“The United States’ economic strength and competitiveness is national security,” said US Secretary of Commerce Gina Raimondo at the Atlantic Council’s Distinguished Leadership Awards in May. Raimondo stressed the US government’s strategy of fueling innovation and deepening commercial partnerships while protecting sensitive technology from falling into the wrong hands. Just a few months later, the Commerce Department on Monday proposed a ban on Chinese software in internet-connected vehicles out of cybersecurity concerns. Raimondo’s May speech and subsequent actions are demonstrating the rapid convergence of economics with national security, a major theme of this week’s Transatlantic Forum on Geoeconomics.
Minimizing economic vulnerabilities by protecting sensitive technology and ensuring energy security should be a national security priority of the next US administration, regardless of who wins the election in November. The next administration will need to work with Western allies and the private sector to address national security threats and achieve three interconnected goals: (1) protect sensitive US technology, (2) drive the energy transition, and (3) secure the financial system.
Identifying economic threats to national security
The United States’ economic strength and competitiveness is primarily derived from three interconnected but often siloed sectors—finance, technology, and energy. The United States has benefited from the post-Bretton Woods era, as the US dollar remains the primary currency for global trade and the most secure and dependable reserve currency. As such, the US financial system has become the backbone of the global financial system. Through reliable flows of venture capital, the US technology sector continues to innovate and advance technologies such as artificial intelligence. These technological innovations have led to advancements in the energy transition that reduce dependencies on fossil fuels but increase reliance on critical minerals not found or processed in the United States. Protecting these three pillars of economic strength is a national security priority.
The United States has been developing trade dependencies with other nations for decades. In addition to creating economic efficiencies, such dependencies were meant to create a common global interest in preserving rules-based international trade and economic security.
However, in recent years, these dependencies have created vulnerabilities for US economic security and therefore US national security. The COVID-19 pandemic, Russia’s invasion of Ukraine, technology competition with China, and conflict in the Middle East put a spotlight on supply chain disruptions and the vulnerabilities they can create for the US economy. Meanwhile, the national security apparatus has grown increasingly wary of the potential weaponization of supply chain dependencies by adversarial and competing regimes.
As a result, trade and economic security considerations are increasingly being incorporated into the national security policy debate. In addition to discussing the traditional geopolitical dynamics and terrorism threats common in national security strategies, the 2022 National Security Strategy framed climate and energy security as an existential challenge. It also stated the objective of preventing strategic competitors from using US critical technology to undermine US national security.
Meanwhile, this year the Office of the Director of National Intelligence’s Annual Threat Assessment identified disruptive technology and digital authoritarianism as some of the top transnational threats facing the United States, along with climate change and extreme weather.
Protecting sensitive technology from falling into the wrong hands
The next US administration will have an opportunity to address a challenge in the technology sector: Figuring out how to keep US and Western critical technology from falling into adversarial or competing states’ hands. Since Russia’s full-scale invasion of Ukraine in February 2022, Western allies have used export controls to prevent the flow of advanced technologies to Russia. While challenges persist in enforcing export controls, the US government and Western allies have been on the same page in terms of what needs to be done to thwart Russia’s military capabilities.
Meanwhile, the threat from China has been simmering for years, particularly when it comes to Beijing’s use of Western technology and capital to further its military-industrial complex. Through investment or knowledge-sharing, US companies may be inadvertently transferring know-how, intellectual property, and technology to Chinese state-owned enterprises, which could pose a threat to US economic and national security in the future. The United States and its allies have leveraged export controls on sensitive Western technology and proposed investment screening regulations to address this issue. However, there is much less agreement on how to address the China challenge more broadly, both within the US government and among Western allies.
The next US administration should ensure a whole-of-government approach to clarify the United States’ strategic end state when it comes to the protection of sensitive Western technology from China and understand the economic implications of achieving that end state. Only then can Washington find common ground with allies on this issue.
Driving the energy transition while securing supply chains
The United States’ use of export controls against China is likely to trigger countermeasures from Beijing: China could leverage its near-monopoly over critical minerals and impose export restrictions on them. This would be problematic for the United States’ clean energy transition goals because clean energy production requires critical minerals. China has already shown its readiness to weaponize critical mineral supply chains: On October 20, 2023, Beijing announced export restrictions on graphite after the United States restricted the exports of highly advanced semiconductors to China. Graphite is one of the major components of electric vehicles and nuclear reactors, which are important technologies in driving the energy transition.
As the world shifts toward clean tech, the demand for critical minerals and competition for them will significantly increase. The United States is joining the game late, but it can still forge partnerships to secure supply chains and drive the transition to clean energy. To this point, 30 percent of the world’s critical mineral reserves are located in Africa. While China and Russia have a larger presence in Africa, US allies such as the United Kingdom, Canada, and Australia have ramped up their engagement with African nations and cooperation on critical minerals mining. The United States could leverage its technological know-how and strong alliances to deepen multilateral engagement with African nations and secure US supply chains for critical minerals and drive the clean energy transition.
Securing the global financial system
Finally, the next US administration should ensure that the backbone of the US economy—the US financial system—is protected from malicious actors who are constantly trying to take advantage of it. According to Nasdaq, financial criminals managed to move $3.1 trillion through the global financial system in 2023. Meanwhile, cyberattacks pose a risk to the core of the global financial system by diminishing its integrity and disrupting critical services. Nearly 20 percent of all cyberattacks target financial institutions to gain sensitive information and extort money from targets.
The security of the US financial system is a critical factor in the world’s trust in the United States and for the success of the technology, energy, and all other sectors of the US economy. Protecting the financial system from cyberattacks and preventing financial crimes are just as critical for US economic success and national security as protecting sensitive technologies and securing critical mineral supply chains. Thus, developing public-private partnerships to help secure the US financial system should be another priority for the next US administration.
There is a growing consensus that US national security and economic security are inextricable. The next administration should focus on preventing adversaries from getting hold of sensitive US technology, driving the energy transition, and safeguarding the global financial system to protect the United States’ interests and secure its position on the world stage.
Kimberly Donovan is the director of the Economic Statecraft Initiative at the Atlantic Council’s GeoEconomics Center and a former senior US Treasury official.
Maia Nikoladze is the associate director at the Economic Statecraft Initiative within the Atlantic Council’s GeoEconomics Center. Follow her at @Mai_Nikoladze.
Further reading
Thu, Mar 28, 2024
The axis of evasion: Behind China’s oil trade with Iran and Russia
New Atlanticist By Kimberly Donovan, Maia Nikoladze
Beijing has developed a way to import Iranian and Russian oil while bypassing the Western financial system and shipping services.
Tue, Jul 23, 2024
Biden will leave an enduring legacy of linking economic and national security
New Atlanticist By Josh Lipsky
The Inflation Reduction Act, the CHIPS and Science Act, and the Bipartisan Infrastructure Law revived the idea that economic security and national security are deeply interconnected.
Wed, Jun 12, 2024
Europe is gearing up to hit Chinese EVs with new tariffs. Here’s why.
New Atlanticist By
The European Commission just proposed new tariffs on China-made electric vehicles of up to 38 percent. Atlantic Council experts explain why—and what might happen next.
Image: US Commerce Secretary Gina Raimondo speaks during a news conference at a Boeing aircraft hangar on August 30, 2023 in Shanghai, China. Photo by Zhao Yun/VCG.