Its past political.

I work in energy now, and we host stuff in AWS. So far so normal.

However, with the tubthumping about invading greenland, We see that america is willing to evaporate any system that gets in the way of the sun king's world view. Sure, he says now that "we were never going to invade" but given the way you've all just given up your 1st, 4th, 10th and now 2nd amendment, we're not really that sure.

This means that when the next recession happens and the EU is busy competing, he'll ask "hey we subsidies the EU by getting them to pay for AWS, why don't we turn it off?" I mean that sounds far fetched, but so did unrelated personally controlled federal militia roving around states disappearing US citizens without trial.

tldr: you're damn right its about politics. He threatened to invade an ally, we aint hanging around to find out whats next.

Also to your point: "can't we just encrypt it?"

Its someone else's computer. The TPM is controlled by someone else. You can't really process on a machine that has a compromised urandom/TPM

Also the bigger issue is having all your access revoked over night. Thats the bigger fear.