Latest / Rittener Reflections / EP:31 Geo‑Strategy: Survival in a Geopolitical World
Transcript
- Jeff Rittener (00:00) Hi, this is Jeff Rittner, and you are listening to Written Reflections, a forum for exploring the dynamic, complex, and essential nature of cross-border trade, and a space to reflect on the deeper questions that shape how we live, lead, and move through uncertainty. You know, today, speaking of uncertainty, we are living through a moment like no other. Geopolitics have moved. From the supporting cast to the main actor, shaping how companies operate, invest, and compete in real time. National security, economic statecraft, and technology leadership are converging, and companies are being pulled into the center of that collision, whether they're ready or not. And that is why this conversation is so important right now, and I wanted Jeanette. in this chair. Jeanette Chu and I have been operating in this world from very different angles. She, as a diplomat, law enforcement veteran, consultant, US China relations specialist at a leading think tank, and now one of Washington's sharpest national security trade strategists. And me, I've spent years inside a global semiconductor company navigating these pressures firsthand. Jeanette introduced me recently to a concept that reframed how I think about all of it. Geostrategy. Connecting geopolitical reality to corporate decision making in a more intentional, forward-looking way. In this two-part series of episode 31, we explore this from both ends, the strategic landscape and the operational reality Of how companies execute. Welcome Jeanette. Thank you for joining me. Today is June 10th, and we are sitting in a podcast room just outside your office here in Washington, D.C. am so excited to spend this time with you. Jeanette Chu (02:27) you so much, Jeff. I'm delighted to see you back here in Washington. Jeff Rittener (02:31) we dive in, I wanted to just ground our listeners in your background and why your voice is so essential right now. You've led national security and competitiveness work at NFTC, founded the Alliance for National Security and Competitiveness, you serve as a non-resident senior associate at CSIS, and you previously spent a decade as a senior U.S. diplomat in China. You've also guided multinational companies through some of the most complex compliance and enforcement challenges in the system. Now, you and I have been in conversation about these issues for years. And in one of our recent discussions, you introduced a concept that really stuck with me: geostrategy. And it really felt like this is the right moment to explore this a lot more deeply. So let's start right there. When you talk about geostrategy, what do you mean and why is this the right moment for companies to adopt that mindset? Jeanette Chu (03:27) Well, Jeff, again, thank you so much for having me on Ritner's Reflections. It's an honor and pleasure to be picking up our conversation, actually, as our thinking about all of this continues to evolve. So you mentioned in your introduction geopolitics. That is still very much front and center. CEOs that never have thought about this now are standing up geopolitical risk departments in their companies. To be able to manage and monitor all of the developments happening around the world. National security, as you mentioned, geoeconomics, economic security, economic statecraft. And now, in this moment, we've arrived at geostrategy. So in the first two, geopolitics is something that is external. It happens, and then we all scramble to respond, right? When we move from national security to economic security, again, something happens, markets respond, companies have to may have to pivot. I think the pandemic was a huge lesson for many of us, particularly those of us that work in supply chain, logistics, trade, right? How very important it is to be able to meet that moment. And increasingly, economic security and national security have become intertwined. They they don't quite converge, but they definitely intertwine. Sometimes into accordion not. Geo strategy in my mind is almost an inflection point. It's how companies think strategically, act proactively, and neutralize surprises. Stability, predictability, is so so so important to business operations. Nobody makes a capex decision in the morning and has it done by noon. Right. Same. You don't unwind that immediately. That's why geopolitics is Has such an outsized influence. Look at all of the world events that have happened so far this year. Huge impact on business. Geostrategy is a way to think about this that harnesses all of that, right? It it harnesses the fact that this morning's opportunity becomes an almost insurmountable challenge before you have finished your coffee. So how do we Harness the sensory overload of information that is always changing, sometimes conflicts, and isn't always reliable, and build that stability, bacon resilience. How do we ensure durability? I hear companies talk a lot about being nimble, responding. Geostrategy reframes that because it's about leaning into headwinds and emerging stronger. You Define the four corners of the box. Jeff Rittener (06:16) I'm just drinking my coffee and I I wonder what's changed today. I love the way you've described that, Jeanette. And I what really resonated with me is I lived through a a moment that you mentioned the pandemic where as a company we were absolutely caught off guard. I mean no one planned. And it it it it was quite a moment of trying to figure out how do you adjust and how do you make sure the business is not impacted. I also went through the same sort of thing when Russia invaded Ukraine and just the sudden, you know, change to our business. And I think I think the struggle I always had is some of these things happen so unexpectedly. So how do companies how do they take that str strategy mindset? How do they really prepare. Are there certain BKMs that you're aware of that would help companies? Jeanette Chu (07:10) I think I have I used to say that I had a murky marble and then somehow it did not make it into my shipment back from China. At this moment I think we're all looking for that same murky marble, right? We're all scrambling after something that we can fix on. information should inform. It should not necessarily drive, right? Right. It is very important To look at data, to understand the data. It is also equally important to know to ask the right questions. Companies that succeed are always pressure testing their assumptions. And that's something that I see as not so much a defensive measure, but it helps you get ahead of that game. You asked what makes you better at this and not being caught off guard. And I think it is that constant. What should I be thinking about? What am I not seeing? What is my outplan? Jeff Rittener (08:02) Yeah, that's that's helpful. I recall back in my days at Intel, we had a team of people that spent time once a year categorizing major risks. And with the idea of you know in in my role as trade, so in in these particular risks, what were the trade implications? And so we had a method to try to keep ahead, but there's always things and today in our world today, I don't know how y as you said, how you keep track with how quickly things are changing. But it is a challenge for companies and I think having a already a framework and understanding this concept that, you know, I can't just like you said, just react to everything that happens, but I have to have a strategic lens and looking at how to how to anticipate. Makes lot of sense. Jeanette Chu (08:45) Sometimes I think about this and I challenge companies on this, how do they separate static out of everything that they hear? Right? Yeah. That's what strategy is. Noise minus static is your strategy. Jeff Rittener (09:00) That's fantastic. Yeah. I I that that makes so much sense because I I I know how easy it is to react to everything. And if you have a s a good strategy, you you're less likely to have to react. 'Cause you you rely on that. Jeanette Chu (09:14) So Jeff, I'm wondering in these meetings, these big risk meetings that you had once a year, it wouldn't shock me by the way, if that is now done quarterly. Yes. Was there ever a Monday morning quarterback or hot wash where you looked at that and said, This one we nailed, this one no one saw coming, we didn't have that on our bingo card or whatever. Did you ever do any kind of a after action analysis? Jeff Rittener (09:39) Yeah, I think with the pandemic I don't recall that. With the Russia situation, yes, because it had huge implications. I think one of the things that I really appreciated with the process was it was an annual process. And every year you had a heat map that you had to document where you were on the risk scale. And what I really appreciated is over the years we could see movement. Right. And so one of the things from a trade perspective is we oftentimes had our business in China as a risk. So high likelihood that there could be something, you know, that would impact our business. And the impact was huge. Right? So you had that that lens of what's the what's the impact? You know, and and it was high. And then what's the likelihood? In some situations it was low likelihood, but on in today's world that likelihood thing was moving a lot. And so what I appreciated was having the ability to look over several years and see where that was moving. And I remember in the whole China thing, I saw that little X in the box move up to what I would call the the corner, the right corner, where you had the intersection of high impact, high likelihood. Right. And so that was ⁓ for me that was a way of monitoring how has to how is this changing and what are we doing about it. And so I think we hit we did have that. ongoing process that helped. But going back and actually taking each situation and diving into it I I don't recall that necessarily. Jeanette Chu (11:04) Fascinating. Thanks for sharing that. Jeff Rittener (11:07) Janelle, let's shift slightly because one of the things I I appreciate about your background is just the the focus on national security and as a competitiveness issue. And I I'm really kind of curious how ha has the national security landscape really expanded. over the last few years. Jeanette Chu (11:26) So traditionally national security has been about military force projection and everything that goes into that. Deployment, personnel, material, weapon systems, protecting the homeland, safe and then it grows, right? The it's about safeguarding critical assets, things like infrastructure, the grid, water resources. those will become the battlefields of the future. We're talking now about space, right? So national security, the expansion of national security is about harnessing forward technologies, term that I coined to capture foundational, critical, and frontier technologies that shape offensive and defensive capabilities. It's more than just rushing up against national security, it's shaping what that means. Sometimes people will say, Well, if everything's national security, then nothing's national security. Fair criticism. But I think again it's about reframing that lens so that you're not reacting to well, they just say everything's national security so it gets focused, but more thinking strategically about how does this impact national security. And so companies are affected more and more today than ever before. Economic tradecraft lawfare, if you want to call it that, means that nation states use the tools at their disposal in order to gain that leverage and often do so by invoking national security interests. We've watched China do this over the past two years, even last week, very, very aggressively, right? With the most recent State Council ⁓ decree around outbound investment. And we see what we've done here in the United States as well. So increasingly these economic security tools are part of the national security, right? How do we use trade tools to gain or preserve strategic national security advantages? Jeff Rittener (13:27) one of the tools that I have lived and breathed for ⁓ decades is export controls. And you and I have talked a lot about export controls. In fact I think I first met you over export controls, right? ⁓ Back in China. But how do you see export controls Shaping this sort of national security. you just mentioned China, and China has also adopted expert controls in the US. So, how do you see that? Jeanette Chu (13:54) I think export controls are always an implement of national security. That doesn't preclude them from being used for other purposes as we've seen in this administration to gain leverage, to get people to the table. Section two thirty two tariffs, for example, are the result of an investigation into the national security implications of certain sectoral imports. A national security tool that has caught attention, made other governments come forward and say, Hey, we want to talk to you. And and it's been used quite successfully to develop new alliances. You can talk about the bilateral agreements on reciprocal trade or arts. You can talk about the plurilateral coalitions that they are still standing up, whether that's Taxilica, the critical minerals ministerial, all of that stuff. So all these things shape global markets. And now export controls, what former Under Secretary Eric Horshern once said, I'll never forget this, it was at a update conference. He said export controls the skunk at the picnic. Now we're front and center, right? I mean this used to be a backwater. Yes. No one even knew what it was. And suddenly everyone is thinking about what are the implications. How does export controls sometimes converge with sanctions or overlap with sanctions or the role that it plays in foreign investment security and other forums? Jeff Rittener (15:25) I've always worked in the export control area and you're right, it was something that was a necessary evil, if you will. You had you had to make sure you had the right authorizations and so on and but today it's it's critical. But I think one of the things I struggle with is what I've always seen was export controls were a multilateral effort. You had agreements within the Wassenar countries to agree on what should be controlled and not. And that seems to have gone by the wayside. And so I'm just curious your perspective on are we moving away from multilateralism and just and now it's just a plurilateral approach or how do you see that playing out? Jeanette Chu (16:04) Well, we still have the missile technology control regime, we still have the Australia group, nuclear suppliers. I share your concern about Vossenar for sure. And particularly since the U S has had such a leadership role. Yeah. And because Vossenar controls both munitions list items and dual use items, the scope is so vast. I think So when I'm at my most pessimistic, I say that we have grown apart from like a bipolar world, right? Or or a world with like there's the US and then there's kind of a Eastern bloc or whatever, and that the New World Order is what you described, Jeff, that bits and pieces of Plurilateral alliances, I would add that these plurilateral alliances are alliances of convenience or around a specific issue and they are non exclusive. I used to say non monogamous, but people would look at me quite oddly. there's room in this world for both. I don't see any move to dissolve Boston or any of the other alliances. Right. But increasingly because of what we other countries, not just China, the EU, others as well, are doing with their own export control laws and mechanisms and exploring the fringes, the frontiers of extraterritorial application, you cannot get away from that plurilateral aspect. Jeff Rittener (17:32) I think that has become critical, and especially in certain technologies. think about semiconductors. that's where I came from, the semiconductor world. But but it's we've seen, you know, export controls be front and center when it comes to semiconductors. do you believe that the export controls for on the whole semiconductor industry is effective? Is it the right way to go? I mean there's been talk about, by putting export controls in place, you're going to prevent China from advancing. Others have said, well by putting export controls and restricting them from getting products, you're actually accelerating their innovation. So how do you see that plan? Jeanette Chu (18:06) You can hold two thoughts in your head at the same time. Right. Both of those have more than a grain of truth for sure. I spoke at CSIS, I was on a panel ⁓ about a month maybe month or two ago where BIS had just announced a huge enforcement action on chip smartphones. And I said many people are pointing to that as a failure of semiconductor export controls. No, that is And export enforcement success. That demonstrates the success of BIS's Office of Export Enforcement and its small but mighty cadre of special agents. So be very clear about that distinction. Just because something is detected, stopped, prosecuted, does not mean that the control itself failed. Jeff Rittener (18:56) So I'd like to kind of shift if I could to China because you spent more than a decade in China as a diplomat. And from your vantage point, what do companies still misunderstand about China's strategic objectives and how does that affect their operating environment? Jeanette Chu (19:15) Jeff, actually I think companies have come a long way and companies get it right more often than not. I worry more about whether or not governments get it right. I think because companies are on the ground and have been for a very long time, they have a pr they're pretty clear eyed about what China's strategic objectives are. What they may not be quite as clear eyed about is their ability To again be pacing to stay ahead of that or underestimating China's ability to not just copy, if you will, with the but to take and synthesize what we talk about this now in the AI context as distillation, right? Right. And so I think if anything, companies might not N they might be underestimating a little bit. Less and less and less and less and less so in the technology space would be my caveat. every company I talk to that has a significant China presence is very realistic and also very much aware and appreciative of the deep talent pool and the resources and the resolve of the government both publicly and also in terms of the investments made domestically for its strategic objective. Jeff Rittener (20:34) we've seen over the last t couple of years China implement their own export control program. And I remember over the years having done business with China, I always wondered when that day was coming. Because they never used to have them and and maybe they had a small rule somewhere, but there wasn't much. you lived in China, you worked there, what do you what's what's going on in their minds when they think about export controls? What exactly are they trying to achieve through their programs? Jeanette Chu (21:03) I remember when they f first started thinking about it. It was actually circa maybe about two thousand and six. at that time, the Ministry of Commerce and BIS jointly administered end use visits. So as the export control officer, I would go with a Ministry of Commerce official who had made the arrangements for us to be able to access a fab, for example, right? And so we're coming home from a bunch of foundry visits in Shanghai to Beijing. We're on the plane, and he turns to me, and this was someone who had been a diplomat in America, by the way, twice, and said to me, I think we need our own export controls. And maybe they should look like this. And he's basically giving parroting back to me the contours of the export administration regulations. And I said, How are you gonna do that? Because up until then, to your point, Jeff, you're exactly right, China's export controls were managed by the Ministry of Foreign Affairs. They were very narrow. They were about nuclear because China was part of the, you know, nuclear suppliers group. And so it was really about managing proliferation of nuclear weapons more than anything else. ⁓ so this concept of dual use controls is extremely novel. What they've done very recently is not just react by having their new export control law, by implementing a foreign anti foreign sanctions law and now outline investment, it's not just parenting. They are laying a foundation so that they have all this toolkit ready to roll. Yeah. Whether they need it or not. Jeff Rittener (22:40) would probably, based on our conversation, I would say that maybe that represents their geostrategy. Jeanette Chu (22:45) It could be, yes. It certainly we saw that in the last year with critical minerals and processed derivatives front and center. Right. But you know, geography is not necessarily destiny. Mm-hmm. Right. So it'll be interesting to see what they do next. Jeff Rittener (23:01) Yeah, one of the things you mentioned the critical minerals, you know, I was working with a company and this became front and center for them and one of the things that just rocked their world was when there was one of the announcements that was published that basically said that any critical mineral and it was at point zero zero one percent of China origin would be subject to China export licenses and trying to think about how would that actually work in reality. And I don't know, do you think that was real? Or is that more of just a negotiating piece to try to come to a better, more middle ground solution? Jeanette Chu (23:38) I'm sure it was real. I'm sure there was a tremendous amount of analysis and study behind it. I think the real question is what would trigger implementing that. Jeff Rittener (23:49) but how would they implement it? Jeanette Chu (23:51) And that's where the rubber meets the road, right? I've not followed as closely the role of the general administration of China Customs. Because a customs official bore personal liability for breaking a seal on a container. So if they were wrong, even if they relied on intelligence or whatever and they were acting in their official capacity, right there could be significant personal ramifications. I don't know if that's changed. Jeff Rittener (24:18) I'd really be interested to see how this will play out because I know that there the Mofcom, which is I think the agency administering the licenses, they are issuing licenses. I know the company I'm with have received a few, so it is happening. But I think probably this is a a journey for China to not only to codify and actually implement. ⁓ export controls is probably a new new experience that that they're going through. So well thank you for the thoughts on China. we could talk forever. There's so much going on there. But I wanna shift over to your work with the Alliance for National Security and Competitiveness. And I just curious what motivated its creation. Jeanette Chu (24:57) So the National Foreign Trade Council, NFTC, was incredibly prescient. Way back in the middle of the pandemic, they started to realize the board, our president Jake Colvin. were some of the first people to understand and see the implications of the convergence of national security and economic security and say, hey, this is going to come and affect all of our companies. What are we gonna do about this? And that's important because NFTC until then had a really important program called USA Engage, which was about Making sure that the voice of business was heard with respect to unilateral sanctions. They did a complete rethink of that, around the time that I always think of him as my predecessor, Richard Sawa, who ran USA engaged, retired. And the thought was, We need to think beyond sanctions. We keep hearing about export controls to your point, Jeff, and all these other things and we gotta get a grip. And so I was working for Pricewaterhouse Cooper's, we Co-leading the National Security Regulatory Compliance Practice at the time. Pricewaterhouse Cooper's PWC sits on NFTC's board, got this white paper, and said, you know, the representative who I knew, the board member, said, I might not know this stuff, but I know exactly who does, and got permission to share it with me. I had a conversation with Jake about their concept around this. I was very intrigued. I thought, wow, you guys are. Really leading the pack. It's all about that sort of setting setting the pace, right? And then thought nothing more. And then months went by, they had stood up the program, they were looking for someone to lead national security policy and create an alliance for national security and competitiveness. So I take absolutely no credit for this. All of it goes to Jake, our executive board, our chair, ⁓ Ambassador Susan. Schwab, former US trade representative, for recognizing the importance of national security. And truly competitiveness is a critical component. You don't get national security without that competitiveness. Jeff, you worked s for decades at a leading US technology firm. Think about all the contributions. Where would we any of us be today without Intel? And think about everything that Intel then spun in. All around the world. Right. Jeff Rittener (27:24) Right. No, that's a great point. Absolutely. So as you work with companies, what themes are emerging? Jeanette Chu (27:34) Companies have integrated that thought process of national security, even if they are not directly involved in making a national security product, whether that's a tangible hardware item or software technology code. Companies understand that they have a seat at that national security table. Right. It's critical that their voice is heard. Right. Companies understand the importance, for example, not just of BIS, but of what Export Administration does far beyond licensing. Because they have to get CCATS, right? They have to get that commodity classification in addition to licenses, in addition to understanding the entity list and all the other things. And they get the broader ecosystem. They understand the importance of things like the Federal Communications Commission and many other players to the table. They are so sophisticated now in how they approach the most critical pressing questions of our time. Jeff Rittener (28:41) as we wrap up here, just looking ahead a bit, ⁓ what are the next frontiers of geostrategy in your mind? Jeanette Chu (28:48) Wow, what a terrific question. What how can we think about frontier technologies? Do we get AI governance right? And when we do, does that become a good blueprint, say, for thinking about quantum? What is life in a post silicon world? I think a lot about that. Because after spending the last year doing a lot of work around critical minerals and some of the like shortages and history and things like that, That gets solved through new materials. It gets solved through fundamental basic research, material science. Are we doing enough to not just ensure that that happens, but what are the correct accelerants to apply to those things? Jeff Rittener (29:37) it's there's no doubt you mentioned complexity and I think as we look forward that complex complexity remains and I think that drives the need for geostrategy, really thinking about the future and how you're gonna navigate a world that's become so complex and and everyone trying to d to to navigate through the the national security implications and all the other geopolitical ramifications that are going on. So I think I think the next year or two are is gonna be fascinating. Jeanette Chu (30:05) Absolutely. I'm looking forward to Jeff Rittener (30:07) this has been a great discussion. Is there anything else you wanted to to say about geostrategy before we we conclude? Jeanette Chu (30:15) Jeff, I have to say you, so many others that we know in this trade space are really the ones that have formed the basis for this framing. And for that I'm profoundly grateful. Jeff Rittener (30:28) Well, thank you, Jeanette. This has been an incredibly rich start to our conversation. we've laid out the strategic landscape, the forces that are reshaping how companies operate, and the realities they can't afford to ignore. In part two, we're going to shift from the big picture to the operational side. And so, how do companies actually execute in this environment? So I hope you'll all join us. Thank you.