For centuries, Europe was the epicentre of human ingenuity. That is increasingly a fading memory. In the great technological race of our day—that for artificial intelligence—the continent is rapidly stumbling into insignificance. While the United States and China sprint ahead, forging AI ecosystems that will redefine wealth, power, and influence across the globe for decades to come, the European Union looks on despondently, mired in self-inflicted paralysis. This is no mere technological lag; it is a geopolitical and economic disaster that threatens to reduce Europe to a bystander in a world it shaped until just a few decades ago. The culprit is a political class so enamoured with its own power and moralising that it has smothered the continent’s capacity to innovate.
The numbers paint a grim picture. AI has become the province of a US-China duopoly. Washington dominates the West with titans like Google, Microsoft, and xAI, backed by a monumental—though probably still fairly modest, given what is to come—$120 billion in annual investment. China, meanwhile, is the other colossus in the field: with state-driven champions like Baidu and SenseTime, Beijing has pumped $912 billion from government venture capital funds into AI and other technology firms over the past decade, leveraging vast data troves—the benefits of its large population, the world’s second largest.
Europe, however, is barely a player. A disgraceful €22 billion in 2024 was what it could sum to invest in technologies that are quite literally as important to today’s ongoing Fourth Industrial Revolution (4IR) as the steam mill was to the original industrialisation process in the 18th and 19th centuries—and everyone knows what being at the forefront of technical transformation did for British power then.
Indeed, the EU’s share of global generative AI patents is a measly 2 per cent, against China’s 70 per cent and America’s 21 per cent since 2014. Europe’s brightest minds are fleeing—half of its top AI researchers now work in Silicon Valley or Shanghai, lured by better pay and fewer limitations. By 2022—and three years is a very long time in the world of AI—only one of the world’s 25 finest institutions for top-tier research in artificial intelligence, Zurich’s ETH, was European; none was in the EU. Fifteen, however, are in the United States. Six are in the People’s Republic of China.
This isn’t just a technological embarrassment, a defeat in prestige akin to America’s painful “Sputnik Moment”. It is actually an announcement of civilisational implosion. AI is the driving force of the future world, supercharging virtually every industry. China and America are already reaping the rewards—AI is projected to add $3 trillion to their combined GDPs by as early as 2030. Europe, by contrast, risks becoming a vast theme park, its industries outpaced by AI-driven competitors. With growth limping at around 1 per cent annually and public debt crushing nations like France (115 per cent of GDP) and Italy (135 per cent), the continent’s welfare states teeter on the brink of disaster. Crashing birth rates and an increasingly desperate lack of workers make a full-on drive towards automation a matter of survival rather than choice. Without AI-fuelled productivity, Europe faces a future of shrinking tax bases, vanishing jobs, and eroded living standards. The EU’s much-vaunted ‘strategic autonomy’ will sound like a cruel joke when its economy, much like Qing China’s in the 19th century, is left behind by far more advanced rivals.
Geopolitically, the picture is bleaker still. AI isn’t a buzzword for weird, impressionable whiz kids. It will determine the possession—or absence—of real power. That goes beyond economics. As Europe sleeps, the US and China are embedding AI into everything, from cyberwarfare to autonomous drones and intelligence dominance, thereby reshaping global security. The Ukraine war, an arena for remarkable innovation on both sides, is but a small sample of what is to come. Both Washington and Beijing are hard at work developing the horrors of AI-powered—that is, fully autonomous—killer drones. Europe, with its Potemkin militaries, negligible AI capabilities and weak R&D apparatus, is a bystander in this new great game. A continent unable to secure its digital borders or compete in AI-driven conflict will find its sovereignty reduced to verbose moralising at Davos and the UN.
What happened to us? A large share of the blame should be placed at the feet of Brussels’ political elite. The continent has grown accustomed to being ruled by a clique of preening apparatchiki and risk-averse ideologues who have turned stagnation into an art form. The EU’s regulatory obsession—the General Data Protection Regulation (GDPR), or the similarly nonsensical AI Act—has achieved nothing but to strangle innovation at birth. GDPR’s data restrictions may be well-meaning, but their real result has been to choke start-ups that need data to train AI models. Similarly, the AI Act, of course, has a rationale behind it—AI technologies are, indeed, highly dangerous and must be developed responsibly. But to effectively asphyxiate our own innovators while no competitor—including, crucially, those well ahead of Europe—shows similar qualms is the height of folly. What the regulators’ obsession with ‘high-risk’ systems has managed is to do is scare off investors and stifle progress. This contrasts brutally with China’s state-backed data hoarding or Washington’s hands-off approach, where companies experiment, fail, and scale at stunning speed.
This regulatory straitjacket actually reveals a more profound and destructive malaise: a political culture that has grown fearful of innovation. The comparison with late Qing China once again seems apt: Europe appears captured by a bureaucratic sclerosis that sees innovation per se as an undesirable threat to social stability, but its aversion to technological progress is a time bomb that is bound to explode. While the obsession with ‘ethical AI’ and ‘human-centric’ frameworks sounds noble, it really masks suicidal delusion. While Brussels agonises over hypotheticals, California and Shenzhen are defining the future. The EU’s leaders have internalised a worldview where ambition is suspect, and control trumps creation. The result, hélas, is a continent of start-ups that dream small, die young, flee, or are devoured in their infancy by foreign capital.
Education is another point of grave collective failure. Europe’s universities churn out world-class AI talent, only to lose it. Underfunded labs, outdated curricula, and zero industry partnerships keep pushing researchers to more promising destinations. The EU’s response continues to be hot air about ‘digital sovereignty’ while its brains fuel foreign innovation. China seduces talent with cash; the US guarantees opportunity. Europe offers neither.
The time has come for Europeans to understand that this naufrage, this shipwreck, is largely self-inflicted. Europe has the minds and the market to compete. Yet its leaders seem to prefer to have Europe as a regulatory leader rather than an innovative one. They speak of “values” while ignoring a brutal albeit much needed truth: values without power are irrelevant, and at no moment of history was this truer than it will be in an AI-driven world.
Europe should be doing a radical U-turn. Instead of strengthening it, Brussels ought to be cutting through the regulatory jungle. The AI Act’s punitive rules should be replaced with credible incentives to developers and investors alike: tax breaks, accelerated approvals, and data-sharing frameworks that empower start-ups. An overhaul of educational priorities, by vastly increasing STEM—that is, science, technology, engineering, and mathematics—funding, forging industry ties, and keeping talent at home, is no less urgent. Lastly, Europeans must finally understand that they can only lead in ethics if they lead at all. No one will listen to Europe’s sensible concerns on AI development if the continent has no hard power with which to back them up.
AI is transforming our world beyond recognition. Our lives will be completely shaped by it. If Europe’s leaders don’t act now, history will judge them harshly: A generation that, faced with the century’s defining challenge, chose complacency over courage, and irrelevance over revival. The question isn’t whether Europe can compete—it can. The question is whether its political class will wake up before the continent becomes a footnote in the AI age, left to suffer its own Century of Humiliation.
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