Europe’s ‘Middle Powers’ Face Structural Challenges in AI Race

WASHINGTON, May 7, 2026 – European countries hoping to compete in the global artificial intelligence race face structural disadvantages that make catching up to the United States and China increasingly difficult.

Speaking at the Carnegie Endowment for International Peace Mort Abramowitz Junior Fellows Conference, panelists discussed the role of “middle powers” – countries that are not leading AI development on the scale of the U.S. or China, but still play a significant role in shaping global technology markets and partnerships.

Experts said Europe’s biggest challenge remains scale, particularly when it comes to building the large data center infrastructure needed to support advanced AI systems.

“The first big problem is scale,” said Anton Leicht , a visiting scholar in Carnegie’s Technology and International Affairs Program. He pointed to the European Union’s efforts to develop “gigafactory” data centers but said investment levels continue to lag behind those in the United States.

Leicht said the disparity is driven in part by differences in financing. While U.S. technology firms continue making aggressive private-sector investments in AI infrastructure, European projects rely more heavily on public funding and more cautious investors.

“The American private sector is very happy to make these very big and some would say speculative investments,” he said, adding that the U.S. AI advantage is closely tied to Silicon Valley’s venture capital ecosystem and its willingness to fund emerging technologies at scale.

Georgia Adamson , a technology fellow at the Institute for Progress, argued that Europe still holds strategic advantages despite lagging in frontier AI development.

“There’s a lot of European datasets that are very unique to really good functioning AI,” Adamson said, pointing to industrial and sector-specific applications where European countries may remain competitive.

Still, panelists suggested middle-power countries may ultimately need to rely on partnerships with American firms to secure access to advanced AI systems and computing infrastructure.

“You have to find a way to negotiate to make sure that you have access to U.S. technology,” said Mohammed Soliman , a senior fellow at the Middle East Institute.

Panelists said European middle powers need to decide what AI focused deployment looks like now for infrastructure and regulation in a market dominated by the U.S. and China.