I Relationships between the economy and national security Analysis and considerations for economic security policy in the Netherlands Lucia Retter, Erik Frinking, Stijn Hoorens, Alice Lynch, Fook Nederveen and William Phillips For more information on this publication, visit www.rand.org/t/RR4287 Published by the RAND Corporation, Santa Monica, Calif., and Cambridge, UK R® is a registered trademark. © 2020 Wetenschappelijk Onderzoek- en Documentatiecentrum Cover image shared by the Frans Berkelaar via Flickr Creative Commons; no known copyright restrictions. RAND Europe is a not-for-profit research organisation that helps to improve policy and decision making through research and analysis. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. All rights reserved. No part of this book may be reproduced in any form by any electronic or mechanical means (including photocopying, recording, or information storage and retrieval) without permission in writing from the sponsor. Support RAND Make a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org www.randeurope.org Preface The Research and Documentation Centre (WODC) in the Netherlands commissioned RAND Europe to explore the relationship between the economy and national security. The study conceptually investigated the connections between the economy and national security, before applying the ensuing perspectives to the characteristics and performance of both the Dutch economy and its national security. This report summarises the findings from the study, and draws on a review of academic literature and national policy documentation, as well as information solicited through expert interviews. In doing so, we present a historical perspective of scholarly thinking about national security and the interconnectedness between the economy and security. The framework and supporting analysis contained within this report present a structured method for understanding the strategic-level relationships between the economy and national security. As part of this study we propose a conceptual framework for examining economy-related factors that could have a disruptive effect on society due to their impact on national security. This approach is consistent with the increased scholarly focus on human-centric security, as well as the way in which national security is operationalised in many modern states. As part of this framework we propose a concept of ‘risk vectors’ – avenues through which national security risks to critical infrastructure, sectors and processes can be manifested. Finally, we explore the proposed framework from an empirical perspective and apply it to the Netherlands, using an illustrative example of three risk vectors. This report may be of interest to policymakers and professionals who are responsible for national security, and to researchers with an interest in economic security. The report is prepared for the National Coordinator of Counterterrorism and Security in the Netherlands. RAND Europe is an independent not-for-profit research institute, whose mission is to help improve public policy- and decision-making through objective research and analysis. Part of the RAND Corporation, RAND Europe has over 25 years of experience in conducting policy research. This report has been peer-reviewed in accordance with RAND’s quality assurance standards. For more information about RAND Europe or this document, please contact Stijn Hoorens ([email protected]). RAND Europe RAND Europe Rue de la Loi 82, Bte 3 Westbrook Centre, Milton Road 1040 Brussels, Belgium Cambridge CB4 1YG, United Kingdom Tel: +32 2669 2400 Tel: +44 1223 353329 iii Table of contents Preface .................................................................................................................................................... iii Table of contents...................................................................................................................................... v Figures ................................................................................................................................................... vii Tables ................................................................................................................................................... viii Boxes ...................................................................................................................................................... ix Summary ................................................................................................................................................ xi Samenvatting ....................................................................................................................................... xvii Acknowledgements................................................................................................................................ xxv 1. Introduction and context ...................................................................................................... 1 1.1. Thinking about economic security in the Netherlands ............................................................ 1 1.2. An approach to understand the links between macroeconomic variables and national security 2 1.3. Research questions and research steps ..................................................................................... 5 1.4. Structure of this report ............................................................................................................ 7 2. A historical perspective on definitions of national security ..................................................... 9 2.1. Scholarly thinking about national security until the 19th century ............................................. 9 2.2. Understanding of interconnectedness between security and the economy in the 20th century 10 2.3. A shift towards a more ‘human-centric’ focus ........................................................................ 16 2.4. Different perceptions of national security result in differences in national risk assessment processes ............................................................................................................................... 22 2.5. A ‘broader’ definition of national security to include the economic dimension ...................... 23 2.6. A trend towards considering economic and welfare aspects in national strategic documents .. 25 2.7. Critical infrastructures, sectors and processes that enable the functioning of society .............. 29 2.8. Summary .............................................................................................................................. 30 3. Interconnections between national security and the economy .............................................. 31 3.1. Conceptualising national security through the lens of critical infrastructure, sectors and processes ............................................................................................................................... 31 3.2. A conceptual framework linking economic factors with potential threats to national security 35 3.3. A closer look at risk vectors ................................................................................................... 39 v RAND Europe 3.4. A closer look at global and regional trends ............................................................................ 56 3.5. Summary .............................................................................................................................. 66 4. The connections between economy and national security in the Netherlands ....................... 69 4.1. Unique characteristics of the Dutch economy and related economic risks ............................. 69 4.2. Risks associated with foreign ownership in the Netherlands .................................................. 73 4.3. Skills gaps in technical professions and the increased risks for critical processes ..................... 79 4.4. National security risks associated with natural resources and food security ............................ 84 4.5. Summary .............................................................................................................................. 90 5. Conclusion ......................................................................................................................... 93 5.1. RQ1: How can national security be defined and what does the international literature suggest about its main components? .................................................................................................. 93 5.2. RQ2: What can be learned from the literature about the relationship(s) between the economy of a country and the various aspects of national security? Which factors, mechanisms and underlying causal mechanisms can be identified? .................................................................. 94 5.3. RQ3: What is the impact of contextual, country-specific characteristics and factors on this relationship?.......................................................................................................................... 96 5.4. RQ4: What do the answers to research questions 2) and 3) tell us about the factors and characteristics that have an impact on the interconnections between the Dutch economy and its national security? .............................................................................................................. 96 5.5. RQ5: How does the Netherlands