Home PublicationsCommentary As the EU Begins to Fight for Liberalism in Earnest, Its Technology Policy Must Catch Up

As the EU Begins to Fight for Liberalism in Earnest, Its Technology Policy Must Catch Up

by Benjamin Mueller

The EU has taken an admirably strong and unified stand in the face of the biggest war on the continent since 1945. Leaders across Europe seem all too aware of the gravity of the situation, summed up pithily by President Macron: “War in Europe does not only belong to history books any more, it’s here. Democracy is no longer unquestioned, it is being challenged under our eyes.” In order for democracies to mount a sustained and effective response to this existential challenge, close strategic collaboration with the United States—the arsenal of democracy—is indispensable. When it comes to technology policy, this requires European leaders to re-think a number of assumptions.

Europe’s response to the invasion of Ukraine brings to mind Lenin’s apocryphal quote, “there are decades where nothing happens, and there are weeks where decades happen.” The war of aggression Russia launched against Ukraine has catalyzed an urgent, epochal shift in the EU’s approach to its defense and security strategy. Virtually overnight, European leaders junked long-held foreign policy shibboleths. The EU passed a package of economic sanctions so wide-ranging—drastic curbs on Russian banks’ access to the international payments system SWIFT, freezing assets of oligarchs, and forcing the divestment of Western funds in Russia—that Russia’s economy plunged into chaos in a matter of days. Europe’s airspace was closed to Russian airlines. Germany announced €100b in additional defense spending for 2022 alone and will even review sacred cows like the decision to shut off its remaining coal and nuclear power plants as it explores ways to reduce dependence on Russian commodities. The coming weeks and months will reveal just how far the EU is willing to go in its efforts to source alternative suppliers for critical raw materials of which Russia is a major supplier like aluminium, neon (a laser gas used in chip lithography), or titanium. 

Behind these steps lies an acute need to prioritize the security of the EU after decades of neglect. Robert Kagan observed 20 years ago that while the United States, continuously exposed to the aggressive realities of world politics since 1941, lives on the warring planet of Mars, Europe sheltered itself on the peace-loving planet of Venus after the Cold War, avoiding the competitive and hostile tumult of international relations. Now, ancient geopolitical realities have rudely awakened Europe’s leaders from their slumber and reaffirmed Hobbes’ dictum that life in an anarchic international system is “nasty, brutish, and short,” requiring constant vigilance and the ability to defend oneself.

In fact, Hobbes included a further adjective in his list—“solitary”—which, thankfully, does not apply to Europe and the United States. The defeat of fascism and communism by an alliance of liberal democracies in the 20th century remains the high watermark of free and open societies, an accomplishment that allowed the rule of law, free markets, and pluralist politics to spread across the globe, spurred on by the collapse of the Soviet Union in 1991. Russian belligerence now puts these values at risk, something Chancellor Olaf Scholz made plain in his speech to the German Parliament: “If we want the last thirty years to be more than a historical exception, then we must do everything we can to maintain the cohesion of the European Union, the strength of NATO, to forge even closer relations with our friends, our partners and all those who share our convictions worldwide.” And so it seems that a great new endeavour is underway by liberal democracies to safeguard their way of life against a rising tide of authoritarian tyrannies that aim to roll back the frontiers of freedom

It is no coincidence that China, despite its parrot-like insistence on the inviolability of the principles of territorial sovereignty and non-interference, refuses to condemn Russia’s flagrant and wanton aggression against a neighboring state. China likely hopes the war in Ukraine is the opening salvo of a sustained offensive to unravel the Western-led international order, heralding a return to a “great power” multipolarity where military might makes right. If so, the likeliest next arena where an authoritarian state crushes a fledgling liberal democracy is the island of Taiwan. The West should be under no illusion that in the coming years and decades, authoritarian powers will aggressively challenge the fundamental pillars of liberal democracy: the right to self-determination, the supremacy of democratic over despotic rule, indeed the very notion of government of the people, by the people, for the people. Totalitarian rulers believe democracies are in terminal decline, riven with societal divisions, economically stagnant, and unable to defend their interests with hard power. More to the point, the very existence of free societies represents a threat to the model of authoritarian rule, because they undermine claims that freedom is not a viable basis for social organization. The challenge to liberal democracies is not temporary: it is going to define geopolitics for an entire generation.

It is against this dramatic backdrop that an urgent rethink of technology policy on both sides of the Atlantic is required. For Europe and the United States to stage a robust and credible defense of freedom and democracy, its leaders should now embark on a path of deep and wide-ranging collaboration that strengthens their joint capacity to promote and defend liberal interests. World War One was the first whole-of-nation conflict in the modern era where victory was a product not simply of the superior application of military force, but also of nations’ ability to harness their economy and society in pursuit of their strategic goals. If the EU and the United States cannot align their social, economic, and technological systems, it will undermine their capacity to mount a sustained campaign in defense of their way of life. 

In the realm of foreign policy, technology connects goals and capabilities. Electricity, the steam engine, and metallurgy drove economic development in the 19th century. In the 21st century, digital technology is the driving force behind progress. The first two decades of this millennium were characterized by the emergence of a digitally connected society, giving rise to entire new industries powered, ultimately, by the ability to generate, connect, and act on digital data. In response to the dislocations this has brought about, the European Union is in the midst of a multi-year effort to pass landmark legislation that regulates the use of digital technologies. If the EU does not pay sufficient attention to the second-order effects of regulatory and economic misalignment with the United States, its closest natural ally, it risks driving a permanent wedge between the two, benefiting only the authoritarian powers who are challenging them both.

Policymakers should therefore urgently re-evaluate five major areas of technology policy in light of their impact on U.S.-EU digital alignment.

First, European legislators should examine whether the strategic goal of “digital sovereignty” is, in fact, a smokescreen for digital protectionism and decoupling. The proliferation of data localization rules, most recently revived in the EU’s Data Act, threatens the viability of the digital free trade principles that have generated immense economic benefits on both sides of the Atlantic. Since David Ricardo’s analyses of Britain’s protectionist Corn Laws in the 19th century, economists have generally accepted that trade should be driven by comparative advantage, not arbitrary governmental interference regarding the location of businesses. The erection of digital barriers to trade will make both Europe and the United States poorer and weaker. In principle, European policymakers understand this—now they should ensure that new laws do not undermine the free flow of data across the Atlantic.  

Second, the United States and the EU should, as a matter of urgency, conclude a new Privacy Shield framework to guarantee the free flow of data across the two jurisdictions. Without such an agreement, the entire transatlantic digital economy risks fracturing in the coming years as courts strike down ever-greater numbers of data flow arrangements. Privacy Shield II should offer U.S. and European citizens new and meaningful redress mechanisms. Any such agreement should also clarify the legal definition of personal data under Article 4(1) of the GDPR. The risk today is that activist European courts can take an overly broad view of personal data, such as deeming IP addresses to be personal data merely because they could in theory be used to identify an individual (by that logic, phonebooks should never have been allowed in the European Union). Relatedly, an EU-US Cloud Agreement is of great importance in order to resolve a number of connected issues on data and access rights for law enforcement on both sides of the Atlantic. Both the U.S. Cloud Act and the EU Data Act contain provisions on access and personal data transfers which are likely incompatible and could create further barriers to digital trade unless the EU and US align the two laws.

Third, the EU’s digital laws should be examined for protectionist biases. The Digital Markets Act, according to its lead negotiator in Parliament, is intended to target the biggest U.S. tech firms, with the absurd implication that they pose a greater threat to the EU’s economy than China’s largest tech companies, all of which are subservient to a Chinese government intent on dominating the EU. The passage of such a law should rightly be considered an unfriendly act by the United States, made all the more tragic because regulatory co-operation between the two blocs is desirable. One fix is easily enacted: the DMA should be amended to cover meaningful European and other foreign competitors as gatekeepers, not just U.S. firms.

Fourth, the EU’s ongoing effort to regulate AI should not be in thrall to Chinese efforts at AI governance. When the Chinese Communist Party passes a law that meddles with the operational and technological design of AI tools, European policymakers should not respond with rapture, but carefully consider whether their own approach embodies liberal or authoritarian values. The inspiration for the AI Act should not be a one-party state’s vision of technology governance designed to control its population. Instead, Europeans should create a forward-looking law that reduces risks and harms from AI whilst encouraging the adoption of the technology

Fifth, the EU should begin to systematically cooperate with the United States on strategic areas of digital policy. While most of the focus has been on regulating Big Tech, it would be much more productive to develop transatlantic cooperation on issues such as cybersecurity, AI R&D, and military AI applications. For example, developing a Geneva Convention on Data could establish international norms to limit harms from cyber attacks during both military conflicts and times of peace. Other important areas for collaboration include export controls for dual-use technologies, semiconductor R&D cooperation, and supply chain resilience.

All of these issues can be addressed by the EU-U.S. Trade and Technology Council’s upcoming meeting in May. The risk of a transatlantic rift in digital affairs should be confronted head-on to avoid cracks emerging in the technological and economic alignment of the two blocs. If our technology laws are in endless conflict, not only will the overall EU-U.S. digital economy weaken, but so too will the critically necessary partnership between the two. At this critical juncture for the future of freedom, this cannot be in the interest of either the EU or the United States. Liberalism’s innate strength lies in its ability to trade, exchange information, and build extensive trade and social links that create a whole greater than the sum of its parts. At the dawn of the digital age, it is incumbent that policymakers allow the flow of data to flourish between like-minded liberal democracies. 

Image credit: Pixabay

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