Launching The Eurasian Century

Analyzing the Great Game of our times

Launching The Eurasian Century

This article inaugurates a new publication at Cyclical Value Investing, The Eurasian Century. As you know, this website is dedicated to analyzing historical cycles and their impact on markets. Over the last year, I grew convinced that soon a new mega-cycle was going to dominate all the others, which is the rise of Eurasia as an alternative to the Atlantic-centric dominion of the “West”.

I will define later in this article what I mean by Eurasia, its forming core centered around 3 nations/empires, and its 4 different peripheries.

But first, why does it matter?

Why Eurasia will be the world’s focus for the decade(s?) to come

Ironically, I intended this publication to launch in November 2021, when I still felt optimistic about the prospect of investing eastward. Notably, I had covered RusHydro in a special report.

I had realized the radical rise of Russia-related risk 2 months later, explaining how I would sit out that risk and reduce exposure to zero. I was not fully sure of how bad it would get (I actually underestimated the scale of the incoming invasion of Ukraine), but sure, some parts of that report feel prophetic in retrospect.

I would however like to bring the focus back to the long-term. The Ukraine-Russia war is a tragic loss of life but did not come out of the blue. It is the result of rising tensions for more than 10 years. I still hoped for de-escalation, but sadly, the world’s powers decided otherwise.

I sincerely hope the different parties will be able to walk down tensions and reach some level of understanding and peace. The alternative of constant escalation would be to no one’s benefit.

As a resident of Estonia, I am literally on the frontline of these tensions.

So understanding what is going on is beyond mere intellectual or editorial interest for me. It is personal.

Behind the current crisis is the much larger question of the West-Eurasia relations. Especially China-USA.

But not only.

Europe-USA-Iran is of importance, EU-USA-Turkey-Russia, USA-India-China, etc…

I noticed over the years a nasty result of the need for “experts” to overspecialize to access media, academic or think tank positions.

An expert on China will have no opinion on Iran. An expert on Russia and Eastern Europe will ignore Asia. This leads commentators to focus on details and short-term news and to miss the bigger picture.

How I will write about it

When it comes to topics like nationalism, history, borders, war, and geopolitics, I think it is a fool’s errand and somewhat dishonest to pretend to complete objectivity. We all have our biases. So I will not claim to look for THE truth here.

What I will do as much as possible is show multiple points of view. So for example, how and why do China’s leaders perceive the threat of America. And how and why America perceives China as a threat.

The ultimate goal of this publication is to help my readers navigate our troubled times, personally and financially, in conjunction with Cyclical Value Investing articles. These analyses will also inform about the macro perspective behind Cyclical Value stock picks.

To do so, we need to stop trying to justify what our side is doing (whichever is “your side”). And understand EVERY participant’s perception, fear and hope, and possible actions.

Asia’s role in History

Since the XVIIth century, the history of the world has been dominated at first by Western Europe, and then the “West” including North America and Australia/New Zealand. Historically, this is just an abnormal blimp over a world economy dominated by Asia.

The graph below by Visual Capitalist is not perfect, as the earliest date should probably have, instead of France, Spain, etc, been labeled together as Rome. But you get the idea.

Since 2000, Asia made a dramatic comeback with the rise of China. It is unlikely for Asia to ever go back to its 70% of global GDP as modern states in North America are going to stay relevant onward. Nevertheless, the 1900-2000 period of complete European/Western dominance is over.

The Eurasian Tripod

The last 10 years have been marked by 2 phenomena from a geopolitical point of view:

1. Growing discontent about the post-WWII world order by major Eurasian centers of power

2. Increasing collaboration between these 3 discontent powers.

I am of course speaking of Russia, Iran, and China. I labeled on the map each of these nations’ historical cores of power. The European part of Russia, the historical Persian empire, and West China (the fertile part of the country).

Everything in between these areas or northward is pretty much totally controlled by one of these 3 powers, alone or together. This makes for one massive chunk of the Earth's landmass, as well as total population/GDP/resources/etc...

Source: https://geology.com/world/world-map.shtml

In the broader view, the whole of Eurasia represents 36% of Earth's landmass and 5 billion people (70% of the world population). So it is easy to see why an alliance of powers able to control or influence the whole of Eurasia would be an unstoppable force.

What the Eurasian Tripod wants

The discontent with the US-led world order manifested in countless, seemingly unrelated events and actions.

• Iran's actions in Iraq, Syria, and Lebanon.

• Iran oil negotiations with Russia and China.

• Russia's intervention in Syria.

• China's border conflict with India.

• India-Pakistan antagonism.

• China’s project in Afghanistan.

In practice, all of these are part of a common direction. I call this the Eurasia Tripod. The nascent alliance of the main 3 powers of core Eurasia, against American influence. The common goals of these countries are:

• Reduce American/Western influence

  • Culturally

  • Politically

  • Financially

• Reach full autonomy/autarchy in:

  • Food

  • Energy

  • Material

  • Industrial capacity

  • IT & Electronics

  • Military/Space capacities

• Control their:

  • Trade routes/supply

  • Vassal states/nearest neighbors/zone of influence

Separately, each of these goals would be from hard to impossible to reach for each of the members of the Eurasian Tripod, including China.

Together, the greater picture changes radically. Each of the countries brings different things on the Tripod:

• Russia:

  • Energy, especially gas

  • All industrial metals and gold

  • Wood, stone, and other construction materials

  • Surplus food, especially staples like grains

  • Advanced military and spatial technology

• Iran:

  • Energy, especially oil

  • A large, young, growing, quite educated population

    • Low-cost labor

  • Influence network in all the Shiite crescent area

  • Strategic land bridge toward the West

  • Cover for hostile military action by other actors in the Middle East

• China:

  • Massive, diversified, sophisticated industrial capacity

  • Massive consumer goods production

  • A large population in demand for all sorts of commodities

  • Influence in Asia and worldwide

  • Advanced Electronics & IT

What’s next?

The next articles will likely be partially behind a paywall. Here are some of the titles of future publications I plan to write over 2022:

• Blockading China

• The Perse-sistant Empire

• Russia’s future in the Tripod

• China’s weaknesses

• The EU splintering

• Europe’s eastern empires

• The middle “-Stans”, the confluence of influences

• The 4 Eurasian peripheries

• India’s double game

• Japan, the most important island in the world

• Myanmar, the next Great Game chessboard?

• ASEAN and the Eurasian Tripod

• Turkey’s gambit

• The Tripod's inherent instability

As you see, there is a lot to cover already, and I am (sadly) sure the news will bring me more to discuss, as the world is gearing toward a new era of geopolitical tensions.

I will try to avoid the clickbait “hot take” and focus instead on what will still be relevant to good strategy and planning in 5-20 years.

I am not sure yet how I want to cover the Ukraine war. Plenty of people are commenting in a very partisan way for both sides, and I want to avoid that. And frankly, the topic is fairly depressing to me. But in due time, I will probably at least cover the possible outcome of this conflict.

See you soon.

Jonathan Schramm