The machine learning architecture used by DeepSeek, based on a system built at comparatively less cost and domestic expertise, has led many countries to believe that it is possible to build home-grown AI foundational models if they invest the necessary capital and resources in domestic firms
Dr. Stuti Banerjee
Soon after assuming office for a second term, President Trump announced the establishment of the President’s Council of Advisors on Science and Technology (PCAST) to drive American innovation and competitiveness in critical and emerging technologies. The PCAST will provide advice and evidence-based recommendations to the President to ensure that policies are aligned with the latest scientific discoveries and technological advancements.
The initiative aims to accelerate research in critical technologies by connecting various initiatives, such as the American AI initiative, National Quantum Initiative, National AI Research Resources and investments in supercomputing to promote a balanced approach to innovation and technology. President Trump has pledged an initial $100 billion investment in AI infrastructure, with the potential to scale up to $500 billion over four years — a move designed to strengthen the country’s position in the global AI race.
In February, France hosted the third Artificial Intelligence Action Summit in Paris, which saw the participation of heads of governments and states, leaders of international organizations, CEOs of companies and representatives from academia, civil society and other organizations to understand how AI is bringing profound changes to our societies. It tried to explore ways to ensure that AI development remains inclusive and maintains humanistic values, ensuring that AI serves the public interest.
These developments align with DeepSeek’s breakthrough in AI technology, which has led to the development of an AI reasoning model that is up to 50 times cheaper to run than many US AI models. The machine learning architecture used by DeepSeek, based on a system built at comparatively less cost and domestic expertise, has led many countries to believe that it is possible to build home-grown AI foundational models if they invest the necessary capital and resources in domestic firms. This breakthrough has also increased investor interest in China’s AI sector, intensifying the growing competition between China and the United States as the nation’s compete for dominance in the AI-driven future.
Unlike past innovations, such as steam engines, which revolutionized transportation, or electricity, which propelled industrialization, AI-enabled tools spread at an unprecedented rate, reaching the general public through chatbots, image generators, content promoters and virtual assistants. AI is an ever-evolving field, but at its core, it enables the processing of vast amounts of data, scenario building and pattern recognition to predict outcomes. This capability empowers policymakers to address complex geopolitical questions and make more informed decisions.
While AI’s significance in foreign and economic policymaking is increasingly recognized, its impact extends beyond data processing. It is deeply tied to stable supply chains; future economic growth models and shifts in the balance of power. These factors must be carefully considered as nations forge strategic partnerships for the future.
The rise of AI is reshaping foreign policy, from enabling more sophisticated cyber-attacks to enhancing business efficiency. At the heart of AI development lies an intense geopolitical rivalry between China and the US, making AI innovation deeply entangled with national security concerns and emerging security threats altogether. With AI applications readily available for military and civilian use, policymakers would have to assess how this technology will redefine global relations. Diplomacy is no longer about nuclear non-proliferation — it extends to the smallest semiconductors that power increasingly advanced AI systems. As AI continues to transform the technological landscape, policymakers face a myriad of challenges. This paper will explore three major issues at the forefront of this evolving debate.
First, the driving force behind AI development is largely economic, but its rapid advancement is set to reshape the balance of power in international politics. Like any major industry, AI relies on a network of global supply chains. Developers worldwide depend on critical supply chain inputs, such as Taiwan’s semiconductor industry, which, in turn, depends on extreme ultraviolet lithography machines from the Netherlands to produce advanced AI chips. AI will drive growth across industries but also add pressure on supply chains. Companies will need to create tailored, end-to-end solutions whilst fostering innovation in software ecosystems. At the same time, nations are looking at tightening trade controls on sensitive technology adding to the existing layers of complexities. These restrictions are not just about economics, — they reflect the shifting dynamics of global power and rising geopolitical tensions.
The second major challenge for policymakers is the growing inequality gap between countries that have invested in the development of AI tools and those lacking the capital or the infrastructure to do so. The global race for AI research and development points to the need to gain early market power. As AI tools increase production through automation, integrate into logistic networks, optimize supply chains and enhance efficiency, they will increase competitiveness between nations and reshape traditional patterns of international trade and economic relations. However, the further challenge before policymakers is to reskill their human resources to adapt quickly to the changes that are taking place. The other challenge is to address the need for standardization of regulations on the ethical use of AI and to ensure fair access to AI benefits for all, particularly as AI tools intersect with cross-border trade.
The third key concern for policymakers is understanding the security risks associated with the use of AI in both the civil and defense sectors. Addressing these risks requires significant capital and infrastructure, as well as the establishment of robust, trust-based partnerships between nations. Secondly, capital and infrastructure are not only essential for research and development but also for operating the energy-intensive data centers that power AI tools. Countries that work with companies to host these AI-driven data centers gain economic, political and technological advantages, strengthening their global influence. This would add to the existing inequalities amongst nations and further reduce access to emerging technologies for some.
Moreover, data centers pose significant national security concerns, as they deal with sensitive information from governments, business and individuals. Governments have to ensure that this information remains safe and secure. The potential misuse of AI-enabled tools is another concern for policymakers, particularly in shaping norms for their use by state security forces, including the military. AI-driven surveillance, facial recognition and predictive policing technologies raise serious concerns about mass monitoring and profiling. The rising reliance on AI for surveillance has sparked debates on its implications for citizens’ right to privacy, especially in countries lacking strong personal data protection laws. There is an urgent need for international cooperation to establish agreements and ethical guidelines for AI governance. Given the rapid pace of AI development and adoption, these frameworks would need to be continuously monitored to ensure responsible use of AI.
Conclusion
AI will have a significant impact on global economies, national security and governance, raising critical ethical considerations. As Prime Minister Modi emphasized in his opening address at the AI Action Summit (Paris 2025), “AI is developing at an unprecedented scale and speed … there is a need for collective global efforts to establish governance and standards that uphold our shared values, address risks and build trust.”
Indian policymakers have highlighted the need to work collaboratively, particularly with the Global South and financial and resource capacities, and have pushed to build mechanisms that allow access to technological developments for all. As AI begins to change the way we interact, it will have a growing impact on foreign policy and international relations. AI is no longer just a topic of discussion in international politics — it is emerging as a vital tool for diplomacy itself. AI needs to be harnessed for social good with human control guiding its design and development.
Dr. Stuti Banerjee is a Senior Research Fellow at Indian Council of World Affairs (ICWA). The views expressed are personal.
This article first appeared in the web articles section of the website (www.icwa.in) of Indian Council of World Affairs, New Delhi, on April 8, 2025
