Global Competition Project (GCP)

February 24th, 2022

Dr. Tim Welter led a panel consisting of the Honorable Zach J. Lemnios (Former Vice President of IBM Research, Potomac Institute Board of Regents Member), Dr. Will Roper (Former Assistant Secretary of Air Force Acquisition, Technology & Logistics), and Ms. Lois Nicholson (Counsellor Defense Acquisition and Technology at the British Embassy in Washington, D.C.). The subject of the conversation was focused on economics and the spectrum of conflict, examining whether the US, and more narrowly, the Department of Defense, is adequately considering the implications of today’s global economic interconnectedness when preparing for war. Dr. Tim Welter, General (ret.) Al Gray, and Dr. Jen Buss delivered introductory remarks.

Dr. Tim Welter provided introductory remarks that explored the implications of our interconnected global environment; one that intertwines the U.S. and strategic competitors like China and Russia, and how such co-reliance impacts U.S. national security. Strategic competitors routinely exploit this state of interdependency, using sustained gray-zone strategies against the United States. Welter defined gray-zone activities as actions that occur below the threshold of war and include the use of propaganda, predatory investment practices, and economic manipulation and coercion to undermine the vitality of the U.S. economy and our overall national security. Using gray-zone practices China and Russia have effectively operationalized economics against the U.S., targeting industries and supply chains critical to our own security as well as that of our allies. Addressing gray-zone threats needs to be a prerogative for the U.S. government and DoD. Currently, there are multiple lines of effort, by policymakers, industry, and the military, to combat the dangers stemming from gray-zone great power competition. However, despite these initiatives, the DoD, Congress, and the budgeting process are still too focused on developing and fielding traditional kinetic platforms that do little to address these gray-zone threats to our economic stability and prosperity. The DoD needs to reimagine how the military prepares for conflict, from day-to-day geopolitical competition to all-out war, and adapt to the realities of the current environment.

The Honorable Zach J. Lemnios began the conversation referencing the tragic invasion of Ukraine by Russia and the scope of impact the invasion has had on the Ukrainian people, global financial markets, and the institutions of NATO and the European Union. However, he noted that the challenges posed by China to U.S. national security and prosperity still posed the bigger threat. As a near-peer competitor, China has integrated its economic, political, and military efforts to displace the U.S. as the leader of the international order. The level of interconnected flow of goods and services between our two nations has elevated the role of economics in great power competition. Lemnios presented statistics outlining China’s understanding of the importance of economics in competing with the U.S., highlighting their annual $2 trillion investment in the Belt and Road Initiative (BRI) over the last eight years. He casted BRI as a means to undercut U.S. economic influence, while increasing its own by opening trade channels in Africa, Asia, and parts of Europe. He then juxtaposed the trillions China spends to increase its economic influence with the mere billions it spends on its military to indicate China’s true area of focus (the former) in competing with the United States. He also outlined China’s Made China 2025 economic plan to lead in 10 key high-tech industries such as IT (Information Technology), infrastructure, and semiconductors. When combined with China’s military-civil-fusion (MCF) strategy, their plan puts the U.S. at a notable disadvantage. The U.S. and its allies must address this multi-faceted challenge holistically to compete effectively at a societal level. In closing, Lemnios listed three areas of significance to U.S. success in competing with China: 1) International partnerships and their importance to understanding global markets and gaining global insight; 2) Industrial partnerships and their ability to provide the U.S. talent, persistence, and depth; 3) The need for agreed-upon long-term (societal level) targets and the emphasis to execute with speed and agility in reaching them. He left the audience with two questions: 1) What should a national framework for multi-level interdependent competition look like? 2) How does the U.S. lead in sustained great power competition?

Dr. William Roper began by warning of the dangers of falling into conventional thinking and using a Cold War approach to competition with China. He emphasized today’s challenges are not like that of the Cold War and if the U.S. does not change its approach, while we may be able to win a future military conflict, we will still face economic ruin and ultimate defeat at the hands of a well-prepared China. Roper noted the current division between the military (.mil) and industry (.com), particularly in the tech sector, are a cause for concern. More alignment is required for the U.S. to meet the societal-level challenges it faces. Like Lemnios, Roper noted that China benefits from its top-down control of industry and aligning them to its geopolitical goals via its MCF strategy. As a free-market, liberal democracy, the U.S. must similarly find ways to capitalize on its systemic advantages. Complicating the challenge, Roper noted that at the height of the Cold War the U.S. government represented over 80% of the total R&D for the nation as opposed to today, where government accounts for only 20%. As a result, the economics of technology development and acquisition have inverted, and the government must adjust by moving from being a developer to a leverager of advanced technology. Instead of driving industry to develop tech explicitly catered for nuanced warfighting capabilities, the government must work to adapt current and emerging tech to meet those needs.

Roper argued for using the military procurement system as a strategic stability market, one that allows for continued funding and investment in deep tech. As a strategic stability market, the military could take full advantage of the U.S.’s world-leading, next-generation industrial base, one with the ability to build a better military and build better markets across the board. Roper cited a prior initiative he facilitated as Assistant Secretary for Air Force Acquisition, called Agility Prime, which used the procurement system to accelerate and hone an emerging capability (eVTOLS, or “Flying Cars”) here in the U.S. The Agility Prime initiative leveraged DoD influence to induce U.S. market activity and competition to domestically capture an emerging tech-market with defense implications before China could (as has occurred in other market areas). Agility Prime provides an example for broader DoD activity in leveraging its procurement system to promote other market areas critical to developing an industrial base that will ultimately benefit both the military and commercial sector. Roper closed by stating that the real battle between China and the U.S. is over the control of the industrial base(s) that will create the next industrial revolution. While the U.S. military cannot enact an MCF strategy like China’s, we can create a symbiotic relationship between government and industry that maximizes the advantages of free markets and avoids the disadvantages of central planning.

Ms. Lois Nicholson rounded out the panel’s remarks by discussing how international cooperation and collaboration play a pivotal role in global competition for both the U.S. and the United Kingdom. International collaboration (particularly between the U.S. and the U.K.) has a well publicized history of tackling “wicked problems”, such as those which surfaced during WWII, the Cold War, and the Global War on Terror. Such collaborations need to be nurtured and encouraged. Nicholson emphasized the need for international collaboration to capture emerging technologies, such as A.I. (Artificial Intelligence) and machine learning, are crucial to succeeding in a global competition with China. She noted that industrial innovation is required to maintain a technical advantage and that data-sharing is critical. She contended that international cooperation could assist in developing solutions to the problems identified throughout the panel discussion, such as the lack of agility and imagination in the defense acquisition system, as mentioned by Roper. International collaboration also provides cost-sharing benefits that allow liberal democracies, like the U.S. and U.K., to mitigate the relative advantages in government spending power held by nations like China, with centralized control over their commercial industry. Export controls (ITAR, etc.) are a notable impediment to international collaboration between strategic partners, as they restrict the sharing of data, information, and technologies between the U.S. and its allies and deter international businesses from entering the U.S. market. In closing, Nicholson noted the U.S.’s network of strategic partners and allies is one of the key advantages it currently holds over China. She warned that not encouraging international collaboration on challenges posed by global competition would be a strategic blunder for the U.S.


Dr. Tim Welter hosted a series of questions from attendees which included the following themes:

How should the DoD address adversarial subversive economic practices against its industrial base?

Lemnios was the first panelist to address this issue, identifying two distinct sub-questions: 1) How should the DoD structure its industrial base to match the best technologies with the needs of the warfighter? 2) How does industry operate as a global enterprise? Roper pointed out that adversarial, subversive economic practices are representative of where future war with near-pear adversaries is going. He suggested that because of increased gray-zone warfare operations, the lines of what constitutes conflict has transformed; by the time a conflict is kinetic, the war might be functionally over. Roper stressed the need for the DoD to restructure itself to defend against threats “left of bang,” such as adversarial economic practices. He recommended war games that start with left of conflict scenarios and end with military mobilization. Nicholson added that collaborations and partnerships can provide effective means of combating adversarial economic practices and advised that barriers retarding those relationships be reexamined. All three panelists agreed that the industrial base needs to be reimagined to address the growing threat of gray-zone warfare. They also suggested the need for government to improve the way it negotiates with industry, identifying points of tension and mitigating the risk industry takes on in a government contract.

Does the government have the tools it needs to partner with Industry?

Roper stated that the government does not currently have the tools it needs to better partner with industry, but the problem is not as bad as people think. He identified the budgeting process as the area that most needs reform, noting that U.S. defense budgets currently lack the flexibility to keep pace with the speed of industry. Roper recommended the DoD adapt a budgeting system that builds a better military, a more competitive industrial base, and allows the DoD to be first in the adoption of deep-tech. Nicholson commented that the U.S. should look to the U.K. budgeting system as a model to increase flexibility and speed in acquiring systems and platforms.

How to deal with supply chain vulnerabilities?

Lemnios stated that supply chain concerns were prevalent long before the outbreak of COVID-19. He noted that our supply chains exist in an environment containing multiple disruptive factors and as a result, should be tailored to be more adaptive and agile. Lemnios described the need for supply chains to have precise forecasting of what tomorrow’s environment should look like. Roper noted that COVID-19 has shown how fragile our supply chains are and that some of the more strategic components of the government’s supply chains lacked the components, personnel, and business functions to respond at scale. He discussed the need to rethink the government model to allow for strategic mobilization against threats like COVID-19 or other non-kinetic challenges.

What role does the reserve component of the military have to play?

Roper argued that the reserve and guard components of the military provide a valuable wellspring of people with cross-knowledge of the needs of the military and private sector. He noted that we need to adjust how we utilize these components to inject the skillsets (STEM, A.I., data analytics, etc.) that the government has difficulty incorporating into its national security workforce. He stated that the reserve and guard components of the military need to be a part of our “whole of nation” approach to defense. Roper argued that reserve and guard components could play a pivotal role in creating synergistic markets that have interchangeable personnel between the private sector and the DoD, thus providing the U.S. a significant advantage over China.

How does the U.S. civilian-military relationship need to adapt to address modern gray-zone challenges?

Lemnios began by pointing out the disconnect between the average citizen and the scientific enterprise. To bridge this disconnect, he pointed out the necessity of educating the next generation to better understand and appreciate science and engineering. In addition, he stated that we need to convey the value of science and engineering in a way that inspires and encourages new thinking. Roper added that the 21st century will involve many more challenges, like COVID-19, which defy traditional military definitions of conflict. He argued that we will be required to rethink what militaries are for in order to address these challenges properly. Roper suggested the elimination of boundaries surrounding traditional concepts of national security and encouraged broadening the DoD’s concept to included non-traditional threats.

Takeaways & Key Themes

The U.S. Lacks a Strategy for Competition – The U.S. lacks a comprehensive national strategy to address emerging threats like adversarial, subversive economic practices that exist in the gray-zone of conflict. The U.S. needs to craft a long-term strategy that incorporates means to combat threats. This will require a reimagining of how the DoD structures its budget and how it engages with industry. If we plan to continue competing on the world stage, we must establish a comprehensive strategy and develop it. Additionally, industrial collaboration between the U.S. and its international allies must play a significant role in any strategy designed to address these threats.

Collaboration Between Government and Industry is Required – R&D funding in the U.S. has decidedly shifted from government to industry. In order to maintain and promote its capabilities, the government must work with industry. This includes the government understanding and evolving with industry’s incentive structures. The U.S. government needs to create a series of mutually beneficial goals and mitigate risks to encourage private sector partnerships with DoD entities and ultimately bridge the divide. Reform is needed if DOD expects to operate at the speed industry is comfortable with, the speed at which the world now moves.

We Must Reimagine our Approach to Maintain Competitiveness – Future warfare will not be limited to kinetic conflict between traditional military platforms and systems. The use of antagonistic economic practices by our adversaries against U.S. and allied industrial bases indicates the economic realm is rapidly becoming another battlefield. The stability, security, and prosperity of the U.S. economy should therefore be considered by the U.S. military in carrying out its mission to defend the nation. As part of this mission, DoD must revolutionize engagement with industry. It must nurture a symbiotic relationship with the commercial sector to render a better military and next-generation industrial base more suited for the global competitive environment. Advantage in the competition between the U.S. and China will be determined by who can leverage the next industrial revolution. DoD must therefore understand and learn to operate in ways that consider the emerging dynamics of the evolving economic sphere of conflict.