Even before tensions with the US reached a fever pitch, European Union officials have wanted to independently develop and control their digital infrastructure and tech, without relying on the US or China. This desire reflects concerns over privacy, competitiveness, nationalism, and Europe’s economic decline. But there are four major problems that make tech sovereignty difficult to achieve.
- Europe’s fragmented governance system limits its ability to create a large single market similar to the US or China.
- The EU lacks a common business and legal culture. Having a single language is an immense advantage for both China and the US. Europe is unwilling to use a single language, and its 27 official languages create obstacles for competitiveness. Even the UN limits itself to six official languages.
- The cost of tech sovereignty is perhaps the most obvious obstacle.
- Building independent tech industries will take years, during which China and the US will not slow down and wait for the EU to catch up.
Fragmented markets and governance create difficult political obstacles to achieving tech sovereignty. To address this, some EU policymakers and analysts propose a “Delaware model,” or 28th regime, to make it easier for European tech startups to scale in Europe.
But Delaware is embedded in a strong Federal system that is seen as legitimate by citizens and companies. This gives Delaware’s rulings a unifying national influence. The other 49 states accept Delaware’s court rulings. A single ruling by the Delaware Court of Chancery sets corporate governance rules for much of the US economy. Under the EU’s new proposal, companies would still be required to deal with national courts.
European attitudes towards risk are another obstacle. European culture is more risk-averse than either China or the US, perhaps reflecting the continent’s unhappy 20th-century history with the World Wars and the Cold War. Europeans regulate technology to mitigate conflict, prevent dictatorship, limit surveillance, or even ensure survival — European special interest groups for climate, for example, are much more influential, and their energy policies have unnecessarily harmed EU competitiveness. While many countries are increasingly risk-averse, the EU provides an institutional framework to manage risk that has noticeably slowed tech innovation
Europe’s chances for tech sovereignty have also been significantly damaged by Brexit. The UK is a global leader in innovation and has a strong, globally connected financial system that other European countries cannot match. While UK-EU cooperation has been ongoing, UK Technology Secretary Peter Kyle recently called for a new tech deal between the two parties.
Europe has underinvested in technology for decades and is now far behind both China and the US. Even starting with adequate funds — and adequate funding would require much more than what the EU and its member states have committed so far — it will take many years for Europe to build technological sovereignty and independence. It took China thirty years, under a much more ruthless and unconstrained government.
Europe is unwilling to make the social spending cuts or increase taxes to remedy the shortfall in tech investment. French President Emmanuel Macron’s unhappy 2023 experience with pension reform served as a lesson for other EU nations. Europe was able to support this level of social spending when the US subsidized its defense. That is no longer the case. It is difficult for any democracy to cut social spending, and this will make it harder for the EU to catch up.
Each problem poses difficult political issues that require compromises and concessions on sovereignty and spending that European nations are unlikely to make. These problems are political and cultural. They slow, if not prevent, tech sovereignty.
Tech sovereignty for Europe is not completely out of the question, but it is not an immediately achievable goal — nor is it cheap. Counterintuitively, a transatlantic tech partnership may be the best approach to build EU tech independence. Europe has a strong research base, a structured government, a common currency, and a supply of innovators. Europe can unite and act when necessary — the Euro is a testament to that. Europe can also take a more assertive role in rebuilding the transatlantic relationship, but only if its leaders make hard decisions on spending, risk, and sovereignty.
Given Europe’s strengths, the US would also benefit from a closer tech partnership. A weak EU tech sector weakens democracies’ strategic advantage, but a strong EU benefits the US more than it does China or Russia. Washington does not need Brussels as much as Brussels needs Washington, but both would be stronger as partners.
James Lewis is a Distinguished Fellow at CEPA’s Tech Policy program.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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