The new German government has identified strengthening “Europe’s strategic sovereignty” as a central foreign policy goal. The fact that the terms “digital sovereignty,” “technological sovereignty,” and “data sovereignty” are also found in the coalition agreement makes it clear that the focus of this quest for “sovereignty” is not primarily about classic military defense, but about future strategic technologies—and thus about dependence on China. The extent to which Europe is dependent on China in mobile communications, for example, was demonstrated by the discussion about Huawei's participation in the development of the 5G mobile network. Although two European alternatives are available in Ericsson and Nokia, the Chinese have considerable market shares; in some EU countries, the entire mobile network is based on Chinese technology.
The further dependencies shift in favor of China, the less important almost all the EU member states become from the perspective of those ruling China.Germany, too, is threatened with this fate if its ability to act internationally cannot be sustainably strengthened within the European alliance. But what does it mean in concrete terms to achieve “strategic sovereignty”? So far, there have been two approaches to this in European politics.
The first approach aims to preserve the ability to enforce a European regulatory framework. This is not only a matter of maintaining regulatory sovereignty within Europe, even if Europe's own value creation is low, but also of preserving the so-called “Brussels effect”: making one's own rules and regulations valid across the continent's borders. The second approach is concerned mainly with European value creation itself. The primary focus is the aspiration to strengthen its own economic sector, which provides digital technologies and services. Although the goals of both positions are worded differently, in practice they differ less than one might think. Even if Brussels limited itself to enforcing regulations in the digital age, it still needs to engage in a minimum level of autonomous value creation.
Standards and Specifications
One example of this is technical standardization. Technical standards such as the Internet Protocol, WiFi, or the new 5G mobile communications standard are, at first glance, technical specifications that enable the compatibility of technologies between manufacturers and across borders. But in practice, these standards have an enormous impact on the distribution of economic gains. They shape the regulatory framework in global trade, generate technological dependencies that can be exploited politically, and define key IT and cybersecurity specifications with direct consequences for national security, stipulating whether, and in what way, fundamental values such as privacy are inscribed in state-of-the-art technologies. Experience shows that the size and buying power of a market are not enough to set technical standards. Technical expertise, innovation and early commercialization are key. If Europe wants to be successful in setting technical standards in key technologies, it has to strengthen its own value creation.
Moreover, the approaches described for achieving strategic sovereignty both fall short. Although it makes sense to strengthen our own value creation of strategically important technologies, merely increasing market share is not conducive to achieving this goal. Even the targeted market share of 20 to 30 percent in the production of the latest chips will only bring Europe marginally closer to the goal of strategic sovereignty. Ultimately, the only effective approach is to maintain mutual dependencies. This must be done in such a way that would make it irrational for others to use Europe's dependency against the EU because they are in turn equally dependent on Europe. This means that Europe must invest at least as much in maintaining its own strengths as in reducing its weaknesses.
This can be illustrated by the example of the European ambitions to manufacture semiconductors, which are currently geared towards the establishment of two-nanometer chip production. However, this would not make the EU independent of East Asia in the foreseeable future. Rather, Europe's strength lies in the fact that the Dutch company ASML enjoys a dominant market position in the manufacture of the latest lithography systems. These are machines that are essential for the production of the latest semiconductors. Maintaining this strength is much more important for Europe's strategic sovereignty than building up its own semiconductor production capacity.
Maintaining one's own strengths while remaining a central part of interdependencies is more complex than one might think. It is not enough to cement the status quo by strengthening ASML. The digital transformation will be accompanied by new technologies and new ways of production. This means that Europe must produce the innovation and the companies on which tomorrow's technology will depend.
There is also another challenge. Strategic sovereignty is complex and must be measured in four dimensions. First, Europe's competitiveness is at stake. In addition to preserving jobs, this also means directing the profits of technological transformation back to Europe.
The second dimension is the establishment of security. In addition to IT and cyber security, such as preventing the sabotage of strategic infrastructures and economic and political espionage, this includes the military use of new technologies. It is also very important to prevent other countries from using technological monopolies to build up political pressure on Germany and Europe.
Third, the aim is to increase resilience. The diversification of value chains is intended to minimize the risk of economic failure caused by local and regional events such as natural disasters, political upheavals, and health emergencies.
The fourth dimension of strategic sovereignty addresses values. Technology is not value-neutral, and Europe is a community of values. Therefore, the EU must specifically examine how it can maintain or create conditions to enforce these values at least domestically and, ideally, to export them as well.
Partner, Competitor, Systemic Rival
In the dimension of competition, Germany and Europe face an uneven playing field. Europe's current industrial policy makes use of individual fragments of the Chinese approach. However, the aim cannot be to copy China's state capitalism. The EU should instead continue on its course of protecting its own market economy from unfair competition and vigorously demanding reciprocity.
In the security dimension, Europe is confronted with the fact that China's technology is widely available, but the EU has no security partnership with the country. On the contrary, in a possible confrontation between the United States and China, Europe would side with the US. China is thus a potential adversary. The task here is to minimize security risks associated with the use of Chinese technology.
In the resilience dimension, there is no clear front line against China. However, it is precisely in those technologies where there is a strong dependence on China today that Europe must diversify at the expense of Chinese market shares.
China is also not a partner when it comes to values. Europe and the People's Republic do not have different ideas on every issue; for example, energy savings as a contribution to climate protection are in the interest of both sides. But fundamental values such as human rights are defined differently in Europe; privacy is also given a higher priority.
Despite everything, China is not only a competitor and rival. Even in the current situation, strategic sovereignty in relation to China must evolve from the triad of partnership, competition, and systemic rivalry as defined by the EU in 2019 for relations with China.
China's innovation, standardization, and production capacity make it more than an indispensable partner. The fact that the added value of digital transformation arises from connectivity also highlights the need for cooperation. Establishing strategic sovereignty is necessary, but conceptually more complex than it initially appears, just as its implementation will be.
Tim Rühlig is a research fellow with DGAP’s Technology and Global Affairs program.