The Triumph of Geopolitics

Weeks Where Decades Happen

Executive Summary

I first met John Butler in 2011, but in truth our introduction came earlier than that. And it came not in person, but through a report he had written for what was an early incarnation of The Amphora Report.

It wasn’t simply that I agreed with the conclusions, but that the way he framed the issues forced me to pause and reconsider assumptions I hadn’t yet realized I was making.

It left a lasting impression and lingered with me well beyond the initial read, shaping the way I began to think about money, power, and the deeper mechanics of the financial system.

It was after this first encounter and meeting with John that I went on to read the original edition of his book, The Golden Revolution, Revisited. It is a great book and I recommend it without reservation.

More importantly, it proved foundational to my own education on the subject, arriving at a moment when I was still forming the framework through which I would come to understand monetary history, financial cycles, and the quiet forces that govern global capital flows.

What struck me then, and what has continued to stand out over the years, is that John has never fit neatly into any intellectual box.

He is not what most people would call a traditional “gold guy,” a label that often implies a narrow worldview or a reflexive attachment to a single asset as an answer to every problem.

His perspective is far more difficult to categorize, and far more valuable for that reason.

John’s background is rooted in traditional finance.

He has worked for some of the largest firms in the City of London, operating inside the very institutions that shape modern capital markets rather than merely critiquing them from the outside.

And he has lived and worked in Europe for decades, absorbing not just its financial culture but its political and historical sensibilities as well.

As a result, he is one of the very few people I have met who can move seamlessly and comfortably between a Wall Street boardroom and a gold conference, speaking fluently to both audiences, without talking past either.

That ability is rare, and it matters, especially in an era where financial discourse is increasingly fragmented into ideological silos.

It is precisely for this reason that the guest piece John has written for us fits so naturally into the body of work we have been building.

Much of what we have published over the past several years has revolved around a central theme: the return of great power competition and the recognition that economics, finance, and geopolitics can no longer be treated as separate domains.

We have featured Michael Every and his articulation of a “Grand Macro Strategy”, which reframes markets through the lens of national interest, strategic leverage, and geopolitical intent.

We have explored BowTied Mara’s examination of Argentina under Javier Milei, not as a curiosity, but as a real-time stress test of ideology colliding with political reality.

And we have written extensively about how the United States, particularly under Donald Trump, has been tearing down what was once marketed as a Rules Based Order, revealing a system that was always more conditional and power-driven than many were willing to admit.

John’s contribution sits squarely within this context.

It does not attempt to offer comfort, nor does it pretend that the future will conform neatly to any single model.

Instead, it engages directly with the structural tensions now shaping the global system, asking uncomfortable questions about monetary arrangements, political legitimacy, and the durability of institutions that have long been assumed to be permanent.

Whether one agrees with every conclusion he reaches is, in a sense, beside the point.

What matters is that the questions are asked seriously, grounded in experience, history, and a clear-eyed assessment of incentives.

To be clear, we do not ourselves necessarily agree with all of the points John makes in this piece.

But that has never been our standard for inclusion.

Intellectual agreement is easy, and it is often lazy.

What we care about is rigor, perspective, and the willingness to explore outcomes that may fall outside the consensus view.

In a world where uncertainty is rising, where old assumptions are being challenged by force rather than debate, and where the costs of intellectual complacency are growing, it is essential to keep an open mind.

John’s work deserves that consideration.

It reflects decades of engagement with markets as they actually function, not as textbooks describe them.

It reflects an understanding of Europe and the United States not as abstractions, but as political entities with histories, constraints, and strategic priorities.

And it reflects a willingness to confront the possibility that the next chapter of the global system may look very different from the last.

We hope our readers appreciate our commitment to presenting a wide circle of views.

That commitment is not about balance for its own sake, nor is it about provocation.

In times of transition, clarity is rarely found in consensus alone, but rather in engaging with competing views and resisting the instinct to reject ideas that unsettle established narratives.

It is in that spirit that we are pleased to feature John’s work here.

We believe it will challenge some readers, reinforce others, and encourage all to think more deeply about the forces now reshaping the global landscape.

At a time when the margin for error is narrowing, that kind of engagement is not just valuable.

It is necessary.

Finally, it is worth noting that John delivered us this piece in late December, at a moment when many of these dynamics still felt theoretical to a broad audience.

Yet within the first days of January, events moved decisively.

The United States directly engaged Venezuela, and Nicolás Maduro was removed from power as a result of this U.S. action.

Regardless of how one interprets the legality, necessity, or downstream consequences of that intervention, the escalation itself is unmistakable.

It underscores that the era we are now in is not one of gradual drift, but of abrupt moves and rapidly collapsing assumptions.

In that sense, John’s work has proven not only prescient, but newly urgent.

What may have read as forward-looking analysis just weeks earlier now reads as an attempt to grapple, in real time, with a world in which geopolitical force, monetary power, and national interest are once again openly intertwined.

Biography

John Butler is an international financial professional with a wide variety of experience in North America and Europe.

Working as an investment strategist and portfolio structurer for more than 30 years, John has advised many of the world’s largest institutional investors and central banks.

He has served as a Managing Director at Deutsche Bank, Lehman Brothers and Dresdner Bank, in charge of global teams responsible for macro and commodity strategy and has been ranked #1 for interest rate strategy by Institutional Investor Magazine.

He has also worked in FinTech, most recently as the Head of Treasury for FinTech startup TallyMoney.

Prior he served as Director and CEO of the Lend and Borrow Trust Company, the world’s first regulated peer-to-peer (P2P) lending platform on which all loans are collateralised by physically allocated precious metals.

He also served as Vice President and Head of Wealth Services for Goldmoney, a leading gold-backed financial services firm.

John is on the record having predicted some of the most important global financial events during his career, including a historic bull market in gold and a US-centric housing and credit bubble that would eventually burst in 2008.

In 2016, he predicted that a series of balance of payments crises would ripple through emerging markets.

In 2019, he predicted that inflation would begin to surge and “stagflation” would set in thereafter.

John’s publications include The Golden Revolution (John Wiley and Sons, 2012) and The Golden Revolution, Revisited (2017), and books explaining the causes and consequences of the 2008 global financial crisis and exploring the financial market implications of the remonetisation of gold.

THE TRIUMP OF GEOPOLITICS, OR “WEEKS WHERE DECADES HAPPEN”

“There are decades where nothing happens; and there are weeks where decades happen.” –Vladimir Ilyich Lenin

If it seems that the world is changing more quickly than you can keep up, you’re not alone.

As I write, the recently renamed US Department of War is announcing the summary destruction of yet another fast boat on the high seas.

President Trump has stated that the cargoes of tankers recently seized off the coast of Venezuela are to be confiscated; possibly also the ships themselves.

He has also issued renewed threats to Greenland, or Denmark if you prefer, that the US simply “needs that country” for its polar security and it is going to get it, one way or another.

Russia poses the most obvious threat to US polar security, yet Trump continues his efforts to achieve a peace settlement with the country over Ukraine.

But while the speed of events might indeed be surprising, the events themselves, when placed in context, are less so.

That context is summarized quite neatly by the new US National Security Strategy (NSS).

Published in November, that document states that in recent decades the US has dangerously overextended itself in Eurasia and, by doing so, left itself dangerously vulnerable at home.

It has spent trillions on arguably outright counterproductive foreign wars while allowing China, among others, to cultivate a high degree of influence over not only Venezuela but other Central and South American countries.

(Some might add Canada and even the State of California into that mix.)

While I can only speculate, I wonder whether last year’s Pentagon Conclave of senior commanders normally on duty around all corners of the globe was about more than values.

Could it have been in order to discuss preparations for an imminent, historical shift in defence posture?

A rapid shrinking of a dangerously overextended Eurasian perimeter to one focused on securing, quickly and at whatever cost, the Americas and key strategic maritime chokepoints critical to global trade?

As we know, actions speak louder than words.

Louder than Trumpian rhetoric even.

And those actions indicate this is precisely what the US has now begun to do.

Tipping points are characterised by their surprising suddenness.

But once they arrive, the conditions that brought them about can be seen in retrospect as to some degree inevitable.

In my opinion, we have now reached a geopolitical tipping point.

One characterised by US acceptance, however reluctant, that the world is now not only multipolar but that the best US response to faded hegemony is to revert to the classic, realist geopolitical strategy of acting as an “offshore balancer”.

The paper below is adapted from one I wrote nearly a decade ago, comparing the modern US strategic situation to that of classical Athens.

This provides essential context for the new, final section, which presents the specific geopolitical constraints the US now faces and policy choices it is likely to make as it implements the new NSS.

HUBRIS AND NEMESIS: WHAT THE US MUST LEARN FROM THE DECLINE AND FALL OF THE ATHENIAN EMPIRE

This paper draws on history to consider something important: how the US should manage its imperial decline if it wishes to avoid fighting a major war with one or more emerging rivals.

This is not a trivial matter.

Athens, arguably the birthplace of much of what we treasure in western civilisation and culture, managed its empire with reckless arrogance.

Socrates and Plato, among others, saw what was happening and did what they could to record and pass the key lessons of imperial hubris down through the generations.

If the US is to avoid a similar fate it should heed their lessons.

But it is Thucydides who saw most clearly what, specifically, precipitated the disastrous Peloponnesian War, from which Athens would never fully recover.

INTRODUCTION

Notwithstanding its dominant, arguably hegemonic position in the mid-5th century BC eastern Mediterranean in all aspects of power...economic, military, political and cultural influence...the Athenian Empire nevertheless declined rapidly when compared to many of the ancient empires.

Over the span of just a few decades...the blink of a historical eye...Athens went from being the Hellenic hegemon to a position of subordination relative not only to rival Sparta but eventually to the growing power of Macedon.

How did this come about?

Did Sparta and Macedon possess qualitative advantages over Athens in economic and military power or political and cultural influence?

Did Athens’ enemies ‘gang-up’ up on it in a way that Athens could simply not have been expected to resist?

Or did Athens make a series of strategic errors, leaving it gravely weakened, such that Macedon merely delivers the final coup d’grace?

This paper argues the latter.

Indeed, the case will be made that the rapid decline and fall of Athens was due almost entirely to strategic error, with external challenges to her dominance being largely endogenous rather than exogenous in nature.

In a way, Athens followed Gandhi’s dictum, but as the antagonist rather than hero: At first, they ignore Sparta’s security concerns; then they ridicule them; then they fight them; then they lose.

This goes strongly against the conventional wisdom, which tends to argue that Athens’ fall from grace was mostly the result of most other major powers of the time ganging up on her for primarily exogeneous reasons, combined with colossal bad luck.

In this author’s opinion, this mainstream view is clouded by the legacy of Athenian influence on western civilization and culture, profound as it is.

How could such an enlightened (for its time), prosperous democracy possibly be at fault for its own demise, when it was surrounded by comparatively barbaric and cruel regimes which produced essentially none of the great scientific, literary, philosophical, and other great achievements of the time?

Shouldn’t we lay the blame at the barbarians’ feet instead?

It is certainly tempting to do so.

For the leadership of today’s purportedly liberal, enlightened, democratic United States it is particularly difficult to take a more critical view of Athenian foreign policy.

Yet this is precisely what they must do.

Athens had many possible strategic choices, yet they chose unwisely time and again.

Paradoxically, for what we regard as the most open society of its day, the Athenian foreign policy debate ultimately descended into a form of hubristic ‘groupthink’, so certain the Athenians were of their superiority over their rivals.

Athens eventually even began to ignore, banish, or otherwise condemn those who sought to caution their contemporaries and suggest alternative policies.

The great Socrates, no less, met his grim fate for precisely this reason.

This resolute unwillingness to openly and honestly debate the fundamental strategic choices of the day eventually proves fatal.

The bad luck often cited by historians should not be ignored; however, if placed in the proper context, it is rendered insignificant at the strategical if not the tactical level.

This paper is divided into four parts.

The first will present and evaluate the Athenian strategic context, noting relevant parallels to the US position of today.

The second will examine the series of blunders that eventually bring Athens down.

The third will draw the most salient and relevant conclusions and lessons and how these might inform US foreign and security policy over the coming decades.

The fourth will consider recent developments and how they fit into the above.

PART I: THE STRATEGIC CONTEXT

In his seminal book surveying the history of international political theory, Man, the State and War, the late Kenneth N. Waltz cites the great Athenian historian Thucydides at length.

Universally acknowledged as the first true historian of the western world, Thucydides served as an Athenian general in the protracted and ultimately disastrous Peloponnesian War against Sparta.

Thus he can hardly be said to be unbiased, and yet while clearly he admires Athens, he is deeply critical of the way in which Athens contributed to the outbreak of hostilities and prosecuted an ultimately unsuccessful war against what was, at least at the outset, a clearly inferior opponent.

Many historians thus consider him a highly qualified, reliable, and credible source, notwithstanding his associations.

Given his position, Thucydides is certainly at least a qualified observer of the political context of the day, the major events leading up to and during the war, and the methods and tactics of warfare employed.

As the Athenian Empire was primarily of a maritime nature...the Aegean and much of the eastern Mediterranean were a de facto ‘Athenian lake’ by the mid-5th century BC...the role of sea power in the rise of Athens and in the conduct of the war is paramount.

Indeed, it is by patiently building up their own, initially highly inferior naval power through strategic alliances and changing the tactics of naval warfare that the Spartans will, eventually, vanquish their rival.

With a navy of some 300 formidable triremes...fast, powerful, three-decked oared ships...Athens was a naval superpower.

No combination of rival powers could collectively place as many ships into action as Athens alone.

This ability to control all strategic navigation, thereby dominating both commercial and military affairs, ensured Athenian dominance in both economic and military aspects of power across the eastern Mediterranean region.

In time, these aspects of power would bring with them immense political and cultural influence.

What would eventually become known as the Hellenistic world, in which the Greek language was spoken along the entire Mediterranean and Black Sea coastlines and throughout much of the Middle East, was primarily an extension of Athenian culture, even though Alexander of Macedon would eventually prove to be its greatest messenger.

If the ‘Pax Athenas’ described above sounds familiar to the Pax Americana that prevailed post-WWII, that’s because it was.

Indeed, a persuasive case can be made that Athens’ 5th century BC strategic military, economic, political, and cultural position vis-à-vis its rivals more closely resembles that of the 21st century United States than that of any other civilization in all history.

The US has been the dominant sea power for many decades, providing for generally safe freedom of navigation for all, yet naturally on terms acceptable to the US.

No collection of rival powers can directly and credibly threaten US dominance of the seas.

The US has also been the dominant economy, the source of the wealth that ultimately supports the US’s ability to project military power not only over the sea, but to almost anywhere in the world.

The combined result has been the spread of US political and cultural influence generally, which now permeates every commercially-relevant part of the world.

Beginning in the 1970s, however, China began a long journey forward from the great leap ‘backward’ into collectivism, as Deng Xiaoping embraced the principles of the market economy.

Russia would eventually re-emerge as an economic power following the huge hangover of Soviet misrule.

The BRICS, as they would eventually choose to call themselves, would grow their share of the global economy and, by the 2000s, this share would grow to exceed that of the US.

Historians estimate that, at the conclusion of WWII, the US’s share of the global economy probably reached 50%.

Today, it has declined to 20% and, given current relative growth rates, it is likely to slide somewhat further over the coming few decades.

As economic power is the ultimate foundation of military and political power, it is an inevitability that, within the same time frame, the US is going to need to manage a relative decline of both.

The Athenian analogy is thus highly apposite.

The US is going to have a great many strategic choices to make over the coming decades, some of which are going to be difficult.

They will challenge both the conventional wisdom and myriad political interests entrenched in the ‘imperial beltway’.

Managing ascendancy can be challenging, but it is a nice problem to have.

Managing decline is harder, in part because it is a problem no one wants to have, and many simply choose to deny its very existence.

For its part, Athens did a horrific job of managing its relative decline and dealing with the rise of Sparta and the Peloponnesian League.

A look at the history of the Peloponnesian War, with the help of Thucydides...arguably the first known ‘realist’ theorist of international politics...will help to illustrate the point.

Early on in his history, Thucydides makes some important observations about the attitude that prevailed in Athens before the conflict, when economic rather than military affairs were in centre focus.

Although it is impossible to make precise calculations there is ample anecdotal evidence that the commercial prosperity of Athens rose dramatically following their successful defence against Persian invasion in the prior century.

Having destroyed the Persian fleet at Salamis in 480BC and thus having acquired a free-hand in both the Aegean and Black Seas, all the smaller powers of the region rapidly fell, happily in most cases, under the Athenian umbrella.

It was a simple proposition: Accept Athenian protection and military dominance in exchange for facilitated trade and commerce.

According to Thucydides, the lesser members of what would form into the Athenian-led Delian league...so-named after the central Cycladic isle of Delos...joined in a more or less voluntary fashion and the Athenian attitude was thus one of acceptance of partners in trade, although from a far more powerful and superior position militarily, economically and culturally.

One poignant illustration of this de facto ‘Pax Athenas’ was the situation of Delos itself.

The entire island was a sacred place, where it was forbidden to carry arms or initiate hostile acts of any kind.

On the island were many sacred temples, including that of Vesta (Hesta), which served as the de facto central bank for the Delian League, where debts between the various members were settled by reallocating the accumulated silver held in the Temple.

These silver reserves were guarded by innocent (Vestal) virgins, who no one would dare defile or otherwise harm in an attempt to rob the Temple or cheat their Delian trading partners.[1]

Although they had fought alongside Athens to defend the Greek peninsula against Persian invasion, Sparta did not find it an enticing proposition to join with the Delian League.

Sparta was, notwithstanding its geographical position on a peninsula, a land power in the geopolitical sense of the day.

It traded relatively little with the islands of the Aegean and lacked access to good, large ports and sources of wood for shipbuilding.

Thus, Sparta had little to gain from any Delian association, which in Sparta’s view might further enhance, rather than help to balance the ongoing rise in Athenian power.

Sparta did, however, control what was the most fertile part of the Peloponnese, and fiercely, with a military culture that would be emulated to an extent by the Roman Republic two centuries later and numerous European states and principalities well into the 20th century.

Sensing its growing, relative weakness when compared to mighty Athens, Sparta began to seek out alliances of its own, eventually forming the Peloponnesian League.

While on paper hardly a proper rival to the Delian League, it nevertheless represents a classic, realist, balance-of-power response to Athenian expansion.

The members tended to be relatively small maritime powers which, for whatever reason, didn’t think that they would benefit much if at all from a Delian association but feared that their decision to remain independent of Athens could lead to a possible future conflict.

Hence the decision to enter in the Peloponnesian League was defensive rather than offensive in nature.

The Athenians, however, did not see things this way.

So certain were they of their cultural superiority over comparatively backward Sparta, they interpreted anyone shunning the offer of Pax Athenas or any willingness to shun their offer of an Athenian-managed peace and countenance an alliance with an obviously inferior culture as a sign of aggression.

This ‘legalistic-moralistic’ rather than ‘realistic’ Athenian attitude towards foreign policy will prove devastating.

Brent’s note: This is the framework John lays out. Whether you find his application of it persuasive or unsettling, the underlying lens, that great-power competition is back and that the post-1945 assumptions are bending under it, is one we have been threading through Premium analysis week after week. The Sunday Macro Pilgrim’s Ledger is where that thread gets tied to the print: which currencies are doing the work, which assets are pricing what, where the next stress shows up first.

PART II: THE STRATEGIC ERRORS THAT BRING DOWN ATHENS

Wealthy as they are and suspicious of Spartan intentions in allying with generally small but, importantly, maritime powers, the Athenians thus continue to build up their naval capabilities.

Eventually, these grow to the point where the Spartans become alarmed that, if a sufficient concentration of Athenian naval force were to be applied, both to blockade Sparta and land a large force of hoplites at strategic points on the peninsula, it could threaten Sparta’s dominance of the Peloponnese itself.

As this is perceived by Sparta as an existential threat, they determine that they have no choice but to prevent any further rise in Athenian naval dominance and thus choose to enter into a preventative, land-based war, knowing full well that it will most probably be devastating for both sides involved.

At a minimum, however, by forcing Athens to fight on land, Sparta calculate that they will have the advantage of having chosen the battlefield.

(Sun Tzu, among other strategic thinkers, held that if a general was able to choose the right battlefield he would win despite even a huge inferiority of force.)

While the blame for the outbreak of the war can hardly be placed exclusively on Athens...after all it is Sparta that initiates hostilities...consider whether Athens could have acted differently in terms of its expansion of the Delian League and response to the creation of the Peloponnesian League.

First of all, those islands refusing to join the Delian League were not in any way a strategic threat to Athenian dominance.

Indeed, from a rational, realist perspective they were nothing more than classic free-riders who sought to benefit from the Pax Athenas without contributing in some way to their own defence.

Second, the fact is such free-riders simply cannot be avoided when it comes to the provision of a public good such as secure navigation (ie freedom of the seas).

As per game theory, there will always be an element of free-riding in any such arrangement, formal or informal.

But the correct analysis is to understand that the amount of ‘rent’ that can be extracted by the free-riders must necessarily remain below the additional ‘cost’ borne by the provider of the peace, in this case Athens.

If not, either the hegemon will withdraw their implied protection or a conflict will break out, both of which are to no one’s benefit.

And so a process of ‘price discovery’ ensues in which all parties, hegemon and key allies on the one hand, free riders on the other, seek to find the optimal Nash equilibrium in which the strategies of all players are the best response to the other players.

Athens, perhaps acting out of some combination of cultural superiority or moral-legal principle, or perhaps sheer greed, or perhaps in ridicule of Sparta’s relatively limited and almost wholly land-based military capabilities, nevertheless becomes unwilling to allow the ‘free-riders’ to exploit the system.

(The ‘Megarian Decree’ imposing trade sanctions on a non-cooperative city-state is the best example of this and is thought by some scholars to be the proximate trigger for Sparta’s decision to initiate hostilities.)

And so, Athens continues to build its navy to the point that it eventually crosses Sparta’s red-line of giving the Spartans reason to believe that the Peloponnese is at strategic risk of Athenian invasion by a large, concentrated naval force.

Now we no longer have just a free rider problem, but rather one of a great power threatening a large if lesser rival power’s vital national interests.

One way to understand the Athenian error is that their application of culturally superior, moral-legal-based foreign policy thinking was linear: For every non-compliant free rider, Athens wanted a few more triremes to ensure they could deal with any incremental exploitation of their hegemony over the sea.

But thinking along these lines as they did, they failed to see at which point their linear, incremental acquisition of triremes became a non-linear threat escalation from the perspective of Sparta, a lesser if nevertheless formidable potential foe.

Once Sparta initiates hostilities, Athens finds it is on the defensive and facing invasion by land, for which it is not well-prepared to fight.

It relies to a large extent on allies for land defence and does manage to repel Sparta, although with material losses on both sides.

As would be expected, the Athenian response is to do precisely what Sparta had feared, which is to mount substantial naval invasions of the Peloponnese.

As with Athens, Sparta manages to defend itself, but again with large losses on both sides.

By this point in the war, the cost in lives and treasure has become substantial.

Athens is also surrounded on land, forcing it to supply itself by sea alone.

Alongside the war effort, this constraint contributes to much economic hardship.

As a result, a domestic front opens up: Opposition to the war grows in Athens, to which the subject matter of multiple of the great classical Athenian playwrights attests.

To what extent this undermines the war effort is unclear, but when a prominent figure such as Socrates is sentenced to death for opposing the war, one can imagine there is a serious impact of the experience of war on Athenian morale generally.

There are two subsequent events, both cited as bad luck by many historians, which contribute to tipping the war in Sparta’s favour.

The first is that a devastating plague hits Athens.

While most probably an entirely random occurrence, it is nevertheless possible that the conditions in the besieged city, including the constrained supplies of many foodstuffs delivered by sea, contribute to poor nutrition and the inability of many Athenians, especially the poor, to fight off the disease.

That even the great Pericles and members of his family eventually succumb suggests that the plague was, in its overall effects however, relatively indiscriminate in nature.

The second piece of bad luck is the ill-conceived Athenian invasion of Syracuse, a Spartan ally in Sicily.

Syracuse had previously attacked an Athenian ally on the island, providing a casus belli, but the Athenian plan for counterattack was far grander in scope: To conquer the entire island and acquire the shipbuilding and other strategic capabilities there.

This stratagem is presented to the Athenians as a matter of national pride, a heroic effort by their leaders.

Yet while couched perhaps in moral-legal terms, in reality it boils down to a huge double-down gamble: Take a huge portion of the remaining fleet, divert it far from Athens for a prolonged campaign that could well fail, and hope for the best.

As we know, the campaign does indeed fail, and Athens’ position is now severely weakened.

To make matters worse, during the Sicilian campaign, for reasons that are unclear but which could be the result of growing dissent against the war, the admiral Alcibiades is ordered to return to Athens to face trial for a 5th century BC definition of ‘war crimes’...defacing religious objects belonging to the opposition...and rather than do so, he defects to Sparta, helping them to improve their naval tactics vis-à-vis Athenian naval battle doctrine.

Meanwhile, the Spartans, thinking more realistically than the Athenians, consider their limited options for winning the war and make two important decisions.

First, they determine that, as Athens is so well-fortified on land and can supply itself indefinitely by sea, the only way to win the war, rather than merely not lose, is to acquire a naval force sufficient to deny Athens dominance over the Aegean, thereby starving her of essential supplies.

Second, with the help of Alcibiades, they determine how to adjust their naval warfare tactics so that with a comparatively small number of ships they can cause disproportionate damage to the Athenian fleet.[2]

For landlocked, relatively poor Sparta to acquire a large naval force is easier said than done, and so out of realist necessity, rather than any legal-moral perspective, the Spartans propose an alliance with their previous enemy Persia, who they had faced down at Thermopylae several decades earlier.

Sparta proposes a deal whereby in exchange for the necessary funds to build additional ships, Sparta will provide the manpower for the expanded fleet.

Once Athens capitulates, Persia calculates it will have a relatively free hand along the Anatolian coastline free of Athenian interference.

In classic, balance-of-power, ‘realist’ fashion, Persia agrees to the deal with its former foe out of pure national interest.

From this point forward, notwithstanding multiple late tactical successes, Athens has lost the war.

Already unable to supply itself by land, it is only a matter of time before they will lose sufficient control of navigation to supply themselves by sea.

Yes, Athens had faced setbacks prior: The failed Sicilian expedition, largely of Athens’ own making; and the plague, certainly an episode of bad luck.

However, these only serve to accelerate Athens’ demise, rather than cause it.

Thus they are of only tactical rather than strategical significance when considering why the Athenian Empire declined and fell as it did.

The true cause is the Spartan/Persian alliance, which if anything would have commenced even earlier had Sparta not benefited temporarily from Athens’ bad luck.

PART III: LESSONS FOR THE 21ST CENTURY UNITED STATES

As discussed in Part I, the US 21st century strategic context has much in common with that of 5th century BC Athens.

Of particular significance today is the free-rider problem facing the US, which no longer enjoys the economic dominance it did in the decades following WWII.

Indeed, the US is now hugely, perhaps dangerously reliant on foreign capital, a situation that leaves it highly vulnerable to asymmetric economic and financial warfare.

(While beyond the scope of this paper, such threats cannot and should not be ignored.)

The US must therefore rationalise its finances and do so in a way that helps to solve the free-rider problem, rather than rely on potentially expensive applications of force to keep others in line.

The Trump administration has already made some policy pronouncements along these lines, for example, selective implementation of tariffs, requesting that other NATO members increase their respective defence budgets and encouraging a handful of Asian allies to do the same.

Much more remains to be done in this area.

Yes, the world is a dangerous place.

Yes, the US can and must defend its national interests.

However, when acknowledging the relative decline of US economic power over recent decades, the US therefore must also be more willing to rely on other countries’ national interests and their natural balancing properties, such that the free rider problem can be reduced without leaving the US strategically less secure.

There is a name for this particular sort of neo-realist foreign policy: offshore balancing.[3]

Several of Kenneth N. Waltz’s most famous students, now eminent theorists of international politics in their own right, have done much work in this area, including Stephen Walt, John Mearsheimer, Steven van Evera and, most notably for the purposes of this paper, Christopher Layne.

As Layne explains:

Offshore balancing is a strategy firmly rooted in the Realist tradition. Primacy adherents regard multipolarity...an international system comprised of three or more great powers...as a strategic threat to the United States, while offshore balancers see it as a strategic opportunity for the United States.

Offshore balancing is predicated on the assumption that attempting to maintain U.S. hegemony is self-defeating because it will provoke other states to combine in opposition to the United States and result in the futile depletion of the United States’ relative power, thereby leaving it worse off than if it accommodated multipolarity.

Offshore balancing accepts that the United States cannot prevent the rise of new great powers either within (the EU, Germany, and Japan) or outside (China, a resurgent Russia) its sphere of influence.

Offshore balancing would also relieve the United States of its burden of managing the security affairs of turbulent regions such as the Persian Gulf/Middle East and Southeast Europe.

Offshore balancing is a grand strategy based on burden shifting, not burden-sharing.

It would transfer to others the task of maintaining regional power balances; checking the rise of potential global and regional hegemons; and stabilizing Europe, East Asia, and the Persian Gulf/Middle East.

In other words, other states would have to become responsible for providing their own security and for the security of the regions in which they live (and contiguous ones), rather than looking to the United States to do it for them.[4]

Writing more recently about the specific strategic context now facing the post-hegemonic United States, Layne argues that:

The United States still wields preponderant military power. However, as discussed above, in the next ten to fifteen years the looming fiscal crisis will compel Washington to retrench strategically.

As the United States’ military power diminishes, its ability to command the commons and act as a hegemonic stabilizer will be compromised.

The end of the United States’ role as a military hegemon is still over the horizon.

However, the Great Recession has made it evident that the United States no longer is an economic hegemon.

Great power politics is about power. Rules and institutions do not exist in vacuum.

Rather, they reflect the distribution of power in the international system.

In international politics, who rules makes the rules.

The post-World War II international order is an American order that privileges the United States’ interests.

Even the discourse of “liberal order” cannot conceal this fact.

This is why the notion that China can be constrained by integrating into the post-1945 international order lacks credulity.

Hegemonic decline always has consequences.

As the twenty-first century’s second decade begins, history and multipolarity are staging a comeback.

The world figures to become a much more turbulent place geopolitically than it was during the era of the Pax Americana.

Accepting the reality of the Unipolar Exit...coming to grips with its own decline and the end of unipolarity symbolized by China’s rise...will be the United States’ central grand strategic preoccupation during the next ten to fifteen years.[5]

The growing danger posed by the prior, hegemonic US policy consensus was potentially substantial, as Layne further explains:

Although U.S. policymakers have convinced themselves that the United States is a benign hegemon, no such animal exists in international politics.

A hegemon is a threat to the security of others simply because it is so powerful.

The United States is not immune to the kind of geopolitical blowback experienced by previous hegemonic aspirants.

Thus, in a self-help world the United States must perform the strategic equivalent of threading a needle.

Whether the U.S. should act unilaterally or multilaterally is really a false dichotomy.

It cannot abrogate its freedom to act unilaterally to defend its interests, but Washington needs simultaneously to find a grand strategy that reduces fears of U.S. preponderant power, thereby reducing incentives to engage in counterhegemonic balancing directed at the United States.[6]

Reading the above, one can see the influence of such thinking on the new NSS.

The urgency with which the US is acting to implement it, however, is less obviously necessary.

Or is it?

Let’s take a look at some recent developments in global affairs for clues as to why the US is now scrambling to secure its American perimeter and strategic global chokepoints.

A Pro note from Brent: The Triumph of Geopolitics is an example of the work we commission for the Pro tier... longer-form essays from outside thinkers whose frameworks we want subscribers to wrestle with. It sits alongside the Santiago Capital Pro reports themselves, including the recent Last Ships brief on littoral chokepoints, where these same dynamics get applied with named scenarios, hedging matrices, and the second-order effects most market commentary skips. Pro is where the framework becomes a position. → Upgrade to Pro

PART IV: THE NSS MEETS MODERN MILITARY REALITIES

Notwithstanding the spectacular US stealth bombing of Iranian nuclear technology sites last year, the US has recently been repeatedly exposed as lacking the hegemonic military power it once had.

During the past three years, even the combined might of the US, NATO and Japanese navies has been insufficient to maintain full freedom of navigation in critical littoral waters.

It is a basic principle of military power that it is easier to deny an enemy access to a territory or waterway than to occupy it yourself.

Think “no man’s land” in WWI between the trenches, for example, where neither side had safe access.

When it comes to freedom of navigation, denial can be far more asymmetric.

Land powers don’t necessarily require navigation at all.

Sea powers do.

The strategy of denial

Think of the strategy of denial as the ultimate passive-aggressive foreign policy.

Rather than resolve an issue diplomatically or declare war to resolve whatever dispute directly through force, you simply deny your rival access to something they desire or perhaps desperately need.

This is what the Houthis were doing in the Red Sea following the Israeli invasion of Gaza.

One of the world’s most important navigations had been rendered effectively unusable by several plucky tribes ensconced high in the mountains of Yemen.

(The US eventually made a deal with the Houthis to re-open the Red Sea, the details of which remain murky.)

The Houthis, presumably with Iranian support, squared off against the most powerful naval force in the world and their strategy of denial prevailed.

The Red Sea and Suez Canal were effectively closed to US and allied shipping for months.

Multiple ships were damaged by Houthi attacks.

Insurance companies ceased providing coverage.

The US Navy was so afraid of the Houthis they refused to commit a meaningful force to the area.

President Trump decided to try and bomb them into submission instead.

When that failed, lacking any military options other than invasion, Trump threw in the towel and negotiated a cease-fire.

More recently, Iran rained missiles down on Israel, degrading and depleting their anti-missile defence capabilities.

Rather than allow that to continue, Israel reached out to the US to broker a cease-fire, which has now held for some months.

So, who is wearing the trousers now?

The Houthis’ and Iranians’ successes were made possible by advances in military technology, in particular missiles and drones.

While these cannot be used to seize and hold territory, they can deny territory, or shipping lanes, to an enemy.

Missile and drone technology is so accurate, long-range, and difficult to defend against today that surface warships (or merchantmen) have become sitting ducks.

The war in Ukraine has demonstrated that tanks and other land vehicles are also vulnerable, if less so.

THE INVISIBLE MENACE BENEATH THE WAVES

Beneath the waves also lies danger.

The Nord Stream gas pipelines were destroyed in 2022.

There are several other such pipelines under the Baltic and North Seas.

Undersea cables carry power from France to the UK.

They also carry information.

The modern internet on which we all now depend so thoroughly makes extensive use of the world’s undersea cable networks.

Among others, the Belgians have expressed concern of late that Russian marine vessels may be involved in undersea cable sabotage.

As reported by EU Today:

Over the past six months, at least five non-military vessels have sailed through the Belgian North Sea, suspected by Belgian security services of being involved in maritime espionage activities.

Belgian Maritime Security Unit also considers it plausible that a large Russian fishing vessel may have been involved in a recent sabotage incident of an underwater cable off the coast of Finland.

As further reported in the article, the risks of undersea espionage and sabotage spread far and wide:

Dealing with espionage beyond territorial waters is not straightforward because there is no international regulation for it.

Outside 12 nautical miles from the coast, the freedom of navigation applies.

“There are various EU and national rules prescribing measures to protect infrastructure against espionage,” say security services.

“We try to identify as many spy ships as possible in advance. Our ports are also protected against possible espionage.”

This week, NATO expressed its concern about the increasing hybrid warfare coming from Russia.

It is not the first time suspicions have arisen about espionage from Russian quarters.

There have been repeated indications recently that Russian ships have quietly lingered near infrastructure in the North Sea, possibly for espionage purposes.

Recently, six North Sea countries, including Belgium, decided to collaborate more closely to better secure the energy and telecommunications infrastructure in our waters.

It is traditionally assumed that, as a large island, Great Britain has an advantageous strategic position in Europe.

During WWII, the US military command regarded it as a large and “unsinkable” aircraft carrier, as well as the ideal staging ground for an invasion of Normandy.

But in an age of global interconnectedness and undersea dependency, islands such as Great Britain, Taiwan, the Philippines, or Japan’s home islands could find themselves at a disadvantage if undersea access is compromised or denied.

Large land powers such as Russia or China have challenges of their own, to be certain, but they are far less dependent on undersea access for critical supplies or communications.

SPYKMAN AND THE STRATEGIC IMPORTANCE OF THE LITTORALS

There is a long-running geopolitical debate regarding the relative advantages and disadvantages of sea and land power.

Alfred Thayer Mahan believed in the supremacy of sea power; Halford Mackinder in land power.

But another geopolitical theorist, Nicholas Spykman, believed both were wrong; that what really mattered was control of the world’s critical littorals.

Littoral waters, where land- and sea-power meet, are the most critical for maintaining freedom of navigation.

It matters little whether the open oceans are accessible if you can’t access major ports.

Deny littoral access entirely and sea power becomes worthless.

This can work both ways, of course.

Land power without littoral access is hardly ideal.

But note the asymmetry here: Great land powers can exist if not necessarily thrive without access to the seas.

Sea power, by contrast, is non-existent without port access.

What the Houthis have demonstrated with such success on a relatively small scale could become a much larger threat in future if major land powers also get in on the game of denying access to critical littoral waters.

Consider Russia and Ukraine. Both depend on access to the Black Sea.

But this dependency is asymmetric.

Russia is the far larger country with access to far greater land resources.

If both are denied access, Ukraine has more to lose, as the ongoing war has demonstrated in spades.

Turning to the Baltic, Russia would have much to lose if it became closed to navigation.

But what about Poland?

The Baltic States?

Finland and Sweden?

As with the Black Sea, denial of Baltic access would disproportionately harm these smaller, more maritime-dependent countries.

Turning to Asia, the situation becomes even more asymmetric.

Japan is in a similar situation to the UK but with more islands stretched out over longer distances, making it relatively more dependent on the seas.

Taiwan, the Philippines and other nominal US and UK allies would suffer disproportionately were freedom of navigation in the far east compromised in some way.

Oil might not flow from the Persian Gulf and Africa if the Straits of Malacca, Formosa or other critical waterways were rendered unsafe due to the threat of possible missile attacks.

The Persian Gulf itself, as we know, is a critical littoral region.

The Straits of Hormuz have remained open through decades of occasionally high tensions in and around the Gulf but they have never been closed.

(It was rumoured during the 2025 12-Day War that Iran was preparing to do so.)

The disruption that could cause to the world at large cannot be overstated.

And while it would affect practically every country in the world, sea-dependent powers would ultimately suffer disproportionately more than resource-rich land powers such as Russia.

Modern China and India, however, are heavily dependent on overseas imports, including Iranian oil.

This is probably one reason why, following decades of suspicious and cool relations with Russia, China has grown closer to its erstwhile Eurasian rival power.

The same is true of India.

While these three are not necessarily friends –there are no permanent friends in international politics – they all share a common interest in avoiding further Eurasian power projection by the United States.

HISTORY IS NOT A COMPLETE GUIDE

This could get messy.

History suggests that major global power shifts result in major wars.

We are seeing one of those already in Ukraine.

Others may be brewing.

But as all human endeavour is conscious choice, today’s power shifts and associated disputes need not be resolved through force.

Indeed, were a direct US-Russia dispute to escalate to a full-blown military conflict, the global damage could dwarf that of WWII.

No one wants to go there.

But will the US be willing to relinquish its previously enviable, dominant position without a major fight?

It will, but it will need to see multipolarity as a potential opportunity, rather than all downside.

Fortunately, as described above, this is indeed the case.

There is also clear historical precedent.

Consider the rise of the British Empire.

It had to successfully fight the Spanish, Dutch and French to achieve Pax Britannia over the waves.

However, Britain wisely never attempted to conquer continental Europe.

Rather, it acted as an offshore-balancer, cleverly aligning itself with whatever country or group of countries would prevent a single power dominating the continent.

This is how Britain dealt with Imperial Spain, Napoleonic France and, in the 20th century, with Germany.

In the latter case, it needed also to enlist support from the US.

But Britain remained on the winning side and retained its disproportionate global influence for well over a century.

Yet Britain was never going to remain a global naval hegemon forever and certainly was never going to conquer all of Eurasia.

It did however occupy a strategically advantageous position to act as an offshore-balancer.

And it played its hand very well.

Arguably, Britain also managed its imperial decline with a certain degree of skill.

The invasion of Suez was a mistake but, when seen as such, quickly abandoned.

No such mistake was ever made again.

There are clear strategic lessons for the US here.

China, Russia, and India are not natural allies.

Far from it.

That they are banding together is due to the US exercising an excessive degree of negative economic and military power in order to force them to behave against their national interests.

Nowhere is this clearer than in the war in Ukraine.

For many years Russia made clear to the world that it would not tolerate Ukraine falling into the US-NATO sphere of influence.

The US called their bluff.

And so the war came.

That China, India and other members of the Global South have generally chosen to side with Russia in this tragic conflict is an important signpost for future historians: that the transition away from Pax Americana to a multipolar world has well and truly begun.

LATE IN THE GAME

To employ some sports jargon, it is thus now rather late in the game for the US to adjust its national security strategy to the new geopolitical reality.

But this it must urgently do.

The pace at which the US is now acting makes much more sense in this context.

Fortunately for the US, its relative isolation carries with it many natural advantages, whereas the geopolitical context of the rising Eurasian powers...China, India, and Russia...is naturally more challenging.

They all share borders.

They all possess vastly different cultural and religious traditions.

They cannot naturally trust one another.

Hence they are not required either to fear or trust the US in order to behave in ways which, if the US is clever and nimble, it can exploit to the benefit of its own national interests.

The US, therefore, is in an ideal position to act as an offshore balancer relative to these other powers and, indeed, arguably every other material power on the planet.

Indeed, simply by pragmatically withdrawing support from key allies, or selectively denying them access to the Americas or to strategic chokepoints around the globe if necessary, the US will expose certain natural flash-points at which these rivals’ respective national interests potentially clash with one or more of the other rising powers.

But as the very nature of a multipolar system implies that most powers will be unable to agree on the specific response to a flashpoint, vacuum or lack of access to a littoral or other area, it is to be expected that, as new (if generally quite small) fault lines emerge, Russia, China and India will find that they cannot agree a common, coordinated response.

Indeed, in most if not all cases, they will disagree or otherwise clash in some way, rather than close ranks.

By engaging in a partial, pragmatic, voluntary and realist-informed retreat from its previous hegemonic role the US will not only reduce the expensive free-rider problem that it can demonstrably no longer afford; it will passively prevent the further coalescence of the Eurasian great powers into a bloc that could threaten one or more core US national interests, such as the independence of Japan, South Korea, Taiwan, Indonesia or the Philippines; a consolidation of power in the Gulf/Red Sea/Suez or either the Black or Baltic Seas.

Worse, a coalition of the Eurasian great powers could also exert an undesirable amount of influence over the Americas, something that could eventually lead to war.

If relieved of the burden of hegemonic regime maintenance and if combined with some key structural economic reforms to rebalance the domestic economy away from excessive imports and dangerous dependence on financial activities to generate merely short-term, unsustainable economic “growth”, the US will, in fact, have the opportunity to consolidate its position and, when and where necessary, apply not only first-rate military but renewed economic and political force at those critical times and places of its choosing.

And we must not forget that, for all its faults, the US will remain for the foreseeable future a formidable cultural force, a soft power to be sure, but one that gives the US enormous if unquantifiable leverage when and where it chooses to supplement this with any combination of the other dimensions of power.

SI VIS PACEM, PARA BELLUM

Five years ago, the US withdrew from Afghanistan, and chaotically.

It was a clear loss of imperial face.

Just over a century ago, in 1919, the Third Anglo-Afghan War ended in something of a stalemate.

It was not such a clear loss of imperial face.

Indeed, it was presented to the British public as a way to help stabilise their control over India.

Some 30 years later, that control was lost for good.

It is often said that, through their empire, the British provided an example to the world.

Indeed they did.

And in more ways than one, including how to wind one down relatively peacefully.

The above heading translates from the Latin as “If you desire peace, prepare for war”.

It is attributed to Roman author and amateur military historian Publius Flavius Vegetius Renatus, but some argue he borrowed and adapted it from Plato.

In any case, it is a famous adage which explains that having a strong defence capability is a crucial ingredient in maintaining peace with your neighbours.

It takes a more modern form in the verse of famous US poet Robert Frost: “Good fences make good neighbours”.

In the transition from Pax Americana to a multipolar world, with the US not only no longer able, but no longer even willing to play the role of world policeman, there is going to be a need for more fences.

Many countries are going to feel a need to arm-up.

Not to be aggressive necessarily, or at least one would hope.

But not only will new fences need to be built.

Old, decaying fences are going to need to be repaired, perhaps reinforced, perhaps made higher.

From the perspective of an investor, this implies you want to own fence-builders, or defence companies if you prefer.

Defence stocks have been on a tear the past few years, rising to high valuations.

But given the realities of geopolitics, those valuations are entirely justified.

Defence has become and will remain, for the foreseeable future, a must-invest sector.

This is all the more so given that it is also not a cyclical sector subject to underperformance during a period of weak global economic growth, or possibly even outright recession brought on by tariff and trade wars.

Footnotes

[1] It is an interesting historical curiosity that, although separated in time by over two millennia, many modern central bank structures, including the Federal Reserve building in Washington, DC, are built in a neo-classical style inspired by the temple designs pioneered by the ancient Greeks.

[2] Facing both superior ships and seamanship, resulting in disproportionate losses on the Spartan side in most encounters with Athenian triremes, the Spartans determine that the best way to fight at sea is an anticipation of the “pell-mell” battle tactics as practiced many centuries later by British Admiral Nelson at the Nile Delta and Trafalgar: Rather than attempt to outmanoeuvre an opponent, risking a prolonged encounter of attrition in which faster ships and better seamanship carry the day, instead head straight at the enemy as quickly as possible, smash into their line, close in to point-blank range and rely on the superior short-range gunnery of the British sailors and marines. While Spartan triremes carried no cannon, they did carry Spartan hoplites, who were regarded as the best close-combat, hand-to-hand fighters...the best “gunners”...of the time.

[3] “Offshore balancing” may seem a more appropriate term for an island nation, such as Great Britain, which for centuries sought to maintain a balance-of-power on the European mainland from an offshore position. However, in the modern strategic context, the US is also a geopolitical “island”, enjoying the advantages of oceanic separation vis-à-vis Eurasia.

[4] Please see http://www.comw.org/qdr/fulltext/02wqlayne.pdf

[5] Please see http://www.carlanorrlof.com/wp-content/uploads/2013/03/This-Time-Its-Real-The-End-of-Unipolarity-and-the-Pax-Americana.pdf

[6] Please see http://www.comw.org/qdr/fulltext/02wqlayne.pdf

Regards,
John Butler

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