The Age of Constraints, Part III

Geopolitics, AI, and the New Digital Divide In the final part of this series, we turn from the physical and technological constraints on growth to the geopolitical ones. Part I highlighted structural headwinds in the world’s labor, capital, and energy markets. Part II explored the potential of AI to act as a macro workaround—while warning that it is not immune to physical limits, particularly energy. Part III brings these threads together: AI is not just a labor-saving innovation or a capital redeployment tool. It is increasingly becoming a geostrategic asset—one whose deployment depends heavily on energy availability, infrastructure, and political control.

1. AI as a Tool of Statecraft What oil was to 20th-century power, processing power is becoming in the 21st. Nations are now racing to dominate the AI value chain—from chip design and fabrication, to data access, to the energy systems needed to power high-performance computing. Export controls, industrial policy, and national security reviews are no longer confined to oil tankers and pipelines—they now apply to GPUs and data centers.

The result is a world increasingly defined not by technological openness, but by fragmentation. From Trump's protectionist agenda—including tightened semiconductor export controls—to the strategic ambitions of the US CHIPS Act under the previous administration, and China’s intensified homegrown AI efforts, digital sovereignty has become an explicit geopolitical objective. The once-celebrated ideal of borderless innovation is yielding rapidly to a harsher reality: national power now hinges increasingly on digital dominance and technological self-reliance.

2. The Energy Arms Race Beneath the Silicon If the second in this series taught us anything, it’s that AI is not ethereal—it’s physical. It runs on electricity, minerals, and metals. It demands stable grids, high-capacity cooling, and energy infrastructure on a scale few countries currently possess. AI isn’t just compute-intensive. It’s energy-intensive. And that shifts the locus of global competition. The new AI geopolitics is not just a chip race. It is quite literally a power race. Countries that control abundant, cheap, and low-carbon energy will gain a disproportionate advantage in AI scalability. Those that don’t, risk falling behind, regardless of their tech ambitions.

As such, energy security is fast becoming the ultimate gating factor in the AI revolution. Just as the post-WTO growth boom in the 2000s was fueled by a surge in real energy consumption and prices, the AI boom may repeat that pattern—only faster, and more unevenly distributed.

3. A World Fragmented by Friction As nations impose restrictions on chip exports, data flows, and even model deployment, we risk an increasingly fractured innovation landscape. Collaboration may give way to parallel AI ecosystems—each shaped by its own regulatory, infrastructural, and geopolitical constraints.

That has productivity implications. But it also has energy implications. Redundant infrastructure, an inefficient allocation of resources, and competitive overbuilding could all amplify energy demand—piling more pressure on already strained grids and commodity markets.

In this world, scarcity compounds: chip scarcity, talent scarcity, energy scarcity. The illusion that AI could magically transcend physical limits could fade. And in its place could find a sobering realization: AI will intensify the very constraints it was meant to bypass.

Conclusion: No AI Without Energy The world is not running out of intelligence—but it may be running short of the power needed to scale it. In this final installment of the Age of Constraints, we've argued that the AI revolution is not an escape from resource limits. It is an acceleration into them. Geopolitical frictions, rising energy costs, and physical infrastructure bottlenecks will shape not only who leads in AI, but how widely its benefits are shared.

In the end, there is no intelligence without energy. And there is no geopolitical edge without the ability to turn that intelligence into action—reliably, affordably, and at scale.