Texas Forever, Rare Earths Aren’t, Turkey vs. Iran? and the Week in Review

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Texas Forever, Rare Earths Aren’t, Turkey vs. Iran? and the Week in Review

Howdy folks. Let’s not even pretend like what is happening in Texas isn’t on the front of our minds. Here are some extended thoughts on what is happening and what it means, followed by our usual summary of other things happening in the world. Stay safe and keep your comrades warm. If you’re bored and have electricity, feel free to distract yourself with our latest podcast on the geopolitics of Scotland. It was a fun one. If you’re one of our many readers not based in the U.S., remember that Texas is the 9th largest economy in the world. What happens in Austin doesn’t stay in Austin. Cheers.

Texas forever. Successive winter storms pounded the U.S. heartland, setting record lows for temperatures across the South and Midwest. The cold temperatures overloaded Texas in particular, where millions went without electricity and water in below-freezing temperatures for days. (Hundreds of thousands still lack both as of this writing.) Texas governor Greg Abbott banned natural gas exports until at least Sunday, leading to blackouts in Mexico affecting almost 5 million people across six northern states.

What it means: Ed Hirs, an energy fellow at the University of Houston, had this gut-punch of a quote in the Houston Chronicle: “The ERCOT grid has collapsed in exactly the same manner as the old Soviet Union. It limped along on underinvestment and neglect until it finally broke under predictable circumstances.”

Let that sink in for a minute. Texas 2021 = USSR ~1980.

It’s too early to begin assessing the cost of the damage done by these winter storms. At least 23 people have died as a result, and that number will likely increase in the days ahead. And yet, despite the loss of life, the damage, and the tragedy of it all, there is mostly a lot of politics and finger-pointing swirling around this story. What failed more, natural gas or wind turbines? Why didn’t Texas winterize power plants when federal regulators recommended they should in 2011? Why is Texas Senator Ted Cruz in Cancun? Remarkably, despite the tragedy and the incompetence and the excuses, we can’t even agree as a community on what is truly wrong.

First and foremost, this is about climate change, and how unprepared we are for it. Indeed, get used to more of this.

Second, U.S. infrastructure sucks. The richest, strongest, most technologically advanced, and geopolitically blessed country in the world has terrible infrastructure. Texas is bearing the brunt of it today, but don’t think for a second Texas is alone in this. You can also bet intelligence reports in China, Russia, and other countries are drawing attention to how brittle the U.S. has become this morning.

Third, U.S. politics is so broken and partisan that none of these issues ever get solved. Instead, we squabble with each other over nonsense and call each other Nazis and Communists and prioritize feeling personally justified or self-righteous instead of working together to fix our problems. There is no accountability, no compromise, no progress – only politics.

Former Mexican dictator-president Porfirio Díaz once famously said, “Poor Mexico: so far from God, so close the United States.” Perhaps the latter part of the phrase should be, “so close to Texas.” Mexico gets 90 percent of its natural gas from the U.S., so in addition to everything else, U.S. incompetence is also alienating Mexico, the country it is arguably most important for the U.S. not to make an enemy out of.

So, what does it all mean? The biggest threat to the United States of America is the United States of America. It isn’t China, Russia, Iran, North Korea, or any other external actors. It isn’t even climate change or nuclear proliferation. These threats are serious, no doubt, and we aren’t saying to ignore them. The point is the U.S. doesn’t look like a country that can deal with much of anything right now. And that’s a bigger issue than all the others put together.

Too often, geopolitics thumbs its nose at the local and domestic while focusing on the grand and strategic. That’s one of the reasons we started Perch Perspectives – because we think geopolitical analysis has to be grounded in what humans are actually doing and

saying and experiencing. We believe when you lose sight of that fundamental truth, you inevitably produce inaccurate insights. (That’s why, by the way, so many analysts failed to predict the collapse of the Soviet Union in the 1980s…and why that quote from Mr. Hers is so sobering.)

Case in point: If you look at the U.S. on paper, it is hard not to see anything but a global superpower. If you look at the U.S. from the bottoms-up, however, the U.S. is behaving like a hulking, sclerotic, deteriorating power. That is the sort of nation other countries increasingly believe they are dealing with – both allies and enemies alike – and is one of the primary forces affecting the global balance of power today.

Rare earths aren’t rare. The Financial Times reports China is considering limiting the export of rare earth minerals to the U.S.

What it means: We have an admittedly contrarian take on this. We don’t think this about China trying to punish the U.S. Instead, we think it’s reflective of the fact that Chinese demand for rare earths has increased so much that the Chinese government needs to restrict exports to secure Chinese domestic supply. As we said in our Texas-sized rant above: if you are trying to understand what a country is doing and why sometimes the answer has nothing to do with a relationship between two states and has everything to do with how one of the actors involved has decided to deal with a domestic issue. If you don’t know the local story, you are not going to arrive at the correct answer, even if you are the best macro-analyst since Mackinder.

Turkey v. Iran? Turkey arrested an Iranian consulate official it accuses of assassinating an Iranian political dissident in Turkey 15 months ago. An Iraqi militant group with ties to Iran called Harakat Hezbollah al-Nujaba threatened to attack Turkish military forces carrying out alleged counterterrorism operations in Northern Iraq. A different and relatively unknown Iraqi militant group called Saraya Awlia al-Dam (“Guardians of the Blood”) claimed responsibility for a rocket attack against an airport in Erbil in Kurdish Iraq.

What it means: Is it just us, or did Turkish-Iranian relations just get a lot more complicated? Also, if these “Guardians of the Blood” have significant ties to Iran, U.S.-Iran relations might not enjoy the upswing we thought they would as the U.S. reorients its strategy in the region under the Biden administration.

Honorable mention

An Iranian cleric believes the COVID-19 vaccine makes people become homosexuals.

Guinea recorded an Ebola outbreak, confirming at least seven new cases of the disease and three deaths.

Myanmar’s military deployed troops and armored vehicles in cities across the country in order to crush protests against its Feb. 1 military coup.

Russia and China will reportedly sign a memorandum of cooperation to create a joint “International Scientific Lunar Station” to create a habitable base on the moon by as early as 2031.

Pro-independence parties increased their parliamentary majority in Catalonia’s regional elections from 70 to 74 seats (out of a possible 135).

French bank BNP Paribas will not finance any customer or client producing or buying beef or soybeans in land cleared in Brazil’s Amazon region since 2008.

French President Emmanuel Macron said he would not reduce France’s military presence in the Sahel region of northern Africa in the short-term, but that reductions in troop levels would take place “in due course.”

China overtook the U.S. as the EU’s largest trading partner in 2020.

 Nigeria’s Securities and Exchange Commission is delaying enforcement of a Central Bank of Nigeria directive that bans using, holding, trading, or transacting in cryptocurrencies. India will reportedly move forward with a complete ban on investment in cryptocurrencies