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Daniel Davis Deep Dive · Brian Thomas

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  Speaker 1: See the talk station, a thirty fifty five KCD talk station.
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  Speaker 1: A very happy Tuesday to you, extra special as always
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  Speaker 1: when we get to hear from Daniel Davis with the
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  Speaker 1: Daniel Davis Deep Dive. That's the name of his podcast.
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  Speaker 1: Find it where you get your podcast, and tune in
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  Speaker 1: every Tuesday at this time to hear what Daniel Davis
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  Speaker 1: has to say. Retire Lieutenant Colonel Daniel Davis, Welcome back
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  Speaker 1: to the Morning Show. I missed you last week. I
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  Speaker 1: understand you were traveling. Yeah, I did.
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  Speaker 2: I get run into some travel nightmares that it had
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  Speaker 2: plagued a lot of the Iris of the country.
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  Speaker 1: Awfully sorry to have missed. That's okay. I was waiting
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  Speaker 1: for your thoughtful analysis about where we are. Things don't
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  Speaker 1: seem to have changed since last week, but apparently right
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  Speaker 1: now we are in the low keying it negotiation standpoint
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  Speaker 1: with the Iranians. It seems like every day or if
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  Speaker 1: not weak passes. Now the Iranians position seems to get stronger.
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  Speaker 1: Now they're demanding reparations from the United States in addition
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  Speaker 1: to all of their other seemingly untenable demands or I mean,
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  Speaker 1: we're gonna completely withdraw from the area. We're never gonna
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  Speaker 1: send a ship ever through the Strait of Horror moonvees.
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  Speaker 1: We're gonna pull all of our military out of an.
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  Speaker 1: I mean, their list of demands seems to be crazy,
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  Speaker 1: but Donald Trump suggested, now we are in not a
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  Speaker 1: kinetic stage of the war, but maybe an economic warfare.
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  Speaker 1: Is this sort of a battle of attrition.
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  Speaker 2: We're now in, Daniel Davis, you know, I think it's
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  Speaker 2: more like we don't know what to do next because
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  Speaker 2: all those new demands you're talking about, actually none of
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  Speaker 2: them are new. They're all from the fourteen point Memorandum
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  Speaker 2: of Understanding that we signed. But one of the big
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  Speaker 2: big differences is that now Iran is saying we will
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  Speaker 2: get all of those things up front, everything that was
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  Speaker 2: in it, all the categories you mentioned in a couple
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  Speaker 2: more before we'll open the straight of horror moves. The
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  Speaker 2: first time it was will lift the blockade, you'll lift
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  Speaker 2: your blockade, you'll do the United States was supposed to
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  Speaker 2: do a couple of things with sanctions and releasing frozen funds,
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  Speaker 2: and then everything else is going to be negotiated. Now
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  Speaker 2: then they're saying, because in their interpretation, we didn't abide
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  Speaker 2: by the terms, especially paragraphs one in five. They're saying, now,
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  Speaker 2: then four will do step one. You're going to do
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  Speaker 2: everything else on the list now. I think that probably
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  Speaker 2: that's because they realize that they have the leverage. They
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  Speaker 2: realize that everything that we have with our military has
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  Speaker 2: not worked. We've tried two rounds of kinetics with the
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  Speaker 2: forty Day and then the thirteen Day, and the same
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  Speaker 2: missiles firing at the same targets of which are basically
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  Speaker 2: granite mountains, aren't going to have a different outcome, and
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  Speaker 2: they know it. So they are being hurt by the
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  Speaker 2: way from our blockade. There's no doubt about that. A
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  Speaker 2: lot of the things that are claimed are accurate, but
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  Speaker 2: it's not something that the Iranian side can't handle for
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  Speaker 2: an extended period of time. But we are facing some
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  Speaker 2: real problems, and one of the most acute right now
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  Speaker 2: is jet fuel because like forty percent of the world's
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  Speaker 2: jet fuel comes out of the Middle East or is
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  Speaker 2: produced out of products from there, and by some estimates
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  Speaker 2: I was looking at just last night, we have three
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  Speaker 2: maybe four weeks at current rates of usage before the
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  Speaker 2: airline industry, especially in Europe, they're going to be the
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  Speaker 2: hardest hit is going to have to start cutting back
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  Speaker 2: flights because they simply don't have enough fuel to operate.
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  Speaker 2: It's not even a matter of how much. It's of
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  Speaker 2: course higher, but then diesel will be right behind that.
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  Speaker 2: So we can't go in this this situation much longer
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  Speaker 2: without having dramatic economic implications for the Western world, which
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  Speaker 2: will eventually hit us too.
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  Speaker 1: Of course it'll hit us, and obviously it's hit us
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  Speaker 1: all ready to a certain degree. But I suppose, first off,
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  Speaker 1: ken Iron manage these economic hardships, and they are pretty
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  Speaker 1: damn significant that the people are struggling under. Can it
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  Speaker 1: manage those economic hardships indefinitely? I mean, just ignoring November
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  Speaker 1: elections and what's happening with the Straight of Horror moves closed, open,
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  Speaker 1: doesn't matter, just the whole economic situation they're facing. How
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  Speaker 1: long can they hold out with that? Yeah?
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  Speaker 2: Probably a long long time, much longer than we too.
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  Speaker 2: And here's the reason why Iran is basically a self
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  Speaker 2: contained country. They have all the natural resources. If their
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  Speaker 2: entire borders got sealed off, all of them land and sea,
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  Speaker 2: they would be able to to survive because they have
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  Speaker 2: all the food they need. They have the water they need,
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  Speaker 2: and they have the petroleum products that they need and
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  Speaker 2: the ability to refine them, so they can contain themselves
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  Speaker 2: set centered, even though you know they won't be getting
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  Speaker 2: any external money, so that's going to cause a big
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  Speaker 2: problem with their economy. But then lack of the Russians
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  Speaker 2: did when we put all those sanctions on them at first,
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  Speaker 2: and especially on everything they had connected to the West,
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  Speaker 2: they retooled and then figured out how to do it
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  Speaker 2: with other assets. Now they have eight I'm sorry, three
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  Speaker 2: thousand miles of land borders with other countries, so they're
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  Speaker 2: not shut off just because the Strait of Horror moves
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  Speaker 2: is shut off. So they can retool. But they've also
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  Speaker 2: done this for forty seven years. They've learned how to
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  Speaker 2: live underneath economic hardshipped imposed by the West, whereas we
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  Speaker 2: have had uninterrupted flows from all the oil and everything else,
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  Speaker 2: and there's not as many workarounds for us in that
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  Speaker 2: jet fuel. That's the long pull in the tenth that
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  Speaker 2: could be the most important failure on our side that
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  Speaker 2: we can't mitigate.
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  Speaker 1: Well, we all know markets are not static. You know,
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  Speaker 1: we had peak LOA at one time, and then we
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  Speaker 1: figured out how to frack which opened up all kinds
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  Speaker 1: of oil reserves, and Scott sent secret Turbercent noticed it
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  Speaker 1: the other day and he made a commentary. Iran has
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  Speaker 1: mistaken a tactical threat for a durable advantage by repeatedly
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  Speaker 1: signaling its willingness to disrupt the Strait of Horror moves.
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  Speaker 1: Tehran hasn't strengthened its hand, it's accelerated the market's exit.
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  Speaker 1: And then there was an analysis about the United Arab Emirates
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  Speaker 1: building out its bypass, the new pipelines that are being built,
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  Speaker 1: the slow moving away from the even needing the Strait
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  Speaker 1: of Horror moves, much like Iran cut off any need
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  Speaker 1: for anything involving the rest of the world self sustained.
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  Speaker 1: As you just pointed out, it's a lesson I think
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  Speaker 1: we needed to learn from COVID. Guess what, we don't
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  Speaker 1: make anything here anymore. We might want to start reshoring
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  Speaker 1: that so we have some independence from the rest of
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  Speaker 1: the world and its disruptions. So over time I can
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  Speaker 1: see a move away as it's happening real time right
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  Speaker 1: now with the Strait of Horror moves. Is there a
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  Speaker 1: day down the road when we won't need it? Anymore.
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  Speaker 2: Daniel Davis, Well, there's I don't think you'll get a
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  Speaker 2: place where you don't need it because even the workarounds
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  Speaker 2: UH rely on on other means to get things out
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  Speaker 2: UH some overland some over poplines, et cetera. That but
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  Speaker 2: that the issue is, you know, it takes considerable amount
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  Speaker 2: of time. But the shortness, the short sightedness of that
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  Speaker 2: that idea UH unders or fails to consider the fact
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  Speaker 2: that even if you have these bypassed routes and these
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  Speaker 2: other pipelines et cetera, the pumping stations and the fields
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  Speaker 2: are still there. You haven't moved them. So if if
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  Speaker 2: Ron wants to say, hey, you you know, if something happens,
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  Speaker 2: they're going to say, hey, we're not gonna worry about
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  Speaker 2: you know, the ship that can pass or not pass
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  Speaker 2: through will go after the pumping station. So there's still
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  Speaker 2: a risk to it that you can't get away from
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  Speaker 2: because of its proximity to the region. And it's of
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  Speaker 2: course it takes a long time. And I'm for that.
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  Speaker 2: I think that that does make sense because if you
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  Speaker 2: minimize the centrality of the of the straight of Horror
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  Speaker 2: moves over time, then that does less than their strategic value,
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  Speaker 2: there's no doubt about that. But do we have the
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  Speaker 2: seven years or so that it's going to take to
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  Speaker 2: get that on. That's not going to help us now,
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  Speaker 2: even if it might help us later.
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  Speaker 1: No, I it's a reason I brought it up in
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  Speaker 1: the context of how long Iran can go under the
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  Speaker 1: economic problems they're struggling with sanctions, et cetera, versus how
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  Speaker 1: long it's going to take for you know, the market
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  Speaker 1: to catch up with the reality of the straight upward moves.
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  Speaker 1: Isn't a great place to be? Is there a workaround solution?
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  Speaker 1: And obviously there are because people they're working on them
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  Speaker 1: right now. So you know who's going to win that.
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  Speaker 1: I suppose over time again markets doing what they do,
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  Speaker 1: they'll try to avoid risk and they'll try to go
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  Speaker 1: something that's better, more stable, less prone to well, they're
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  Speaker 1: assets being removed pivoting over. Can you give my listening
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  Speaker 1: audience kind of a recap of where we are for
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  Speaker 1: the last couple of weeks vice of you, Russia and Ukraine.
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  Speaker 2: Yeah, there's there's there's some real problems over there for
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  Speaker 2: for our side, because on the one hand, the Western
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  Speaker 2: media has loved to highlight all of these additional and
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  Speaker 2: longer range strikes by the Ukraine side into Russia. There
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  Speaker 2: was more overnight. They hit another Wildberry's plant. I think
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  Speaker 2: it's like the seventh one if I'm not mistake. And
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  Speaker 2: they they also and I think the day before, hit
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  Speaker 2: another oil refinement facility, et cetera. But we have to
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  Speaker 2: understand the scale is so massive in Russia that they're
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  Speaker 2: able to a lot of these that that that that
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  Speaker 2: were hit other than the warehouses, but the fuel facilities
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  Speaker 2: especially that were hit like three and four weeks ago,
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  Speaker 2: most of which have already been repaired. So these things
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  Speaker 2: are temporary kind of like they have been on the
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  Speaker 2: Ukraine side over the last almost three years now. A
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  Speaker 2: lot of the stuff that Russia hits, they they were
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  Speaker 2: able to repair it and get it back up. Problem is,
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  Speaker 2: Russia has a lot more missiles now and so they
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  Speaker 2: can re engage and re hit them and knock them out.
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  Speaker 2: And of course I think everybody's now aware that Ukraine
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  Speaker 2: has effectively run out of interceptor missiles and which were
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  Speaker 2: you know, didn't have a great intercept rate anyway, but
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  Speaker 2: now that they have none, and so Russia has literal
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  Speaker 2: free reign to hit anything they want anywhere in Ukraine.
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  Speaker 2: And they've been really hitting heavy the ports in Odessa
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  Speaker 2: and Microlive and Zapparigia overnight in this south and they're
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  Speaker 2: hitting targets that have a real impact on the economy
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  Speaker 2: of Ukraine. Stuff that's not easy to fix. And when
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  Speaker 2: you're talking about a country that's massive like Russia and
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  Speaker 2: relatively small like Ukraine, the target sets are a lot
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  Speaker 2: more concentrated on Ukraine. They can't get into an attrition
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  Speaker 2: warfare like this, It won't work out, especially if you
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  Speaker 2: have literally no air defense.
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  Speaker 1: Yes, and you know, one of the things we learned
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  Speaker 1: early on in this conflict, this war between Russian and Ukraine,
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  Speaker 1: how plentiful the bounty of crops that come from Ukraine
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  Speaker 1: historically have been. Are they back to working the farms
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  Speaker 1: in Ukraine or has that area been hit? Is it?
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  Speaker 1: Is it presenting a problem moving forward in terms of
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  Speaker 1: food supply.
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  Speaker 2: It has been damaged in terms of just the physical farms,
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  Speaker 2: just because a lot of the frontlight has now moved
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  Speaker 2: into some of that bread basket area you're referring to.
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  Speaker 2: But there's a whole lot more that has been But
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  Speaker 2: the big problem is because Russia is taken out Odessa
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  Speaker 2: and Makolaiev. That's where a lot of the ports where
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  Speaker 2: these things were sent out, and that has been, if
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  Speaker 2: not shut down, severely curtailed, like seventy eighty percent reduction
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  Speaker 2: in the capability, and so they're not able to get
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  Speaker 2: their product out right now. There's been some big problems
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  Speaker 2: with that for the last month or so as the
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  Speaker 2: Ukraine's struggled to try and repair the damage. But Russia
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  Speaker 2: keeps coming back with these huge onslaughts and keep destroying
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  Speaker 2: even more. And right now it's effectively shut down the
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  Speaker 2: ports and I'm not sure how they're going to get
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  Speaker 2: by this one, do you know?
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  Speaker 1: And for we Park Company, one last question on Ukraine.
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  Speaker 1: Has there been anything have you read anything? Is there
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  Speaker 1: been any studies on how the Ukraine's future economic future
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  Speaker 1: will be impacted by well, the significant reduction in men
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  Speaker 1: military age, men who are no longer going to be
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  Speaker 1: able to be out in the fields working or farming
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  Speaker 1: or manufacturing because they died in a war.
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  Speaker 2: Oh yeah, massive problems with that lot. A lot of
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  Speaker 2: people are already saying listen that this the combination of
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  Speaker 2: how many have been killed and severely wounded and how
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  Speaker 2: many have left, likely never to come back. Is just
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  Speaker 2: absolutely catastrophic there, you know, the replacement range or whatever.
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  Speaker 2: I forget the birth rate. You have to have like
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  Speaker 2: two points something to be able to maintain a country.
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  Speaker 2: They're like below one right now because there just aren't men.
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  Speaker 2: That's so many have left in here.
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  Speaker 1: Of late.
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  Speaker 2: I want to say it was like two hundred thousand
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  Speaker 2: of the younger men were allowed to finally leave. And
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  Speaker 2: so now that the younger guys that they're going to
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  Speaker 2: need for their future bailed as soon as they had
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  Speaker 2: the chance, on top of everybody that's already been killed
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  Speaker 2: or wounded, and it's a pretty bleak situation that not
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  Speaker 2: enough people in the West pay attention.
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  Speaker 1: To Daniel Davis. Deep Die. That's what we get every
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  Speaker 1: Tuesday here beginning at eight third in the fifty five
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  Speaker 1: Cassey Morning Show. Find his podcast where you get your podcast.
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  Speaker 1: Daniel Davis, thank you so much for the analysis. Always
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  Speaker 1: enjoyable talking with you. Look forward to next week and
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  Speaker 1: do it enough. That's a great week. See you then, brother,