Peter Zeihan: The World Should Watch Out for a Shift in U.S. Foreign and Economic Policy

By
Peter Zeihan, geopolitical analyst

At the CFA Institute Middle East Investment Conference held in Dubai on 20–21 March, Peter Zeihan, an expert in international politics, economics, and energy gave us his insights on geopolitical factors emerging on the global stage. In particular, Zeihan focused on the United States, which he believes could have a direct and substantial impact on investment strategies for the Middle East.

A central theme in Zeihan’s thesis was a perceived shift in U.S. foreign and economic policy based on the gradual realisation that through the United States’ energy supply chain in Canada, and its increasing production of shale oil, North America has the capacity to become energy self-sufficient by 2020.

Statistics shared with an increasingly intrigued audience included:

  • 50% of all natural gas as produced in the United States is from shale oil
  • Texas supplies 25% of Mexico’s natural gas and this will rise to 50% in the next five years
  • New York has moved from zero natural gas usage a year ago to using nine billion cubic meters today — in the space of 12 months (a consumption greater than Belgium’s)

Zeihan stated that as a result, “Americans are on the cusp of realising that they have accidentally changed their world.” Clarifying the significance of this energy supply shift, Zeihan unpacked what he saw as the standard American outlook, explaining that “the United States has not thought of itself as being separate from the rest of the world since 1938.” But he said change is coming.

Zeihan argued that for the last 60 years a common understanding in U.S. policy formation has been that ensuring trade is a key path to protecting security and that protecting energy routes is a key part of protecting trade. But with the demise of the historical Russian nemesis, a European bloc vastly different from the 1930s, and a Chinese economy unable to consume all it produces, a shift in economic and foreign policy is inevitable. This trend is compounded by the advent of an energy self-sufficient North America, still home to the largest military force in the world. He predicts that in the years ahead, we will witness a United States that strives less to engage with the international community economically and adopts more of an isolationist stance.

In light of the Arab Spring and the potential impact of such a shift in U.S. policy for the Middle East, Zeihan urged Middle Eastern countries to reconsider their investment priorities from a political point of view, not just a financial one. He told the audience: “You need to find someone who can provide the strategic coverage required in an era where the United States is out to lunch.”

A new destination for Middle East investments?

Reviewing potential candidates with whom Middle Eastern countries may wish to forge major strategic alliances, Zeihan highlighted Turkey as a potential front runner for consideration, despite some concerns over higher levels of corruption when assessing investment credentials.

Europe, India, and China were ruled out as key strategic partners because of either the lack of any major military might or the ability to mobilise it effectively. Instead Zeihan suggested that not only is Turkey the only rising power in the region with the possibility of having a regionally active military, but its historical trade links with the region also provide an opening for potentially lucrative dialogue that Middle Eastern countries should not ignore.

Furthermore, while the current circumstances in Turkey may not class it as an ideal, ready-made partner, Zeihan stated that on closer inspection, the country does in fact meet key criteria that warrant further analysis, namely: an industrial sector, existing markets, trade routes, and an established trade profile. Perhaps the biggest advantage for potential investors, may be found in the fact that while Turkey’s political establishment seeks to enhance its expertise in international trade, there is a significant lack of capital to facilitate the change they wish to bring about. That is where the real opportunity lies for prudent investment, he added.

With Turkey at the forefront of his recommendation for potential investment consideration, Zeihan shared his views on potential scenarios facing a range of Middle Eastern countries on the back of the Arab Spring. He also highlighted potential investment opportunities in perhaps less obvious destinations, such as Morocco and Algeria; should some of the manufacturing that these countries lost to poorer European countries begin to return as a result of the eurozone crisis. In his closing comments, Zeihan drew attention to Lebanon as a country to be monitored for possible investment, as he believes the crisis in Syria provides an opportunity for it to revise its status as the primary import–export facility in the Levant.

This entry was posted in Archives, Economics, News, Speakers and tagged , , , , . Bookmark the permalink.

4 Responses to Peter Zeihan: The World Should Watch Out for a Shift in U.S. Foreign and Economic Policy

  1. Harry Woolf says:

    A most interesting viewpoint on the coming energy surplus in US and how that may impinge on ME

  2. mahdi says:

    it was surprising that iran and saudi arabia are not mentioned as attractive investing sestinations, despite having lots of mineral potentials. As far as we know simulations show the investment in iran will be 22% more attaractive. is there any explenations for that?

    • M Augustus says:

      The reason Iran is not mentioned is because it’s regime is not attractive for foreign investment due to it’s history of nationalization, corruption and outright tyranny. It is not just a belief, it’s an actual fact that the regime does not honor contracts with foreign corporations. They have gone even further and have appropriated foreign property and infrastructure. So for reasons of security and investment nobody sees Iran as a good investment. The reason Saudi Arabia was not mentioned, is because of their long history with the US and relations. It is complex, but it is becoming more difficult to deal with them as time passes, since the people there are becoming more hostile towards Westerners and the US, and the state sooner or later will find itself applying policies based on it’s people’s ideology. They once imposed an oil embargo on the US over Israel, when Israel was at war with Egypt and Syria. The Saudis are pretty anti-Israel and have been since their beginning.

  3. Wowowow says:

    Just finished his book. I couldn’t put it down now I got a new pair of eyes to see the past present and future of the world coming from an engineering background with many years in business I was not into looking at hocus-pocus stuff but I want facts and figures and data and his book provided more than ample supply being a futurist predictor is a tough business but I have a sneaking suspicion he is actually on the right path based on what’s been happening to the world and what US has been slowly doing with their policies it will be an interesting 15 years. Photos of you asking questions about what he covered you have to read the book he goes into detail how our policies of pulling back from the world will affect almost each and every single develop country it was an eye opener I am telling everybody who is interested in what is going to happen in our world to read this book there’s also a YouTube video I love him in a soybean convention and the first 40 minutes is basically a snapshot of the book how he goes into demographics. N the energy boom We’re having with Shale Oil and natural gas and also how geography before the book I thought America was going downward spiral but now I see that it seems like it’s almost a part of the plan and Americans now will be releasing all responsibility to the world because we no longer be need to be responsible we were only responsible because we need to protect our interest and everybody benefited from it including us so if we do a pull back all that benefit will be gone from all the countries except us we are the accidental superpower just like we were at the beginning of ww2 history repeating itself sorry for this one big blur of words with no punctuation I am using voice to text to type this as I’m driving because I’m so pump from reading the book now I wait and see what all policies will be and from there the roll map is already been said by Peter

Leave a Reply

Your email address will not be published. Required fields are marked *