In Geopolitics Today - Friday, August 27th
The Impact of Afghan Withdrawal on Transatlantic Relations and Global Chip Shortage Expected to Continue
The Impact of Afghan Withdrawal on Transatlantic Relations
President Joe Biden foreign policy moves during the first months of his presidency involved mending ties with Europe. Biden repeatedly asserted the phrase “America is back,” as he worked to bring European nations on board a more unified policy toward China. But events in Afghanistan have undone much of Biden’s hard work trying to persuade his allies, demonstrating to NATO partners a vacuum they did not expect the United States to leave behind.
Trust in US leadership may be the hardest to repair, European confidence in the transatlantic relationship has tanked following the disorderly withdrawal of US forces from Afghanistan. Washington failed to coordinate its withdrawal decision and execution with its allies or partners, and thereby created tremendous embarrassments for them to face. NATO partner countries were left scrambling to figure out how best to withdraw their own staff and civilians. The High Representative of the EU for Foreign Affairs, Josep Borrell, described the ongoing situation in Kabul as “a catastrophe,” and went on to highlight the need for the EU to develop its own military capacity.
Many EU countries now also fear a significant migration wave to come about as a result of events in Afghanistan. With the last major refugee crisis in 2015 already exposing differences between many EU member states, it is difficult to say what effect a similar event might have on European cohesion. Thousands of Afghans have already fled with most heading toward either Pakistan or Iran. After that, many are likely to attempt to reach Europe, where governments are already struggling to cope. As the going gets tough, the countries most susceptible to the flow of Afghan refugees are unlikely to forget Washington’s disastrous withdrawal.
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Global Chip Shortage Expected to Continue
The semiconductor industry is gradually adapting to the ongoing global chip shortage. Some sectors, however, are suffering. In particular, the automotive and
consumer electronics sectors are having to cut back production which translates into huge costs for manufacturers. Amidst the shortages, some chip-makers are taking advantage by jostling for a larger market share and more lucrative government contracts.
Taiwan Semiconductor Manufacturing Company (TSMC) and Intel are especially well-positioned to compete over a privileged position at a time when the US government is heavily incentivising domestic chip-makers to step up their production efforts. But the Chinese Semiconductor Manufacturing International Corporation (SMIC) is also following similar footsteps, as the company tries to absorb as much capacity as possible.
While SMIC is increasing production at advanced nodes, it is said the Chinese chip-maker is having difficulties achieving a cost-efficient unit which can be scaled up. The chip industry may depend on high-volume data centre spending and other tech-based markets for sustained growth. If demand for chip-based goods falls, there could be broad overcapacity in the supply chain, and manufacturers who accrued cash during the pandemic will be able to buy out the smaller, struggling firms.
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