Divided Europe in the Technology Race

How US AI Chip Export Restrictions Reveal EU Weaknesses

Recent US restrictions on the export of advanced artificial intelligence (AI) chips have exposed the fragility of European unity and the inability of the European Commission to ensure equal treatment for all EU member states. According to the new policy, only half of the EU member states are considered "reliable partners" for high-tech trade, leaving Central and Eastern Europe at a significant disadvantage in technological development.

The US Policy and EU Fragmentation

The United States, irrespective of whether it is led by a Republican or Democratic administration, continues to treat the European Union not as a unified market but as a collection of individual states, ranked according to perceived reliability and strategic importance. Even Poland, a major player in Central and Eastern Europe and a member of the Three Seas Initiative (3SI), finds itself among the "losers" under this policy. If a country as strategically important as Poland is sidelined, what can smaller countries expect?

Consequences for Tier 2 EU Countries

Countries classified as Tier 2, including key players in Central and Eastern Europe, are now facing limited access to critical AI technologies. This lack of access threatens to widen the technological and economic gap between Western Europe and the rest of the continent. It is a significant blow to industries in these nations that are striving to compete globally, particularly in high-tech sectors that require advanced AI chips for innovation and growth.

The restrictions could undermine the progress of emerging tech ecosystems and stall the growth of promising industries. Without access to these critical components, Tier 2 countries risk falling further behind in the global technological race, with broader implications for economic development and geopolitical stability.

Where Has Europe Failed?

The key question is what the European Commission has done to prevent this outcome. Instead of acting decisively and using diplomatic leverage to pressure the US to adopt a unified approach to Europe, the Commission has passively allowed the continent to be divided into privileged and marginalized member states. Such an approach undermines the very idea of European unity and exacerbates regional inequalities.

Even more troubling is the lack of action from the Three Seas Initiative, which should have been a platform for Central and Eastern Europe to advocate for their shared interests. Where is the strategic coordination? Where are the unified demands directed at Brussels and Washington? If the 3SI’s purpose is to ensure the economic and infrastructural cohesion of the region, now is the time to prove its relevance.

What Should Tier 2 Countries Do?

1. Form a United Front: Tier 2 countries must collaborate to form a coalition that amplifies their collective voice in Brussels and Washington. By presenting a united stance, they can increase their leverage in negotiations and push for equitable treatment.
2. Engage in Strategic Bilateral Negotiations: Tier 2 countries should pursue bilateral agreements with the US to secure higher quotas for AI chip imports. Demonstrating reliability as partners in technological security could lead to improved access.
3. Strengthen Regional Alliances: Collaboration within regional platforms, such as the Three Seas Initiative, should focus on advocating for shared interests in technology and infrastructure development. Joint lobbying efforts can increase visibility and credibility.
4. Invest in Domestic R&D: Governments in Tier 2 countries should significantly increase investments in research and development to foster innovation and reduce dependence on external suppliers. This includes creating incentives for local companies to develop homegrown technologies.
5. Push for EU Policy Reform: These countries must advocate for a more inclusive EU approach to negotiations with global partners, ensuring that all member states benefit equally from international agreements.

Economic Justification for Bridging the Gap

According to Eurostat, research and development investment in Central and Eastern Europe averages only 1% of GDP, compared to 3% in Western Europe. Closing this gap could generate significant economic growth and innovation. Studies indicate that a 1% increase in R&D investment correlates with a 0.6% boost in GDP growth. For Tier 2 countries, this could translate into billions of euros in economic gains over the next decade, allowing them to compete more effectively on the global stage.

Conclusion

The US restrictions on AI chip exports have laid bare the weaknesses of European unity and the urgent need for stronger coordination within the EU. Without decisive action, Europe risks deepening the technological divide between its Western and Eastern members, with long-term economic and societal consequences. Now is the time for Tier 2 EU countries, the 3SI, and the European Commission to step up and ensure that no member state is left behind in the race for technological advancement.