University of Chicago Study Warns EU May Free-Ride on U.S. Critical Minerals Spending Without Strong Penalties

Highlights

• A University of Chicago thesis demonstrates the EU’s tendency to free-ride on U.S. investments in critical mineral infrastructure.
• The study uses a Markov Decision Process model to simulate EU strategy in developing alternative supply chains against China’s mineral dominance.
• Without enforceable frameworks, the U.S. risks overextending its leadership while allies benefit without matching investment.

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A groundbreaking thesis by Divya Rajesh (opens in a new tab), published by the University of Chicago’s Committee on International Relations under the guidance of Nobel Laureate Dr. Roger Myerson, (opens in a new tab) reveals that the European Union is likely to free-ride on U.S. investments in critical mineral infrastructure unless the United States imposes credible economic penalties. The study uses a Markov Decision Process model (opens in a new tab) to simulate EU strategy in response to U.S. leadership in building alternative supply chains to counter China’s rare earth and critical mineral dominance.

Building Models with a Warning

Key findings indicate that under most geopolitical and economic conditions, the EU is unlikely to commit significant capital to developing its own supply chain infrastructure, instead choosing to rely on U.S. and allied investments while securing access through trade. Only when the U.S. credibly threatens economic penalties does the model show a shift toward meaningful EU participation. The research also identifies structural barriers—including long mine development timelines, rising populism, and budget constraints—that make EU commitment politically and economically difficult.

Rajesh’s thesis presents a sharp critique of the Minerals Security Partnership and current “friend-shoring” strategies, arguing that they lack enforceable mechanisms to ensure equitable burden sharing. While the study emphasizes security imperatives—military, energy, and economic—it also acknowledges limitations: it models the EU as a unified actor. It simplifies the diversity of mineral priorities between the U.S. and the EU. External grants did not fund the paper and represent an independent academic contribution to a growing body of critical minerals policy research.

This analysis is a wake-up call. Without enforceable frameworks, the U.S. risks overextending its leadership in global critical mineral supply chains, while allies extract benefits without matching investment. As China tightens its grip on rare earth exports, Rajesh’s study underscores the strategic necessity of transforming friendship into a mutually enforceable economic alignment.