Terry Gerton The industrial base and supply chains are getting a lot of attention these days, whether it’s from tariffs or recovery still from the pandemic. You’ve got a recent report out that suggests we need a better definition of the national defense and national security industrial base. What do you see as the problem with the current definition?

Michael O’Hanlon Hi, Terry. Well, thanks for the question. And my co-authors, Marta Wosinska and Mark Muro and Tom Wright, what we wanted to do was to look at areas where the country’s basic functioning and basic safety of its people could be threatened, even if the military or the military’s manufacturing base per se was not. So we define national security to be something that could threaten the basic functioning of the country or its territory or large numbers of its people in a physical way, real, you know, real acute danger and so we try to make that definition broader than just defense but also fairly tight we didn’t want everything to be labeled national security. For example, I don’t think it’s that important where my flat screen television is made that’s not national security. And I don’t even think it’s that important that we dominate every single industry because unless being denied access to foreign goods could quickly put Americans, large numbers of Americans, at acute risk and unless there is a single potentially hostile foreign supplier that dominates, I don’t think we have to use the term national security to deal with that concern. There may be other reasons to want to promote a certain industry or certain part of our economy, but not for national security. So we’re trying to broaden it, but within reason. And so that led us to a certain specific methodology.

Terry Gerton It sounds like you might say that things both like shipbuilding and pharmaceutical manufacturing would be included there.

Michael O’Hanlon Yeah, those are good examples. So for shipbuilding, I don’t really think that it matters that much where the United States gets its commercially traded goods from and what ships are carrying those goods and where they’re built. But in the event of a prolonged conflict or even deterrence of conflict, like right now, when we’re trying to build more ships than we currently own and the size and capability and capacity of the ship building base is one of the constraints on our ability to, let’s say, build more attack submarines, then yes, I do think the shipbuilding manufacturing sector should be considered part of the national security industrial base. Commercial shipbuilding can sort of be your backup, your latent capability that you can transform into military shipbuilding in the event of prolonged need. And therefore, even commercial shipbuilding can be encompassed within this definition of a national security industrial base. With pharmaceuticals, it sort of all depends, you know, in the sense that if the medications are made, we buy them from abroad and they’re crucial to keeping Americans alive, let’s say antibiotics, and they are made in Germany or Canada, I don’t have any concern that we’re going to be cut off in a crisis. But if large numbers are either made in China or depend on precursor chemicals made in China, then we could be in trouble. As my colleague, Marta Wosinska, who’s really an expert on this stuff — she really did the hard work for us and taught the rest of us, as well as, you know, authoring the key part of the paper on this subject — and China indeed is the source of a lot of generic medications because it’s good at making things at low cost. And actually, it produces a lot of the precursor chemicals. Often, the final medications are produced in India or someplace else, but China is still potentially the bottleneck if they chose to be. And some people might say, well, would China really ever cut off medications or chemicals for medications upon which millions of American lives depend? Let’s say, again, antibiotics being a good example. And I think in a war, they might. I mean, in a war, we bombed cities in World War II. In war, as the saying goes, all the rules are off. There are no rules in love and war. And if you’re really pitted in an existential struggle of two countries duking it out — heaven forbid we ever have that conflict with China — but of course, here we’re thinking about deterrence and being a credible way to deter the war as our goal. There’s no reason to think China would supply those medications just out of the goodness of its heart. So I think that’s a vulnerability. Maybe not for Excedrin or aspirin or things that, you know, are really medications of convenience. I mean, sure, they’re important to keeping people comfortable. But I’m talking more about medications that keep people alive. And on those, I don’t think we want too many foreign dependencies when it involves a country like China.

Terry Gerton Your paper talks about three specific criteria for identifying critical supply chains. Walk us through those and how they fit together.

Michael O’Hanlon Well, we say that, and this builds on what you and I have been discussing, are large numbers of lives potentially at risk? Is there a dependence on foreign supply where one potentially hostile foreign supplier in particular could choose to cut off supply? And then could we react quickly and find alternatives, substitutes, or build up our own manufacturing capacity within the relevant time scale to avoid serious harm? And if you can’t do that, and you do have a dependency on a potentially hostile foreign actor and a put-off or an interruption of the supply could lead to many thousands or even millions of Americans lives being at risk or the economy breaking down or the military being non-functional, then you’ve got a problem. So if those three criteria give you sort of the wrong answer on each point you need to take remedial action for your own manufacturing base and your alternative sources of supply right now rather than wait for the crisis

Terry Gerton I’m speaking with Michael O’Hanlon. He’s a senior fellow and director of research and foreign policy at the Brookings Institution. You looked at 16 critical infrastructure sectors, which emerged as perhaps most vulnerable.

Michael O’Hanlon Yeah, well, the Department of Homeland Security helped us out here, specifically the Cybersecurity and Infrastructure Security Agency, CISA, because they had created this framework of 16 areas of critical infrastructure, basically the same kind of criteria being used to develop that that we use. Where are their large numbers of lives potentially at risk from damage to that infrastructure? Where could the economy become nonfunctional or the military become nonfunctional, or the country be vulnerable? So we went through, and there are some areas, let me just give a couple examples, like for example, stadiums and gathering places. You know, no one really cares in terms of national security if, let’s say, you’ve got a dependence on China for huge flat-screen TVs for, you know, the Washington Commander Stadium, and then that’s cut off in a crisis. Well, heaven forbid, you know. We don’t have to see as many replays of our beloved commanders losing for a few months. I’m being a little facetious, but you see my point. The reason why that kind of a category is established is because terrorists could strike it and a lot of lives could be quickly lost and that’s why it’s critical infrastructure. But it’s not the supply chain, it’s not the manufacturing or the sourcing of key equipment that’s going to potentially be interrupted and therefore put the nation’s security at risk. But an example of where you could have that kind of a vulnerability beyond pharmaceuticals or military manufacturing that we’ve already discussed might be, let’s say, agriculture. If you really depend on foreign suppliers for fertilizer, insecticide, pesticide, etc., and then that was cut off, you might not have people starving the next day, but within a few months, fundamental disruption could occur to crop production here in the United States and you could have big shortages. Now maybe there are ways to substitute potatoes for corn or what have you, but you need to do some detailed analysis because if there are certain chemicals upon which we depend heavily on China’s manufacturing base and then if you can then determine that those chemicals, if cut off, the absence of them would produce a crisis in food production within months, that’s pretty serious. And that’s, by the way, an example where there’s nuance and shades of gray, and we don’t claim to have definitively answered that question in our study. We didn’t have the capacity to do that with the four of us. But we did say there do seem to be some chemicals, especially with some insecticides, pesticides, where we have a high dependence on China. And we probably need to do some more work to see, in a hypothetical scenario, what would result if China cut off those pesticides and insecticides due to a national security crisis. How fast could we build alternative supply? How could we do crop rotation or substitution so that we didn’t depend as much on those chemicals, etc.? So that’s an example of where there probably is some excessive dependency. Maybe not enormous, but worth looking at.

Terry Gerton Your report suggests some action steps. Can you walk us through those and who would be responsible for them?

Michael O’Hanlon Well I think you would do it a little bit sector by sector and so I just mentioned agriculture. I would think the Department of Agriculture would know how to assess, you know, these kinds of hypothetical disruptions to supply chains much better than I would, as a more traditional national security analyst, for example. The Pentagon already does its own assessments, and they’ve gotten much better at the assessments. I’m not sure they fixed all the problems, but they’ve done much better with the assessments in the last few years. Of course, we’ve had big national debates in recent years on semiconductor production, and I think that’s been led by a number of agencies, probably the National Science Foundation and probably the Department of Energy and places that have some expertise in this kind of manufacturing and this kind of high precision, you know, technology. And so with that one, and maybe National Institutes of Standards and Technology. So there might be three or four. And with health and pharmaceuticals, it might be HHS, you might be CDC, NIH. So for each one, you would designate a lead agency within the federal government and try to work through, starting with this broad framing approach that we suggested or something similar, sort of narrow down your realm of more detailed investigation and then try to look through and see where you’ve got these dependencies that really could put national security at some risk. And then you use a common — if you find something you’ve gotta fix, you use combination of subsidies and various inducements and maybe direct regulation to try to change that situation and create alternative sources of supply, either here in the United States or from friendly nations. And that’s sort of the toolkit.

Terry Gerton Is this all an administrative approach in the executive branch or would you need the legislative branch to get involved here too and create some statutory frameworks?

Michael O’Hanlon I think you certainly need resources from the legislative branch, so you need appropriations. And you also would want state and local governments to help out in thinking about certain kinds of either vulnerabilities to their manufacturing sector or places where they could contribute to helping create new capability. And by the way, we’re looking at supply chain interruption. There are two other big ways in which critical infrastructure could be threatened — at least two, but one would be cyber attack. Whether you got the technology from abroad or not, if a foreign actor is able to access the technology through the internet, as we know China has with its Volt Typhoon malware that it’s implanted in a lot of infrastructure, you got to worry about that vulnerability too. So states can look into where they might have those sorts of vulnerabilities and could improve their resilience. And then, so you’ve got cyber, and then you’ve supply chain, and then, you’ve the possibility of physical damage either from natural catastrophe or from terrorist attack, so let’s say a dam or a single production facility where we make a lot of our IV fluid, for example, has happened during one of the hurricanes in 2024 in a facility I think in North Carolina was rendered incapable of producing that and it accounted for more than half the country’s total supply. So states and localities and the private sector can look into where they might have vulnerabilities of one of those types. Again, not the main focus of our paper, but you want to look at this all together and try to develop a national strategy for greater resilience in supply chains as well as against catastrophe or attack.

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