In Geopolitics This Week
The United States Tightens Export Controls on China's Semiconductors, OPEC+ Cuts Oil Production Despite US Pressure, A Section of the Kerch Strait Bridge Destroyed, and other stories.
The United States Tightens Export Controls on China's Semiconductors
The Biden administration has enacted a sweeping set of export controls, including a measure to cut China off from semiconductor chips made anywhere in the world with US tools. The move vastly expands the reach of US enforcement mechanisms for the transfer of technology to China as Washington continues its attempts to slow Beijing’s technological and military advances.
The US Commerce Department's Bureau of Industry and Security (BIS), which oversees the department's export controls and policies related to national security, issued two new rules to tighten restrictions on China's entire semiconductor industry. The first rule restricts the export of supercomputing and artificial intelligence chips to China. This includes a prohibition on the export of semiconductor equipment used to make advanced chips. The second rule makes it easier for the BIS to add Chinese tech companies to its Entity List going forward, which is the toughest US export control blacklist.
These measures could amount to the biggest shift in US policy towards transfers of technology to China since the 1990s. If the measures prove effective at their intended goal, they could set China’s chip manufacturing industry back years by forcing companies to cut off ties with China’s leading semiconductor factories and chip designers.
OPEC+ Cuts Oil Production Despite US Pressure
Ministers from the OPEC+ grouping of oil exporting countries led by Saudi Arabia and Russia have agreed to jointly cut output by two million barrels per day. The new oil production cuts expose growing political rifts between Saudi Arabia and the United States, and signal that the oil producing bloc of nations reject price caps.
The decision came after heavy lobbying by Washington against the move, and the White House said it was “disappointed” with what it saw as a “short-sighted” decision. Despite pressure from the US, Saudi Arabia is pushing ahead with these cuts by arguing that market fundamentals support higher prices. Saudi Arabia has repeatedly said that it is concerned about short-term oversupply and have warned that global spare oil production capacity is limited.
Whatever the true intentions of the Saudi goverent, the United States will view the production cuts as a signal that the bloc is aligning with Russia and rejecting recently imposed price caps. One of the key motivating factors behind the decision by OPEC+ is to prevent any such price-cap mechanisms from gaining momentum. Major oil producers in OPEC+ are justified in their fears that if the G-7 endorsed price cap is effective in reducing Russia's oil export revenue, similar caps could be imposed in the future on non-Russian producers.
A Section of the Kerch Strait Bridge Destroyed
An explosion has caused a partial collapse of the bridge linking the Crimean Peninsula with Russia, damaging an important supply artery for Russia. It is likely that a Ukrainian attack has damaged the bridge, thereby threatening Russia’s primary supply line for food, fuel, ammunition and reinforcements into the Crimean Peninsula.
The explosion, which Russian authorities say was caused by a truck bomb, risks a further escalation in the war, though if and how Russia responds remains unknown. The destruction of the bridge beyond immediate repair would severely hamper Russian logistics to the frontlines in south Ukraine. While it would not be a catastrophic loss due to the fact alternative rail, road and ferry routes are available, it would nonetheless complicate Moscow's ability to resupply its forces
Should the damage prove to be more serious, the most important logistical flow for Russian forces along the southern axis would be lost. This would greatly reduce the number of personnel and equipment that Russia would be able to ferry to Crimea and its troops on the front. Without the ability to adequately resupply, Moscow may find it increasingly difficult to hold Ukrainian territory against well-trained and supplied Ukrainian troops operating with NATO intelligence.
For Ukraine, the destruction of the Kerch Strait Bridge will be a part of any concrete efforts at reclaiming Crimea. If Ukraine has indeed severed the Russian supply connection to its forces, Kiev will need to prevent Crimea from supplying itself. The recapture of Kherson would allow Kiev to disable the water supply flowing into the Crimean Canal. Without irrigation, food production in Crimea would drop significantly, and, over time, create the conditions for a famine on the Peninsula.