Christine Lagarde Warns Europe of Strategic AI Dependence

European Central Bank President Christine Lagarde warned that Europe faces strategic vulnerability if it continues to rely on imported artificial intelligence technologies, primarily from the United States. Speaking at the Hofburg im Dialog event in Vienna on September 14, Lagarde argued that total dependence on foreign AI would grant trade partners leverage that could be used in negotiations over digital taxes and tariffs.

Lagarde highlighted a severe infrastructure gap, noting that the United States hosts 75% of global AI computing capacity compared to Europe's 5%. She estimated that Europe's data center gap could reach 600 billion euros over the next decade. To address this, she proposed increasing local computing capacity and creating a savings and investments union to direct European household savings toward local projects rather than foreign firms. She noted that European households currently hold approximately 440 billion euros in shares of U.S. technology companies like Alphabet and Nvidia, meaning Europe is financing the U.S. AI boom without sharing in the profits.

Lagarde emphasized that AI will soon manage critical sectors, including healthcare, tax audits, and border security. She cautioned that if access to these technologies is withdrawn or terms are altered, the consequences would affect every sector simultaneously. To mitigate these risks, she urged the development of local AI models and the expansion of European capital markets so companies can adopt AI based on merit without worrying about data location.