The creation of interdependencies has been a long standing feature in the history of modern capitalism. In good times, such relationships of dependence are considered to be largely unproblematic and ideologically justified by the Ricardian paradigm of comparative advantage. However, the dynamism of global capitalism and especially of its politics systematically lead to some critical junctures where the liability constituted by some of these connections is violently exposed. Moments of realization come nevertheless always late.
Perhaps the most impactful of these critical junctures in the recent history of Western capitalism was the one stemming from the Post-WWII concentration of oil production in a handful of oil-producing countries, especially the OPEC cartel (Organization of the Petroleum Exporting Countries). Between 1950 and 1973 the share of OPEC countries in total World oil production raised from 32% to 47%1. In those years, Western economies were living their Golden Age of high economic and wage growth. Then the Kippur War (1973) broke out and the OPEC decided to exert its cartel powers and cut oil production and raise prices. The World thus suddenly realized the extent to which a single chokepoint in global supply chains can disrupt a whole economic model.
While a cubic meter of oil was 15.60$ worth in 1973, the price had raised to 72.84$ in 19742. Since crude oil was at the basis of the whole manufacturing and energy model of the period, this sharp price growth impacted consumer prices extensively. The ensuing crisis drove out of competition many Western companies, especially in energy-intensive sectors like steel.
Although the contradictions of the Fordist model cannot be accounted for by one single crisis, the crisis of the 1970s is widely considered to have dealt the final blow to the Fordist model, as well as to the high levels of unionization and labour power of the post-WWII period. As expressed by the regulationist economists Boyer and Saillard: “The 1973 oil crisis, accompanied by the most serious recession in post-war history, signaled the end of the virtually unlimited availability of energy at low prices and struck at the other pillar of French growth. This led to major reconsiderations, since France was highly dependent on energy” (p. 247)3.
More recently, the sudden halt in gas imports from Russia has exacerbated an ongoing structural crisis, the full impact of which will only become apparent in the future. This is particularly true for high-intensity manufacturing countries such as Italy and Germany, which were dependent on Russian gas imports for respectively 45% and 51.3% of their consumption4. As with the previous oil crisis, the 2022 gas crisis has led to strong short-term inflation and accelerated an already looming competitiveness crisis in relation to regions where production factors (e.g. labour, energy and raw materials) are cheaper.
If a dependency of 40–50% can have such striking consequences, what might happen if the dependency we are talking about was 80% or higher? We may find out soon, as this is currently the percentage by which the world depends on one country for a wide array of critical raw materials.
More specifically, the International Energy Agency reports that China accounts for more than 90% of the global production of materials such as rare earth elements (REEs) and graphite, while producing between 70 and 80% of cobalt and lithium. Although more than 40% of nickel is produced in Indonesia, ownership patterns show that Chinese companies own more than 60% of the world’s nickel production5. Although lower, the concentration levels for copper are also considerable. Even though the concentration is slightly lower in the extraction phase (before refinement), the overall magnitude of dependency remains unchanged.
These materials are all fundamental, and in most cases irreplaceable, for producing batteries, semiconductors, power grids, electric vehicles, wind turbines, and other energy technologies. Given that these technologies are now integral to modern economies, a rise in their prices could lead to significant overall price increases, potentially reaching levels similar to those experienced during the 1970s crisis. Furthermore, given that geopolitical tensions have made reliance on gas as an energy source increasingly dangerous and the IEEFA has predicted that the EU might become reliant on the US for 80% of its gas imports, decelerating the transition to renewables is also not a viable option.
Far from being hypothetical situations, China and other producer countries have repeatedly imposed export restrictions, sometimes overtly for reasons of price control, leading to sharp price hikes for certain materials. For example, the price of dysprosium oxide increased by 289% following the introduction of Chinese export controls in 2025, while the price of bismuth surged by 90% between January and March of that year, with antimony also experiencing significant price hikes67.
It could be argued that most of these raw materials are used to make products that are predominantly produced in China. Nevertheless, this kind of liability is the reason why governments are increasingly undertaking reshoring and friend-shoring strategies. In this respect, strategies for securing a stable supply of raw materials should be the “mother of all industrial strategies”, since re-shoring production makes little strategic sense if this supply is unavailable.
Nevertheless, dependencies on critical raw materials present specific features that make them ‘stickier’ than those in other parts of the supply chain. Firstly, geological explorations require a considerable amount of time and entail a very high risk of failures. It is estimated that the required time for a mineral extraction process to become fully operational ranges between 10 and 15 years. Secondly, even when there is a high degree of certainty regarding the existence of ores, extraction requires considerable bureaucratic hurdles and, most importantly, substantial investment. Furthermore, the IEA report shows that the prices of raw materials have remained relatively low, since rising demand tends to be compensated for by rising supply, thereby discouraging private operators from investing in extraction activities. Even for copper, where demand is projected to exceed supply considerably in the future, investment is discouraged by the particularly high capital intensity and the risk of price volatility.
As a matter of fact, industrial powers are competing to gain access to, or diversify their supply of, raw materials. The United States is the most notable case, having been actively engaged in occupying critical nodes in the raw materials supply chain since at least the Biden administration, with considerable state-backed financial resources at their disposal, as a recent article from the International Institute for Strategic Studies shows8. Japan started with diversification and reshoring strategies at least since the early 2010s, when the diplomatic crisis with China led to export restrictions of rare earths to the country9.
European manufacturing-intensive countries were the latest to realize the structural nature of the problem and are now faced with an existential battle to cut their space in the global arena. In this respect, the European Union is once again not using its potential to score decently in this competition. Although raw materials and energy strategies are being implemented by national governments (e.g. the Mattei Plan in Italy or the Raw Material Strategy in Germany), the financial firepower made available to them is minimal in relation to the hundred of billions of dollars employed by the US. The European Raw Materials Act of 2023 is also not particularly helpful. While the intention to establish a unified procurement instrument for critical raw materials goes in the right direction, what is factually set in place by the Act is a slow and weak bureaucracy with little factual capacity.
More generally, the European Union seems to have remained stuck in a crisis of political creativity. The current trade policy paradigm is still anchored in the Ricardian idea of comparative advantage right in the moment when the rest of the World is moving beyond it. In this respect, the present attempt to speed up trade deals cannot pay out for the specific kind of challenge Europe is facing.
To begin with, free trade deals are frown with political obstacles, since liberalizing markets in an economy with strong problems of high factor costs exposes domestic economic operators to cut throat competition. The example in this sense is the Mercosur deal, which happens to strike European agriculture right at a moment of high price pressure due to higher gas and fertilizer costs. There is a considerable risk that another problematic scenario may delineate in the case of the recent trade deal with India, which brings however additional and considerable problems of implementation in a country where the largest part of the economy is informal. Second, the comprehensive nature of trade deals makes their discussion and conclusion especially long, specifically in the case of the European Union which has the additional duty to carry out an internal trilogue.
As a matter of fact, a recent report of the European Court of Auditors provides an assessment of the effectiveness of the European policy instruments for raw materials and specifically on the European Raw Materials Act10. It would be hard to exaggerate how grim the picture depicted by the report appears regarding what has been done so far. In particular, the analysts found no relationship between the Free Trade Agreements and the Strategic Partnerships undertook by the EU and increased supply of raw materials to the continent. In some cases, the flow of raw materials from some partner countries even dropped. Even the targets that have been set up for extraction, refining and recycling rely on an unclear methodology and they are set for critical raw materials overall, failing to set quotas for individual materials. Monitoring and impact assessment are also lacking.
Considering that matters of timing and of market structure (see above) make so that the problem of raw materials’ diversification cannot be solved in a timely matter by the private sector, the European Union should act in the logic of providing a public good and make stronger use of the financial firepower of the European Investment Bank to pursue an international development policy that is both convenient for the EU and for the receiving countries. Only by making a considerable financial firepower available, without the shyness of the current budget constraints, can European economies have the flexibility and the credibility to invest quickly and effectively in the critical nodes of global raw materials. European policymakers seem to be the only ones in the World not having understood the fundamental urge for a change of approach in the current phase.
This would allow European economies to gain a solid grounding for their re-industrialization efforts and, at the same time, give a strong signaling to the Global South that Europe is ready to reciprocate for what it gets. Only by concretely aiding development and concurring to the economic upgrade of the invested countries the EU can distinguish itself as a reliable, fair and convincing trade partner.
References and readings
- Oil production ↩︎
- Crude oil prices ↩︎
- Boyer, R.; Saillard, Y. (2003). Regulation Theory. Routledge ↩︎
- Vatansever, A., & Goldthau, A. C. (2025). The political economy of breaking European dependence on Russian gas. Resources Policy, 109, 105696. ↩︎
- IEA (2025), Global Critical Minerals Outlook 2025, IEA, Paris https://www.iea.org/reports/global-critical-minerals-outlook-2025, Licence: CC BY 4.0 ↩︎
- Wachtmeister, H. (2025). China’s mineral export restrictions: Market impacts and implications. link: chinas-mineral-export-restrictions_market-impacts-and-implications_nkk_2025.pdf ↩︎
- IEA (2025), Global Critical Minerals Outlook 2025, IEA, Paris https://www.iea.org/reports/global-critical-minerals-outlook-2025, Licence: CC BY 4.0 ↩︎
- US critical-minerals diplomacy: from America-First deals to Pax Silica ↩︎
- Katada, S. N., Lim, J. H., & Wan, M. (2023). Reshoring from China: comparing the economic statecraft of Japan and South Korea. The Pacific Review, 36(5), 1005-1034. ↩︎
- https://www.eca.europa.eu/en/publications/SR-2026-04 ↩︎
Dr. Marco ObertI 
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