Globalization: Implications for U.S. National Security

Globalization: Implications for U.S. National Security

Order Code RL31018
CRS Report for Congress
Received through the CRS Web
Globalization: Implications for
U.S. National Security
June 15, 2001
Robert Shuey
Specialist in U.S. Foreign Policy and National Security
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Globalization: Implications for U.S. National Security
Summary
Globalization is a term usually used to describe intercontinental economic, social,
and political integration. Many people, businesses, and countries benefit from
globalization but others may be hurt economically, some cultures may be harmed, and
the environment may suffer. U.S. national security faces both benefits and risks from
globalization.
Several contemporary developments that effect U.S. security are often linked to
globalization even though they may not be not directly related to multinational
integration. Developments such as decreased defense budgets, increased military use
of civilian products and technology, privatization of defense R&D, consolidation of
defense industries, and increased military use of sophisticated information systems are
the results of decisions based on changes in the foreign threat, technological
innovations, and domestic political and economic changes. Globalization and other
developments affecting U.S. defense industry and government research, acquisition,
security, and export control policies have shaped a security environment sharply
different than that of the Cold War.
Globalization may actually reduce the risks of conflict among closely connected
nations. Economic integration probably contributes to international political stability
by increasing economic interdependence and helping the spread of democracy. In
conjunction with related defense developments, globalization has contributed to
enhanced U.S. military capabilities through the efficient application of commercial
technologies and commercial services, and has improved interoperability of allied
forces, according to a study by the Defense Science Board. The U.S. military’s
exploitation of advanced information systems, sensors, navigation devices, and
computers – some of the same technologies that have driven globalization, has
enabled U.S. leaders to coordinate firepower and troop movements with
unprecedented combat effectiveness while reducing the level of U.S. casualties.
Globalization is also increasing U.S. vulnerability as key military and dual-use
technologies become available to all countries that can afford them and world travel
and information flows have been made inexpensive and relatively easy. The U.S.
armed forces also have become more reliant on sophisticated electronics – some of
it produced abroad – and are exposed to new forms of information warfare. The
military industrial base may become less responsive to national security needs as it
takes clients, materials, labor, and capital from the global market.
Many policy options have been suggested that may offer limited means for
exploiting the opportunities and ameliorating the problems created by globalization
and related developments. Some options that are likely to receive congressional
consideration include: modifying defense R&D, procurement, force structure, forward
deployment, and information security. The changing environment could also prompt
the United States to reexamine its alliance relationships, industrial and work force
policies, nonproliferation and export controls programs.

Contents
The Concept of Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Related Phenomena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Implications for U.S. National Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Positive Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risks or Negative Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Options to Maximize Benefits and Minimize Problems . . . . . . . . . . . . . . . . . . . . 6

Globalization: Implications for
U.S. National Security
The Concept of Globalization
Globalization is a widely and somewhat loosely used term, intended to describe
the recent and rapid process of intercontinental economic, social, and political
integration. This worldwide integration allows people to communicate, travel, and
invest internationally, and helps companies market their products widely, acquire
capital and human and material resources more efficiently, share advanced technology,
and enjoy economies of scale. While many benefit from globalization, others are hurt
economically, some cultures may be harmed, and local environments may suffer.
Globalization, in conjunction with a range of other developments and policies,
produces both benefits and risks affecting U.S. national security. For a broader view
of economic globalization, its history, controversies, and prospects, see CRS Report
RL30955, The Issue of Globalization–An Overview, by Gary J. Wells.
Four Definitions of Globalization
! “The integration of the political, economic and cultural activities of
geographically and/or nationally separated peoples,” (not new or
irresistible, not a “policy option.”)a
! The increase of globalism which “is the state of the world involving
networks of interdependence at multicontinental distances ... through flows
and influences of capital and goods, information and ideas, and people and
forces, as well as environmentally and biologically relevant substances.”b
! Rapid movement toward international economic integration; consensus on
political values, processes, and principles; and the revolution in information
and communication technologies.c
! The defining international system based on “the inexorable integration of
markets, nation-states and technologies.” d
a
Final Report of the Defense Science Board Task Force on Globalization and Security,
December 1999, p. 5.
b
Keohane, Robert and Joseph Nye. “Globalization: What’s New? What’s Not? (And So
What?),” Foreign Policy, Spring 2000, p. 105.
c
Carnegie Endowment for International Peace, Global Policy Program, p. 1.
d
Friedman, Thomas L. The Lexus and the Olive Tree, Anchor Books, 2000, pp. 7-9

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The factors that are most often credited with driving globalization are the rapid
advances in electronic information and transportation systems, the end of the Cold
War with the attendant collapse of Communism, and the inherent urge of many people
to trade, travel, and spread information. The concurrent spread of democracy and
free markets makes politically possible that which has become physically and
economically possible. Warfare, trade protectionism, economic recession, or disease
can slow globalization.
Even if, as many authors contend, globalization is an inevitable development,
numerous policy decisions will affect the U.S. ability to exploit its benefits and avoid
some of its pitfalls. A discussion of some of the many policy options Congress may
consider can be found on the last two pages of this report.
Related Phenomena
Some authors link a range of defense-related developments to globalization in
explaining causes of the current security situation and arguing for certain remedies,
even though these other developments are not directly related to multinational
integration. While they affect U.S. national security and have occurred largely since
the end of the Cold War, many such phenomena derive from U.S. policy decisions
rather than from globalization per se. Including these developments in the discussion
may aid one’s understanding of trends in U.S. national security, but it may obfuscate
the issue of globalization. Frequently linked phenomena include:1
! “deep cuts in U.S. defense investment since the end of the Cold War”2
! increased Pentagon purchasing of “off-the-shelf” civilian items
! civilianization of U.S. defense research and development
! a shift of emphasis in military R&D from long-term to near-term
! rapid consolidation of defense industries
! increased military purchases of sophisticated information technologies
! increased importance of economic factors in U.S. arms sales
! Defense Department transition to electronic business operating systems
! increasingly vulnerable personnel security and export control systems
! increased influence of globalized corporations in national security policy
! uncertainty over the types of future military challenges
1Most of these are discussed in, Final Report of the Defense Science Board Task Force on
Globalization and Security, Dec. 1999, pp. 1, 7-21, 31. See also, Kosiak, Steven, Andrew
Krepinevich, and Michael Vickers, A Strategy for a Long Peace, Center for Strategic and
Budgetary Assessments, Jan. 2001, p. 53.
2Defense Science Board, Final Report, p. 7. According to the Board report, “procurement and
R&D are down 70% and 27% in real terms, respectively, since the late-1980s.” But in 1990
at the end of the Cold War, Defense R&D was $44.9 billion in constant 2001 dollars, and in
2001 R&D is $37.9 billion, a 15.6% reduction. The Board’s figure apparently reflects the
decline in R&D from 1985 to the projected level for 2005, in constant FY2001 dollars.
Declines in procurement, personnel, and construction have been significantly greater than the
decline in R&D. See CRS Report RL30447, Defense Budget for FY2001, by Mary
Tyszkiewicz and (name redacted).

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! uncertainty over U.S. ability to maintain military superiority through
technology
These phenomena have benefits and risks of their own, separate from those of
globalization. It may be useful to try to maintain these distinctions when examining
policies to respond to the effects of globalization.
Implications for U.S. National Security
The effects of globalization and related factors on national security are mixed:
they provide benefits and opportunities as well as problems and risks. Some
observers believe globalization has reduced the risks of war among interdependent
states, made the U.S. military more efficient and technologically sophisticated, but
also more vulnerable to nuclear, biological, and chemical (NBC) weapons, missiles,
and information warfare, and more dependent on civilian industries, including foreign
companies that have little direct stake in U.S. security. Based on these developments,
the U.S. military appears to be increasingly linked to international companies,
technologies, and threats.
But even though U.S. military involvement and influence are widespread, some
authors believe military globalism is in a period of decline, having peaked in the two
world wars and the extensive competition between East and West during the Cold
War. This “military deglobalization” has a profound effect on U.S. national security:
the United States no longer needs to prepare for total war with a Soviet behemoth,
but has the option of reshaping its armed forces to deter or defeat less powerful
regional forces, prevent the use and spread of NBC weapons, counter international
terrorists, and defend against information warfare.3
Positive Implications
A recent report by the National Intelligence Council concluded that economic
globalization would contribute to international political stability by increasing
economic interdependence and helping the spread of democracy.4 According to the
Defense Science Board Task Force on Globalization and Security, globalization and
DoD’s increased use of civilian businesses have numerous actual and potential
benefits:5
! “huge gains in [military] capability achieved through rapid insertion of leading-
edge commercial technology ... and comparable gains in efficiency through use
of commercial services”
! “increased pace of modernization by reducing system acquisition cycle”
! potentially lowered costs of systems, upgrades, and operational support
3Keohane, Robert and Joseph Nye. “Globalization: What’s New? What’s Not? (And So
What?), Foreign Policy, Spring 2000, p. 106.
4U.S. National Intelligence Council. Global Trends 2015, December 2000, p. 7.
5Defense Science Board, Final Report, pp. ii-iii, 7-26. The Board reports that the effects of
globalization are inseparable from those of the increased use of the commercial sector, p. 11.

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! enhanced DoD efficiency and effectiveness
! improved sharing of the fiscal burden of development and production among
allies
! better innovation and industrial efficiencies
! increased political-military cohesion and promoted interoperability
The first four of these benefits appear to be more closely associated with DoD’s
increased use of the U.S. civil sector and civilian business methods than with
inexorable globalization per se. Additional benefits accrue to the U.S. military from
its exploitation of some of the same technological advances that have facilitated
globalization. For instance, the U.S. development of long-range precision guided
munitions and advanced communications and navigation systems have greatly reduced
U.S. casualties while giving U.S. forces the ability to coordinate the operations of its
forces and support units, collect information on its enemy, and inflict heavy enemy
losses. The diffusion of the English language, Western culture, and Western
concepts, probably improves the ability of U.S. forces and allies to communicate and
operate worldwide.
Risks or Negative Implications
The primary risks of globalization identified by the Defense Science Board are
as follows:6
! “Globalization’s most significant manifestation is the irresistible leveling effect
it is having on the international military-technological environment in which
DoD must compete.” Commercial technology (including space-related,
surveillance, sensor, signal processing, simulation, and telecommunications
technology) is nearly universally available.
! Using new technology, adversaries could exploit current U.S. weaknesses in
power projection, disrupting deployment preparations, denying access to the
theater, degrading U.S. force capabilities in the theater, raising the costs of
U.S. intervention, and eroding U.S. military dominance.7
! Extensive use of the internet “places most of DoD’s digital activities and
information within the cyber-reach of any and all who want to rapidly gather
intelligence on the United States and/or who wish us harm.” Also DoD’s
“ever-increasing reliance on commercial software – often developed offshore
and/or by software engineers who owe little, if any allegiance to the United
Sates – is likely to amplify DoD vulnerability to information operations....”8
6Defense Science Board, Final Report, pp. iii-vi, 7-26.
7According to the DSB, the vulnerabilities of current heavy, slow, short-range, U.S. general
purpose forces are compounded by declining defense R&D investments which have “severely
depressed U.S. military-technological innovation.” p. vi. See footnote 2 for trends in defense
R&D.
8The risk is reportedly compounded by an ill-configured personnel security system which over-
classifies information, emphasizes physical access control, and inadequately monitors
(continued...)

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! Foreign-owned firms (or potentially any individual) operating in the United
States may transfer sensitive technology to a hostile power. Open channels of
communication, trade, and travel facilitate such transfers.9
! U.S. defense industrial capabilities could be eroded if foreign firms buy U.S.
firms and relocate facilities overseas.
! U.S. government influence in weapon system design could decrease if
consolidations lead to a few large companies serving many nations.
! Arms sales may harm national political or security objectives because of
increasing influence of economic considerations.
These risks are each closely associated with the global spread of dual-use
technology and foreign participation in U.S. defense industry, except that the
commercialization of foreign arms sales is probably more driven by the end of the
Cold War, reduced U.S. military procurement, industry’s profit motivation, DoD’s
desire to reduce unit acquisition costs through longer production runs, and the lack
of international consensus on security threats and export controls.
Reduced controls on the export of dual-use technologies and globalized trade
may facilitate the proliferation of nuclear, biological, and chemical weapons, and
missile delivery systems, which will “be destabilizing and increase the risk of
miscalculation and conflict that produces high casualties.”10 Lack of caution in
exporting conventional weapons and dual-use technology may also help regional
powers build military capabilities that could be destabilizing and harmful to U.S.
security, particularly if transfer decisions are based increasingly on business concerns
rather than U.S. security interests. In the 1980s many Congressmen were concerned
the United States was exporting too much technology to Iraq; in the last several years
numerous Congressmen have criticized U.S. technology exports to China because of
the implications for national security.
A direct threat to local security, if not national security, is generated by adverse
public reaction to certain aspects and perceptions of globalization. To some,
globalization smacks of cultural imperialism. José Bové and four of his colleagues in
Peasant’s Confederation destroyed a McDonalds restaurant in France in a protest
against capitalist globalization.11 Large groups demonstrated against globalization at
the World Trade Organization meeting in Seattle in November 1999, the World
Bank/IMF meetings in Washington, D.C. in April 2000 and in Prague in September
8(...continued)
personnel and unclassified, but critical, information. DSB, p. iv.
9The Defense Science Board concludes, “So long as the established security mechanisms are
in place, the risks of unauthorized disclosure can be mitigated, if imperfectly.” p. v. See note
13.
10Global Trends 2015, p. 40.
11More specifically, the action was triggered by a U.S. embargo of French agricultural
products in response to an EU refusal to import U.S. meat from cattle treated with hormones.

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2000, the presidential inauguration in Washington in January 2001, the Summit of the
Americas in Quebec in April 2001, and in several South American cities. The Seattle
demonstration was particularly disorderly. These demonstrations can lead to riots and
could be exploited by terrorist groups. Some riots in the United States have been
very destructive but none in recent history were taken over by revolutionary groups
or threatened national integrity.
Governments have also attempted to defend their countries from foreign cultural
and economic “invasion.” Many have tried to curb the influence of American music,
motion pictures, television, printed material, alcoholic beverages, and even clothing.
China relented after its Cultural Revolution, but some Islamic countries remain
adamant. France tries to protect its language. Resistance to the presence of
American troops in strategically located countries is another security challenge
somewhat related to globalization.
The increased involvement of multinational companies in the U.S. defense sector,
suggests a broader risk. Some of these companies are positioned to exert a great deal
of influence on U.S. policies through lobbying and election campaign contributions.
The views of these companies regarding issues such as force structure, acquisition
policy, research, export controls, and sanctions could be based more on multinational
profit considerations than on fundamental notions of U.S. security.12 If these effects
of globalization continue, the U.S. government may become less able to use industry
to influence foreign countries, and industry may be more able to use the U.S.
government to support its commercial interests. Without consensus on a clear
security threat, the National Intelligence Council predicts “the United States will have
difficulty drawing on its economic prowess to advance its foreign policy agenda.”13
On the other hand, some authors contend globalization is not significantly weakening
sovereignty or state control. These observers believe that even though national
corporations, national currencies, and national citizenship may have eroded, states still
maintain their physical borders, and the governments of economically advanced
countries are more heavily involved in national economies than they were 50 years
ago.14 Others note that campaign finance reforms currently being considered in
Congress may moderate corporate influence on government policies.
Options to Maximize Benefits and Minimize
Problems
Because globalization is sometimes said to be a “fact,” not a choice or policy
option, it can be used to argue the futility of certain government actions, or to justify
12Global Trends 2015 predicted business firms and nonprofit organizations will exercise
increasing influence in national and international affairs. States will remain dominant but will
have much less control over flows of information, technology, finances, weapons, people, and
disease. p. 8. See also p. 26 of the report.
13Ibid., p. 10.
14“Sovereignty,” Foreign Policy, Jan-Feb 2001, [http://www.foreignpolicy.com].

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inaction. But policy choices clearly play a role in the way globalization affects
security.
The Defense Science Board suggests the United States should maintain its military
dominance, in the face of global technology leveling, primarily by strengthening
essential U.S. military capabilities. In its view, modernization efforts should rely on
the exploitation of commercial products and services. While continuing to protect
essential defense technology (particularly system integration capabilities) from
compromise and hostile exploitation, the country should de-emphasize technology
protection as a means of preserving dominance. The Board suggests DoD should
identify and mitigate its vulnerabilities arising from its use of commercial software and
the globalization of information technology, fixing responsibilities for information
systems integrity in the acquisition process and in operations. To aid in determining
which technologies are widely available and therefore difficult to control, and in
identifying potential foreign sources of useful information, the Board recommended
that DoD maintain a global database of militarily relevant technologies and
capabilities.
In its report, the Board also recommends measures to facilitate transnational
(particularly transatlantic) defense industrial collaboration and integration. It says
DoD should be open to “cross-border defense industrial linkages that enhance U.S.
security, interoperability with potential coalition partners, and competition in defense
markets.” The U.S. government, in the Board’s view, should also facilitate defense
exports and foreign direct investment in the U.S. defense sector.15 It also
recommended less emphasis on personnel security clearances and the classification
of large amounts of information, focusing instead on the security-related behavior of
people in sensitive positions, the need-to-know, and the protection of particularly
sensitive information and information systems whether they are classified or not.16
The DoD Strategic Studies Group did not disagree with the Board’s
recommendations and added detailed suggestions for enhancing information and
personnel security.17
The Center for Strategic and Budgetary Assessments has proposed a somewhat
different approach for reforming the newly consolidated defense industry so that it can
respond to emerging challenges and uncertainty created by technology diffusion and
globalization of the defense industrial base. U.S. defense industries should probably,
according to the Center, maintain the skilled design teams and computer-assisted
processes for architecture integration – creating a wide variety of products and
systems of systems. The industries should also maintain the ability to apply available
technology to military systems quickly so that the military can shape its acquisitions
to developing needs and avoid large quantities of unneeded equipment. In case the
15Defense Science Board, pp. xii and 48. Increasing foreign arms sales and foreign direct
investment would stimulate globalization with its implied benefits but also its risks.
Congressman Jim Gibbons and Senator Robert Bennett recently expressed concern about
foreign corporations buying federally funded companies that work on highly classified
material. Space News, Feb. 19, 2001, p. 17
16Defense Science Board, pp. vii-xiii, 31-51.
17Secretary of Defense Strategic Studies Group IV, 1999 Final Report, Premises for Policy:
Maintaining Military Superiority in the 21st Century.

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United States is unable to terminate some future conflict within a few days or weeks,
the Center suggests the U.S. defense industrial base must find ways to hedge against
the denial of offshore (globalized) industrial support.18
The Center made additional suggestions for maintaining the strength and
innovative capabilities of the defense sector as it is further consolidated and globalized
and as competition within the defense budget grows. The Defense Department should
identify the areas of technology in which research and development will be critical
and efficient. R&D should be focused more on science and the technology of several
new weapons systems, rather than on the expensive engineering and manufacturing
development to modify older systems. Defense firms should be encouraged to use
Independent Research and Development (IRD) funds to pursue new, innovative
capabilities.19 To help the financial health of defense industries, the Center suggested
DoD consider sharing cost savings that industries realize through greater efficiencies
and also increasing progress payments in the early phases of the development cycle.
To help maintain a skilled workforce at Boeing and Lockheed Martin, the Center
suggested DoD might extend production of the F/A-18E/F and the F-16 Block 60 to
cover the gap until Joint Strike Fighters are being produced, and might press the
development of unmanned combat air vehicles. They believe that multi-year
procurement contracts would add greater stability and predictability to military
production. Increasing commonality of systems and subsystems, using more off-the-
shelf technology, reducing underused production facilities and sharing the savings
with industry could also benefit the health of the U.S. defense sector, in the view of
the Center.20
A number of diverse options for addressing the effects of globalization in
addition to those suggested by the Defense Science Board include:
! Maintaining backup communications, fire control, and information systems,
and developing systems that are less susceptible to jamming, intercept, and
alteration
! Negotiating arms control and nonproliferation agreements to win international
cooperation in observing norms in the development, testing, deployment, use,
or transfer of particular weapons and technologies
! Maintaining core alliances with great regional powers, preserving and building
military relationships with friendly second tier military powers, and avoiding
military competition with other great regional powers21
18Kosiak, et al., pp. 54-55.
19DoD allows firms to count some of their privately funded R&D as an expense on the firms’
on the firms’ contracts for other DoD work under the IRD program.
20Ibid., pp. 54-58.
21Kosiak, et al., p. 59.

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! Establishing a new division of labor among allied forces that will supplement
dominant U.S. capabilities; help allies enhance their capabilities, and encourage
them to assume a greater role in the common defense22
! Further subsidizing U.S. defense industries to preclude the necessity for
exporting particular weapon systems, as is done for missiles, bombers,
submarines, anti-submarine warfare, stealth technology, reactive armor, and
aircraft carriers,23 and subsidizing defense workers to keep them from
migrating to higher paying jobs24
! Encouraging greater diversification and commercialization of defense industry
allowing for less subsidization to a narrow group of producers
! Acquiring highly sensitive systems only from U.S., or only U.S. government
sources25
! Decreasing U.S. foreign military deployments to avoid their vulnerability –
enhancing national security by forsaking hegemonic goals and international
activism; increasing the emphasis on long range weapons and C4ISR system
located in the United States or perhaps in space26
! Or, increasing deployments and/or enhancing the survivability of overseas
forces to ease the constraints on force projection; establishing a network of
bases along the periphery of areas influenced by potential adversaries; a larger
network of intermittently manned bases; or a system of mobile bases27
! Aggressively using U.S. military force, economic strength, and “coercive
diplomacy”28 to counter emerging global threats to U.S. security and national
interests, such as long-range missiles; nuclear, biological, and chemical
weapons, cyber attacks, and narcotics29
22Ibid., p. 60- 61.
23Strategic Studies Group IV, p. 7.
24Tonelson, Alan. The Race to the Bottom
25Ibid., p. 34.
26Pfaff, William. “The Question of Hegemony,” Foreign Affairs, January/February 2001, pp.
221-232; Kosiak, p 66. C4ISR refers to Command, Control, Communications, Computers,
Intelligence, Surveillance, and Reconnaissance.
27Defense Science Board, p. 25, discusses potential difficulty gaining access to theaters but
does not recommend maintaining larger numbers of troops abroad. Kosiak, et al., p. 63 - 65.
28Lake, Anthony. 6 Nightmares: Real Threats in a Dangerous World and How America Can
Meet Them,” Little Brown, 2000, reviewed by Chris Lehman, Washington Post Book World,
January 21, 2001, pp. 4-5.
29Rumsfeld, Donald H. Testimony before the Senate Committee on Armed Services,
confirmation hearing, January 11, 2001.

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! Reversing some past decisions that have reduced DoD R&D programs and that
have liberalized controls on exports of militarily useful goods to adversarial
countries,30 and allowed foreign ownership of U.S. defense industries.
While there is divergence on the nature of globalization and its effects on
security, there is even greater divergence on proper policies to manage globalization.
What is good for a large multinational corporation may or may not be good for U.S.
national security. It is widely held that it is beneficial to U.S. security to help the
economic modernization of even our adversaries because that may lead to political
liberalization and international responsibility. However, few would suggest we help
adversaries modernize their military capabilities. Congress may wish to examine
carefully policies proposed in the name of globalization for their security implications
as well as business and political implications.
30S. 149, The Export Administration Act of 2001, attempts to strike a new balance between
security and economic objectives.

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