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1. United States–China semiconductor standoff: A supply chain under stress

Author:
Jeremy Mark and Dexter Tiff Roberts
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
In August 2022, the US Congress passed the CHIPS and Science Act, a law that approves subsidies and tax breaks to help jump-start the renewed production on American soil of advanced semiconductors.1 Just two months later, the Joe Biden administration issued wide-ranging restrictions on the export to China of chips and chip-making technology to undercut that country’s ability to manufacture the same class of integrated circuits.2 Taken together with a steady stream of Biden administration prohibitions on technology sales to key Chinese companies, the US initiatives represent a profound turn toward competition with China in the high-tech realm.3 They also highlight an effort to restructure the complex, multinational supply chains centered on East Asia that manufacture hundreds of billions of dollars of semiconductors a year. As such, the Biden administration has set in motion a process that could alter the business strategies—and fortunes—of homegrown and foreign-invested semiconductor companies based in China, world-leading chipmakers in Taiwan and South Korea, and suppliers around the world that provide the industry with the machinery and myriad inputs that fuel chip production. The Biden administration insists that its restrictions on sales to China are intended only to limit China’s ability to produce the cutting-edge chips that can feed into the development of weapons and other strategically important technologies—and not to cripple its semiconductor industry. But the current state of play of sanctions and support for US-based semiconductor production, including by Taiwanese and Korean chipmakers, is not the endpoint in this process. Rather, the momentum to constrain Beijing’s semiconductor program is likely to continue in the coming months, at the very least with additional restrictions on Chinese companies and government-linked entities, and unprecedented bureaucratic scrutiny of American venture-capital and equity-financing flows to China. That amounts to more bad news for corporate leaders in Asia, North America, and Europe who have spent the past generation building a globe-spanning semiconductor industry that has faced few barriers to expansion. As US restrictions mount, and sales of certain technologies to China flag, the once-unimaginable process of reorienting semiconductor supply chains will become an ever-present reality. The CHIPS and Science Act already is becoming an important factor in corporate strategy, providing incentives for Taiwanese, Korean, and American companies to make big bets on new factories in places like New York, Ohio, Texas, and Arizona—witness Taiwan Semiconductor Manufacturing Company’s (TSMC’s) recent decision to build a second factory in Phoenix.4 This paper explores the potential implications of US semiconductor policy for the global semiconductor supply chains and the competition for primacy in an industry that is constantly changing the face of the global economy and one that has implications for global security in all its dimensions. It begins by examining the policies put in place by the Biden administration, and then discusses the changes taking place across the industry, with a focus on Asia.
Topic:
Economy, Business, Supply Chains, Semiconductors, and Economic Competition
Political Geography:
China, Asia, North America, and United States of America

2. China and the new globalization

Author:
Franklin D. Kramer
Publication Date:
01-2023
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
The unitary globalized economy no longer exists. Driven in significant part by security considerations, a new and more diverse globalization is both required and being built. The transition is ongoing, and its final form is yet to be determined. Many of the causal factors for this very significant change revolve around China and the consequent responses to its actions by the United States, other democracies of the transatlantic alliance, and the advanced democratic economies of the Indo-Pacific. There are other important factors generating this new globalization including the impact of the Russia-Ukraine war both on energy markets and on trade and investment with Russia generally, as well as the global requirements for mitigating and adapting to climate change. However, China has been a critical element in what might be described as the “maximum trade-centered globalization,” which has dominated trade and investment policy in the three decades since the end of the Cold War. This issue brief describes the still-developing new globalization focusing on the issues surrounding China. A fundamental challenge that China presents arises because its actions have generated significant security and economic challenges, yet it nonetheless is a massive trade and investment partner for the “advanced democratic economies” (ADEs),1 which for purposes of this analysis include the Group of Seven (G7) countries,2 plus Australia, Norway, the Republic of Korea, and the European Union. Adapting to a new globalization requires establishing a strategic approach that resolves the inherent contradictions between those conflicting considerations.
Topic:
Security, Defense Policy, Diplomacy, Environment, Politics, Science and Technology, Economy, Business, and Energy
Political Geography:
China, Europe, Eurasia, Canada, Asia, United States of America, and Indo-Pacific

3. Authoritarian kleptocrats are thriving on the West’s failures. Can they be stopped?

Author:
Francis Shin and Ben Judah
Publication Date:
01-2023
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
A hidden web of power revealed itself to Internet users in early 2022. Following a brutal government crackdown in Kazakhstan in January, anyone using open-source flight-tracking websites could watch kleptocratic elites flee the country on private jets. A little more than a month later, Russia’s invasion of Ukraine brought a new spectacle: social media users were able to track various oligarchs’ superyachts as they jumped from port to port to evade Western sanctions. These feeds captured a national security problem in near real time: In Eurasia and beyond, kleptocratic elites with deep ties to the West were able to move themselves and their assets freely despite a host of speeches by senior officials, sanctions, and structures designed to stop them. Kleptocratic regimes—kleptocracy means “rule by thieves”—have exploited the lax and uneven regulatory environments of the global financial system to hide their ill-gotten gains and interfere in politics abroad, especially in the United States, the United Kingdom, and the European Union. They are aided in this task by a large cast of professional enablers within these jurisdictions. The stronger these forces get, the more they erode the principles of democracy and the rule of law. Furthermore, the international sanctions regime imposed on Russia in response to its invasion of Ukraine has little hope of long-term success if the global financial system itself continues to weaken. The West still has a long way to go to rein in the authoritarian kleptocrats who have thrived on the institutional dysfunction, regulatory failure, and bureaucratic weakness of the transatlantic community for far too long. We need to rethink not just how we combat kleptocracy, but also how we define it. Policy makers need to understand that authoritarian regimes that threaten transatlantic security are closely linked to illicit financial systems. As it stands, our thinking about how foreign corruption spreads is too constrained by stereotypes about kleptocratic goals and actions.
Topic:
Corruption, Diplomacy, Intelligence, Politics, Sanctions, Authoritarianism, Reform, European Union, Regulation, Finance, Economy, Rule of Law, and Russia-Ukraine War
Political Geography:
Russia, United Kingdom, Europe, Ukraine, Canada, and United States of America

4. Afghanistan: Where US-Iranian interests may yet intersect

Author:
Borzou Daragahi
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
A new issue brief, Afghanistan: Where US-Iranian Interests May Yet Intersect, authored by Atlantic Council senior fellow Borzou Daragahi delves into the Taliban takeover of Afghanistan and how the swift collapse of the US-backed government in Kabul last summer not only shocked the United States and its allies in the 20-year struggle in that country, but also Afghanistan’s influential neighbor, Iran. As refugees continue to stream into Iran, the government in Tehran has still not recognized the Taliban regime and remains worried about a further deterioration in Afghanistan’s economy and social cohesion, as well as the growing presence of Sunni Jihadi militants. As Iran-Afghan relations evolve, will US concerns about Afghanistan’s fragile state provide a basis for tacit cooperation between Washington and Tehran, similar to what existed when the Taliban was last in power?
Topic:
Government, Taliban, Geopolitics, Economy, and Strategic Interests
Political Geography:
Afghanistan, Iran, South Asia, and United States of America

5. Advancing a framework for the stabilization and reconstruction of Ukraine

Author:
Patrick Quirk and Prakhar Sharma
Publication Date:
10-2022
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Russia’s illegal and unprovoked war on Ukraine has shattered peace on the European continent and created tectonic shifts in the transatlantic security architecture. The Kremlin’s invasion has decimated Ukraine’s economy and infrastructure, and left tens of thousands of innocent civilians wounded or dead as part of a war-crime ridden military campaign. At the time of writing, Kyiv is making slow advances in the South and East with the help of significant Western military and economic aid, yet the outcome of the conflict continues to hang in the balance. A prolonged stalemate and some variation of a negotiated settlement seem most likely, with a Russian victory remaining a distant possibility.1 Absent an absolute Kremlin victory, Ukraine will need to stabilize vast swathes of its territory and reconstruct the social and industrial infrastructure therein.2 Due to their proximity to Ukraine and long-standing economic, political, and social connections, transatlantic allies and partners will most likely be deeply involved in this effort and will be significantly affected by its end result. The purpose of this issue brief then is to help Ukrainian, North American, and European policymakers consider stabilization and reconstruction needs and have a playbook in place regardless of the circumstances or outcome.
Topic:
Security, Defense Policy, Diplomacy, Science and Technology, Reconstruction, Economy, Business, Innovation, Resilience, Russia-Ukraine War, and Stabilization
Political Geography:
Russia, Ukraine, Eastern Europe, and United States of America

6. How the rest of the world responds to the US-China split

Author:
Hung Tran
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The election of Joe Biden as the forty-sixth US president is not expected to change the list of substantive issues dividing the United States and China, such as trade, investment, technology, geopolitical competition, national security, and human rights—except that the priority among them may change, with human rights concerns moving more to the forefront. However, the tone and modality of the unfolding of the US-China competition will change from Donald Trump’s unilateralism to Biden’s efforts to build alliances with “likeminded” countries in Europe, Asia, and elsewhere to deal with the challenges China has posed. In a way, Biden’s alliance-building approach may intensify pressure on the rest of the world to take sides. How countries respond to this challenge, unwelcome by most, depends on whether they see themselves as competitors to China, or as “price takers” in the international economic system.
Topic:
Global Markets, Regulation, Finance, Economy, Trade, and Digital Policy
Political Geography:
China, Europe, Asia, North America, United States of America, and Indo-Pacific

7. Priorities for US-Africa commercial policy in the Biden Administration

Author:
Aubrey Hruby
Publication Date:
04-2021
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
With a renewed focus on multilateralism, President Joe Biden, in his first one hundred days, has actively been reengaging with traditional US allies and partners repeatedly sidelined by the Trump administration. African countries have been included in this effort. When addressing the African Union Summit of African presidents in February, he reaffirmed the United States’ commitment to partnering with African nations to address challenges including climate change and erosion of democratic institutions. Biden has gained widespread praise for supporting the appointment of Dr. Ngozi Okonjo-Iweala as the first African head of the World Trade Organization (WTO), nominating officials who have deep experience in African markets to Cabinet positions, such as Linda Thomas-Greenfield as ambassador to the United Nations, and putting together a historically diverse government, including many senior members of the African diaspora. Building on this early progress, Biden has an opportunity to reset US-Africa policy by not only prioritizing it at a level unseen during the last four years, but also changing the long history of siloing Africa policy. The Biden administration should look to further integrate African nations into broader US foreign policy, acknowledging Africa’s increasing importance to US priorities and enhanced standing on the global stage. Doing so will allow the new administration to deepen commercial and people-to-people ties with African nations, benefiting US businesses, furthering US interests, and working to address global challenges, such as public health and climate change. This more multifaceted and nuanced engagement with African states will set a foundation for stronger US-Africa partnerships, support mutual economic growth, and contribute to strengthening US global leadership. While cooperation with African states is critical to regional stability and global security, this issue brief sets aside security policy and focuses on ways the Biden administration can strengthen its commercial policy and public diplomacy with African nations. This effort includes building on commercial policies started under the Trump administration, facilitating green growth, and deepening people-to-people ties. In doing so, Biden’s domestic priorities of promoting diversity and climate responsibility will be reflected in Africa policy and ensure US businesses can take advantage of increasing opportunity in African markets and remain competitive globally.
Topic:
Foreign Policy, Diplomacy, Economy, Business, and Joe Biden
Political Geography:
Africa, North America, and United States of America

8. Enhancing US-Japan cooperation on global supply chains

Author:
Miyeon Oh and James Hildebrand
Publication Date:
05-2021
Content Type:
Special Report
Institution:
Atlantic Council
Abstract:
Mounting US-China tensions and the COVID-19 pandemic have led to growing calls in the United States and among its allies and partners, including Japan, to address the vulnerabilities in global supply chains critical to national security and economic competitiveness. Strategic uncertainty has led stakeholders to pose the following questions. What role should government play, and to what extent can, or should, governments require firms to operate more in line with national security interests? How can firms manage short-term and long-term risks to balance national security requirements and commercial interests? How should trusted partners be defined, and what is a desirable allied and multilateral approach to enhancing security and resilience of global high-tech supply chains? With new administrations in both the United States and Japan, the two countries have an opportunity to consider these questions and rethink coordination of their efforts to establish secure and resilient supply chains. This issue brief analyzes recent developments in US and Japanese supply-chain policy, explores the importance of closer coordination through case studies of the semiconductor and rare-earth minerals industries, and provides a set of recommendations for the Joseph R. Biden Jr. and Yoshihide Suga administrations to enhance US-Japan cooperation in the years ahead. These recommendations include actions to operationalize the April 2021 US-Japan Joint Leaders’ Statement by creating a bilateral interagency Supply Chain Steering Committee that includes sector-specific working groups to enhance public-private-partnerships in high-technology industries, and by expanding bilateral supply-chain cooperation into multilateral efforts through flexible and informal frameworks.
Topic:
Science and Technology, Bilateral Relations, Economy, Innovation, Trade, Defense Industry, and Supply Chains
Political Geography:
Japan, Asia, North America, and United States of America

9. United G20 must pave the way for robust post-COVID-19 recovery

Author:
Phil Thornton
Publication Date:
07-2020
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The world is facing unprecedented health and economic crises that require a global solution. Governments have locked down their economies to contain the mounting death toll from the COVID-19 pandemic. With this response well underway, now is the time to move into a recovery effort. This will require a coordinated response to the health emergency and a global growth plan that is based on synchronized monetary, fiscal, and debt relief policies. Failure to act will risk a substantial shock to the postwar order established by the United States and its allies more than seventy years ago. The most effective global forum for coordinating this recovery effort is the Group of 20 (G20), which led the way out of the global financial crisis (GFC) in 2009, the closest parallel we have to the current catastrophe. Eleven years ago, world leaders used the G20 meeting in London as the forum to deliver a unified response and a massive fiscal stimulus that helped stem economic free fall and prevented the recession from becoming a second Great Depression. A decade on, it is clear that the G20 is the only body with the clout to save the global economy. This does not mean that the G20 should be the only forum for actions for its member states. The United States, for example, should also work closely with like-minded states that support a rules-based world order, and there are many other fora where it can and must be active with partners and allies. But no others share the G20’s depth and breadth in the key focus areas for recovery. The other multilateral organizations that could take up the challenge lack either the substance or membership. The United Nations may count all countries as members but is too unwieldly to coordinate a response. The International Monetary Fund (IMF) has the resources but requires direction from its 189 members. The Group of Seven (G7), which once oversaw financial and economic management, does not include the fast-growing emerging economies. The G20 represents both the world’s richest and fastest-growing countries, making it the forum for international collaboration. It combines that representation with agility.
Topic:
Security, Energy Policy, G20, Global Markets, Geopolitics, Economy, Business, Trade, Coronavirus, and COVID-19
Political Geography:
China, Middle East, Canada, Asia, Saudi Arabia, North America, and United States of America

10. Taking stock: Where are geopolitics headed in the COVID-19 era?

Author:
Jeffrey Cimmino, Matthew Kroenig, and Barry Pavel
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The COVID-19 pandemic is a strategic shock, and its almost immediate, damaging effects on the global economy constitute a secondary disruption to global order. Additional secondary strategic shocks (e.g., in the developing world) are looming. Together, these developments pose arguably the greatest threat to the global order since World War II. In the aftermath of that conflict, the United States and its allies established a rules-based international system that has guaranteed freedom, peace, and prosperity for decades. If the United States and its allies do not act effectively, the pandemic could upend this order. This issue brief considers the current state of the pandemic and how it has strained the global rules-based order over the past few months. First, it considers the origins of the novel coronavirus and how it spread around the world. Next, it examines how COVID-19 has exacerbated or created pressure points in the global order, highlights uncertainties ahead, and provides recommendations to the United States and its partners for shaping the post-COVID-19 world.
Topic:
Security, Defense Policy, NATO, Diplomacy, Politics, European Union, Economy, Business, Coronavirus, and COVID-19
Political Geography:
Russia, China, South Asia, Eurasia, India, Taiwan, Asia, North America, Korea, United States of America, and Indo-Pacific