The war between the US and Iran is being felt far beyond the Gulf, not only in energy markets but in the balance of technological power. As pressure builds on oil supplies and infrastructure, the conflict is drawing attention to something else: the vast amounts of energy required to sustain and expand artificial intelligence. Questions of compute, electricity and industrial capacity are no longer abstract concerns for tech companies; they are deciding the global balance of power.
Nina Schick, a political commentator focused on the intersection of technology and geopolitics, sees the conflict as part of a wider contest. Her idea of “industrial intelligence” describes a shift already under way, in which AI is no longer just a business opportunity but also how nation states exercise hard power. In that context, military operations, energy supply and data infrastructure begin to look less like separate domains and more like parts of the same strategic landscape.
She spoke with the New Statesman about how the war intersects with the US-China rivalry, what it reveals about the limits of Britain’s current approach to AI and why the economic consequences may extend well beyond energy.
Luke O’Reilly: What are the implications of the Iran war for the AI race?
Nina Schick: I think this is the first AI war. [People say] it’s just Trump following Netanyahu and they have no plan and they don’t know what they’re doing, like the Israelis have just brought them into this. And maybe there’s some truth to that. [However,] I think there’s a very risky strategy. I don’t know how much is 3D chess, but this definitely came into the calculus, that this is to do with the kind of big geopolitical contest of the century, which is China versus the US, and the kind of technology questions absolutely central to that.
It’s not lost on the Trump administration that Iran is a major supplier of fossil fuels to China, right? And that at this crucial point where energy is the constraint to scaling and deploying AI… Consider the counterfactual, that they didn’t think at all how this might impact China, or how this might impact China’s energy supplies. I don’t think that’s true.
At the same time, it’s also a display, because what we saw in Venezuela and we saw in Iran and we’re seeing in Ukraine, is just how… in army talk, they call it the kill chain, which is the ability to gather all the data, observe, understand and react. And what’s been happening with AI software, like the ones deployed in Ukraine, through Palantir, deployed in Nato, and obviously the use of AI also for these operations in Venezuela and Iran, is just like how unbelievably good the intelligence has become.
The precision of the strikes, how quickly they’ve been able to use AI to make that kill chain unbelievably accurate, sophisticated – you could even argue that that’s been to their detriment, right? Because they’re so effective in wiping out the Iranian leadership with the missiles that there’s no one left to kind of negotiate with any more, right? None of the softer ones that they thought they might be able to negotiate a deal with. There literally is nobody to negotiate and end the war with. So it’s also to display [strength].
Why would the US feel the need to display strength to China?
If you look at how the conventional thinking has been in Beijing for a long time, the American military machine is outdated, it wouldn’t be able to withstand, it wouldn’t be able to respond, it wouldn’t be able to do anything. And of course this all comes down to the question of Taiwan, right? That’s central to the AI race because 92 per cent of the world’s most advanced semiconductors are still manufactured in Taiwan. That’s why, since the Trump administration took office, they’re desperately trying to onshore their supply chains.
How does the energy crisis impact Britain’s ability to be an AI superpower?
If you want to have a transformational impact with AI, it’s not enough to just build AI models or have really good AI companies, because that’s what the UK has. They have great talent. They have great AI companies. But if you want to have a transformational effect, you actually have to scale. If you look at the whole race between China and the US… countries like the UK have better talent, arguably, [and] the US has the better frontier models. But that’s not going to make the difference. It’s about who’s going to deploy these capabilities broadly.
And for China, if you look at what they’ve been saying with a number of policy pronouncements, the most recent one just coming last week in their 15th five-year plan, they have an aggressive government mandate for AI to be deployed within key industries by 2030 with about 90 per cent deployment targets. So it’s an aggressive scaling and deployment of these capabilities.
So while in the US and in, to a lesser extent, the UK, companies are building really cool things, the value is actually going to come from applying it and deploying it. And to do that, the number one constraint is energy. And already, if you look at industrial electricity prices in the UK vs the US or China, it’s five, six times more expensive, right?
What did Britain get wrong?
They chased decarbonisation as some kind of moral strategy, instead of having an industrial strategy to do it how China is doing it, or even closer to how Norway is doing it. You want to see net zero, but you do it as some kind of moral strategy. The UK is always like, well, we’ve got to lead. I know it doesn’t make much difference if the UK completely decarbonises as a share. [There’s] the well-trod argument that it’s only 0.7 per cent or 0.8 per cent of global emissions. So even if you went to zero, it wouldn’t make a difference on the world stage. But then the counter is, well, we’ve got to lead, we’ve got to show the way.
And if you want to look at who’s actually leading where there’s like global impact, look at what China is doing – they added more solar panels in a single year than the US has done. They completely dominate the entire supply chain for green technology.
So one other thing that people haven’t even realised yet in the broader debate is right now, [they say] this is a reason why we need to get off fossil fuels, because we’re vulnerable to the supply side shocks. We’re vulnerable to imported fossil fuels from the Middle East or elsewhere, but you’re essentially trading one vulnerability for another, because the green energy supply chain is completely dependent on China, from 80 per cent of the solar to all the rare earth minerals to all the component parts of the wind turbines. So you have to be pretty clear eyed about where the strategic vulnerabilities are.
What else?
So that was one mistake. They didn’t continue using the North Sea resources, which are still there, and pursued a kind of decarbonisation, not being clear eyed about the supply chain risks.
And we know that’s a risk and that’s the story with what happened with nuclear, right? If you look at the story of Hinkley Point C, that is another story similar to Germany. They got it catastrophically wrong with nuclear, and that wasn’t inevitable. The world’s first commercial nuclear reactor for energy was built in Britain.
Britain used to be a leader in nuclear, but that goes hand in hand with the kind of the hollowing out of the industrial base. You need that investment, and you need to have the technical talent and the ability to maintain these facilities.
What can Britain do to improve its nuclear power capacity?
By the government’s own assessment, the UK is the most expensive place in the world to build nuclear reactors. So what they should do, of course, it takes a while to turn this around, is not to abandon decarbonisation yet, continue on that, but obviously make use of the resources in the North Sea. That is a policy choice, it’s not a geological choice.
And they have to fast track nuclear development with SMRs [small modular reactors]. So what you see with Rolls-Royce, it’s still world-leading, right? This is where Britain can get an asymmetric advantage, and the SMR design of Rolls-Royce is a huge win for British energy policy and British industry and the British economy more widely.
How serious is this?
People are looking at this like a supply side shock, right? You know, “it’s not going to be that long, the war is going to be over, and then things are going to go back to normal”. And that’s absolutely the wrong way to read it.
This isn’t just a market shock. This is the shifting of geopolitical sands. So there is no going back to the status quo antebellum, and so much of that is tied to what’s happening now – the bigger geopolitical picture about AI and how what’s happening in Iran also has to do with how the US sees China.
That’s not to say that their strategy is to succeed. It’s a big gamble, it may well backfire, but the kind of supply chain shocks that we’re going to see in the global markets reverberate far beyond energy.
It’s turning out that all these critical supply chains, whether it’s on fertiliser – therefore relating to food – whether it’s on semiconductors, all of that is being choked right now. There is no fast resolution to this war.
[Further reading: The world energy shock is coming]
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