed in energy (joules) per specified amount (e.g. kilograms). There are many reasons to prefer sources of high energy density, particularly in modern societies demanding large and incessant flows of fuels and electricity. Obviously, the higher the density of an energy resource, the lower are its transportation (as well as storage) costs, and this means that its production can take place farther away from the centers of demand.
Heat value/ Energy Density Natural uranium, in FNR 28,000 GJ/kg Uranium enriched to 3.5%, in LWR 3900 GJ/kg Natural uranium, in LWR (normal reactor) 500 GJ/kg Natural uranium, in LWR with U & Pu recycle 650 GJ/kg Hydrogen (H2) (in theory, no prototype) 120-142 MJ/kg Methane (CH4) 50-55 MJ/kg Liquefied petroleum gas (LPG) 46-51 MJ/kg Petrol/gasoline 44-46 MJ/kg Diesel fuel 42-46 MJ/kg Crude oil 42-47 MJ/kg Natural gas 42-55 MJ/kg PV panel 39.5 MJ/lg Dimethyl ether - DME (CH3OCH3) 29 MJ/kg Hard black coal (Australia & Canada) c. 25 MJ/kg Hard black coal (IEA definition) >23.9 MJ/kg Methanol (CH3OH) 22.7 MJ/kg Wind turbine 21.48 MJ/kg Sub-bituminous coal (Australia & Canada) c. 18 MJ/kg Sub-bituminous coal (IEA definition) 17.4-23.9 MJ/kg Lignite/brown coal (IEA definition) <17.4 MJ/kg Firewood (dry) 16 MJ/kg Lignite/brown coal (Australia, electricity) c. 10 MJ/kg Geothermal (heat capacity of water) 4.186 MJ/kg *Uranium figures are based on 45,000 MWd/t burn-up of 3.5% enriched U in LWR
POWER DENSITIES Power is simply energy flow per unit of time (in scientific units, joules per second, which equals watts, or J/s = W), spatial density is the quotient of a variable and area, and hence power density is W/m2, that is, joules per second per square meter. The power density rates include not just the physical power plants land footprint but also all right of way (ROWs) considerations including aspects such as transmission lines, access ways, set backs and substations. Perhaps the most important attribute of an energy source is its density: its ability to deliver substantial power relative to its weight or physical dimensions. When choosing a power source, you want a higher power density so that in the smallest space possible, we can produce the most energy so that land can be otherwise used for agriculture, industrial use, residential use, commercial use or even leisure use as opposed for power generation. For renewables, the research provides these values. For non-renewables, the research reveals the following. In other words, we can compute that one nuclear power plant produces the energy of thousands of wind turbines easily. To generate the same amount of energy as a typical nuclear reactor, it would take several hundred wind turbines depending on the size of the reactor and the wind turbine, with estimates often ranging between 500 and 1,000 or more turbines to match the output of a single nuclear reactor. A nuclear power plant has several reactors typically. This just gets us to equivalent power rates referring to Watts. When we add in the spatial component (m2), we can very plainly see that “energy transition” is problematic. For example, wind turbines must be set apart to avoid excessive wake interference. Turbines must be placed at least three, and better five, turbine diameters apart in the crosswind direction, and at least six and preferably ten diameters in the downwind direction. You can do the math, 1000s of turbines separated that much by regulation versus the typical footprint of a nuclear power plant doesn’t compare. Just to further put a point on the issue of total energy transition away from fossil fuels towards lower density intermittent renewables, Professor Smil is instructive and is worth directly quoting: Tomorrow's societies, which will inherit today's housing, commercial, industrial, and transportation infrastructures, will need at least two or three orders of magnitude more space to secure the same flux of useful energy if they are to rely on a mixture of biofuels and water, wind, and solar electricity than they would need with the existing arrangements. This is primarily due to the fact that conversions of renewable energies harness recurrent natural energy flows with low power densities, while the production of fossil fuels, which depletes finite resources whose genesis goes back 106–108 years, proceeds with relatively high power densities… Fossil fuels (when transportation and transmission ROW needs are included) generally supply energy with power densities higher than those prevailing in city downtowns, and the only instances in which the power densities of energy use surpass those of common ways of energy production are the energy-intensive industrial processes (often well above 1,000 W/m2) and city blocks consisting of densely packed high-rise buildings (on an annual basis they can go well above 500 W/m2) and during short periods of peak demand (driven by winter heating or summer air conditioning) in downtown cores, where they can go to as much 1,000 W/m2 or even more… Net fossil fuel imports added about 750 GW to the domestic production, and so the power density of the entire system would be about 50 W/m2. As expected, the overall power density of the nascent energy supply delivered by new conversions of renewable energy sources is much lower: the growing triad of wind turbine–generated electricity, solar electricity, and liquid biofuels reached a bit over 60 GW in 2010, and even after counting only the land actually occupied by wind turbines and their infrastructure and excluding all transmission ROWs the new renewable system delivers with an overall power density of just 0.4 W/m2, less than 1/100th of the currently dominant arrangements… If all of America's gasoline demand in 2012 (a total of 16.96 EJ, or 537.87 GW) were to be supplied by corn-based ethanol produced with that power density, then the United States would have to be growing corn for ethanol on 234 Mha, an area nearly 75% larger than that of all recently cultivated land and a third larger than the country's total cropland… [In conclusion], such a ramping-up of all kinds of capacities [that come with a total transition from fossil based fuels to strictly renewables]—design, permitting, financing, engineering, construction, all going up between one and five orders of magnitude in less than two decades—is far, far beyond anything that has been witnessed in more than a century of developing modern energy systems. And that still leaves out two other key facts, namely, that such a gargantuan renewable energy system would need an enormous expansion of high-voltage transmission and would require the creation of an entirely new, hydrogen-based society….To totally de-carbonize Britian in favor of renewables would require 240,000 km2 which is essentially the entire area of Britain. The same holds true for Germany as it would require about 350,000 m2 which is likewise essentially the country’s entire area. And there is Japan, which to decarbonize would require nearly 600,000 km2 of land which is nearly 60% more than the area of the four main islands. [Finally,] a reality check is in order: how can this prospect be squared with the growth of megacities whose densely crowded, high-rise blocks may average throughout the year more than 500 W/m2 and reach 1,000 W/m2 during the hours of peak demand? Since 2007 more than half of the world's population has been living in cities. By 2050 that share will be above 70%, and more than half will live in megacities with populations of more than 10 million, areas with the highest power density of final energy uses. Even if the power densities of energy use in many megacities were to decline gradually in the decades ahead, it would be impossible to supply them with decentralized PV-based electricity…. New energy arrangements are both inevitable and desirable, but without any doubt, if they are to be based on large-scale conversions of renewable energy sources, then the societies dominated by megacities and concentrated industrial production will require a profound spatial restructuring of the existing energy system, a process with many major environmental and socioeconomic consequences. (Power Density: A Key to Understanding Energy Sources and Uses (MIT Press) by Vaclav Smil ENERGY RETURN ON INVESTMENT Energy Return on Investment (EROI) is a ratio that measures the amount of usable energy produced from an energy source compared to the amount of energy used to create it. An EROI of less than or equal to one means the energy source is a net "energy sink" and can no longer be used as an energy source. An EROI of about 7 is considered break-even economically for developed countries, providing enough surplus energy output to sustain a complex socioeconomic system and cities. Life-cycle energy ratios for various technologies
Source R3 energy ratio – EROI (output/input) Hydro
Uchiyama 1996 50
Held et al 1977 43
NZ run of river Weissbach 2013 50
Quebec Gagnon et al 2002 205 Nuclear (centrifuge enrichment)
See Table 1 81
PWR/BWR Kivisto 2000 59
PWR Weissbach 2013 75
PWR Inst. Policy Science 1977* 46
BWR Inst. Policy Science 1977* 43
BWR Uchiyama et al 1991* 47 Coal
Kivisto 2000 29
black, underground Weissbach 2013 29
brown,open pit, US Weissbach 2013 31
Uchiyama 1996 17
Uchiyama et al 1991* 16.8
unscrubbed Gagnon et al 2002 7
Kivisto 2000 34 Natural gas - piped Kivisto 2000 26
- CCGT Weissbach 2013 28
- piped 2000 km Gagnon et al 2002 5
LNG Uchiyama et al 1991* 5.6
LNG (57% capacity factor) Uchiyama 1996 6 Solar
Held et al 1997 10.6 Solar thermal parabolic
Weissbach 2013 9.6 Solar PV rooftop Alsema 2003 12-10
polycrystalline Si Weissbach 2013 3.8
amorphous Si Weissbach 2013 2.1
ground Alsema 2003 7.5
amorphous silicon Kivisto 2000 3.7 Wind
Resource Research Inst.1983* 12
Uchiyama 1996 6
Enercon E-66 Weissbach 2013 16
Kivisto 2000 34
Gagnon et al 2002 80
Aust Wind Energy Assn 2004 50
Nalukowe et al 2006 20.24
Vestas 2006 35.3 Geothermal Traditional
9
Enhanced Geothermal Systems (EGS)
unknown CAPACITY FACTOR Capacity factors allow us to examine the reliability of various power plants. It basically measures how often a plant is running at maximum power. A plant with a capacity factor of 100% means it is capable and does produce power all the time at full load. Nuclear has the highest capacity factor of any other energy source—producing reliable, carbon-free power more than 92% of the time. That’s nearly twice as reliable as a coal (49.3%) or natural gas (54.4%) plant and almost 3 times more often than wind (34.6%) and solar (24.6%) plants.
Capacity Factor Nuclear 92.7% Geothermal 71% Natural Gas 54.4% Coal 49.3% Hydropower 37.1% Wind 34.6% PV 24.6%
COLD START TIME Cold start time is the time from full shut down for greater than 24 hours to full achieving full load. We want fast cold state up time to meet our goal which is to make sure that we have energy when there is a demand for it. Hydrogen 30 seconds to a few minutes in theory Natural gas several minutes to 6 hours Wind 10 minutes Solar 10 minutes Hydroelectric: 10 minutes Geothermal 2-4 hours Coal 6-48 hours Nuclear 12 hours
ENVIORNMENTAL IMPACT: And as a bonus for those interested in the numbers when it comes to environmental impact, I have provided both water related statistics and issues as well as gCO2/kWh and “green house gas” emission rates for consideration. gCO2/kWh Japan Sweden Finland coal 975 980 894 gas thermal 608 1170 (peak-load, reserve) - gas combined cycle 519 450 472 solar photovoltaic 53 50 95 wind 29 5.5 14 nuclear 22 6 10 - 26 hydro 11 3 -
CONCLUSION
In conclusion, determining an optimal energy policy requires balancing multiple priorities such as affordability, reliability, and convenience. Through key metrics like energy density, power density, energy return on investment (EROI), and cold start times, we can assess various energy sources in a way that readily reveals the strengths of nuclear energy over others. Nuclear power, with its high energy density and superior EROI, stands out as the most efficient and practical solution for meeting large-scale energy demands. One nuclear reactor can generate the same amount of energy as hundreds, if not thousands, of wind turbines, all while requiring far less land and infrastructure. The power density of nuclear energy also allows for continuous, uninterruptible electricity generation, a critical requirement for industrial and societal stability that intermittents like wind and solar cannot. While natural gas offers a lower EROI and less energy density than nuclear, it still surpasses most renewable sources in terms of efficiency and reliability. Natural gas, with its shorter cold start times and more manageable infrastructure, represents a viable alternative when nuclear energy is not practical over the other alternatives. By the numbers, nuclear energy should be the primary focus for long-term energy solutions, with natural gas as a secondary option. This approach ensures that energy policy remains centered on practical, scalable solutions that support economic growth and uninterrupted energy supply, providing the best outcomes for modern society’s demands. In the end, the logical outcome is energy diversity instead of energy transition away from fossil fuels or nuclear if we want to keep our mega cities and current quality of life and rates of growth. “Energy transition" refers to a large-scale shift in an entire energy system, typically moving away from fossil fuels and towards renewable energy sources to combat climate change, while "energy diversification" means actively increasing the variety of energy sources used within a system, which can include incorporating renewables but also means relying on multiple sources to reduce dependence on any single one, enhancing energy security; essentially, diversification is a tactic within a broader energy transition strategy. While adding intermittents is politically appealing a goal of shifting the entire energy system to that exclusively is not wise and is not something that can be done if we want to keep our mega cities and current quality of life and rates of growth. Basing our energy sector on non-renewables primarily nuclear and natural gas and supplementing that with occasional intermittents is a sound path forward that is supported by the data.
Conclusion: The data-driven approach to energy policy reveals a clear path: a balanced system grounded in nuclear and natural gas, supplemented by renewable energy where feasible. Nuclear energy, with its unmatched energy density and EROI, proves indispensable for sustaining large populations and high-demand areas. Natural gas provides flexibility with quicker cold start times, making it a practical complement to nuclear. Although the allure of a complete shift to renewables is strong, the demands of megacities and modern life require energy diversity rather than a singular transition or even one that is dominated by renewables. Moving forward, embracing a diversified energy portfolio allows for stability, economic growth, and resilience against the constraints of any single energy source. To secure an efficient, reliable energy future, we must prioritize solutions grounded in practicality and scalability, ensuring that energy policy serves both current needs and long-term sustainability.
Sources: Power Density: A Key to Understanding Energy Sources and Uses (MIT Press) by Vaclav Smil https://world-nuclear.org/information-library/facts-and-figures/heat-values-of-various-fuels https://www.investopedia.com/terms/e/energy-return-on-investment.asp https://www.sciencedirect.com/science/article/abs/pii/S0360544213000492 https://www.energy.gov/ne/articles/what-generation-capacity Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 06 Nov 2024 | EP63: Protecting Security or Sinking Stocks? The High Stakes of Dutch Export Laws | 00:18:50 | |
Summary: The Netherlands has imposed strict export controls on advanced semiconductor manufacturing equipment, particularly those produced by ASML, to protect national security. These controls require companies to obtain licenses before exporting such equipment outside the European Union. The restrictions have impacted ASML's stock valuation and sparked discussions about potential adjustments to the export laws. The Netherlands aims to balance its commitment to national security with the economic well-being of its high-tech industries. Questions to consider as you read/listen:
Long format: Protecting Security or Sinking Stocks? The High Stakes of Dutch Export Laws Introduction: The Netherlands has established stringent export controls on strategic goods and services, particularly in the high-tech sector, as part of its national security and international policy. Among the most closely monitored items are advanced semiconductor manufacturing technologies, critical for producing cutting-edge microchips used worldwide. These controls reflect the Netherlands’ commitment to balancing economic growth with global security responsibilities, an approach increasingly relevant in today’s geopolitical landscape. DETAILS The Netherlands has export controls on strategic goods and services, including advanced semiconductor manufacturing equipment, to protect national security: Advanced semiconductor manufacturing equipment As of September 1, 2023, Dutch companies need a license from the Central Import and Export Office to export certain advanced semiconductor manufacturing equipment outside of the European Union. This includes equipment for atomic layer deposition, lithography, and epitaxial growth, as well as Extreme Ultraviolet (EUV) pellicles and production equipment for EUV pellicles. EUVs are the only equipment in the world that can produce chips under 7nm. ASML is the only company in the world that makes EUVs. Older technology deep ultra violet lithography systems (DUVs) are made at ASML as well as other countries and companies. But two of the higher end DUVs require export licenses to ship out of the Netherlands. The TWINSCAN NXT:1970i and 1980i DUV immersion lithography systems from ASML require export licenses from the Dutch government. Strategic goods and services The Netherlands has export controls on military goods, dual-use goods, and certain types of software and technical advice. The Netherlands does not issue licenses for the export of these goods if they could contribute to human rights violations, international aggression, or instability. Principles The Netherlands' export control policy is based on the principles of prioritizing security interests over economic interests, and not contributing to the development of weapons of mass destruction. The future of Dutch export controls October 15, 2024 the ASML earning report was released. The stock tumbled and with it a large amount of the valuation of the company. Many analysts point to these restrictions as the reason As a result there have been grumblings to revisit the law so that ASML doesn’t crater. Conclusion: The impact of the Netherlands’ export control policies, particularly on semiconductor manufacturing, has drawn considerable attention, especially in light of the recent decline in ASML’s stock valuation. With such significant economic repercussions, discussions are emerging about possible adjustments to these restrictions. As the Netherlands continues to navigate its role in global trade and security, the future of these policies may hinge on balancing the interests of national security with the economic well-being of its high-tech industries. Sources: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 08 Nov 2024 | EP71: Ports, Power, and Provocation: China's Naval Ambitions from Djibouti to Cuba | 00:18:20 | |
Summary: In this episode, we explore the growing trend of China establishing military bases around the world, particularly in strategically important locations along maritime trade routes. The author of the study, Justin James McShane, argues that this expansion represents a significant shift in China’s ambitions, moving from a regional defense posture to a global power projection strategy. We detail China's existing bases in Djibouti, Gwadar, Cambodia, and Tajikistan, and discuss the potential for new bases in Cuba, Equatorial Guinea, Gabon, and other locations. This expansion poses significant security and economic challenges for the United States, as it could disrupt global trade, compromise U.S. security, and alter the balance of power. We conclude by emphasizing the importance of understanding and addressing these developments, suggesting that the United States must reassess its strategies and strengthen its alliances to counterbalance China’s growing influence. Questions to consider as you read/listen:
Long format: Ports, Power, and Provocation: China's Naval Ambitions from Djibouti to Cuba By Justin James McShane (One sentence thesis: Not well known to most but China’s global expansion of military bases from Djibouti to Cuba signals a shift towards power projection and control over strategic routes, posing significant security and economic challenges for the United States.) TL;DR: China has established military bases around the world—in Djibouti, Gwadar, Cambodia, Cuba, and Tajikistan—strategically placing itself near key shipping routes and U.S. interests. This expansion aims to create a true “blue water navy” that can project power globally. Americans should be concerned, as China’s new bases could disrupt global trade, compromise U.S. security, and shift the balance of power. Introduction: China's global influence has grown substantially over the past two decades, with its ambitions stretching far beyond its immediate borders. Nowhere is this more apparent than in the development of strategic military and logistical bases around the world. As China expands its presence in locations such as Djibouti, Gwadar, Cambodia, Cuba, and other possibilities such as Equatorial Guinea, the implications for the United States and its allies become increasingly pressing. These outposts, coupled with China’s efforts to build a true “blue water navy,” signify a shift from regional defense to global force projection. Americans should pay close attention to these developments, as China’s expanding military footprint in these key locations could reshape global power dynamics, affect U.S. security, and challenge long-standing economic and strategic interests across critical maritime routes and in the Western Hemisphere. INFORMATION In my prior posts I suggested a definition of what constitutes a “blue water navy”. I wrote then… Here is a proposed standardized definition of “blue water navy” that I suggest: “A blue water navy is able to independently and regularly sustain and operate in open ocean at distance from your own territorial waters and Exclusive Economic Zone (EEZ) a force projection to both deliver a large number of combat troops and associated logistics and also protect long distance shipping lanes vital for your home country’s trade. Sustained means measured by at least one month of force projection activities with support as well as full time shipping lane protection. Plus there has to be a component of demonstrated force projection and shipping lane protection orientation if not actual capabilities beyond one’s EEZ. A blue water Navy must have the capability to detect, identify and engage targets over the horizon. This implies some degree of sophistication in intelligence, surveillance and reconnaissance (ISR) as well as weapon capabilities. I do think that some static features to serve as minimum requirements would be necessary to serve as thresholds. I propose:
When my definition was applied to China I concluded that the PLAN was not a blue water navy because: “What makes it not a blue water navy is logistics, sustained force projection realities and its orientation. The PLAN fleet lacks the necessary logistical infrastructure, operational range, and global basing capabilities to project significant military power across vast expanses of the open ocean. It lacks friendly ports that would be available to it in the time of global conflict. It also primarily focuses its naval operations within its near seas, particularly around the East and South China Seas. [It’s naval strategy is focused mostly on anti-access/area-denial (A2/AD) strategy] This means they are not currently capable of sustained operations far from their home shores like a true blue water navy would be.” Well, there is some cause for stopping and reevaluating this in terms of a trend. DJIBOUTI This is China’s only claimed military base outside of China. It began in 2017. Its location is strategically important because it is in the commercial shipping area of the Red Sea that is under attack by pirates off Somalia as well as the Houthis in Yemen. The heavily fortified base is 0.5 square kilometers (0.2 sq. mi) in size and staffed by approximately 1,000–2,000 personnel, and has an underground space of 23,000 square meters. The base has a 400m runway with an air traffic control tower, as well as a large helicopter apron. PAKISTAN China has already acquired control of Gwadar Port on 16 May 2013. Originally valued at $46 billion, the value of CPEC projects was $62 billion as of 2020. By 2022, Chinese investment in Pakistan had risen to $65 billion. China refers to this project as the revival of the Silk Road. China's continued investment in the port, despite its lackluster performance, has raised suspicions that it is intended for use as a Chinese navy base. Gwadar Port is located at the mouth of the Persian Gulf, at the junction of major oil trade and shipping routes. It's also near the Straits of Hormuz, which are used by more than 17 million barrels of oil per day. CAMBODIA The PLAN developed Ream Naval Base on the Gulf of Thailand in late 2022. It has a pier facility that could berth an aircraft carrier. Its strategic position is clear when one looks at a map as the Straight of Malaca is nearby. TAJIKISTAN The Chinese maintain a small military post in Gorno-Badakhshan., It is a mountainous region in eastern Tajikistan. It is not on the shore or have access to any waterway, but it is important to note. The Chinese insist that it is not a military base but instead is an outpost. But it is one. CUBA Recent satellite imagery analyzed by the Center for Strategic and International Studies (CSIS) reveals China’s expanding military presence in Cuba, with four key signals intelligence (SIGINT) sites Bejucal: Located near Havana, this site has undergone significant upgrades over the past decade, including the addition of a new radome, indicating an evolving mission set. El Salao: Situated east of Santiago de Cuba, construction began in 2021 on a large circularly disposed antenna array (CDAA). Once operational, this facility could monitor U.S. military activities, including those at the nearby Guantanamo Bay Naval Base. Wajay: Approximately 10 kilometers north of Bejucal, this complex has expanded over 20 years to include 12 antennas and various support facilities, suggesting a complex SIGINT mission. Calabazar: Close to Wajay, this military complex hosts over a dozen dish antennas and pole antenna arrays, indicating involvement in space-monitoring and SIGINT operations. These developments suggest that China is enhancing its intelligence-gathering capabilities in the Western Hemisphere, potentially intercepting sensitive communications from U.S. military bases and other strategic sites. The proximity of these facilities to the southeastern United States raises significant security concerns. EQUATORIAL GUINEA China’s pursuit of a naval base in West Africa, particularly in Equatorial Guinea, has garnered significant international attention. Reports indicate that China is negotiating with Equatorial Guinea to establish a military presence at the Port of Bata, a deep-water commercial port on the Gulf of Guinea. This development would mark China’s first permanent military installation on the Atlantic coast, enhancing its global naval reach. U.S. defense officials have expressed concerns, noting that such a base could enable Chinese warships to rearm and repair in proximity to the U.S. East Coast, posing strategic challenges. The potential base aligns with China’s broader strategy to protect its overseas interests and secure maritime routes, especially in regions like the Gulf of Guinea, which is vital for global shipping and has faced piracy issues. While some analysts argue that fears of China’s Atlantic naval ambitions may be overstated, the establishment of a base in Equatorial Guinea would signify a notable shift in China’s military posture, with implications for U.S. and European security interests. GABON In August 2023, then-President Ali Bongo of Gabon disclosed to U.S. officials that he had privately assured Chinese President Xi Jinping of China’s permission to establish a military presence on Gabon’s Atlantic coast. This revelation alarmed the U.S., which views the Atlantic as a strategic area and perceives a Chinese naval base there as a significant security threat. Following a military coup in Gabon, U.S. diplomats engaged with the new authorities to dissuade them from honoring Bongo’s commitment. Concurrently, the U.S. has been urging Equatorial Guinea to reject similar Chinese overtures for a naval base, emphasizing the potential risks to regional stability and U.S. security interests. But it doesn’t stop there. The October 2023 U.S. Department of Defense China’s Military Power Report outlined that the PRC has already considered “Burma [Myanmar], Thailand, Indonesia, Pakistan, Sri Lanka, United Arab Emirates, Kenya, Equatorial Guinea, Seychelles, Tanzania, Angola, Nigeria, Namibia, Mozambique, Bangladesh, Papua New Guinea, Solomon Islands, and Tajikistan” as potential locations and that it probably already has attempted to set up bases in Namibia, Vanuatu, and the Solomon Islands. In comparison, a July 2023 AidData publication highlighted on eight possible basing locations, based on Chinese financial flows abroad: Hambantota, Sri Lanka; Bata, Equatorial Guinea; Gwadar, Pakistan; Kribi, Cameroon; Ream, Cambodia; Vanuatu; Nacala, Mozambique; and Nouakchott, Mauritania.
Conclusion: China’s global strategic expansion through its bases in places like Djibouti, Gwadar, Cambodia, and Cuba is reshaping the international landscape. By securing footholds along vital maritime routes and near U.S. interests, China’s long-term ambitions are clear: to enhance its ability to project power and protect its expanding interests worldwide. For the United States, understanding and addressing these developments is essential. America must reassess its strategies and strengthen its own alliances to counterbalance China’s growing influence. By staying vigilant and proactive, Americans can help ensure that the country remains secure and prepared to meet the challenges posed by a rapidly changing global power structure. Sources: https://foreignpolicy.com/2022/03/03/china-pla-navy-base-west-africa-atlantic-equatorial-guinea/ https://japan-forward.com/the-security-implications-of-a-chinese-military-base-in-equatorial-guinea/ https://ecfr.eu/article/chinas-new-military-base-in-africa-what-it-means-for-europe-and-america/?amp https://www.wsj.com/world/africa/u-s-china-tensions-have-a-new-front-a-naval-base-in-africa-616e9e77 https://docs.aiddata.org/reports/harboring-global-ambitions/Harboring_Global_Ambitions.html https://www.newsnationnow.com/world/china/satellite-images-chinese-military-presence-cuba-csis/amp/ https://www.specialeurasia.com/2021/10/28/chinese-military-base-in-tajikistan-regional-implications/ https://jamestown.org/program/china-increasing-its-military-presence-in-tajikistan/
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| 30 Oct 2024 | EP50: America’s Addiction to War: The Military-Industrial Complex in the Age of Big Tech | 00:06:26 | |
Summary: In this episode, we examine the substantial financial and societal costs of the "War on Terror" initiated following the 9/11 attacks. We explore the financial burden of these conflicts on the U.S. budget, including the expenditures on military operations, veterans' benefits, and reconstruction efforts. We also discuss the influence of the military-industrial complex, highlighting the role of private companies in shaping defense policy and benefiting from these ongoing wars. Additionally, we shed light on the increasing adoption of advanced technologies, particularly artificial intelligence, within the military and the potential ethical and societal implications of this integration. Questions to consider as you read/listen:
Long format: America’s Addiction to War: The Military-Industrial Complex in the Age of Big Tech TL;DR America’s heavy military involvement abroad is driven less by strategic necessity than by a deeply entrenched military-industrial complex (MIC) increasingly tied to Big Tech. While a robust military is crucial, the United States tends to reflexively engage in conflicts, often without considering true national security stakes. The MIC—made up of defense contractors, policymakers, and, now, Big Tech—profits from ongoing warfare and has grown even stronger through mergers, political lobbying, and partnerships with companies like Amazon, Google, and Palantir. This alliance extends the MIC’s reach, funding wars, developing advanced tech for conflict, and making the U.S. more interventionist. Big Tech’s entry into the MIC has added new dimensions like AI-driven targeting, cloud computing, autonomous systems, and cybersecurity, reshaping military strategies and making engagement easier and cheaper. The result: America’s dependence on war has morphed into an economic and technological reliance, creating incentives for constant conflict. To shift away, the U.S. must implement stricter Congressional controls, and question each military involvement more rigorously. INTRODUCTION AND THESIS We (the United States) are ADDICTED to war. Absolutely addicted. The 20+ year GWOT and Iraq are exhibits A and B. But it’s not just the war for war’s sake that is our addiction. It’s the military-industrial spending and the logistics providing. This is especially so in the area of the non-direct warfare functions related to deployment of weapons, troops or materials. Some have argued that the war in the Ukraine is yet another iteration and presentation of this addiction. America’s vast military footprint is not solely a result of strategic interests or a commitment to global security. Instead, a powerful and increasingly entrenched military-industrial complex (MIC) sustains, and arguably drives, the nation’s seemingly endless cycle of warfare. I am not a "peacenik," nor do I advocate for defunding the military. In fact, I firmly believe in the importance of a strong, capable military, especially in today’s post-globalization landscape where geopolitical threats are evolving rapidly. A well-resourced and prepared military is crucial to protect national interests and ensure security at home and abroad. However, our frequent and almost reflexive response to deploy troops or send military aid to conflicts worldwide—often without critical examination of their true strategic importance—raises important questions about how we prioritize and approach global engagement. We must evaluate whether every conflict justifies American military involvement or if some of these entanglements detract from our ability to respond effectively to challenges that genuinely threaten our national security. The GWOT cost 8,000,000,000,000 ($8T). There are no precise figures but it is estimated that well over half of that money was for non-direct warfare functions such as logistics, maintenance, transportation, computer support, training, and other similar types of required capabilities and related activities such as outsourcing food preparation, outsourcing laundry, outsourcing telecommunications back home for troops, bringing along a McDonald’s and/or Burger King, FOB construction, general construction and so on. The military industrial complex (MIC) in this country is no joke. As former Supreme Allied commander and later US President Dwight D Eisenhower warned us: “In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” (January 17, 1961, in this farewell address) But the MIC is bigger and more entrenched now than in 1961 with a new dimension added to it—BIG TECH. Big tech has put the MIC on steroids. In addition there has been a massive consolidation of MIC companies through merger and acquisitions. The rise of mega-firms has led to fewer defense contractors, with five giants now dominating Pentagon contracts. The MIC also wields enormous influence through political lobbying, spending over $247 million recently, with 820 lobbyists engaging Congress, and through funding foreign policy think tanks that shape pro-defense industry narratives. The MIC has become more pervasive, more profitable, and more influential, fueled by the burgeoning partnership between traditional defense contractors and Silicon Valley’s tech giants. This paper explores America’s deep-seated dependence on the MIC, examining how Big Tech’s integration into the defense sector has cemented this reliance, expanded it technologically, and ultimately made the MIC harder to disentangle from U.S. foreign policy and economic imperatives. I. The Foundations of the Military-Industrial Complex: From Cold War to Endless Conflict Eisenhower’s farewell address in 1961 cautioned against the “unwarranted influence” of the military-industrial complex, a network of defense contractors, military officials, and policymakers with a vested interest in sustaining military budgets and global conflicts. During the Cold War, this alliance focused on countering the Soviet threat, producing the largest, most advanced military in history. Yet, after the Cold War ended, the MIC did not wither. Instead, it adapted, supporting wars in the Middle East, the war on terror, and an ever-growing range of international conflicts. President Biden recently framed the U.S. as the “arsenal of democracy” amid conflicts in Ukraine and Gaza, echoing Roosevelt’s WWII call for American military support. By keeping America in a state of perpetual conflict, the MIC has ensured that military spending, political support for foreign intervention, and the demand for new weapons systems remain high. Today, the United States controls a staggering 45% of the global arms market, with arms manufacturers like Raytheon, Lockheed Martin, and Northrop Grumman generating billions from foreign arms sales. According to recent figures, wars in Ukraine, Gaza, and the broader Middle East have increased demand for U.S.-produced weaponry, sustaining profits for contractors while generating windfalls for investors and corporate executives. President Biden himself has praised the arms industry as an “arsenal of democracy,” depicting military production as a patriotic pursuit. Yet, this narrative obscures the MIC’s profit-driven motives, which are deeply intertwined with the persistence of international conflict. II. The Expansion of the MIC: Big Tech Joins the Fray In recent years, Silicon Valley has added a new dimension to the MIC, as tech companies like Microsoft, Amazon, Google, and Palantir secured massive Department of Defense (DoD) contracts. These companies provide the military with cutting-edge capabilities, including artificial intelligence (AI), cloud computing, and data analytics, which have become essential for modern warfare. The integration of Big Tech into the defense ecosystem reflects a shift toward “data-driven warfare,” which relies on AI-enabled drones, autonomous systems, and cloud-based intelligence processing to identify and target threats. This Big Tech-MIC collaboration is a significant evolution from the Cold War model, which focused on traditional weaponry. Today, military leaders increasingly view AI and data processing as indispensable tools, and Silicon Valley’s powerful tech giants have proven to be eager suppliers. Contracts like the DoD’s $9 billion Joint Warfighting Cloud Capability (JWCC) initiative, awarded to Amazon, Google, Oracle, and Microsoft, signal that tech companies are not merely service providers but are now core players in the MIC. Despite employee protests against projects like Google’s Project Maven or Amazon’s Project Nimbus, Big Tech firms have continued to pursue defense contracts, positioning themselves as crucial partners in America’s military future. Big Tech has significantly fueled and expanded the military-industrial complex (MIC) by embedding itself into the defense sector and reshaping military operations with advanced technology. Historically, the MIC was dominated by traditional defense contractors focused on manufacturing conventional weapons systems—tanks, jets, missiles. Today, companies like Amazon, Google, Microsoft, Palantir, and Anduril have introduced new capabilities, including artificial intelligence, big data analytics, cloud computing, and autonomous systems. These innovations have become integral to modern warfare, driving a new era of high-tech military operations and dramatically expanding the MIC’s influence, reach, and profitability. 1. AI and Data Analytics: Enhancing Targeting and Surveillance Big Tech’s AI and data analytics tools have transformed how the military processes and utilizes intelligence. Companies like Palantir provide advanced data integration and analysis, allowing the military to process massive volumes of data for more precise and efficient targeting, pattern recognition, and threat prediction. These AI-driven capabilities are now central to surveillance and reconnaissance operations, making them critical in both domestic security and foreign conflicts. For example, Google’s controversial involvement in Project Maven, which provided AI to analyze drone surveillance footage, marked a watershed moment in Big Tech’s integration with the MIC. Although Google employees protested the project, arguing it turned civilian tech into tools of war, the project underscored how AI could significantly enhance military efficiency and effectiveness. By partnering with tech firms, the military can leverage AI to automate target identification and threat assessments, ultimately lowering the threshold for deployment and engagement in overseas conflicts. 2. Cloud Computing: The Backbone of Modern Military Operations Cloud computing has become a cornerstone for military infrastructure, supporting secure, scalable, and centralized data storage and processing. Microsoft, Amazon, and Google have all secured major contracts with the Department of Defense to provide cloud services that enable rapid data access and support for real-time operations. The Joint Warfighting Cloud Capability (JWCC), a $9 billion contract, exemplifies Big Tech’s critical role in modern military strategy. This initiative provides cloud services across Amazon, Microsoft, Google, and Oracle, enabling the military to operate across dispersed locations with better data integration, intelligence sharing, and mission coordination. Cloud computing allows the military to streamline and unify its operations, making it more agile and capable of coordinating complex, data-heavy missions worldwide. It also supports increasingly autonomous warfare by serving as the foundation for real-time data processing required for AI-driven systems like drones and robotic weaponry. In short, cloud computing has not only become essential to military readiness but also enables a more continuous, “always on” operational posture that feeds the MIC’s expansion. 3. Autonomous Systems and Robotics: Redefining Warfare Big Tech’s advancements in autonomous systems and robotics have also redefined the MIC by moving beyond traditional hardware to include autonomous weapons and surveillance platforms. Defense-oriented startups like Anduril Industries specialize in autonomous technologies, including drones and surveillance systems that do not require human pilots or operators. Anduril’s Lattice AI platform, for example, integrates sensors, drones, and other autonomous systems to detect and track targets autonomously, a capability that reduces reliance on human personnel while expanding military reach. This shift towards autonomy has profound implications. Autonomous drones and robotic systems allow for persistent surveillance and engagement capabilities without the immediate need for human involvement. This reduces costs and logistical constraints, enabling the U.S. to engage in more operations with fewer personnel—a dynamic that amplifies America’s capacity for military action. By facilitating persistent presence without putting troops on the ground, Big Tech has lowered the perceived costs of military engagements, making intervention more feasible and potentially increasing the frequency and scope of U.S. involvement abroad. 4. Cybersecurity and Cyber Warfare: Expanding the Digital Battlefield The MIC has increasingly expanded into cyberspace, with Big Tech playing a leading role in cyber defense and cyber warfare capabilities. Microsoft and Google provide the military with advanced cybersecurity solutions to protect critical infrastructure, secure communications, and defend against cyber threats. In addition, these companies often work closely with U.S. Cyber Command to defend against foreign cyber-attacks and develop offensive cyber capabilities. The integration of Big Tech’s cybersecurity tools into the MIC extends the battlefield into the digital realm, creating new opportunities for conflict that require constant surveillance and a rapid response capability. This extension of military activity into cyberspace has broadened the MIC’s domain, reinforcing the need for high-tech solutions and generating a steady flow of government contracts for cybersecurity and cyber intelligence tools. In turn, this expands the MIC’s influence and further intertwines Big Tech with national defense objectives. 5. Global Surveillance Infrastructure: Supporting U.S. Geopolitical Influence Through partnerships with the intelligence community and military, Big Tech has helped create a global surveillance infrastructure that enhances the U.S. ability to monitor geopolitical threats. Companies like Amazon and Palantir provide platforms for the collection, storage, and analysis of vast amounts of intelligence data. For instance, Palantir’s software is widely used by the CIA, FBI, and military to analyze surveillance data and generate actionable intelligence. This global surveillance network enables the U.S. to maintain a dominant position in intelligence-gathering, a capability that reinforces its geopolitical influence. By supporting extensive intelligence operations, Big Tech has effectively broadened the scope and ambition of U.S. foreign policy, facilitating a more interventionist stance and enabling the MIC to maintain an active presence across multiple global regions. This infrastructure reinforces the MIC’s entrenchment, as maintaining and expanding surveillance networks creates a constant demand for high-tech solutions and supports a continuous funding stream. 6. Lobbying Power and Political Influence: Reshaping Defense Policy In addition to providing technological infrastructure, Big Tech also wields significant lobbying power in Washington, which it uses to influence defense policies and secure lucrative contracts. Amazon, Microsoft, and Google, for example, have established powerful lobbying teams that advocate for increased defense spending on technology and less restrictive regulations on military contracts. This lobbying influence allows Big Tech to shape defense policy to ensure favorable terms and maintain a steady flow of government contracts. Furthermore, Big Tech’s role as a defense contractor has blurred the line between private enterprise and public policy, leading to the “revolving door” phenomenon, where executives and officials move between industry and government roles. This convergence of corporate and government interests has resulted in policies that prioritize defense funding for advanced technology and downplay ethical concerns or restrictions on foreign arms sales, ultimately entrenching Big Tech within the MIC. Big Tech=Big Money Big Tech’s entry into the MIC has transformed the landscape of American military operations, moving the MIC beyond traditional weaponry and expanding its reach into high-tech domains. From AI-driven surveillance and autonomous systems to cyber warfare and cloud-based intelligence, Silicon Valley’s technologies have become indispensable to the modern military. As a result, Big Tech has not only fueled the MIC’s growth but has entrenched it in new, harder-to-regulate areas of defense. Most importantly, this expansion has lowered the barriers to military engagement, enabling a more interventionist U.S. foreign policy and creating a constant demand for high-tech solutions that fuel both profits and conflict. The involvement of Big Tech has also made the MIC more politically powerful and harder to reform, as the influence of these companies extends deep into defense policy, government contracts, and military decision-making. Consequently, Big Tech’s integration into the MIC has not only bolstered America’s military capabilities but has solidified a structure that makes reducing America’s dependence on warfare far more challenging. III. How the MIC Shapes Foreign Policy: Arms Exports and Congressional Influence The influence of the MIC extends into U.S. foreign policy, where it shapes decisions about where to sell arms, whom to support in conflicts, and how long to maintain military engagements. U.S.-supplied arms fuel conflicts in dozens of countries, from Saudi Arabia to Ukraine. For example, American weapons have been central to Saudi Arabia’s intervention in Yemen, which has led to hundreds of thousands of civilian casualties and a prolonged humanitarian crisis. Though Congress occasionally attempts to restrict arms sales to human rights violators, the MIC’s influence within Washington usually ensures that these efforts fail. Companies like Raytheon and Lockheed Martin actively lobby to preserve their lucrative deals, leveraging their status as job providers and patriots. The MIC’s ability to influence Congress is significant. Recent efforts by arms companies to reduce regulatory scrutiny over arms sales highlight how deeply they are embedded in the policymaking process. The Foreign Military Sales program, which expedites weapons transfers to foreign governments, has essentially turned the Pentagon into an international arms broker for U.S. corporations. To make matters worse, current law requires a veto-proof majority to block arms sales, which, given the millions of dollars in campaign contributions from defense firms, has never been achieved. To rein in this unrestrained influence, some suggest reversing this rule to require Congressional approval before sales can proceed, making it more difficult for the MIC to sell arms indiscriminately. IV. The New Drivers of War: Big Tech and the Militarization of Technology The involvement of Big Tech has added new pressures for continuous conflict. Silicon Valley thrives on constant innovation and the drive for increased efficiency and scalability. Translated to the defense sector, these impulses result in a constant demand for newer, more advanced, and more automated weapons systems. This cycle of technological innovation pushes the MIC toward creating increasingly advanced forms of warfare, making it difficult to dial back or restrain military spending. With Big Tech involved, the defense sector is incentivized not only to develop and deploy more weapons but to make them more sophisticated, autonomous, and integrated into surveillance networks. Furthermore, Big Tech’s involvement in the MIC brings immense political and economic clout to the defense sector. Tech CEOs like Amazon’s Jeff Bezos and former Google CEO Eric Schmidt advocate for expanded U.S. defense initiatives, arguing that technological superiority is essential for national security. This alignment between tech leaders and military officials effectively merges the goals of Silicon Valley with those of the defense industry, creating a powerful alliance that propels the U.S. toward continuous military expansion. V. Breaking the Cycle: Toward a New Approach to National Security The entrenchment of Big Tech within the MIC has made it harder than ever to reduce military spending to non-essential conflicts or shift away from a reliance on arms exports and military interventions wherever they may be. However, various reforms could help reduce America’s dependence on the MIC and redirect resources toward diplomacy and peaceful engagement. One possible approach would be to implement stricter Congressional oversight of arms sales, requiring a majority vote for each proposed sale. Increased transparency around defense contracts, particularly with tech firms, would also help reveal the true costs and ethical implications of these partnerships. Moreover, a greater emphasis on diplomacy and non-military solutions could help counter the impulse to view every geopolitical challenge through a military lens. Conclusion/Opinion The partnership between Big Tech and the traditional MIC has created a formidable entity that profits from and promotes continuous military engagement. This alliance ensures that both defense contractors and tech firms have a vested interest in sustaining conflicts, fueling a cycle of military intervention that undermines our true strategic best interests and diverts public resources from critical civilian needs. Reversing this trend will require a concerted effort to curb the influence of the MIC, sitting back and questioning whether or not the US truly has to become involved in a conflict and otherwise be more prudent in our deployment of precious resources. America’s addiction to war is no longer just a matter of defense policy—it is an economic and technological dependency that endangers both the nation and perhaps the world. In reasserting democratic control over the MIC, the United States has the opportunity to redefine its role in the world, not as an arsenal of democracy but as a champion of pragmatism. We do not need to police the world. Sources: https://stats.areppim.com/stats/stats_afghanwarxcost.htm https://www.thenation.com/article/world/military-industrial-complex-defense/ https://watson.brown.edu/costsofwar/files/cow/imce/papers/2023/2024/Silicon%20Valley%20MIC.pdf https://www.defense.gov/News/Releases/Release/Article/3239378/department-of-defense-announces-joint-warfighting-cloud-capability-procurement/https://www.bloomberg.com/news/newsletters/2024-02-29/inside-project-maven-the-us-military-s-ai-project https://www.hacc.mil/Portfolio/JWCC/ https://www.oracle.com/government/federal/jwcc/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 11 Nov 2024 | EP74: Ukraine will just build a nuclear bomb in 6 months | 00:15:15 | |
In this episode, we examine the possibility of Ukraine developing a nuclear weapon within six months. Justin James McShane, debunks this claim by outlining the technical challenges and logistical hurdles that would need to be overcome. He points out Ukraine's lack of enriched uranium, the complex process of uranium enrichment, and the need for specialized equipment and expertise in manufacturing gas centrifuges. McShane also emphasizes the difficulty of securing necessary materials and establishing a covert production facility in a war zone. He concludes that a six-month timeframe is unrealistic and highlights the significant resources and expertise required for a successful nuclear program. Questions to consider as you read/listen: 1. What are the technical challenges and logistical hurdles Ukraine faces in building a nuclear weapon? 2. What factors would make it extremely difficult for Ukraine to develop a nuclear weapon in a short timeframe? 3. How do the current circumstances and the history of Ukraine's nuclear program affect the plausibility of this scenario? Long format: Ukraine will just build a nuclear bomb in 6 months… Trying to guess the new administration and what it will do in Ukraine and the reactions of Ukraine or Russia is a fool’s errand. Some folks say “they [Ukraine] will build a [nuclear] bomb in 6 months. Checkmate.” Let’s look at that claim. 1 Ukraine has zero stockpile of high enriched uranium (HEU). 2 According to my research the Ukrainians have four nuclear power plants. One is currently under Russian control. So they potentially have low enriched uranium (LEU). 3 LEU needs to be enriched to 90% for it to be considered weapons grade uranium otherwise known as HEU. That process to enrich from LEU to HEU requires gas centrifuges. 4 A nuclear bomb requires about 25 kilograms (55 pounds) of uranium enriched to 90% to 93% U-235. 5 Ukraine has zero gas centrifuge manufacturing in Ukraine needed to enrich LEU to HEU. How do we know? IAEA. It is unlikely that Ukraine would be able to buy HEU in the open market because whoever sells it is under export restrictions requiring licensing and even if not, then that company will know it will definitely be used. Not great optics. 6 So companies or a government consortium needs to be spun up quick to produce Zippe-type centrifuge or American style centrifuges. Can that be done covertly? Maybe. The physical plant could be under 500 m2. But it’s a battle zone and who knows if they can keep a lid on it. It would seem logical to me that Russia would target such companies and physical plants. But for the sake of this thought exercise that the Russians can’t destroy the static sites where these centrifuges are made…. moving on. 7 So they’d have to secure a lot of material unnoticed. That includes: carbon fiber, maraging steel and high-strength aluminum; Items for electric power control systems, such as frequency convertors and process control software; Equipment to operate cascades, such as pressure transducers and vacuum pumps. Those are pretty unique systems and if bought suddenly sure signal what you are doing. After they get the materials in sufficient amounts then they have to physically make the centrifuges which takes time. Then they have to test them to make sure they work according to specifications which takes time. 8 Using non-cascading methods, it takes 4,000 centrifuges to produce 25 kg of 90% uranium per year. They have to let them run for a year to have enough HEU for ONE bomb. Just one. 9 Let’s say the Ukrainians decide to get a lot more sophisticated and the Russians let them. Let’s say that on their own they build a 12-cascade plant can produce 90 kg of HEU per year. That’s 3 bombs only in a year’s time. That cascading pipework which is complex and under the best circumstances could add several weeks or months up front. It is difficult to run and maintain if you have zero experience. Six months? The math isn’t there. There’s an entire bunch of if’s and best case scenarios. (By way of reference Iran is a lot closer because they already have plenty of gas centrifuges constructed and likely have them in cascade) 10 Let’s leave all of the above behind…. There is delivery of the bomb. Having a bomb doesn’t matter at all unless you can put it on target. The next question is the method of delivery. Dropping a bomb is easy presuming it is stable and small enough and you have a big enough bomber to deliver it. Delivering a bomb aboard a missile rather than simply dropping it from the air entails mastering both ballistics — all the calculations involved in getting the warhead to its target — and the miniaturization of the nuclear charge so that it can be mounted on the warhead. Not as easy but possible if given enough time. I would think for all of the above reasons six months is not realistic or possible. If you *think* or *believe* or *feel* I am wrong, please tell me of the above where I am wrong. An appeal to authority (i.e., because so and so said so) that’s quite fine but if they don’t provide facts, sources or an alternative timeline with details than the above, then that’s not too useful, I suggest. Sources: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 01 Nov 2024 | Episode 53: North Korea launches its furthest, highest and fastest ICBM to date: Why you should care? | 00:05:59 | |
Summary: North Korea successfully launched a long-range intercontinental ballistic missile (ICBM) on October 31, 2024. Happy Holloween! This marks a significant advancement in the country's missile program. The missile traveled for 86 minutes, reaching an altitude of over 7,000 kilometers, putting the entire continental United States within its potential range. While experts believe North Korea hasn't yet achieved a fully operational nuclear-armed missile capable of striking the U.S., this test is a crucial step towards that goal and could be timed to influence the upcoming U.S. presidential election.
Questions to consider as you read/listen:
Long format: North Korea launches its furthest distance ICBM test North Korea has completed preparations to test an ICBM-class missile, South Korea's Yonhap News Agency reported on Wednesday October 30, 2024, citing the South Korean military, with an intended launch possibly timed to coincide with next week's U.S. presidential election. The launch happened today, October 31, 2024. The reports claim that the missile’s flight duration of 86 minutes and its maximum altitude of more than 7,000 kilometers (4,350 miles) and flew over 1000 kilometers exceeding past tests. This was a high angle launch not a standard trajectory launch as such this test cannot examine a missile’s reentry vehicle technology. That is a distance that puts anywhere in the mainland United States within range. Many foreign experts believe the country has yet to acquire a functioning nuclear-armed missile that can strike the U.S. mainland but this is a step towards that ultimate goal.
Sources: https://www.globalsecurity.org/wmd/library/news/dprk/2024/dprk-241030-rfa03.htm
Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 20 Nov 2024 | EP86: The Real Answer to Drone Swarms: Meet the U.S. Weapon Changing the Battlefield (Epirus Leonidas) | 00:09:39 | |
Summary: In this episode, we focus on the Epirus Leonidas High-Power Microwave (HPM) system, a new weapon developed by the United States to counter the threat of drone swarms. The system uses directed energy to disable electronics, effectively creating a “force field” that can disable multiple drones simultaneously. Unlike traditional kinetic weapons, Leonidas offers cost-effectiveness, scalability, and minimal collateral damage. It is currently being deployed by the U.S. Army, Navy, and Marines and has already been used in Ukraine. The system represents a significant leap in electronic warfare and showcases the U.S.’s commitment to adapting to the evolving battlefield of the future. Questions to consider as you read/listen: 1. What is the current state of drone technology and its potential impact on the battlefield. 2. How does the Epirus Leonidas system counter drone threats, and what are its strengths and weaknesses compared to other countermeasures? 3. What are the broader implications of the Epirus Leonidas system for the future of warfare, particularly with regards to defense against emerging technologies? Long format: The Real Answer to Drone Swarms: Meet the U.S. Weapon Changing the Battlefield (Epirus Leonidas) TL;DR: Hyped headlines about China’s CH-7 stealth drones fueling fears of U.S. military inferiority overlook the reality: advanced defenses like the Epirus Leonidas High-Power Microwave system are game-changers. Leonidas can disable drone swarms with precision, cost-effectiveness, and scalability, proving the U.S. remains ahead in countering emerging threats. The battlefield isn’t about who has the flashiest tech—it’s about who innovates smarter, and America continues to lead the way. Introduction: Whenever articles such as this: China Reveals Its New CH-7 Stealth Drone https://nationalinterest.org/blog/buzz/china-reveals-its-new-ch-7-stealth-drone-213726 Henny Penny folks think that this will signal the end of the battlefield and China is “ahead” and that China has a “technological edge” over America. They imagine scenarios of unending Chinese CH-7 Stealth Drones reigning ruin on the US Navy and in Taiwan rendering America impotent. This is great clickbait! But… let’s just consider one type of counter to the drone swarms scenario. The Epirus Leonidas Information: The Epirus Leonidas is a directed energy weapon system that uses High-Power Microwave (HPM) technology to disable electronics. The Epirus Leonidas system essentially functions as an EMP (Electromagnetic Pulse) weapon in the sense that it emits high-intensity electromagnetic energy that can disrupt, damage, or destroy electronic equipment. However, there are some important distinctions: 1. Focused Energy: Unlike a traditional EMP which might affect a broad area indiscriminately, the Leonidas uses directed energy, which can be precisely aimed at specific targets. This minimizes collateral damage to non-targeted electronics. 2. Microwave vs. EMP: While the term EMP often conjures images of nuclear-induced pulses or large-scale events, High-Power Microwave (HPM) systems like Leonidas operate on similar principles but use microwave frequencies. HPMs are a subset of EMP technology, but they're designed for more controlled, tactical use. 3. Non-Nuclear: Traditional EMPs are often associated with nuclear detonations, whereas HPM devices like Leonidas are non-nuclear, making them more practical for battlefield use without the catastrophic side effects of nuclear weapons. 4. Operational Range: The effective range of an EMP from a nuclear detonation could be vast, whereas the Leonidas system has a more localized effect due to its power output and the physics of microwave propagation. 5. Selective Disruption: The Leonidas system can be tuned to specific frequencies that might affect certain types of electronics, allowing for some selectivity in its effects. Traditional EMPs are less selective in what they disrupt. So, while the Epirus Leonidas does indeed generate an electromagnetic pulse through its microwave emissions, it's more accurately described in operational contexts as an HPM system due to its focused, non-nuclear, and tactical approach to countering electronic threats. The Leonidas fires HPM beams to target individual electronics or cover a large area. The HPMs can be steered for precision or adjusted to create a force field effect. The Leonidas is designed for both static and mobile defense. It can intercept targets in crowded environments, address multiple threats simultaneously, identify and neutralize drone swarms and hit targets with high precision and accuracy. The Leonidas uses gallium nitride (GaN)-based semiconductors, which can operate at high voltages with low temperatures. The Leonidas uses digital beamforming to create an invisible "force field" that can disable specific targets while leaving nearby friendly assets unharmed. The Leonidas can also attack an entire area at once by using wide beam mode. The Leonidas can be programmed to create no-fly zones that allow friendly drones to operate while disrupting hostile drones. Leonidas has a short set-up and take-down time, allowing operators to move it quickly as the threat environment changes. Leonidas' line-replaceable amplifier modules (LRAMs) can be serviced or repaired in less than eight minutes. Recent contracts suggest a cost of around $2 million per unit for a full system. The primary focus is on the low cost per drone neutralized, rather than the individual system price. Leonidas is designed to take down multiple drones simultaneously, further reducing the per-kill cost. In January 2023, the US Army awarded Epirus a $66.1 million contract to deliver and support prototypes of the Leonidas. The first four Indirect Fire Protection Capability HPM systems were delivered to the US Army, with the final two delivered in May 2024. The US Navy is testing Epirus' Leonidas technology to temporarily disable small vessels and outboard motors. The Navy is also testing the technology's effectiveness when deployed on uncrewed autonomous vessels. The US Marine Corps is receiving the Leonidas Expeditionary, a long-pulse, high-power microwave system that can drop drone swarms with electromagnetic energy. The system is designed to be compact and maneuverable, and will be integrated with the USMC's Common Aviation Command and Control System (CAC2S). Epirus Leonidas is being used in Ukraine to defend against drone swarms. The Epirus Leonidas High-Power Microwave (HPM) system provides several advantages over traditional kinetic energy missile kills, particularly in the context of countering unmanned aerial systems (UAS) and drone swarms: 1. Cost Efficiency: Traditional kinetic interceptors, like missiles, can be very expensive, sometimes costing millions per unit. In contrast, the cost per engagement for the Leonidas system is significantly lower, often described as pennies per kill, due to its non-kinetic method of operation which doesn't require physical projectiles. 2. Unlimited Magazine: Unlike missile systems that have a finite number of interceptors, the Leonidas system can engage targets repeatedly without needing to reload. Its energy-based approach means it can theoretically operate as long as it has power, offering an "unlimited magazine" for continuous operation against multiple threats. 3. Area Denial and Swarm Defeat: The Leonidas can create a wide-area effect where it can disable multiple drones at once, making it particularly effective against swarm attacks. Traditional missile systems typically engage one target at a time, which might not be as effective against mass drone incursions. 4. Reduced Logistical Burden: The system's design allows for quick setup and takedown, which means less logistical support for deployment and redeployment. Traditional missile systems often require more extensive support for munitions logistics, maintenance, and resupply. 5. Safety and Minimal Collateral Damage: The Leonidas uses microwave energy which is safer for humans and less likely to cause unintended damage compared to the explosive force of missiles. It selectively disrupts electronic devices, reducing collateral damage to surrounding areas or friendly assets. 6. Flexibility and Modularity: The system can be integrated onto various platforms, from fixed installations to mobile units like vehicles or even drones. This flexibility allows for its use in different terrains and operational environments where traditional missile systems might be less adaptable. 7. Low Probability of Interception: The Leonidas operates with low emissions, making it less detectable to enemy electronic warfare measures, which is an advantage in scenarios where stealth or low observable operations are required. 8. No Physical Debris: After engaging a target, the Leonidas leaves no physical debris, unlike missiles which can produce shrapnel or unexploded ordnance, posing risks to civilians or friendly forces in the aftermath. 9. Scalability and Upgradeability: Through software updates, the lethality and capabilities of the Leonidas can be enhanced or adjusted without hardware changes, providing a forward-looking solution that can evolve with new threats. These advantages make the Leonidas system particularly suited for scenarios where cost, logistics, and the ability to counter mass threats are critical considerations over traditional kinetic solutions. Leidos's Time Integrated Gigawatt Electromagnetic Response (TIGER): This is a man-portable, battery-powered High Power Microwave (HPM) system focused on countering small UAS (Group 1 & 2). It's designed to operate in concert with other counter-UAS systems like jamming, lasers, or kinetic effects. Conclusion: While sensational headlines about the latest technological advancements from foreign adversaries may grab attention, they often overlook the robust and rapidly evolving defensive capabilities that counter such threats. The Epirus Leonidas High-Power Microwave system is a prime example of how the United States is not only keeping pace with emerging challenges like drone swarms but actively shaping the battlefield of the future. With its cost-effective, precision-focused, and scalable design, Leonidas represents a significant leap in electronic warfare. By neutralizing drone swarms and other electronic threats with unparalleled efficiency, it demonstrates that the narrative of America being technologically outmatched is far from accurate. Ultimately, systems like Leonidas reaffirm that the balance of power on the modern battlefield is not determined by any single piece of technology but by the ability to adapt and innovate. In this arena, the U.S. continues to lead, proving that for every offensive development, there is an equally, if not more, formidable defensive solution waiting in the wings. Sources: https://www.army-technology.com/projects/leonidas-high-power-microwave-hpm-system-usa/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 04 Nov 2024 | EP56: Geopolitics of time zones | 00:16:50 | |
In this episode, we discuss the complexities and controversies surrounding time zones and daylight saving time. We explore how time zones have been used for political and economic purposes, citing examples like China's adoption of a single time zone for national unity and Russia's imposition of Moscow time on annexed Ukrainian regions. We also examine the potential economic and energy impacts of daylight saving time, with some arguing that it may not be as beneficial as previously thought. Finally, we highlight the international complexities that arise from differing time zones, particularly in the context of business, travel, and communication. Questions to consider as you read/listen: 1. What are the historical, political, and economic factors that have influenced the adoption and rejection of daylight saving time in different countries? 2. How have time zones been manipulated as tools of political control and national identity by governments around the world? 3. To what extent do time zones, including daylight saving time, impact international trade, travel, and communication, and how can these challenges be reduced? Long format: Geopolitics of time zones Timezones. They exist. But there is some controversy involved in their existence especially when it comes to local options like day light savings time. There is an alternative which is to switch to universal time or Zulu time. Zulu time is the military name of Universal Time Coordinated (UTC) and Greenwich Mean Time (GMT). Zulu time provides a uniform time reference across the globe, eliminating confusion that can arise from time zone differences. This is particularly crucial for international communication and coordination. In aviation and military contexts, Zulu time is used to ensure that all parties have a consistent understanding of timing. Flight schedules, military operations, and navigation rely on precise timing to avoid misunderstandings. Events that involve participants from multiple time zones, such as conferences, sports events, and broadcasts, use Zulu time to synchronize activities and schedules. Is the US the only country that does daylight savings? No, the United States is not the only country that observes daylight saving time (DST). In fact within the US not every state participates in DST. In the United States, every state except Hawaii and Arizona observes DST. The Uniform Time Act of 1966 allows states to choose whether to observe DST, but it must be statewide. Fewer than 40 percent of countries in the world currently apply daylight savings time switches, although more than 140 countries had implemented them at some point. Here is a chart that shows what countries who changes their clocks.
DST and economic impact The principal reason for introducing (and extending) daylight saving time (DST) was, and still is, projected energy savings, particularly for electric lighting. However many energy experts and economists dispute its savings in modern times with more efficient lighting. While some historians point to railroad time tables being an original reason some modern historical research seems to refute this. Daylight saving time (DST) is considered inefficient by some because it can disrupt sleep, increase energy costs, and make international travel, trade and communications more difficult. Some studies show that DST can increase energy costs. For example, a study in Indiana found that DST increased residential electricity consumption by 1% overall, and up to 4% in the late summer and early fall. Different countries change their time on different days, and some poorer countries don't change their time at all, which can make international business and travel more difficult. Airlines estimate that DST costs them $147 million per year. According to the American Academy of Sleep Medicine, 63% of Americans favor eliminating seasonal time changes. A study from the AP-NORC Center for Public Affairs Research found that only 25% of Americans like the current system of shifting between DST and standard time. One study has found that time zone differences are found to reduce bilateral trade between the US and Canada by 11% on average, which amounts to about one-sixth of the international border effect between the US and Canada. As one author summed it up: Benjamin Franklin conceived of it. Sir Arthur Conan Doyle endorsed it. Winston Churchill campaigned for it. Kaiser Wilhelm first employed it. Woodrow Wilson and Franklin Roosevelt went to war with it, and more recently the United States fought an energy crisis with it. Does China have only one time zone? Yes. China has one time zone. It is officially called China Standard Time (CST). It is 8 hours ahead of Coordinated Universal Time (UTC+08:00). Well…. the most complete answer is the People's Republic of China spans geographically across five different time zones when measured from the Greenwich Mean time or the Universal Coordinated time as the case may be. However, the country observes one time across all the extent of the territory of China. Why only one zone? Controlling time became part of an official narrative about a China united under the party's rule. Officially, they claim one time zone would allow a national work schedule (important during the times of communal work units), for news to be broadcast at the same time throughout and for communication. But China isn’t the only one using time and time zones to control. In January 2024, Russian authorities announced that annexed regions of Ukraine were to switch from Ukrainian time to Moscow time. During Sri Lanka’s 25-year civil war between the central government and the Tamil Tigers, the government adjusted the country’s time by setting clocks back half an hour. However, in 1996, the Tamil Tigers rejected and did not implement this change in the regions they controlled, creating a situation where Sri Lanka effectively operated in two different time zones at the same time. Other time anomalies and time rebels exist. When India gained independence from Britain in 1947, it eliminated the separate time zones for Mumbai and Kolkata, unifying the country under a single official time zone. Nepal, meanwhile, set its time zone to align with the peak of the sacred Gaurishankar Mountain, east of Kathmandu, resulting in a unique quarter-hour time zone, unlike most other nations that base their timekeeping on hourly increments or, less commonly, half-hour increments. In 2015, North Korea’s government announced a shift in its time zone by setting clocks back by half an hour. Sources https://www.washingtonpost.com/news/worldviews/wp/2014/11/04/the-strange-weird-geopolitics-of-time/ https://onlinelibrary.wiley.com/doi/pdf/10.1111/tesg.12114 https://costcontrolassociates.com/blog/the-cost-of-daylight-savings-time/ https://www.csg.org/2024/03/11/is-daylight-saving-time-worth-saving/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP24: What will North Koreans actually do in Ukraine? | 00:03:34 | |
Summary: In this episode we explore the potential consequences of North Korea sending troops to fight in the Ukraine war. We express skepticism about the practicality of integrating North Korean soldiers into the Russian military due to significant differences in language, military equipment, and cultural values. We speculate that a large-scale North Korean deployment could potentially lead to a higher rate of friendly fire incidents and could even expose North Korean soldiers to new ideas and freedoms, potentially triggering regime change within North Korea. We discuss the potential risks associated with North Korean involvement in the war are substantial for both Russia and North Korea. Questions to consider as you read/listen:
Long format: What will North Koreans actually do in Ukraine? So they are coming. Some say up several brigades of up to 12,000 soldiers, some say they are special forces or elite troops, but what will they actually do? North Korean soldiers speak Korean, not Russian. Russians speak Russian not Korean. My due diligence search shows no large combined arms military exercises involving the two. Different munitions. Different systems. Different command and control. Different communications systems. Entirely different cultures. Different world views. Different psychologies. It’s not like these 12,000 troops can be plugged into existing units as replacements to ameliorate the war of attrition at the unit level. So what are they going to actually do? Provide for a higher rate of friendly fire, a higher rate on blue on blue incidents? One of the things I’m starting to wonder is if NK goes full on and sends a lot more troops, say 100k or 250k. After all they have 1,320,000 or so. Does that bring Poland or the Baltics or Nordic countries or France boots on the ground? Ok. That’s a foreseeable level. Folks are talking about. I want to go on deeper in the “what if”. Suppose they do send 100k or more troops. Not all of them will die. Some will go home. Being in the Ukraine war space and being around the Russians will be like an Amish person going to a rave to the North Koreans, I should think. They will undoubtedly be exposed to new thinking, some degree of new freedoms, some exposure to new cultures and thoughts. Being exposed to that versus the self reinforcing hermitage bubble of North Korea and now coming home with those broadened horizons en masse…. I suppose some folks will think that ticket from NK to Ukraine is a one way ticket. No return. But if enough return….. I can’t think of better model for self inflicted regime change than this. Seems really risky. Risky to Russia for blue on blue. Risky to NK because of broadened horizons. I guess they will be reduced to point to human wave attacks like Berserkers. Dunno. I wouldn’t want them in my battle space. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 04 Nov 2024 | EP54: A Contrary view of Geopolitics and Deglobalization | 00:15:24 | |
Summary: In this episode, we discuss the work entitled “Rethinking Gropolitics” by Jeremy Black. In that book Black examines the similarities between the geopolitical challenges facing the United Kingdom in the early 20th century and the United States today. We discuss how the work “highlights the parallels between Britain's position as a declining global power facing rising competition from countries like Russia, Germany, and the United States, and the US's current situation with China”. Black emphasizes how both countries struggled with balancing their global commitments with domestic political pressures and how their strategic priorities shape their future. We talk about how Black’s theories are different than our own. Where Black suggests that just as the USSR and the US emerged as superpowers following World War II, the world may see the rise of new superpowers in the future as America decoupled like Britain did. We discuss how this differs from our view that the decoupling will result in regional powers and most likely no single superpower or multiple superpowers. Questions to consider as you read/listen: 1. How does the text relate the current geopolitical landscape to the historical example of Britain's transition from global superpower to a more regionally focused power? 2.What are the implications of the author's comparison between the current state of the US and Britain in 1904 for the future of the world order? 3. What is the author's argument about the role of technology in shifting global power dynamics? Long format: A contrary view of geopolitics and deglobalization I’m reading an interesting book that although I find it interesting, ultimately, I would not recommend. It is titled “Rethinking Gropolitics” by Jeremy Black. I don’t recommend it because it covers history that I think all of us are very familiar with. He notes that 120 years ago Halford Mackinder gave an important geopolitical talk featuring what he called the “global pivot”. As we all know at the time (1904) Britain was the world’s true one and only superpower with the world’s greatest navy and true global reach and force projection. Mackinder noted that at the dawn of the 20th century, at the time, Britain was becoming more isolationist and seeking to consolidate its position and not expand its influence. At one point he summed the feeling to be at the time that there was no need for Britain to be the school marms of the world settling arguments it had nothing to do with (sounds familiar, eh?) Further he noted even back in 1904 that this isolationist/consolidating positioning was leading to serious challenges from more than one power: the USA, Russia and Germany. All three he noted were growing and expansionist. He noted the change in technology of the time from the primacy of maritime to rail-borne land power and even an audience member noting the new age of air. Quoting directly from his work is the following sentiment: —-start of quote—- So also in 2024 for the United States and the challenges it confronts, notably from China but also from the very volatility of a global system in which US leadership is under great challenge, as, more generally, is the civilizational model of and from the West. Indeed, China deliberately sets out to contest US international models, seeing the United States’ global liberalism as a challenge to national sovereignty, as well as being self-interested, with China presenting instead the Communist model of “managed socialism.” At the same time, the United States itself is very divided by the question of engagement with the outside world, as well as the nature of prioritization in strategic areas and tasks, for example, competing commitments to Taiwan, Ukraine, and the Middle East. This is a prioritization that sees geopolitics in action. In part, the use of geopolitics in this context is an aspect of the debate about prioritization, one that is rhetorical as well as analytical. This then sets the stage for a consideration of the 120 years from Mackinder to now, as well as geopolitics present and geopolitics future. There are clear parallels between past British and present US geopolitical issues. Thus, in 1883, William Henry Smith, a Conservative politician, who had been First Lord of the Admiralty in 1877–80, spoke to the House of Commons about “the duties to be discharged by the Navy, and which are of a very varying nature throughout the world, because heavier duties fall upon the Navy of this country than fall upon the Navies of all other countries taken together. We have a large commerce, and practically we have to perform what are called the police duties of the seas, and we have, in consequence, to maintain an ironclad Fleet equal to any emergency.” This he explained later that year was difficult: “At this moment, ironclads have to be employed in the China and Australian Seas, in the Pacific, on the Coast of North America, and in the West Indies. Our Fleet is scattered in a manner in which the Fleet of no other power can be scattered; and while it is discharging duties in three or four different seas, if, unfortunately, we should be engaged in a war, Foreign Powers might be able to concentrate their forces against our Navy.” Comparable issues were to face Britain and the United States as leading powers. ——end quote—- Well if this analogy holds true, would it not be the case that instead of a series of decentralized regional powers that many of us including myself believe will happen, that new superpowers will arise as the USSR and the USA did after WWII? Dunno. Interesting to always ponder the other side, right? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP27: Cuba power outages, whose fault is it? | 00:15:36 | |
Summary: In this episode we examine the reasons behind Cuba's recent widespread power outages, specifically focusing on the country's dependence on unreliable oil suppliers. We highlight Cuba's reliance on Venezuelan oil, which has significantly decreased due to international sanctions and internal problems, leading to a shift towards Russian oil. Additionally, we criticize Cuba's choice to rely on Pemex, Mexico's dysfunctional state-owned oil company, as a supplier. We emphasize Cuba's lack of diversification in its energy mix, heavily reliant on crude oil, and the lack of investment in modernizing its power infrastructure. This combination of factors is presented as a major contributor to the ongoing power outages in Cuba. Questions to consider as you read/listen:
Long format: Cuba power outages, whose fault is it? The island of Cuba has undergone a series of unplanned and involuntary blackouts island wide. Cuba blames the US for its sanctions policy and the lack of access to modernizing technology as the reason for their plight. While that may be a contributing factor to a degree is it the sole or even most impactful reason? Cuba has a lot of power infrastructure problems. I don’t know enough about that. But I do know how to read export charts. And know mistakes when I see them. Historically, Cuba got most of its crude from Venezuela. Venezuela's oil exports to Cuba so in 2023 dropped to 55,000 barrels per day (bpd) from almost 80,000 in 2020 (Pandemic lows). So far this year as of June the delivery is only at 27,000 barrels per day (bpd), compared with 51,500 bpd in the same period of 2023. This year PDVSA (Venezuela) failed to deliver on almost all of its commitments due to its ships being under international sanctions, US sanctions and holes (yes holes) in boats which ya know isn’t good. So they chose a horrible supplier to rely upon. So it seems they doubled down on imprudence by turning to…. you guessed it….Russia! Wow. And further compounding that it seems according to those in the industry is that there was a lack of foresight that crude API and characteristics matter in refining. Venezuela is very heavy. Very. Russia is considered a medium-sour crude oil that's a blend of heavy oil from the Urals and Volga regions and lighter oil from Western Siberia. Again, beating the drum. Crude is not crude for refining purposes. Your set up for your input matters. You have to set it up right for the refinery to produce efficiently. And when all doubt appeared about the ability and stability of Russian crude, Cuba went to arguably the most dysfunctional and self harming international oil company, Pemex A series of bad decisions. You add in whatever problems from their infrastructure….. Sources: https://www.reuters.com/world/americas/venezuela-resorts-dark-fleet-supply-oil-ally-cuba-2024-06-25/ Cuba's total energy supply mix in 2022 (must current year available) was: 0% coal, 80.6% crude, Biofuels and waste 11.6% and everything else including hydroelectric 7.8%. Cuba's domestic energy production in 2022 was: 52.9% crude oil, Biofuels and waste 28.2, everything else 18.9% Cuba's electricity generation mix in 2022 was: crude 83.5% and natural gas at 12.5 and everything else 4% Energy mix meaning total final consumption in 2022 was: 4% crude oil, 50% crude refined products, electricity 23.4% and everything else 22.3%. So you overload your crude oil basket and "secure" your crude partners who are anything other than reliable and you do not diversify your energy mix (the .... I mean how can you not see this as a mounting problem? Obtuse really. Icloud link to some charts of value to me including the charts that show a complete non-responsiveness to diversifying out of crude oil into other means of power production since 2000: https://share.icloud.com/photos/0a5WDcRcv4YFBPQSMBiFW-TIw Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP18: Is Jordan truly a puppet state? And is Jordan going to be the new Syria? | 00:10:49 | |
Summary: In this episode we explore the potential for instability in Jordan, examining the country's complex history, political landscape, and current events. The We highlight the historical tensions between Jordan and its Palestinian population, which has become increasingly sympathetic to Hamas, a group supported by Iran. The author also discusses the difficult balancing act that Jordan's King Abdullah II faces, attempting to maintain relations with both Israel and his own Palestinian population. Ultimately, we raise concerns about the possibility of civil unrest and the potential for Iranian influence to destabilize Jordan. Questions to consider as you read/listen:
Long format: Is Jordan truly a puppet state? And is Jordan going to be the new Syria? Interesting article to read is:
https://nationalinterest.org/feature/iran-gaining-ground-jordan-213288
Consider this part of the story: The streets echoed with chants of “Labayk ya Nasrallah” (“We are here, oh Nasrallah”), a Shia chorus of devotion rarely heard in Jordan, which is almost entirely Sunni. (https://x.com/jamedJeddan/status/1840487888007385457)
Also other protests such as the one depicted here: https://www.haaretz.com/opinion/2024-09-16/ty-article-opinion/.premium/border-crossing-shooting-shows-jordans-relations-with-israel-are-a-tough-balancing-act/00000191-f6cc-db99-adfb-f6ee758c0000 ('Carry a Quran With a Knife': How Growing Extremism Threatens Jordan – and Its Security Partnership With Israel - Opinion - Haaretz.com)
And other large groups of people talking long walks (as PZ likes to call it) is all over X with “Put the bullet in the chamber…We are your men, [Yahya] Sinwar” and “Our army is the army of the free…We are your soldiers, oh Sinwar.” Is Iran gaining a foothold into Jordan?
Will this cause insurrection against the King and tip Jordan into a civil war?
This is most interesting given the history of Jordan, Palestinian and Iran. Here’s why…
So Jordan has a very complicated history.
Let’s stroll down the corridors of history. During World War I, the Arabs revolted against the Ottomans in 1916. The League of Nations awarded the region to the United Kingdom as a mandate for Palestine and Transjordan.
In 1921, the British established the Emirate of Transjordan, a semiautonomous region ruled by Hashemite Prince Abdullah.
In 1946, Transjordan gained independence from the British and became the Hashemite Kingdom of Jordan.
What is a Heshimite? With no offense intended, simplified grossly, a Hashemite is a sect of the Arab family that descends from the prophet Muhammad and has founded dynasties in the eastern Mediterranean. The Hashemites originated in Mecca, Saudi Arabia, and ruled the city from the 900s to the 1900s. The Hashemites led the Arab Revolt against the Ottoman Empire in 1916, which freed the lands of Jordan, Lebanon, Palestine, Iraq, Syria, and the Hijaz. But the Hashemites were in control of Mecca and parts of modern day Saudi Arabia (then called Hijaz) until defeated in battle in 1924 by King Abdulaziz bin Saud, founder of the current Saudi kingdom. Losing the holy sites was a big blow as one can imagine.
Why this becomes important will be apparent later but bookmark it for now.
Now we need to look at a specific part of the history of Palestine.
Jordan became populated with Palestinians after the 1948 Palestine War, when the country annexed parts of Palestine and granted citizenship to Palestinian refugees and indigenous West Bankers.
In 1949, Jordan signed an armistice with Israel that gave it control of the West Bank and East Jerusalem. In 1950, Jordan formally annexed this territory, which included the former Palestinian districts of Jenin, Nablus, Tulkarm, Ramallah, East Jerusalem, and Hebron.
Jordan granted citizenship to Palestinian refugees and indigenous West Bankers on the same basis as existing residents. This was unlike other Arab countries that hosted Palestinian refugees.
Between 1947 and 1967, about 250,000–300,000 Palestinians fled or were expelled from Mandatory Palestine. Many of these refugees settled in Jordan.
Jordan is the only Arab country that fully integrated the Palestinian refugees of 1948. However, relations between Palestinians and Jordan have been strained at times, including in 1970 when King Hussein sent troops against Palestinian guerrilla strongholds.
They took in a very large population of Palestinians. This has led at least one prominent observer to call Jordan a puppet state of a few tribes overwhelmed by Palestinians.
The post October 7th position of the King has certainly been a very tense balancing act between acknowledging his large Palestinian population which is very sympathetic to Gaza and Israel which the King really wants to get along with and is allied with the US. An insightful article is offered here: https://www.usip.org/publications/2024/09/jordans-three-balancing-acts-navigating-post-october-7-middle-east
When you enter into the equation that Jordan’s unemployment rate is now 21 percent. We get a large population of disaffected people generally and a population specifically aligned more with the message of Iran to support Hamas than the Kjng himself.
It makes for odd bed fellows. You have Shia Iran that historically seen Sunni as apostates (recall apostasy is punishable by death in Iran, although the Islamic Republic has never codified the crime of apostasy) now supporting Sunni Hamas (while they of course support Shia Hezbollah).
This is not the first time this tension has come to a head. Consider https://amp.theguardian.com/world/2024/apr/15/jordan-difficult-balancing-act-row-downing-iranian-drones-israel
But post October 7th and the Israeli invasion of Gaza makes this sit different.
What’s going to happen? Dunno
Can King Abdullah II continue to walk the tightrope? Dunno
But large groups of people taking long walks chanting any government things isn’t historically a good thing, right? Time will tell.
Sources:
https://www.wilsoncenter.org/article/royal-rifts-history-jordanian-and-saudi-monarchies
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| 31 Oct 2024 | EP51: Is AI all hype? | 00:18:18 | |
Summary: We discuss the limitations of artificial intelligence (AI), specifically focusing on its inability to replicate human creativity, empathy, and dexterity. We argue that while AI is useful for specific tasks, its reliance on narrowly defined objective functions makes it unsuitable for activities requiring genuine creativity, emotional intelligence, or complex physical manipulation. We also criticizes the tendency to overhype AI's capabilities, emphasizing the importance of separating scientific fact from media sensationalism and understanding the limitations of current AI technology. Questions to consider as you read/listen:
Long format: Is AI “all hype”? I was on a forum where a contributor was in essence arguing that AI is all fanboy hype and would never amount to anything and is a big old bubble ready to burst. He quoted an article that is an interpretation of the actual peer reviewed study with quotes from the primary author. Here is the actual peer reviewed article: https://arxiv.org/pdf/2410.03703 Their own conclusion quoted verbatim is: "Through this work, we sought to understand the impact of LLMs on human creativity. We conducted two parallel experiments on divergent and convergent thinking, two key components of creative thinking. Taken together, these experiments shed light on the complex relationship between human creativity and LLM assistance, suggesting that while AI can augment creativity, the mode of assistance matters greatly and can shape long-term creative abilities. In closing, we hope this work offers a template to experimentally evaluate the impact of generative AI on human cognition and creativity." The authors of the study clearly see a place for AI (not that it is all hype) but warns that if relied upon too much that overall creativity may suffer. And that is an interesting thought. —— I am not here to defend AI or say that even if you don't like it, it cannot be fairly dismissed as "all hype" as time will prove that AI is here, it is useful and it will change things. AI will change things for the better and for the worse like all tools. Fire has good and bad. Cooks food. Burns down house. ---- I don't know of anyone who is a true thought leader in AI that says that AI will supplant human creativity. In fact, quite the opposite. When you look at all of the literature that is in the mainstream and is at a high level, they all speak to the fact that AI will not ever be good at creativity. Even the mainstream super proponents of AI clearly think AI cannot create, conceptualize, or plan strategically. While AI is great at optimizing for a narrow objective function (see definition below and discussion for narrow objective function), it is unable to choose its own goals or to think creatively. Nor can AI think across domains or apply common sense. And it most likely never will. So yes relying on AI to be creative is like relying on a hammer to be a great screwdriver. It is not its intended function or purpose. Every tool has a use. AI’s use is not in creativity and no one I have read who is a subject matter expert in AI says that it is. — In terms of creativity. Yes, jobs that require vision, creativity, outside of the box thinking and “seeing around a corner” are most likely very safe from AI supplanting them. The jobs most at risk of automation by AI tend to be routine and entry-level jobs. Another words the poor will become poorer. AI will also displace increasingly complex types of blue collar work. Warehouse pickers will be replaced and displaced. Kai Fu Lee theorizes that about 40% of jobs could be accomplished mostly by AI and automation technologies by 2033. What can’t AI do well? Creativity: AI cannot create, conceptualize, or plan strategically. While AI is great at optimizing for a narrow objective function, it is unable to choose its own goals or to think creatively. Nor can AI think across domains or apply common sense. Empathy: AI cannot feel or interact with feelings like empathy and compassion. Therefore, AI cannot make another person feel understood or care for. Even if AI improves in this area, it will be extremely difficult to get the technology to a place where humans feel comfortable interacting with robots in situations that call for care and empathy, or what we call “human touch services“. Dexterity: AI and robotics cannot accomplish complex physical work that requires dexterity or precise hand – eye coordination. AI can’t deal with unknown and unstructured spaces, especially ones that it hasn’t observed before. Jobs that are asocial and routine, such as insurance adjusters, are likely to be taken over in their entirety by AI. For jobs that are highly social but routine, humans and AI would work together, each contributing expertise. For jobs that are creative but asocial, human creativity will be amplified by AI tools. Finally the jobs that require both creativity and social skills are where humans will shine and will survive past the AI revolution. Please see the charts provided from Kai-Fu Lee’s books. ----- There are a lot of limitations of AI. The chief of which is the difficulty of defining the appropriate objective function so that a most appropriate outcome of LLM comes about. The possibility for abuse in AI has to do with the simplicity of the objective function, and the danger from single-mindedly optimizing to the single objective function. If the objective function is defined very narrowly, then all other considerations will be discarded and trying to achieve that single-minded objective function. Further, we humans have a good grasp of what we know and what we don’t know, GPT does not. GPT is also weak in causal reasoning, abstract, thinking, explanatory statements, common sense, and intentional creativity. And I agree with Kai-Fu Lee when he writes: "People often rely on three sources to learn about AI: science fiction, news, and influential people. Science Fiction books and TV shows, people see depictions of robots that want to control or outsmart humans, and super intelligence turned to evil. Media reports tend to focus on negative, outlying examples rather than quotidian incremental advances: an autonomous vehicle killing a single pedestrian, technology companies, using AI to influence elections, and people using AI to disseminate misinformation in deep fakes. Relying on “thought leaders” ought to be the best option , but unfortunately, most who claim the title are experts in business, physics, or politics, not AI technology. The predictions often lack scientific rigor. What makes things worse is that journalist tend to quote the leaders out of context to attract eyeballs." Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP16: Deep Big Data Learning (DBDL) a theory and a question | 00:04:02 | |
Summary: In this episode we explore the concept of Deep Big Data Learning (DBDL), a new form of artificial intelligence (AI) that utilizes large datasets and advanced algorithms to uncover hidden relationships and patterns. We begin by outlining the evolution of AI from supervised learning to the current "sequence transduction" approach exemplified by Google's "transformer" and OpenAI's GPT models. These systems, trained on vast amounts of text data, have shown remarkable capabilities in language generation and other tasks. We then explore a proposed DBDL as a further advancement, suggesting that applying similar techniques to Big Data, which encompasses a broader range of data types, could lead to transformative discoveries, particularly in healthcare. While acknowledging the potential benefits, the author also highlights the ethical implications of this powerful new technology.
Questions to consider as you read/listen:
Long format: Deep Big Data Learning (DBDL). I in no ways mean to be rude, but I think in order for me to discuss what I mean by Deep Big Data Learning (DBDL ***N.B., I had to change what I was trying to convey from what I originally wrote as “Deep Data Learning” as that concept already exists and is not what I was looking to imagine or discuss), it might make sense to make sure that we are on the same page with the current most prevalent means of computer learning. There was the old-school way of learning which is supervised learning which requires the computer to be provided with the correct answer for each and every training point. Very labor intensive, very slow and domain restrictive. The alternative is “sequence transduction” a sort of self surprised non-human based learning that requires a tremendous amount of data from different sources and an astronomical amount of computing power.
In 2017 with the introduction off the Google “transformer” we had the birth so to speak of this second form. It trained on huge quantities of text available on the Internet of Things. If we keep things simple this is what we Ean by deep language learning (DLL). After Google came Open AI’s GPT (GPT stands for generative pre-trained transformers). GPT-3 was trained on 45 terabytes of text which would take 500,000 lifetimes for humans to read. And since 2020 with this initial training, it has expanded ten times every year, adding capabilities at unbelievable exponential pace. As best as can be computed GPT-3 produced a gigantic model with 175 billion parameters. If this sounds to you to be amazing, then wait until you consider what is now going on with Generative Adversarial Network (GAN) which is a deep learning architecture that takes all of the above but trains two neural networks to compete against each other to generate more authentic new data from a given training dataset. The n continues to generate more adversarial networks off of the networks and on and on. Some suggest it is evolutionary. GAN is thought of as an important step towards that Holy Grail of AGI. So yes, as Mr. Kilgore writes with an exclamation mark, it is truly amazing. The DLL with GAN is largely built on information data sets from the Internet of Things. What is not necessarily or wholly on the IOT, Big Data. I am wondering what this type of learning, referring to sequence transduction (unsupervised) and GAN, were to involve the dataset is not text from the Internet of Things, but instead the very intimate dataset that exists in Big Data collections. This is what I call Deep Big Data Learning. The GAN and sequence transduction coupled with the CPU processing and chip power could discover relationships the likes of which we as humans could never discover. This application set is not just in the form of advertising, but think of the possibilities especially in healthcare. Disease prevention. Finding sources of carcinogens that are heretofore not known. Genomics. Therapies. Pretty wild stuff. Like all new technology it has potential for abuse. When humans discovered fire, it was both good and bad. Good heat and light. Bad fire that burns down house and people. Same same with AI. I just got to thinking about DBDL. Thanks for going down the rabbit hole with me. All substantive comments welcome. Cheers and high fives. Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 06 Nov 2024 | EP64: Balancing Progress and Protection: Japan’s Role in Global Semiconductor Security | 00:09:23 | |
Summary: Japan has implemented strict export controls on semiconductor technology, specifically targeting advanced manufacturing equipment, in alignment with U.S. efforts to limit China's access to cutting-edge chip technology. These controls involve licensing requirements, expanded restrictions on specific technologies, and streamlined processes for trusted countries. Japan's approach prioritizes national security and responsible technology export while fostering international cooperation to safeguard crucial technological advancements in the semiconductor industry. Questions to consider as you read/listen:
Long format: Balancing Progress and Protection: Japan’s Role in Global Semiconductor Security Introduction In response to global concerns over technology security and competitive advantage, Japan has implemented a series of export controls for semiconductor technology. These regulations, particularly aimed at advanced semiconductor manufacturing equipment, reflect Japan’s strategic stance on technology exports, especially in alignment with U.S. efforts to limit China’s access to cutting-edge semiconductor processes. Japan’s approach includes a combination of licensing requirements, expanded restrictions, streamlined processes for trusted countries, and enhanced reporting protocols, all designed to safeguard critical technology from reaching unauthorized markets. INFORMATION Japan has implemented several export controls for semiconductor technology, including: Licensing requirements Japanese suppliers need a license from the Ministry of Economy, Trade and Industry (METI) to export certain semiconductor manufacturing equipment. As of July 23, 2023, Japan requires a license from the Ministry of Economy, Trade and Industry (METI) to export 23 types of advanced semiconductor manufacturing equipment. These include equipment for: Forming circuit patterns, Testing chips, and EUV (extreme ultraviolet) lithography. Put simply, manufacturing equipment required for advanced semiconductors with range of 10 to 14 nanometers and below are subject to export control restrictions. Expanded restrictions Japan has expanded export restrictions on technologies such as scanning electron microscopes, gate-all-around transistors, and cryogenic CMOS circuits. Simpler application process A simpler application process is available for exports to 42 countries and territories that are part of the Wassenaar Arrangement, including the United States, South Korea, and Taiwan. General Comprehensive License A blanket permit called the “General Comprehensive License” is required for exports to a list of countries, including the Netherlands, the United States, Taiwan, India, and Lithuania. Increased reporting requirements Suppliers must increase their reporting requirements to METI. Public consultation The government holds public consultations to discuss and exchange information with export companies. Japan's export controls are in line with the US's efforts to limit China's access to key semiconductor processes. CONCLUSION Conclusion Japan’s semiconductor export controls underscore a growing trend among leading economies to protect advanced technologies and strengthen national security interests. Through licensing requirements, extended restrictions, and ongoing public consultations, Japan is reinforcing its commitment to responsible technology exports while fostering cooperation with allied countries. By aligning its regulations with those of the U.S., Japan’s export policy not only aims to control sensitive technology access but also contributes to a broader international framework of technology security in the semiconductor industry. Sources: Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 12 Nov 2024 | EP76: US Oil, LNG, and Carbon Capture: Inside the Next Energy Czar’s Bold Energy Vision-Doug Burgum | 00:19:07 | |
Summary: In this episode, we explore the potential candidacy of North Dakota Governor Doug Burgum as the "energy czar" for the United States under a future administration. Burgum advocates for a balanced approach to energy policy, combining support for traditional energy sources, particularly oil and gas, with progressive environmental goals. He is notably pushing for carbon neutrality in North Dakota by 2030, relying on carbon capture and storage (CCS) technologies. We highlight the increasing strain on the U.S. energy grid due to rising domestic demands and global market shifts, and Burgum’s potential role in navigating this complex landscape while promoting both economic growth and sustainability. Questions to consider as you read/listen:
Long format: US Oil, LNG, and Carbon Capture: Inside the Next Energy Czar’s Bold Energy Vision-Doug Burgum By Justin James McShane TL;DR: President-elect Trump is considering North Dakota Governor Doug Burgum as “energy czar.” Burgum combines support for traditional energy with progressive environmental goals, aiming to make North Dakota carbon-neutral by 2030 using carbon capture and storage (CCS). The U.S. energy sector is strong and self-sufficient, with record oil and LNG exports, but rising domestic energy demands from manufacturing, infrastructure projects, and tech growth are straining the grid. Burgum’s balanced approach could help the U.S. continue its energy independence while addressing sustainability and economic growth. Introduction: As President-elect Trump considers North Dakota Governor Doug Burgum for a potential role as “energy czar,” Burgum’s unique blend of traditional energy support and progressive environmental policies make him an intriguing choice for shaping America’s energy future. The United States, a global leader in energy production and exports, faces a period of extraordinary opportunity and challenges in the energy sector. With a robust oil, natural gas, and liquefied natural gas (LNG) export infrastructure, the U.S. is well-positioned for continued growth. However, rising domestic energy demands, global market shifts, and ambitious economic goals, including semiconductor production and reshoring manufacturing, are pushing the energy grid to its limits. As the country stands at the precipice of unprecedented energy transformation, Burgum’s policies and perspectives on balancing fossil fuel reliance with carbon neutrality are poised to play a significant role in addressing these demands while striving for sustainable progress. INFORMATION President-elect Trump is looking toward North Dakota Gov. Doug Burgum (R) as a potential “energy czar. Who is he? What does he believe in? The USA is in a very important period where energy policy is going to vital. This incoming administration has inherited a very strong US energy sector. The US has been a net exporter of petroleum since 2020. In 2023, the US exported 1.64 million barrels of petroleum per day more than it imported. The United States is a net crude refinery product exporter and a large one at that. Further, the US is the world’s biggest LNG exporter. The US became the world's leading LNG exporter in 2023, surpassing Australia and Qatar. In 2023, the US exported an average of 11.9 billion cubic feet of LNG per day, which was a 12% increase from 2022. The US continued to be the world's largest LNG exporter in 2024, shipping 56.9 million metric tons of LNG in the first eight months. However, export prices dropped by more than 25% from the first half of 2023, which led to a $4 billion drop in export revenues. The US is projected to double its LNG exports by the end of the decade as new export facilities are built along the US coastline. The US has an estimated 1.66 trillion barrels of technically recoverable oil resources. That’s enough oil for 227 years. If the oil is devoted exclusively to gasoline production, it is enough gasoline to fuel the transportation sector for 539 years at 2023 usage levels, the report stated. Total technically recoverable resources of natural gas in the U.S. amount to 4.03 quadrillion cubic feet, according to the report, which stated that, at the current consumption rate, that’s enough natural gas for the next 130 years. The 4.03 quadrillion cubic feet figure is a 47 percent increase in the estimate of technically recoverable natural gas since IER’s 2011 report, the study highlighted. The report also pointed out that the U.S. has over 65 quadrillion cubic feet of in place natural gas resources. Again, we are a net exporter. US shale oil is light and sweet, while a lot of oil coming from OPEC is medium or heavy, and often sour. This is due to the nature of result of fracking as it not just recovering blobs of pools of oil but rather in simplistic terms out of the porous rocks. It is thought that because the shale oil is “younger” than the pooled oil that it has less contamination (sulfur). Why does this matter? Until recently, US refineries were set up to process the dirtier more contaminated Middle East sour oil almost exclusively. As a product of legacy we do still import sour oil. However, we are in a pretty mad race to retool our domestic refineries to sweet. Sweet (API value less than 40 and sulfur less than 0.5%, really hydrogen sulfide (H2S) gas) is easier, less costly and less energy intensive to refine. So we are all over that. An abundant sweet source with sweet refineries being retooled or added. Look out for US energy. Sounds great right? It is but…. We have a totally unprepared energy grid for what comes next. We are in an unprecedented time of an exploding demand for energy. We are in a period of hyper growth. Our economy is humming. Thanks to the Inflation Reduction Act, we are building out and replacing infrastructure unlike any other time in history. We are also reshoring our manufacturing and industrial capacities at an accelerated rate. The deglobalization phenomenon and decoupling and shortening of supply chains with its building of manufacturing and industrial plants costs a lot of energy. Plus, we have declared a policy intent to win the Asians semiconductor war. AI and semiconductor and related manufacturing and use takes more energy than you can imagine. These demands are all coming to a head. And a planned and careful approach is needed if we want to continue our quality of life, the growth of our economy, reshoring and also AI and semiconductor ambitions. Doug Burgum’s energy policies and thoughts He stands out fairly uniquely among Republican leaders with his carbon neutral stance. In 2021, he signed legislation creating a Clean Sustainable Energy Fund to support low-emission technology projects. He set an ambitious goal to make North Dakota carbon-neutral by 2030. This vision, announced in 2021, aims to balance environmental responsibility with the state’s economic reliance on fossil fuels. His approach leverages carbon capture and storage (CCS) technology, which captures carbon dioxide emissions from fossil fuel operations and stores them underground. By doing so, Burgum hopes to reduce carbon emissions without compromising North Dakota’s thriving oil and gas sector, particularly in the Bakken region. Burgum’s carbon-neutrality goal has generated significant private-sector interest, sparking a reported $25 billion in investments from energy companies eager to capitalize on CCS and other environmentally focused technologies. In remarks at the North Dakota Petroleum Council’s annual meeting, Burgum highlighted these investments as proof that economic growth and environmental responsibility can coexist. Furthermore, he supports using captured carbon dioxide in enhanced oil recovery, a process that not only reduces emissions but also boosts oil production by injecting CO2 into underground reservoirs. Agriculture also plays a crucial role in Burgum’s carbon-neutral strategy. He advocates for farming practices that sequester carbon in the soil, adding another layer to his comprehensive approach to climate and energy policy. North Dakota’s expansive agricultural lands offer a unique opportunity for carbon storage, reinforcing his commitment to sustainability across multiple sectors. Burgum is a strong supporter of traditional energy infrastructure, like the Dakota Access Pipeline, which he believes is vital for the state’s economic health and energy independence. He has frequently emphasized that energy independence is not only an economic priority but also a matter of national security. In his view, relying on domestic oil and gas production shields the U.S. from volatile global energy markets and strengthens its geopolitical standing. In addition, Burgum is a vocal critic of federal policies that he sees as overly restrictive for the fossil fuel industry. He has criticized the Biden administration’s policies, such as subsidies for electric vehicles and regulations phasing out gas stoves in certain new housing. He argues that these initiatives threaten consumer choice and undercut the economic potential of liquid fuels. Instead, Burgum supports opening federal lands managed by the Bureau of Land Management to increase domestic energy production, including oil, gas, and rare earth metals essential for various industries. Burgum’s approach reflects his belief that carbon neutrality and energy sector growth can coexist, using advanced technology and smart policies to support both goals. By fostering a favorable regulatory environment and encouraging innovation, he positions North Dakota as a model for how traditional energy industries can adapt and contribute to environmental solutions, all while ensuring economic growth and energy security. Conclusion: In navigating the complexities of the U.S. energy landscape, Doug Burgum’s vision underscores a commitment to both economic growth and environmental responsibility. His approach, combining advanced technologies like carbon capture and a favorable regulatory environment for traditional energy, could help shape a new model for sustainable development. As the U.S. aims to maintain its energy independence, support burgeoning industries, and meet increasing power demands, a thoughtful strategy led by individuals who understand both fossil fuels and clean energy innovation will be vital. Burgum’s potential leadership as energy czar offers a pathway for the U.S. to strengthen its global energy standing while supporting national security and economic resilience, aligning with the country’s drive for both stability and innovation in this crucial era. Sources https://thehill.com/homenews/campaign/4981850-trump-considering-burgum-for-energy-czar/ https://www.ft.com/content/6c390cc1-f5b8-4096-a361-c53d8145b85a https://www.washingtonpost.com/politics/2024/05/09/trump-oil-industry-campaign-money/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 22 Oct 2024 | EP19: Are Russian Crude Oil Sanctions Working? | 00:04:54 | |
Summary: In this episode, we discuss the effectiveness of sanctions imposed on Russian crude oil exports, arguing that despite a price cap, the volume of Russian oil traded has increased. This increase is facilitated by a "dark fleet" of vessels, which allows Russia to evade sanctions and continue exporting oil. We also demonstrate that while Russian oil is sold at a discount compared to similar crudes, this discount is shrinking, implying that sanctions are becoming less effective at reducing revenue for Russia. We conclude by questioning the efficacy of the sanctions and raise concerns about their effectiveness in curbing Russia's oil income, which remains a significant portion of its federal budget.
Questions to consider while listening:
Long Format:
Are Russian Crude Oil Sanctions not working? There are two objective measures to this question. The first is in terms of volume. The second is in terms of price. This article addresses the former. https://www.cnbc.com/2024/10/14/russian-oil-trade-rises-with-record-volumes-of-dark-fleet-crude.html (Russia’s oil trade is rising as record volumes of Russian crude are carried on ‘dark fleet’ vessels. ) Despite the crackdown, Russia has expanded the capacity of oil transported by its shadow fleet of oil tankers by almost 70 per cent year on year—from 2.4 million barrels per day in June 2023 to 4.1 million in June 2024. The article above suggests that it is even greater than those June 2024 numbers due to “record” dark fleet transportation. Source material: https://kse.ua/wp-content/uploads/2024/08/KSE_core_shadow_fleet.pdf Now as to price question, we have to examine this longitudinally. Yes, Urals crude is selling at a discount vis a vis other similar API graded crude, but that discount is evaporating. When the cap was fully phased in, in February 2023, Russian crude was selling at a 30% discount. A year ago, the discount was about 16%. Now it is getting back up there with other comparables of medium sour crude. Urals crude spot price was at $73.40 as of October 11, 2024. (Which is ay above the $60 cap) Dubai Crude (medium sour) was $73.760 for September 2024. Mars (medium sour) was $75.56 as of October 13. Brent (light, sweet) on that day was $77.26. WTI (light sweet) is at $74.130 today (October 19, 2024). Source: So, it begs the question that if the volume is way up and the discount is decreasing to closer to zero, is this sanction effective any more? Not a Russian apologist. Not a useful idiot. Just asking based upon the math. Short of bombing the “dark fleet” what can be done in reality to have the desired impact of $60 or less and less volume to “starve” Russia of its income given that oil and gas revenues have accounted for 30–50% of Russia's federal budget in the past decade? (In the first half of 2024, oil and gas revenue rose 41% year on year). Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP26: Autonomous Hunter Killer Drones | 00:10:40 | |
Summary: In this episode we discuss the development and deployment of autonomous hunter-killer drones by various countries, particularly focusing on the US, Israel, Turkey, and China. We examine the capabilities of specific drones such as the US' Replicator and Replicator 2, Israel's Orbiter 2 LM, Turkey's STM Kargu 2, and various Chinese drones. We also raise the question of whether the US is falling behind in the field of autonomous weapons systems and explores the implications of this technology in modern warfare. Questions to consider as you read/listen:
Long format: Autonomous Hunter Killer Drones With the announced confirmed death of Yahya Sinwar with the following link reported to show his end moments https://x.com/sentdefender/status/1847006929790685652 We can clearly see this was a weaponized UAV attack. Israel has a quadcopter named Lanius that this appears to be that is a human driven hunter killer. Israel's Aeronautics Group has unveiled a new variant of its renowned Orbiter 2 unmanned aerial system (UAS) that combines surveillance and precision strike capabilities. The Orbiter 2 LM one-way attack platform is designed to neutralize targets with nearby intelligence, surveillance, and reconnaissance (ISR) drones. Goshawk: An autonomous drone hunter developed by Robotican and the Israeli Air Force. It's patterned after birds of prey and can reach speeds of nearly 80 miles per hour. ROTEM: Israel's version of a suicide drone system. Without a doubt the CLAIMED capabilities of Chinese with autonomous weapon systems sounds impressive such as GJ-11 Sharp Sword, Sunflower 200, Wing Loong and Caihong 4 (CH-4) as well as highly autonomous weapon systems like FH-97A.
Where is the US? Maybe we haven’t publicly sent into the field a STM Kargu-2 (Turkey), Saker Scout (Ukraine) or Gospel (Israel) like weapon with great fanfare, but that doesn’t mean our military has not. We are just tight lipped about it as explained in the article below. We do have Replicator (offensive all-domain attritable autonomous ((ADA2) systems using AeroVironment Inc.’s Switchblade-600) and Replicator 2 (more defensive anti swarm minded AI autonomous based) that are in the field deployed in Ukraine per the below sources. As PZ says one of the “nice” things about the war in the Ukraine and in Gaza is that we get to see the evolution and effectiveness of changes in tactics and techniques in this new asymmetrical warfare environment. We get to deploy and evaluate systems and see how they work in the real world in real conflict.
UAVs. USVs. UGVs. Are we at parity with China, Israel, Turkey or Ukraine? Dunno. Maybe. But $1B minimum sure ought to put you in the ballpark. We are not idly sitting by like an Ostrich with its head in the sand waiting to be eaten by the Chinese lion. Sources: https://news.usni.org/2024/03/11/pentagon-will-spend-1b-on-first-round-of-replicator-drones
Türkiye (the new name for the country of Turkey) has the current state of the art of true autonomous hunter killer UAV called STM Kargu 2 drone The STM Kargu 2 is a quadcopter drone with many features, including: The STM Kargu 2 is a quadcopter drone with many features, including: Attack capabilities: The Kargu 2 is designed to be an anti-personnel weapon that can select and engage human targets. It can be operated autonomously or manually Swarm operation: The Kargu 2 can operate in a swarm of up to 20 drones, which can provide a massive attack potential. Day and night operation: The Kargu 2 can operate reliably day and night. Target tracking: The Kargu 2 can track moving targets. Navigation: The Kargu 2 has a high performance navigation and flight control system. Ammunition: The Kargu 2 can use different types of ammunition, including high-explosive fragmentation, thermobaric, and cumulative. Safety: The Kargu 2 has in-flight mission abort and emergency self-destruction capabilities. It also has advanced electronic ammunition safety, setup, and trigger systems. Artificial intelligence: The Kargu 2 has built-in artificial intelligence (AI). The details are a little fuzzy but clearly it has autonomous navigation capabilities. What is less clear is that it can be set up in a loitering/monitoring position (think like an IFR hold pattern) and has an automatic target recognition system. Sources: https://lieber.westpoint.edu/kargu-2-autonomous-attack-drone-legal-ethical/ https://www.turkishdefencenews.com/kargu-rotary-wing-attack-drone/ https://automatedresearch.org/weapon/stm-kargu-loitering-munition/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 23 Oct 2024 | EP 35: A distinction without a meaningful difference? Decoupling v. De-risking | 00:18:24 | |
Summary: In this episode, we discuss two distinct strategies for addressing economic dependence on China: de-risking and strategic decoupling. De-risking, favored by the Biden administration, aims to reduce reliance on China in specific strategic sectors like semiconductors through targeted tariffs and export controls. In contrast, strategic decoupling, favored by Republican policymakers, advocates for broader tariffs and restrictions to minimize trade deficits and dependencies, prioritizing long-term economic threats. We highlight that while both approaches seek to reduce dependence on China, they differ in their scope and implementation, with de-risking potentially facing criticism for perceived compromises and strategic decoupling risking backlash from trade partners and businesses. We conclude by suggesting that regardless of the political outcome, the United States will reduce its global footprint and increase reshoring, with the degree of change depending on the chosen policy approach. Questions to consider as you read/listen:
Long format: A distinction without a meaningful difference? Decoupling v. De-risking De-risking, as endorsed by the Biden-Harris administration, selectively uses tariffs and export controls to target specific strategic sectors, aiming to reduce reliance on China, especially in key industries like semiconductors, without severing all economic ties. It balances the costs of action (e.g., tariffs and restrictions) against the costs of inaction (e.g., dependency on China). Strategic decoupling, favored by Republican policymakers and rooted in the ideas of former U.S. Trade Representative Robert Lighthizer, seeks to minimize trade deficits and dependencies by implementing broader tariffs and restrictions. It places a stronger emphasis on the potential risks of inaction, such as China’s growing economic and military dominance, and seeks to prevent U.S. economic engagement with China where it is deemed harmful, while allowing beneficial exchanges. While both strategies focus on reducing dependencies on China, de-risking aims for targeted, balanced interventions, while strategic decoupling advocates for more comprehensive actions with a focus on preventing long-term economic threats. These differences in policy approaches could lead to distinct challenges in implementation and political support, with de-risking facing criticism for perceived compromises, and strategic decoupling risking backlash from trade partners and businesses. But in all practical senses is this a word game of semantics or is there a practical difference? This article gives evidence to the thoughts presented in our podcast that no matter who wins the POTUS race, the US footprint in the world will be less and reshoring continues, it is just a question of degree.
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| 28 Oct 2024 | EP45: What is a blue water navy? | 00:13:16 | |
Summary: In this podcast, we propose a new standardized definition for a blue water navy, outlining the key capabilities required for a navy to project power globally. We then categorizes various navies around the world into tiers based on this definition, examining the strengths and weaknesses of each navy. We highlight the United States Navy as the only Tier 1 navy, possessing unparalleled global reach. Tier 2 includes France, Japan, the UK, and Italy, though the UK's status is debated due to ongoing fleet maintenance and modernization challenges. Italy is a unrecognized navy that definitely deserves to be here. Tier 3 consists of China, India, and Russia, all of which have formidable forces, but lack the sustained operational and logistical capabilities for global reach. Questions to consider as you read/listen:
Long format: What is a blue water navy? The term blue water navy is tossed about so much, but did you know there’s no universal definition? I propose one. TL;DR: Definition and Analysis of a Blue Water Navy Oddly enough there is no standardized definition in geopolitics or even in the military for what the term “blue water navy” means. Within the deep dive I offer one. Top Tiers: Tier 1: USA – unmatched global capability. Tier 2: France, Japan, the UK (questionable), and Italy. —UK: Facing fleet maintenance and modernization challenges, limited carrier availability. —Japan: Recently expanded carrier capabilities, though constrained by constitutional defensive-only policies. —Italy: Often overlooked, possesses the capability for global operations. Tier 1 and 2 countries meet the proposed standardized definition and therefore ought to be considered “blue water navies”. Tier 3: China (PLAN), India, Russia. Each have formidable forces but… —India’s mindset prevents its desire to operate much out of its EEZ —PLAN and Russia lack the sustained operational and logistical capabilities needed for global reach. Plus, Russia at the present has no functioning aircraft carrier. WHAT IS A BLUE WATER NAVY? A PROPOSED STANDARDIZED DEFINITION Here is a proposed standardized definition of “blue water navy” that I suggest. A blue water navy is able to independently and regularly sustain and operate in open ocean at distance from your own territorial waters and Exclusive Economic Zone (EEZ) a force projection to both deliver a large number of combat troops and associated logistics and also protect long distance shipping lanes vital for your home country’s trade. Sustained means measured by at least one month of force projection activities with support as well as full time shipping lane protection. Plus, there has to be a component of demonstrated force projection and shipping lane protection orientation if not actual capabilities beyond one’s EEZ. A blue water Navy must have the capability to detect, identify and engage targets over the horizon. This implies some degree of sophistication in intelligence, surveillance and reconnaissance (ISR) as well as weapon capabilities. I do think that some static features to serve as minimum requirements would be necessary to serve as thresholds. I propose:
With that in mind, we examine the candidates. TIER 1: Tier one and standing all alone at the top is the USA. TIER 2: Tier two is France, Japan and perhaps the UK and Italy. There’s unlikely to be a debate that France or the UK belongs on this list. The UK is teetering on the edge of being delisted. The UK is withdrawing quite a bit. The UK is undergoing fleet maintenance and modernization issues. The Royal Navy is getting rid of its entire minehunter fleet. Delays in procurement programs make it difficult to maintain older ships, which can then be unavailable for operations for extended periods. As of February 2024, the UK's aircraft carrier HMS Queen Elizabeth was sidelined due to a propeller shaft issue. The HMS Prince of Wales only in September 2024 returned to service after issues. Where there may be disagreement is including Japan and Italy. But let’s look closely. Japan makes the list as of October 21, 2024, when the Japanese Maritime Self-Defense Force (JMSDF) reached a milestone in its aircraft carrier capabilities as a U.S. Navy F-35B Lightning II conducted its first landing on the JS Kaga (DDH-184). Japan possesses a fleet of highly advanced warships including destroyers with powerful missile systems, capable submarines, and helicopter carriers, allowing for multi-mission operations in distant waters. It boasts two multi-purpose operation destroyers (de facto aircraft carriers), two helicopter carriers (called helicopter destroyers), 26 destroyers, 10 small destroyers (or frigates), six destroyer escorts (or corvettes), 22 attack submarines, 29 mine countermeasure vessels, six patrol vessels, three landing ships and 30 minesweepers. Article 9 of Japan's constitution prohibits the country from maintaining a military for offensive purposes, technically limiting its ability to project force far beyond its borders. It is developing an Amphibious Rapid Deployment Brigade to conduct operations on land from the sea. Japan’s close cooperation with the US through joint exercises and technology sharing, leveraging the US's expertise in force projection. Japan does not have nuclear submarines. The Italian Navy doesn’t get the respect I think it should. Let’s look at it objectively using the above criteria and definitions. The Italian Navy possesses the capabilities to operate effectively across vast ocean expanses, far from its home shores, including a fleet of modern warships like aircraft carriers (Cavour and Giuseppe Garibaldi), amphibious assault ships, destroyers, and submarines, allowing it to deploy and participate in multinational operations in distant regions like the Indian Ocean and the Pacific, demonstrating its ability to project power on a global scale. This is further supported by its routine participation in large international naval exercises like RIMPAC. The Italian Navy has a well-maintained and technologically advanced fleet with various types of surface combatants and submarines. It has on order and therefore demonstrated its commitment to modernize and expand its capabilities. Italy does not have nuclear submarines. TIER 3: Tier three is PLAN, India, Russia These tier three navies don’t make the cut to blue water navy. Let’s talk about why. PLAN The Chinese have a very formidable force on paper. It is the world’s largest navy by number of hulls. It has 12 nuclear submarines with half being attack types and half being boomers. It has three aircraft carriers. It has 32 landing ship tanks, 33 landing ship mediums, and 4 landing helicopter docks. Overall, it has 79 submarines. It has 62 destroyers, 58 frigates, 75 corvettes, 150 missile boats, 26 submarine chasers, over 17 gunboats, 36 mine countermeasure vessels, 19 replenishment ships and 23 auxiliaries. And it is growing. What makes it not a blue water navy is logistics, sustained force projection realities and its orientation. The PLAN fleet lacks the necessary logistical infrastructure, operational range, and global basing capabilities to project significant military power across vast expanses of the open ocean. It lacks friendly ports that would be available to it in the time of global conflict. It also primarily focuses its naval operations within its near seas, particularly around the East and South China Seas. This means they are not currently capable of sustained operations far from their home shores like a true blue water navy would be. RUSSIA It also has the same logistical difficulties that China has but not as bad. Following the Soviet Union's collapse and limitations in its shipbuilding and fleet maintenance capabilities has made its ships fall into disrepair. Russia currently has no aircraft carriers in service. INDIA India also has a quite formidable force on paper. India has nuclear submarines (4). It has about 150 ships. As of July 2022, they have two aircraft carriers, one amphibious transport dock, eight tank landing ships, 12 destroyers, 12 frigates, 16 conventionally powered attack submarines, 20 corvettes, ten large offshore patrol vessels, five fleet tankers as well as various auxiliary vessels and small patrol boats. Indian military mindset is mostly defensive, non-violence principles really have large mindshare in Indian geopolitical thinking. No one in India is thinking that they should be a global police, other than sticking to Indian Ocean. Sources: https://maritime-executive.com/editorials/the-decline-of-the-royal-navy https://www.pw.live/exams/defence/list-of-active-indian-navy-ships/ Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 12 Nov 2024 | EP77: From Imitator to Innovator: How ‘Made in China 2025’ aims to Transform China’s Position to the Top of the Global Value Chain | 00:08:49 | |
Summary: "Made in China 2025" is a comprehensive industrial policy implemented by the Chinese government to transform the nation into a global leader in high-technology manufacturing by mid-century. The plan emphasizes domestic innovation, reduced reliance on foreign technology, and the development of globally competitive Chinese brands. While "Made in China 2025" is seen as a positive step towards modernization by China, the policy has sparked justifiable considerable concern in the United States. Critics in the U.S. argue that the plan prioritizes state intervention, potentially distorts free markets, and raises concerns about intellectual property rights. Additionally, the policy's focus on self-reliance and the potential for China to dominate key technologies raises questions about national security and global influence. We analyze the core strategies of "Made in China 2025," the potential economic and geopolitical implications of its success, and the resulting tension between China and the U.S. as they compete for global leadership in high-tech industries. Questions to consider as you read/listen: 1. What are the core strategies of "Made in China 2025" and how do they challenge American economic principles? 2. What are the potential economic, security, and diplomatic consequences for the US if China achieves its "Made in China 2025" goals? 3. What are the key differences between "Made in China 2025" and American economic values, and what are the implications of these differences for the global value chain? Long format: From Imitator to Innovator: How ‘Made in China 2025’ aims to Transform China’s Position to the Top of the Global Value Chain TL;DR: China’s “Made in China 2025” is an ambitious policy aimed at transforming its manufacturing sector into a global leader in high-tech industries like AI, aerospace, and robotics. The plan focuses on increasing domestic innovation, reducing reliance on foreign tech, and elevating China to a top position in the global economy by mid-century. This state-led, nationalist strategy contrasts sharply with U.S. free-market principles, as it leverages state support, technology acquisition by any means available, and strategic industry targeting to gain a competitive edge over American firms. Key sectors include advanced IT, green vehicles, aerospace, and medical devices, with heavy investment in talent and green manufacturing. The potential shift of China to the top of the global value chain threatens U.S. economic dominance, risking American jobs, technological leadership, and influence over international standards and security. For the U.S., this creates critical challenges in maintaining its own competitive edge and ensuring fair global competition. Introduction: China’s “Made in China 2025” plan represents a formidable and well-crafted blueprint designed to elevate China’s global position in advanced manufacturing and technology. At its core, this strategy embodies China’s intention to secure economic self-reliance, modernize its industries, and ultimately challenge the United States’ leadership on the global stage. This is their plan to vault themselves to the very top of the global value chain (GVC). The policy signals China’s serious ambitions to not only compete with the United States but potentially surpass it in critical high-tech and industrial sectors. As this plan unfolds, it presents a significant threat to American economic interests and the principles of a free-market system, as China leverages a state-driven approach to challenge U.S. influence in global standards, technology, and trade. INFORMATION: "Made in China 2025" is China’s ambitious industrial policy designed to transform its manufacturing sector, focusing on increasing domestic innovation, boosting productivity, and reducing dependence on foreign technologies. The policy, which has been likened to the German "Industry 4.0" plan, emphasizes the integration of advanced technology, green manufacturing practices, and the development of globally competitive Chinese brands. Below is a detailed breakdown of the policy's core strategies, goals, and its ten priority sectors. Core Strategies of "Made in China 2025" To establish itself as a global manufacturing leader, China plans to: Enhance Innovation Capabilities: Strengthen research and development (R&D), boost innovation within manufacturing firms, and create a supportive ecosystem involving government, industry, and academia. This includes establishing industrial innovation centers to advance critical technologies. Prioritize Quality and Efficiency: Focus on high-quality production standards, introduce strict quality controls, and enhance brand reputation. The goal is to improve the quality and efficiency of Chinese manufacturing to compete with global standards. Promote Green Development: Implement energy-saving practices, encourage resource recycling, and adopt sustainable production methods to build a green manufacturing system that minimizes pollution and resource consumption. Optimize Industry Structure: Upgrade traditional industries, develop advanced manufacturing capabilities, and encourage the growth of service-oriented manufacturing. This shift focuses on developing high-value-added manufacturing activities. Develop a Talent Pipeline: Train and recruit skilled professionals, technicians, and engineers to support the development of advanced industries. The government aims to create a robust workforce with expertise in cutting-edge technologies. Foster International Collaboration and Expand Global Presence: Promote the internationalization of Chinese manufacturing firms by encouraging them to acquire foreign technologies, establish global R&D centers, and expand overseas markets. Strategic Milestones 2020: Establish a strong base by advancing industrialization and improving manufacturing informatization and automation, with significant gains in specific technologies. 2025: Mark China's arrival in the ranks of world manufacturing powerhouses, with globally competitive Chinese brands and a robust capacity for innovation. 2035: Move into the middle ranks of world-leading manufacturing nations with industries that drive innovation globally. 2049: Achieve a position as a leading global manufacturing powerhouse, with China as a top industrial nation. Ten Priority Sectors of "Made in China 2025" The strategy focuses on ten core industries where China seeks to become a global leader, reduce its dependence on foreign technology, and promote self-reliance. Here’s a closer look at each sector and the specific measures to advance them: Advanced Information Technology (IT): Goal: Develop domestic capabilities in critical IT components like integrated circuits, high-performance computing, quantum computing, and advanced telecommunications. Action: Invest heavily in R&D for key IT technologies, including 5G, artificial intelligence, and cybersecurity. The government will support developing core technologies such as high-end chips, system software, and large-scale data processing platforms. High-End Numerical Control (CNC) Machinery and Robotics: Goal: Build capabilities in precision machinery and automation, focusing on producing CNC machines, robotics for industrial automation, and additive manufacturing (3D printing). Action: Establish joint research efforts for CNC machines and advanced robotics components, such as high-precision sensors and servo motors, to reduce reliance on foreign components. Aerospace and Aviation Equipment: Goal: Strengthen domestic capabilities in aircraft design and production, targeting commercial and military applications, including passenger aircraft and drones. Action: Focus on developing large passenger jets, improving engine technology, and advancing unmanned aerial vehicle capabilities to support the aerospace sector’s independence and reduce the reliance on Western aerospace technology. Maritime Engineering and High-Tech Ships: Goal: Advance capabilities in maritime equipment, focusing on deep-sea exploration and high-tech shipbuilding, including oil rigs and LNG (liquefied natural gas) carriers. Action: Develop advanced marine equipment and ships, emphasizing high-value-added segments like offshore oil and gas platforms, deep-sea exploration vessels, and luxury cruise ships. Rail Transport Equipment: Goal: Become a global leader in high-speed rail technology, urban transit systems, and heavy-haul rail systems. Action: Invest in R&D for rail technology, particularly in high-speed trains and supporting infrastructure, and develop advanced manufacturing for energy-efficient and smart rail systems. New Energy and Energy-Saving Vehicles: Goal: Transition to electric and hybrid vehicles to reduce emissions and position China as a leader in new energy vehicles (NEVs). Action: Support battery technology R&D, create incentives for electric vehicle production, and promote the adoption of fuel-efficient vehicle technology to meet stringent environmental standards. Power Equipment: Goal: Enhance China’s capacity in nuclear, wind, and solar energy equipment, targeting key components for domestic production. Action: Strengthen technological capabilities in energy generation and distribution, focusing on green power equipment, such as wind turbines, solar panels, nuclear reactors, and smart grid technologies. Agricultural Machinery: Goal: Modernize agricultural equipment production to improve efficiency and reduce labor dependency in farming. Action: Develop advanced machinery for planting, harvesting, and processing to support large-scale, efficient agricultural production, focusing on automation and precision farming. New Materials: Goal: Lead in producing materials like high-strength steel, lightweight composites, advanced polymers, and specialty metals. Action: Boost R&D in new material sciences, focusing on high-performance structural and functional materials to replace imports in industries such as aerospace, defense, and telecommunications. Biopharmaceuticals and High-Performance Medical Devices: Goal: Increase capabilities in biotechnology and the production of advanced medical devices, reducing dependence on foreign pharmaceutical and medical technologies. Action: Accelerate the development of innovative biopharmaceuticals, traditional Chinese medicines, and advanced diagnostics. Expand R&D in areas like personalized medicine and high-performance diagnostics, such as imaging and wearable devices. Key Supporting Policies Financial Incentives: Government subsidies, tax breaks, and funding for R&D in priority sectors. Standards and Regulations: Establish strict quality standards and strengthen intellectual property rights protection to build internationally recognized brands. Industrial Internet and Smart Manufacturing: Invest in smart manufacturing technologies, digitalize manufacturing processes, and create smart factories that improve efficiency and reduce costs. Public-Private Partnerships: Facilitate partnerships between government, private firms, and research institutions to foster collaborative innovation. Green Manufacturing Initiatives: Promote sustainable practices across the manufacturing sector to minimize environmental impact and meet global green standards. Internationalization and Self-Reliance Goals China aims to reduce reliance on foreign technology by developing domestic supply chains for critical components, materials, and high-tech products. Efforts include: IPR Development: Strengthening intellectual property rights (IPR) to foster innovation and protect domestically developed technologies. Acquisition of Foreign Technologies: Encouraging Chinese companies to acquire foreign firms or technology licenses, particularly in areas where China lags. Export and Brand Building: Supporting Chinese firms in exporting goods to global markets, establishing Chinese brands as competitive alternatives to foreign brands. Global Partnerships and Standard Setting: Working with international partners to establish global manufacturing standards, creating pathways for Chinese products to become globally dominant. "Made in China 2025" is a roadmap for transforming China into a high-tech manufacturing powerhouse by mid-century. By focusing on innovation, quality, sustainability, and self-reliance, the policy envisions China as a world leader in advanced manufacturing and technology, capable of competing globally with established industrial powers. "Made in China 2025" is considered by many in the United States to be incompatible with American economic and political values, largely due to its strategic approach to industrial policy, state intervention, and self-reliance in critical technologies. Here’s a breakdown of specific areas where the policy contrasts sharply with American principles: 1. State Intervention vs. Market-Driven Economy Chinese Model: "Made in China 2025" relies heavily on state intervention and government-led initiatives. The Chinese government directs resources, offers subsidies, and sets industrial targets to bolster specific sectors, favoring domestic firms over foreign competitors. American Value: The U.S. economy traditionally emphasizes free-market principles where market forces, rather than government directives, shape industry success. Heavy government intervention and favoritism toward state-favored companies is viewed as distorting fair competition and reducing economic efficiency. 2. Technology Transfer and Intellectual Property Concerns Chinese Approach: As part of its industrial policy, China has encouraged aggressive acquisition of foreign technology through joint ventures, foreign acquisitions, and sometimes controversial practices around intellectual property (IP). Many Western businesses have faced pressure to share proprietary technologies as a condition of accessing the Chinese market. American Value: The U.S. holds that intellectual property rights are fundamental to innovation. Forced technology transfers, IP theft, and the use of acquired technology for competitive advantage conflict with the American view that IP protection fosters innovation by ensuring creators benefit from their inventions. 3. Economic Nationalism vs. Global Economic Integration Chinese Model: The policy prioritizes self-reliance, aiming to reduce dependence on foreign technologies, goods, and services by fostering homegrown alternatives. This nationalist approach extends to sectors like semiconductors, aerospace, and artificial intelligence, where China intends to replace imports with domestically produced technology. American Value: While the U.S. supports national competitiveness, it traditionally advocates for global economic integration, open markets, and free trade, arguing that economic interdependence leads to greater efficiency and mutual benefits. China’s selective openness is seen as antithetical to the level playing field that the U.S. promotes globally. 4. Global Influence and Strategic Competition Chinese Model: By dominating certain high-tech sectors, China aims to influence global standards, reshape international supply chains, and position itself as a leader in the Fourth Industrial Revolution. The Chinese government envisions a future where Chinese technologies and standards are the global norm, providing Beijing with greater geopolitical influence. American Value: The U.S. values a multipolar global economy with competition among businesses, not direct government-driven dominance. This goal of reshaping global norms under China’s leadership poses a strategic challenge, as the U.S. sees it as undermining a free and open international system. 5. Trade Practices and Protectionism American Values: The U.S. generally promotes open trade and opposes protectionism, favoring agreements and practices that enable fair competition without significant government barriers. Made in China 2025: The policy has been interpreted as promoting a form of economic nationalism, with the explicit goal of reducing dependence on foreign technologies. Critics argue that this leads to protectionist practices, including preferential treatment for Chinese companies and barriers to foreign firms in key industries. For example, many high-tech sectors targeted by "Made in China 2025" have been difficult for foreign companies to penetrate, limiting market access and putting foreign companies at a competitive disadvantage. 6. Transparency and Rule of Law Chinese Model: "Made in China 2025" operates within a context where government intervention is often opaque, and policy objectives can shift quickly with little public accountability. Regulatory favoritism and political incentives often drive business decisions, leading to practices that foreign companies see as unfair. American Value: The U.S. promotes transparency, rule of law, and predictable regulatory frameworks to support business fairness and accountability. The perceived lack of transparency and impartiality in China’s system fuels American concerns that foreign companies and governments face an uneven playing field. 7. Individual Innovation vs. State-Driven Innovation Chinese Model: The focus on state-led R&D centers, government-driven innovation goals, and close state-industry collaboration represents a top-down model of innovation. China’s strategy channels resources into areas it identifies as critical, often prioritizing efficiency over fostering individual or private-sector innovation. American Values: U.S. culture traditionally emphasizes individual initiative, personal enterprise, and the notion that success is achieved through individual effort and innovation. 8. Environmental Standards and Labor Rights American Values: American society increasingly values corporate responsibility, including environmentally sustainable practices and fair labor standards. Made in China 2025: Although the policy mentions green manufacturing, China’s rapid industrialization has often come at a significant environmental cost, with critics noting that environmental standards are sometimes sacrificed for economic growth. Similarly, U.S. firms are often held to higher labor standards than some of their Chinese counterparts, which can lead to competitive imbalances when products enter global markets at lower prices due to cost advantages derived from less stringent regulations. 9. Global Security and Strategic Concerns American Values: The U.S. aims to maintain a secure global order in which economic and strategic interests do not threaten international stability. Made in China 2025: The policy’s focus on self-sufficiency and leadership in critical technologies like aerospace, telecommunications, and advanced materials has raised national security concerns in the U.S. Since many of these technologies have dual-use potential (both civilian and military), China’s development in these sectors is seen as potentially undermining U.S. security interests. This has led to a perception that "Made in China 2025" is a way to achieve technological supremacy that could disrupt the current balance of power. In summary, "Made in China 2025" reflects an industrial strategy that diverges significantly from the market-oriented, competition-driven, transparent approach valued in the U.S. The policy’s state-led, nationalist orientation and strategic targeting of industries perceived as globally competitive are seen as challenging foundational American economic and cultural values, leading to tensions between the two countries. These differences drive concerns about fair competition, intellectual property, and market access, as well as broader questions about global economic security and the future of free-market capitalism. Moving up the Global Value Chain (GVC) “Made in China 2025” is China’s strategic push to dominate the global value chain by shifting from low-cost manufacturing to high-tech leadership. By fostering domestic innovation, particularly in sectors like AI, aerospace, and advanced robotics, China aims to reduce dependency on foreign technology and elevate its industrial standards to compete globally. The plan emphasizes high-value production, sustainable practices, and rigorous quality control, positioning Chinese brands as trusted, cutting-edge players. With targeted investment in skilled talent and global expansion, China seeks to reshape international markets, setting standards that align with its strengths. Ultimately, “Made in China 2025” is China’s blueprint for economic independence and dominance in key technologies, challenging current global leaders and securing a top position in the global economy. If China rises to the top of the global value chain and the U.S. loses its dominant position, several significant shifts would impact global economics, security, and influence: 1. Economic Dependence on China: Countries worldwide would increasingly rely on China for high-tech goods, critical materials, and advanced manufacturing. This dependency could grant China greater control over global supply chains and trade, allowing it to set terms and pricing for essential goods and technologies. 2. Loss of U.S. Technological Leadership: As Chinese companies lead in advanced sectors like AI, aerospace, and telecommunications, U.S. companies may lose their competitive edge, reducing innovation-driven economic growth. This would likely lead to fewer high-paying tech jobs in the U.S. and could impact the overall economy, as critical sectors lose market share to Chinese firms. 3. Shifts in Global Standards and Influence: China, as the new technological leader, would likely set international standards for emerging industries, from 5G to AI ethics. This shift could influence the global economy to align more with Chinese priorities, favoring state-driven systems over market-driven principles. U.S. companies would be forced to adapt to these new standards or risk exclusion from key markets. 4. Increased National Security Concerns: A China-led global value chain would give China leverage in technologies with dual civilian and military applications. The U.S. and its allies might face increased vulnerabilities if critical technology supply chains are under Chinese control, as these could be weaponized or restricted in times of geopolitical tension. 5. Erosion of U.S. Soft Power and Diplomatic Influence: Losing economic leadership would also weaken U.S. influence in global institutions and trade alliances. China’s rise could enable it to exert more influence over organizations like the WTO or IMF, challenging the liberal, rules-based order that the U.S. has long championed. This shift would likely reduce American leverage in shaping international policies on human rights, environmental standards, and security. 6. Potential for Economic Instability: If the U.S. economy becomes heavily reliant on imported technology and critical materials, domestic industries may decline, leading to job losses and economic inequality. A less self-sufficient U.S. economy could struggle to respond to global crises or adapt to rapid technological shifts without reliance on China. In summary, China’s dominance in the global value chain would challenge the U.S. economically, strategically, and diplomatically, leading to a world where China’s priorities increasingly shape the international landscape. For the U.S., staying competitive would require major investments in innovation, trade alliances, and technology to avoid ceding ground in a critical era of global restructuring. Conclusion: The “Made in China 2025” policy is more than an industrial roadmap—it’s a strategic plan to reshape the global economic landscape and challenge the United States’ long-standing industrial dominance. By targeting key high-tech sectors, focusing on self-reliance, and advancing state-led initiatives, China is positioning itself as a major player in industries that will define the future. For the United States, the stakes are high, as the policy raises concerns about fair competition, intellectual property, and even national security. Understanding this ambitious strategy is essential for assessing the real challenges and implications it poses for the U.S., underscoring the urgent need to address this emerging global competition. Source: https://cset.georgetown.edu/wp-content/uploads/t0432_made_in_china_2025_EN.pdf Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 05 Nov 2024 | EP59: China’s overcapacity problem aka Dumping | 00:21:21 | |
Summary: In this episode, we examine the issue of China's overcapacity problem and its impact on global trade. The problem arises from excessive production in various sectors like steel, cement, and solar panels, leading to low export prices and accusations of dumping by China's trading partners. These low prices threaten the viability of foreign competitors and distort global markets. We analyze the factors contributing to overcapacity, including government subsidies, tax breaks, and strategic policies aimed at promoting domestic industries. They also explore the consequences of China's overcapacity, such as deflationary pressures, trade tensions, and the potential for economic instability. We conclude by discussing the challenges posed by China's overcapacity, emphasizing the importance of maintaining fair trade practices and competitive neutrality in the global economy. Questions to consider as you read/listen: 1. How has China's overcapacity affected global markets and competition? 2. What are the economic and political implications of China's export practices? 3. How is China's "Made in China 2025" strategy shaping the global economy? Long format: China’s overcapacity problem aka Dumping TL;DR: China is flooding global markets with artificially dirt-cheap goods in some industries, from steel to solar panels, using aggressive government subsidies and tax rebates as trade tactics that make it difficult or impossible for foreign competitors to compete who don’t have these advantages. Critics decry that China isn’t practicing free trade but rather it’s a means of bankrupting non-Chinese capacity by supplanting competition for long term hopes of driving non-Chinese companies out of business and therefore the only suppliers to survive are Chinese monopolies. The result is eventually we are all at the mercy of Chinese supplies and Chinese prices for these products and goods. Industries in the U.S. and Europe are scrambling to fight back as China’s overproduction, pumped up by billions in subsidies, slashes prices and threatens jobs worldwide. The EU and American politicians are awakening to this. China’s “Made in China 2025” plan? Is it a blueprint for total tech and manufacturing dominance? Are we now or about to be in a trade war fueled by heavy government subsidies to bankrupt foreign competition to gain long term dominance, featuring tactics of forced tech transfers and industrial/commercial espionage, and raw material hoarding, all while the world struggles to keep up playing by rules that China neither accepts or follows? I look at these issues using sources and data. WHAT IS OVERCAPACITY China's overcapacity problem is the result of high production levels in certain industries, which leads to low prices on exports and can harm foreign competitors. This issue has become a contentious topic in global trade, and the US and European Union have responded with countervailing and antidumping duties. WHAT OVERPRODUCTION CAN DO Excess supply can create deflationary pressure in the world market which can lead to lower prices, which can create a cycle of lower wages, lower consumer spending, and even lower prices. Overcapacity can distort global prices and threaten the long-term viability of foreign competitors. Supportive policies can keep firms alive that should have failed under normal market competition (zombie companies). DUMPING People and countries on the receiving end of the subsidized overproduction exports call the practice “dumping”. China is accused of “dumping” a variety of products including:
Dumping is when a company exports goods at a lower price than its domestic price. China's oversupply of goods is due to a number of factors, including factories producing more than the economy can use, a global trade surplus, and slower economic growth. Undoubtedly a reason for the overproduction is that the Chinese are concerned with high unemployment. Disaffected folks who are unemployed tend to organize into long marches and gatherings that seek regime change. Xi Jinping knows this leading him to pledge to make full employment a “priority goal” and youth employment the “focus of the focus” at the May party meeting. HOW THE CHINESE GOVERNMENT CREATES DUMPING The Chinese government subsidizes dumping in a number of ways, including:
The Chinese government's subsidies have been shown to promote exports and limit imports. The effects of these subsidies are magnified by supply-chain linkages. China's "Made in China 2025" strategy is focused on developing the country's own intellectual property and products. China's technology transfer policies have helped the country become a leader in sectors like artificial intelligence and high-speed rail. However, these policies have also contributed to the U.S.-China trade war. CONCLUSION In conclusion, China’s overcapacity and subsidy-driven export practices have significant implications for global markets, competition, and economic stability. By bolstering domestic industries with subsidies, tax incentives, and strategic policy measures, China has enabled overproduction across multiple sectors, including steel, cement, vehicles, solar panels, chemicals, and lithium batteries. These practices, often perceived as “dumping,” distort market prices, disrupt foreign industries, and pressure global economies through deflationary trends and the erosion of competitive balance. Countries impacted by China’s low-cost exports, such as the United States and European Union, have responded with trade remedies like countervailing and antidumping duties to protect domestic industries. However, the issue persists, amplified by China’s focus on self-sufficiency and technological advancement under initiatives like “Made in China 2025.” While this strategy strengthens China’s domestic industrial base and global market presence, it has contributed to rising tensions in international trade relations, as other economies grapple with the effects of cheap Chinese exports and the strategic advantages these policies afford China in high-tech and resource-critical sectors. As global trade partners address the challenges posed by China’s overcapacity, the balance between fostering fair trade and maintaining competitive neutrality will remain a critical issue, particularly as the world navigates the economic ripple effects of China’s approach to industrial and economic growth. Sources: https://www.cnn.com/2024/03/28/business/china-goods-exports-trade/index.html https://www.bbc.com/news/articles/cw004vvkj1xo Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 24 Oct 2024 | EP38: US Navy versus Fast attack Craft (FACs) and other asymmetrical attacks | 00:13:15 | |
Summary: In this episode we discuss the vulnerability of the US Navy to asymmetrical attacks, particularly from small, fast boats, known as Fast Attack Crafts (FACs). The attack on the USS Cole in 2000 serves as a stark example of the threat posed by FACs, highlighting the ability of small, inexpensive weapons to inflict significant damage. In response to this threat, the US Navy has implemented various countermeasures including deploying patrol boats and Zodiacs in littoral zones, employing the Phalanx CIWS and MK 38 25mm gun systems, and researching solutions such as electronic warfare and directed energy weapons. We also acknowledge the emerging threat posed by unmanned surface vehicles (USVs) operating in swarms, further highlighting the evolving nature of this threat and the ongoing need to develop effective countermeasures.
Questions to consider as you read/listen:
Long format: US Navy versus Fast attack Craft (FACs) and other asymmetrical attacks This week’s report that Houthi rebel rockets came perhaps as close as 200 meters of the USS Dwight D. Eisenhower US Aircraft carrier the question becomes what is the US Navy’s capabilities in terms of asymmetrical attacks? The asymmetrical nature of the modern threat is those FACs (Fast Attack Craft). The US Navy experienced a huge wake up call and shock with the USS Cole attack. A very small fiberglass boat carrying shaped C4 explosives and two suicide bombers approached the port side of the destroyer and exploded, creating a 40-by-60-foot (12 by 18 m) gash in the ship's port side. 2 suicide bombers on board a cheap not particularly fast boat with about 1000 pounds of C4. (Interestingly the boat was the same one used in the unsuccessful USS The Sullivans attack the year prior) Friendly gestures got those two suicide bombers way too close. I don’t think the US Navy is going to allow access anywhere near an asset again. Big lesson learned. This attack caused $240m in damage. 17 sailors killed. 39 injured. Cole's Sailors fought fires and flooding for the following 96 hours to keep the ship afloat. Very very asymmetrical. Since the USS Cole wake up call, the fleet has really focused on FAC defense. This includes the deployment of a variety of patrol boats and Zodiac like boats when in littoral zones. The Phalanx CIWS (20 mm AP tungsten penetrator rounds when operating under Surface Mode, the ROF is 50 rounds/sec. With a drum capacity of 1,550 rounds, that gives Phalanx 31 seconds worth of firing before running dry.) is optimized a last-ditch defense against incoming missiles. It can be used against attacks by FACs, but was not designed for that purpose. The MK 38 25mm gun system (hard hitting 25 mm rounds at a rate of 3 rounds/sec on auto mode, AP, incendiary, or semi-AP shells. With 168 ready-rounds on mount, firing time is nearly double at 56 seconds) has been installed specifically as a defense against FACs like those used by the Iranian IRGC forces in the Gulf. An Unmanned surface vehicles (USVs) swarm is something different altogether. The potential for a large number of small, inexpensive USVs to overwhelm a defender's limited supply of high-cost defensive weapons is a legit risk. Identifying and engaging multiple small targets simultaneously within a large area in real time and distinguishing foe from not foe is also difficult. It’s an evolving response to this new threat. Swarm on swarm is being studied and explored. Electronic warfare to deny control over the USVs is the current prevalent countermeasure. Directed energy weapons are being researched and developed.
Sources: https://www.fbi.gov/history/famous-cases/uss-cole-bombing Wikipediahttps://en.wikipedia.org › wikiMark 38 25 mm machine gun system https://www.gd-ots.com/armaments/naval-platforms-system/phalanx/
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| 27 Nov 2024 | EP93: The Quiet Crisis Above: Unveiling the Dark Side of Space Militarization | 00:15:13 | |
Summary: In this episode, we examine the growing militarization of space, focusing on the development and testing of anti-satellite weapons (ASATs) by various nations, including the U.S., Russia, China, and India. We detail the history of space militarization, from the Cold War to the present, highlighting the dangers of space debris and the inadequacy of existing treaties like the Outer Space Treaty in addressing modern threats. Different types of ASATs are described, both kinetic and non-kinetic, along with electronic warfare systems used for disrupting satellites. We also discuss the lack of international cooperation and robust enforcement mechanisms to prevent an arms race in space, emphasizing the need for new agreements to ensure the peaceful use of outer space. Ultimately, we warn of the potential for space to become a new theater of conflict. Questions to consider as you read/listen: * What are the primary drivers of space militarization globally * How effective are existing treaties in preventing space weaponization? * What are the potential consequences of an armed conflict in space? Long format: The Quiet Crisis Above: Unveiling the Dark Side of Space Militarization By Justin James McShane TL;DR: Space is increasingly militarized, with nations like the U.S., Russia, China, and India developing anti-satellite weapons (ASATs) and electronic warfare systems capable of disrupting or destroying satellites. Recent tests, such as Russia's 2021 ASAT test, have escalated tensions and created dangerous debris in orbit. Treaties like the Outer Space Treaty (1967) aim to prevent weaponization, but gaps in regulation allow conventional weapons and military activity in space. The lack of modern agreements and enforcement mechanisms risks turning space into a conflict zone, threatening global communication, navigation, and scientific exploration. International cooperation is crucial to keep space peaceful. Introduction The militarization of space has evolved from a distant Cold War possibility to a present-day reality, where nations are deploying capabilities that could potentially turn outer space into a new battleground. This article delves into the current state of space militarization, highlighting recent threats, the development of anti-satellite weapons, and the treaties designed to keep space peaceful. History: Here is a concise history of issues related to the militarization of space: 1950s - Space Race Begins: The launch of Sputnik by the Soviet Union in 1957 marked the beginning of space exploration with an implicit military subtext, as both the USSR and the USA used space to demonstrate technological prowess, which had military implications. 1960s - Early Militarization: The U.S. and Soviet Union developed reconnaissance satellites for espionage. The U.S. had an operational Anti-Satellite (ASAT) system by 1960. The Outer Space Treaty was signed in 1967, banning nuclear weapons and other weapons of mass destruction in space but not conventional weapons. 1970s - 1980s: The U.S. tested its first ASAT weapon in 1985. Both superpowers researched non-nuclear weapons like laser systems for space warfare. The Strategic Defense Initiative (SDI or "Star Wars") by Reagan in 1983 aimed at a missile defense shield using space-based technologies. 1989 - End of Cold War: This period saw a reduction in overt space weaponization efforts due to thawing U.S.-Soviet relations, but military space programs continued. Late 20th Century to Early 21st Century: With the end of the Cold War, the focus shifted to space surveillance and missile defense. However, interest in ASAT capabilities persisted, especially with the rise of China as a space power. 2007 - China's ASAT Test: China demonstrated its ASAT capabilities by destroying one of its own satellites, escalating concerns over space militarization. 2010s - Present: India tested an ASAT missile in 2019, joining the ranks of nations with such capabilities. Russia conducted an ASAT test in 2021, criticized for creating debris. The U.S. established the Space Force in 2019, focusing on protecting U.S. interests in space and potentially engaging in space warfare if needed. Recent Threats to Militarize Space In November 2021, Russia conducted a direct-ascent anti-satellite (ASAT) test, destroying one of its old satellites, Cosmos 1408, with a ground-based missile. This action not only demonstrated Russia's capability to engage targets in space but also created a significant amount of space debris, posing risks to other space assets. This test has been criticized internationally for its irresponsible nature, potentially threatening the safety of space operations like those on the International Space Station. While the U.S. has been at the forefront of space militarization with the establishment of the U.S. Space Force, aimed at protecting U.S. interests in space, it has also taken steps towards non-proliferation of certain space weapons. In April 2022, the Biden administration announced a self-ban on testing anti-satellite weapons, urging other nations to follow suit to preserve the space environment. China has been active in developing its space capabilities, including ASAT technology. In 2007, China tested an ASAT weapon which destroyed a satellite, leading to widespread debris. This action raised concerns about China's intentions in space, potentially to deter U.S. space-based military assets in any conflict scenario over regions like the South China Sea. Anti-Satellite Weapons Several nations possess or are developing anti-satellite capabilities. There are two major types of ASAT weapons. The first are Kinetic ASAT Weapons which include missiles designed to physically destroy satellites or co-orbital ASAT which are satellites that can maneuver into the path of an enemy satellite to either destroy it by collision or interfere with its operations through proximity operations. Countries like the U.S., Russia, China, and India have tested such systems. The second are Non-Kinetic ASAT Weapons. These encompass electronic warfare, cyber-attacks, and directed energy weapons like lasers. These methods can disable satellites without creating debris, though they're less publicly acknowledged. Here is an overview of some of the most current Anti-Satellite (ASAT) weapons known to be in the world's inventories, along with their country of origin and capabilities: For the United States, the current inventory includes: Ground-Based Midcourse Defense (GMD), Space-Based Interceptor (SBI) and Laser Systems. The Ground-Based Midcourse Defense (GMD) is primarily designed as an anti-ballistic missile system. Its exo-atmospheric interceptors could potentially function as ASAT weapons due to their ability to engage targets in space. The Space-Based Interceptor (SBI) is part of the Missile Defense Agency's research, this concept involves satellites with interceptors for ballistic missile defense, theoretically adaptable for ASAT purposes. The ASM-135 was developed during the Cold War. This was an air-launched ASAT missile. It was successfully tested in 1985 when an F-15 launched it to destroy the P78-1 (Solwind) satellite. The system was designed with a Miniature Homing Vehicle (MHV) that would collide directly with the target, employing the principle of kinetic kill. The U.S. has explored directed-energy weapons, including those for ASAT roles. The Airborne Laser Testbed, for instance, was a project to develop a laser-equipped Boeing 747 to shoot down missiles or satellites. Space-Based Laser (SBL) concepts are still in the table of thought. Although the Reagan-era project was canceled, the concept of using lasers from space to disable or destroy satellites has been revisited in various forms. Airborne Laser (ABL) were initially aimed at shooting down ballistic missiles, the technology could theoretically engage satellites if modified for that role. For Russia, the current inventory includes Nudol and the S-500 Prometheus. The Nudol (A-235/PL-19 Nudol) is a direct-ascent kinetic ASAT system designed to intercept satellites in low Earth orbit (LEO). It was tested in 2021, successfully destroying a satellite. It's also part of Russia's Anti Ballistic Missile (ABM) system. The S-500 Prometheus is primarily an air and missile defense system, but there are claims that it might have an ASAT capability, especially for lower orbit satellites. For China, its inventory includes the DN-1, DN-2 and co-orbital ASAT technologies. The DN-1 is a direct-ascent kinetic ASAT missile. It was tested in 2007 against the FY-1C weather satellite. This test created a significant amount of space debris. The DN-2 is a more advanced version of the DN-1, reportedly capable of reaching geosynchronous orbits (GEO), though this capability has not been publicly demonstrated. China has tested technologies that could place a satellite near an adversary's satellite for potential interference or destruction using co-orbital ASAT technology. India's ASAT test involved a PDV Mark-II missile, which is an anti-ballistic missile system modified for the test. It successfully destroyed a satellite in low Earth orbit at an altitude of about 300 km on March 27, 2019. The development and deployment of ASAT capabilities are often cloaked in secrecy, making it challenging to have a complete and up-to-date inventory. However, these listed systems represent the known or publicly acknowledged technologies in this domain. The strategic use of these weapons could potentially lead to space becoming a domain of conflict, prompting international calls for regulations and treaties to prevent such scenarios. Electronic Warfare Systems: Electronic Warfare (EW) systems play a crucial role in Anti-Satellite (ASAT) operations by interfering with, jamming, or spoofing satellite communications and navigation systems without physically destroying them. Here are some examples and concepts of EW systems that could be or are being used for ASAT roles. There are several different jamming techniques and systems. Uplink jamming systems target the communication link between satellites and their ground stations. By overwhelming the satellite's receiver with noise or false signals, they can prevent the satellite from receiving legitimate commands or transmitting data. Downlink jamming systems are aimed at disrupting the satellite's ability to send data back to Earth, making the satellite's intelligence or surveillance capabilities useless. Crosslink jamming interfere with the communication channels between satellites, which can be critical in satellite constellations where data is relayed from one satellite to another. The U.S. Counter Communications System (CCS) is designed to disrupt satellite communications. Its Block 10.2 version is known for its capability to temporarily disrupt satellite operations. Russia's Borisoglebsk-2 is a multi-functional electronic warfare system capable of intercepting, locating, and jamming various signals, including satellite communications and navigation signals like GPS/GLONASS. Global Navigation Satellite System (GLONASS) is Russia's version of GPS. The Borisoglebsk-2 is designed to suppress enemy communications and electronic intelligence-gathering capabilities. China's Electronic Warfare capabilities include demonstrated significant capabilities in electronic warfare, including technologies that could jam or spoof satellite signals. This includes capabilities to interfere with satellite navigation systems, potentially affecting GPS, GLONASS, or their own Beidou system. Announced in November 2021 by Israel Aerospace Industries, a system named Scopius can disrupt radar, communications, and potentially satellite signals from ships, UAVs, and other platforms simultaneously. There is evidence that North Korea possesses capabilities to jam and possibly spoof GPS signals, which could disrupt navigation and communications in regions like the Korean Peninsula. During military exercises or significant political events, there have been instances where GPS signals were jammed, affecting both civilian and military navigation in South Korea and adjacent waters. While less documented, there have been suggestions that North Korea might attempt to spoof Global Navigation Satellite Systems (GNSS) signals, though this capability is harder to verify or might be less sophisticated compared to other nations. Emerging technologies like High-Power Microwave (HPM) Systems are technologies for us all to keep an eye on. They are non-kinetic, but will disable satellites in place. These can be used to overload or damage satellite electronics from a distance, although they're more commonly associated with terrestrial targets such as drone swarms, their application against satellites isn't out of the realm of possibility. See our EP86: The Real Answer to Drone Swarms: Meet the U.S. Weapon Changing the Battlefield (Epirus Leonidas) for more information on the technology and its terrestrial use. https://www.geopoliticsunplugged.com/audio/episode-86-the-real-answer-to-drone-swarms-meet-the-u-s-weapon-changing-the-battlefield-epirus-leonidas/ Electronic warfare for ASAT roles focuses on denying or degrading an adversary's use of space without the physical destruction and debris creation associated with kinetic ASAT weapons. This approach aligns with broader strategies of space control and protection of national space assets. However, the specifics of these systems are often kept confidential due to their sensitive military applications. The development of all of these weapons underscores the potential for space to become a theater of war, where satellites critical for navigation, communication, and military intelligence could be prime targets. Treaties to Prevent Militarization of Space The Outer Space Treaty (1967) is the cornerstone of space law, this treaty prohibits the placement of nuclear weapons or other weapons of mass destruction in orbit or on celestial bodies. It also declares that the Moon and other celestial bodies shall be used exclusively for peaceful purposes. However, it does not ban all military activities in space, leaving room for interpretation regarding traditional military hardware like ASAT weapons. The Prevention of an Arms Race in Outer Space (PAROS) includes efforts under this initiative at the UN that aim to prevent an arms race in space. Various proposals, including a draft treaty by Russia and China in 2008, have been tabled but have not led to binding agreements due to disagreements over verification regimes and coverage of terrestrially based ASAT systems. The Treaty on the Prevention of the Placement of Weapons in Outer Space, the Threat or Use of Force against Outer Space Objects (PPWT) are proposed by Russia and China. This draft treaty seeks to prevent the weaponization of space but has faced criticism for not addressing ground-based ASAT systems adequately. The current legal framework, primarily based on the Outer Space Treaty, lacks specificity on many modern threats posed by space militarization. The dual-use nature of space technology, where civilian and military applications overlap, complicates regulation. Moreover, the absence of a robust international body to enforce space law or regulate new conflicts in space adds to the challenge. Conclusion The militarization of space represents a complex interplay of national security, international law, and global cooperation. While no nation has openly declared an intent to wage war in space, the development of ASAT capabilities and the increasing strategic reliance on space assets suggest that the domain might become contested. The international community's ability to negotiate and enforce new treaties will be crucial in ensuring that space remains a realm for peace and scientific exploration rather than a new frontier for warfare. Sources: https://behorizon.org/increased-militarisation-of-space-a-new-realm-of-security/ https://press.un.org/en/2024/ga12597.doc.htm https://casebook.icrc.org/case-study/space-militarization https://press.un.org/en/2023/gadis3722.doc.htm https://www.reachingcriticalwill.org/resources/fact-sheets/critical-issues/5448-outer-space https://www.orfonline.org/expert-speak/space-the-militarised-global-common https://www.armscontrol.org/factsheets/outerspace https://www.globalissues.org/article/69/militarization-and-weaponization-of-outer-space https://www.lockheedmartin.com/en-us/capabilities/electronic-warfare.html https://www.vaia.com/en-us/explanations/engineering/aerospace-engineering/electronic-warfare/ https://www.space.com/anti-satellite-weapons-asats https://hir.harvard.edu/anti-satellite-weapons-and-the-emerging-space-arms-race/ https://www.armscontrol.org/act/2024-03/news/us-warns-new-russian-asat-program https://www.militaryaerospace.com/sensors/article/14168864/airborne-electronic-warfare https://aerospace.csis.org/space-threat-2018-north-korea/ https://www.space.com/anti-satellite-weapons-asats Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 28 Nov 2024 | EP94: Racing to Rule the Skies: How Satellite Internet is Reshaping Global Power Dynamics | 00:20:37 | |
Summary: In this episode, we provide an in-depth analysis of seven major players in the rapidly evolving satellite internet sector: Starlink, SpaceSail, Amazon Kuiper, Viasat, HughesNet, OneWeb, and AST SpaceMobile. We compare their technological approaches (LEO vs. GEO), market strategies, and speeds. Furthermore, we examine the significant geopolitical implications of these companies, including their roles in international conflicts, their potential impact on national security and data sovereignty, and their influence on global power dynamics and internet governance. The diverse approaches to providing global internet access highlight the increasing competition and potential for both cooperation and conflict in space. Finally, we explore the future of the industry and its potential to shape the global landscape. Questions to consider as you read/listen: * How do diverse satellite internet models reshape global power dynamics? * What are the key geopolitical implications of competing satellite constellations? * How does satellite internet access influence international relations and conflicts? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 29 Nov 2024 | EP95: Mining the Moon and in Space: Legal Loopholes and Geopolitical Rivalries in Space | 00:17:41 | |
Summary: In this episode, we offer a comprehensive overview of international space law, examining existing treaties like the Outer Space Treaty and the Moon Agreement, alongside newer initiatives such as the Artemis Accords. We highlight the complexities arising from the increasing involvement of private companies in space activities, particularly concerning resource extraction and space debris. We further analyze the geopolitical implications of space exploration, emphasizing the competition between nations and the need for updated legal frameworks to address current challenges. Ambiguities in existing laws regarding resource ownership and the militarization of space are discussed, along with proposals for new treaties and agreements. Finally, we underscore the urgent need for evolving space law to maintain peaceful cooperation and prevent conflict in the cosmos. Questions to consider as you read/listen: * How does evolving space law address commercial interests and national sovereignty? * What are the major geopolitical implications of space resource exploitation and competition? * How effectively do existing space treaties manage emerging private sector activities? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 02 Dec 2024 | EP96: Broken Minds, Broken Nation: The Economic and Geopolitical Fallout of America's Mental Health Crisis | 00:08:17 | |
Summary: In this episode, we detail a serious mental health crisis in the United States, citing high rates of mental illness among adults and youth. This crisis significantly impacts economic productivity through decreased workforce participation, increased healthcare costs, and a rising NEET (Not in Education, Employment, or Training) rate. The NEET phenomenon is strongly linked to mental health issues, creating a feedback loop of inactivity and worsening mental health. Furthermore, when combined with the decreasing demographics in the US, the crisis poses geopolitical challenges, weakening the U.S.'s influence globally due to reduced economic strength and a decline in perceived national stability. Questions to consider as you read/listen: * How does America's mental health crisis impact economic productivity and growth? * What is the relationship between mental health, NEET rates, and demographic trends? * How does the US mental health crisis affect its global influence and standing? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 02 Dec 2024 | EP97: Who Killed Haiti? The Complex Web Behind a Nation's Downfall | 00:16:36 | |
Summary: In this episode, we detail Haiti's profound crisis, examining its multifaceted descent into near-state failure. We cover the historical roots in colonialism and reparations, the ongoing impact of political instability—highlighted by President Moïse's assassination and subsequent leadership turmoil—and the pervasive influence of powerful armed gangs controlling much of the country. The economic and humanitarian consequences are explored, alongside the limitations and criticisms of past and present international interventions, particularly the Kenyan-led mission. Ultimately, we paint a grim picture of Haiti's future, raising questions about its ability to regain sovereignty and stability, even considering the recent appointment of new interim Prime Ministers. Questions to consider while listening: * What historical, political, and economic factors caused Haiti's current crisis? * How have gang violence and political instability intertwined in Haiti's collapse? * What role has the international community played in Haiti's downfall and recovery? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 05 Dec 2024 | EP101: Nearshoring in Canada: Opportunities Amid Tariff Challenges | 00:21:52 | |
Summary: In this episode, we investigate the potential for nearshoring in Canada, analyzing the advantages and disadvantages of various regions. Major metropolitan areas like Toronto, Vancouver, and Montreal are highlighted as prime locations due to their robust infrastructure and skilled workforce, while remote and northern regions are deemed less suitable because of high operational costs, limited infrastructure, and sparse populations. We also consider the impact of factors such as labor costs, regulations, and potential tariffs on the overall feasibility of nearshoring initiatives in Canada. We conclude that while opportunities exist, success depends on addressing challenges and implementing strategic economic policies. Questions to consider as you read/listen: * What factors drive Canadian nearshoring trends and their regional variations? * How do Canadian labor costs and regulations affect nearshoring feasibility? * What are the long-term economic impacts of nearshoring on Canada? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 03 Dec 2024 | EP98: Manufacturing’s Homecoming: The American Cities Best Positioned to Thrive in the Reshoring Era | 00:11:38 | |
Summary: In this episode, we analyze the reshoring trend in U.S. manufacturing, identifying cities poised for growth and those facing challenges. Key factors influencing reshoring include supply chain disruptions, automation advancements, and government incentives. Beneficial locations possess strong infrastructure, skilled workforces, and strategic geographic positions, while areas with high costs, aging infrastructure, or dependence on single industries are predicted to struggle. We highlight the transformative potential of reshoring for the U.S. economy while acknowledging the varied regional impacts. Ultimately, the success of reshoring hinges on strategic partnerships, innovation, and building resilient supply chains. Questions to consider as you read/listen: 1. What factors determine which US cities thrive with reshoring? 2.How does reshoring impact different US regions economically? 3. What challenges hinder reshoring in specific US locations? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
| 03 Dec 2024 | EP99: DJT the OpecSec President… and the National Security Agency Vacancy | 00:23:47 | |
Summary: In this episode, we discuss the lack of an NSA director appointment in a potential second Trump administration. We explore the significance of the NSA's role in national security, including its capabilities and involvement in the Five Eyes intelligence alliance. We also details the Trump transition team's rejection of GSA resources due to surveillance concerns. Finally, potential candidates for NSA director under a Trump administration are considered, focusing on loyalty and alignment with his views. We offer insight into the political implications of these decisions and the future of the NSA. Questions to consider while listening: * What security risks did Trump's transition team perceive, and why? * How does the NSA's role intersect with domestic and global privacy concerns? * What factors influence the selection of an NSA director under Trump? Get full access to GeopoliticsUnplugged Substack at geopoliticsunplugged.substack.com/subscribe | |||
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