Category: Media

  • AI Financial Exuberance as a Shield Against Reality

    AI Financial Exuberance as a Shield Against Reality

    Op-Ed for Les Echos, Friday, June 5, 2026. The text below is a more detailed version of the article published in the print edition of the newspaper.

    The general rebound led by AI and semiconductor stocks, since the onset of de-escalation in the Middle East, is not enough to dispel concerns about the current investment cycle. On the contrary, this exuberance raises questions about its sustainability, against the backdrop of a race among LLM providers to go public.

    The already massive and growing weight of the sector in stock indices fuels a self-reinforcing dynamic, driven by passive investments: the more the sector grows, the more it attracts waves of capital, which in turn drive further growth—until a shock finally disrupts this mechanism.

    From this perspective, markets have quickly dismissed material risks—such as energy shortages or supply chain pressures for essential semiconductor inputs—as temporary. This reaction is not merely diplomatic optimism. For three years, the financing model has relied on the stratospheric expansion of LLMs, while downplaying questions about their business models, the consequences of pricing adjustments in the era of agentic AI, or the intrinsic limitations of these models in terms of reliability.

    The strong performance of cloud and semiconductor companies, combined with abundant liquidity and the dominance of a handful of firms, has reinforced the notion that demand for generative AI infrastructure will remain indefinitely robust.

    Circular Capital Flows and Technological Concentration

    This dynamic stems in part from the increasingly circular structure of financing. In 2026, projections for investments by Nvidia, Alphabet, Apple, Microsoft, and Amazon in “hyperscale” infrastructure range between $600 and $725 billion. The interconnections within this ecosystem are particularly tight. Nvidia occupies a central position as both the dominant supplier of GPUs and a key investor, reinforcing a loop in which investments, demand for computing capacity, and production capabilities are mutually dependent.

    Microsoft has invested $13 billion in OpenAI, whose computing costs rely heavily on Azure—further boosting Microsoft’s cloud revenue and its ability to sustain its investments. Google has poured several billion dollars into Anthropic, which has simultaneously committed to massive cloud infrastructure contracts, split between Google and Amazon. Amazon itself has invested around $8 billion in Anthropic, which then developed subsidized access for developers through the cloud infrastructure of these same companies.

    However, usage-based pricing models (per token) introduce uncertainty about whether this growth can translate into sustainable revenue, particularly if mechanisms of “subsidization” or indirect support were to wane. These mechanisms sustain growth expectations but blur the line between independent demand and self-perpetuating capital flows. A significant portion of the sector’s apparent strength rests on a small number of companies that simultaneously finance the infrastructure, provide the computing power, and support the applications consuming that power.

    The rise of passive investing further amplifies this phenomenon. As major AI-related companies see their valuations climb, their weight in major indices automatically increases, attracting more financial inflows and intensifying market concentration. The “Magnificent Seven” now account for between 30% and 45% of the S&P 500’s market capitalization, depending on the period, while Nvidia’s market cap has surpassed $5 trillion.

    Material Constraints and Financial Fragility

    At the same time, the material foundations of this expansion are becoming increasingly critical. Cutting-edge AI depends on massive growth in electricity consumption, semiconductor manufacturing capacity, cooling systems, and data centers. Semiconductor production itself relies on complex industrial supply chains involving LNG, helium, specialty gases, copper, and stable electrical power.

    Helium exemplifies this dependency. Qatar is one of the world’s leading exporters, and any disruption to maritime routes in the Gulf could quickly impact semiconductor manufacturers in East Asia. In Taiwan, several industrial groups have already expressed concerns about the security of LNG and helium supplies.

    Moreover, the island sits at the heart of the U.S.-China diplomatic chessboard, with Trump’s approach amounting to a refusal to engage on the issue. Meanwhile, China has embraced the U.S. strategy of restricting semiconductor exports and is betting on building its own autonomy—centered around Huawei—which, in the long run, could challenge the dominance of American giants and their financial constructs.

    Additionally, the rapid obsolescence of infrastructure adds another layer of fragility. Data centers built around current GPUs could lose a significant portion of their competitiveness for advanced computing workloads in as little as 18 to 36 months, even if they remain usable for inference or secondary applications. Yet, accounting depreciation periods typically span three to five years, potentially obscuring underutilized infrastructure and delaying visibility into long-term financial obligations.

    This is not about questioning the AI revolution itself, but how financial markets treat LLMs’ growth as limitless—underestimating physical, financial, industrial, and geopolitical constraints… as well as the opportunities of alternative models. Large language models fit naturally into the current financial architecture because they deploy efficiently through cloud infrastructure and (partial) subscription-based business models. In contrast, physical AI—particularly in robotics—operates under a different logic. It depends more on real-world deployment and longer development cycles, which align less neatly with current financing mechanisms.

    This dynamic echoes Minsky’s financial instability hypothesis, which posits that long periods of stability gradually encourage increasing risk-taking. The limits of financial and industrial resilience may soon force a rude awakening, perhaps triggered by profit-taking after a wave of IPOs.

  • France Might Become Europe’s Data Center Hub, but Where Does It Stand in the AI Race?

    France Might Become Europe’s Data Center Hub, but Where Does It Stand in the AI Race?

    Interview with Atlantico on France’s AI Infrastructure investments, following the 2026 Choose France Summit announcements (Excerpts).

    Are the Choose France announcements a sign that France is winning the AI race—or just the data center race? Behind the €93 billion figure, how much actually goes toward developing AI technologies, models, and intellectual property compared to infrastructure?

    These investments do not mark a decisive victory for France in the AI race, but they do position the country at the heart of Europe’s AI infrastructure. While they bring industrial benefits, the creation of intellectual property largely remains in the hands of international players. The challenge now is to leverage this attractiveness to develop a national AI industry.

    Amid an energy crisis, France—with its largely decarbonized electricity and stable grid—has become a European hub for AI infrastructure, drawing in players like SoftBank, Brookfield, and Ardian. These firms are investing in data centers and sparking industrial partnerships. Schneider Electric, for instance, is mobilizing its expertise in energy efficiency, cooling, and automation. These projects help develop high-performance data center management skills.

    However, the development of key technologies and models remains limited. Despite initiatives like the Bull/Foxconn project on motherboards, the focus is more on infrastructure than R&D labs or GPU production—the latter being where much of the sector’s real value lies. Europe still lags far behind in semiconductors, despite some promising efforts.

    We must also consider the financial exuberance surrounding AI, particularly in infrastructure financing. A national strategy cannot be built on speculative promises alone. As seen in global initiatives, France should develop local funding sources and protect the integrity of its tech companies, both in terms of intellectual property and capital resilience.

    We often distinguish between inference data centers (which execute queries) and training data centers (where large AI models are developed). Is France hosting the most strategic parts of the value chain, or mainly data centers that benefit from our energy advantage?

    Overall, the projects cover both types, though the distinction isn’t always clearly defined. The Ardian/Verne “AI Gigafactory”—combining high-performance computing and research activities—appears to be the most training-focused. Training centers are more strategically valuable from a geopolitical and industrial standpoint, as they require massive resources (energy, cooling, GPUs) and are difficult to relocate.

    Inference data centers, on the other hand, are less strategic since they rely on pre-trained models and optimized chips. Yet they complement France’s offering by enabling large-scale AI service deployment with reduced latency for European users. Their value lies in proximity to end markets.

    The key challenge is avoiding the role of a mere host. France must capitalize on these infrastructures to develop technological partnerships, attract R&D centers (by conditioning support on technology transfer commitments), build ties with local industry (for sector-specific models), and ensure it doesn’t remain just a provider of electricity and land.

    Arthur Mensch, Mistral AI’s CEO, told the National Assembly that AI is first and foremost a heavy energy industry. Does France truly understand that the AI battle won’t be won on talent or software alone, but on the ability to produce and deliver electricity? Can France meet the electrification challenge posed by AI’s demands?

    Mensch rightly reminded policymakers that AI isn’t just about models—it’s about physical and energy infrastructure. Behind every model lie data centers, semiconductors, cooling systems, and power grids. Beyond leveraging France’s tradition of mathematical creativity and its versatile engineers and researchers, the country must also exploit its abundant, stable, and competitive electricity supply. Here, nuclear power remains a key advantage, even if the sector has been weakened by strategic indecision and hindered by a flawed European pricing framework.

    Why does France face a two-year window of opportunity in AI? Are we witnessing an industrial revolution where today’s decisions will shape global power dynamics for decades?

    We’re entering a phase of consolidation. The early years of generative AI were experimental—models were developed, pricing was fluid. Now, the players controlling compute, data, talent, and energy are locking in their positions. The parallel with industrial revolutions is clear: those who dominate foundational infrastructure set the technological, financial, and geopolitical standards that follow.

    Yet we must resist the dominant narrative. We’re in an era of excessive valuations, with circular financing mechanisms between semiconductor companies, hyperscalers, and model providers. Many use cases remain unproven, while markets anticipate massive future revenues—even as some models continue to operate at a loss.

    Europe shouldn’t blindly copy the U.S. hypergrowth model, fueled by deep capital markets and a high tolerance for deficits. We lack the financial firepower and the same risk appetite. Instead, we must pursue more selective, industrial, and efficient pathways.

    Open source is a strategic lever: it enables cost-sharing, broader access, reduced dependence on American platforms, and the development of specialized models without requiring tens of billions in capital. As Yann LeCun has noted, much of Meta’s early Llama development happened in Paris. The real challenge is turning conceptual strength into industrial power.

    According to estimates, AI could require up to 40 additional gigawatts of power in France. Should nuclear be seen as the absolute condition for digital sovereignty, or is a more pragmatic mix—nuclear, solar, renewables, and grids—now unavoidable?

    Nuclear is essential if France wants to maintain a controllable, decarbonized, and competitive electricity supply at scale. Industrialized AI cannot rely excessively on intermittent energy sources. But the challenge extends beyond nuclear: it’s about the entire energy system—grids, storage, hydropower, energy efficiency, and cooling capacity.

    Meanwhile, China is taking a more pragmatic approach: lower-cost infrastructure, more compute-efficient models, and aggressive hardware optimization. Beijing is also working to replicate Nvidia’s capabilities in the face of U.S. export restrictions.

    The global AI race is now moving at a pace incompatible with France’s bureaucratic inertia—not just in energy, but across the board. We need to recreate industrial and technological free zones: streamlined regulations and tailored tax incentives for innovation and critical infrastructure. The French paradox is that we once had one of the world’s most competitive energy and scientific systems, only to then systematically deindustrialize ourselves.

    Is France missing the AI value chain upgrade, left providing only energy, infrastructure, and expatriated talent while the U.S. captures the real value?

    The risk is real: France could end up confined to the lower rungs of the value chain—supplying power, hosting data centers, and exporting talent—while the U.S. monopolizes the high-value segments. But to reposition ourselves, we must first understand the sector’s current state, with its flaws and emerging opportunities.

    Beyond the inherent limitations of LLMs, much of the AI sector today is driven by highly speculative financial expectations. Many use cases remain difficult to monetize, even as compute and capital demands skyrocket in the age of agentic AI. The next wave may well come from AI deeply integrated into real industrial systems: robotics, automation, maintenance, defense, logistics, industrial simulation, and healthcare. The goal isn’t just to imitate OpenAI but to drive productivity gains through integration with physical production chains.

    With OpenAI’s rumored IPO at $850 billion, Anthropic at $900 billion, and SpaceX at $2 trillion, American giants will have the capital to lock in compute capacity and energy resources at a scale Europe can’t match. Is there still a realistic path for France and Europe to close the AI gap with the U.S. and China in the next two years? Could robotics be part of the solution?

    These valuations underscore America’s financial dominance. These companies can raise sums that secure semiconductors, data centers, and energy contracts on a scale beyond Europe’s reach.

    Europe has also trapped itself in a regulatory labyrinth, particularly with the AI Act. Multiple European states and companies have pleaded for adjustments to preserve industrial competitiveness—only to see their concerns overlooked. Meanwhile, Donald Trump merely had to demand that Ursula von der Leyen fall in line with U.S. interests—and she complied.

    France and Europe can still build strong positions in areas where we have industrial, scientific, or even energy advantages. Robotics is a prime example: it combines software, sensors, mechanics, power electronics, and industry—even if we don’t cover every link in the chain.

    Physical AI offers an alternative to consumer-focused, chatbot-driven applications. Advanced industrial robotics delivers direct gains in competitiveness, productivity, and reindustrialization. This is likely where we have the best chance to create synergies with our industrial base.

    Read the full interview on Atlantico.

  • Reopening the Strait of Hormuz: Toward a Frozen Conflict amid US Political Paralysis

    Reopening the Strait of Hormuz: Toward a Frozen Conflict amid US Political Paralysis

    English transcript of my interview on France Info TV – 29 May 2026.

    Hello, Rémi Bourgeot. At the heart of this issue, as always, is money—the economy. In Donald Trump’s decisions, just minutes ago, we were told the U.S. president wanted to take his time before possibly announcing his decision on the Iran deal. And now, we see things accelerating. Do you see an economic dimension here?

    Rémi Bourgeot: Absolutely, this is the primary source of pressure on Donald Trump, stemming from the global economy and the U.S. economy. So he’s under this urgency.

    But today, he’s also facing internal divisions. Personally, he quickly realized the disaster that the U.S.-Israeli campaign against Iran had become, especially since he’d been promised it would only last a few days.

    On the American side, he’s dealing with tensions from parts of the Republican Party, particularly the neoconservatives, who oppose any diplomatically realistic agreement. And then there’s the pressure from Israel, which—at least from Benjamin Netanyahu’s perspective—has no interest in reaching a deal with Iran, let alone one with regional repercussions, especially regarding the war against Lebanon. So the situation remains highly uncertain.

    For the Americans, the core issue is still nuclear. Yet we also see the weight of Iran’s position and the immense military challenges—on top of the economic difficulties the U.S. faces—having to concede to Iran’s main demand: delaying a nuclear agreement. Let’s not forget that under Obama, such negotiations took years. Today, the discussion is about Iran committing not to develop nuclear weapons—but that’s already the case. The negotiations focus on civilian nuclear programs and enrichment levels to prevent Iran from being in a technical position to develop military nuclear capabilities.

    We’re seeing a situation of extreme difficulty for the United States. Trump has recognized the deadlock he’s in, but he’s facing massive opposition and pressure, with all this back-and-forth and incredible uncertainty. And the negotiation process itself is quite surprising: he’s being asked to approve something that, in theory, he himself is supposed to negotiate—because the negotiators have a very limited mandate.

    So the parties are indeed trying to agree on reopening the Strait of Hormuz, which was fully open before this conflict. But beyond this partial agreement, tensions remain extremely high with the U.S., which is struggling to acknowledge this strategic defeat.

    Rémi Bourgeot, you’re still with us. Are we talking about war, potential solutions to the conflict, or not? And are we mainly discussing nuclear and oil issues?

    Yes, I think it’s fair to say that even if an agreement is reached, it would be a very partial one. In reality, the situation would look much more like a frozen conflict than a peace deal. The goal is to reopen the Strait of Hormuz and, for now, set aside the nuclear issue for a potential future agreement—because such negotiations take a very long time.

    What’s happening right now is that Donald Trump feels the need to include the word “nuclear” in his announcement. But in reality, this isn’t a genuine concession, since Iran isn’t developing—and did not intend to develop—a military nuclear program. That wasn’t the issue.

    As for enrichment, even for civilian or experimental purposes, concessions were already on the table. For Iran, the key is maintaining the ability to enrich uranium. So we’re seeing the situation unfold as it has over the past three months.

    This is a strategic debacle for the United States and for Israel as well. Trump is facing immense difficulty in reaching an agreement, even though he’s been trying for two months to extricate himself from this situation.

    The most significant concession from Iran seems to be over control of the Strait of Hormuz. Even if they adjust access or transit conditions, or reopen the strait in coordination with the Americans, they’ve demonstrated what some have called their own “nuclear weapon”: the ability to control the strait, albeit with very limited means compared to, say, their ballistic missile program.

    So we’re looking at a situation that leans toward a frozen conflict, with the prospect of a nuclear deal coming later. The positive side is that there’s a shared will to reopen the Strait of Hormuz and make mutual concessions. But there’s still a major roadblock on the U.S. side, which Trump must overcome to realistically achieve any kind of breakthrough.

    Thank you, Rémi Bourgeot, for your analysis.

    This automatic transcript has been edited for the sake of clarity.

  • War Deepens the Industrial and Social Crisis

    War Deepens the Industrial and Social Crisis

    Interview on France 24 in French with journalist and novelist Aude Lechrist and in English with William Hildebrandt on how the Middle East war derails the West’s economic, industrial and social model further. Translation of the French interview below the English video.

    Aude Lechrist: In France, as elsewhere in the world, the closure of the Strait of Hormuz is making itself felt. Trade unions are pushing for wage increases, particularly as inflation makes a comeback. To help us understand how workers are being affected by today’s upheavals — the geopolitical situation, climate pressures, and the dizzying pace of advances in artificial intelligence — we are joined by Rémi Bourgeot. Thank you for being here. First, are workers facing the same pressures the world over?

    Rémi Bourgeot: Extreme globalization has taken hold, creating significant transmission belts running through industrial models — but alongside that, vastly different policies have been pursued on either side of the divide. The fast-developing countries of Asia have pushed industrial policies, import substitution strategies, and drives toward productive self-sufficiency. The West, by contrast, has undergone rapid deindustrialization over the past few decades.

    And yet Asia is heavily affected today on the energy front, even though China in particular had put anticipatory policies in place. This crisis feeds directly through to workers, to job opportunities, and to cost pressures stemming from globalized supply chains — though that globalization is now somewhat in retreat, as countries seek greater autonomy and resilience.

    So workers are immediately more exposed — that much is clear from the geopolitical context. What knock-on effects are you observing?

    The economic consequences are immediate and concrete — the energy crisis, for instance, has brought production lines to a standstill. Economists point to fractions of a percentage point being shaved off overall GDP, but the real issue is a crisis of the real economy, the physical economy, of supply chains. For many countries around the world, that is precisely what drives economic and industrial development.

    And just about everywhere, questions of industrial development, genuine development, educational development are back at the centre of the debate — because these are the factors that determine long-term growth prospects and the opportunities open to workers.

    A major fault line has opened up between countries that believed growth could rest indefinitely on services — particularly financial services — and others that have followed a more traditional development path, reminiscent of postwar Europe: industrial development, educational development — which opens up more opportunities for workers, even if working conditions are sometimes very tough.

    But right now, an inflection point has clearly been reached: developed countries no longer have a functioning growth model.

    Artificial intelligence, which you mentioned at the outset, is also reshuffling the deck — particularly through its applications in robotics, which will increasingly affect manual workers, in addition to office jobs. And again, that fault line is visible, with the development model unraveling across much of the Western world.

    The United States has managed to stay ahead on the digital front and now in AI. How do you read that, especially against the backdrop of the Strait of Hormuz crisis — given that the key investors are the Gulf states?

    The development model has genuinely unraveled right across the Western world. The United States holds the high ground technologically, but on the premise that it can keep pushing indefinitely down a path heavily dependent on financial flows and foreign capital — particularly from the Gulf.

    The announcements from Sam Altman and OpenAI have been staggering — trillions supposedly raised in the Gulf to fund data center infrastructure in the United States and beyond. And the financial structures taking shape among players in this sector have all the hallmarks of a bubble — customers being financed by their own suppliers like Nvidia, investments completely untethered from economic and industrial reality.

    And yet genuine innovations do exist, and there is extraordinary talent out there, even from a purely technological standpoint. AI researchers like Yann LeCun argue that generative AI and LLMs are running into a dead end because of their intrinsic errors — something anyone who uses these tools day to day can see for themselves. Other technologies need to be developed, and that is already happening, particularly for robotic applications in the real world.

    But the moment an innovation appears, vast financial edifices get built up around it that have little to do with actual economic, industrial, or human development.

    And then there is the fear among workers — Americans in particular — who see an economic crisis on the horizon. Trade unions are clearly gearing up for major action. Labor Day in the United States is separate from International Workers’ Day, but significant mobilization is expected today all the same. Donald Trump has clearly done very little to address the concerns of American workers.

    Yes, and that is the great paradox. All the wavering, the U-turns, the chaos surrounding Donald Trump tell the story — he was supposed to upend the system in favor of reindustrialization from his very first term. Efforts were made in that direction, but the personal competence simply was not there, nor were the right people around him, to deliver a genuine industrial policy — not even on the tariff front, when it came to applying duties where they were actually needed, where domestic production could realistically be substituted or rebuilt at an acceptable cost.

    And yet that question did get put on the table — one that recurs throughout American economic history, as it does in the history of any country pursuing industrial development.

    When the Democrats returned to power, they largely continued in the same vein of industrial realism, of attempted reindustrialization — more through subsidies than tariffs, but still within a broadly protectionist logic.

    And now, with this new Trump term, the result is a bizarre and catastrophic world of blunt-instrument measures that get walked back almost immediately, with no strategic underpinning and utterly chaotic trade negotiations. The negotiators — on trade, but also on geopolitical, diplomatic, even military matters — have no idea what they are doing. Some of them can barely find the countries in question on a map.

    The chaos that has ensued points to a very deep systemic crisis — a crisis of American society and of Western society more broadly — an inability to bring about political renewal, or even basic reform, that would reconcile human and industrial development with the realities of globalization. That can only deepen the anxiety of workers who already see a vast gulf between the uncertainty generated by outside forces — conflicts, tensions, climate risks, artificial intelligence — and their governments’ capacity to respond, compounded by the interdependence between all these countries.

    That is genuinely alarming — because beyond all the political divides, the different countries and currents of opinion, there actually is a broad shared diagnosis: reindustrialization is needed. And yet nothing happens. Promises are made and forgotten.

    You said as much about the United States, but Europe is no different — if anything it is worse, having missed every significant technology wave over the past twenty or thirty years. The engineering expertise is still there for now, but it is eroding. And has the appetite for innovation gone with it? Is it no longer what drives students who dream of building a better world? Do you share that concern?

    What keeps me from losing hope entirely is that talking to young people — students in engineering schools, in other fields, in the humanities — one still finds that curiosity, that intellectual energy. Despite the decline of the education system, a wealth of tools exists online, countless ways of accessing knowledge — with their strengths and their limitations — that still allow people to learn, to catch up, to make discoveries. The curiosity is very much alive.

    The problem lies in the economic, political, and industrial system as it stands, which crushes that creativity. Entrepreneurship is a case in point — starting a business is an uphill struggle in Europe and in France especially. And at the level of larger companies and public bodies, reindustrialization is talked about endlessly but always in the vaguest of terms.

    Looking back, what has been the real impact of Emmanuel Macron’s two terms on workers in France?

    There has been a genuine slippage. A commitment to entrepreneurship was at least proclaimed, but it was mostly rhetorical from the outset. The occasional junior minister had a genuine grounding in the real economy, but overall, a headlong rush toward deindustrialization has unfolded, dressed up in rhetoric pointing in the opposite direction — toward rebuilding France’s industrial fabric. The means simply have not been there: the human resources, the investment decisions at the national level, the European coordination.

    Then there is the energy pricing system, which is extremely damaging for the French economy. France should enjoy a competitive advantage thanks to nuclear power, but that advantage is largely neutralized by the European pricing mechanism — a trap the country remains locked in.

    On top of that, the strategy of kicking the can down the road goes back to the introduction of the euro. The trade balance has been deteriorating and in the red since the start of the eurozone. This ongoing decline has been masked by the illusion of monetary stability — but with debt soaring and interest rates rising, that cannot go on indefinitely.

    What is really lacking is a technological, industrial, economic, and human understanding — including in terms of skills — to get an industrial development agenda back on track. That is exactly what other countries are doing, not that their models should be copied wholesale — China being the obvious example. A genuine boom in industrial development and technological expertise is underway in China today, comparable to Japan’s spectacular catch-up across every technological front forty or fifty years ago.

    France has extremely strong expertise — pockets of world-class engineers, outstanding skills, including in mathematics — and none of it is being properly put to use.

    Rémi Bourgeot, thank you very much for joining us — a fascinating conversation. Thank you.

  • Industrial Disruptions and Geopolitical Shift

    Industrial Disruptions and Geopolitical Shift

    Click on the image to view the video on LinkedIn – Full transcript below the summary on this page

    On France 24, I discussed the deep industrial impact of the Iran war and the shift in political bargaining:
    – Economic forecasts tend to account poorly for shocks in the physical world, focusing on market price variations and assuming substitution. The main economic damage lies in material shortages and supply chain disruptions, from energy to fertilizers to helium for chips manufacturing…
    – Geopolitically, Trump’s grand bargain on uranium enrichment has stalled. With a peace deal a distant prospect, sanctions relief for Iran is off the table as well. More focused steps should now center on the strait: the level of Iranian control, the lifting of the US blockade, and some international coordination.

    Full transcript of the interview:

    Good morning, Rémi, and thank you very much for being with us. Can I start by asking you what the immediate effects of the Iran war have been economically, beyond the fuel crunch, which of course everyone is very familiar with?

    This situation in energy markets isn’t just a story about rising oil and gas prices—it’s really disrupting supply chains all over the world in critical aspects. It’s about energy imports for many countries, especially in Asia, and also in Europe, but to a lesser extent. But it’s affecting some industries very, very heavily through price surges and shortages.

    There was little awareness in the beginning that critical components like helium would disrupt supply chains in production, such as semiconductors and chips generally. So it’s really a global crisis sparked by these shortages and by the way production is being disrupted.

    It’s not just about economic statistics or making assumptions about how GDP might be affected over a three-month horizon. It’s a much deeper crisis, really affecting supply chains. And that goes beyond the scope of just short-term economic monitoring and forecasting. It’s a real industrial crisis with so many ramifications—also for food production, in terms of fertilizer imports for so many countries.

    The Gulf has become so critical, not just beyond energy. Energy is obviously key, but we see all these ramifications, and this is affecting countries and industries across the world in very different ways. For some countries and social groups, this is having really dramatic effects—it can create situations of famine. You can go to such extreme levels.

    You mentioned helium there. Qatar exports 40% of the world’s supply, and it’s used in the production of semiconductors and pretty much across tech in general and other sectors. What might the societal repercussions of shortages in this sense mean for the world?

    It was somehow reminiscent of what happened during the COVID pandemic. Supply chains were heavily disrupted, and then there was also a boom in demand with fiscal support. So this is really running very deep into supply chains. You see disruptions everywhere.

    Some countries have stocks, so the effect is not immediate. It’s just like in energy markets—some countries have had this policy, this strategy of storing a lot of oil. That’s the case with China, which is supposed to be very dependent on the Gulf but is less affected in the short term thanks to this storage policy. So it applies to many countries and industries. But over time, after a few weeks and especially after a few months, you start to see much more concrete effects with these shortages.

    It means it’s really affecting production. It’s not just the rise in prices. There’s really a gap in production at the moment. This directly translates into decreased production. It’s not just about price signals or higher costs—it’s really outside the scope of usual everyday economic reasoning. It’s a crisis affecting the material world, not just economic models.

    Now, how critical is this for a lasting peace to be reached in this war? We’ve got an extension, an indefinite extension of the ceasefire, but that does not mean the war is over. Is there a big difference between the war continuing for another three to four weeks or the war continuing beyond that? Or is there already sufficient damage that will be felt for months to come?

    Well, it’s a critical distinction indeed. The prospect of a lasting peace or a lasting peace agreement, in my view, is still very distant. There’s been so much confusion in the negotiations—or in the talks, I should say—between Iran and the US, with this focus on the American part on the nuclear issue, even attributing statements to the Iranians which were completely unthinkable in their view. So negotiations have really not taken a good path in that respect.

    In the end, you have this prolongation of the ceasefire, and it’s indefinite. That’s really what matters in terms of relieving the pressure somehow. I think the talks are going to focus on the Strait of Hormuz and finding some kind of compromise—acknowledging Iran’s control of the Strait with some toll booth model.

    China, for example, has been pressuring Iran to take a moderate approach on the issue of fees. But the key focus right now is finding some kind of limited compromise rather than achieving a peace deal. The US doesn’t even have the proper negotiators to achieve any such aim. There’s been so much confusion on the part of the US to impose this kind of counter-blockade of Iranian ports and ships. It’s trying to have leverage on this specific issue of the reopening of the Strait of Hormuz to find some way with Iran.

    But the prospect of incorporating all the possible aspects of a deal, including nuclear energy and uranium enrichment, is really very ambitious and a very distant prospect.

    Now the UK and France are spearheading talks to open the Strait of Hormuz or to keep it open once the war comes to an end. We’ve often spoken of de-risking with regards to China from the perspective of Western countries, but is this an instance of European countries perhaps de-risking in the face of Washington’s current unpredictability?

    Well, I think when it comes to managing the Strait of Hormuz, it’s not so much a strategy towards the US. There will need to be some kind of international arrangement, even if Iran retains control over the Strait and charges fees. That’s why the Iranians were willing to make some arrangements with Oman to have this international dimension to the management of the Strait.

    Europe clearly can be part of it. There needs to be some agreement, some arrangement to reopen the Strait, to make traffic happen smoothly, to reassure insurers, and to return to some kind of business as usual. It won’t be like before—it will be a new situation, clearly—but it has to be a predictable one. That’s really the key issue here.

    That’s why the Europeans are all playing this part, trying to show this willingness to take part in an international system of cooperation guaranteeing passage—not free passage literally, but to create a kind of new normalcy for passage through the Strait. That’s really what’s essential. It’s not just Iran stopping its threats to ships and the US lifting their counter-blockade. You need to have a real kind of international arrangement for things to resume in some normal way.

  • Energy Markets Will Remain Shaped by Iran’s New Status Quo

    Energy Markets Will Remain Shaped by Iran’s New Status Quo

    Op-ed in Les Echos, 11 April, 2026.

    Iran’s control over the Strait of Hormuz is upending global energy markets. Prices remain under pressure, and geopolitical uncertainties are hindering a return to normalcy. Investors and governments must adapt to this new equilibrium, characterized by structurally higher costs and persistent tensions, according to economist Rémi Bourgeot.

    Iran’s dominance over the Strait of Hormuz, coupled with the emergence of a new transit regime, is poised to have a lasting structural impact on global supply chains and price formation. This new reality is expected to have enduring effects on both markets and the real economy. There is little prospect of energy markets fully reverting to their pre-conflict state, even in the event of de-escalation.

    The conflict has been marked by Donald Trump’s erratic shifts between negotiation overtures and escalation threats, with no viable strategy in sight, underscoring the pressing need for de-escalation. The current ceasefire is diplomatically unstable, with parties failing to agree even on essential aspects such as the halt of Israeli strikes on Lebanon or on the version of Iran’s proposed list of negotiating points. While the prospect of a genuine peace agreement remains distant, the U.S. withdrawal from the Iranian front is rooted in the necessity of extricating itself from a particularly damaging stalemate. It thus seems unlikely that the United States will seek to fully reopen this front.

    Nevertheless, a U.S. disengagement without a concrete agreement paves the way for a new, ambiguous situation. The status of the Strait of Hormuz risks remaining undefined, based on the de facto control Iran exercises. It is therefore crucial to anticipate the dynamics that may prevail in energy markets amid this shifting landscape. Iran’s control over the Strait of Hormuz, coupled with the emergence of a new transit regime, is poised to exert a structural impact on global supply and price formation. This new reality is likely to have lasting effects on both markets and the real economy. There is little prospect of energy markets fully returning to their pre-war state, even in a de-escalation scenario.

    The rest of this piece is available on Les Échos website in French. For similar insights, see my April 1, 2026 article, which already analyzed the implications of a looming de-escalation—with Iran’s de facto control over the management of the Strait of Hormuz: Partial Normalization in Energy Markets After Iran War Deescalation.

  • Iran to Control Reopening of Strait of Hormuz

    Iran to Control Reopening of Strait of Hormuz

    I was interviewed by France 24 about the energy crisis and the challenges of reopening the Strait of Hormuz amid the military stalemate. English transcript below the video.

    Rémi Bourgeot, you’ve been following this crisis very closely. Is this only the beginning?

    It obviously depends on how the military situation evolves. Donald Trump has been sending mixed signals, and markets have been swinging wildly in response.

    What we are seeing, in any case, is a military quagmire. Some geopolitical experts believe this is only the beginning. There are also signs of panic on the part of the U.S. administration, particularly from Donald Trump, who actually dislikes war. In fact, he prefers theatrical operations, like the one in Venezuela a few weeks ago. This, however, is a genuine quagmire.

    So he is sending signals suggesting he would like to stop, while striking as hard as possible. The Iranians, for their part, largely dominate the situation, but they are also sending signals through these exchanges, notably with Oman, to at least establish some kind of framework that could apply to a partial reopening.

    But what we are heading toward is Iranian control over the Strait of Hormuz. It could be reopened in part, even quite broadly, but likely under Iranian control, given that the United States is not capable of reaching its objectives—assuming there ever were tangible ones.

    This Iranian control over the Strait of Hormuz, over time, implies a different system, a different economic regime, notably involving tolls, of which we have already seen certain outlines, partially implemented. That does not mean this will be the final configuration, but costs will be raised and this transit system will be put in place in a way that serves Iran’s geopolitical interests.

    There have also been behind-the-scenes signals of exchanges between Iran and certain Gulf states—especially Qatar—to avoid strikes. But the situation is extremely tense, particularly with the United Arab Emirates, which has called on the United States to “finish the job,” to escalate, implicitly suggesting the deployment of ground troops. One could imagine Iran penalizing the United Arab Emirates more than other Gulf states.

    And in any case, this reopening cannot be achieved by force, only through negotiations?

    There is no real negotiation. There may have been emails or very indirect contacts, but there are very serious doubts about the reality of Donald Trump’s statements when it comes to negotiations.

    That said, the notion of de-escalation cannot be ruled out. This is not what we are seeing these days, but Trump is extremely uncomfortable with the situation and understands that he needs to withdraw. His political position is collapsing. There are very serious doubts about his personal condition and about the political system surrounding him. He is dismissing generals around him in order to hear what he wants to hear, to avoid bad news.

    What we are seeing is a genuine regime crisis developing in the United States, with much deeper roots. There is also an industrial side to this crisis, as the manufacturing base is unable to sustain what would be a long war.

    On the question of ground troops, this is perhaps the most revealing signal: there has been no such announcement. There has been no announcement either of an end to the war or of a withdrawal. Yet sending ground troops would mark the entry into a long war, with even more severe uncertainties—something that would be almost suicidal on Donald Trump’s part.

    Today, we are in an in-between situation, with a desire to get out of this quagmire, but Trump wants to be able to claim some form of victory and avoid humiliation. That humiliation is there in any case.

    To return to the very concrete consequences of this political and military deadlock, there has been much discussion in recent weeks about measures taken by countries to ration fuel, cut taxes, and provide subsidies. France, for the time being, is refusing to do any of this. Is that relevant?

    When it comes to acting on prices, taxes are often short-term measures. They can have positive effects. But the real situation we are facing is a form of shortage that is now emerging. This is about very concrete, material realities: ships that were supposed to arrive are not arriving. A shortage is taking hold, already very severe in Asia.

    It is worth recalling that Europe is much less dependent on the Gulf for its energy supply than many Asian countries. The various sources of supply—Norway, North Africa, the United States for LNG, and partly the Gulf—show that this dependence exists but remains limited. Some countries have larger reserves; this is the case for China, which also has greater autonomy, while still being largely dependent on the Gulf.

    The reality is therefore material: a shortage is taking shape. It is less pronounced in Europe, but it is already being felt. This is happening in the context of an economic crisis, particularly an industrial one, that was already acute before the start of this war. The issue of energy prices was already critical, with the effects of the war in Ukraine: loss of supply, attempts to reorient away from Russia, but at the cost of creating new dependencies—on the United States or on certain Gulf countries.

    We are thus seeing a form of hyper-globalization of energy networks that is now proving extremely vulnerable.

    On top of the crisis you’re describing, there is also inflation—the general rise in prices, including food prices to come. Should people in France prepare for this?

    Yes, it has a strong inflationary effect. We are not in the same situation as with the war in Ukraine, which came after the pandemic and very expansionary fiscal policies. We are not seeing the same kind of surge, but inflation is clearly rising.

    Above all, inflation is a composite index: behind it lies everyday life, constrained spending that affects certain activities and certain social groups more than others. That is what is particularly problematic, both socially and in terms of political instability.

    For more on the energy crisis and the Strait of Hormuz, read Partial Normalization in Energy Markets After Iran War Deescalation.

    This transcript has been slightly edited for clarity.

  • Iran Quagmire: Tackling the Long-Term Costs

    Iran Quagmire: Tackling the Long-Term Costs

    Click on the image to access the video

    Donald Trump is looking for an off-ramp from the Iran war quagmire. While threatening major escalation that would make parts of the region uninhabitable, he claims that negotiations are taking place.Although real peace negotiations are now out of reach, given the unbridgeable gap in demands, a deescalation is possible.

    Countries dependent on energy imports from the Gulf however brace for long term consequences even if the conflict halts. Production capacity is now damaged and Iran is likely to retain a high level of control over the strait.

    Europe is less exposed to the supply crisis than Asia but the energy price surge severely aggravates its multiple crises, from manufacturing to debt management. The relegation of nuclear energy leaves the continent particularly exposed to this succession of geopolitical crises, with governments constantly shifting from one external dependency to the next as shocks erupt.

    I took part in Al Jazeera’s Counting the Cost. Extracts of my interventions are available here.

  • Beyond the Iran Fiasco, an Abysmal Strategic Vacuum

    Beyond the Iran Fiasco, an Abysmal Strategic Vacuum

    Op-ed published by Les Echos on 24 March 2026. As Donald Trump seeks a way out of the Iranian quagmire—to suspend hostilities without any real prospect of peace—I invite you to consider a broader reflection on the strategic void that accompanies this situation:

    The war with Iran reveals a structural failure within the American decision-making apparatus, marked by a difficulty in aligning immediate tactical actions with long-term political objectives. This misalignment extends beyond the military sphere. Defense, trade, finance, and technology policies interact in a chaotic manner. The conduct of the trade war has already illustrated this: the legitimate goal of reindustrialization has been overshadowed by geopolitical coercion.

    In this very real war, the inability to anticipate the consequences of a failed regime change or the closure of the Strait of Hormuz further demonstrates a loss of overall vision. The military instrument is wielded without a political framework capable of setting a clear direction.

    These strategic and material flaws, already evident in the war of attrition in Ukraine, suggest a system grappling with internal contradictions and a reliance on a form of virtual thinking. The strategic framework appears frozen in patterns inherited from the era of the Iraqi adventure, even as industrial and geopolitical realities have radically transformed, reshaping the balance of power. This latest crisis calls on Europe to undertake a difficult reorientation.

    Retreat of Monetary Hegemony

    Economic sanctions have become a central tool of diplomacy. Yet their use generates side effects that are beginning to reshape the global financial architecture. Initially designed to isolate specific actors without direct military engagement, these measures have accelerated the search for alternatives. Beyond the surge in gold, we are witnessing a proliferation of bilateral agreements in local currencies and the development of parallel clearing systems, which are undermining one of the pillars of American power.

    The Iranian conflict acts as a catalyst here. The paralysis of the Strait of Hormuz underscores how power depends not only on dematerialized flows but even more on complex material systems: energy and industrial infrastructures. The West finds itself in a position where its instruments of pressure are losing effectiveness as regional powers adapt, coordinate outside traditional frameworks, and are prepared to escalate.

    Industrial Wars of Attrition

    Above all, the evolution of recent operational theaters, particularly in Ukraine, has forced a belated rediscovery of the importance of the industrial base. Technological superiority and the development of financial markets may have created the illusion that mass production capacity was secondary. The reality of a war of attrition has shown that economies with much more modest GDPs, but equipped with resilient production systems supported by China, can stand up to technological powers whose production chains are fragmented or optimized for peacetime.

    This situation reveals a divide between nominal wealth, driven by services and intangible assets, and the actual ability to mobilize material resources in prolonged crises. Tensions over ammunition stocks and delays in reactivating defense industries illustrate this lack of industrial depth. Although deindustrialization is recognized as a risk to social cohesion and strategic autonomy, the response has remained superficial. Tariff policies are often employed erratically, serving more as diplomatic tools than as genuine levers for rebuilding an integrated productive fabric.

    Misalignment of Capital and Educational Erosion

    Meanwhile, financial markets continue to channel capital toward high-visibility sectors, to the detriment of fundamental infrastructure. The AI bubble absorbs a disproportionate share of investments, while heavy industry and industrial transformation struggle to attract the necessary funding. This imbalance creates a two-speed economy, where digital innovation advances without an industrial infrastructure capable of withstanding geopolitical shocks.

    This crisis of strategic thinking is rooted in the weakening of educational structures, particularly in scientific culture and the classical humanities. The decline in science education reduces the ability to grasp the physical and technical constraints of the real world, fostering a virtual vision where it is believed that large language models can replace versatile engineers. At the same time, the retreat of the humanities deprives decision-makers of the historical intuition needed to understand the long term.

    Europe particularly embodies this tension. The continent’s industrial catch-up is hampered by regulatory complexity, compounded by a shift in decision-making power from the technical to the administrative, reducing the capacity for long-term planning. The management of contemporary crises highlights the need for a transition toward a systemic approach, integrating energy security, industrial resilience, monetary stability, and technological innovation within a strategic framework. This transformation cannot occur without questioning decision-making and educational mechanisms. The reallocation of resources must be accompanied by a renewed emphasis on fundamental knowledge, capable of restoring a long-term vision.

    This piece was originally published on Les Echos website in French.

  • Why Gold Loses Its Appeal Amid the Iran War

    Why Gold Loses Its Appeal Amid the Iran War

    I answered questions from journalist Nils Adler on gold’s steadiness despite the Iran quagmire. In addition to quotes on Al Jazeera’s website, here is my broader analysis.

    A geo-economic shock such as the disruption of the Strait of Hormuz would traditionally be seen as driving gold demand higher. However, structural factors have tempered its safe-haven appeal.

    Flight to Liquidity, Volatility, and Market Psychology

    During major crises, financial markets often experience broad stress, with assets across the board under pressure as investors seek liquidity and safety, particularly in the U.S. dollar and Treasuries. Even gold, historically a safe haven, can remain flat or decline when markets favor cash or liquid assets. This pattern has been evident as the Iran war escalated. Gold has stayed relatively stable rather than rallying sharply, despite extreme tensions. Paradoxically, it is the potentially systemic nature of this crisis that limits demand for gold, as other financial mechanisms play out.

    In addition, the Federal Reserve’s stance remains decisive. Rising energy costs and persistent inflation reinforce expectations that interest rates may stay elevated, strengthening the dollar and making interest-bearing assets more attractive than non-yielding gold. This interaction suppresses bullion’s immediate appeal, showing how monetary policy interacts with geopolitical and structural financial risks.

    Also, the gold market is increasingly shaped by speculative trading and heightened volatility, which can spook risk-averse investors. Rapid swings and profit-taking discourage accumulation, undermining gold’s role as a safe-haven asset. Pre-existing multi-year highs amplify this effect, preventing a full-scale flight into bullion. Speculative volatility can defeat gold’s short-term function.

    Meanwhile, apart from bouts of systemic financial risks which can trigger flights to dollar liquidity, the geo-economic landscape will remain shaped by massive fragmentation, which support diversification efforts, including into gold over the longer term.

    Protracted Stalemate, Escalation Risk, and Energy Shocks

    The U.S. is faced with a strategic fiasco, as Donald Trump did not anticipate Iran’s response on gulf states and the strait of Hormuz. While he threatens to keep going up the escalation ladder, even his closest allies refuse to participate in high-risk, potentially suicidal, missions to escort tankers in the strait. The economic and political consequences pressure him to look for an escape strategy,

    However, even in case of deescalation, cessation of hostilities and reopening of the strait, a long-term negotiated peace between US/Israel and Iran is now out of reach for the foreseeable future. The central scenario is a protracted stalemate, which prolongs regional instability and durably threatens the Gulf’s export reliability. The conflict cannot be seen as a mere short-term and limited event. It will have significant consequences on the global economy and the block logic.

    Sanctions and Financial Fragmentation

    The expanding scope of sanctions and the increasing use of trade policy as a tool of geopolitical coercion have contributed to a fragmentation of the global financial system, encouraging state institutions, banks, and multinational corporations to explore alternatives to dollar‑based mechanisms. Where once the dollar served as a relatively uncontested anchor for international trade and reserve holdings, the growing risk of exclusion from dollar clearing and finance has led policymakers in several regions to reassess their reliance on U.S.‑centric systems. The war in Ukraine illustrated how quickly the reliance on traditional financial instruments can shift. The outbreak of hostilities and the flow of sanctions coincided with a sharp rise in the price of gold, as investors and central banks sought perceived safe havens.

    More recently, escalating trade tensions and competitive tariff strategies have prompted renewed diversification, whether through other currencies, gold and other commodities, or the development of regional payment systems. These dynamics suggest a broader reassessment of long‑standing assumptions about dollar dominance and raise questions about how economic policies will evolve in an era of intensifying geopolitical rivalry.

    The Essence of Gold

    Gold’s trajectory depends on the consequences of the Iran conflict, central bank responses, and the structural fragility of global finance. The muted price response to the Iran war confirms that gold does not always skyrocket during crises. Its enduring value lies in being a real, physical store of wealth, reflecting interactions among liquidity, sanctions, dollar dominance, interest rates, speculative volatility, and strategic uncertainty, rather than acting solely as a short-term panic hedge. Even under strong sanctions and geopolitical risk, gold’s primary role is preservation of wealth, not reactive price spikes.

    This piece is published for analytical purposes and does not constitute investment advice.