Abstract: In the context of governance, AI offers chances to improve efficiency and effectiveness in public services. However, the strategic use of AI necessitates careful consideration of ethical concepts, including openness, accountability, and justice. Regarding security, AI is changing the nature of battle and conflict. Nations are investing significantly in AI-powered military capabilities, such as autonomous weapons systems and cyber warfare. Strategic issues are essential in this setting, as governments aim to discourage adversaries while maintaining a strategic advantage in an AI-enabled battlefield. Political leaders must also consider the ethical implications of artificial intelligence in conflict, such as the employment of lethal autonomous weapons and their impact on civilian populations.

Problem statement: How do strategic decisions impact AI adoption, benefits, and risks?

So what?: Political leaders must navigate these complexities to guarantee that AI is used ethically and benefits society. Politically, artificial intelligence has the potential to drive significant growth and innovation. Nations and organisations are competing strategically to gain an AI development and deployment advantage. This battle is about more than simply scientific abilities.

AI-Powered Technology and Transformation

The fast growth of artificial intelligence (AI) over the last decade has dramatically altered the process of global strategic and political manoeuvring. From altering the character of combat to reshaping the dynamics of international relations, AI is increasingly becoming an important component of both national and global agendas. As governments and the corporate sector engage extensively in AI research and development, the ramifications of this technology reach beyond economics and technology, altering political power structures, state sovereignty, and the global balance of power.[1]

As governments and the corporate sector engage extensively in AI research and development, the ramifications of this technology reach beyond economics and technology.

In today’s geopolitical landscape, the use of AI in military and security operations has emerged as a distinguishing feature of modern warfare. AI-powered technology, such as autonomous weapon systems, cyber warfare capabilities, and enhanced surveillance methods, have transformed how battles are fought. These technologies provide extraordinary precision, speed, and efficiency, allowing nations to operate with minimum human interaction.[2]  While the use of AI in military strategy improves the capabilities of state actors, it also raises ethical questions about the possibility of autonomous systems making life-or-death decisions without human oversight.

The rising global rivalry for technological superiority emphasises AI’s geopolitical relevance. Nations acknowledge that AI is a tool for increasing economic efficiency and an important component of national security.[3] This struggle is reminiscent of the Cold War era when technological advances in nuclear weapons and space exploration were regarded as critical determinants of global power. Unlike Cold War competitions, which were binary, the AI race involves a complex web of state and non-state entities, including multinational firms, research institutions, and technology startups.[4]

As AI advances, its impact on governance and statecraft becomes more apparent. Governments are using AI to improve decision-making, public service delivery, and population management. AI algorithms are being used to predict and minimise social upheaval, track public opinion, and even affect election results.[5] Concerns regarding AI’s impact on democratic values are raised by various stakeholders, including civil rights organisations, political analysts, technology ethicists, and international agencies. Civil rights groups, like the Electronic Frontier Foundation and Human Rights Watch, warn that AI-powered monitoring and data collecting violate privacy and civil freedoms, potentially leading to totalitarian practices. Political scholars believe that AI-driven manipulation, such as micro-targeted propaganda, jeopardises the transparency and impartiality required for democratic elections. Technology ethicists and researchers have highlighted the dangers of AI-powered disinformation, pointing out how powerful algorithms may quickly spread false narratives, manipulate public opinion, and polarise nations.

Technological Realism, Dependency and Deterrence

AI is altering political manoeuvring and strategy, opening new opportunities and problems in international affairs, governance, and defence. The scientific theories mentioned above give frameworks for comprehending these changes, highlighting the importance of multidisciplinary approaches that mix technology, ethics, and political theory.

AI technologies are changing the balance of power between nations. Theories in this field argue that countries with sophisticated AI capabilities will have strategic advantages in the military, economic, and political spheres. According to technological realism, AI accelerates the technical arms race, with governments competing for AI dominance to ensure national security and global influence.[6] AI is frequently considered as a “force multiplier” that strengthens a country’s military and intelligence capabilities. It enables faster data processing, predictive analytics, and decision-making that exceeds human capability. Some countries strive for technical sovereignty, ensuring that AI development and deployment remain under national control to maintain their strategic autonomy.[7]

Some countries strive for technical sovereignty, ensuring that AI development and deployment remain under national control to maintain their strategic autonomy.

AI is affecting global economic structures, resulting in power imbalances. Dependency theory has been re-examined considering AI, as underdeveloped nations may become reliant on AI technologies generated by more advanced economies, increasing global disparities.[8] The race for AI domination is fueling political manoeuvring, with countries such as the U.S. and the People’s Republic of China (PRC) investing extensively in AI research, innovation, and deployment as they compete for economic leadership. For example, the European Union’s “White Paper on Artificial Intelligence” advocates ethical rules and retraining initiatives to combat job displacement. Similarly, the PRCs “Next Generation AI Plan” focuses on reducing inequality through education and innovation. Strategies include encouraging collaboration among governments, corporations, and academic institutions. These techniques contribute to developing policies that benefit workers while encouraging equitable AI-driven growth.

AI is rapidly being used in cybersecurity to detect and mitigate risks. Cyber deterrence theory has expanded to encompass AI-powered systems capable of anticipating cyberattacks, responding autonomously to threats, and even engaging in cyber warfare. AI systems that may make autonomous judgments in combat or strategic situations create ethical and legal concerns, as examined in theories of Just War and Post-Human Warfare.[9] These theories provide criteria that will ultimately be decided by human judgement from life-or-death choices. A significant real-life example of AI in hybrid warfare is Russia’s employment of AI-powered disinformation tactics during the 2016 presidential election in the United States of America. Russian operatives used AI-powered social media bots and algorithms to propagate fake information, sowing strife and influencing public opinion. This hybrid warfare combines old geopolitical methods with contemporary cyber operations and psychological manipulation. AI has also been used to enhance cyberattacks, such as the 2015 power grid hack in Ukraine, which was blamed on Russian actors. These episodes show AI’s rising involvement in hybrid warfare, exacerbating the impact of disinformation, cyberattacks, and economic coercion on national security.                `

AI’s role in governance—via algorithmic decision-making—influences policy formulation, notably in sectors such as security, migration, and healthcare. According to algorithmic regulation theory, AI-driven systems will progressively influence policy decisions, sparking debates over transparency, accountability, and bias in algorithmic systems. Cyber political warfare theories investigate the strategic exploitation of AI, such as its use in disinformation campaigns or automated political persuasion.[10] States and non-state entities utilise artificial intelligence to influence public opinion and manipulate elections. Some scholars think AI could help authoritarian governments maintain control through monitoring, predictive policing, and social credit systems, expanding ideas from authoritarian resilience theories.[11]

AI-Powered Geopolitical Strategies

Incorporating AI into geopolitical strategy transforms global power relations, strengthens statecraft, and redefines how nations engage. As AI technologies advance, they give capabilities for evaluating large datasets, projecting geopolitical events, and optimising decision-making processes.[12] One of the most visible uses of AI in geopolitics is military operations. AI improves the speed and precision of modern warfare, especially with the emergence of autonomous systems. The U.S. Department of Defence’s Project Maven, which debuted in 2017, demonstrates how AI is used to analyse drone imagery and identify prospective targets, drastically lowering human error in battle zones.[13] The technology processes massive volumes of video data in real-time, allowing for faster decision-making and minimising the risk to human life.[14] The U.S. and the PRC have included AI in their military strategies. The PRC’s concentration on AI as part of its “Next Generation Artificial Intelligence Development Plan” seeks to update its military capabilities, such as autonomous weapons and surveillance technologies.[15]

The U.S. Department of Defence’s Project Maven, which debuted in 2017, demonstrates how AI is used to analyse drone imagery and identify prospective targets, drastically lowering human error in battle zones.

Transformation of Political-Strategic Manoeuvre in Trade Wars

The evolution of political-strategic manoeuvre in trade conflicts reflects the shifting structure of global power relations. Trade wars have traditionally used tariffs and quotas to pressure rivals economically. However, in the modern period, they have switched to more complex techniques, such as technology, data control, and supply chain manipulation. The trade conflict between the United States and China is a classic illustration of how tariffs, technology sanctions, and intellectual property issues have all become tools of geopolitical leverage. Countries today use political manoeuvres such as strategic alliances, regional trade agreements, and economic coercion to gain influence. For example, China’s Belt and Road Initiative seeks to ensure geopolitical leverage by economic dependency, whereas the United States employs sanctions and trade restrictions to undermine China’s influence.
AI is also being deployed in economic forecasting, where it helps governments predict market trends, trade flows, and economic crises AI can process large amounts of data related to global trade, currency fluctuations, and commodity prices, offering real-time insights that shape trade policies.[16]

Moreover, AI tools are being used to negotiate trade agreements. During the U.S.-Mexico-Canada Agreement negotiations, AI models analysed various economic scenarios to assist negotiators in predicting the potential outcomes of different terms. These predictive capabilities give governments a strategic advantage in crafting policies that benefit their economic interests while mitigating risks.[17]

U.S.-PRC Economic Warfare

Suppose we develop a framework to measure which country is at the forefront, namely which country’s economic security is more resilient to withstand the damage of economic warfare.

In 2018/2019, the PRC experienced a notable downturn in its international trade, as reported by the Chinese Customs Administration. Overall, the country’s trade fell by 11% during this period, with significant declines in trade with its key partners: the European Union (14.2%), the United States (19.6%), and Japan (15.3%). Additionally, the PRC recorded an international trade deficit of $7.09 billion over the final two months of 2019 (PRC, 2020). This contraction coincided with a sharp drop in the country’s manufacturing sector, as reflected by a 14.3% decrease in the Purchasing Managers’ Index (PMI) for February, according to data from China’s National Bureau of Statistics.

The economic repercussions of the COVID-19 pandemic further exacerbated these challenges. The Asian Development Bank (ADB) projected that the pandemic could cost the Chinese economy as much as $42 billion, potentially reducing GDP growth by 1.74% (ADB, 2020). A more pessimistic forecast came from Rabo Bank, which suggested that the growth rate might drop to 2.4%, down from the previously anticipated 5.7% (Rabo Bank, 2020). Prior to these economic disruptions, the PRC had been a significant buyer of U.S. goods, purchasing $165 billion worth of products in 2015. This made up 7.3% of total U.S. exports and contributed 1% to the U.S. economy. High-value goods like cars, trucks, building materials, and semiconductors were key components of these trade relations, supporting jobs in the U.S.

The Asian Development Bank projected that the pandemic could cost the Chinese economy as much as $42 billion, potentially reducing GDP growth by 1.74%.

This data underscores the global economy’s interconnectedness, with the PRC’s economic fluctuations having ripple effects on domestic and international trade and on the economies of its trading partners.

U.S. corporations have expanded their commercial and financial services provision to the PRC, with sales growing from $6.7 billion in 2014 to $7.1 billion in 2015. Projections indicate that by 2030, these figures could reach $520 billion. In 2000, the PRC was the 11th largest U.S. export market, but by 2017, it had ascended to third place. The growth in U.S. exports to the PRC has significantly impacted domestic job creation and GDP, contributing approximately $165 billion to the U.S. economy in 2015 alone.

The U.S.-PRC trade war officially commenced on March 01, 2018, when President Donald Trump imposed tariffs on $60 billion worth of Chinese exports, targeting sectors such as aerospace, medical equipment, satellite technologies, and defence products. In retaliation, PRC’s Ministry of Commerce levied tariffs on 128 U.S. goods—including aluminium, vehicles, pork, soybeans, and aviation components—on April 02, 2018. The U.S. downplayed the Chinese countermeasures, noting that these products represented only 0.3% of its GDP and would have minimal economic impact. However, on April 05, 2018, Trump escalated the situation by threatening additional tariffs on $100 billion worth of Chinese goods.

Analysis

The statistics on U.S. exports illustrate how interconnected the PRC’s economy has become to the U.S. economy over time. The onset of the trade war in 2018 marked a major shift in U.S.-PRC relations, characterised by escalating tariffs and retaliatory measures. Trump’s administration aimed to address concerns over intellectual property theft, unfair trade practices, and the trade deficit. The trade war disrupted global supply chains and had varying effects on different sectors of both economies, from agriculture to technology.

It is argued that U.S.-PRC economic relations and trade linkages are more essential than the solar panel debate or even the global financial crisis because expanding commerce and the benefits of bilateral superiority transcend military confrontation or trade disruptions. According to Robert Gilpin, bilateral alliances and common interests soften countries’ egotistical behaviours, making it more difficult to cut economic ties due to political differences.[18]

Bilateral alliances and common interests soften countries’ egotistical behaviours, making it more difficult to cut economic ties due to political differences.

The battle for AI supremacy is central to the economic conflict between the U.S. and the PRC. Both countries view AI as the foundation of future economic and military dominance.[19] The PRC’s “Next Generation Artificial Intelligence Development Plan,” announced in 2017, intends to make the PRC the worldwide leader in AI by 2030.[20] The plan proposes significant investments in AI research, education, and infrastructure, emphasising the country’s long-term goal of harnessing AI to achieve a competitive advantage in global markets.

Another aspect of the AI-powered economic conflict between the U.S. and the PRC is the struggle for control of global supply chains.[21] Semiconductors, the fundamental building blocks of AI research, are an important strategic resource. As the world’s largest manufacturer of these minerals, the PRC exerts significant influence over global technology industries.[22]
In response, the U.S. has begun initiatives to minimise its reliance on Chinese supply chains. The CHIPS and Science Act, which was passed into law in 2022, offers major incentives for local semiconductor manufacture and research. The U.S. hopes to safeguard its AI future by reshoring the production of crucial technical components.[23]

Both the U.S. and the PRC face significant ethical and geopolitical concerns as they escalate their AI-powered economic competition. On the ethical front, these concerns stem from the potential misuse of artificial intelligence, including violations of privacy, algorithmic bias, and the use of AI technologies for surveillance or authoritarian purposes. International organisations, human rights groups, and civil society have raised alarms over the lack of transparency and accountability in AI development, especially in areas related to data privacy and human rights. Human Rights Watch and Amnesty International, for instance, have voiced concerns over AI’s use in mass surveillance, facial recognition, and its implications for freedom of expression.

Geopolitically, both countries face pressure from their allies and competitors. European nations, through the European Union’s General Data Protection Regulation (GDPR), have set strict guidelines on data protection, implicitly challenging the data-hungry AI models pursued by both the U.S. and China. Moreover, international bodies like the United Nations have begun discussing the need for AI governance frameworks to regulate the ethical use of these technologies in global markets. The U.N.’s High-level Panel on Digital Cooperation has called for creating international norms that guide the ethical development and use of AI, reflecting the growing demand for global oversight.

The PRC’s use of AI in surveillance and human rights violations, particularly in Xinjiang, has sparked international censure.[24] The U.S. must balance its AI breakthroughs with worries about privacy, monitoring, and the potential militarisation of AI technologies. Comprehensive global AI legislation exacerbates these issues, as no international framework controls AI’s ethical use in economic warfare. Both countries are also dealing with the unexpected repercussions of rapid AI adoption, such as employment displacement, societal inequity, and a breakdown in democratic norms.

The PRC’s use of AI in surveillance and human rights violations, particularly in Xinjiang, has sparked international censure.

Technical Prowess and Military Might

Moreover, the deployment of AI in the global economy has introduced new dimensions to economic statecraft. AI-driven automation and the rise of the digital economy are reshaping global supply chains, labour markets, and trade dynamics. This has implications for both developed and developing countries, as adopting AI could exacerbate existing inequalities and create new forms of economic dependency. The term “digital colonialism” refers to the idea that technologically advanced nations, often multinational corporations, dominate the global digital economy, creating a form of control like historical colonialism.[25] In this framework, countries lacking technological infrastructure and expertise are forced to depend on those that lead in AI, data, and tech innovation. Kenya is an example of a country that relies on foreign AI technology due to limited resources, having implemented AI solutions mostly through cooperation with the EU and the People’s Republic of China. Kenya’s lack of significant indigenous AI infrastructure forces it to rely on foreign knowledge and investment for projects such as digital public services and healthcare technology. This dependence creates weaknesses, such as concerns about data sovereignty and the possibility of foreign influence on data regulations. Similarly, African Union projects prioritise local capacities to lessen dependency but have obstacles in funding and knowledge.[26]

This can result in a one-sided economic relationship where less-developed nations are dependent on the technological outputs of richer nations, unable to shape the global digital agenda. While dependency theory, which emerged in the mid-20th century, focuses on the economic dependence of developing nations on the industrialised world, often through the exploitation of natural resources and unequal trade relationships, digital colonialism emphasises control over digital infrastructure, data, and AI. Dependency theory is based on material resources and industrialisation.[27] In contrast, digital colonialism highlights the asymmetry in technological capacity and data sovereignty, showing how controlling digital assets creates a new layer of economic and geopolitical power. For instance, countries that lack the technological infrastructure and expertise to compete in the AI-driven economy may find themselves at a disadvantage, potentially leading to a new form of digital colonialism where technologically advanced nations dominate global markets.

Digital colonialism highlights the asymmetry in technological capacity and data sovereignty, showing how controlling digital assets creates a new layer of economic and geopolitical power.

The term “digital colonialism” refers to how advanced tech countries use data and AI technology to exercise control over underdeveloped regions. This type of influence resembles historical colonialism by establishing dependency relationships in which powerful firms from wealthy countries oversee and control data infrastructures in impoverished countries. As a result, big firms impose their beliefs and economic interests, frequently disregarding local requirements. Unlike dependence theory, which stresses economic reliance on trade, digital colonialism focuses primarily on tech-driven control, stressing tech businesses’ geopolitical impact over data sovereignty.[28]

AI’s ethical and legal challenges further complicate the strategic and political landscape. As AI systems become more autonomous and capable, questions about accountability, transparency, and the rule of law arise. The development of international norms and regulations for AI is still in its infancy, with no consensus on how to govern the use of AI in areas such as warfare, surveillance, and data privacy.[29] The absence of a comprehensive global framework for AI governance leaves room for exploitation and misuse, particularly by authoritarian regimes that may use AI to suppress dissent and entrench their power.

The strategic importance of AI is increasingly reflected in global diplomacy, where countries are engaging in efforts to build alliances, collaborate on research, and establish ethical norms for AI development. AI diplomacy has manifested through various bilateral and multilateral agreements, often aiming to foster technological exchange, enhance national AI capabilities, and ensure ethical governance of AI technologies. The U.S.-PRC AI rivalry is also a critical example of how AI diplomacy is shaping global relations. While the U.S. has formed alliances with allies such as the United Kingdom and Israel to enhance collaboration in AI research and defence, the PRC has expanded its Belt and Road Initiative (BRI) to include AI and digital infrastructure investments in countries across Africa and Southeast Asia. China’s Digital Silk Road (DSR) initiative seeks to build digital infrastructure, including AI systems, in partner countries, strengthening the PRC’s influence while raising concerns about data sovereignty and surveillance technologies. In addition to state actors, non-state actors—such as multinational corporations and international organisations—play an increasingly critical role in shaping the global AI landscape. Companies like Google, Amazon, and Microsoft lead the way in AI innovation, often surpassing governments in research and development capabilities.[30] Their significant financial resources drive their dominance in AI, access to vast amounts of data, and ability to attract top talent. These tech giants not only set industry standards but also influence policy decisions, often determining the direction of AI advancements in ways that challenge traditional governance frameworks.

While the U.S. has formed alliances with allies such as the United Kingdom and Israel to enhance collaboration in AI research and defence, the PRC has expanded its Belt and Road Initiative to include AI and digital infrastructure investments in countries across Africa and Southeast Asia.

Economic frameworks are a key area where these corporations exert influence. Their substantial market power allows them to shape the global AI economy, dictating the flow of investments and controlling access to crucial digital infrastructure. For instance, the AI technologies developed by these corporations are integrated into everything from cloud computing to e-commerce platforms, enabling them to dominate entire sectors.[31] Amazon’s AI-driven logistics systems, Google’s AI-enhanced search algorithms, and Microsoft’s AI in enterprise software are examples of how these companies not only innovate but also create economic dependencies for smaller companies and governments alike. The sheer scale of these operations often places these tech giants outside the scope of national regulations, allowing them to operate within a loosely governed global economic framework where they hold considerable power over international markets.

Geopolitically, these corporations influence global relations by positioning themselves as indispensable partners to governments. Their technologies are integral to sectors such as defence, healthcare, and transportation, where AI plays an increasingly strategic role. In the U.S., for example, companies like Google and Microsoft collaborate with government agencies, including the U.S. Department of Defense, on AI research and security-related projects. Such partnerships highlight the deep intertwining of corporate and national interests in AI development. Similarly, the PRC’s technology companies—such as Baidu and Alibaba—operate within the country’s state-driven economic model, aligning their AI innovations with national goals, particularly within the Belt and Road Initiative, where AI infrastructure is exported to developing nations as part of the PRC’s global strategy.[32]

In the U.S., for example, companies like Google and Microsoft collaborate with government agencies, including the U.S. Department of Defense, on AI research and security-related projects.

Yet, the role of non-state actors in AI governance raises concerns about accountability and power distribution. These corporations often operate beyond the reach of traditional regulatory frameworks, and the absence of a unified global governance structure for AI exacerbates these issues. Existing regulatory systems, such as competition law or national security frameworks, often do not address the full scope of AI’s impacts.[33]  For example, European Union regulations like the General Data Protection Regulation (GDPR)attempt to set standards for data privacy and algorithmic transparency. Still, tech giants frequently navigate around these laws through their global operations. In contrast, other regions, such as Africa and Southeast Asia, often lack the legal frameworks and resources necessary to regulate these powerful corporations, leaving them vulnerable to exploitation.[34]

Improved Decision-Making

AI improves the decision-making powers of both state and non-state actors, enabling predictive analytics, sophisticated surveillance, and automated threat responses.[35]  However, the ethical quandaries and security issues brought by AI necessitate nuanced approaches to prevent escalation and misuse. These challenges exacerbate the hazards of cyber conflicts and hybrid threats, as AI can be used for cyberattacks, misinformation campaigns, and economic sabotage.[36] As a result, states must manage AI policies that strike a balance between innovation and regulation, assuring both a competitive advantage and global stability.

Establishing international frameworks to encourage ethical AI use, avert arms races, and preserve fundamental rights is an important component of strategic AI manoeuvring. Multilateral cooperation, particularly through organisations like the United Nations and NATO, will be critical in developing policies to prevent AI’s potential misuse. In the meantime, strategic alliances and partnerships will be redefined as countries with similar values and technology capabilities work together to counteract the influence of unfriendly powers.

To summarise, the political landscape produced by AI necessitates a combination of innovation, ethics, and diplomacy to realise AI’s revolutionary promise for peace, stability, and equitable global development.

 

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Mr. David Shakarishvili is a PhD candidate in political science from Klaipeda University. He holds academic degrees in International Relations and Diplomacy (Estonian School of Diplomacy), Business Management (Klaipeda University), Intelligence and Global Security (Charles University) and Public Administration (IBSU). Mr. Shakarishvili was a research fellow at the Johan Skytte Institute of Political Studies of the University of Tartu and at the Documentation Center of the Organisation for Security and Cooperation in Europe (OSCE). He has professional experience in the direction of international politics in private, as well as governmental, non-governmental and international organisations. Mr. Shakarishvili gave lectures at BBA INSEEC (France), Vilnius University of Applied Sciences, University of Szeged, Katowice University of Economics and Lusófona University. He is the author and co-author of numerous academic research papers and book. The views contained in this article are the author’s alone and do not represent the views of Klaipeda University.

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