Europe’s Comfortable Illusion of Leadership

Europe is approaching a decisive moment where its regulatory mindset is no longer sufficient to navigate a rapidly changing global innovation landscape.

For decades, the European Union has presented itself as the moralcenter of global innovation: a guardian of ethics, a champion of responsible technology, and a defender of values. The “European model” is regularly promoted in speeches from Brussels, framed as a counterweight to the techno-libertarianism of Silicon Valley and the state-driven dynamism of East Asia.

Yet this self-image is increasingly out of touch with reality.
The world is shifting at speeds Europe no longer seems capable of matching.

The United States is now the uncontested frontier of artificial intelligence, biotech, and space technology. East Asia—China, South Korea, Singapore—is building industrial ecosystems with scale, speed, and precision. And Central Asia, especiallyKazakhstan, has quietly become one of the world’s most aggressive builders of new digital, logistical, and educational infrastructures.

Europe imagines itself as leading.
The rest of the world sees a continent falling behind.

Regulation as Identity: How Europe Turned InnovationInto a Compliance Exercise

Europe has drifted into a new political identity: it regulates instead of innovates.

The EU’s reflex when confronted with new technologies—AI, blockchains, digital currencies, biotech—has been to legislate first and understand later. Regulation has become a substitute for ambition, a ritual of control that reassures policymakers but undermines entrepreneurs, innovators, and pioneers.

This approach once gave Europe moral authority.
Today, it limits Europe’s ability to act.

Innovation requires uncertainty.
Regulation demands certainty.

These two forces can coexist, but in Europe the balance has swung decisively toward caution. While Brussels refines frameworks and consultative processes, the world’stechnological frontier is shaped by actors willing to take risks, tolerate failure, and prioritise capacity over procedure.

Europe has become the continent of caution.
And caution does not produce power.

Hirschman’s Warning Becomes Reality: Europe’s Dependence Is Now Its Weakness

Few analyses are more relevant to Europe’s condition today than Albert O. Hirschman’s theory of asymmetric interdependence. InNational Power and the Structure of Foreign Trade, Hirschman argued that dependence on foreign suppliers of critical inputs becomes a source of strategic vulnerability.

Europe today is a textbook example:

•It depends onChina for 98% of its rare earth minerals, essential for batteries, chips, and green transition technologies.

•It depends onthe United States for cloud platforms, AI models, and most digital infrastructure.

•It depends onTaiwan and South Korea for advanced semiconductors.

•It depended—until recently—onRussia for energy.

Europe’s vulnerability is not theoretical. It is systemic.

The EU is attempting to regulate away its dependencies, but Hirschman teaches thatdependencies cannot be solved by frameworks.They must be solved by:

•buildingcapacity,

•diversifyingpartnerships,

•modernisinginstitutions,

•and creating new industrial foundations.

In short:
Europe must rebuild what it outsourced.

Central Asia: The Most Underestimated Region in Europe’s Geostrategic Thinking

Perhaps the most dramatic blind spot in European policy thinking isCentral Asia.

For decades treated as a peripheral region—important at times for energy, occasionally for security—Central Asia has undergone a transformation that Europe has barely acknowledged.

Kazakhstan: A Quiet Technological Powerhouse

During my engagements as Honorary Professor in Kazakhstan, I have seen a political and economic environment committed to transformation:

•AIsupercomputinginfrastructure

•sovereign digital currency (the Digital Tenge)

•fintechregulatorysandboxes

•greenindustrialclusters

•cross-border digitalcorridors

•world-class STEM educationhubs

•rapidly reforming universities

•a government that sees technology not as a threat, but as a national priority

While Europe debates, Central Asia builds.
While Europe hesitates, Central Asia experiments.

Uzbekistan and Azerbaijan follow similar trajectories, modernising their economies and opening themselves to global partnerships with unprecedented speed.

Central Asia does not want lectures from Europe.
It wants alliances, joint development, and shared technological ecosystems.

Europe should see this as a historic opportunity.
Instead, it is barely looking.

Europe’s Collaboration Deficit: The Silent Killer of Innovation

Europe’s most damaging weakness is not lack of talent or money—it is lack of collaboration.

Internally, the EU is fragmented.

National strategies compete.
Capital markets are divided.
Talent is scattered.
Universities stand apart from industry.
Industrial policy is weak and inconsistent.

Across sectors, cooperation is formal, not functional.

Universities specialise in theory.
Industry demands practice.
Policy produces frameworks.
Entrepreneurs struggle to scale.

Externally, Europe treats partners as recipients of norms rather than equals in co-creation.

This is why Europe’s influence is shrinking, even among regions that want Western engagement.

The EU must understand:
Collaboration is not a value—it is a capability.
And rightnow, Europelacks it.

Rediscovering Mises, Hayek and Schumpeter: Europe Must Regain its Intellectual Compass

Europe’s innovation policy has become too technocratic, too procedural, and too detached from the human engine of development:the entrepreneur.

The Austrian School provides the intellectual tools Europe abandoned:

Mises teaches that innovation arises through spontaneous discovery, not through planning.
Hayek reveals that knowledge is distributed across society, not concentrated in ministries or directorates.
Schumpeter explains that economic transformation depends on the entrepreneur—the agent of creative destruction.

Europe embraced these thinkers in the 20th century.
In the 21st, Europe has forgotten them.

The result is predictable:
Europe penalises risk.
It mistrusts wealth creation.
It fears disruption.
Itworshipsstability.

Thus:
Europestagnates.

Strategic Technologies: The Domains Europe Cannot Afford to Lose

The future global order will be shaped by:

•artificialintelligence

•rareearth minerals

•semiconductors

•advancedmanufacturing

•cloudsovereignty

•digitalcurrencies

•quantuminfrastructure

•biotech

•greenindustrialtechnologies

Europe does not dominatea single one.

The EU speaks loudly about “Strategic Autonomy,” but autonomy cannot be proclaimed—it must be constructed.Europecannot have strategicautonomywithout:

•AIcapability

•industrialcapacity

•critical mineral security

•entrepreneurialvitality

•deepinternationalpartnerships

•bold missions that transcend electoral cycles

Right now, Europe has none of these in sufficient degree.

Why Central Asia Must Become a Core Component of Europe’s Grand Strategy

In a multipolar world, the EU cannot rely solely on North America and East Asia. Europe must diversify partnerships to ensure supply chain resilience, technological capacity, and strategic stability.

Central Asia offers everything Europe currently lacks:

•criticalraw materials

•geopoliticalleverage

•speedofimplementation

•politicalwillingness

•institutional hunger for progress

•a strategic position between China, Russia, South Asia and the Middle East

As Visiting Professor at University Mother Teresa in North Macedonia and Honorary Professor in Kazakhstan, I have seen how the region’s universities, ministries, and industries are actively seeking real partnerships—joint ventures, dual-degree programs, AI labs, innovation corridors, and entrepreneurship networks.

Europe needs Central Asia.
Central Asia wants Europe.
The synergy is obvious.
The delay is political.

Conclusion: Europe Must Act Before Irrelevance Becomes Permanent

Europe stands at a historic crossroads.
It can remain a beautifully regulated continent with shrinking strategic influence, or it can rediscover ambition and embrace the partnerships and entrepreneurial capacity needed to shape the technological century.

If Europe wants to remain a geopolitical actor rather than a technological observer, Brussels must treat innovation capacity as a strategic priority equal to energy security and defence.

Innovation cannot be regulated into existence.
Partnership cannot be outsourced.
Entrepreneurs cannot be sidelined.
And Central Asia cannot be ignored.

The global order is being rewritten.
The question is no longer whether Europe can keep up—it is whether Europe can rediscover the courage to try.

By Dr. Glenn Agung Hole
Associate Professor, University of South-Eastern Norway
Visiting Professor, University Mother Teresa, North Macedonia
Honorary Professor, Sarsen Amanzholov East Kazakhstan University, Republic of Kazakhstan
Geoeconomic and Geopolitical Commentator