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THE PRESIDENT ROLLED AN UNLIT CIGAR BETWEEN his thumb and forefinger. “Why?” he asked in an irritated tone. “Why would the Chinese suddenly halt all exports of rare earth elements?”
An uncomfortable silence filled the Oval Office.
I can only suspect it’s for leverage,” the Secretary of State said. “Something they can use as a bargaining chip to counter our pressure on their support of trade with Iran or their refusal to float the yuan.”
Have they told you as much?”
No, the Foreign Ministry has only indicated it was done out of ‘strategic necessity.’”
Sure,” said Vice President Sandecker. “The necessity to torpedo our economy.” A cigar aficionado himself, he eyed the President’s stogie with envy.
It is quite a bold move,” the Secretary of State said. “I would have expected some hint of negotiation over the matter, but the Chinese are playing it close to the vest.”
The President turned to his national security advisor, a raven-haired woman named Dietrich. “How bad is it going to hurt us?”
Over ninety percent of our rare earth imports come from China,” she said. “Commercially, it will devastate a number of industries, particularly electronics and the alternative energy fields. Almost every high-tech industry in the country will be affected.”
Are we just talking higher prices?” asked Tom Cerny.
Skyrocketing prices will be just the first impact. Until work-arounds can be developed, products will be in short supply—or simply unaffordable. Either way, demand will evaporate, and jobs along with it. It could easily drive the economy back into a serious recession.”
What about other sources of rare earth?” the President asked. “I know we’ve got that mine in California. Tell me the Chinese aren’t the only game in town.”
The Mountain Pass Mine came on line a few years ago and was just ramping up their production,” Dietrich said, “but a recent fire at the facility destroyed the mine’s extraction operations. It’s effectively closed for an indeterminate period, probably two years. That was our only domestic source.”
Has anyone looked into the cause of the fire?” Sandecker asked.
It was believed to have been accidental, but now the owners have called in the FBI to find out if it might have been arson.”
How about other foreign sources of rare earth?” the President asked.
We do source a fraction of our imports beyond China,” Dietrich said. “Australia has been the primary backup, with additional smaller amounts from Russia, India, and Malaysia. But there’s also a problem down under, I’m afraid. The major Australian producer has announced a temporary shutdown due to an expansion program.”
The President shoved his cigar into an ashtray. “So we’re left whistling past the graveyard while our economy sputters to a halt?”
Dietrich nodded bleakly. “I’m afraid we have little, if any, control over the supply situation.”
That’s only the half of it,” Sandecker said. “The shortage strikes a pretty nasty blow to several of our key defense technologies.”
The Vice President is correct,” Dietrich affirmed.
Where’s the damage?” the President asked.
The Navy gets hit hard,” she said. “The propulsion system for the Zumwalt class destroyer and the new stealth cruiser relies heavily on rare earth elements, so those programs will come to a crashing halt. I’m waiting for a report from the Air Force, but I’ve been told there’s a significant impact to the new joint fighter and several satellite development programs.”
We’re talking programs that are budgeted in the billions of dollars,” Cerny said.
Sounds to me,” the President said, “as if the Chinese might be exploiting their monopoly as an opportunity to catch up militarily.”
The heads in the room nodded.
What if we tell the Chinese their export ban is unacceptable?”
The Secretary of State squirmed in his seat. “I don’t think that dog will hunt, sir. The Chinese leadership won’t take well to any threats. If we get into a trade war, we’ll be the bigger loser. And if they stop purchasing our debt securities, that would create even worse problems.”
So we’re facing an economic nosedive when we can least afford it,” the President said. “On top of that, we’re sacrificing our military readiness by delaying the next class of destroyers, fighters, and spy satellites.”
There’s one other casualty,” Sandecker said. He moved close to the President and spoke in a whisper. “The Sea Arrow.”
The President nodded. “Of course.”
The President walked to his desk and peered out the high windows behind it for several minutes. When he turned back to his audience, he spoke in a soft, defeated voice. “Find out what the Chinese want,” he said, “and give it to them.”