The Peter Zeihan Podcast Series - The Two-Sided Coin of Russian Sanctions || Peter Zeihan

Episode Date: February 1, 2025

This video was recorded before Peter left on his New Zealand tripWestern sanctions against Russia aim to restrict revenue flows by barring access to Western shipping, banking and insurance...but there's one more step that could be taken to put the final sanction nail in the Russian coffin. Join the Live Q&A on Feb. 7 by becoming an Analyst member on Patreon here: https://www.patreon.com/PeterZeihanFull Newsletter: https://mailchi.mp/zeihan/the-two-sided-coin-of-russian-sanctions

Hey, everybody. Peter Zine here coming to you from Chihuahua City in Chihuahua, Mexico. Today we're going to take another entry from the Ask Peter Forum on the Patreon page, and that specifically, if I was to redesign Russian sanctions, what would you need to do in order to make them hit harder? And the answer to that is very simple. You go after the Shadow Fleet. The Western sanctions against Russia are designed, or at least the intent is, to limit the Russian ability to just, generate income from their sales of natural gas and oil and fertilizer and everything else,

but without actually impinging on supply. And that's the problem. If you really want to hurt the Russians, you have to actually go after the supply itself. Now, the Westerners are trying to have their cake and eat it to by saying that you can't use Western ships. You can't use Western banks. You can't use Western insurance. And so what the Russians have done is to build up an alternative supply system and an alternative transport system using ships. that were about to be decommissioned or already had been, as well as generating their own state-owned insurance. So the ships tend to be old, they tend to be leaky, and we're just kind of lucky that there hasn't been some sort of catastrophic accident thus far. But if you were to, say, use Western naval assets to, say, limit the ability of the Russians to leave the Black Sea or the Baltic Sea,

then all of a sudden, roughly two-thirds of what the Russians send out would be shut off within a day. Now, that has consequences, obviously. can't just remove a few million barrels per day of crude from the market. You can't remove one of the largest supplies of wheat from the market, the largest supplier of fertilizer and bauxite and all the other things from the market without massive outcomes. And that is the reason why the Europeans have chosen to not take that step. Also, if, if you were going to go that route, you're going to change the way the ship registries work in the world.

Right now, there is absolutely no link between what is the owner of the vessel, what is the cargo of the vessel, what is the origin of the destination, nation of the vessel and how it's registered. And so as a result, most ships are registered in places like Panama or Guinea-Bissau or something like that, because it's cheaper. If you're going to start going after shipping for whatever reason, you need to start linking where the ships are registered to countries that actually have naval forces so that they can actually protect those ships. And at this point in time in the world, there is no country, even the United States, that has the naval firepower and reach that is necessary to protect a substantial percentage of

of the world's shipping. The world's shipping has evolved over the last 80 years from the concept that the seas are free and anyone can use them at any time for any reason. If you start to impinge upon that, we go back to a system that predates World War II, where all of a sudden military force is necessary to keep your sea lanes open. And since the United States has a supercarrier-heavy fleet, we don't have enough to protect the tens of thousands of ships that ply the world's waters every day or even the proportion that is going to or from American shores. So if you pull the trigger on this, we are on a new world overnight. And most countries are not ready for that.