American Power Can’t Buy Victory Against Asymmetric Threats
The Iran conflict, now almost five months in, has exposed the absence of an integrated strategy that combines American prominence in technology, energy and geopolitical power. China and other adversaries are watching closely, and three lessons demand attention from U.S. leaders.
First, overwhelming U.S. economic and military superiority no longer guarantees victory in asymmetric warfare. Iran has managed to leverage a single chokepoint—the Strait of Hormuz—to rival U.S. power by deploying speedboats, naval mines and low-cost drone technology deep into American logistics and against Gulf allies. Economic size and the most advanced technology cannot overwhelm the willingness to absorb economic pain, especially when authoritarian regimes face no domestic pressure to change course. Ukraine has learned a similar lesson in a different conflict. Courage and political determination, the development of native drone technology and targeting Russia’s refinery capacity as a chokepoint appear to have shifted the conflict’s trajectory.
Second, the conflict has challenged the premise that American energy abundance and independence equate to energy security. For decades, U.S. energy security has relied on buffers like the Strategic Petroleum Reserve to cushion supply shocks and, more recently, domestic production gains from advancements like fracking. Yet, while expectations of future crude oil prices have fallen, the price difference between refined products (like gasoline, diesel and jet fuel) and crude (the raw input) has remained stubbornly wide—and most recently widened further.
U.S. domestic refining capacity has declined due to operational disruptions, economic disincentives and regulatory and environmental barriers. Compounding this, recent policy decisions to discourage renewable energy sources like wind and solar have narrowed America’s energy options. Energy security requires a diversified menu of streams, not just a deeper reliance on oil and gas alone, which are hostage to geography and chokepoints like the Strait of Hormuz or Bab el-Mandeb in the Red Sea. China has fully grasped this for a while now. It is pursuing full speed electrification, which can be powered by any energy source.
This matters because the Iran conflict illustrates a third, more concerning dynamic for U.S. policymakers. In its great-power conflict with the U.S., China is advancing decisively in both energy and AI, already positioning itself as the global leader in solar and wind technology. Countries seeking to reduce dependency on chokepoints, as the Iran conflict suggests they should, find themselves closer to Chinese energy technology. Combined with reports of significant Chinese progress in terms of AI technology—particularly in market share, cost and token usage—the U.S. faces a challenge that transcends energy alone.
This is a profound shift in U.S.-China competition, one that strikes at the core of American hegemony and alliances. An era of weaponized interdependence has begun.
Businesses and investors must recognize that geopolitics, energy and technology operate as a single domain and cannot be managed in isolation. Exposure to chokepoints is now a strategic risk. Energy security and supply-chain resilience must inform strategic business planning. Those treating them as secondary concerns are already paying a hefty price.
For the U.S. government, half-measures will not suffice when setting economic and foreign policy. Acquiring stakes in individual companies like Intel or MP Materials will not work without a coherent policy strategy. America needs a comprehensive framework addressing policy objectives, governance, exit strategies, and, crucially, how to partner with the private sector. Private capital and competitive incentives remain key drivers of technological innovation—a financial firepower the rest of the world envies and struggles to replicate. This advantage will erode without a credible long-term strategy to guide American economic statecraft in the 21st century.
The U.S. must also learn with humility from China’s industrial policies, which have become broader and more systematic than idiosyncratic American approaches. The Chinese approach to industrial policy has evolved over time, spanning vertically across production steps and horizontally across industries, while maintaining ruthless competition in some cases.
As the Houthis announce the imposition of a naval blockade on Saudi Arabia, the Iran conflict reveals that American strengths—military power, economic resilience and technological superiority—are not as effective as in the past. Adversaries are taking advantage of U.S. political instability, which leads to short-sighted energy policy, and an unwillingness to endure economic pain. An integration of energy, technology and geopolitical strategy is now what’s needed. The question is whether American policymakers will recognize that maintaining global influence in this regime change is much bigger than partisan politics.
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