NATO Ankara, The Rhetoric And Reality 

Business Confronts a New Blended Paradigm of Security and Trade 

Einar Tangen 

 

 

The NATO Summit in Ankara marked another milestone in the Alliance's transformation from a security organization built around deterrence into one preparing for sustained competition among major powers. Defence spending targets have increased, industrial cooperation is expanding and governments are searching for ways to rebuild military capabilities that atrophied after the Cold War.

Much of the discussion has focused on budgets, procurement and interoperability. These are important, but they overlook the fundamental issue. Rearmament is not simply a financial exercise. It is an industrial one.

Modern militaries depend on basics that begin long before a missile is assembled or a drone enters service. They begin with mining, refining and processing critical minerals, metals, chemicals, investment, expertise, and manufacturing facilities. Areas that China currently dominates that will take time and expertise to respond to not just money, so expanded defence budgets alone are not a solution.

For decades China has invested systematically across the entire value chain of critical minerals, chemicals, expertise, and manufacturing facilities. While much of the EU and US attention focuses on mining, China's real strategic advantage lies in processing and refining. Rare earth ores extracted almost anywhere in the world require processing in China before they become usable components in advanced manufacturing. China's advantage is the technology that allows it to produce the purity of material needed at low cost points.

China produces roughly 95 percent of the world's primary gallium, a material essential for gallium nitride semiconductors used in advanced radar, electronic warfare systems and missile guidance. It is also the dominant processor of graphite, tungsten, magnesium and several other minerals considered indispensable for defence production. In rare earth separation and refining, Chinese companies account for more than 90 percent of global capacity, while China's share of heavy rare earth processing approaches a near-monopoly.

This did not occur by accident. It reflects decades of coordinated industrial policy, sustained capital investment, environmental trade-offs and the deliberate development of manufacturing ecosystems. Processing capacity cannot simply be replicated by opening another mine. It requires specialised technology, trained labour, supporting industries and years of accumulated expertise.

That distinction matters because Western policymakers discuss reducing dependence on China as though new mining projects alone solve the problem. They will not. Even when rare earth concentrates are extracted in the United States, Australia or Africa, the material will still require processing before entering advanced manufacturing supply chains. So, processing remains the most critical strategic bottleneck.

From Industrial Leverage to Strategic Legal Defences. China's export controls on gallium, germanium, graphite and selected medium and heavy rare earth elements demonstrate that Beijing views critical minerals as part of a broader national security framework rather than purely commercial commodities. These measures emerged in the context of responding to the widening technology restrictions, sanctions and export controls imposed by the United States and its allies.

One point of clarification: Although China imposed restrictive export controls on gallium, germanium, antimony and superhard materials to the United States in 2024, the most restrictive clause—which "in principle" prohibited exports to the U.S.—was temporarily suspended from November 9, 2025, to November 27, 2026. The suspension does not eliminate the controls entirely but reflects Beijing's tactical calibration of these measures. The broader point remains: China has demonstrated its willingness to leverage critical minerals strategically in response to US, EU, and Japanese containment actions. The controls are meant to remain in place as a signalling mechanism during the suspension period.

What is developing is the legal architecture surrounding these measures. In 2026 China expanded its anti-sanctions framework through State Council Decrees No. 834 and No. 835, allowing penalties against entities that participate in what Beijing describes as "improper extraterritorial jurisdiction" or actions that disrupt Chinese industrial and supply chains.

· Decree No. 834 (March 2026): Provisions of the State Council on Security of Industrial and Supply Chains—China's first dedicated administrative regulation on industrial and supply chain security.

· Decree No. 835 (April 2026): Regulations of the People's Republic of China on Countering Foreign States' Unlawful Extraterritorial Jurisdiction—establishes a legal framework to block foreign "long-arm jurisdiction."

In May 2026 Beijing invoked its blocking rules to prohibit Chinese entities from complying with certain U.S. sanctions related to Iranian oil purchases. MOFCOM issued Announcement No. 21 of 2026 on May 2, 2026, barring Chinese citizens and companies from "recognizing, enforcing, or complying with" U.S. sanctions imposed on five Chinese "teapot" oil refineries for buying Iranian oil.

That same month, China's Ministry of Justice applied Decree No. 835 to determine that an EU investigation into Nuctech, a Chinese security equipment company with subsidiaries in Europe, was a case of "improper extraterritorial jurisdiction." In line with the decision, no organisation or individual may assist in the EU probe.

The issue is no longer limited to physical exports. Multinational firms increasingly face conflicting legal obligations across jurisdictions. As James Hsiao, a Hong Kong partner with the multinational law firm White & Case, observed in Al Jazeera's reporting, companies may be required under U.S. or EU sanctions rules to restrict dealings with a counterparty while simultaneously considering whether those actions create risk under Chinese countermeasures.

A third legal instrument, still in draft form as of June 2026, would allow Chinese prosecutors to bring cases against foreign organisations and individuals whose "unlawful acts harm the country's national interests or social public interest," according to state media. This is part of a broader effort to strengthen China's public interest litigation law.

This does not mean China is attempting to coerce foreign firms into abandoning Western markets. Beijing presents these measures as defensive mechanisms intended to protect national supply chains and counter what it views as extraterritorial pressure. The practical result, however, is that compliance itself has become a geopolitical issue. As Beijing-based advisory firm Trivium China put it, foreign companies will be "increasingly caught between an American rock and a Chinese hard place."

Industrial Capacity Has Become the New Measure of Military Power. Critical minerals explain why rebuilding defence industries will be difficult. The experience of Ukraine explains why it has become urgent.

More than three years of high-intensity warfare have demonstrated that modern conflict remains a contest of industrial endurance. Precision weapons and advanced technology matter, but they have not replaced the need to manufacture enormous quantities of artillery ammunition, missiles, drones and replacement equipment.

Russia has steadily expanded defence production despite extensive sanctions. Western intelligence assessments indicate that Russian artillery output now exceeds the combined production of Europe and the United States by a substantial margin.

Europe and the United States have responded with hundreds of billions of dollars and euros in new defence spending. The problem is not simply funding. Explosives production, specialised steel, propellants, electronic components and precision machining all require capabilities that were allowed to contract during the post-Cold War era. Production capacity, not procurement budgets alone, has become the limiting factor.

China presents an instructive contrast. Although Beijing has not fought a major war in decades, it has continued expanding shipbuilding, machine tools, advanced electronics, chemicals, batteries and critical mineral processing. Civilian industrial policy has created strategic depth that could support military mobilisation if required.

The New Economics of War. For much of the post-Cold War period, military power was measured by technological superiority. Advanced aircraft, precision-guided munitions and carrier strike groups became the defining symbols of military dominance. Recent conflicts suggest that assumption is becoming increasingly difficult to sustain.

Ukraine has shown that inexpensive unmanned systems can destroy equipment worth hundreds or thousands of times more. Commercial drones costing hundreds of dollars have been adapted to attack armoured vehicles worth millions, while one-way attack drones costing tens of thousands of dollars have forced defenders to expend interceptor missiles costing several million dollars.

The reality is stark. The attacker no longer needs every drone to reach its target. It needs enough inexpensive systems to force the defender into consuming far more expensive interceptors. Quantity and affordability are again becoming decisive variables.

This is driving a shift from platform-centric warfare toward system-centric warfare. Success increasingly depends on integrating sensors, communications, artificial intelligence, electronic warfare and autonomous systems into networks capable of absorbing losses while continuing to operate. Individual platforms remain important, but they no longer determine the outcome by themselves.

The implications extend well beyond NATO or Ukraine. The international system is entering a period in which competition will increasingly be defined by industrial ecosystems rather than military alliances alone.

For three decades globalization encouraged countries to optimize for efficiency. Manufacturing dispersed across borders, companies pursued the lowest production costs and governments assumed economic interdependence would reduce the likelihood of conflict. The pandemic, the semiconductor shortage and the wars in Ukraine and the Middle East have undermined that assumption.

The United States, the European Union, Japan and South Korea are investing heavily in semiconductors, batteries and critical mineral supply chains. China is accelerating investment in the same sectors while strengthening domestic innovation and industrial upgrading. The objective on all sides is not complete decoupling but reduced vulnerability.

This is creating a more fragmented global economy. Countries increasingly operate across overlapping systems with different technology standards, financial arrangements and regulatory frameworks rather than within a single integrated marketplace.

The Global South is becoming increasingly important because many of the world's largest reserves of critical minerals are located in Africa, Latin America, Central Asia and Southeast Asia. These countries are demanding greater participation in downstream industries, technology transfer and infrastructure development rather than remaining simple exporters of raw materials.

Developing alternative supply chains therefore requires more than investment. It requires long-term partnerships. China recognised this evolution years ago through infrastructure projects, industrial partnerships and manufacturing integration across multiple regions. The West is now attempting to narrow that gap, but rebuilding comparable ecosystems will take years.

The Strategic Contest Beyond the Battlefield. The central lesson emerging from Ankara is not that NATO lacks money or technology. It is that military power can no longer be separated from industrial policy.

The larger question still unanswered is whether wars are winnable and what comes after.

Military strength rests on economic strength. Economic strength depends on industrial capacity. Industrial capacity depends on secure access to energy, raw materials, skilled labour, technology and resilient supply chains. Each layer supports the next.

This is why China's position cannot be understood simply by comparing defence budgets or counting naval vessels. The more consequential comparison concerns manufacturing capacity, infrastructure, engineering capability, logistics networks and the ability to mobilise national resources over extended periods.

Beijing's new legal framework reinforces this industrial advantage. By penalizing foreign firms that cooperate with Western sanctions, China has extended its industrial strategy into the compliance decisions of multinational corporations. These measures are not about coercion—they are about making it structurally costly for businesses to participate in Western efforts to constrain Chinese industry. The result is a legal environment that fragments global operations, forces duplication of compliance systems and discourages investment that might otherwise flow across both jurisdictions.

The wars in Ukraine and the Middle East have reaffirmed an old reality: nations fight with the industrial systems they have spent decades building, not the budgets they approve once conflict begins. NATO's rearmament reflects an understanding that the international security environment has changed fundamentally. Whether Western economies can rebuild the industrial foundations necessary to sustain that effort remains one of the central geopolitical questions of the coming decade.

The decisive contest will be fought less on the battlefield than in mines, refineries, semiconductor fabrication plants, shipyards, research laboratories and factories—and in the legal departments of every multinational corporation trying to decide whether to stay, leave, or somehow straddle both sides. Those who control the industrial foundations of the twenty-first century, and the legal frameworks that govern them, will possess the greatest influence over its strategic future.

For business this means more careful and complex structuring of their businesses. The result will be higher costs, as firms are forced to create duplicate structures and facilities to avoid compliance issues, but competition will continue.