In a new piece for The Economic Standard, ARPN’s Daniel McGroarty argues that while the “intellectual shrug” of “who could have seen this coming” tends to be a common reaction to our new normal of sheltering in place and social distancing, there were warning signs for a coming crisis we failed to recognize for what they were, and act accordingly.
McGroarty tells the story of what he calls a “Red Swan” based on COVID-19’s point of origin in Wuhan, China — a leaked classified cable sent by the U.S. State Department in 2010 revealing “Critical Infrastructure/Key Resources” outside of the U.S. “whose loss could critically impact the public health, economic, and/or national and homeland security of the United States.” On it, under the heading for China: “Polypropylene Filter Material for N-95 Masks” — which, as McGroarty points out, are “[p]recisely the ones the federal government and states are scrambling to source right now. […] The U.S. Government knew in 2009 that N-95 masks were critical, came from China… And did nothing about it.”
However, and this is where followers of ARPN may perk up, this is not all.
As McGroarty writes, the classified list in the cable also included a series of mines in China that were deemed critical, developing critical materials ranging from fluorspar and germanium over graphite to Rare Earths, tin and tungsten — for all of which the United States is greatly import-dependent, with degrees of reliance ranging from 63% for tungsten to 100% for fluorspar, graphite and rare earths.
“As a warning unheeded, the cable makes for interesting reading in light of today’s COVID pandemic – and as U.S. policymakers embark on a rolling series of multi-trillion dollar spending bills, the next of which will include infrastructure projects.
At issue is not just one but three layers of risk: Maybe the metals and minerals produced by the Chinese mines will be withheld in time of conflict, as Beijing seeks to leverage access for American concessions. Maybe the metals and minerals will soon be prioritized for internal Chinese consumption, under its Made in China 2025 program to drive Chinese technology dominance, with little left for export to the U.S. or elsewhere.
Or maybe – as the leaked cable presciently notes – the Chinese mines will be disrupted by a pandemic, slamming on the supply chain brakes for a U.S. economy dependent on critical materials that go from arriving “just in time” to “not at all.”
In any case, the warning could hardly be more clear. The U.S. has a choice: It can take immediate steps to reduce its dangerous dependency on a Chinese supply chain for critical technology metals. Or we can hope COVID 2.0 will not disrupt supply in a second global shut-down – or that Beijing won’t one day decide to curtail access to these critical materials in time of crisis.
But here’s one thing we can no longer do: If an act of nature or of man cuts off U.S. access to vital technology materials, we can’t claim to be surprised by the appearance of a Red Swan. We’ve seen it coming.”