Repost: Book review Disunited Nations (Peter Zeihan) Plus Reflections on Australasian Geopolitics
This week I am reposting a fairly lengthy book review from my former Wordpress blog that ends with a geopolitical analysis of the various parts of Australasia. Please excuse the lack of new material, but the new donkey foals just arrived and my days are taken up tending them. They are confined in the old milking shed to begin while I gradually adjust their diet to my rich and diverse pastures, essential to avoid the risk of bloat. They also need a lot more halter training, and to become respectful of electric fences, something that I hope to begin tomorrow.
Somewhere in the middle of that I managed to fit in a podcast interview with Geopolitics and Empire https://geopoliticsandempire.com/2024/04/10/shane-cheap-energy-mad-max/. This show speaks with a wide variety of thinkers on these topics, mostly on the fringes of conventional opinions. I highly value such channels, especially since I don’t always agree with everything that every guest proclaims. During times of stress, societies tend to split into warring factions, and usually everyone ends up losing. I’m determined to talk to anyone and everyone about the potential of landrace and adaptation agriculture, and I hope you can accept my position in this regard.
Now for the book review…
It is a common refrain for people to complain about the way the United States of America has assumed the mantle of the world’s leader and policeman in the post cold war dynamic since the fall of the USSR three decades ago. The Americans are accused of preying upon resource rich weaker nations (that story is well accounted in “Tales of an Economic Hitman) and starting minor wars with tragic consequences.
The book in question outlines the main ingredients that allow countries to maintain continuity. They would be fertile interior farmland, internal navigable rivers (or failing that useful ocean ports), defensible natural borders (such as mountains, deserts or oceans), and a manageable amount of neighbourhood competition. In modern industrial times other natural resources (especially fossil fuel energy) and the economies of scale that allow them to be exploited, plus a stable demographic profile are also necessary. The USA are one of the few places that has all of these ingredients in relative abundance, though the author makes much of the American shale fracking “miracle” as a means for the USA to withdraw from energy dependencies around the world.
Other regional centres with some potential include France, Turkey, Japan and Argentina. Countries with the most severe challenges include Russia, China, Brazil and Germany. The author’s central argument is that the USA is withdrawing from their role of global leader, abandoning the global order they maintained that allowed other nations to participate in global trade and that gave them access to cheap imports and to international markets for lucrative exports. This loss of order will make international shipping impossible, with a handful of militarily capable countries at best creating regional trade security, greatly diminishing the capacity for global trade and spurring a return to constant regional conflict over limited resources.
Overall I found the book’s insights into the inner dynamics of various major countries to be compelling. The author however skirts around arguments that the global fossil fuel energy system is facing dire challenges and that a substantial decline in oil production volumes is likely to unfold in coming decades, with severe economic consequences. Even the fracking boom in the continental USA represents a final desperate resource grab rather than a transition to an era of regional energy abundance. Likewise the dynamics of the global coal industry appear to be heading into dire straits, with the energy profit of systems falling low enough to drive many major coal mining companies into bankruptcy before the current economic turmoil. This unfolding dynamic is likely to be particularly hard on energy importing countries such as Japan and those in Europe.
China is in an especially perilous position, with the domestic cheap coal and electricity that made its rapid industrialisation possible reaching limits. Such a stressful dynamic suggests a return to the large scale conflict of the early 20th century, a mirror image from the start of the oil age then with the end of the oil age today. I believe this time around there is no grand prize to seize and instead minor localised conflicts as were common throughout history will re-emerge. A good analogy would align the grand struggles of the world wars with the existential fight between Rome and Carthage. After it won, Rome continued to run on momentum until eventual resource limitations caused it to cede unprofitable territory at its periphery until nothing was left. Likewise I can foresee a similar process of the global network gradually losing dominion over a growing list of failed states, though with the central role of oil in global shipping this disintegration is likely to unfold in a much shorter time frame than the fall of Rome.
Zeihan’s book spent little time considering the fate of Australasia (Australia, New Zealand, New Guinea, and in the broader sense Polynesia and Indonesia). I thought it would be interesting to use a similar form of geopolitical and economic analysis of our neighbourhood to see if it can help us understand how we might cope during the unfolding period of global disorder.
Of these regional players only Indonesia has much of a population of note at 270 million. Their territory is a vast archipelago of scattered islands, connected by many reasonable quality ports. The seas are shallow and the distances short, and trade connections to mainland Asia can likely be maintained. Indonesia has 0.22 acres of arable land per person, close to the world average. Indonesia is a major exporter of palm oil and coal, but also imports a large amount of wheat and soybeans. They had been a major rice importer until it was recently banned. Indonesia has been pushing for self-sufficiency in staple crops in recent years, increasing prices but also supporting local production. Fertiliser use per acre is high and increasing, with most being imported, meaning food stress is still on the horizon if global trade is interrupted. Indonesia shifted from being a net oil exporter to importer in the early 2000s but has sufficient domestic coal resources. Heavy reliance on international oil companies for production and capital to develop fields in scattered locations may limit their ability to produce oil in the future. The military is the largest in the region but its home grown production capacity is fairly limited. Military imports are fairly diversified but predominantly from distant countries. Given the diverse and geographically fragmented nature of its territory it seems likely that unrest of the type seen today in West Papua and Aceh is likely to consume much of their military focus. My prediction is that Indonesia will continue to be fragmented and chaotic but relatively stable, with a decent chance of maintain at least cultural if not political continuity on a local level as local agriculture weans itself off imported fertiliser while population peaks and decreases through the 21st century.
Papua New Guinea is in a more difficult position. The population of 9 million (plus another million in West Papua) has a mere 0.08 arable acres per person. The population has grown rapidly from 3 million in 1980, fuelled by large imports of staple foods supported by mineral export income. There are several large ports but the internal road network is very limited due to the difficult terrain. Without continuing access to global trade the population faces a starkly limited food supply. This is coupled with a deeply divided population which retain the tradition of violent feuds with neighbouring tribes. The nominal government in Port Moresby has very limited capacity to project power and normally does business by dividing up the spoils of globalisation among various parties. As globalisation unwinds PNG faces a very difficult situation. If Indonesia can maintain coherence it may attempt to push it’s territorial claim to the whole island, though given the speed of the unfolding disruption the opposite is more likely with Indonesia ejected from the island (simply because global demand for the commodities being extracted falls too low to make them worth the bother). The New Guineans have however maintained an almost unbroken tradition of subsistence agriculture, more intact than almost anywhere else in the world. This alone gives them the ability to emerge from the other side of the disruption with the ability to revert to their pre-industrial social and economic forms. That said, these traditional systems are especially poor at producing protein, vital for reducing the impact of infectious disease, meaning PNG faces population reduction through disease.
The smaller Polynesian nations of the Pacific face a similarly difficult situation. Their population also grown rapidly since the 1980s, supported by imported staples. Significant migration to New Zealand and Australia reduced local population growth somewhat, but makes many nations dependent on a flow of cash remittances from family members abroad. The nations are highly dependent on seafood for protein, a resource at risk if industrial Chinese fleets continue to pressure the area. The primary challenge though for these widely scattered islands is transportation, since they have zero fossil fuels. They have considerable economic dependence on luxury tourism, itself dependent on affordable oil and viable international airlines, something that already seems to be in the past with the impact of the coronavirus pandemic. Further into the future various lower lying islands are also threatened by rising sea levels. My prediction is that these small nations will be cut adrift, more rapidly than PNG since tourism is more of a luxury than bauxite, and mostly forgotten in a world that is preoccupied with its own pressing problems. The local pre-industrial cultures have remained mostly intact (though not as vibrant as PNG) and are likely to experience a resurgence though the transition may be more difficult because the populations are often in a poorer state of health than those in PNG due to a longer period of subsisting on noodles and tinned meat, though the amount of conflict is likely to be lower due to higher levels of cultural cohesion (though recent tension with Indian communities in Fiji is a notable exception).
New Zealand has some similarities to the situation of the Polynesians, where sheer distances dictate the situation. Despite the clean and green image that lures tourists from even further away than for Polynesia, the island itself has some of the most intensively industrialised agriculture in the world, which makes up a significant part of its export economy. The New Zealanders use the highest rate of fertiliser per acre of any nation, producing predominantly high end and highly perishable foods for luxury customers in Asia and the USA. This reliance on very long distance refrigerated transport to get delicate products to customers with disposable incomes is likely to experience major troubles as globalisation unwinds. Both the export agriculture and tourism industries could collapse very rapidly in the event of a major economic disruption. New Zealand itself has a reasonable number of ports and well developed road network, but maintaining both may be challenging without access to oil imports, though it does refine the majority of its Middle Eastern imports domestically. Disruption of middle eastern oil exports could leave New Zealand without a viable replacement. One area of major advantage is that a large proportion of electricity is produced from hydroelectricity and geothermal sources, which could insulate the economy somewhat to energy shocks (though will do little to help the critical transport sector that is almost entirely oil dependent). New Zealand also has the benefit of virtually zero military threats, one payoff for its exceptional isolation. They have a significant potential internal cultural rift between the Maori and later settlers, which is likely to be inflamed during a period of economic stress. The country also has a relatively limited amount of arable land, only 0.12 acres per person and well below global averages. In the future it will need to rapidly convert its existing export oriented agriculture to serve domestic needs and to wean it off its astonishing fertiliser dependence, though its history of agricultural innovation may help it work miracles.
The most interesting and personally relevant case is Australia. I sometimes like to joke you would get this country if you crossed Saudi Arabia with Britain. The continent is almost as inhospitable as the former and suffers a case of a resource curse nearly as severe. And yet we have what appears to be a fairly functional democracy. Unlike other countries in the neighbourhood we have a stunning 1.9 acres of arable land per person, with even more stunning 80 acres of mostly useless desert per person. Despite this most of the population is packed into the sprawling suburban fringes of our major cities. The north of the continent is especially depopulated, consisting of savannahs that swing from “on fire” to “under water”, fringed by coasts of mud, mangroves and crocodiles with very few useful ports. This northern side forms a useful protective border since no one in their right mind would want to invade it, let alone claim it. The south is more hospitable with several great port cities. Australia is the only country in the region with a significant interior, yet we lack any navigable rivers that would connect production and populations. Our road network is extensive but vulnerable in the future since it relies on imported petroleum, both to make the roads and run the trucks. Many regions barely have enough surface water for livestock, and instead rely on pumping from our extensive groundwater basins. Our highly erratic climate makes broad scale agriculture challenging here even in some of the better places since the climate is erratic year to year. For this reason the initial colony was a net food importer for the first century of its existence. With industrialisation these marginal regions were brought into production, often simply through better weather forecasting that allowed farms to be left idle during prolonged droughts, and which now allows Australia to be a significant exporter of low value commodity crops like wheat during good seasons (and a sometimes net importer during prolonged droughts). Coupled with our mining exports this has served to maintain a very high average standard of living, though rising wealth inequality has pushed a greater proportion of the population into relative poverty. Housing prices in particular have crushed real incomes of the younger generation. Australia’s housing bubble continued to rise through the GFC that punctured many overseas, buoyed by the influx of cash fleeing the Chinese economic mainland. There are strong signs the bubble is currently being popped by the impacts of the coronavirus pandemic.
Australia is in some ways an energy power house, with substantial volumes of domestic coal and a recently booming gas industry. Both commodities are however a pain to export, coal since it is so bulky and gas since it requires high tech ships. Both commodities are very important for Australia, but a rounding error for their destinations in Asia. Australia has always been the producer of last resort due to the distance and high labour costs making us less competitive. Only when the world is desperate for a commodity does it come to Australia, leading to our economy through boom and bust cycles. Neither coal nor gas are anywhere near as important as oil for the world economy, especially for its critical role as a transport fuel. Australia has modest oil production, but peaked in the early 2000s and now imports a bit more than half of what they use. Our oil refining capacity is declining rapidly as a result, halving in the last decade as old plants are decommissioned and not replaced. Instead much of our domestic oil goes to Singapore to be refined. Our oil is also mostly light crude, which must be blended with heavier oil from the Middle East. This reliance on long distance shipping to Singapore and ongoing Middle Eastern stability is a major vulnerability.
The need for diesel for freight trucking, agriculture and mining represents a major strategic weakness. Interruption of the economy of Singapore, its refining capacity, its import routes from the Middle East, or the safety of lumbering oil tankers going back and forth would put Australia in a dangerous position. Piracy is already a significant issue in the waters of South East Asia, and a disintegrating Indonesia could make these waters unnavigable without the US military to act as a free security force. This sets the scene for a possible marriage of convenience between Australia and Indonesia. Australia needs a steady supply of diesel in order to maintain its primary export industries, or merely to feed its suburban populations. Indonesia needs some reliable source of calories and protein imports to prevent its population from rioting. As long as both sides can keep their part of the deal it could work, but ongoing declines in global oil production would probably mean the relationship could hold at best for a few decades. After that point Australia is likely to also be cut adrift from its critical oil lifeline.
In a severely oil limited world Australia would have some advantages and disadvantages. The enormous internal distances would likely lead to the more remote parts of the country falling out of the orbit of the urban population centres. The more severe arid zones would likely become uninhabitable without energy and parts to maintain ground water pumping. Despite its astonishing immigration to cope with falling birth rates the country is still fairly culturally homogeneous, in part a result of having one of the most mobile populations in the world. Australians commonly are born in one place and then move repeatedly during their life over long distances. Provided the government remains functional there is capacity to use remaining domestic oil production to feed the urbanised population centres for another generation at least (though with steadily diminishing quality of life). Land made arable by industrial inputs is still usually very distant from population centres, so over time the diminishing population would likely relocate to regional centres with some local agricultural capacity. Two acres of arable land per person gives us a shot of reorganising our economy without experiencing dramatic population losses by the end of the 21st century, though our current demographic balance suggests it will decline even ongoing immigration. We may find ourselves with reason to continue immigration, though perhaps with more of a focus on young people from PNG and Indonesia with experience in pre-industrial farming rather than urban professionals.
This is my limited take on the state of Australasia in 2020, though I am by no means a professional analyst in these matters. What other interesting factors have I overlooked? I would love to hear the opinions and insights of others on this grim but unavoidable topic. If all of this is too depressing then you can always look at the photos of my new donkey foals instead.
Interesting to see some similarities between Canada and Australia - over 2 acres of arable land per person, access to oil (though much of it is fracked), largely empty interior and a very hostile climate in the north. I wonder if our vicinity to the USA will be a help or a hindrance.
I'm writing a fiction book at the moment which attempts to sketch a possible future for Australia and industrial society in general, set eighty years ahead. I've spent ten or more years working on it and broadly, I'm in accordance with what you've laid out here. Nice to communicate with a like minded soul! There's no-one else to talk to about it in my immediate circle, even though they are generally from the educated elite.