00:00:04: We're seeing a shift towards something far more complex to grasp and defend

00:00:10: against.

00:00:11: And this is new geoeconomics.

00:00:15: Economics has become

00:00:16: the

00:00:17: central instrument of power in today's world.

00:00:21: Those who control the economic levers are the ones who can exert control over others.

00:00:28: In the last weeks and months alone, we've seen a rise in drastic export controls on critical inputs.

00:00:36: We've seen the systemic use of tariffs and non-trade measures.

00:00:41: We've seen global supply chains deployed as a vector for pressure.

00:00:58: but a political power instrument.

00:01:06: Export controls, cells, targeted attacks on delivery chains.

00:01:09: All this shows how much the global economic order has changed.

00:01:12: It is particularly visible when it comes to critical raw materials.

00:01:18: They are often invisible, only make a small part of the world trade and decide whether batteries are built, windmills run or defense systems work.

00:01:42: Therefore, Europe is asking itself a central question.

00:01:47: Hello, Ato.

00:01:48: Ato Rohstoffe.

00:01:50: are now a central security and geopolitical issue for Europe.

00:01:54: Almost every technology that the EU wants to expand, whether it's only electric cars, energy storage, wind power plants, up to half-manage and defense systems, depends on materials.

00:02:05: Europe rarely produces or processes itself.

00:02:09: So rarely earth, lithium, graphite, nickel.

00:02:12: All this has to be imported to a

00:02:15: large part of the

00:02:15: EU.

00:02:16: Can you summarize what this structure is?

00:02:19: Dependency for the EU means?

00:02:22: You just described how essential these critical raw materials for a whole series of industries are.

00:02:29: Firstly, for the energy turns, it is used in batteries, but also in wind turbines, for the digitization, for halve lights or electronics are these essential?

00:02:38: and also in the defense industry, because further developed missile sensor systems.

00:02:43: And why the EU is so dependent here is an extreme concentration of delivery chains.

00:02:48: And there is particularly the departure of China from relevance, which was then building dominance in the decades to come.

00:02:55: And while these departures were rather a theoretical risk for years, or were carried out by individual companies, when it came to unifying them, it is now becoming more and more political.

00:03:07: This is due to the fact that economic departures, especially in recent years, are more used for pressure training or also for oppression.

00:03:15: That has now been seen by Trumps.

00:03:17: Zollpolitik, which was mixed with Ukraine guarantees or China through increased export controls, as you have seen for example with the Nexberia chips.

00:03:27: That

00:03:28: means these economic dependencies in the EU will be geopolitically instrumentalized.

00:03:33: Where is Europe currently at these critical resources?

00:03:35: Can one somehow quantify the dependencies and at what point the value chain is particularly large?

00:03:41: According to the individual raw

00:03:43: materials, you can manufacture them.

00:03:47: Especially large is the possibility of further processing.

00:03:52: China has built up an extreme monopole there and is working on a hundred percent of the worldwide graphite, ninety percent of the rare earth.

00:04:01: For example, the EU is calling it a hundred percent of the rare earth from China.

00:04:06: At Kupfer there are also forty, at Lycium sixty percent of the processing that happens in China.

00:04:11: That means... Even if the construction is a bit diversified, all these currents run through China.

00:04:18: This creates an extreme node point, which China uses more for economic flows, but also political pressure on neighboring countries from the South.

00:04:27: Considering

00:04:28: this dependency in the description, what does this mean for Europe both politically and also for the companies in the US?

00:04:35: Exactly.

00:04:35: Over the last few years, China has increased export controls and license flows for the export of these substances.

00:04:42: And that started in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year in the year And this has led to delays and also to fewer exports.

00:05:13: This has been strengthened again in October this year, as not only cells, but also restrictions on chips, i.e.

00:05:21: half a liter, from the US to China.

00:05:25: And then China threatened to use any products that only use minimal native materials to block.

00:05:33: And categorically all uses for the military sector.

00:05:36: That was aimed directly at the USA, but at the same time globally structured, so that Europe would also live under these restrictions.

00:05:45: And exactly there, it was shown how quickly companies could come into supply chains.

00:05:49: It was then clearly visible how little the dependencies for some companies were visible.

00:05:52: And that it could come very quickly into supply chains within two production steps or further down in the supply chains.

00:06:00: Especially relevant here is the military industry and the implications for this.

00:06:05: Especially where Europe wants to start a military expansion.

00:06:08: So that you can quickly limit the capacity and the supply of supplies or production stops.

00:06:14: Now the

00:06:16: EU does not start with the topic of critical raw material.

00:06:19: There was already the Critical Raw Materials Act a year and a half ago.

00:06:22: At that time, we had also made a podcast episode in June, in which ambitious goals have already been formulated.

00:06:30: Now we are a year and a half after this act was taken into force.

00:06:36: What are the lessons learned from it?

00:06:39: What worked and where does the existing funding and existing regulations affect their limits?

00:06:45: The Critsch Rohstoff Act has, as you say, set out ambitious goals.

00:06:49: It was determined that by the end of the year, it should be built up to ten percent in the EU and a certain percentage has been recycled and processed.

00:07:00: Only the problem here was that there was no financial framework that could really achieve this.

00:07:08: So there was again such an expectation and possibilities.

00:07:12: What has done very well was a clear strategic framework.

00:07:15: You have decided to design certain strategic projects and the simplified access to expertise, but also to financial means, there is no new financial means.

00:07:27: That's why there was great ambition, but if you look back on it for a year and a half, nothing has changed because the decisions will still be left on the private sector and because of this extreme advantage that China has built in the last decades.

00:07:42: they can produce at the most cost and this systemic risk that it can come to delays or delivery stops is not yet

00:07:50: priced enough.

00:07:51: Now we don't just try to solve the problem on the EU, but there are also attempts in the middle states to counter national raw materials.

00:07:58: In any case, this effect on what happened on the EU level.

00:08:02: These

00:08:04: national raw materials... can help to close such gaps while there are few European financial resources.

00:08:10: The problem here is only that it is possible to be fragmented, that member states support their necessary materials.

00:08:18: But because the European supply chains are so closely connected, a real resilience is actually only created when a whole Europe is independent and resilient in these supply chains.

00:08:30: And on the other hand, these fronts are still quite small and there's something behind them.

00:08:37: Germany took the front online last year and only took the first edition last week.

00:08:43: And it's not clear what's going on.

00:08:45: And whether this financial means, the Italian, France, Germany, and again, is planning a front like this, is ready to be able to flow really well into these projects.

00:08:54: Now

00:08:54: the Commission has set up a new initiative in early December.

00:08:58: Resource EU.

00:08:59: What differentiates these initiatives from the previous ones?

00:09:04: Resource EU.

00:09:05: He has a clear economic security framework.

00:09:09: He tries to combine several political fields, such as industrial policy, economic policy, international partnerships, and tries to make this goal of the Kritsch Rohstoff Act, which is only called rhetorical, into use.

00:09:22: And there are three new core elements.

00:09:25: Firstly, the central coordination through a new center that will be created, new financial resources, European projects or diversified projects for partner countries should be made investable and capacities that are not Chinese should be strengthened and the resilience should be strengthened by recycling or setting up crisis instruments.

00:09:46: What is good here is the commissioning, which tries to strengthen the demand for European products that can still be kept pricey.

00:09:57: investors to step back, to give back the capital that is needed for the investment.

00:10:03: The problem with the whole thing is that at the moment in the absence of large EU financial resources, we are in the current budget, up to the new mayoral financial warm-up, we still have two years, there are not so many new money, and therefore it is much a new package of existing instruments.

00:10:21: If

00:10:21: we talk about the limits of the critical raw materials and of the resource EU, you already mentioned the missing income finance.

00:10:29: But that's what you're talking about.

00:10:31: Europe will also be limited by the fact that other actors are much faster and much more determined than we are at the moment.

00:10:39: That's exactly

00:10:40: what I wanted to do with the comparison.

00:10:43: For example, the U.S.

00:10:43: is now investing one billion dollars to bring the projects forward, while other direct competitors are much more on the both sides.

00:10:52: China, through the state-run industrial policy for decades, but also the USA, which has now been divided into direct export controls, is investing up to one hundred billion dollars in certain banks for the expansion of crude raw materials and delivery chains.

00:11:07: This is not a problem for the EU, when new suppliers and diversified sources exist.

00:11:15: However, the US has agreed so aggressively in the past months, that the risk is that these limited non-Chinese suppliers will be added to the USA.

00:11:26: It has been seen that there is, for example, another processing refinery in France, from a Belgian company.

00:11:33: It has now signed a contract with the USA.

00:11:36: Therefore, you have to be careful that by missing financial means you don't have the capacity to build up, but to deliver other states in the end.

00:11:46: And you don't have to identify yourself.

00:11:50: Now the EU is trying to diversify, that is, to refer raw materials from different regions.

00:11:56: Which regions play a central role here, except China and the USA?

00:12:02: That was a big trade and partnership push from the Commission to travel in several countries and these new strategic partnerships.

00:12:11: These are not all trade agreements, not free trade agreements in the classical sense, but it is actually meant to go into investments in particularly relevant industries and so that the new deliveries can be delivered there.

00:12:27: The last of these partnerships that were hidden was that with South Africa.

00:12:33: There you want to invest more in renewable energies, or invest in pre-products.

00:12:38: And the stripping of more diversified sources of waste has then also been reflected in the African Union and the EU.

00:12:48: And steadily the relevance that the African continent plays.

00:12:52: Even if in rare lands other countries, such as Sweden or China, play a greater role, there is still a much wider one.

00:13:00: And that is, for example, Obald, Holtan, Mangan, or Lithium, and exactly these mines, especially on the African continent.

00:13:08: And why the EU hopes that these countries want to have more local value and want to achieve more economic success, not just by rebuilding, but by continuing to work.

00:13:22: And I think that's the chance that the European Union has to use and that it can also give a challenge against China, which has been there for decades and partnerships.

00:13:30: The problem again is that relatively many financial resources, not only for the direct affineries or further processing capacities, but also for secure and functional energy and infrastructure network, have to be prepared.

00:13:44: So that's really a long-term project.

00:13:46: You've already emphasized that further processing of critical raw materials is actually a tight fit.

00:13:51: Is it realistic that Europe may also build its own

00:13:56: processing plant here?

00:13:57: That's a realistic certainty.

00:13:58: But you start with a large percentage.

00:14:01: compared to the Chinese telecommunications refinery.

00:14:03: And it has now also shown how very China-willed is to distribute this advantage or this platforming, in which the October package also has export restrictions on telecommunications technologies.

00:14:17: So you have to pick up a disadvantage there, can eventually not attack Chinese technologies and have to calculate that the own telecommunications products are clearly.

00:14:29: are more expensive and therefore are more difficult to find and scale.

00:14:33: And that's exactly where political intervention is needed.

00:14:36: What about the dependency of China's EU?

00:14:39: How urgent is it for the EU to get out of these dependencies and over what time horizon are we talking about here, realistically?

00:14:49: How urgent is that?

00:14:50: Very urgent.

00:14:51: You have now noticed how fast it can lead to these stops or to these strict problems.

00:14:59: China is very eager to instrumentalize these dependencies.

00:15:05: And the USA, as a country that can build its capacities, is not a reliable partner at the moment.

00:15:20: That's why you have to focus on it.

00:15:29: You won't achieve autarky.

00:15:35: In my opinion, that's not the point of this whole exercise.

00:15:40: You have to reduce individual cutting points or break points that can really cause great macro-political or macro-economic damage.

00:16:00: No, no, no.

00:16:00: For example, Japan had already tried to get rid of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens of tens.

00:16:23: is this political will, that you really implement it, what you have announced in the EU, that you increase demand for European or the specified products and also buy these higher prices.

00:16:35: You also have to be aware that the triple components of the critical raw materials or the further processed products make up a small part of the financial pressure.

00:16:46: And if you deliver yourself four times more expensive raw materials, or further processing, then it will only mean a small price increase.

00:16:58: And in my opinion, this is the theme risk that such direct excursions for those who can bring something, it will be worth it to take some money and make yourself more resilient.

00:17:09: Thank you, Arthur, for being here so far.

00:17:11: But before we completely change our podcast, I still have Our category asks three questions for you.

00:17:18: That means I have three questions that you please answer with one word.

00:17:22: The first question is, for which industry in the EU do you see the biggest difference due to the dependence on critical resources?

00:17:31: Participation.

00:17:31: If you

00:17:31: give the EU a note, do you have to?

00:17:37: How effective will the initiative be?

00:17:42: What note would you give

00:17:45: her?

00:17:45: Three minus.

00:17:47: Okay.

00:17:47: And the third and last question.

00:17:49: Who is the biggest geoeconomical danger for the Buddha?

00:17:53: China.

00:17:54: Thank you

00:17:55: very much, Arthur.

00:17:56: You're welcome.

00:17:57: That

00:17:57: you were in this last You to Go episode of the year twenty-five.

00:18:04: Thank you very much for being here.

00:18:05: An unsere Zuhörer und Zuhörer, das war hiermit die sechsenfünfzigste Folge des YouTube-Podcasts im Podcast für Europapolitik des Drack der Loscenters in Berlin.

00:18:14: Alle unsere Folgen gibt es wie immer auf Spotify und allen anderen Gengen Podcast-Portalen zum Nachhören und natürlich auch auf unserer Webseite deloscenter.eu.

00:18:23: Mein Name ist Thunüren.

00:18:25: Danke fürs Zuhören.

00:18:26: Auf Ruhr Weihnachten, ein gutes neues Jahr und bis zum nächsten Mal.