Rare Earth Elements and National Security

pIn the early twenty-first century, China produced 97% of the worldrsquo;s rare earth elements (REE), and Japan held key intellectual property for intermediate products made from REE. Many high-tech products use REE, including U.S. defense systems and green technologies like wind turbines. Because of REErsquo;s extreme supplier concentration and the wide acceptance that REE are important to ldquo;strategicrdquo; products, many politicians and pundits feared that the United States was vulnerable in international affairs. However, market forces (not policy initiatives) quickly corrected the vulnerability. This case suggests that even best case situations for economic coercion may offer only fleeting leverage in international politics. The crisis in rare earths was not the first resource panic, nor will it be the last. The successful market-led response offers a positive lesson for policy-makers considering how to react to fears of vulnerable resource supplies in the modern era of globalization: government is not alone in responding to risk, and often private firms, acting in their own interests, offer a relatively nimble solution to vulnerability./p