#xxviii Beyond Citations | Towards a geo-dirigiste Europe
In its quest for tech sovereignty, Europe is moving from market-creation to market-direction.
Note to readers: Beyond Citations will be on an autumn break for the month of October 2025. Regular programming resumes in November 2025.
How recent is Europe’s fear of falling behind? Let us consider the two separate quoted texts below. First, words of M Albert and RJ Ball:
Europe’s dependence is even greater in electronics than in energy. It has suffered a veritable ‘technological shock’ no less formidable than the ‘oil shock’.
And, next, words of Henry Farrell and Abraham Newman:
As with earlier European efforts to block sanctions, China and the United States can usually bet on the EACO principle that “Europe Always Chickens Out” in geoeconomic confrontations. Europe lacks the information, institutional clout, and internal agreement to do much else.
Make a guess which quote is from which year?
The first quote is from a 1983 report ‘Towards European Economic Recovery in the 1980s’ presented to the European Parliament. The second one is from a recent essay on weaponised interdependence published in the Foreign Affairs magazine. Similar quotes could be found from the 1950s and 1960s (early days of the Cold War). The fear of Europe falling behind, or aspirations of a more powerful and decisive Europe are not new.
Back to the contemporary era, it is this fear of falling behind that in-part motivated Europe’s renewed push towards technology sovereignty as the US-China tech rivalry began heating up in the late 2010s. From 5G to AI, Europe found itself grappling with internecine tech geopolitics without having the US’ edge in innovation or China’s scale. Europe’s broad approach in the late 2010s and early 2020s was to position itself as a global norm entrepreneur in the tech field. The General Data Protection Regime or the EU AI Act are good examples. In its role as a norm entrepreneur, Europe championed policies with extra-territorical implications.
But Europe might have just hit a ceiling with this approach.
Trump’s approach towards Europe, at times publicly hostile, is only accelerating Europe’s focus on tech sovereignty. Consider Trump’s threat to jurisdictions that institute ‘[d]igital taxes, legislation, rules or regulations’ that are ‘designed to harm, or discriminate against, American technology’. Or Trump threatening more tariffs on Europe because of the latter fining Google for violating anti-monopoly laws.
But there is something more to the European tech sovereignty story than just a performative articulation. While Europe’s fear of falling behind is not new, this time it is leading to a different outcome, according to following 2024 paper published in the Journal of European Public Policy:
Timo Seidl & Luuk Schmitz (2024) Moving on to not fall behind? Technological sovereignty and the ‘geo-dirigiste’ turn in EU industrial policy, Journal of European Public Policy, 31:8, 2147-2174, www.doi.org/10.1080/13501763.2023.2248204 (open access)
The authors’ core argument is that historically the European fear of falling behind led to more market-creation while industrial policies involving market-direction were less successful. Thus, from the 1950s till late 2010s, the European approach to reclaiming their place in the world was to create a more competitive horizontal market instead of creating or nurturing European champions.
But this is now changing in the new geotech world where geopolitics and technology are closely intertwined. The authors call this the ‘geo-dirigiste’ turn in Europe’s industrial policy.
But why did this turn happen?
What lies behind this rather profound shift from market-creating to market-directing is a dwindling trust in the ability of markets to deliver technological competence and economic competitiveness, especially at a time when key partners and rivals engage in market-directing industrial policy of their own (Chazan et al., 2023; see also, McNamara, 2023). As one Commission official put it,‘the mood has changed’: Europe used to believe that ‘the market knows better’, but for ‘technologies that we consider strategic (…) there is no market’ (Interview 9). There is thus less and less conviction that markets can‘price in’ geopolitical and geoeconomic costs if left to their own devices.
The authors do not draw this conclusion just based on historical reading of European market’s evolution or interviews. They also conduct computational text analysis to strengthen their case. See the figure from their paper below, for instance:
But amid this geo-dirigiste turn, why is Europe going after digital sovereignty or tech sovereignty more broadly? Why did ‘tech sovereignty’ become discursively important? Because, according to the authors, for ‘actors to get behind an intermediate policy agenda even if they have divergent long-term interests requires a shared discursive banner that is vague enough to accommodate such diverse interests.’
The paper was published before we witnessed Trump’s 2.0 truths aimed at Europe. Actions of the Trump administration may accelerate more market-direction on part of the EU going forward. If this happens, which tech sectors do you think the EU would prioritise? Let us know in the comments section below.