How Elon Musk Came to Influence the Fates of Nations

From a Wall Street Journal story by Greg Ip headlined “How Elon Musk Came to Influence the Fates of Nations”:

Most business leaders go a lifetime without creating an international incident. Elon Musk has done it twice this month.

First, he drew Ukraine’s ire over revelations in Walter Isaacson’s biography that he declined to activate his satellite service, Starlink, over Crimea, thereby foiling a Ukrainian attack on the Russian navy.

Days later, Taiwan slammed him for saying the People’s Republic of China sees the self-governing island the same way the U.S. sees Hawaii: “Taiwan is not part of the #PRC & certainly not for sale!” its Foreign Ministry said on Musk-owned X, formerly known as Twitter.

Those were just a few of the items on Musk’s diplomatic agenda this month, which included meetings with the leaders of Israel, Turkey and Hungary.

Musk’s international influence poses an interesting problem for the U.S. In a world where geopolitical leadership depends increasingly on technology, Musk ought to be one of the U.S.’s most important assets. And yet he is a de facto independent actor.

Of course, commerce has mingled with statecraft for centuries. In the 1700s, the East India Company became a state unto itself, colonizing India in pursuit of profit. “A great prince was dependent on my pleasure; an opulent city lay at my mercy,” Robert Clive, who had commanded its forces, told the British Parliament.

Closer to home, William Randolph Hearst goaded the U.S. into war with Spain in part to sell newspapers. Henry Ford, a fervent isolationist, tried to keep the U.S. out of both world wars. In 1940, Ford vetoed a contract to build engines for fighter planes that Britain needed to battle Nazi Germany.

During the Cold War, Armand Hammer used his perch atop Occidental Petroleum to cultivate detente between the Soviet Union and the U.S. George Soros has used the wealth earned from betting against the currencies of some countries to press for democracy and human rights in others.

Musk owes his influence not to the control of oil, capital or private armies, but of technologies vital to economic competitiveness, national security and public opinion.

NASA and the Pentagon depend heavily on Musk-owned SpaceX to get into space. As Gregory Allen of the Center for Strategic and International Studies notes, SpaceX is not like a traditional defense contractor almost entirely dependent on sales approved by the U.S. government, which means Musk feels less obligation to align his views with Washington’s.

After Russia knocked out Ukraine’s other satellite service in the early hours of its invasion in February 2022, Ukrainians credit Musk’s provision of Starlink terminals with restoring connectivity on the battlefield and helping Ukraine avoid defeat. (Musk has said Starlink was not activated over Crimea, to avoid being “explicitly complicit in a major act of war and conflict escalation.”)

Tesla isn’t the world’s only electric vehicle manufacturer, but it is the most advanced and prestigious. National leaders understandably think hosting a Tesla factory provides a handhold on the industry’s future. It’s why China let it open a wholly owned subsidiary, a first for a foreign automaker, in Shanghai in 2019, betting correctly that Tesla’s presence would invigorate domestic brands. It’s why Saudi Arabia is talking to Tesla about an investment, The Wall Street Journal has reported. Musk called the report false.

Finally, while Musk’s purchase of X has proved immensely dilutive financially, it has been accretive politically, granting him say over who gets heard, amplified, filtered or banned on the world’s most influential social-media platform.

Only the U.S. could produce an entrepreneur like Musk, who emigrated from South Africa to Canada as a teenager and then to the U.S. “The U.S. is literally a distillation of the human spirit of exploration,” he told Isaacson.

And perhaps only in the U.S. could he have so much political autonomy. Musk is in almost continuous conflict with the state, from the Federal Trade Commission to the Justice Department. In China or Russia, where power flows from one man, that would cost you your business, your freedom, or both. In the U.S., where power is diffused between different branches and parties, Musk thrives.

Musk’s foreign-policy influence has aroused plenty of consternation; yet businesses regularly weigh in on such matters, though without the same reaction that greets Musk, a polarizing figure.

More consequential than Musk’s independence from the U.S. government is his vulnerability to China’s.

Isaacson writes that the factory closures mandated by China and then California to contain Covid-19 “inflamed his anti-authority streak.” Yet only California came in for Musk’s public wrath; he called lockdowns fascist and the responsible official ignorant. He said nothing similar publicly about China, even when Tesla’s Shanghai factory was closed for 22 days last year.

Musk’s deference to China extends to the former Twitter. Isaacson writes that shortly after his purchase, Musk told the journalist Bari Weiss the platform would have to be careful about “the words it used regarding China, because Tesla’s business could be threatened.”

One should not single out Musk for locking horns with American politicians while kowtowing to Beijing; the chief executives of lots of companies do the same, from Walt Disney to JPMorgan Chase.

The difference, of course, is that the fate of nations depends much more on which has the best technology than the best bank loan or animated film.

Musk’s influence over international relations will be diluted if his influence over technology is diluted. Competitors are hard at work trying to weaken SpaceX’s market share in launch and X’s in social media. As for electric cars, now that Chinese brands have caught up, expect Tesla to be squeezed out of China’s market much as other foreign companies have been, once Beijing no longer found them useful. Musk might be less vulnerable to China when he no longer has sales there to protect.

Greg Ip is a Canadian-American journalist, currently the chief economics commentator for The Wall Street Journal.

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