Globalization at risk

European governments are gambling on their future place in the world. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( Intel Corp.’s decision to pump $36 billion into chip making in Europe is a bold corporate bet. It’s also a gamble by European governments on their future place in the world. The announcement yesterday included almost $19 billion for a leading-edge semiconductor plant in Magdeburg, Germany, plus a research center in France and a packaging facility, probably in Italy. That’s welcome news for the European Union, which aims to boost the bloc’s chip production fourfold. It’s backing that goal with some $50 billion in public and private funds: Intel is looking for something like 30% of its investment to be offset. Key reading: - [The Global Fight Over Chips Is Only Going to Get Worse]( - [A New World Energy Order Is Emerging From Putin’s War on Ukraine]( - [U.K.’s Johnson Arrives in Gulf Seeking Help With Energy Crisis]( - [China’s Goal With Putin Is to Resist U.S. Without Economic Pain]( The EU isn’t alone. The U.S. has provided $52 billion for domestic chip production, while Japan and China are also spending big to build out their respective semiconductor industries. Governments are more than willing to pay, not just for high-quality industry jobs, but the geopolitical significance they represent. Cutting-edge chips are the basic building blocks of future-oriented technologies. Yet they are almost exclusively made in Taiwan and South Korea. That dependence was never an issue until U.S.-China tensions spiked during the Donald Trump administration, a competition that has deepened under President Joe Biden. The pandemic’s supply-chain disruptions further highlighted the pinch points in a highly globalized industry. Politics prompted national moves to reshore production. Russia’s war on Ukraine is another death knell to globalization: Already, the world’s long-established energy alliances are reshaping into new spheres of influence. Russia’s aggression also serves as a reminder that both Taiwan and South Korea are in potential future war zones. Berlin and Brussels can celebrate their new-found chip capacity. But their success might be remembered as another stage in the passing of the globalized world we all came to know. — [Alan Crawford]( An employee carries out quality checks on a silicon wafer inside the clean rooms at Infineon Technologies semiconductor manufacturing facility in Villach, Austria. Photographer: Krisztian Bocsi/Bloomberg Sign up [here]( for the Special Daily Brief: Russia’s Invasion of Ukraine. And share this newsletter with others too. They can sign up [here](. Global Headlines Edging nearer | Ukrainian President Volodymyr Zelenskiy said Russia’s “positions in the negotiations sound more realistic” as the two sides are [scheduled]( for another round of talks today. Russian Foreign Minister Sergei Lavrov said Moscow’s demands for Ukraine’s neutrality in the future are under serious discussion, though the talks aren’t going easily. Russian forces continue to strike infrastructure targets while the overall military situation is largely unchanged, Ukraine said. - Biden will [travel]( to Brussels next week to meet with NATO allies and take part in a summit of EU leaders. First totals were published for Feb. 27, three days following the Russian invasion. Each day’s tallies might include casualties that occurred on previous days if later confirmed. Source: UN’s Office of the High Commissioner for Human Rights Brain drain | Hundreds of thousands of Russians have [fled]( the country since President Vladimir Putin’s invasion of Ukraine, abandoning homes and careers to seek safe haven in nations ranging from Kyrgyzstan to Georgia and Israel. As [Leonid Bershidsky]( reports, it’s a stampede for the exit by people who can’t imagine living under the Soviet-style autarky to which international sanctions have doomed Moscow. - Russia would be in [default]( if it doesn’t pay the coupons on its dollar debt in the U.S. currency within a 30-day grace period, according to Fitch Ratings. An extended conflict between Russia and Ukraine would hit all 50 U.S. states, according to Moody’s Analytics. Businesses from beer breweries in Missouri to semiconductor plants in California would see an [impact](, as the war and even harsher sanctions constrict supplies and drive up global prices for oil and other critical materials. Oversight setback | The failure of Biden’s pick to become the top banking regulator gave Wall Street a major [reprieve]( from tougher oversight. Progressives were counting on Sarah Bloom Raskin to help intensify scrutiny of the nation’s largest lenders and boost the Federal Reserve’s role in combating climate change, but stiff Republican opposition doomed her chances to become the Fed’s vice chair for supervision. Best of Bloomberg Opinion - [A Ukrainian Economist Fights the Russians: Scott Duke Kominers]( - [Why Countries Want to Sit Out the New Cold War: Pankaj Mishra]( - [Indonesia Put Authoritarian Rule Behind It, Right?: Daniel Moss]( Ballistic failure | North Korea’s missile program suffered a rare [setback]( when a rocket fired from near Pyongyang’s main airport appeared to have exploded shortly after take-off. The launch came just days after Yonhap News Agency reported Kim Jong Un’s regime was preparing to test its first intercontinental ballistic missile in about five years. Explainers you can use - [When Stocks Crash, China Turns to Its ‘National Team’]( - [Why Bitcoin’s Energy Problem Is So Hard to Fix]( - [Why Colombia’s Election Has Voters Looking Left]( Reporter deaths | The [killing]( of Armando Linares Lopez yesterday brings the number of reporters murdered in Mexico this year to at least eight. President Andres Manuel Lopez Obrador has lashed out against a growing number of journalists he says oppose him and criticized the U.S. and the European Parliament for joining opposition demands that he take action to stem the violence. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - The woman who interrupted Russian state-TV news with a protest against the war in Ukraine received a small fine, but could face more legal [trouble]( after a top legislator called for her to be prosecuted. - China blasted foreign media organizations’ use of Chinese staff to report on issues such as Covid-19 and Xinjiang, in an apparent [escalation]( of Beijing’s efforts to restrict critical coverage. - Almost half of Sudan’s population will face [hunger]( this year as the fallout from October’s coup and the war in Ukraine make it more difficult for the cash-strapped African nation to source food. - Russia said the U.S. provided [guarantees]( that sanctions for the invasion of Ukraine wouldn’t hamper atomic-supply arrangements with Iran, potentially paving the way for the resumption of nuclear talks. And finally ... An [accidental]( firing of a missile by India last week prompted Pakistan to prepare a retaliatory strike, people familiar with the matter told [Sudhi Ranjan Sen]( and [Faseeh Mangi](, showing how close the nuclear-armed neighbors came to blows over a potentially disastrous mistake. Islamabad held back because an initial assessment indicated something was amiss, the people said. Like Balance of Power? [Get unlimited access to Bloomberg.com](, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022