Chapter 6

Chapter 6: Geopolitics – The New Oil Debate

Data Infrastructure as the Next Strategic Resource

Introduction

As artificial intelligence and cloud computing redefine global economic priorities, computing power is increasingly being described as "the new oil." Where oil once determined geopolitical leverage, today it is access to high-performance data infrastructure—and the energy to power it—that shapes national advantage.

This chapter examines how AI-centric data centers are becoming strategic geopolitical assets, influencing energy security, trade policy, and national development strategies. It also explores how nations are positioning themselves in this new race for digital infrastructure leadership.

Why Data Centers Are Geopolitical

Unlike oil, which is naturally distributed, data centers can be deliberately sited—incentivized, designed, and controlled based on national priorities. This makes infrastructure siting an active instrument of economic and technological power.

Key factors influencing geopolitical significance:

• Control over compute capacity

• Access to clean, stable energy

• Semiconductor manufacturing and supply

• National data sovereignty and security policies

Countries that can provide the right mix of land, energy, policy support, and network infrastructure stand to benefit most in the coming decade.

6.1 The United States

The U.S. remains a global leader in AI, but faces growing constraints in infrastructure, energy supply, and permitting speed.

Core Challenges

• Speed: New data center projects often face multi-year interconnection delays and local permitting bottlenecks.

• Supply: Demand for power is growing faster than generation capacity. AI-scale data centers are now waiting up to seven years for full grid access.

• Scalability: Much of the U.S. grid infrastructure is outdated. Around 70% of transmission and distribution systems are operating beyond mid-life, creating systemic risk.

Efforts are underway to:

• Expand nuclear capacity (e.g., Microsoft’s Three Mile Island restart)

• Modernize permitting systems

• Accelerate interconnection with new FERC policy proposals

However, tension remains between clean energy goals and the pragmatic need for gas-powered generation to fill renewable gaps.

6.2 The People’s Republic of China

China is actively integrating AI and energy planning into a cohesive national strategy. Under its 14th Five-Year Plan, the country has prioritized:

• "East Data, West Compute" policy: Moving AI workloads to western provinces with abundant renewable energy and land.

• Hydropower-heavy zones like Guizhou and Sichuan for green data center expansion.

• Sovereign cloud infrastructure that aligns with national cybersecurity and surveillance goals.

China’s approach is marked by centralized coordination, low-cost land and energy, and state-led investment in semiconductor independence and AI infrastructure.

6.3 Geopolitical Swing States

Countries such as Indonesia, the United Arab Emirates, Brazil, and Ireland are emerging as digital infrastructure hubs. Their advantages include:

• Abundant clean energy (hydro, solar, geothermal)

• Aggressive incentive packages

• Geostrategic location (e.g., subsea cables, regional connectivity)

• Labor and land cost arbitrage

Example:
The SIJORI region (Singapore–Johor–Riau Islands) is rapidly becoming a transnational digital corridor. Singapore provides network density and regulatory rigor, while Johor and Batam offer lower-cost expansion capacity and connectivity via subsea cables.

These swing states are increasingly being courted by U.S. and Chinese tech giants looking to hedge risk and diversify infrastructure footprints.

6.4 Security Concerns and Data Privacy

The rise of hyperscale infrastructure has introduced new national security and privacy challenges:

• Cross-border data flow regulations are tightening, particularly in Europe and Asia.

• Governments are scrutinizing foreign ownership of strategic data infrastructure.

• Data centers are becoming targets in cyber conflicts and geopolitical disputes.

Western governments are now emphasizing:

• Data localization laws

• Domestic cloud provider requirements

• Zero-trust security architectures

The location and control of AI infrastructure is now inseparable from discussions about digital sovereignty, national resilience, and cyber defense.

Summary

The competition for data center development has become a matter of economic policy, energy strategy, and geopolitical positioning.

As countries race to host and control the digital infrastructure of the future, they must weigh:

• Who owns the compute?

• Where does the energy come from?

• How is data regulated, protected, and monetized?

In this new landscape, the ability to site, power, and govern AI infrastructure is becoming a defining feature of national competitiveness. Like oil in the 20th century, compute power in the 21st century will shape alliances, economies, and strategic dominance.