There’s no disputing the fact that at least since World War II the geopolitical landscape has been primarily defined by a contest over access to and control of cheap energy in the form of crude oil. The need to control the extraction, processing, and transportation of – at least in the case of the Arabian Peninsula – what lies beneath the sand has been central to the interests of the great powers in international politics. The centrality of cheap fuel extends far beyond the needs of the domestic consumer. The US Department of Defense is the world’s largest single user of petroleum-based fuels – its vaunted global air dominance is petroleum-based. And the US dollar’s role as global reserve currency, and thus its monetary and financial power, is underpinned by its status in the oil trade.
Control of what lies beneath the sand has been a source of geopolitical power – but it is also a great vulnerability. The quest by the US Department of Defense to be, paraphrasing General James Mattis from 2005, “unleashed from the tether of fuel”, is ongoing. Reduced American dependence on Persian Gulf oil also destabilises a key plank of its stranglehold on the monetary system. While the global oil trade remains predominantly conducted in US dollars, the high operational costs of defending that status are perpetually weighed against the strategic benefits, which, as the United States approaches energy independence, are shrinking.
At its heart, energy transformation is much more than an operational imperative. As North American academics Jeremy Packer and Joshua Reeves argue in their recent book, Killer Apps: War, Media, Machine, we are witnessing an epochal shift in the way energy is transformed into strategic power, and importantly, how that shift alters the traditional relationship between strategic power and territory. They argue, “The line differentiating the sovereign control of terrestrial space from the virtual control of virtual space has been increasingly blurred. Inscriptions onto the territorial maps and boundaries that make up borders that are protected and penetrated by military weapons are not necessarily the most important forms of military advancement. Instead, the logic of the circuit has taken over, and one of its primary formulations is to reconfigure the spatiotemporal horizon of warfare.”
What we are witnessing is, the authors continue, “in large part a media shift – a shift from sand to silicon – from al-Levant to algorithm... military dominance takes place in the manipulation of silicon and the means by which its potential can be maximized through AI.” The digital age has given rise to a new battleground over not what lies beneath the sand, but what can be derived from sand itself. They conceive the ‘al Levant’ – Arabic for the countries bordering the eastern Mediterranean and long the fulcrum of geopolitics in the hydrocarbon era – as ‘media’, the manipulation of which, via naval, air, and ground forces, has delivered strategic power. With the rise of artificial intelligence (AI) as a key input into both civilian and military-use systems, we are witnessing a new way of manipulating an old medium. In the battle over sand that can think, the traditional relationship between territory, energy, and strategic power is reconstituting.
Silicon, a natural semiconductor, is the main ingredient in beach sand and the foundation of chip fabrication. The semiconductor supply chain is now arguably the geopolitical frontline of the digital age, and in Australia’s region, that frontline is a map of maritime East Asia. The world’s largest chip foundry is TSMC in Hsinchu, Taiwan – other large foundries are in South Korea and Japan, while China’s chip manufacturing capacity plays catch-up. TSMC recently announced plans to build a US$12 billion foundry in Arizona as the U.S. governments seeks to disentangle its huge semiconductor industry from global supply chains. Earlier this year, the US Commerce Department released a directive aimed at cutting China’s Huawei out of the same supply chains, closing a loophole left open last year which saw the big US companies still doing business with Huawei.
Australian mines have been shipping silica sand to Japanese foundries for decades, and with increasing demand new opportunities arise. Australia’s defence industry has long sought to integrate itself into the American value chains, and the ADF has been on a decades-long interoperability quest. But it’s not only the disruptive political and geopolitical landscapes that are rattling these planks – Australian industry could find itself shaken loose by these ruptures despite all the very best intentions. To assure its place at the higher rungs of the value chain, and to reinforce the ADF’s capacity to compete on future battlefields, the time to utilise the considerable national knowledge-base and develop a sovereign Australian capability in dual-use chip design is upon us.
The geopolitics of AI are not like those of previous eras. The intellectual property required to compete in these industries will become so fiercely quarantined that the value-add rungs on the multilateral supply-chain ladder that Australian industry has been able to occupy may cease to exist. At the same time, opportunities to forge indigenous design capabilities that leverage the retreat of the American giants from the East Asian foundries will emerge. Australia’s economic strategy to integrate itself into the knowledge economy must quickly face the reality of the new environment. Our understanding of energy, strategy, and territory must evolve. Shipping raw materials to be converted into strategic power elsewhere already presents diminishing returns for the nation.
'Raw material’ takes on a new meaning and status in the digital age. Governments and their populations outside of China and the US face the prospect of becoming mere data-generating resources that feed these respective AI giants. The only way to avoid becoming mere raw material is to forge the parts of the supply chain we can control ourselves. That means design knowledge, know-how, foresight, and the grit and determination to move when a seismic shift is undeniable. Otherwise Australians risk not only the status of raw material – as data banks and sandboxes for fin tech and other digital innovations, but also that of hapless consumer – forced to swallow terms and conditions over which we have no say. These effects will be felt across military and civilian domains which are increasingly entangled. Often ignored, the will and capacity of Australian industry to stand up indigenous capability benefits all Australians – citizens, soldiers, and regulators alike. Ironically, sovereignty only takes on greater meaning and importance in an intangible economy, and on a military battlefield more radically untethered from traditional territorial power than we have seen.
Dr Zac Rogers PhD is Research Lead at the Jeff Bleich Centre for the US Alliance in Digital Technology, Security, and Governance at Flinders University of South Australia. His research combines a traditional grounding in national security, intelligence, and defence with emerging fields of social cybersecurity, digital anthropology, and democratic resilience.