In times of national emergency, it can be crucial that governments can maintain an uninterrupted supply of essential goods and services, be it technology, food, or raw materials. As countries across the world now face an unprecedented demand on supplies and services to tackle the outbreak of the coronavirus, it may be important for governments to take stock of the potential risks to national security that could accompany their choice of vendor.
In a study for the Dutch government, RAND Europe researchers looked at the relationship between the economy and national security. The study identifies seven economy-related risks that could threaten the critical infrastructures, sectors, and processes that are vital for the sustainable functioning of society.
Foremost of these is ownership, or foreign direct investment, in critical sectors. While foreign investment brings great opportunities for economic growth, jobs, information exchange, and international collaboration, it may also allow access and control of critical sectors and processes by foreign actors.
Earlier in the year, the UK made the decision to give the Chinese technology giant, Huawei, access to certain sections of its 5G telecommunications network. Since then, China's response to the coronavirus has once again brought into question whether the UK should be reliant on new technology from the country. As a result, the UK's mobile providers are now being banned from buying new Huawei 5G equipment after December 31, 2020, and they must also remove all the Chinese firm's 5G kit from their networks by 2027.
Leaving politics aside, the concern over Huawei highlights the close interconnection of economy-related risks. Foreign direct investment and ownership of critical infrastructure and sectors can increase the risk that foreign entities gain influence and control over their operations. It can also lead to critical infrastructure becoming vulnerable to the risk of dependence on specific suppliers further downstream in the supply chain, such as those responsible for the maintenance of critical infrastructure and processes.…
The remainder of this commentary is available at nationalinterest.org.
Stijn Hoorens is the director of RAND Europe's Brussels office.
This commentary originally appeared on The National Interest on July 26, 2020. Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.