Tech Policy in the Age of Raw Power
From Davos walkouts to Digital Decoupling
At the World Economic Forum in Davos, Switzerland, the European Central Bank president Christine Lagarde walked out of a VIP dinner. She had heard enough from the U.S. Commerce Secretary Howard Lutnick slamming Europe. Quickly after, the host, BlackRock CEO Larry Fink, called off the event before dessert.
The next day, in his Davos speech, the President of the United States said that “We have never gotten anything from helping NATO. We were paying their bills, for what?” and that "the United States was paying for virtually 100% of NATO". He also said that NATO troops in Afganistan “stayed a little off the frontlines”, and for all of these sacrifices the U.S. should now obtain Greenland from Denmark, a "small ask”.
All of his claims false, of course.
In relation to Greenland, NATO and tariffs, the U.S. Treasury secretary Scott Bessent tells European leaders to ‘sit back, take a deep breath’ and ‘let things play out’.
But Europeans - and Canadians - are done with sitting back. In his much quoted Davos speech, the Canadian Prime Minister Mark Carney, said:
For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles, we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection.
We knew the story of the international rules-based order was partially false that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigour depending on the identity of the accused or the victim.
This fiction was useful, and American hegemony, in particular, helped provide public goods, open sea lanes, a stable financial system, collective security and support for frameworks for resolving disputes.
So, we placed the sign in the window. We participated in the rituals, and we largely avoided calling out the gaps between rhetoric and reality.
This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition.
Carney laid out a strategy for building coalitions that work, issue by issue, with partners who share enough common ground to act together. In some cases, this will be the vast majority of nations creating a dense web of connections across trade, investment, culture. He said, the middle powers must act together, because if we’re not at the table, we’re on the menu.
What Carney called a rupture, the European Commission President Ursula von der Leyen calls a permanent state. According to her, it is time to seize this opportunity and build a new independent Europe.
“If this change is permanent, then Europe must change permanently too.”
So Canada adapting to a rupture, not a transition, by calling for the middle powers to work together and the EU is changing permanently to be more independent. What does this mean for global technology industries?
Raw Power rules, OK?
As Van den Leyen put it in the opening speech of the European Parliament on January 21st, we now live in a world of raw power whether it’s economic, military, technological, or geopolitical. The EU is now speeding up its independence in security, technology, economy and democracy, adding resources to strong innovation and technology capacity, education and talent, “above all a real capacity to defend ourselves”.
Europe is quickly and permanently breaking up its structural foreign dependencies in energy, raw materials, and digital technologies.
Diversifying supply chains with the Mercosur deal, a breakthrough after 25 years of trade negotiations, creating the largest free trade zone in the world, lessens both Europe’s and Latin America’s dependencies in the U.S. Other countries that the EU is negotiating with, or already signed agreements with in 2025, include Mexico, Indonesia, Switzerland, Australia, the Philippines, Thailand, UAE, and India.
Within the Union, EU is introducing something called EU Inc. a new corporate type that adheres to a joint set of rules across all 27 member states. People will be able to set up this company in 48 hours and operate in any EU country. This is hoped to attract and generate more innovation, investment, and technology growth in the region.
The EU is planning to do the same with financial markets, creating a seamless EU wide, deep and liquid, capital market union. This is hoped to direct funds to scaleups, SMEs, innovation, and industry.
In defence, Europe has done more in 2025 than in the decade before, budgeting 800 billion euros to be invested until 2030. Member States are stepping up investments at record levels which has tripled the market value of European defence companies since January 2022. In context with Arctic Security, the EU is forming regional defence partnerships with Canada, UK, Iceland, and Norway.
EU’s new Security Architecture is coming out later in 2026, it will no doubt address the changing landscape of alliances and allies.
Security and economy go hand in hand, and technology is smack in the middle of both.
“Companies and Countries, time to take the sign down”
The sign that Canadian PM Carney refers to in his speech is from a 1978 essay by the Czech dissident - later president - Vaclav Havel, the Power of the Powerless. In it, Havel asks the question, how did the Communist system sustain itself. His answer began with the greengrocer.
Every morning the greengrocer would place a sign on the window that said ‘Workers of the World - Unite’. He didn’t believe it, and neither did the other shopkeepers on all the streets that all placed the same sign. They did it to show compliancy, to avoid trouble. A systems power does not come from its truth, but from everyone’s willingness to perform as if it were true. And its fragility comes from the same source. When even one shopkeeper takes their sign down, the system starts to crumble.
When Mark Carney is asking for countries, and companies, to take the sign down, he is saying that the old system with its trade rules, technology standards, and American hegemony is over. It’s over permanently, because this is a rupture, trust is broken, and subordinates are no longer willing to participate in their sub-ordinance.
As the United States has withdrawn from international organizations and strongly and continuously signal to other countries that it is not willing to work with them on standards, on interoperability, on harmonized legislation, on prices, American technology companies are not only looking at shrinking markets to sell their products to, but an increased competition from regions they used to call allies.
Consumers are increasingly wary of buying American products that have remote software control capabilities, countries are re-evaluating their reliance on American software and military products, coming up with local and regional alternatives.
This is happening within strong markets such as Canada and the EU, but also across the new alliances that are quickly forming across the globe, issue by issue, among the middle powers as they grapple with the death of the American hegemony.
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That’s a great article Petra.