everyone peter zion here coming to you from home in colorado so first of all on saturday the 18th
the the lithuanians in essence shut down the rail line that links the enclave of clinton
grads the russian territory on the baltic sea from russia proper specifically they say they
are now enforcing international european sanctions on kaliningrad as a separate entity since it is
physically separated and this basically means that even if you could get something in russia
you now have to go through an international link to get to kaliningrad and vice versa since that
goes through lithuania that's international space that's a different sovereign country the sanctions
now apply so about two-thirds of the economic activity between kaliningrad and russia proper
passes on that rail line the other third goes by ship and probably half of that cargo overall
now falls without the sanctions whether it's because of finance or technology or energy or
whatever it happens to be now kalinagrad is a weird little pocket of territory
in northern europe it used to be the easternmost position of german power it was part of prussia
it was a military base that they used to project power east and north and in the aftermath of the
world wars it became soviet territory and because under the soviet union all of the republics were
in a single country it really didn't matter that it was never formally incorporated into
say latvia or poland it was instead part of russia proper but on a map it didn't matter
when independents for the former soviet world happened in 1999 1989 to 1982 however poland
and lithuania went their own way and now culinard became physically isolated now the clinton graders
and the russians are saying that they're going to get around this by just having more vessels take
maritime shipments from kaliningrad up through the northern baltic sea into the gulf of finland and
to st petersburg doesn't work as well as you might think um having a small population like kirtland
and grad only about a million people physically separated but having that dedicated rail line you
know that broadly works it's awkward it causes a series of diplomatic crises historically we had
even larger reliance dependence on russian energy resources since the regaining of our independence
we were highly exposed to russian energy resources russian energy import but 10 or even more years
before we just realized that we shouldn't have any illusions regarding russia so we have to
do everything in order to make our alliance on russian energy resources less every year now
poland and estonia and latvia and lithuania and denmark and germany other baltic sea littoral sea
states are all in nato already and finland and sweden are on their way to joining pretty quickly
so really the only chunk of the baltic that is not nato is going to be russia proper and in that sort
of environment having an exposed supply line is at at a minimum dubious but it's more than that
there's also a climate issue uh unlike most of the bays of the world the baltic sea can freeze
sweden finland the baltic states northern russia all of them get a lot of precipitation
most of that ends up in the baltic specifically in the northern arm called the gulf of bothnia
and the eastern arm gulf of finland so bothne and finland freeze over regularly and in fact
stockholm in sweden and riga and latvia are where they are because that's the furthest south that
the freeze line normally goes to kaliningrad is south of that they don't freeze but petersburg is
definitely on the north side so if you're moving into an environment where you're shipping things
by water through a nato lake that freezes over for a couple months of the year that does not
strike me as a very viable option the russians are already um shooting solid gold kittens over this
clinton grad is incredibly exposed and while nato has always been nervous about it because they see
it as a dagger at europe's heart and it is it's also completely surrounded now by hostile states
and in any sort of meaningful conflict between russia and nato kaliningrad would probably fall in
a matter of days if not hours so the russians are doing what the russians can they can't get troops
there because you'd never be able to get troops on that rail line and you know naval transport
has never been the russians forte uh they may be able to fly in some paratroopers but that's
not gonna really dissuade anyone to do anything differently and they can't move regular forces
because they're all committed on the ukraine front their only option is to put in missiles
there are already iskander medium range ballistic missiles with nuclear tips there already
count on the russians to put in a lot more and to beat their chest about how they can incinerate
european cities uh specifically the eskenders are designed to be able to hit rome and paris
yeah okay so that's that piece uh the second big thing that's going on is it between sanctions and
some difficulties out of the russians in trying to make life for the europeans as difficult
for their sanctions as possible natural gas flows from russia to europe proper down by
about a third right now with most of the recent reductions being reductions in the nordstream one
pipeline this is a pipeline that was operational about ten 8 to 10 years ago nordstrom 2 was going
to come online this year but because of the war that's been indefinitely shelved
now there's a lot of inconsistencies in european energy policy and how the way it's manifesting at
the immediate moment is that the germans because they're facing immediate natural gas shortages now
are discovering that they have to go back to coal in a very big way and they announced their
plans to do that this weekend a lot of greens in everywhere are already condemning the germans but
it's worth picking apart what's going on with european energy policy here because it's a lot
worse than most people are suggesting now the europeans didn't start importing natural gas in
mass until really the 1980s and now imports are over half of total consumption and that
makes it sound better than it is because most of those domes domestically produced european
uh uh production i'm sorry the domestically produced stuff the stuff that comes from within
europe most of it's not within the eu and most of that comes from norway with a little bit coming
from the united kingdom as well so when you say that imports are half it's really the imports
are 80 percent and about half of that comes from russia so the degree of exposure here really is
high also a number of the european countries have steadily pushed nuclear out of their fuel mix for
political reasons uh some one little fun thing to keep in mind that the
origin of the anti-nuclear protests in europe and in the united states in the 1960s and 1970s
that was an fsb operation so the roots of today's german green party in particular are rooted in
russian propaganda it's moved on and taken a life of their own so i don't mean to suggest that the
russians are puppeteering the german greens right now but you know there is a background
there that is worth acknowledging when you're making policy that really hasn't been to this
point so then there's the possibility of green tech solar and wind but europe is neither a windy
nor a particularly sunny continent and most of the green tech that has been installed at this point
at high cost i might add has been very seriously underperforming there are three countries on the
continent that have decent potential make that four denmark and the united kingdom have really
good wind potential specifically offshore and both of them get a significant percentage of their
electricity from that source uh group but remember the uk left the eu so you can't count uk data in
that anymore and that was about one third of the eu's plan for going green was power from the uk
second is greece greece has great offshore wind as well but it's it's freaking greece
and no one wants to invest a trillion dollars in generating infrastructure in a country that is
already on financial drip feed and has no hope of long-term survival and then the third one is
spain which has pretty good solar the problem is that spain is almost completely disconnected from
the broader european grid there's minimal pipe and electricity transmission across the french
spanish border they're building it up and the current rates you know maybe that'll be really
impressive in 10 to 15 years but even if spain becomes a massive solar producer that helps
france which is not one of the countries that has a problem here so without those those four
states or at least the the three bigger ones you know there's not much else going on here
the germans like to say that they're building out all this green tech and on paper they now
have solar and wind capacity installed that nameplate capacity is capable of generating twice
the electricity that they need for their peak demand the problem is is that the country is both
calm and cloudy so it generates only a spare a few percentage points of what it's
capable of and then they use accounting chicanery to make it look better than it is so for example
on those six days in august when everyone in germany is on vacation and the industrial plant
is shut down and the sun finally comes out the germans generate huge amounts of electricity
far more than they could ever need themselves and so they export it those exports are counted
as domestic consumption in terms of the amount of electricity that's generated from green sources
similarly for most of the year when it's cloudy and the solar is pointless
they use coal plants to generate electricity but they only count the coal generated
electricity that comes at the time when it's actually directly linked up to the grid
when the sun goes down i'm sorry when the sun comes up and they do get some solar
the coal is immediately disconnected from the grid and the solar is giving privileged access
to the grid it takes 36 to 48 hours to spin up or spin down and coalignite power plant love the
kinds of the germans have so when solar displaces they don't count the coal generated electricity
in their numbers so that that depresses the coal figures and increases artificially the
green tech figures probably they're only getting about 10 of their electricity by a more standard
accounting method from green sources anyway natural gas is definitely not being provided in
the volumes or the reliabilities that enables most of the european economic system and especially the
electrical grid to function in the way it was designed and so what the germans are doing right
now and removing natural gas from the mix because they have no choice and putting coal back in
some version of this is now going to happen across most of europe and that has three big outcomes
number one it means you have minimal natural gas allowed to be used to generate electricity it is
now going to be mostly hoarded for industrial use second there's not enough even for that or
there won't be soon because even if this little spat is resolved there's going to be another one
and the natural gas that's transported by pipe across ukraine that is not long for this world so
what natural gas they can get access to is going to have to be hoarded and reserved for
industrial use and then it's going to have to be rationed for the industrial sector
now that suggests that what is already an energy induced recession in europe is about to expand
becoming broader industrial recession that will last a significant amount of time because there
just isn't a good alternative at all and then third of course i absolutely massive
coal build across europe starting in germany but continuing on which will completely obliterate
europe's climate goals even with more accounting creativity all right those are the two big things
there's more things going on so buckle up the next few weeks as regards the ukraine war are going to
be particularly intense we have european insurance sanctions on russian oil exports that are now in
place so we're probably going to see nato navies seizing russian oil tankers before too long
the world food program is loudly and accurately screaming about famines starting this year in a
number of countries and if anything they're not thinking loud enough about half of the
foodstuffs that the wfp distributes to the poor countries of the world that are food insecure
it comes from ukraine and they can't get any and we're also seeing significant weakness in
the weapons flows from the west to ukraine some of it's bureaucratic some of it's political some
of it's logistical some of it is just because some countries in nato are starting to run out in the
meantime the russians are rushing hundreds maybe even a couple of thousands of older tanks to the
front so we are setting up to have a clash between the ukrainians and the russians that will face
will have russians with outdated poorly maintained equipment manned by low morale poorly trained
troops facing a grou off against ukrainian infantry that has minimal weapons at all
uh it's going to be an ugly end of summer over there all right that is it from me apologize for
this one being so long but you know holidays and i will see you all next time until then
this time passing zero seven zero four one four zero rtb linking via septum