“Friend-Shoring:” A Collaborative Industrial Strategy to Solve Geostrategic Challenges
On July 11, the White House announced the Icebreaker Collaboration Effort (ICE Pact), a trilateral partnership between the United States, Canada, and Finland to cooperate in building a new fleet of strategically important icebreakers for the Arctic and Antarctic. As global warming makes the Arctic more accessible to shipping and resource extraction, it has become an area of increasing strategic competition and consequently of growing Russian and Chinese presence; this agreement is part of a response from NATO Arctic powers. Similar to the Australian, United Kingdom, and United States trilateral nuclear submarine agreement (AUKUS), the ICE Pact is an innovative collaboration that leverages allies’ resources and capabilities to produce strategically vital assets that are complex, expensive, and require technical know-how and industrial infrastructure. The ICE Pact and AUKUS agreement are examples of an innovative model of onshoring amongst allies: friend-shoring. This strategy of industrial cooperation leverages allied capabilities, can reduce inefficiencies, takes advantage of economies of scale, and most importantly, renews stagnant strategic industrial capacities. The innovative friend-shoring model should be applied to other geostrategic assets where U.S. production or procurement capacity has diminished. Uranium enrichment is an example of one such geostrategic asset where this model has great potential. The United States and four of its allies have recognized this and begun a friend-shoring agreement on securing their nuclear fuel supply chain and advancing their uranium-enrichment capabilities.
The ICE PACT: a Cooperative Model for Future Competition
As the Arctic begins to heat up, so is geopolitical competition over the region’s increasingly accessible shipping routes and resources. Although seven of the eight nations bordering the Arctic are NATO members, NATO has thus far not matched Russia’s strategic posture in the region. Last August, the PRC, declaring itself a “near-arctic power,” participated in a naval exercise with Russia, sailing eleven ships off the coast of the Aleutian islands. Like aircraft carriers in the ocean, icebreakers, capable of traversing the thick arctic ice sheets and clearing passage for other ships, are vital strategic assets that serve as markers of geostrategic strength in the Arctic. Russia currently has seven nuclear-powered (one armed with a second on the way) and thirty diesel-powered icebreakers. The PRC has four but is currently building a next-generation icebreaker; with 50.7% of the world’s shipbuilding capacity, the PRC’s fleet is likely to expand. Canada has nine icebreakers, and Finland has 12 in addition to the Helsinki shipyard, recently transferred from Russian to Canadian ownership, which has built more than half of the icebreakers in use today. Meanwhile, the United States has one heavy icebreaker from the 1970s and one medium icebreaker from the 1990s that caught fire in August.
The dearth of U.S. icebreaker production has resulted in the knowledge and labor force necessary to build these complex machines atrophying like unused muscle. The U.S. industrial base’s deterioration has extended to the entire defense industrial base (DIB). Since 1979, the number of U.S. manufacturing jobs has shrunk by 36% and the number of DIB-specific manufacturing jobs has contracted by 63.5%. This has implications for entire industries, including shipbuilding. One result is the U.S. Navy’s inadequate ability to maintain and update its fleet. The DoD is aware of this impasse and has identified it as a key national security challenge.
The ICE Pact is an important step in the right direction towards rebuilding American DIB capacity. The ICE Pact will focus on “information sharing, collaboration on workforce development, and an invitation to allies and partners to purchase icebreakers built in American, Canadian, and Finnish shipyards.” Importantly, this agreement will help secure guaranteed orders years in advance, vital for expensive long-term projects like shipbuilding. By leveraging its allies’ unique abilities and knowledge, the United States can rebuild its industrial capacity in this key area.
AUKUS: Friendly Shores in the Indo-Pacific
AUKUS is a similar trilateral agreement between the United States, Australia, and the United Kingdom, that leverages allies’ capabilities and close cooperation to generate exponential impact. Of its two pillars, Pillar 1 is better known and focuses on Australia’s nuclear submarine capability. It calls for the basing of allied nuclear submarines in Australia, the sharing of sensitive nuclear-propulsion technology, and the training of Australian personnel on that technology. It also calls for the co-development of a next-generation nuclear submarine and the sale of up to three Virginia-class submarines to Australia beginning in the early 2030s.
Pillar 2 of AUKUS is less known but no less important. Pillar 2 is an agreement to collaboratively develop advanced capabilities in six technological areas: undersea capabilities, quantum technologies, artificial intelligence and autonomy, advanced cyber, hypersonic and counter-hypersonic capabilities, and lastly, electronic warfare. The second pillar further includes two functional areas of cooperation: innovation, and information sharing. This agreement will however go beyond information sharing, cooperative research, development, testing, and evaluation (RDT&E), and interoperability. It aims for true joint production by strengthening connections between the members’ respective industrial bases. Plans include freeing up defense trade restrictions and creating forums for greater public-private coordination within and among the three respective DIBs. AUKUS delivers cost savings from “increasing platform sharing and innovation costs” and more efficient development of advanced capabilities. The attractiveness of this model is underscored by Japan’s desire to join pillar 2 of AUKUS, to which the member states have expressed openness. The U.S. Senate is considering—and should pass—a bill to direct the Executive Branch to engage with Japan on this opportunity.
While Australia needs the resources, expertise, and labor training offered by AUKUS, the United States also stands to benefit. AUKUS increases the level of deterrence in the Indo-Pacific with its provision to base U.S. nuclear submarines in Australia and the addition of a nuclear submarine-capable regional ally. The agreement also increases the number of guaranteed orders for U.S. shipbuilders and spurs U.S. leadership in the technology sectors of the future, such as AI and quantum computing. From a geopolitical perspective, these types of agreements have the added benefits of strengthening and deepening alliances, which are of increasing importance in a non-unipolar world.
Uranium Enrichment—An Example of Future Application of the Friend-Shoring Model
With the demonstration of friend-shoring’s potential for ice breakers and nuclear submarines, policymakers ought to extend its application to address gaps in access to other geostrategic products and processes. It presents a unique opportunity to deepen collaboration with allies whose resources and needs dovetail with those of the United States. The good news is that U.S. policymakers are applying this model to one such area: uranium enrichment.
Nuclear energy is seeing a renaissance spurred by climate change and the resulting need for electrification and for carbon-neutral base load electricity generation (electricity which is reliably available, unlike renewables). As a result, nuclear plants and uranium mines are reopening for the first time, and uranium prices recently hit a fifteen-year high. At the same time, the U.S. capacity to produce and enrich uranium is insufficient for future energy needs, and its uranium supply chain is too reliant on adversaries, with 27% of its enriched uranium being supplied by Russia in 2021. In the wake of the invasion of Ukraine, Congress passed a law blocking U.S. purchases of Russian uranium by 2028, but the U.S. may not currently have the capacity to support its own needs.
Due to rising environmental fears in the late 70s and early 80s, partially caused by high-profile nuclear accidents, and rising costs from regulation and other factors, the U.S. significantly slowed its building of nuclear energy. When combined with the “Megatons to Megawatts” program begun in the 90s—which diluted weapons-grade uranium from Russian warheads for use in U.S. nuclear reactors and flooded the market—the supporting industries of uranium mining and enrichment had atrophied by the 2010s. In 1980, the United States produced 44 million pounds of yellowcake (processed uranium). In 2023, the United States produced a mere 50,000 pounds of yellowcake. And in the 2010s, the United States’ global share of enrichment capacity fell from 20% to 7.5%. The rest was mined and enriched in several countries, including Russia and Kazakhstan. These two countries are first and sixth in uranium production, respectively, but Russia is the world’s top enricher, with 44% of global capacity, while the United States has only 12%.
Uranium enrichment is necessary to convert the raw mineral into fuel for nuclear reactors. It is also incredibly complex and expensive to execute. While uranium mining capabilities are more dispersed, few nations have the capability to enrich it. This makes uranium enrichment a chokepoint that can be used as a form of coercion or “soft power,” which encourages states to adopt that enricher’s nuclear technology. Turkey, a NATO ally, is a concerning example. In 2018, Ankara signed a partnership with Rosatom, Russia’s nuclear energy provider, to build the Akkuyu nuclear power plant in Turkey. Given Russia’s known use of energy exports to “exert political and economic pressure,” furthering the reliance of a NATO ally on Russia for its nuclear energy should be of great concern. As nuclear energy becomes more widespread, whose nuclear technology is adopted may largely be driven by enrichment capacity. Because nuclear energy infrastructure is capital intensive and energy production is core to state power, uranium enrichment and nuclear technology are likely to be an important new field of play in the era of green-energy geopolitics. The beginning of this trend can already be seen with Saudi Arabia’s stated ambition to enrich its own nuclear fuel and flirtation with the PRC to provide the necessary technology.
The United States and its allies have already begun to take steps to collaborate and friend-shore their nuclear energy supply lines and technology development. On April 16, 2023, the United States, UK, France, Japan, and Canada (the Sapporo Five), who collectively account for half of the world’s uranium enrichment capacity, announced a strategic partnership to separate their nuclear fuel supply chains from Russia. In subsequent statements in 2024, the Sapporo Five announced that they had identified areas where they could collaborate on securing a stable fuel supply for their current reactor fleets while also developing advanced fuels for next-generation reactors and reducing their dependence on Russian supply chains. The larger aim of the effort is to leverage each country’s unique nuclear assets to establish a “global commercial nuclear fuel market” and collaborate on strategic opportunities in each stage of the nuclear fuel supply chain ( uranium extraction, conversion, enrichment, and fabrication). They have already mobilized $5.6 billion in public/private investment in expanding enrichment capacity in the next three years (exceeding their $4.2 billion target).
This is the model of friend-shoring in action. Relying on each other’s resources and knowledge to secure supply chains and increase capacity. If the Sapporo Five go through with their plans, they will establish a “global commercial nuclear fuel market,” which will benefit the U.S. nuclear industry. Moving forward, the United States and its allies should aim to formalize this cooperation to ensure the interoperability of the next generation of nuclear reactors, for which economies of scale are vital. While the United States should continue to look for other opportunities to apply this model, such as securing the rare earth mineral supply chain, whether it will is now uncertain. Isolationism and a lack of clarity on the purpose of American foreign policy are obstacles to the long-term strategic thinking and trust among allies necessary for friend-shoring to succeed.
Views expressed are the author’s own and do not represent the views of GSSR, Georgetown University, or any other entity. Image Credit: CollectEdNy