Geopolitics Unplugged

Summary:

The European Union’s Critical Raw Materials Act (CRMA) is a legislative initiative aimed at securing the EU's access to critical raw materials. The Act seeks to strengthen domestic supply chains, reduce reliance on single suppliers (particularly China), and promote sustainable mining, processing, and recycling within Europe. By facilitating access to existing EU funds and prioritizing “Strategic Projects”, the CRMA aims to increase the EU’s self-sufficiency and reduce supply chain risks associated with critical raw materials, which are essential for advanced technologies like electric vehicles, renewable energy, and defense. However, the Act’s impact is uncertain due to high costs and infrastructure needs, and its potential to affect global supply chains, impacting the cost and availability of these technologies for consumers and industries worldwide, remains to be seen.

Questions to consider as you read/listen:

1. What are the main objectives and strategies of the European Union's Critical Raw Materials Act (CRMA)?


2. How might the CRMA affect global supply chains for critical raw materials and the broader technology landscape?


3. How does the CRMA's approach to securing critical raw materials differ from the US CHIPS Act and IRA, and what are the potential consequences of these differences?

Long format:

Critical Raw Materials Act (CRMA) why you should care

A lot of focus and attention is placed on the US CHIPS Act and the IRA and rightfully so. One additional and somewhat related EU act that should be likewise known is The European Union's Critical Raw Materials Act (CRMA).

TL;DR: European Union’s Critical Raw Materials Act (CRMA)

The CRMA aims to secure the EU’s access to critical raw materials by strengthening its supply chains, reducing dependency on single suppliers (especially China), and promoting sustainable mining, processing, and recycling within Europe. This includes “Strategic Projects” with streamlined permitting and funding access to develop essential materials like lithium, cobalt, and rare earths for technologies such as EVs, renewable energy, and defense.

Unlike the U.S. CHIPS Act and IRA, the CRMA doesn’t offer direct funding; instead, it facilitates access to existing EU funds. While aiming to bolster the EU’s self-sufficiency and reduce supply chain risks, the Act’s impact is uncertain due to high costs and infrastructure needs. Americans should care because it could affect global supply, possibly impacting the cost and availability of critical technology components worldwide.

CRMA

The European Union's Critical Raw Materials Act (CRMA) is a legislative initiative designed to secure the EU's access to critical raw materials by strengthening its domestic supply chains, reducing reliance on single suppliers, and promoting sustainable practices, aiming to mitigate risks of supply disruptions in key industries like cleantech and digital technologies by increasing extraction, processing, and recycling capacities within the EU while diversifying import sources.

The Act seeks to identify “Strategic Projects" with streamlined permitting and access to finance to build domestic capabilities to reduce the influence outside of the EU and China.

The Act identifies specific raw materials considered "critical" due to their high economic importance and potential supply chain vulnerabilities, such as rare earth elements, lithium, cobalt, and graphite.

According to the European Union Critical Raw Materials Act, "critical raw materials" are raw materials considered highly important to the EU economy but with a high risk of supply disruption, while "strategic raw materials" are a subset of critical raw materials that hold additional strategic importance due to their use in advanced technologies like green energy, digitalization, defense, and space applications; essentially, strategic raw materials are considered even more critical for the EU's security and technological advancement.

The CRMA aims to diversify the EU's sourcing of critical raw materials by reducing dependence on single third countries and encouraging partnerships with multiple suppliers. In other words, trying to China-proof themselves.

The Act incentivizes the development of mining and processing capacities within the EU to increase domestic extraction and processing of critical raw materials.

A key aspect of the CRMA is to enhance recycling and reuse of critical raw materials to improve circularity within the value chain.

Americans should care about the European Union's Critical Raw Materials Act because it could significantly impact the global supply chain for essential minerals used in critical technologies like electric vehicles, renewable energy systems, and electronics, potentially affecting the cost and availability of these products for American consumers and industries, particularly if the EU prioritizes securing its own supply chains at the expense of other markets due to concerns over reliance on single suppliers, like China, for critical raw materials like lithium, cobalt, and rare earths.

The effectiveness of this Act is unknown and not yet at all certain. Building domestic mining and processing capacity in the EU can be costly and time-consuming, requiring significant investment and infrastructure development. One of the “holes” of the Act is the lack of direct government funding. This may curb its effectiveness.

Unlike the CHIPS and IRA Acts, the European Union Critical Raw Materials Act (CRMA) does not provide direct funding itself, but instead facilitates access to existing EU funds like the Recovery and Resilience Facility, Just Transition Fund, European Regional Development Fund, Innovation Fund, and InvestEU to support "Strategic Projects" which are critical raw material projects deemed of high strategic importance, enabling them to receive streamlined permitting and potential financial assistance through these funds; essentially, the Act creates a framework for prioritizing and expediting funding for key projects in the critical raw materials sector rather than directly allocating new funds itself.

Sources:

https://www.consilium.europa.eu/en/infographics/critical-raw-materials/#:~:text=An%20EU%20critical%20raw%20materials,and%20the%20development%20of%20substitutes

https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials_en#:~:text=The%20Critical%20Raw%20Materials%20Act%20is%20a%20comprehensive%20response%20to,functioning%20of%20the%20single%20market

https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan/european-critical-raw-materials-act_en#:~:text=The%20European%20Critical%20Raw%20Materials%20Act%20aims%20to%20strengthen%20EU's,supply%20chain%20sustainability%20and%20circularity

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_2748#:~:text=With%20this%20Act%2C%20the%20EU,Member%20States%20and%20large%20companies

https://ec.europa.eu/commission/presscorner/detail/m/qanda_24_2749#:~:text=What%20does%20the%20Critical%20Raw,stage%20of%20the%20value%20chain

https://www.slrconsulting.com/insights/understanding-the-european-commission-s-critical-raw-materials-act-crma/#:~:text=According%20to%20the%20EU%20definition,shown%20in%20the%20image%20below

https://unece.org/media/news/391440#:~:text=Additionally%2C%20the%20Act%20mandates%20that,risk%20of%20supply%20chain%20disruptions

https://www.fastmarkets.com/metals-and-mining/eu-critical-raw-materials-act/#:~:text=1.,and%20enhance%20its%20recycling%20infrastructure

https://www.dentons.com/en/insights/alerts/2023/december/7/eu-critical-raw-materials-act-what-does-it-mean-for-business#:~:text=The%20CRMA%20is%20part%20of,important%20to%20the%20EU%20for:

https://www.delorscentre.eu/en/publications/eu-critical-raw-materials#:~:text=The%20Critical%20Raw%20Materials%20Act%20may%20well%20be%20an%20important,away%20from%20meaningful%20corporate%20regulation

https://ipisresearch.be/weekly-briefing/the-eu-critical-raw-materials-act-handshakes-extracting-processing-and-recycling-why-not-reducing-and-prioritizing/#:~:text=The%20CRM%20Act%20defines%20the,supplier%20of%20eight%20of%20them

Summary:

In this podcast, we propose a new standardized definition for a blue water navy, outlining the key capabilities required for a navy to project power globally. We then categorizes various navies around the world into tiers based on this definition, examining the strengths and weaknesses of each navy. We highlight the United States Navy as the only Tier 1 navy, possessing unparalleled global reach. Tier 2 includes France, Japan, the UK, and Italy, though the UK's status is debated due to ongoing fleet maintenance and modernization challenges. Italy is a unrecognized navy that definitely deserves to be here. Tier 3 consists of China, India, and Russia, all of which have formidable forces, but lack the sustained operational and logistical capabilities for global reach.

Questions to consider as you read/listen:

1. What are the key characteristics that define a blue water navy?


2. How do the navies of different countries compare in their capabilities and strategic goals?


3. What are the current trends and challenges facing blue water navies globally?

Long format:

What is a blue water navy?

The term blue water navy is tossed about so much, but did you know there’s no universal definition?

I propose one.

TL;DR: Definition and Analysis of a Blue Water Navy

Oddly enough there is no standardized definition in geopolitics or even in the military for what the term “blue water navy” means. Within the deep dive I offer one.

Top Tiers:

Tier 1: USA – unmatched global capability.

Tier 2: France, Japan, the UK (questionable), and Italy.

—UK: Facing fleet maintenance and modernization challenges, limited carrier availability.

—Japan: Recently expanded carrier capabilities, though constrained by constitutional defensive-only policies.

—Italy: Often overlooked, possesses the capability for global operations.

Tier 1 and 2 countries meet the proposed standardized definition and therefore ought to be considered “blue water navies”.

Tier 3: China (PLAN), India, Russia. Each have formidable forces but…

—India’s mindset prevents its desire to operate much out of its EEZ

—PLAN and Russia lack the sustained operational and logistical capabilities needed for global reach. Plus, Russia at the present has no functioning aircraft carrier.

WHAT IS A BLUE WATER NAVY? A PROPOSED STANDARDIZED DEFINITION 

Here is a proposed standardized definition of “blue water navy” that I suggest.

A blue water navy is able to independently and regularly sustain and operate in open ocean at distance from your own territorial waters and Exclusive Economic Zone (EEZ) a force projection to both deliver a large number of combat troops and associated logistics and also protect long distance shipping lanes vital for your home country’s trade.

Sustained means measured by at least one month of force projection activities with support as well as full time shipping lane protection.

Plus, there has to be a component of demonstrated force projection and shipping lane protection orientation if not actual capabilities beyond one’s EEZ.

A blue water Navy must have the capability to detect, identify and engage targets over the horizon. This implies some degree of sophistication in intelligence, surveillance and reconnaissance (ISR) as well as weapon capabilities.

I do think that some static features to serve as minimum requirements would be necessary to serve as thresholds. I propose:

1. At least one functional aircraft carrier that is open seaworthy.


2. A cadre of cargo ships that can be used in trade and/or logistics enablers for far off force projection.


3. Submarines (both attack and Ballistic missile submarines)


4. Cruisers


5. Destroyers


6. Frigates


7. Landing craft

With that in mind, we examine the candidates.

TIER 1:

Tier one and standing all alone at the top is the USA.

TIER 2:

Tier two is France, Japan and perhaps the UK and Italy.

There’s unlikely to be a debate that France or the UK belongs on this list. The UK is teetering on the edge of being delisted. The UK is withdrawing quite a bit. The UK is undergoing fleet maintenance and modernization issues. The Royal Navy is getting rid of its entire minehunter fleet. Delays in procurement programs make it difficult to maintain older ships, which can then be unavailable for operations for extended periods. As of February 2024, the UK's aircraft carrier HMS Queen Elizabeth was sidelined due to a propeller shaft issue. The HMS Prince of Wales only in September 2024 returned to service after issues.

Where there may be disagreement is including Japan and Italy. But let’s look closely.

Japan makes the list as of October 21, 2024, when the Japanese Maritime Self-Defense Force (JMSDF) reached a milestone in its aircraft carrier capabilities as a U.S. Navy F-35B Lightning II conducted its first landing on the JS Kaga (DDH-184). Japan possesses a fleet of highly advanced warships including destroyers with powerful missile systems, capable submarines, and helicopter carriers, allowing for multi-mission operations in distant waters. It boasts two multi-purpose operation destroyers (de facto aircraft carriers), two helicopter carriers (called helicopter destroyers), 26 destroyers, 10 small destroyers (or frigates), six destroyer escorts (or corvettes), 22 attack submarines, 29 mine countermeasure vessels, six patrol vessels, three landing ships and 30 minesweepers. Article 9 of Japan's constitution prohibits the country from maintaining a military for offensive purposes, technically limiting its ability to project force far beyond its borders. It is developing an Amphibious Rapid Deployment Brigade to conduct operations on land from the sea. Japan’s close cooperation with the US through joint exercises and technology sharing, leveraging the US's expertise in force projection. Japan does not have nuclear submarines.

The Italian Navy doesn’t get the respect I think it should. Let’s look at it objectively using the above criteria and definitions. The Italian Navy possesses the capabilities to operate effectively across vast ocean expanses, far from its home shores, including a fleet of modern warships like aircraft carriers (Cavour and Giuseppe Garibaldi), amphibious assault ships, destroyers, and submarines, allowing it to deploy and participate in multinational operations in distant regions like the Indian Ocean and the Pacific, demonstrating its ability to project power on a global scale. This is further supported by its routine participation in large international naval exercises like RIMPAC. The Italian Navy has a well-maintained and technologically advanced fleet with various types of surface combatants and submarines. It has on order and therefore demonstrated its commitment to modernize and expand its capabilities. Italy does not have nuclear submarines.

TIER 3:

Tier three is PLAN, India, Russia

These tier three navies don’t make the cut to blue water navy. Let’s talk about why.

PLAN

The Chinese have a very formidable force on paper. It is the world’s largest navy by number of hulls. It has 12 nuclear submarines with half being attack types and half being boomers. It has three aircraft carriers. It has 32 landing ship tanks, 33 landing ship mediums, and 4 landing helicopter docks. Overall, it has 79 submarines. It has 62 destroyers, 58 frigates, 75 corvettes, 150 missile boats, 26 submarine chasers, over 17 gunboats, 36 mine countermeasure vessels, 19 replenishment ships and 23 auxiliaries. And it is growing.

What makes it not a blue water navy is logistics,  sustained force projection realities and its orientation. The PLAN fleet lacks the necessary logistical infrastructure, operational range, and global basing capabilities to project significant military power across vast expanses of the open ocean. It lacks friendly ports that would be available to it in the time of global conflict. It also primarily focuses its naval operations within its near seas, particularly around the East and South China Seas. This means they are not currently capable of sustained operations far from their home shores like a true blue water navy would be.

RUSSIA

It also has the same logistical difficulties that China has but not as bad. Following the Soviet Union's collapse and limitations in its shipbuilding and fleet maintenance capabilities has made its ships fall into disrepair. Russia currently has no aircraft carriers in service.

INDIA

India also has a quite formidable force on paper. India has nuclear submarines (4). It has about 150 ships. As of July 2022, they have two aircraft carriers, one amphibious transport dock, eight tank landing ships, 12 destroyers, 12 frigates, 16 conventionally powered attack submarines, 20 corvettes, ten large offshore patrol vessels, five fleet tankers as well as various auxiliary vessels and small patrol boats.

Indian military mindset is mostly defensive, non-violence principles really have large mindshare in Indian geopolitical thinking. No one in India is thinking that they should be a global police, other than sticking to Indian Ocean.

Sources:

https://maritime-executive.com/editorials/the-decline-of-the-royal-navy

https://nationalinterest.org/blog/buzz/us-navy-f-35-fighter-jet-just-landed-japanese-aircraft-carrier-213300

https://www.navair.navy.mil/news/US-Navy-partners-Japan-Maritime-Self-Defense-Force-deliver-JPALS-equipment/Tue-02072023-1436

https://www.csis.org/analysis/building-defense-cooperation-japan-acquisition-and-industry#:~:text=Japan's%20latest%20national%20security%20and,well%20as%20regional%20security%20challenges

https://eastasiaforum.org/2022/12/23/japan-steps-closer-to-global-military-power/#:~:text=It%20has%20also%20sought%20to%20augment%20its,destroyer%20and%20air%20defence%20and%20strike%20capabilities

https://www.stimson.org/2023/deterrence-by-denial-japans-new-strategic-outlook/#:~:text=Operationalizing%20Deterrence%20by%20Denial,operations%20to%20dissuade%20conflict%20escalation

https://www.usni.org/magazines/proceedings/1996/march/italian-navy-major-role-sea-troubles#:~:text=Italy's%20national%20interests%20are%20extended,of%20the%20former%20mare%20nostrum

https://www.defensenews.com/global/europe/2020/11/09/italy-plans-new-destroyers-for-2028-delivery/#:~:text=%E2%80%9CDestroyers%20are%20fundamental%20for%20a%20blue%20water,of%20maritime%20and%20joint%20operations%2C%E2%80%9D%20Vice%20Adm.&text=%E2%80%9CApart%20from%20carriers%2C%20amphibious%20vessels%20and%20submarines%2C,strike%20and%20task%20group%2Dprotection%20capabilities%2C%E2%80%9D%20he%20added

https://www.unav.edu/web/global-affairs/global-maritime-power-russian-navy-faces-an-uncertain-future#:~:text=In%20the%20first%20place%2C%20because,oceans%20for%20some%20more%20years

https://nationalinterest.org/blog/buzz/admirals-look-nervous-can-putin-stop-collapse-russian-naval-power-211486#:~:text=During%20the%20Cold%20War%2C%20the,tug%20and%20a%20replenishment%20ship!

https://www.telegraph.co.uk/news/2024/06/07/russia-aircraft-carrier-kuznetsov-navy-jets-mig-29/#:~:text=The%20Russian%20navy's%20sole%20aircraft,Kuznetsov%20didn't%20leave

https://www.pw.live/exams/defence/list-of-active-indian-navy-ships/

Summary:

In this episode, we examine Türkiye’s evolving military capabilities, particularly its naval and air forces. The sources discuss Türkiye’s development of new fighter jets and submarines, its ambitions to become a major naval power, and its recent decision to acquire a new domestically designed and manufactured aircraft carrier. We also discuss Türkiye’s current economic and political climate, highlighting factors that influence its military growth. We provide insight into Türkiye’s military modernization, focusing on its naval and air forces, and their implications for the region.

Questions to consider as you read/listen:

1. What is the current state of Türkiye’s  military modernization efforts, particularly concerning its naval and air capabilities?

2. How does Türkiye’s domestic population growth and demographic trends impact its national security posture and regional ambitions?

3. What are the major economic and political challenges facing Türkiye and how do these factors influence its military development and foreign policy decisions?

Long format:

The Assent of Türkiye Cumhuriyeti (Turkey)?

With the news released on Saturday, October 26, 2024 that Türkiye is now developing its own fifth-generation stealth fighter, the TAI Kaan (also known as TF or MMU), aiming to rival advanced aircraft like the F-35, it makes sense to look at Türkiye again and see where it is militarily, demographically and finally economically.

TL;DR: Türkiye's Military, Economic, and Demographic Overview

Military: Türkiye, the second-largest NATO military, has advanced its defense industry significantly, highlighted by its development of the TAI Kaan stealth fighter. The air force ranks 9th globally, emphasizing unmanned drones and airspace defense. Its navy is ranked 10th, with a substantial submarine fleet and an aircraft carrier, and aims to transition to blue-water capability. The Turkish Army, with 401,500 personnel, operates globally and is modernizing its tank and artillery assets. Türkiye also boasts a highly regarded Special Forces unit.

Demographics: Türkiye’s fertility rate (1.98) is below the replacement rate but higher than many developed countries, with a population median age of 34. It is in far better shape than a lot of countries.

Economy: Türkiye’s $1.024 trillion economy is the 17th largest worldwide. While inflation and currency devaluation are concerns, the country’s strategic location, young workforce, and diversified economy support steady growth, though foreign investment and productivity challenges persist.

MILITARY

Türkiye has come a long way in a short amount of time in terms of its military capabilities and its military industrial complex. Here are some updated facts to consider.

1. Türkiye is the second largest military in NATO, behind the United States.


2. Türkiye has a large land force, with significant armored capabilities, alongside a capable air force and naval fleet.


3. Türkiye has developed extensive experience in recent conflicts like the Syrian Civil War and operations in Libya. It is no longer a virgin in terms of actual operation in combat spaces.


4. Türkiye has a growing capability to produce advanced weapons systems, including drones, significantly enhancing their military strength.

TURKISH AIR FORCE

Türkiye's air force is ranked ninth in the world, according to a 2023 list from Global Firepower.

The Turkish Air Force has 34,600 personnel (2024)

Turkish Air Force features:

1. 607 aircraft including 230 F16s (they were removed from the F35 program and no operational models in inventory), 


2. 4 Airborne Early Warning and Control (AEW&C) aircraft


3. 7 Boeing KC-135R Stratotankers (refuelers), 


4. ordered a total of ten A400M Atlas aircraft heavy military transport aircraft, and 


5. the strength of their Air Force is their top tier unmanned aerial vehicles including the world’s most advanced fully autonomous AI powered Hunter-killer drone the STM Kargu-2. 

The key operational characteristics of the Turkish Air Force include: 

1. a significant presence in NATO operations, 


2. a strong focus on air defense of Turkish airspace, and


3. participation in international exercises

All of this leads many to conclude that Türkiye is one of the largest combat aircraft fleets within NATO, with a considerable ability to engage in international operations and missions across continents.

Türkiye even has 3 modern reconnaissance satellites in space with high resolution optics.

Türkiye anti aircraft anti missile capabilities are multi-layered, experienced and evolved. Türkiye has a variety of anti-aircraft and anti-missile capabilities, including: 

1. SİPER which is a long-range surface-to-air missile (SAM) system that can defend against aircraft, cruise missiles, air-to-ground missiles, and unmanned aerial vehicles (UAVs). 


2. ATILGAN PMSS which is a pedestal mounted air defense system that has been used by the Turkish Land Forces for over a decade. 


3. HISAR which is a medium-altitude air defense system that can detect, track, identify, and fire on targets such as fighter aircraft, attack helicopters, cruise missiles, and UAVs. 


4. HISAR-A which is a low-altitude air defense system designed to defend against aircraft, helicopters, cruise missiles, and UAVs


5. SUNGUR which is an air defense missile system with a high explosive, semi armor piercing warhead. 


6. KORKUT which is a system with cannons that can fire 35×228 mm ammunitions, including smart ammunition that ejects tungsten pellets at a predetermined distance. 


7. Levent which is a naval air defense system that uses modernized AIM-92 missiles. 


8. Kara Atmaca which is a surface-to-surface missile system that has successfully hit targets at long range. 


9. Under contract to produce Chinese FD-2000 long range missiles.


10. They have bought S-400 missile systems from Russia.

TURKISH NAVY

Türkiye is a fourth tier navy. It is not a blue water navy, but it is certainly coming along towards making that leap into the third tier and making it a blue water navy. The World Directory of Modern Military Warships (WDMMW) ranked Türkiye's navy 10th in the most recent global assessment.

Here are some facts and figures:

The Turkish navy has 45,000 active personnel and 55,000 reserve personnel

The Turkish Navy has a large fleet of ships, including the biggest submarine fleet in the region. The Turkish Navy also has a variety of ships, including frigates and corvettes, and 60 maritime aircraft. Turkey's Navy and Coast Guard operate more than 300 ships.

Türkiye has a 12-piece submarine fleet. They are all attack style submarines. 

They have one amphibious assault ship, 17 frigates, 10 corvettes , 26 offshore patrol craft, 18 fast attack craft, and many more including unmanned surface vehicles. Plans of a guided missile destroyer 

Türkiye has one aircraft carrier (TCG Anadolu) in service. The TCG Anadolu can accommodate helicopters, including the domestically produced T129 ATAK, and AH-1W Super Cobra attack helicopters and SH-70B utility helicopters. It also launches USVs. They have plans to build domestically another aircraft carrier. In February 2024, the Ministry of National Defense shared photos of the design for Turkey's future aircraft carrier. They also have more than 2,800 older M48 Pattons.

TURKISH ARMY

The Turkish Army has 401,500 members. The Turkish Army has a global footprint that includes military operations in northern Iraq and northern Syria, deployments in northern Cyprus, and exercises in the Mediterranean, Aegean, and Black Seas. At present, the primary main battle tanks of the Turkish Army are the Leopard 2A4 and the M60T. There are also around 400 Leopard 1 and 750 M60 Patton variants in service. They are on a building/spending spree to update and enhance their armor capabilities including South Korean K2 Blank Panther battle tanks. They have a domestically designed and produced main battle tank called the Altay. It has 2 current deployed with 1000 planned. They have well over 800 modern self-propelled artillery pieces as well as nearly 1000 towed artillery pieces. They have around 300 rocket artillery pieces. They also have a cadre of unmanned ground vehicles either on station or in development or pending delivery.

Türkiye has six months of compulsory military service.

TURKISH SPECIAL FORCES

The Turkish Special Forces, officially called the "Special Forces Command," are a fairly highly trained, multi-purpose unit capable of performing specialized operations like direct action, reconnaissance, counter-terrorism, hostage rescue, and foreign internal defense. They are considered by some to be one of the top special forces units in the world, with a reported force size of around 14,000 personnel, organized into brigades with the capacity to scale operations depending on the mission requirements.

TURKISH MILITARY INDUSTRIAL CAPABILITIES

This has been a disappointment generally. The government of Türkiye has had to import a lot of arms and equipment from foreign partners. The lone bright spot has been on drone production. However, as noted above Türkiye has announced that it will begin to increase its ship building capabilities including attempting to build its own aircraft carrier domestically. In addition, the slow crawl of delivering a main battle tank of its own design and production has been frustrating to Türkiye. Türkiye is clearly trying to build its own domestic capabilities… and it needs to in order to make it to the next level.

DEMOGRAPHICS 

In 2023, Türkiye’s total fertility rate (TFR) was 1.994 children per woman, which is below the replacement level of 2.1. This is a significant drop from 2001, when the TFR was 2.38. However, recently, reports have stated that current fertility rate for Turkey in 2024 is 1.980 births per woman. This is closer to the needed 2.1 replacement rate. The fertility rate for Turkey in 2023 was 1.994 births per woman, a 0.85% decline from 2022. The fertility rate for Turkey in 2022 was 2.011 births per woman, a 0.84% decline from 2021. So yes, they are below the replacement rate but not to the degree that Germany's total fertility rate (TFR) in 2024 is 1.35 children per woman or China's total fertility rate (TFR) in 2024 is estimated to be 1.55 children per woman or Taiwan at 1.11.

In 2023, Türkiye’s population growth rate was 1.1‰, which is an all-time low. This is down from 7.1‰ in 2022 and 14.7‰ in 2018.

In 2024, Türkiye’s age structure was estimated to be 21.7% for ages 0–14, 68.6% for ages 15–64, and 9.6% for ages 65 and over. The median age was estimated to be 34 years old which is much better than a lot of countries.

ECONOMICS

In brief, Türkiye’s economy is the 17th largest in the world, with a GDP of $1.024 trillion as of 2023. It is a member of the OECD and the G20. Turkey's economy grew 4.5% in 2023, down from 5.5% in 2022. Türkiye’s GDP growth in 2024 is projected to be between 3% and 3.5%. Türkiye’s biggest trade partners are the European Union (EU) (31.8%), China (12.4%), Russia (12.6%), the United States (2nd largest export partner), and Switzerland (5.5%). Türkiye’s economy is made up of a mix of modern industry, agriculture, and services, with the service sector being the largest contributor to GDP. It is located between Europe, Central Asia, and the Middle East, and is close to key export markets. It has a large internal domestic market with good rates of consumerism. Türkiye has a young population and an educated workforce. Türkiye has a highly developed technological infrastructure in transportation, telecommunications, and energy sectors. Türkiye has attracted $262 billion in foreign investment since 2003. In fall 2022, inflation reached 85.5%, the highest rate in two decades. A significant increase to the minimum wage in 2024 has contributed to the recent inflation. The Turkish lira has hit record low levels. The central bank's low-interest policy to stimulate borrowing and investment has led to a strong depreciation in the value of the lira. Türkiye is dependent on imported energy and intermediate goods. Türkiye has a high level of short-term private external debt and low level of gross international reserves. The Heritage Foundation's Index of Economic Freedom ranks Türkiye 102 out of more than 180 economies. 

Corruption in Turkey poses a significant challenge to its bid for European Union membership. According to Transparency International’s Corruption Perception Index, which ranks 180 countries based on perceived public sector corruption (from 0 as highly corrupt to 100 as very honest), Turkey’s score has steadily declined. Since the index adopted its current scale in 2012, Turkey’s score has dropped from a high of 50 in 2013 to a low of 34 in 2023, indicating a worsening perception of corruption. In 2023, Turkey ranked 115th globally, well below the average score of 43. Regionally, within Eastern Europe and Central Asia, Turkey’s score also trails behind the average of 35 and the region’s highest score of 53, emphasizing the need for improvement.

Some have pointed to low productivity growth, weakening foreign direct investment, credit-driven growth performance, and Inefficient monetary policy as headwinds for Türkiye.

CONCLUSION 

In conclusion, Türkiye’s ascent reflects a nation that has strategically invested in its defense, economic stability, and demographic resilience. With the unveiling of the TAI Kaan fighter jet, Türkiye signals its intent to join the global elite of military technology, bolstered by a robust armed forces structure that includes a potent navy and capable special forces. Economically, while challenges like inflation and currency depreciation persist, Türkiye’s advantageous location, young population, and industrial growth support its ambitions on the world stage. As Türkiye continues to expand its domestic capabilities and modernize its military infrastructure, it is positioning itself not only as a formidable regional power but as an influential player in both NATO and the broader geopolitical landscape. The road ahead will require balancing internal economic pressures with its ambition for military self-sufficiency and global stature, but Türkiye’s progress thus far suggests a commitment to overcoming these challenges.

Sources:

https://nationalinterest.org/blog/buzz/tai-tf-kaan-turkeys-new-stealth-fighter-born-213396

https://www.incirlik.af.mil/News/Photos/igphoto/2000533411/#:~:text=The%20Turkish%20Air%20Force%20is,back%20to%20their%20home%20bases

https://www.defenceprocurementinternational.com/features/air/kaan-takes-flight-turkey-s-new-era-in-advanced-fighter-jets#:~:text=The%20KAAN%20fighter%20jet%20will,operations%20as%20a%20standard%20feature

https://www.defensenews.com/native/turkish-defence-aerospace/2020/09/21/the-rise-of-turkish-naval-industry/#:~:text=Turkey's%20Navy%20and%20Coast%20Guard,element%20of%20Turkey's%20export%20capability.

https://www.voanews.com/a/turkey-aims-to-become-a-major-naval-power-alarming-neighbors/7778465.html#:~:text=Turkey%20is%20undertaking%20a%20massive,meet%20Turkey's%20growing%20regional%20commitments

https://www.navalnews.com/naval-news/2024/02/our-first-look-at-the-turkish-navys-future-aircraft-carrier/#:~:text=On%20February%2016%2C%202024%2C%20the,Turkish%20Navy's%20future%20aircraft%20carrier

https://www.navalnews.com/naval-news/2024/08/turkish-navy-commissions-first-reis-class-aip-submarine-tcg-piri-reis/#:~:text=Importance%20of%20the%20project&text=The%20Turkish%20Navy%20has%20a,diesel%2Delectric)%20attack%20submarines

https://www.iiss.org/publications/the-military-balance/the-military-balance-2023

https://en.m.wikipedia.org/wiki/List_of_active_ships_of_the_Turkish_Naval_Forces

https://data.tuik.gov.tr/Bulten/Index?p=Birth-Statistics-2023-53708&dil=2#:~:text=Number%20of%20live%20births%20was%20958%20thousand%20408%20in%202023,children%2C%20Mardin%20with%202.40%20children

https://www.cia.gov/the-world-factbook/countries/turkey-turkiye/#:~:text=People%20and%20Society-,Population,1%2C000%20population%20(2024%20est.)

https://www.macrotrends.net/global-metrics/countries/tur/turkey/fertility-rate#:~:text=The%20current%20fertility%20rate%20for,a%200.84%25%20decline%20from%202021

https://www.worldbank.org/en/country/turkey/overview#:~:text=T%C3%BCrkiye%20is%20the%2017th,official%20development%20assistance%20(ODA)

https://bti-project.org/en/reports/country-report/TUR#:~:text=Highly%20politicized%20and%20inefficient%20monetary,following%20Russia's%20invasion%20of%20Ukraine

https://www.coface.com/news-economy-and-insights/business-risk-dashboard/country-risk-files/tuerkiye

https://www.allianz-trade.com/en_US/resources/country-reports/turkey.html#:~:text=Deteriorated%20business%20environment,output%20and%20the%20recycling%20rate

Summary:

In this episode, we analyze Fervo Energy's recent advancements in enhanced geothermal systems (EGS) technology as part of geothermal power plants. The company's Project Red and Project Cape aim to generate electricity by harnessing deep geothermal heat using hydraulic fracturing techniques. While EGS has the potential to provide constant, baseload power, it faces challenges like low energy density, high water usage, and limited scalability. Despite these challenges, Fervo has achieved significant breakthroughs in drilling efficiency and production, demonstrating the potential for EGS to become a more commercially viable renewable energy source. We examine the advantages and drawbacks of EGS, comparing its performance with other renewable and non-renewable energy sources, ultimately highlighting the need for further research and development to determine its viability in a broader energy policy context.

Questions to consider as you read/listen:

1. What are the main advantages and disadvantages of Enhanced Geothermal Systems (EGS) compared to other renewable energy sources?


2. How does Fervo Energy's Project Red and Project Cape differ from traditional geothermal power plants in terms of technology and performance?


3. What are the key challenges and potential solutions for scaling up EGS geothermal energy to meet broader energy needs?

Long format:

 Update on Geothermal Power Plants: Fervo Energy’s Project Red, Project Cape and FORGE

On September 10, 2024 at the Houston Enegery and Climate Startup Week, Fervo energy hosted its 2nd annual Technology Day, and just 2 days ago (October 24, 2024) press embargo for the presentations elapsed thereby permitting the slide ware and white papers to be published. There was some new information, most of it quite promising. It begs an update. The most important of which is this one. https://eartharxiv.org/repository/view/7665/

TL/DR

Fervo Energy’s Projects Red and Cape use enhanced geothermal systems (EGS), which leverage hydraulic fracturing techniques to produce geothermal energy. EGS plants circulate water into deep, hot rock to create steam, driving turbines to generate consistent, emissions-free electricity. Fervo’s drilling innovations have significantly cut drilling time and costs, with Project Cape achieving 12 MW peak output.

Advantages:

• EGS is a renewable and offers constant, baseload power, unlike wind and solar.


• Early tests show no issues with pressure loss or thermal decline, key concerns in geothermal.


• ESG GTPP has a very high capacity factor

Challenges:

• EGS plants have very low energy densities, have a relatively low energy rate of investment (EROI), high water usage, and slow cold start up time.


• Scalability is limited to areas with specific geological conditions, like California and Nevada.

Fervo’s advancements are promising. At least preliminarily, it appears the ESG GTPP is “king” among the renewables. But it’s uncertain if EGS GTPP will meet broader energy needs and will become truly commerical.

BACKGROUND

Fervo Energy's Project Red and Project Cape Geothermal Production Plant (GTPP) that use hydraulic fracturing horizontal drilling techniques. When the shale methods of unconventional drilling is used in Geothermal is called Enhanced Geothermal Systems (EGS).

THE TECHNOLOGY

Just as a quick reminder and oversimplified EGS systems inject high-pressure water into the ground to reopen fractures in hot rock, creating a reservoir. That reservoir is heated by the naturally occurring hot rock at that depth and in that location. This heat is generated due to the radioactive decay of various materials and continuous formation processes within the Earth’s structure. It is then circulated with the resultant steam brought back to the surface to drive steam turbines. The turning of the steam turbines creates electricity. The steam is then, of course, cooled back into water and reinjected back into the system for reuse. It, unlike other renewables like wind or solar (PV) is not an intermittent and can in theory run constantly. Therefore, it is a base load energy source.

In terms of the two domains of environmental concern, green house gases and water use, here is how ESG GYPP stack up. ESG GTPP is also technically emissions free. However, the other environmental concern, referring to water, is an issue. It does take a lot of water as you can imagine. During geothermal plant construction, water is mainly required for the construction of the production and injection wells. Estimated construction water use for both hydrothermal systems and EGS are less than 0.1 gal/MWh. Then, during operations, water is required for cooling processes (e.g., wet, dry, and hybrid). During plant operation, non-cooling-related consumptive water use was estimated and was found to be in the range of 0.001–0.12 gal/kWh. This water use is related to maintenance activities and other domestic uses. EGS has additional water requirements for simulation techniques, where a fluid which is often water is injected into the geothermal reservoir and circulated between injection and production wells to produce power. Some of this water is lost (1%–10%) as the reservoirs are not confined, and thus additional water is required to maintain system efficiency.

Water Consumption (gallons per MWh)

Process

Geothermal Technology

Meldrum et al. (2013) (Median Estimates)

Sullivan et al. (2013) (Average Estimates)

Plant Construction

EGS

N/A

13

Hydrothermal-flash

N/A

1

Hydrothermal-binary

N/A

1

Plant Operations

Binary: Hybrid Cooling

460

N/A

Binary: Dry Cooling

290

270

Flash

11

10

EGS: Dry Cooling

510

510

For visual learners I offer these two YouTube videos and this diagram:

https://youtu.be/4S3aiMxfwhY?si=fYFlxcM_Kz3kK9Ky

https://youtu.be/3GbEOrzZUBU?si=SN8go_nOlMeKm46Q

FERVO ENERGY SITES

Fervo has claim to have successfully drilled several horizontals. Specifically, at Project Cape fourteen wells have been drilled, and three of them have been stimulated. Meanwhile at Project Red one vertical and two horizontal wells were drilled. This drilling in and of itself isn't technically difficult using polycrystalline diamond compact (PDC) drill bits, but it is a unique use of the unconventional well drilling technology.

Further, according to Servo’s press releases it “has consistently reduced drilling times and costs in horizontal, high-temperature, deep granite drilling. Though Cape wells are hotter and over 2,100 feet deeper than Project Red wells, Fervo drilled its fastest Cape well in just 21 days, a 70% reduction in drilling time from Fervo’s first horizontal well drilled at Project Red in 2022. This increase in drilling efficiency has translated into significant cost reductions, with drilling costs across the first four horizontal wells at Cape falling from $9.4 million to $4.8 million per well.”

What is also claimed is that these EGS power plants do not go down as far as a typical shale well and instead is about half the depth. Less depth means less cost. That is a good thing.

It has resulted in what Fervo has stated in its press release as follows: "Fervo performed a 30 day well test, the results of which established Project Red as the most productive enhanced geothermal system in history."

Sounds amazing, right?

Well, let’s look at the data.

A 30-day production test was performed at the Project Cape three-well pad in July and August 2024. The first production well at the Cape site achieved a peak output of over 12 MW and a sustained output of 8-10 MW. The power capacity density is 9.1 MW per km3, 5-10 times larger than previous estimates for EGS technology.

BUT WHAT DOES THIS MEAN IN ALL PRACTICAL EFFECT?

Here are some comparisons:

The average capacity of a newly installed wind turbine in the U.S. in 2023 was 3.4 MW. However, extremely large wind farms can produce over 700 MW.

The size of solar photovoltaic (PV) power plants can range from less than 1 MW to over 2,000 MW.

The Department of Energy (DOE) defines large hydropower plants as those with a capacity of more than 30 MW. Small hydropower plants generate between 100 kilowatts and 10 MW, while micro hydropower plants have a capacity of up to 100 kilowatts.

Biomass power plants are generally larger than 15 MW, but can range from less than 1 MW to over 50 MW.

A typical natural gas-fired power plant can produce anywhere from 20MW to over 1,000MW, depending on its size and design, with larger, combined-cycle plants generating closer to 1,000MW and smaller plants producing around 20MW; a common range for a single unit within a plant is between 200MW and 500MW.

Coal-fired power plants can produce anywhere from 3,000 to 6,700 megawatts (MW).

A small nuclear plant with one generator can produce 476 MW, while a large plant with multiple generators can produce 3,825 MW.

In summary, while EGS geothermal plants have a peak output of 12 MW and a sustained range of 8-10 MW, they are relatively modest in scale compared to other types of non renewable power plants. However, their constant baseload power generation, independent of weather or time of day, gives them an advantage over wind and solar, which are intermittent. This leads us to understand that ESG GTPP may very well be the king of the renewables. This preliminary data is promising. (But there is the issue of water which we will address later).

BUT THERE IS GOOD

There are a lot of good things to consider. First this is not full production at the site instead it was a select number of horizontals stimulated. If it is all cranked up will it meet its projected goals? Time will tell.

Not well noted but I think is very good is the fact that in this 30 day test at Project Cape as well as at Project Red there has been no reports of pressure issues or thermal decline. One of the early concerns in ESG and GTPP was that there was the potential for declining reservoir pressure due to extraction of hot water and steam without proper reinjection. Further with the pressure issue was fears that there was a potential for induced seismicity caused by injecting high-pressure fluids into deep rock formations to create fractures and extract heat, which can trigger small earthquakes if not carefully managed, potentially leading to instability in the reservoir and surrounding areas; this is a major concern for the widespread adoption of EGS technology. The pressure issues seem to not be an issue which is good. Further, "thermal decline" refers to the gradual decrease in the temperature of the geothermal reservoir over time, which leads to a reduction in the amount of heat available to generate electricity, essentially impacting the plant's power output and efficiency; this decline can occur due to factors like excessive fluid extraction, poor reinjection practices, and the natural cooling of the reservoir rock. This concern also was absent these results which is another great result for the technology.

WHERE DOES ESG GTPP FIT INTO LOGICAL ENERGY POLICY?

Now I have to be a little bit of a Debbie Downer. One of the major drawbacks of geothermal are the big five considerations that I write about all the time.

As I write when we look at logical and unemotional energy policy we can to a degree reduce all of our goals (but for the priority/value judgement involved with environmental issues) into 5 statistics as they are quantifiable: (1) energy density, (2) power density, (3) energy return on investment, (4) capacity factor and (5) cold start up times.

-ESG GTPP energy density: 4.186 MJ/kg (which is the lowest on our chart of power plant designs, even lower than phytomass and dry firewood)

-ESG GTPP power density: 2.88 which puts is at among the highest of the renewable categories, but is an order of magnitude lower than other baseload power plants such as natural gas (482.1), nuclear (240.8) and anthracite (180.9)

-ESG GTPP EROI: unknown but traditional geothermal is at 9 which is less than wind, higher than PV, but no where near piped natural gas fired power plant or any form of hydroelectric or nuclear

-ESG GTPP Capacity factor: 71% which is leagues better than wind (34.6%) and PV (24.6%), better than natural gas fired power plants (54.4%) but less than nuclear (92.7%)

-ESG GTPP cold start up time: 2-4 hours which is bottom of the pack with coal (6-48 hours) and nuclear (12 hours) and way less than natural gas fired power plants (several minutes to 6 hours) and wind, hydroelectric and solar (10 minutes)

Finally, there are scalability issues. ESG and GTPP won’t work everywhere. They are location restricted. The most suitable locations are those with deep, hot rock formations with sufficient permeability to allow for fluid circulation, often found in areas with volcanic activity or tectonic plate boundaries. Current enhanced geothermal systems (EGS) are limited to brittle rock although Fervo is trying to deal with this limitation. In the United States, the best geographic areas that these conditions are thought to be met are California, Nevada, Utah, and Oregon. A significant amount of land area that is suitable for ESG GTPP is with Bureau of Land Management Land. Some research is starting to research of West Virginia and Pennsylvania may be suitable as well.

It’s too early to see if ESG and GTPP will be the “fix” that everyone is looking for. Time will tell.

Sources:

Power Density: A Key to Understanding Energy Sources and Uses (MIT Press) by Vaclav Smil

https://fervoenergy.com/fervo-energy-breaks-ground-on-the-worlds-largest-next-gen-geothermal-project/#:~:text=Earlier%20this%20year%2C%20Fervo%20announced,%2C%20Mayor%20of%20Milford%2C%20Utah

https://fervoenergy.com/fervo-energy-drilling-results-show-rapid-advancement-of-geothermal-performance/#:~:text=This%20increase%20in%20drilling%20efficiency,to%20$4.8%20million%20per%20well

https://linkedin.com/pulse/fervo-energy-technology-day-2024-entering-geothermal-decade-matson-n4stc/?trackingId=qF6bTgyiRICdGFEfX6YRhQ%3D%3D

https://pangea.stanford.edu/ERE/db/GeoConf/papers/SGW/2024/Xing2.pdf

https://pangea.stanford.edu/ERE/db/GeoConf/papers/SGW/2023/Xing.pdf

https://gdr.openei.org/files/1523/2023%20Annual%20Report%20Phase%203B%20and%20Appendices%20for%20GDR.pdf

https://pangea.stanford.edu/ERE/pdf/IGAstandard/SGW/2014/Shiozawa.pdf

https://eartharxiv.org/repository/view/7665/

https://jpt.spe.org/fervo-and-forge-report-breakthrough-test-results-signaling-more-progress-for-enhanced-geothermal

Summary:

In this episode, we discuss how the US led sanctions targeting Russia's Arctic LNG 2 project have significantly hindered its operations. The project, designed to boost Russia's global LNG market share, has faced challenges in securing buyers for its cargoes due to the sanctions, causing the project to temporarily halt production. The sanctions have also hampered construction of new trains and caused delays in equipment procurement, impacting the project's overall capacity. These difficulties underscore the broader challenges faced by Russian LNG projects under heightened sanctions, potentially reducing Russia's energy revenue and weakening its position in the global market.

Questions to consider as you read/listen:

1. How do the latest US sanctions impact Arctic LNG 2's operations and future prospects?


2. What are the broader implications of Arctic LNG 2's suspension for Russia's energy industry and global LNG markets?


3. To what extent do the US sanctions on Arctic LNG 2 achieve their strategic goals of limiting Russian energy revenue and global market share?

Long format:

 The latest success of Russian LNG sanctions: Russia’s Arctic LNG 2 project suspends operations indefinitely

As any far of our podcast and website over at Geopolitics Unplugged will remember, we have extensively covered in Episode 19: Are Russian oil sanctions working (short answer no) at https://www.geopoliticsunplugged.com/audio/ep19-are-russian-crude-oil-sanctions-working/ and Episode 14: Are Russian LNG sanctions working? (Short answer yes) at https://www.geopoliticsunplugged.com/audio/episode-14-the-health-of-the-russian-lng-sanctions/ , we have been watching the effectiveness of the sanctions against Russia.

On Friday, October 25, 2024, we got a big indication that the LNG portion of the sanctions are working.

Russia's Arctic LNG 2 project, led by Novatek on the Gydan Peninsula, has halted its operations as U.S. sanctions make it increasingly difficult to find buyers for its cargoes. The project ceased production at its first liquefaction train (6.6 million tons per year) several weeks ago when storage tanks reached capacity, according to sources close to the project. As a result, it may be unable to resume production this winter. Compounding the issues, gas production feeding into the facility has decreased to minimal volumes, underscoring the project’s operational challenges under intensified sanctions pressure.

After suspending production temporarily earlier in the year due to an inability to export LNG, Arctic LNG 2 resumed production in August. However, tankers that received shipments became targets of new sanctions by the Biden administration, which aims to reduce the economic benefits Russia derives from LNG sales. While U.S. sanctions avoid penalizing existing Russian LNG export facilities, the Arctic LNG 2 project has faced specific targeting to limit its new production volumes, a part of the broader U.S. strategy to limit Russia’s energy revenue following the 2022 invasion of Ukraine. Since August, Arctic LNG 2 loaded eight LNG cargoes, yet none have reached an end buyer.

Technical issues have also disrupted operations. The facility's only active LNG train has been running at below 50% capacity due to malfunctions with a Baker Hughes LM9000 gas turbine, which has recently undergone repair. When reinstalled, the turbine should allow production at full capacity, though it remains uncertain whether Train 1 will restart given the ongoing storage limitations. Moreover, the project’s second train, slated to begin by year-end, may be delayed as storage tanks remain occupied. The second train, completed and stationed at the Arctic site, has not yet commenced operations due to the operational and logistical challenges posed by sanctions.

Sanctions have also hampered construction of Arctic LNG 2's third train, initially planned for completion in 2026 but now postponed to 2028 due to equipment procurement issues. However, recent indications suggest that delays may be mitigated as hundreds of contractors from China’s Penglai Jutal Offshore Engineering Heavy Industries are expected to arrive at Russia’s Novatek Murmansk LNG construction center in January 2025 to assist with Train 3’s assembly. Despite these efforts, the project’s full potential is limited by logistical barriers, as Arctic LNG 2 has yet to receive all 21 ice-class tankers originally ordered to support the project’s three-train scheme, reducing its capacity for winter shipping.

The project is 60% owned by Novatek, with stakes held by TotalEnergies (10%), China National Petroleum Corporation (10%), China National Offshore Oil Corporation (10%), and a Japanese consortium of Mitsui and Jogmec (10%). The facility was launched in December 2023 with high expectations to boost Russia’s global LNG market share from 8% to a targeted 20% by 2030. However, with Train 1 offline and no imminent restart, these ambitions are in jeopardy as sanctions complicate market access, tanker availability, and equipment procurement.

The US administration’s strategic focus on Arctic LNG 2 aims to pressure Russia’s revenue streams specifically from new LNG ventures while permitting ongoing operations at other Russian LNG projects, such as the Yamal and Portovaya, to maintain broader energy market stability. As of late October, several LNG-laden tankers from Arctic LNG 2 are anchored, awaiting destinations amid buyer hesitation due to fears of secondary sanctions. This scenario reflects the broader logistical and market challenges faced by Russian LNG projects under heightened sanctions, with Arctic LNG 2 particularly impacted.

Further fueling the effectiveness of the sanctions is that LNG prices globally are low.

Recall, oil and gas revenues have accounted for 30–50% of Russia's federal budget over the past decade.
Sources:

https://www.bnnbloomberg.ca/investing/2024/10/25/russias-arctic-lng-2-plant-halts-amid-tightening-us-sanctions/https://oilprice.com/Latest-Energy-News/World-News/Russias-Arctic-LNG-2-Project-Put-on-Ice-With-No-Restart-Plans.html

https://www.energyintel.com/00000192-c449-d095-afde-c4ef15550000

https://www.bloomberg.com/news/articles/2024-10-25/russia-s-arctic-lng-2-plant-halts-amid-tightening-us-sanctions

Summary:

In this episode, we explore the Wagner Group, a Russian private military company, and its activities in Africa, specifically its involvement in gold mining and its role in supporting various African regimes. We expose how Wagner’s gold extraction operations in countries like the Central African Republic, Sudan, Mali and beyond provide a significant source of revenue for Russia, potentially contributing to its funding of the war in Ukraine. We also examine the impact of Wagner’s actions on local populations and the challenges faced by international organizations and governments in curtailing its operations. In addition to detailing the Wagner Group’s activities, we discuss various efforts made by Western nations, including the imposition of sanctions and the provision of military support to African countries, in an attempt to counter Wagner’s influence in the region.

Questions to consider as you read/listen:

1. How does Russia's use of African gold influence the war in Ukraine


2. What is the extent of the Wagner Group's impact on African nations?


3. What strategies are being implemented to counter the Wagner Group's influence?

Long format:

 African Gold as a Russian means to help fund its fight in Ukraine

In today’s episode and blog I want to focus on another source of Russia’s war economy that does not get as much publicity and attention as crude sanctions or LNG sanctions.

See our other episodes for information on oil and LNG sanctions:

About the lack of effectiveness of Russian oil sanctions:

https://www.geopoliticsunplugged.com/audio/ep19-are-russian-crude-oil-sanctions-working/

About the success and effectiveness of Russian LNG and natural gas sanctions

https://www.geopoliticsunplugged.com/audio/episode-14-the-health-of-the-russian-lng-sanctions/

Russia is getting a fairly significant amount of gold from Africa facilitated by the Wagner Group. That gives us quite a few questions.

1. How much control does Russia have over African gold production through groups like the Wagner group?


2. Is it just restricted to the Sahel region?


3. How “big” is the problem? What if anything is being done about it?

WHO:

The Wagner Group (Russian: Группа Вагнера, romanized: Gruppa Vagnera), officially known as PMC Wagner (ЧВК «Вагнер»), is a Russian state-funded private military company (PMC) controlled until 2023 by Yevgeny Prigozhin, a former close ally of Russia's president Vladimir Putin. You may remember Prigozhin swan song when he marched off the front lines of Ukraine with his troops towards Moscow. The steam went out. And… eventually Prigozhin’s steam went out by way of most likely an act of sabotage or bomb on a plane that he was on. Funny how that happens. His troops were in Belarus and now have been more or less fully re-assimilated into the Russian sphere of influence.

WHAT:

Wagner is active in countries with rich gold resources, and the group's operations extend beyond military support to include disinformation, suppression of political opposition, and silencing independent media. Here are some of their top actions:

1. Central African Republic (CAR):

-Ndassima Gold Mine: Wagner has been granted exclusive rights to operate the Ndassima mine, the largest gold mine in the country. Wagner Group was granted exclusive rights to operate the Ndassima Gold Mine in the Central African Republic (CAR) as part of a broader arrangement in which the mercenary group supports the authoritarian regime of President Faustin-Archange Touadera. This agreement was part of a quid pro quo that involved Wagner providing military and security services in exchange for access to lucrative natural resource extraction opportunities, especially gold.

-Human Rights Abuses: Wagner has displaced local miners, sometimes through violence, and is involved in brutal tactics, including attacks on civilians, to maintain its control.

2. Sudan:

-Unreported Gold Market: Wagner controls major gold refining and smuggling operations. Russian military transport flights have been identified smuggling gold out of Sudan.

-Key Activities: Wagner is the dominant buyer of unprocessed Sudanese gold and plays a major role in smuggling processed gold out of the country. It has reportedly moved nearly $2 billion in unreported gold out of Sudan annually.

-Political Role: Wagner has supported military factions, including aiding the former dictator Omar al-Bashir in suppressing protests and working closely with the military since his removal.

3. Mali:

-Military Support: Wagner is paid an estimated $10.8 million per month to support the ruling military junta led by Colonel Assimi Goïta. They are also involved in destabilizing rebel groups and suppressing democratic movements.

-Mining: Wagner operates more indirectly in Mali’s gold industry, but it benefits financially from the country's reliance on Western gold mining companies, which pay substantial taxes to the junta. Wagner assists the junta in controlling the state and extracting revenues.

-Expansion: Wagner is reportedly involved in building a new mega-refinery, which will handle gold produced by international companies.

4. Other Potential Operations:

-Libya: Wagner has been involved in supporting military factions, particularly Khalifa Haftar’s forces. While Wagner's direct exploitation of gold in Libya is not well-documented, its strategic presence in southern Libya gives the group leverage over gold smuggling routes from Africa. Gold from Sudan, in particular, is often smuggled through Libya, taking advantage of the country's porous borders and weak governance in certain regions. Wagner's military operations have likely facilitated the safe passage of gold and other resources, indirectly benefiting the group's financial interests.

-Madagascar: There are indications that Wagner may be expanding its influence. While gold mining in Madagascar is less industrialized compared to some African countries, there are extensive artisanal mining operations across the island. Wagner’s interest in Madagascar likely stems from its potential to exploit these resources, much like it has done in other African countries where it combines political support with resource extraction deals.

-Burkina Faso and Democratic Republic of the Congo (DRC): There are reports suggesting Wagner’s potential interest in expanding operations in these resource-rich but unstable regions, though the extent of current operations remains unclear. Burkina Faso has well been a hot mess and is politically unstable with a series of coups or near coups. That type of instability is well suited for Wagner’s special brand of joy spreading. Burkina Faso  is one of Africa’s largest gold producers, and the industry is vital to its economy. The country is home to several industrial gold mines as well as a large number of artisanal mining operations. Gold mining represents a significant revenue stream, making it an attractive target for Wagner's model of resource exploitation. The DRC is attractive to anyone as the country has vast deposits of gold, much of which is mined in the eastern regions, such as Ituri, South Kivu, and North Kivu provinces, which are also areas of ongoing conflict. Gold mining in the DRC is largely informal and involves a high degree of artisanal mining, making it difficult to regulate and susceptible to exploitation by armed groups.

WHY DOES THIS MATTER?

Since its invasion of Ukraine in 2022, Russia has made more than $2.5 billion from trade in African gold, according to the Blood Gold Report. To put this in perspective

As of January/February 2024 reports, the best estimate is that military operations in Ukraine have cost Russia up to $211 billion and the country has lost $10 billion in canceled or paused arms sales.

So this gold grab is paying for more than 10% of the war in Ukraine. Not bad. But that’s not the entire story is it?

According to most estimates, every day of the war in Ukraine costs Russia $500 million to $1 billion.

According to another February 2024 report, the war had cost Russia an expected $1.3 trillion in previously anticipated economic growth through 2026 and about 315,000 Russian troops.

Russian central bank maintains an interest rate of 19%, while claiming that annual inflation is only 9.1%. These are published figures with a lot of economists saying the best case is to add at least another 3% to that.

According to an October 2024 report, including all the hidden costs, Russia will probably spend about $190 billion, or 10% of GDP, on the war this year, and that figure presumably represents the peak, given the constraints imposed by Western financial sanctions.

<<https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-tracker/ ) >>>

WHAT IS BEING DONE ABOUT WAGNER AND RUSSIA IN AFRICA?

Honestly, not terribly much that has a major impact. If you are an outlaw, rules don’t apply, right?

The United States, European Union, and the United Kingdom have imposed targeted sanctions on Wagner Group, its key members, and associated companies. These sanctions aim to disrupt Wagner’s ability to operate by freezing assets, restricting their access to financial markets, and blocking any transactions with entities linked to the group. For example, the U.S. Department of the Treasury has sanctioned Wagner’s leaders and affiliated companies involved in resource extraction, including gold, diamonds, and other natural resources. Some Western governments, notably the U.K. and the U.S., have been considering designating Wagner as a terrorist organization. This designation would make it easier to prosecute Wagner operatives and impose stricter sanctions on individuals and companies associated with the group. While this effort has not yet fully materialized, it remains an ongoing topic of discussion, as designating Wagner as a terrorist group would significantly complicate its operations by restricting its financial transactions and making it illegal for any entities to provide support to Wagner. Some Western countries, particularly France and the United States, are increasing military and counterterrorism support to African nations to provide alternatives to Wagner’s security services. This includes training and equipping local forces in regions like the Sahel, where countries like Mali and Burkina Faso have turned to Wagner for help in fighting insurgencies.

Sources:

https://www.project-syndicate.org/commentary/russia-war-economy-weakening-under-sanctions-by-anders-aslund-2024-10

https://apnews.com/article/mali-wagner-mercenaries-russia-abuses-b03cf8fe6d9ddbbcdb2d012464944906

https://bloodgoldreport.com/

https://www.reuters.com/world/europe/russia-operations-ukraine-have-probably-cost-up-211-billion-us-official-2024-02-16/

https://www.defensenews.com/pentagon/2024/02/16/ukraine-war-has-cost-russia-up-to-211-billion-pentagon-says/

https://www.cfr.org/in-brief/what-russias-wagner-group-doing-africa

https://www.state.gov/the-wagner-groups-atrocities-in-africa-lies-and-truth/

https://www.bbc.com/news/world-africa-68322230

https://www.brookings.edu/articles/whats-ahead-for-the-wagner-group-in-africa-and-the-middle-east/

https://acleddata.com/2022/08/30/wagner-group-operations-in-africa-civilian-targeting-trends-in-the-central-african-republic-and-mali/

https://crsreports.congress.gov/product/pdf/IF/IF12389

Summary:

In this episode we detail Russia's alleged provision of targeting data to the Houthi rebels in Yemen, enabling them to launch attacks on Western ships in the Red Sea. This assistance highlights Russia's efforts to undermine the U.S.-led global order and destabilize regions where its partners are engaged in conflicts with the U.S. and its allies. We also discuss the potential consequences of Russia's involvement, including the heightened risk of escalation and the potential for the Houthis to acquire more advanced weaponry.

Questions to consider as you read/listen:

 1. How has Russia’s support of the Houthis impacted the stability of the Middle East and global trade?

2. What are the implications of Russia’s growing military partnerships with Iran and North Korea for global security

3.What are the potential consequences of Russia’s involvement in the conflict between the Houthis and the United States and its allies?

Long format:

 Russia Provided Targeting Data for Houthi Assault on Global Shipping

Per the Wall Street Journal.

Russia provided targeting data for Yemen’s Houthi rebels as they attacked Western ships in the Red Sea with missiles and drones earlier this year, helping the Iranian-backed group assault a major artery for global trade and further destabilizing the region.

The Houthis, which began their attacks late last year over the Gaza war, eventually began using Russian satellite data as they expanded their strikes, said a person familiar with the matter and two European defense officials. The data was passed through members of Iran’s Islamic Revolutionary Guard Corps, who were embedded with the Houthis in Yemen, one of the people said.

The assistance, which hasn’t been previously reported, shows how far Russian President Vladimir Putinis willing to go to undermine the U.S.-led Western economic and political order. Russia, in this case, supported the Iran-backed Houthis, which the U.S. designates as a terrorist group, as they carried out a series of attacks in one of the world’s most heavily traveled shipping routes.

More broadly, Russia has sought to stoke instability from the Middle East to Asia to create problems for the U.S., analysts say. The widening conflict in the Middle East, triggered by last year’s Oct. 7 attack on Israel, has absorbed resources and attention at a time when Washington has sought to focus on the threatsfrom Russia and China.

“For Russia, any flare up anywhere is good news, because it takes the world’s attention further away from Ukraine and the U.S. needs to commit resources—Patriot systems or artillery shells—and with the Middle East in play, it’s clear where the U.S. will choose,” said Alexander Gabuev, director of Carnegie Russia Eurasia Center, a think tank based in Berlin.

A spokesman for the Russian government didn’t immediately respond to requests for comment. A Houthi spokesman declined to comment.

Moscow has sought to build tighter military partnerships with autocracies, pulling Iran and North Korea deeper into its Ukraine war effort. The countries have provided ammunition, drones and missiles, and North Korea sent 3,000 troopsto train in Russia in recent weeks, according to U.S. and South Korean officials.

The assistance gives battlefield help to Russia, which is running short on manpower and materiel, but it also serves Moscow’s strategic aims by destabilizing two regions where its partners are facing off against the U.S. and its allies.

South Korea, a top U.S. ally in East Asia, has expressed increasing concern at the prospect that North Koreans could gain battlefield experience through their exposure to the Ukraine war. South Korea is one of the world’s fastest-growing weapons manufacturers, and Seoul has warned it would take measures in response, including potentially sending lethal aid to Ukraine. While South Korea has sent weapons to countries supporting Ukraine, it has declined to send arms directly.

In the Middle East, the Russian assistance underscores a tectonic shift in its strategy. Putin has strengthened ties with Iran, while turning a cold shoulder to his longstanding relationship with Israel and Prime Minister Benjamin Netanyahu. Israel has engaged in a growing conflict with Iran and the militias it backs in the region, such as Hamas in Gaza, Hezbollah in Lebanon and the Houthis in Yemen. Putin has criticized the U.S. and Israel over the Gaza conflict. On Thursday, he said the region was on the brink of a full-scale war.

The Houthis began launching their attacks in the Red Sea, where ships travel to and from the Suez Canal, late last year in protest against Israel’s ground invasion of Gaza, and continued them through the first months of this year. In total, the militants have attacked more than 100 ships since November 2023, sinking two and hijacking another.

The attacks caused major disruptions to global trade, as shippers diverted vessels for a period south around the Cape of Good Hope, a longer and more expensive voyage. Almost 1-in-10 barrels of oil shipped every day worldwide transit through Bab al-Mandab, the strait that separates the Red Sea from the Indian Ocean. The tanker traffic through that route was 77% lower in August 2024 compared with October 2023, according to Windward, a maritime-intelligence company.

The U.S. vowed to protect the international shipping lanes, and in December of last year launched a multinational naval coalition to escort ships traveling through the strait. By April, the U.S. had spent some $1 billion on munitions to knock out Houthi drones and missiles and protect shipping in the Red Sea. The U.S. has since gone further and earlier this month sent B-2 Spirit bombers to strike Houthi arsenals.

The U.S. has been concerned that Russia could escalate the situation further by providing the Houthis with Russian antiship or antiair missiles that could threaten the U.S. military’s efforts to protect ships in the region, but there is so far no evidence that Russia has done so.

Earlier this month, Russian arms dealer Viktor Bout, who had recently been released from a U.S. prison in a prisoner swap with Moscow was trying to broker the saleof about $10 million worth of automatic small arms to the Houthis, The Wall Street Journal has reported. It was unclear whether the sale had been initiated or blessed by the Kremlin.

Since the Houthis started attacking vessels connected to Israel and its allies almost a year ago, most vessels undertaking the dangerous crossing near their territories have started switching off their radio signals, complicating efforts to track them. Once a vessel goes dark, its live movements can only be continuously accessed through high-quality satellite imaging. Commercially available satellite services tend to suffer gaps in coverage and delays in transmission.

Tankers carrying Russian oil cargoes, including by Kremlin-connected Rosneft, have been attacked by the Houthis on several occasions. But these shipments are carried out through a so-called ghost fleetowned by shell companies to evade sanctions whose Russian connection is only known by a close circle of Russian oil officials and market players.

——///

My take on it is this is major revelation. If this assistance can be linked to the June 2023 Houthi attack where the Houthi’s launched a barrage of missiles that got with 200 meters of the multi billion dollar US aircraft carrier USS Dwight D Eisenhower and the Similar close calls were reported, including a January incident involving a missile that nearly struck the USS  Gravely(DDG-107), this is pretty big. 

Now the administration did attack the Houthis by way of a B2 strike on hardened bunkers and missile facilities on October 16, 2024

Sources:

https://www.defense.gov/News/Releases/Release/Article/3937640/statement-by-secretary-of-defense-lloyd-j-austin-iii-on-us-airstrikes-in-houthi/

https://nationalinterest.org/blog/buzz/just-200-meters-away-houthi-missile-nearly-struck-navy-aircraft-carrier-213258

https://www.wsj.com/world/russia-provided-targeting-data-for-houthi-assault-on-global-shipping-eabc2c2b

Summary:

In this episode we discuss a proposed Russian project to transport liquefied natural gas (LNG) using nuclear-powered submarines. While some see this as an ambitious solution to Russia's challenges in shipping LNG, especially in icy waters, critics point out the country's lack of shipbuilding capacity and the complex engineering involved. This idea, first proposed in 2019, envisions a submarine more than twice the size of the largest existing submarine, powered by three reactors and capable of carrying 180,000 tons of LNG.

Questions to consider as you read/listen:

1. What are the technological challenges and potential implications of using nuclear-powered submarines to transport liquefied natural gas?

2. How does the proposed LNG-submarine project compare to existing submarine designs and the current state of Russian shipbuilding capacity

3. What are the geopolitical and economic motivations behind Russia's proposal to use nuclear-powered submarines for LNG ?

 Long format:

  Submersible nuclear LNG tankers

In the weird news department…. I think I found THE winner for today. I offer this:

Russia Is Looking to Use Nuclear-Powered Subs to Transport LNG

https://nationalinterest.org/blog/buzz/russia-looking-use-nuclear-powered-subs-transport-lng-213328

At first I thought this was a put on. But apparently this is being discussed. 

I guess the thinking is if you can’t buy or make Arc7 ice-class tanker or rally your existing ice breakers to clear a reliable path for the few LNG tankers you have, you either build some that no one on earth has attempted or repurpose your nuclear sub fleets to do it. How they will do it even in the short term, sure beats me. 

Above water LNG carriers are some of the most difficult vessels to build, and can take up to 30 months to construct. Add on nuclear propulsion and all the complexities with making a “good” submersible… ambitious. 

This is not simple crude transport, it requires for it to be at about -260° Fahrenheit (-162 C) for shipping and pressurized. 

I found some sources dating back to 2019 when this was first floated out (pun intended) and used google translator to get some additional details. 

The world’s largest submarine today is the Soviet-designed ballistic missile carrier of the Typhoon class which is 175 meters long and 23 meters wide. The proposed LNG-submarine would in others words be more than twice the size of the Typhoons.

Unlike navy submarines, which have one or two reactors, the LNG-submarine would be powered by three reactors, providing 90 MW power to the propellers.

It would carry 180,000 tons of liquified natural gas

In a different publication, Aleksandr Nikitin, a nuclear expert that until 2022 chaired the St. Petersburg-based Environmental Right Centre Bellona said “Russia doesn’t even have basic shipbuilding capacities,” he argues and point to the fact that the country is short of abilities to build basic tankers and dry cargo ships.

“In short, this is nonsense from Kovalchuk,” Nikitin says.

But I guess all of that is a mere detail to the Russians.

Sources:

https://www.thebarentsobserver.com/news/fantasy-project-nikitin-says-about-nuclear-gas-carrier-submarine/326492

https://www.thebarentsobserver.com/industry-and-energy/sunrise-could-come-for-nuclearpowered-submarine-tanker/137649

Summary:

In this episode we discuss the vulnerability of the US Navy to asymmetrical attacks, particularly from small, fast boats, known as Fast Attack Crafts (FACs). The attack on the USS Cole in 2000 serves as a stark example of the threat posed by FACs, highlighting the ability of small, inexpensive weapons to inflict significant damage. In response to this threat, the US Navy has implemented various countermeasures including deploying patrol boats and Zodiacs in littoral zones, employing the Phalanx CIWS and MK 38 25mm gun systems, and researching solutions such as electronic warfare and directed energy weapons. We also acknowledge the emerging threat posed by unmanned surface vehicles (USVs) operating in swarms, further highlighting the evolving nature of this threat and the ongoing need to develop effective countermeasures.

Questions to consider as you read/listen:

1. How has the US Navy responded to the threat of asymmetric attacks from fast attack crafts and unmanned surface vehicles?


2. What are the key challenges in defending against swarms of small, inexpensive unmanned surface vehicles?


3. How has the US Navy's experience with the USS Cole attack influenced its approach to maritime security?

Long format:

US Navy versus Fast attack Craft (FACs) and other asymmetrical attacks

This week’s report that Houthi rebel rockets came perhaps as close as 200 meters of the USS Dwight D. Eisenhower US Aircraft carrier the question becomes what is the US Navy’s capabilities in terms of asymmetrical attacks?

https://nationalinterest.org/blog/buzz/200-meters-away-did-houthis-nearly-sink-navy-aircraft-carrier-213267#:~:text=A%20recent%20report%20revealed%20that,actors%20equipped%20with%20advanced%20weaponry

The asymmetrical nature of the modern threat is those FACs (Fast Attack Craft). The US Navy experienced a huge wake up call and shock with the USS Cole attack. 

A very small fiberglass boat carrying shaped C4 explosives and two suicide bombers approached the port side of the destroyer and exploded, creating a 40-by-60-foot (12 by 18 m) gash in the ship's port side. 

 2 suicide bombers on board a cheap not particularly fast boat with about 1000 pounds of C4. (Interestingly the boat was the same one used in the unsuccessful USS The Sullivans attack the year prior) 

 Friendly gestures got those two suicide bombers way too close. I don’t think the US Navy is going to allow access anywhere near an asset again. Big lesson learned. 

 This attack caused $240m in damage. 17 sailors killed. 39 injured. Cole's Sailors fought fires and flooding for the following 96 hours to keep the ship afloat. Very very asymmetrical. 

 Since the USS Cole wake up call, the fleet has really focused on FAC defense. This includes the deployment of a variety of patrol boats and Zodiac like boats when in littoral zones. 

 The Phalanx CIWS (20 mm AP tungsten penetrator rounds when operating under Surface Mode, the ROF is 50 rounds/sec. With a drum capacity of 1,550 rounds, that gives Phalanx 31 seconds worth of firing before running dry.) is optimized a last-ditch defense against incoming missiles. It can be used against attacks by FACs, but was not designed for that purpose.

 The MK 38 25mm gun system (hard hitting 25 mm rounds at a rate of 3 rounds/sec on auto mode, AP, incendiary, or semi-AP shells. With 168 ready-rounds on mount, firing time is nearly double at 56 seconds) has been installed specifically as a defense against FACs like those used by the Iranian IRGC forces in the Gulf.

 An Unmanned surface vehicles (USVs) swarm is something different altogether. 

 The potential for a large number of small, inexpensive USVs to overwhelm a defender's limited supply of high-cost defensive weapons is a legit risk. Identifying and engaging multiple small targets simultaneously within a large area in real time and distinguishing foe from not foe is also difficult. 

 It’s an evolving response to this new threat. Swarm on swarm is being studied and explored. Electronic warfare to deny control over the USVs is the current prevalent countermeasure. Directed energy weapons are being researched and developed. 

Sources:

 https://www.fbi.gov/history/famous-cases/uss-cole-bombing

 Wikipediahttps://en.wikipedia.org › wikiMark 38 25 mm machine gun system

 https://en.wikipedia.org/wiki/Phalanx_CIWS#:~:text=The%20Block%201A%20and%20newer,uranium%20with%20discardable%20plastic%20sabots.

 https://www.gd-ots.com/armaments/naval-platforms-system/phalanx/

 https://www.rtx.com/raytheon/what-we-do/sea/phalanx-close-in-weapon-system#:~:text=U.S.%20Air%20Force)-,The%20Phalanx%20close%2Din%20weapon%20system%20is%20the%20last%20line,Next

 https://www.usni.org/magazines/proceedings/2024/august/counterswarming-imperative#:~:text=This%20example%20raises%20the%20question,catch%20a%20drone%20swarm%E2%80%9D%20approach

Summary:

In this episode, we discuss the increasing prominence of cashless societies, specifically focusing on China's rapid transition to a digital payment system. We highlight the use of mobile payment platforms like WeChat Pay and Alipay, the widespread adoption of QR code transactions, and the government's introduction of the digital yuan. Furthermore, the sources examine the implications of a cashless society for big data, emphasizing the collection and analysis of user data for both commercial and governmental purposes. We express concerns about the potential loss of privacy and the potential for manipulation in a fully cashless society.

Questions to consider as you read/listen:

1. How does the shift towards a cashless society impact the role of big data and privacy concerns?


2. What are the key technological drivers and societal implications of China's cashless payment system?


3. What are the potential benefits and drawbacks of a cashless society in terms of economic and social impacts?

  Long format:

Big data, data tracking, data flows and Chinese cashless system 

There’s a new sentiment that says the new war front isn’t physical, but rather informational. The flow of data shapes the flow of money. Geoeconomics. 

A simple example are Internet cables which are a tangible aspect of data geo-politics. Not as physical is the collection, aggregation and interpretation of big data. From national security projects such as Project Echelon to big data collection in the corporate world like today’s news brief article that highlights the DOJ efforts regarding data tracking and search engine matters by Google with big data (https://www.npr.org/2024/10/09/nx-s1-5146006/justice-department-sanctions-google-search-engine-lawsuit)

I thought on this. 

I was reminded of stories regarding Chinese cashless system efforts. 

China's cashless system is based on digital wallets, QR codes, and other technologies to enable a variety of transactions:

The most popular domestic Chinese payment methods are WeChat Pay and Alipay, which are owned by Tencent and Alibaba, respectively. These apps allow users to make purchases, transfer money, book transportation, and more. They use a variety of technologies, including QR codes, facial recognition, fingerprint scanning, and voice recognition.

China's domestic card network, which issues debit and credit cards, and provides EPOS machines for merchants. UnionPay cards are accepted at most ATMs and POS terminals, but foreign-issued cards may not be as widely accepted.

Some Chinese cities have rolled out facial recognition payment systems that allow users to pay for purchases by smiling.

How pervasive is it?

As of June 2023, over 943 million people in China use mobile payments, which is a 38.3% penetration rate.

Alipay and WeChat Pay are the most popular payment apps in China, with 92% and 85% of respondents preferring them, respectively.

QR codes are widely used for payments in China, with buyers either scanning the seller's QR code or displaying their own. 

The government introduced the digital yuan to replace physical bank notes, in part due to the COVID-19 pandemic.

Without cash, we would be forced to leave a record of everything we buy. While this may not bother some, there are many who worry that governments and/or corporations could use our purchasing histories as a way to track us, monitor us, influence us, persuade us, and even intimidate us.

Fully implemented, moving towards a cashless system will significantly increase the role of big data, as every digital transaction generates a vast amount of data about consumer behavior, spending patterns, and location, which can be analyzed and utilized by businesses and institutions to gain valuable insights and make informed decisions; this raises privacy concerns as well.

I haven’t fully settled on this other than it *may* be an issue. I’m noodling on it. Anyone else noodling on it or want to here?

Sources: 

 https://www.brookings.edu/articles/chinas-digital-payments-revolution/#:~:text=While%20America%20spent%20the%20past,network%20incentives%20has%20been%20unleashed

 https://www.forbes.com/sites/zennonkapron/2024/05/26/the-limits-of-cashless-payments-in-china/#

 https://daxueconsulting.com/payment-methods-in-china/#:~:text=Over%20943%20million%20individuals%20actively,Chinese%20or%20international%20credit%20cards

 https://theconversation.com/chinas-experience-with-mobile-payments-highlights-the-pros-and-cons-of-a-cashless-society-201177#:~:text=Over%20the%20past%20two%20decades,just%20their%20smartphone%20or%20smartwatch

 https://www.cambridge.org/core/books/abs/law-and-the-party-in-china/technologies-of-risk-and-discipline-in-chinas-social-credit-system/9C07910C3EF48B555D3D481BDB6A0A9E

 https://www.paymentsjournal.com/a-cashless-future-can-big-data-change-how-we-pay/#:~:text=As%20society%20slips%20into%20a,for%20fintech%2Dinfused%20money%20movement