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Vladimir Putin controls the supply chain of western technology, so who is bluffing?

Russia has the power to hobble key industries in the US and Europe by restricting supplies of metals - article by Ambrose Evans-Pritchard for the Telegraph 22.02.22

The wishful thinking has begun. Core Europe is already persuading itself that Vladimir Putin will be sated with Donetsk and Luhansk, allowing European companies to keep selling Gucci bags and BMWs to Russia in exchange for commodities – after a stern lecture on international law, of course.

The US, UK, and Poland have reached the opposite conclusion, strongly suspecting that the military occupation of the Donbas is the springboard for a full invasion of Ukraine.

Bear in mind what Putin has lost by this action: he has killed the Minsk accord and therefore ended the possibility of controlling Kyiv’s foreign and security policy through the veto power of these two puppet regions.

If he left it there, he would emerge from this crisis in a weaker strategic position.

This stretches credulity, since two-thirds of the Russian army is coiled for a strike on the border, with little to stop them except Ukraine’s valiant but ill-armed reservists.

Mr Putin is not even hiding his intention.

As he said in his diatribe last night, Ukraine was an artificial creation of the Bolsheviks after Brest-Litovsk in 1918 and “never had a tradition of genuine statehood”.

The Munich Security Summit over the weekend was a love-fest of transatlantic unity, a choreographed effort to show that all key countries agree on far-reaching sanctions if he attacks.

The words “massive” and “devastating” were repeated ad nauseam, as if it were an agreed script.

But this Potemkin unity is unlikely to alter the Kremlin calculus. The West cannot activate serious measures because it risks an asymmetric response – a lighter variant of ‘mutual assured destruction’ from the Cold War.

It is already well understood that Europe is a captive of Russian gas, and dares not eject Russia from the SWIFT system of international payments because it would suffer a more immediate crisis than fortress Russia itself.

Less understood is the technology angle.

Washington professes to have a killer weapon that avoids such a risk of blowback and will therefore cause Putin to hesitate: it threatens to cut off Russian access to the global market for semiconductor chips.

This would be the modern equivalent of a 20th century oil embargo, since chips are the critical fuel of the electronic economy.

It would gradually asphyxiate Russia’s advanced industries, and would in theory reduce Putin’s regime to a stunted technological dwarf.

But this too is a dangerous game. Putin has the means to cut off critical minerals and gases needed to sustain the West’s supply chain for semiconductor chips, upping the ante in the middle of a worldwide chip crunch.

Furthermore, he could hobble the aerospace and armaments industry in the US and Europe by restricting supply of titanium, palladium, and other metals.

If he controlled Ukraine, his control over key strategic minerals would be even more dominant, giving him leverage akin to Opec’s energy stranglehold in 1973.

The Kremlin could unleash an inflation shock every bit as violent as the first oil crisis, with a recession to match.

The White House has been slow to wake up to Russia’s counter-strike capability. It did not canvas US semiconductor companies on the risk until the critical materials firm Technet revealed the extent of US dependency on Russian supply of C4F6 gas, neon, palladium, scandium.

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Vladimir Putin controls the supply chain of western technology - by Ambrose Evans-Pritchar
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Russia could fall back on China to supply microchips for its weapons Credit: Yuri Smityuk\TASS via Getty Images

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