Peter Zeihan Interview - Hamas, Gaza, Israel and the Possibility of Outside Intervention - Oct 2023
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Zeihan argues that the Israel-Gaza conflict will be long and devastating but geopolitically contained, with no major regional escalation or World War III scenario; the real strategic pivot hinges on Saudi Arabia's normalization decision with Israel, which will reshape the entire Middle East.
- Israel must conduct a lengthy house-to-house ground invasion to destroy Hamas infrastructure, lasting years not months, due to failed intelligence
- No regional actors have capacity or incentive to escalate: Iran's proxies are constrained, Hezbollah won't risk destabilization, China and Russia are non-factors
- Saudi Arabia's generational divide on Palestinian concessions will determine whether the entire Sunni Arab world normalizes with Israel, reshaping geopolitical alignment
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Gaza and Palestine have no market or commodity importance to global markets; there is no commodity that starts in, ends in, or transits Israel-Palestine; the only reason markets care is if another country (like Saudi Arabia in 1973) decides to make it matter through OPEC action.
“one of the things that the markets discovered in the aftermath of the 1911 assault is that Palestine and Israel really don't matter to any Market whatsoever unless another country decides to make it matter”
Shanghai Academy of Sciences reported China has overcounted its population by over 100 million people with all missing millions under age 40, indicating atrocious demographics; estimated 1.5 to 3 billion excess housing units, representing a 100-200% overbuild from which the country cannot recover.
“the newest news from the Shanghai Academy of Sciences which are kind of the the wise men in their system basically if imagine the Federal Reserve if they weren't in charge of monetary policy and it was just their job to kind of comment on statistics and economics that would be the Shanghai Academy um they're the WIS men in the room they're now saying that not only has the country overcounted their population by over 100 million people with all the missing Millions under age 40 U making their demographics Beyond atrocious they're now estimating that somewhere between there there's enough housing units in the country to house an extra somewhere between 1.5 and 3 billion people indicating a one to a 200% overbuild”
Gaza imports over 90% of its food and energy and has no indigenous agriculture because the entire population lives an industrial lifestyle, meaning destruction of Hamas infrastructure will create catastrophic humanitarian consequences with thousands of deaths per month from inability to distribute aid.
“since this is a zone that Imports over 90% of their food and their energy that and everyone lives an industrial lifestyle I mean there's no there's no agriculture here uh the the human suffering is going to be immense”
Hamas plays a governance role in Gaza controlling aid distribution from the outside, so destroying Hamas infrastructure creates a prisoner management problem: you have a prison without a distribution system, leaving no good outcome—either occupation (which Israel won't do) or withdrawal (which allows Hamas to reform).
“whoever is in control of it basically controls the distribution of Aid that comes in from the outside most of it being funneled through Israel uh but if you rip up the entire infrastructure of Hamas which includes the local government then you're going to be left with a situation where you have a prison environment without a distribution system”
Reliable tactical data sources don't exist in the Middle East, which is problematic because bad information moves faster than facts and inspires global protests and violence; Gaza and Palestinian health officials provide inflated numbers making it impossible to assess ground reality.
“if you're looking for a reliable source of tactical data in the Middle East you're never going to find it which is problematic because obviously I mean this ends up being the proximate cause and the inspiration for protests all around the world when you see something like this when the numbers are inflated you don't know what's happening and people are reacting to it”
Hamas's October attack with six different modes of transport across 40 locations represents a complete operational intelligence failure by Israeli services, indicating their intelligence on Hamas is severely limited despite Hamas being on their border and every cell phone call and text in Gaza transiting through Israeli towers.
“the fact that this attack happened at all that Hamas was able to plan for six different modes of transport and launch attacks in 40 different locations um that should have never happened the Israeli intelligence services this is the number one thing they watch and and it's right on their border so to think that they've failed that completely indicates that their operational Intelligence on Hamas is quite limited”
China can't deploy forces without assistance from the American Navy operating through Singapore, making China a non-factor in regional conflict; Russia is locked down in Ukraine; therefore neither power can materially affect Gaza conflict.
“as for a country like China China can't deploy forces without assistance from the American Navy path Singapore so the Chinese are complete non-factor here and the Russians are completely locked down in Ukraine”
Iran has no tools to affect the Gaza situation; Hamas was always considered a disposable asset by Iran; Hezbollah is a more valuable long-term partner for Iran due to Shia religious affiliation while Hamas is Sunni and considered apostates worthy of destruction.
“Iran has no no tools here um Hamas they are always considered a disposable asset and now it's been disposed of so you know they're done there uh Hezbollah they consider more of a long-term partner because they're Shia um Hamas is Sunni and Muslim and so the Iranians have always publicly considered them apostates and worthy of Destruction”
Israel has a standing policy that hostage situations do not affect operational or tactical planning, which is why Israeli hostages are rarely taken; this contrasts sharply with the US approach where hostage rescue is a social contract obligation of government.
“the Israelis have made it very clear over and over and over for decades that if there are hostages involved they will not affect their operational or tactical planning one bit that's one of the reasons why Israeli hostages as a rule are not taken because the Israelis don't let that affect their planning”
Hezbollah lacks the capacity for ground operations that would seriously threaten Northern Israel; they can launch rockets but that's not equivalent to meaningful military capability; Hezbollah won't escalate because they're part of Lebanese government coalition and escalation would trigger Israeli regime change in Lebanon, destabilizing Hezbollah's own position.
“Hezbollah doesn't have the capacity to really put too much pressure on Israel they can launch a lot of rockets and I don't mean to suggest that's nothing but they're not capable of a ground operation in in a way that would really threaten Northern Israel”
Egypt controlled Gaza from 1949 to 1973 and hated the experience; Egypt dislikes Palestinians as much or more than Israel does; Egypt is the only other proximate country for Palestinian refugees but is not a viable option, creating an inescapable humanitarian trap.
“the only other proximate country is Egypt and people forget that Egypt controlled the Gaza from 1949 until 1973 and they hated it the only people out there who like the Palestinians less than the Israelis are the Egyptians”
China and Russia talk to each other but are not true allies; Russia and China have longstanding border disputes with Russian official policy being to nuke China if they cross the border; Russia and Iran fought over the Caucasus and disagree on Azerbaijan's independence.
“don't get me wrong they all talk but none of them are allies uh people forget that the Chinese and the Russians have longstanding border disputes and the official Russian policy is to Nuke China if they cross the border people forget that the Russians and the Iranians have fought tooth and nail over the caucuses and the Very existence of an independent azerbajan is one that Iran is pathologically opposed to”
In early 2021 Beijing and the whole country suffered widespread blackouts and brownouts but Xi didn't find out until September; he only learned about it when it came up on a Zoom call with Joe Biden, illustrating the complete breakdown of information flow to the top.
“one of my favorite stories is what happened in early 2021 when Beijing and the whole country were suffering from widespread Brown and blackouts she didn't find out until September because no one would tell him it happened to come up on a zoom call with none other than Joe Biden”
If US gets involved with Hezbollah in southern Lebanon, an aircraft carrier battle group is the absolute worst tool for the job; ground forces are needed; the US has MEU units available with 3-5,000 Marines capable of amphibious landing, but 3-5,000 Marines is insufficient to patrol Southern Lebanon border.
“if you are going to get involved with Hezbollah in southern Lebanon an aircraft carrier battle group is the absolute abute worst tool for the job uh you want ground forces and aircraft battle groups don't have ground forces now we do have the meus and I think one is on its way to the area they do House 3 to 5,000 Marines and you could theoretically do a amphibious Landing with them but 3 to 5,000 Marines is not enough to patrol Southern Lebanon of the border”
US Congress members Rashida Tlaib and Ilhan Omar and major media outlets ran with Hamas narrative blaming Israel for hospital bombing before investigating; after facts emerged showing Gaza militants fired the misfired rocket, media and politicians had already spread misinformation globally.
“Palestinian officials say nearly 500 people were killed in an Israeli raid on gaza's alahi hospital two US congresswomen Talib and Omar also immediately spread the Hamas narrative and blamed Israel for the hospital strike and now of course we see after more facts Intel and video footage have been collected that the rocket was actually not even fired by Israel but internally by an Islamic group within Gaza it of course misfired and fell on the hospital Hamas however spun the disaster and then wildly exaggerated the number of casualties which the media just ran with before doing any investigation or factchecking first”
Iranian assets in Syria are positioned far from the border zone and separated by a Druze buffer population that doesn't like Iranian assets; the Golan is empty; therefore Iranian assets in Syria are a non-factor unless Iran wants to lob missiles over countries to reach Israel, which would achieve opposite of Iranian interests.
“the Iranians do have assets on the ground in Syria as part of the Civil War but they're nowhere near the border Zone and the Border Zone also has a buffer zone populated by Drews who don't like the Iranian assets and then you got the Golan which is empty uh so the capacity of Iranian assets in Syria are really a non-factor and and that's everything so unless they want to lob some missiles which everyone will notice and everyone will have an opinion on when you know lob missiles over some countries to hit another country um which will achieve the opposite of anything Iran would like um I'm not too worried”
The ground invasion of Gaza will require house-to-house fighting through territory with 2.5-3 million people over an area twice the size of Washington DC, lasting at least a couple of years, not three weeks or three months.
“that means hous to house fighting through a Zone with two and a half million .3 million people over a territory that's about twice the size of the District of Columbia uh that's not a program that'll be done in 3 weeks or three months uh this is probably something that going to be keeping them busy for at least a couple of years”
The hospital bombing was fired by a rocket from Gaza (not Israel), evidenced by convincing missile footage and a cell phone intercept of the perpetrator saying 'oh my God what did we just do'; Biden's intelligence assessment confirmed this.
“all of the intelligence that I have seen suggest that is the case as well and there's some fairly convincing footage of the missile and a fairly convincing cell phone intercept of the guy who fired it who basically says oh my God what did we just do”
The spread of lies and misinformation by US Congress and media can be characterized charitably as unfortunate reality of war, or less charitably as members of Congress and media becoming mouthpieces for terrorist organizations Hamas when it fits their narrative.
“if we were to characterize this in the most charitable manner we would say that the intentional or unintentional spread of lies and misinformation is just an unfortunate reality of War if we were to be less charitable we might say that members of US Congress and large parts of the media have shown that they are now more than willing to be the mouthpieces for terrorist organizations when it fits their narrative”
There will be no broader regional war or World War III scenario; no additional countries will get involved in the Gaza conflict beyond the current parties; immediate neighborhood actors lack both interest and capability to escalate.
“no I mean man the talk about things like that has gotten nuts hasn't it and no there is not going to be a broader War we've already gone through the immediate neighborhood no one is interested or capable”
When a leader is in a dark room with no information making policy, they become desperate; but it's impossible to predict Xi's behavior because we don't know what information he actually has access to; without Xi speaking to anyone, there's no inner circle to tap, no emails to hack, so all predictions about Xi's behavior are guesswork.
“when when you're in that kind of box making policy in a dark room with no information do you feel desperate and if you do feel desperate what are you desperate about what might you do”
The US has never put boots on the ground in Israel; the US provides intelligence and equipment but after that it's all on Israel; the reason US sent firepower to region and Biden visited in person is to signal a new era where US has less interest in global stability and wants to make clear to allies like Saudi Arabia that Israel is a core ally that others must align with.
“we have never never never put boots on the ground in Israel this is an Israeli show we provide intelligence and to a degree equipment but after that it's all on them”
Xi Jinping has destroyed the country's capacity to generate and flow information up (covid deaths, consumer confidence, dissertations, political biographies), preventing a new generation of leadership from rising and destroying basic decision-making intelligence about what's happening in his own country.
“XI has so destroyed the capacity of the country to feed information up they're not collecting things like covid deaths consumer confidence data College dissertations political biographies the the things that would allow a new generation of leadership to form and Rise G is destroyed so that they can never threaten him and he's shot the messenger so many times that he's not even getting basic information about what's going on within his own country”
Zeihan expects more drastic and mindboggling breaks in the Chinese system over coming months; he has shifted from being a 'doomsayer' to being 'very confident' and 'very worried' that China's breakdown will be unprecedented in scope but repeats a 3,000-year pattern when systems over-centralize power.
“I think we're going to be seeing a lot more drastic and mindboggling breaks in the system kind of like we have seen with foreign policy like we've seen with the intelligence services like we've seen with housing uh over the next several months um from my point of view every day that China doesn't collapse is a gift because it gives the rest of us a chance to build for a post China environment”
Saudi Arabia's older generation including King Salman are pro-Palestinian and want real concessions (self-rule, territory expansion, Israeli withdrawal from West Bank) as part of any normalization deal; the younger generation including Muhammad bin Salman doesn't care about Palestinians and wants normalization on pure strategic/economic terms.
“the older generation including the king king Salman um are pro Palestinian and they see to a certain degree any talks with Israel as a degree of betrayal and so if there is going to be a deal they want to make sure that something that is more than merely platitudes is granted to the Palestinians whether it's self-rule expansion of the territory they can control uh Israelis out of the West Bank whatever it happens to be they're they're pretty flexible in what it looks like as long as it's real”
You don't come back from China's level of housing misallocation; only sound policies redirecting resources could stave off catastrophic economic degradation short-term, but Chairman Xi has destroyed all information transfer avenues in the country so he can't make sound decisions.
“you don't come back from that sort of misallocation uh and the only way you can Stave off catastrophic economic degradation in the short term is with some really sound policies that redirect a lot of resources and chairman X is so blind because he's destroyed all avenues of information transfer in the country even with his his own government that I think we're going to be seeing a lot more drastic and mindboggling breaks in the system”
Hamas consists of dozens if not hundreds of factions, and Israel knows very little about the specific faction that conducted the October attack; from Israel's perspective the specific perpetrators are almost a sideshow compared to the need to destroy the parent Hamas organization entirely because Hamas leadership allowed the attack to fester.
“Hamas has dozens if not hundreds of factions and the Israelis are going to go in and take out them all they know very little about the faction that actually did the attack and from their point of view that's almost a sideshow because Hamas allowed something like this def Fester”
The US needs to double its industrial plant and ideally China would be part of this story because 40 years of manufacturing offshoring means the US can't meet all needs without external equipment, with China being the largest external supplier.
“if you're like me and you think the United States needs to double the size of its industrial plant China ideally was going to be part of that story because so much manufacturing has been offsh short over the last 40 years we can't do everything that we need by ourselves without at least some equipment from other places and China is the biggest one of those places”
If Iran does escalate, it will be against perceived American interests, not Israeli interests, because Israeli interests are out of reach; but since the US has pulled out of everywhere in the Middle East, there's no clear American interest for Iran to target, so Iran would be acting without clear strategic objective.
“if Iran is going to do something they're going to do it against perceived American interests not a perceived Israeli interest because the Israeli interests are just Out Of Reach but honestly now that the United States has pulled out of everywhere in the Middle East I'm not sure where that would be anymore and it certainly wouldn't be linked to Israel so Iran is going to Iran and we should expect more of that”
Cold War Alliance worked because US accepted products from everyone and kept markets open to maintain economies around Soviet threat; now without overarching Soviet threat, US partnership is no longer based on anti-communism but on US terms where certain countries are part of US inner family (UK, Australia, Singapore, Japan, Israel) and there's little negotiation.
“what made the Cold War Alliance work is that the United States just sucked up all the details we accepted uh product from everyone kept our markets open to keep their economies going and it was all about the Soviets and so we were willing to partner with almost anyone if they had an anti-soviet posture and their strategic policy and that put us in bed with some very questionable characters up to including ma tongue himself now we don't have one of those overarching strategic goals and so if you want to partnership with the United States it's not on your terms it's on our terms and that means there's certain countries that we've decided are part of our inner family the United Kingdom Australia Singapore Japan now Israel and you have to be okay with that there's not going to be a lot of negotiating here because there aren't a lot of countries out there that we need”
Saudi Arabia, not Israel-Palestine conflict itself, is the key strategic actor determining market response and regional escalation; Saudi decision on normalization with Israel will reshape the entire Middle East alignment and will be made within one month based on whether the older pro-Palestinian generation or younger anti-Palestinian generation (MBS) gains control of foreign policy.
“I'd say a 95% chance that aside from a little emotion uh there's going to be no impact on energy whatsoever the other five% depends upon the saes”
China would sell Iran to Saudi Arabia in a heartbeat if it meant better relations with Saudi Arabia, because Saudi Arabia is the world's largest oil exporter while Iran can only export ~1 million barrels per day on a good day; from a pure numbers perspective Saudi Arabia is far more important to China than Iran.
“as for the Iranians and the Chinese uh the Chinese would sell the Iranians in a heartbeat if it meant a better relationship with Saudi Arabia because it's just about the numbers for them China is the world's largest importer of crude Saudi Arabia is the world's largest exporter of crude and Iran on a good day can only export about a million barrels a day so you know if you have to make a choice that's an easy one for them”
The US patrolled the Persian Gulf for decades because oil going to allies, not the US; the US doesn't care about that anymore; allies have to adjust expectations and tamp down national egos; Biden's trip was successful at making clear there won't be negotiation on core issues.
“we patrolled the Persian Gulf for decades because the oil from that wasn't going to us it was going to our allies that we needed to maintain the alliance against the Soviets we don't care about that anymore and that means everyone has to adjust their expectations and kind of Tamp down their National Egos and I think the Biden trip was very very successful at making that point”
Israel delayed ground invasion because they wanted to try to minimize mass casualties, not because they lacked US support; they are still early in the information-gathering phase (only two weeks in as of October 19) and are not ready militarily.
“why do you think it's taken so long for them to move in and conduct this ground invasion is because they're waiting for us support or I I I think there's only one reason and they would like to not kill a half a million people as part of the process and so they're trying to gather information on targets that's my best guess”
Q3 2023 Chinese economic growth at 4.9% is real growth, driven by global supply chain rush orders as importers fear future restrictions; whether this stabilization is durable year-on-year remains uncertain.
“most of the stabilization is from everyone rushing orders out of China for things that they think they might not be able to get in the future so the growth I in my opinion is real whether that number is real of course is a normal question about Chinese statistics but I do think that this last quarter they've actually have seen an uptick uh because everybody needs what they have”
A Taiwan conflict is 'reasonably possible' but cannot be predicted due to Xi's information isolation and lack of communication with any inner circle; the only approach is to tap the rest of the Chinese system to anticipate what might happen after Xi makes a decision.
“I don't want to say that there's not going to be a conflict over Taiwan I think that's something reasonably possible but we have no idea what the thought process is in G's head and since he doesn't speak with anyone there's no Inner Circle there's no phone to tap there's no emails to hack uh and it's just guesswork so all you can do is tap into the rest of the Chinese system and once she has made a decision then do what you can to adapt to the situation”
China's public siding with Palestinians will hurt China's relationship with Saudi Arabia long-term; Russia's public siding with Hamas will likely destroy the Russia-Israel relationship which both sides have worked hard to maintain; both countries are acting against their own interests due to pathological anti-American sentiment.
“the Chinese siding so publicly with the Palestinians for example is going to really really really hurt them with Saudi Arabia in the long run um we're kind of seeing a break down in all things Chinese The Cult of Personality has gotten in so deep uh that they're making horrific mistakes like this and the Russians inciting so obviously and publicly with Hamas is something that's probably going to destroy the relationship with the Israelis over the long term which is something that both sides have gone out of their way to maintain”
Israel will conduct a lengthy ground invasion of Gaza lasting years, and during this time there will be many mass casualty events as they conduct building-to-building searches; these events are inevitable consequences of the military operation, not policy decisions.
“let's assume for the moment that everyone decides oh yeah this was Hamas and not Israel that hit that hospital I don't think it matters because there's going to be many many many more mass casualty events”
Oil prices have only a 5% chance of being affected by the Gaza conflict; the other 95% depends entirely on what Saudi Arabia does; there's a 95% probability of no energy market impact aside from minor emotion.
“I'd say a 95% chance that aside from a little emotion uh there's going to be no impact on energy whatsoever the other five% depends upon the saes”