Introduction
As we enter the latter half of the 2020s, artificial intelligence (AI) capabilities are increasingly crucial to economic and military power. Following years of tightening US export controls on advanced semiconductors to China, one of the latest acts by the Biden administration is issuing a “Proposed AI Dissemination Rule.” If this rule remains unchanged, access to cutting-edge AI development materials will be limited to a select group of allies.
The AI Dissemination Rule and its Implications
This rule establishes a three-tiered access hierarchy. The lowest tier includes China, Russia, and other usual suspects, effectively cutting them off from the market. The highest tier comprises eighteen trusted allies and trading partners, including members of the “Five Eyes” intelligence-sharing alliance (comprising the US, Australia, Canada, New Zealand, and the UK) and Asian tech powers like Taiwan and South Korea.
The middle tier consists mainly of NATO and EU members, despite being close US allies. They face stringent restrictions, including a cap on high-end AI chips (50,000 per country until 2027). Moreover, the rule impacts not just hardware but also “weights” containing AI model-learned capabilities. Any country wanting access must navigate strict and burdensome security protocols.
Impact on Central and Eastern Europe
Central and Eastern European economies, industrially robust, need advanced AI chips to ensure their economic and military competitiveness over the next decade. If the US fails to be a reliable partner and provider, these economies might gravitate towards China’s sphere of influence.
For instance, Poland, one of the region’s best-capitalized economies, recently launched a $240 million initiative for the country’s first large-scale language model. Just before the US tightened AI chip restrictions, Poland announced plans to invest nearly $1.2 billion in AI-based technologies this year. In February, Polish Prime Minister Donald Tusk signed a memorandum of understanding with Sundar Pichai, CEO of Alphabet (Google), to expedite AI adoption in cybersecurity, healthcare, energy, and other sectors.
Risks to Central and Eastern Europe’s Economic Future
By relegating Central and Eastern Europe to the second tier, the US risks the region’s economic future in at least three ways:
- Restrictions will hinder the modernization of traditional industries like automobile manufacturing, crucial for Europe’s advancement in autonomous and self-driving vehicles, AI-assisted production, and predictive maintenance technologies.
- Uncertainty about future US policies will deter long-term planning and numerous new investments, which is detrimental to business activity.
- Without access to high-performance chips, the nascent startup ecosystem in Central and Eastern Europe might migrate to countries in the top tier, stunting the development of a strategic sector before it matures. This setback could delay the region’s progress by a decade.
Public discontent has spread across European capitals, from Brussels and Prague to Riga and Warsaw.
Geopolitical Consequences
US officials argue that these restrictions aim to safeguard US technological leadership and national security interests, despite straining relations with long-standing allies. However, AI chip restrictions could fracture NATO cohesion and hinder its military modernization. The Ukraine war has highlighted AI’s growing military significance (ranging from cyberdefense to drones). Limiting Central and Eastern Europe’s ability to develop these technologies contradicts the US goal of encouraging European NATO members to shoulder more defense responsibilities.
Although most regional countries are far from the AI Dissemination Rule’s quota due to insufficient computing power and other requirements, they might seek alternative partners as their capabilities grow. In 2023, Hungary alone absorbed 44% of China’s foreign direct investment in Europe, surpassing France, Germany, and the UK combined. Despite Poland’s pro-Western stance, China is already a significant trading partner, and the entire Central and Eastern European automotive cluster has substantial indirect supply links to China.
These connections could facilitate a broader geopolitical reallocation, prompting the US to adopt a more selective strategy. True AI leadership involves controlling hardware and software, but also setting global norms for technology development, deployment, and governance. By distancing allies from AI’s cutting edge, the US risks losing influence over the technology’s trajectory, a result unlikely to serve its interests.
About the Author
Soňa Muzikárová, a non-resident senior research fellow at the Atlantic Council and a Mason Scholar at Harvard Kennedy School of Government, was an economist at the European Central Bank, an OECD diplomat, and a senior advisor to the Deputy Minister of Foreign Affairs of the Slovak Republic.
