The Global Hunt for AI Chokepoints
Artificial intelligence has become the central arena for geopolitical competition, with major powers racing to secure control over critical technologies and resources. According to a recent essay published in Foreign Affairs by Henry Farrell, Abraham Newman, and Yeling Tan, the world is entering what they term a "chokepoint trap." In this dynamic, each state’s effort to increase its own security makes other nations feel less safe, creating a cycle where restraint is viewed as vulnerability. The authors argue that the likeliest outcome of this dynamic is a fragmented and volatile global order.
Niall Ferguson, Lisa Klaassen, and Eric Schmidt describe the current landscape as one where America and China have evolved into "AI empires." These two powers now hold dominion over the essential components of the industry: models, chips, minerals, and capital. This concentration of power has triggered a global scramble for leverage. Washington is actively warning its allies against depending on China while simultaneously seeking to exploit their reliance on American markets, technology, and the dollar.
Beijing has responded to these pressures by leveraging its control over rare earth elements. Meanwhile, Iran is positioning itself strategically by eyeing the Strait of Hormuz. The competition extends beyond traditional military alliances into the infrastructure that powers modern economies. To counter Chinese influence, the United States launched Pax Silica last December, a US-led coalition focused on chips and critical minerals, with India joining in February.
Experts note that artificial intelligence is described as the biggest chokepoint stack ever built. This status transforms AI from a mere technological sector into a primary instrument of state power, where control over data centers and semiconductor supply chains dictates geopolitical influence.
Pakistan’s Strategic Positioning in the Digital Economy
Amidst this great power competition, Pakistan finds itself at a critical juncture. The country is strategically positioned at the crossroads of South Asia, the Gulf, Central Asia, and China, holding mutual defense agreements with Saudi Arabia and Türkiye. This geographic and diplomatic leverage allows Islamabad to navigate the competing interests of Washington and Beijing.
Pakistan has already begun integrating into US-led supply chains. The first mineral shipment under a US memorandum moved from Pakistan in October 2025, marking a tangible step in its alignment with Western resource strategies. However, the nation also maintains complex ties with other global players. Gul Ahmed Energy Group is currently building a Huawei data centre worth up to USD 600 million, illustrating the dual-track approach many developing nations are forced to adopt.
On the regulatory front, Pakistan has argued for years that machines should not decide who lives or dies, establishing a moral framework for AI deployment that contrasts with the purely strategic calculations of superpowers. Domestically, the country is attempting to build sovereign capabilities. Data Vault Pakistan runs a sovereign cloud on about 3,000 Nvidia GPUs obtained through US-approved channels, signaling an effort to maintain data sovereignty while adhering to export controls.
Economic Ripples and Labor Market Shifts
The global rush for AI infrastructure is causing significant volatility in financial markets and labor sectors. Oracle’s stock dropped 19 percent in five days, marking its worst week since the dot-com bust in June, reflecting investor anxiety over the sustainability of current AI spending.
Financial pressures are mounting as the five largest US companies are worth about USD 18 trillion while borrowing heavily to fund their AI ambitions. This debt-fueled expansion is altering corporate structures globally. Barclays has cut around 5,000 jobs and is reportedly using AI and offshoring to India for a GBP 2 billion savings plan, demonstrating how automation and cost arbitrage are reshaping traditional industries.
The impact on labor markets is particularly acute in the technology sector. Washington’s H-1B crackdown reduced new approvals from nearly 140,000 in 2024 to around 52,000, tightening the flow of skilled labor. Consequently, entry-level hiring at major Pakistani tech firms fell by a quarter even as IT exports hit USD 4.6 billion. This divergence highlights a structural shift: while export revenues grow, domestic job creation for new graduates is contracting due to automation and reduced visa availability.
Pakistan spends an estimated USD 700 to 800 million a year on foreign computing resources and negotiates each deal separately, underscoring the high cost of remaining outside sovereign AI ecosystems. As the world fragments into competing technological blocs, nations must decide whether to invest in local infrastructure or continue paying premiums for access to foreign digital utilities.
Cooperation Amidst Competition
Despite the prevailing narrative of zero-sum competition, some experts argue for a different path. Alex Imas, Mohamed El-Erian, and James Manyika argue in a Foreign Affairs essay that AI is a cooperative game. They suggest that the challenges posed by artificial intelligence require global coordination rather than isolationist strategies.
This perspective offers a counterpoint to the "chokepoint trap" described by Farrell, Newman, and Tan. While the current geopolitical reality favors fragmentation and empire-building, the long-term stability of the AI ecosystem may depend on collaborative frameworks that prevent the complete decoupling of global technological standards.