When the Cold War ended 30 years ago, the United States was unrivaled in virtually all of the technologies thought to define the future of civilization. In the intervening years, however, there has been a steady decline in U.S. technological leadership and, in turn, a deterioration of the country’s economic performance.
For the geospatial intelligence (GEOINT) industry, economic consequences have given way to real national security risks. GEOINT, which encompasses all manner of information about people, places and things on Earth’s surface, has a wide variety of uses, from mapping to mineral exploration to commercial logistics, but it is especially valuable to military consumers seeking to understand the activities of potential adversaries. The industry is heavily dependent on the federal government — and vice versa. In an ideal world, the industry thrives under the government’s patronage and protection, while the government benefits from the industry’s sensitive information and world-leading innovation.
This arrangement, however, is broken. The U.S. commercial GEOINT industry is being outstripped by investments and innovations from foreign companies and providers, a problem that will only intensify as emerging players like China increasingly dominate supply chains, set global technology standards, and gradually drive U.S. companies from the marketplace. Protecting U.S. GEOINT, on the other hand, could provide an economic boost and offer a blueprint for preserving our technological leadership in other industries important to our national security.
A strong first step for revitalizing U.S. commercial GEOINT would be to update regulatory policies to reflect existing market conditions. This may seem like low-hanging fruit, but one reason foreign providers are catching up with their U.S. counterparts is that the U.S. government, for fear of enabling our adversaries, has constrained American suppliers and opened the door for foreign providers to market and profit from advanced GEOINT capabilities.
But if a Chinese entity sells overhead imagery on the open market with high resolution and short revisit rates, it is hard to see what benefit the U.S. gains by preventing domestic enterprises from doing the same. America cannot remain competitive in GEOINT or any other critical industry if its own regulatory policies stifle innovation. And if its commercial capabilities cease to be competitive, U.S. GEOINT providers will continue to diminish and national security will certainly suffer.
As a second step, the government should wield its mighty purchasing power to, wherever possible, favor indigenous sources of commercial geospatial intelligence. U.S. providers are not competing on a level playing field with foreign rivals, and it is not realistic to expect them to compete successfully with offshore entities that are heavily subsidized by their governments. China is by far the worst offender.
Foreign sources offer not just questionable economic competition but a less trustworthy product — the U.S. intelligence community should never rely on an intelligence infrastructure that is designed, built, operated, maintained or housed in other countries or by foreign-influenced companies. But if domestic providers cannot match the product offerings of offshore ones, the intelligence community might not have a choice. Other countries intentionally cultivate domestic industry to both head off these national security concerns and to benefit their local economies — the United States should do the same by favoring domestic commercial partners. Industrial policy must promote U.S. technology and companies over foreign suppliers to preserve mission confidence in the intelligence information chain to the war fighter.
If the U.S. alternative to offshore sources is occasionally more expensive, that pricing differential will likely be due to market-distorting foreign subsidies. If domestic sources are forced from the market by predatory pricing by their overseas rivals, U.S. intelligence and military consumers will have little pricing leverage with foreign sources in the future. In other words, going offshore may save money in the near term at the expense of creating much bigger costs — and risk — over the long term.
Finally, Washington should take active steps to encourage investment in the commercial GEOINT sector. As MITRE observed in its October 2020 report, “the United States has fallen behind, and foreign investment, largely funded by foreign governments, has begun to dominate the industry.” That does not necessarily mean that the U.S. government has to invest in the domestic industry, but it should foster conditions that make the industry attractive to private investors.
This can be accomplished by streamlining regulation and favoring domestic providers, as mentioned above, but also by encouraging agencies such as the Export-Import Bank to assist companies in exporting, and by sharing the benefits of government research with providers on a preferential basis. If these measures require infringing on traditional interpretations of free trade, it is only because the domestic GEOINT industry is struggling to survive in a “free” global market where other players receive extensive benefits from their home governments.
Over the last generation, the United States has steadily eroded it global leadership in an array of industries, from GEOINT to shipbuilding to machine tools to semiconductors. All of these industries, and especially GEOINT, have direct relevance to national security and could be preserved if the government streamlines regulations for domestic commercial providers, favors them in procurement and takes measures to stimulate investment. If that does not happen, the strength of our intelligence community and America’s prospects for remaining the world’s sole superpower will be diminished.
Loren Thompson is the chief operating officer of The Lexington Institute and chief executive officer of the consultancy Source Associates. He writes about the strategic, economic and business implications of defense spending.