The necessity of an artificial intelligence-centric foreign policy for the European Union

The European Union (EU) is positioning itself to leverage its advanced lithography technologies for access to compute and the development of frontier AI models, aiming to benefit both its economy and security. This strategic move comes in the face of intense global competition, particularly from the US and China, both of whom are pursuing global dominance in AI.

According to the US AI Action Plan, published in July 2025, failure to meet international AI demand could lead partners and third countries to turn to rivals. The EU, however, is well-positioned to approach AI foreign policy from a position of strength, thanks to its significant investments and leadership in the field.

The EU's manufacturing capacity, particularly in countries like Germany and Switzerland, can turn into an indispensable asset within the AI value chain. This is due to the increasing demand for new products from AI innovations. Germany's technological innovation and cooperation focus, along with Switzerland’s emphasis on innovation in AI and robotics, indicate their roles in strengthening European strategic autonomy in AI technologies.

One of the EU's notable assets in the AI sector is the Dutch company ASML, which controls 79% of global lithography, the technology that produces the most advanced AI chips. However, the EU's only frontier model developer, French AI start-up Mistral, remains dependent on US chips, making it vulnerable to America's trade policy whims.

The EU's manufacturing sector plays a greater role in its economy as a share of GDP than in the US. This sector could insure the EU against increased AI automation generating more economic value for non-EU firms. The EU has also announced a €20bn AI gigafactories initiative, although it will make up only around 2% of the world's compute supply.

The EU's AI foreign policy could act as a lever to amplify the global effect of the EU's AI regulation, potentially influencing other jurisdictions to adopt Europe's AI regulatory approach. The EU could use its manufacturing capacity as leverage to secure access to cutting-edge AI models and deter the export of downgraded versions into the EU market.

It's crucial for the EU to consider a scenario in which its member states face cut-offs in critical AI inputs, like the January 2025 US export restrictions towards 18 EU member states. The EU's adoption of an AI Continent Action Plan, aimed at enhancing its AI competitiveness through a more coherent internal policy, is a step in the right direction.

However, the US continues to lead in the field, with companies like Anthropic, Google, OpenAI, and xAI based in the country. OpenAI's model is reportedly on the verge of a $500bn valuation, underscoring the US's dominance.

The EU runs a goods surplus with the US, mainly driven by cars, machines, and chemicals. This could potentially be leveraged in AI foreign policy negotiations. Denmark and Ireland, with their strong manufacturing capacities in areas like pharmaceuticals, could also play significant roles in the EU's AI strategy.

In conclusion, the EU is poised to strengthen its AI foreign policy in response to global competition, leveraging its manufacturing capacity, advanced lithography technologies, and strategic partnerships to secure a strong position in the AI landscape.

The necessity of an artificial intelligence-centric foreign policy for the European Union