Boosting the EU's Position in AI Through Third Places Diplomacy

The European Union (EU) is, unfortunately, lagging in the domain of artificial intelligence (AI). None of the leading AI companies are based in the EU. None of the top 25 institutions for top-tier AI research are based in the EU. Between 2018 and 2020, “the overall AI investment gap between the US and the EU more than doubled,” according to the European Court of Auditors. In 2022, only 786 AI-related patents were registered by the European Patent Office (EPO) compared to almost 16,000 in the US (a difference of 2,000%). With (some parts of) the EU AI Act having entered into force this year, the EU risks being sidelined instead of spreading its influence on AI development and deployment globally via the famous “Brussels Effect.”

The current boom of AI marked by the launch of ChatGPT sparked soul-searching debates about AI in the EU. While the concept of “AI sovereignty” has been cited by some (“what is sovereignty when you don't have any champions?”), this question is made particularly pressing with the expert expectations that AI will play a crucial role in the global economy in the years to come – “generative AI is expected to add between $2.6 and $4.4 trillion in annual value to the global economy,” according to the World Economic Forum. With the rapid progress of AI development and deployment, the EU needs to find its firm standing in the field, independent of just regulating the technology.

Despite its highly educated AI and engineering talent and large public education and academic investments through its funding programs such as Horizon Europe, the EU has not been able to boost its position in the AI context and build its own AI champions. Moreover, there have been several indications that companies might withhold some of their AI-based products from the EU market due to the “unpredictable” regulatory behavior and general unease about complying with the EU digital regulation. Therefore, the EU needs to become more engaged in the AI space both to establish its position in this field and to ensure that it does not miss out on the benefits stemming from AI.

With the new leadership starting soon in the core EU institutions, the bloc should build new partnerships with countries that are not yet recognized as the leaders in AI but have outsized preconditions to contribute to or influence AI development and deployment – the so-called “third places.” The term “third places” originally comes from urbanism and was coined by sociologist Ray Oldenburg as locations “where we exchange ideas, have a good time, and build relationships” outside of home and work.

Within the scope of this piece, the following countries are considered “third places”: the United Arab Emirates (UAE), Saudi Arabia, Singapore, South Korea, Canada, and Israel. These countries were chosen for their track record in AI and interest in further development of this technology. While there might be doubts about including authoritarian regimes, such as Saudi Arabia and the UAE, Kevin Xu rightly identifies that there is already competition for getting Middle Eastern states to their own corner, and the EU could effectively offer “the third way.” Prioritizing engagement with these “third place” countries and establishing new initiatives with them could help the EU boost its own AI sector and increase its relevance in the AI context.

Moreover, in doing this, the EU could leverage its traditional strengths, such as capable and professional diplomatic corps (represented mainly by the European External Action Service – EEAS) and legitimate soft power influence. With the new European Commission, the new High Representative of the Union for Foreign Affairs and Security Policy/Vice-President of the European Commission (HR/VP), and the French AI Action Summit happening in February 2025, the EU has a unique chance to re-evaluate its priorities and launch new non-regulatory initiatives.

Third places diplomacy is an overarching ambition that can take different shapes and forms. In its least resource-intensive form, it could focus on information-sharing between the EU AI Office and other bodies in the “third place” countries and regular meetings between the EU AI Office’s Advisor for International Affairs and their respective counterparts. Moreover, there could be more emphasis on AI collaboration in the chosen EU Delegations, demonstrated through the organization of events focused on this topic and the facilitation of discussions between the EU and the local AI industry and research bodies.

In its more resource-intensive form, the EU could establish new research programs focused on AI research with the “third place” countries, building shared compute (a term describing computational resources) infrastructure, and creating joint regulatory sandboxes. Expanding the EU’s research initiative through new joint ventures between European universities, research centers and institutions in the targeted countries could help boost innovation and pool more money into the typically expensive AI research. Allowing companies from "third place" countries to enter EU’s regulatory sandboxes could foster further collaboration and improve access to the EU market. In addition, this could informally facilitate the strength of the Brussels Effect of the EU AI Act.

As the new European Commission prepares for its mandate, it should perhaps focus less on new regulation and instead reorient its attention to implementation and partnership-building. Dedicating more focus to the external dimensions of AI and its role in the international context seems to be fairly simple and cheap to implement while also potentially highly valuable. Adopting “third places” diplomacy would allow the EU to increase its competitiveness in the AI space and ensure that its values and opinions are reflected in the discussions surrounding AI more broadly.