Rahm Emanuel Rips Us Defense Firms, Calls For Punishments In Final Tokyo Missive

U.S. Ambassador to Japan Rahm Emanuel is calling for defense firms that miss deadlines and increase costs to be forbidden from bidding on new military contracts as a punishment.

The final note in his “Tokyo Takes” newsletter, obtained by The Hill, calls for defense firms to be blocked from buying back billions in stock if they fail to meet their obligations on major weapons systems.

He specifically proposes a five-year ban on buying back stocks or a ban on buying back stocks until deadlines are met for firms that fail to meet their commitments. 

“Trust me, that would quickly get the attention of the C-suite,” Emanuel wrote.

He also suggested blocking “the big five” from bidding on contracts in some areas, like emerging systems, and encouraging bids from start-ups and “small, ambitious firms only.”

While he doesn’t name them, the five biggest contractors with the Department of Defense are Lockheed Martin Corporation; Raytheon Technologies Corporation; General Dynamics Corporation; The Boeing Company; and Northrop Grumman Corporation, according to the Congressional Research Service.  

“I know that both ends of Pennsylvania Avenue and both parties are responsible for this situation. None of us are free from blame here, which means we need to work together to solve it,” the ambassador wrote. 

Emanuel’s focus on military production is part of wide-spread recognition that America’s defense industrial base is failing to meet demands necessary to counter China’s aggressive ambitions in the region. U.S. resources are further strained by supplying Ukraine in its defensive war against Russia and aiding Israel’s defense in the Middle East. 

“Everybody agrees that something beyond business as usual, has to happen, that this is a breaking point,” Emanuel said in a brief phone call with The Hill. 

“I don't know whether a five-year restriction on stock buy-back until they fix it will work, but somehow you have to shake up Lockheed, Raytheon, General Dynamics, Grumman and Boeing, somehow they have to be brought to heel, and the corporate suite has to be brought to a laser focus to solve this problem.”

Emanuel calls the “atrophied defense industrial base” the “weak link” in America’s strategic posture and blamed the major defense contractors as having “zero sense of urgency or understanding at how America’s deterrence and security commitments are being undermined.”

Emanuel, who served as White House chief of staff to former President Barack Obama and was previously a congressman from Illinois and Chicago’s mayor, said he had to use “my political capital with Japanese officials to cover for American firms’ failures.”

The “Tokyo Takes” newsletter goes out to an estimated 180 members of Congress, chiefs of staff, and professional staff of committees, including Armed Services and Foreign Affairs.

Biden officials and lawmakers in both parties have called for reforms to America’s military production. Earlier this month, Biden National Security Advisor Jake Sullivan called it a “a generational project” for the U.S. government to invest in military procurement and research and development. 

The bipartisan, House Select Committee on Competition Between the U.S and the Chinese Communist Party focused a December hearing on “The Imperative to Strengthen America’s Defense Industrial Base and Workforce.”

“Bold policy changes and significant resources are now needed to restore deterrents and prevent a fight with the PRC [People’s Republic of China],” said Rep. John Moolenaar (R-Mich.), the committee chairman. 

Emanuel also calls for employing “economic statecraft” to counter China, saying energy should be used as a “strategic asset.” 

“Right now, our economic statecraft is absent — and that’s a ‘diplomatic’ understatement,” Emanuel wrote. He called for marrying economic policies with “political, diplomatic and security policies.” 

“We have lurched from lauding every trade deal, regardless of the cost, to denouncing every trade deal, regardless of the benefits. We can agree that this area requires a more nuanced position than ‘all’ or ‘none.’”

Emanuel also called for using energy as a “strategic asset, not just a resource,” and pointed to how the U.S. helped replace banned Russian energy in Europe, which was cut off after Moscow launched its full-scale invasion of Ukraine.

He described this as a roadmap for the Indo-Pacific to “woo nations and expand our network of partnerships.”

China is the second largest importer of U.S. crude oil, behind the Netherlands, according to U.S. government data, and Asia and Oceania are the second largest destination for U.S. oil exports behind Europe.

The U.S. is the largest exporter of Liquefied Natural Gas (LNG), with nearly half of exports heading to Europe and 38 percent heading to Asia. 

Emanuel called for maintaining and strengthening U.S. partnerships in the region that were developed under the Biden administration – including the U.S., Japan and, South Korea trilateral summit. He also mentioned strengthening the Quad of Australia, Japan, India and U.S. and of creating the Australia, U.K. and U.S. (AUKUS) partnership for naval warfare production. 

“Our partnerships root us in the region — much to China’s irritation,” Emanuel wrote. 

“We need to repay that trust by continuing to cultivate those multilateral arrangements. If our goal is to undermine China, we can’t undermine our allies at the same time.”

When asked if he’ll be in a position back in the U.S. to push forward his solutions, Emanuel said he will continue to work with lawmakers as he has to date. 

“I won't have the platform of ambassador, but quiet does not come naturally to Rahm Emanuel.”

Newsletter recipients include Senators Jack Reed (D-R.I.), outgoing chairman of the Senate Armed Services Committee; Mark Warner (D-Va.), outgoing chairman of the Senate Select Committee on Intelligence;John Cornyn (R-Texas), a member of the Senate Committee on Finance and Intelligence Committee; and Todd Young (R-Ind.), co-author of the CHIPS Act that focused on investing in semiconductor manufacturing to the U.S. as a counter to China.

Other recipients include Reps. Adam Smith (D-Wash.), the ranking member of the House Armed Services Committee; and Speaker Emerita, Rep. Nancy Pelosi (D-Calif.)