The New Geopolitics of Supply

Interferon g p Interference in January. You can buy one of $200. So that's what an imagining adversary, imagine especially adversaries who actually have this resiliency, knowing of our vulnerabilities that goes into a cross of the whole supply, which in fact, you're talking about the strain Hormuz. GPS Gaming Today Is Weaponized In The In Russia and Ukraine. All governments need to be figure out how to do this backup You know, use it in private drones, and things like that. So it is a serious problem. So what we're encountering at MedStar, as an under lined invisible light air, air that can be poisoned, invisible resilience back up to We're closing the ground level network that actually over comes all of this so that if jamming if scooping happens in The US today, intentional, unintentional. Intentionally overseas, we can have an rely on this layer of roundup. That's it. You know what it's like? To deal with sensitive networks. In fact, you provide service to a 150,000,000 customers under mobile and fixed networks, more than a 140,000,000 users across digital services. Redundancy resilience is awfully important to you. What are the questions we should be asking? Joe, first of all, thanks a lot for having me here. And thanks to Milton Institute. It's really a fantastic platform to talk about these issues. You know, being headquartered in Dubai the Nasdaq is a company operating in Ukraine, Pakistan, Bangladesh, Uzbekistan, Kazakhstan. And as a person Turkish man married to a Greek lady, I am no stranger. To geopolitical. And we have been maybe too especially. And the last four years of experience we have in Ukraine, you know, we are the largest boarding investor in which more put us in a position where we have to practically replenish our infrastructure every single day due to the attacks and make sure that our network goes with investing in solar infrastructures in which sure that we have energy sustainable quality. And but more important to that, we understood that operating terrestrial networks was simply not enough. We integrated that's any point even in, you know, landline areas or in areas where, you know, our network fails because of energy costs that we could support our customers. I think that was nothing else. The new industry happened. And currently, So, you know, 190 today. And that, of course, is a direct impact on the energy supply in the and Spangos, especially these two countries are very And but, you know, human are incredibly adaptive. And I was in interaction about three weeks ago. Has solar panels. And the last three years, it has been a consumer almost the revolution of solarization. Now typical said that, of course, these type of shops will have impact. We are very well aware of the fact that only the companies who have pricing power is relevant to the customers. They'll be able to survive these type of shops by making sure that they get And that's what we focus on. You know, customers matter and being relevant. The customers matter. But I'm So, look, I I think that just touching on where we started. Just take a step back. Right? So it's sort of 2020, and we start with COVID. That's the first time know, nations figure out what's critical, what's supply chain, what belongs to the group. Then you fast forward, you have the Ukraine conflict, then you have tariff, and then of course, the the born Middle East, fragmentation of work. And along with that comes a super powerful, I guess, in AI. Right? It's a strategic race to to develop an element model that is solvent that was actually advanced. Superior than than other people we started with sort of in 2020 sharing infrastructure in a large Chinese infrastructure, you would think about it, because we will globalize and optimize profits. Now we are in a world where everybody is racing to develop their own AI model and bring it up core of it if you listen to Sam Altman and need basically says infrastructure is key. Because in the end, these models consume massive amounts of energy. Nobody knows how to run these models without electron. Right? So effectively, US being a place with has abundance of energy, good capital markets, has started this race where every country wants to build their own system, power grid resiliency, AI models, in The US. It's true in parts of Europe that have started it. You and we are seeing as Ice Square Capital that's prints found in Brazil and many other countries, and they're also scraping the extra energy they create stop their own AI with speed. And I think it sense, it's it's excellent for infrastructure. Because it frankly localizes the infrastructure. And so every nation is now saying, how do I get to infrastructure? How my energy is dependent? What is my policy? For songwriter dependent? And so for the first time, investing and and and frankly, and that coincided first and the commonality for us as a global investor is that we're not doing any of this without the infrastructure. We cannot actually develop an any to let bank is Well, that's a really important thing. A lot of what we're talking about here in here is sovereign independence answer to this? Or does it create additional challenge? Joe, that's such a brilliant question. I think if you think about supply, when you think about four things, you know, the general about question across these four segments is is there a shortage of electrodes, fits, molecules, neurons, or is there an artificial constraint on the exchange of things? And I think the word geopolitics is a polite word to say that we have decided as a word for some reason. That we will now inject artificial and in the screens of these four things. That causes some very big problems that are second order problems. I'll give you one tangible example. The US led an attack on Iran. And in that, 16 of the Tomahawk missiles that we have in in arsenal were expended in forty days. About 60% of the SM three missiles would have spent it in that same period of time. About a third of the Patriots were third Patriots expended in that same period of time. Now all of us have read this It's common knowledge. It's in the papers. The other thing that this says to us is that whether it's going to take us Mhmm. Years to revert this capacity. But can we bring this capacity, what we're really saying is that we have to make huge investments in having the capacity to rebuild that if we are going to do it in Southern What is that expense? Well, the president has told us that there's going to be a $500,000,000 increase in the defense budget where we will take it from 1,000,000 to 1,500,000,000,000.0. What does that mean? What that means, you can project the rate at which our economy is growing and the rate at which our debt So I'm trying to paint a picture from left right, which is to say, electrons, bits, neurons, molecules, We built a world that was designed to optimize the production of these four things and share them amongst ourselves. Due political reasons, we decided then to bifurcate and to cut these channels. The consequence of that is we now live in a super power that has expended half of it relevant arsenal in a month with would take ten years to renew on the last point on which I'll end, Yeah. Is that the key material dysprosium, magnets, rare earths, that will be required to refill this RCA will come from China. And China has sanctioned us. I told you we had a smart panel for you here. I wanna see is on the idea of underinvestment. If we can point the conversation that way, Nate, your job is to find areas of our opportunity, and I I wanna come to you now after we heard from our other panelists because this is a money making opportunity as well as a strategy officer. Wanna what areas we're looking at. When you see what what nature that 100 investment in this area. Huge spend that's happening will Thanks, Joe. Well, I I came back to finance. I came to service most recently from the State Department after serving as ambassador for cyber and digital for The United States where the letter technology was almost around the world. And in in that job, everything that might come here have said resonated very strong. And so in in thinking now about the investment opportunity, I do think that the nest it in the question of what's going on. Summarizing the state of the world in 2026 and thirty sixty nine seconds skills have gone to I think though every one of on the stage is singing different versions of the same thing. Kurt, geopolitics is bad. If you went to college twenty or thirty years ago, you've read books like The End of History and The World Is Flat. They made you feel a little bit wide too. It didn't end. The world's not flat. Right? And in that geopolitical competition, these these battle grounds are emerging, and they are primarily technological or industrial. They are AI. They are navigation systems. They are telecom infrastructure. They're all these things we're talking about. All of systems, to Amira's point, were optimizing more or less since the end of World War two for cost. For economic efficiency. And then, you know, put aside the war in Iran, put aside US China competition, do you remember the ship getting stuck in the Suez? Like, do think events like that relatively minor things that you might have been employed to last about over the breakfast table actually reverberated through the global economy and some really ways. So those supply chains now are being realized. And that's a that's a long term requirement. And then the fourth thing I would point to is this isn't about one political administration. The Biden administration did the chips act and the IRS The Trump administration is doing a ray of things, and whoever comes next in The United States is have to confront us. It's also not just about The United States. German auto led manufacturers repurposing production lines for defense, Japanese defense spending, look around the world. It's so so to answer your question, macro secular and enduring. It's a critical importance to many outcomes around the world. And so in that is, you know, the the silver linings in a very dark cloud from a human perspective Yep. Is a huge amount of opportunity, I think, all the areas that everyone out here You know what mean? And and as the CEO of a public need for that investment? Because so many days we find ourselves after the closing bell, there's an announcement on CapEx and the stocks going down. Because there's great worry about overspending on this. Yeah. Great. But Thank you. I think the shareholders do want understand the coming of national security and a lot of spend is the national, as Nate can tell you. And and it's it's very much focused on how do we build resiliency, how do we bring national security together, the private markets? How do they partnerships. Right? And how can the government play a role in this? And I think they do see that opportunity. However, they also see the risk because at least in The United States, things like this do take time. And and basically, you know, complex processes that explain exist at our agencies. At our administration, extend this. Right? So you need whole of government coverage. Right? We talk about AI investment from from the DOW, from all the agencies who talk about his public private recognizing and bringing all of that together. But from an investor, standpoint, I think that's where the risk is to seek because Mark government is not set up to have a full bill You know? We're putting the you know, the authorities, FCC, and they have different processes. So I think I would be need to see that so to talk to my insurance to an extent, how when you make decisions about deploying capital against this backdrop of uncertainty, do you how do you two out the noise when everyone's telling you that you're overspending or you're looking at the done this. Investments in about 70 countries. And I think the key to actually running a global firm is to be hyper local. So gains, no especially when it comes to infrastructure. So energy And so it may mean other types of power. So for us, it means the common Right? We have this provider of that common foundation of which industrial society and and a fragmented world exists. And I I completely believe in Nate, right? You can't share that infrastructure. Those corporate profit optimization. Now we are on a secure optimization base. And then the call today is to electron and those digital bits. And there are three common there are three manufacturers of turbines in the world. They're not two twenty five Right. So and the of physics are exactly the same, whether it be in or US or or Asia. So so for us, it's basically replicating that philosophy of building works class beautiful infrastructure. But aligned with the local properties, use local teams cannot come here to The US company and try to build an asset even in The UK. I think you find it very difficult. You have to be a local company, local development team, local management, but, of course, common engineering, home and aligning yourself with where that nation is doing. If you do that, it's tremendous opportunity at a time with every national job has record deficits. They don't have any money. Right? I mean, so president talked about a defense by So all of this is gonna actually come from private capital. It does mean that the model that the world existed in, if you go back five years, home visitor on Bloomberg and everywhere was I want to be Right? And and software or technology heavy. Today, I think people have suddenly discovered the resilience of actually owning an asset. Mhmm. So I think that's what very important shift. That shift is globally. It might be twenty years plus of investments, I've never seen it. Right? Was common infrastructure and and sort of an afterthought about low returns, and now suddenly and suddenly there is a demand to build these assets where no governments are low and the skill set is not there. So it's think it's private capital providing that that layer of and that is a global strategy. So Connor private enterprise is doing what government simply cannot do now. It's it's the modern corporation essentially the new government? I think what we're going to say is very think makers or one But call me old fashioned, but I still believe that there is something called the consumer and enterprise and the customer. Mhmm. And serving the customers, I think, will always be the way to all these And there comes an important cost because we have been talking about AI I believe the word artificial is very well defined for AI. There is nothing artificial about AI. This is augmented intelligence. companies, and companies, and so they are is, I think, one of the best rules monetize this incredible value creation over the next decade. And in a way, you're right, is the companies will be able to deliver Sovron AI to their customers to make it teacher a better teacher, a doctor a better doctor, a parent a better parent, better. So I still believe that there is a future for us in light models, and our customer will be in the front. And monetization of these capabilities will the the government service center. Are governments creating the safe space that companies need to invest and explore and and ensure these technologies to to support our supply chains were You know, I think lot more the over a three year period, they went from basically no sort of by distributed solar, and it's one of the reasons why this recent crisis of the energy affected the country in in a mild way in relative terms. So that is an example of a government not getting in the way that private tremendous amount. There are other examples for example, in The US, we US and and fifteenth the size of the It's quite remarkable. That would be another example. In The US, we've had a need in areas that due to regulation, I founded a company called Sky Bridge partnership with Boeing, which Boeing acquired last year. The point of that Skies, safe areas, ways in which we could Allowing potentially millions of drones to build a logistics network in the sky. I I recognize the need for safety. I recognize the need for, you know, deliberate progress in areas like that. But it's been a long time. And by now, one would have called that The US having had such a lead in the area kinds of logistics business and opportunities for the next iteration of the UPS and the FedEx and just changing the game and how things have delivered. The drone partners are now being against another So my point is, think it's it's not as simple as western democracy. Check. Check. Check. If I country problems. It's much more sophisticated than that. And in many areas, it's because the government did something good. In many in many cases, it's because the government just didn't do anything, which is good enough for for private Just stay out of the way? Stay out of the way. Nate, what do you make of pockets like this? Drone technology is a great example with The United States was leading. Oh, okay. For some reason, we stopped. Being able to see around corners and continuing to develop this technology. We're now asking the Iranians in some cases for help. For instance, in militarizing drone technology as an investor, how do you rationalize that? So there's a long history of complacency resulting in the loss of leadership Yeah. Right? Look at The US telecom sector back in the in the in the nineteen ninety's where The US had a had a pretty commanding posture in in wireless technology. I think the combination of, in that case, Chinese IP theft and and subsidies in the market resulted in margin compression in in US companies and ultimately, the cost of our and D edge and made my way. And, you know, when I was I used to was an un member of the Aritzson Nokia sales teams. And I go around the world trying to sell finish in Swedish technology, this was a heck of a lot better than deployed Huawei tech. And so we've seen this movie before. I think the drone case is a little bit different because there we had entrenched interests, I think, in The US defense industrial base that were slow to innovate. And the Ukrainians, with their backs against the wall in a war of existential importance, were doing incredible things. And I made a bunch of trips into wartime in Ukraine, including in their factories in the East where they were making drones. And you walk in and you see a bank of three d printers on one side of the room cheering out components, and then benches with ring lights with magnifying black and usually women sitting at the benches with the men are at the front. And they're soldering or screwing the componentry together. And the magic is it's hardware innovation, software innovation, and doctrinal innovation all in one feedback. And, I mean, the what the old saying is necessity is the mother of invention. I think part of the opportunity, and we keep trying to get to the silver lining with our cloud, but part of the in all of this is in a lot of these technology areas, our facts are you know, I'm I'm I I I subscribe to Warren Buffett's view that at the end of the day, I'm I I think it's hard to bet against The United States. States, and I will bet on the the power of free markets and entrepreneurship ultimately are prepared. Well, so what is our To your brain, it's pretty clear. They've been at work for years. Is it the prospect of losing me I think So I think I think we see a pretty disturbing degree of what I call adversary alignment. Where the Russians, the Chinese, the Iranians, and the North Koreans working together to afford us a different way. That's a big problem. But I think the existential threat for us is actually, you trouble. It's our inability to stick together. As it is. It's internal cohesion, unity of purpose, a functioning political system that doesn't drive people to extremes. But actually drives us to come around I I think our one, two our our top three problems are are probably more into the next one. That means they're solved. That's it. That's something talk about this fracture, how would you respond to that? Or other governments? You may handling this outside of the I think there is a very important awakening about two things in terms of how countries will become the entire AI revolution is actually opening the eyes of we a data producing country? And are we able to process our own data? In the way that our people will be able to use it? And I believe as, you know, mobile operators who are in also in digital services, we play a very important role. And we are actively actually participating in JPE and people to make sure that we lead the sovereign AI people We we don't have the chips or necessary infrastructure for it. But we have the capabilities to distribute whatever it is being produced. At the fraction of a cost base. And that's actually number one agenda that I see in the the list of priorities of the government in every single country that I pay over. I wanna remind everybody that you can interact our audience member for sending the first question. And I thought I would jump right to it so we can get everybody involved. Here. Given how cheaply and effectively Iran has been able to block the strength of Hormuz. How do we underweight risk arising from other nations? Think Indonesia, starting forcing tolls, demanding payments, enable access to shipping. America Bahama. I think we need you to mind us