N. Peter Kramer’s Weekly Column
Cotton and weapons, it doesn’t seem like an obvious match. Yet, Rheinmetall, the German defense group, warns that cotton lint is a weak spot. The fluff is processed to produce cellulose nitrate, ‘shooting cotton’, which causes ammunition to explode, faster than classic gunpowder. Half of all the cellulose nitrate in the world comes from China. ‘Beijing could stop exports’, warns Rheinmetall that is profiting from the hype of an ‘EU war economy’. But, in a real war economy everything is protected against external shocks.
In 2020-2021, the European Commission prepared a report for the first time on the risks of strategic dependencies in the industry. By comparison, China studies how it can become more self-sufficient in every five-year plan. The Commission therefore had to admit that China has become less dependent on ‘highly concentrated’ foreign imports over the past 20 year. EU independency has remained at the same level.
At least 5000 products were eligible in the report. ’45 percent of all crucial ingredients for medicines come from China’. And ‘All permanent magnets for wind turbines too’. The EU also has a major problem in terms of digital infrastructure, networks, servers. ‘Managing data in the cloud is of strategic importance’ the Commission said. ‘Four American companies are occupying the market; Chinese companies are investing and preparing to enter the market. The EU has no companies offering cloud infrastructure’. Despite US warnings to ban China from 5G networks, for instance 59 percent of Germany’s infrastructure is in the hands of Chinese players.
Now, the EU is looking for raw materials and markets to growing countries. But it offers them too little technology transfer and economic cooperation. ‘The EU mainly demands raw materials under the guise of democracy and Western values’, a researcher of the Austrian think tank OFSE said. The EU war economy seems to be far away…
