The U.K. government must move to protect the financial services industry from the potential costs of an unpredictable Trump administration, the City of London’s newly appointed artificial intelligence czar told POLITICO.  City firms which are “heavily reliant on U.S. technology” face the “risk” of changes beyond their control due to the climate of uncertainty stemming from U.S. President Donald Trump’s government, said Harriet Rees, who is one of two appointments by the U.K. Treasury to champion artificial intelligence adoption in financial services. “I definitely see a geopolitical risk right now when it comes to our relationship with U.S. technology, our reliance on it,” said Rees, who serves as the chief information officer at Starling Bank. She added: “Within my role as AI champion, I will be looking for some more confidence for the industry as to what the government is doing to protect firms, or what mitigations the industry needs to be put in place, so that we’ve got the confidence that we won’t be out of pocket for the things that we don’t have any input over.” Her warnings come as multiple sectors are eyeing ways to diversify away from the U.S., particularly in the EU, in the wake of Trump’s ongoing tariff war and threat to use force to take Greenland. In financial services, the focus is on creating a new payments system to replace U.S. card heavyweights Visa and Mastercard. Aurore Lalucq, a left-leaning member of the European Parliament, said last month: “The urgency is our payment system. Trump can cut us off from everything.” In Britain, banks will meet in mid-March to discuss account-to-account payments, a system which would also bypass Visa and Mastercard by allowing payments directly between bank accounts. But regulators in the U.K. insist plans are about “resilience” rather than an intention to cut out the U.S. Industry plans should take into account this eventuality, Rees argued. “We see that the U.S. is prepared to make changes, be it tariffs, be it the way trade operates between countries and so where we are reliant … on exports from the U.S. we need to make sure that we understand the risks,” she said, adding that it’s key to “have plans in place as an industry to be able to cope with that, should that eventuality happen, that we have the government really lobbying on our side to make sure that that is an unlikely risk to crystallize.” British firms’ reliance on American cloud service providers poses a particular risk, Rees said, with U.S. tech giants Amazon, Microsoft and Google dominating in the cloud computing space. She called on regulators to ensure the providers are adhering to legislation. Any outage of these cloud providers could cause “significant disruption” for the financial services industry, Rees said, and Britain should “ensure that we hold those technologies to the same standards as we would any other critical infrastructure here in the U.K.” A bug in automation software took down Amazon Web Services, the largest cloud provider in the world, in October last year, causing outages for thousands of sites and applications. Last month, MPs criticized the government for not acting decisively enough on cloud service providers. New rules for “critical third parties” — firms, such as cloud providers, whose disruption could impact Britain’s financial stability — came into effect in Jan. 2025. They give the U.K.’s City regulators new powers of investigation and enforcement over providers designated as critical.  Despite the regime being in place for a year, no providers have been handed the designation. MPs on the Treasury Committee queried why the government “has been so slow to use the new powers at its disposal.”

It seems impossible to have a conversation today without artificial intelligence (AI) playing some role, demonstrating the massive power of the technology. It has the potential to impact every part of business, and European policymakers are on board. In February 2025, Ursula von der Leyen, the European Commission president, said, “We want Europe to be one of the leading AI continents … AI can help us boost our competitiveness, protect our security, shore up public health, and make access to knowledge and information more democratic.” Research from Nokia suggests that businesses share this enthusiasm and ambition: 84 percent of more than 1,000 respondents said AI features in the growth strategy of their organization, while 62 percent are directing at least 20 percent of ICT capex budgets toward the technology. However, the equation is not yet balanced. Three-quarters of survey respondents state that current telecom infrastructure limits the ability to deliver on those ambitions. Meanwhile, 45 percent suggest these limitations would delay, constrain or entirely limit investments. There is clearly a disconnect between the ambition and the ability to deliver. At present, Europe lags the United States and parts of Asia in areas such as network deployment, related investment levels and scale. > If AI does not reach its full potential, EU competitiveness will suffer, > economic growth will have a ceiling, the creation of new jobs will have a > limit and consumers will not see the benefits. What we must remember primarily is that AI does not happen without advanced, trusted and future-proofed networks. Infrastructure is not a ‘nice to have’ it is a fundamental part. Simply put, today’s networks in Europe require more investments to power the AI dream we all have. If AI does not reach its full potential, EU competitiveness will suffer, economic growth will have a ceiling, the creation of new jobs will have a limit and consumers will not see the benefits. When we asked businesses about the challenge of meeting AI demands during our research, the lack of adequate connectivity infrastructure was the fourth common answer out of 15 potential options. Our telecom connectivity regulatory approach must be more closely aligned with the goal of fostering AI. That means progressing toward a genuine telecom single market, adopting a novel approach to competition policy to allow market consolidation to lead to more investments, and ensuring connectivity is always secure and trusted. Supporting more investments in next-generation networks through consolidation AI places heavy demands on networks. It requires low latency, high bandwidth and reliability, and efficient traffic management. To deliver this, Europe needs to accelerate investment in 5G standalone, fiber to enterprises, edge data centers and IP-optical backbone networks optimized for AI. > As industry voices such as Nokia have emphasized, the networks that power AI > must themselves make greater use of automation and AI. Consolidation (i.e. reducing the number of telecom operators within the national telecom markets of EU member states) is part of the solution. Consolidation will allow operators to achieve economies of scale and improve operating efficiency, therefore encouraging investment and catalyzing innovation. As industry voices such as Nokia have emphasized, the networks that power AI must themselves make greater use of automation and AI. Policy support should therefore extend to both network innovation and deployment. Trust: A precondition for AI adoption Intellectual property (IP) theft is a threat to Europe’s industrial future and only trusted technology should be used in core functions, systems and sectors (such as energy, transport and defense). In this context, the underlying connectivity should always be secure and trusted. The 5G Security Toolbox, restricting untrusted technology, should therefore be extended to all telecom technologies (including fiber, optics and IP) and made compulsory in all EU member states. European governments must make protecting their industries and citizens a high priority. Completing the digital single market Although the single market is one of Europe’s defining projects, the reality in telecoms — a key part of the digital single market — is still fragmented. As an example, different spectrum policies create barriers across borders and can limit network roll outs. Levers on top of advanced connectivity To enable the AI ecosystem in Europe, there are several different enabling levers European policymakers should advance on top of fostering advanced and trusted connectivity: * The availability of compute infrastructure. The AI Continent Action Plan, as well as the IPCEI Compute Infrastructure Continuum, and the European High-Performance Computing Joint Undertaking should facilitate building AI data centers in Europe.   * Leadership in edge computing. There should also be clear support for securing Europe’s access to and leadership in edge solutions and building out edge capacity. Edge solutions increase processing speeds and are important for enabling AI adoption, while also creating a catalyst for economic growth. With the right data center capacity and edge compute capabilities available, European businesses can meet the new requirements of AI use cases.  * Harmonization of rules. There are currently implications for AI in several policy areas, including the AI Act, GDPR, Data Act, cybersecurity laws and sector-specific regulations. This creates confusion, whereas AI requires clarity. Simplification and harmonization of these regulations should be pursued.  * AI Act implementation and simplification. There are concerns about the implementation of the AI Act. The standards for high-risk AI may not be available before the obligations of the AI act enter into force, hampering business ambitions due to legal uncertainty. The application date of the AI Act’s provisions on high-risk AI should be postponed by two years to align with the development of standards. There needs to be greater clarity on definitions and simplification measures should be pursued across the entire ecosystem. Policies must be simple enough to follow, otherwise adoption may falter. Policy needs to act as an enabler, not a barrier to innovation.  * Upskilling and new skills. AI will require new skills of employees and users, as well as creating entirely new career paths. Europe needs to prepare for this new world.  If Europe can deliver on these priorities, the benefits will be tangible: improved services, stronger industries, increased competitiveness and higher economic growth. AI will deliver to those who best prepare themselves. We must act now with the urgency and consistency that the moment demands. -------------------------------------------------------------------------------- Author biography: Marc Vancoppenolle is leading the geopolitical and government relations EU and Europe function at Nokia. He and his team are working with institutions and stakeholders in Europe to create a favorable political and regulatory environment fostering broadband investments and cross sectoral digitalization at large. Vancoppenolle has over 30 years of experience in the telecommunication industry. He joined Alcatel in 1991, and then Alcatel-Lucent, where he took various international and worldwide technical, commercial, marketing, communication and government affairs leadership roles. Vancoppenolle is a Belgian and French national. He holds a Master of Science, with a specialization in telecommunication, from the University of Leuven complemented with marketing studies from the University of Antwerp. He is a member of the DIGITALEUROPE Executive Board, Associate to Nokia’s CEO at the ERT (European Round Table for Industry), and advisor to FITCE Belgium (Forum for ICT & Media professionals). He has been vice-chair of the BUSINESSEUROPE Digital Economy Taskforce as well as a member of the board of IICB (Innovation & Incubation Center Brussels).

Europe is laying the foundation for renewed economic growth. Regulatory simplification is gaining traction. Public investment is accelerating in technology, energy and defense. Private capital is supplementing these efforts. These are meaningful steps, which, in the eyes of many, are long overdue and still need to gain pace. But an additional ingredient is required.  Our new research finds that closing the continent’s competitiveness gap requires Europe’s major companies to place a new emphasis on entrepreneurial courage: that is, the increased willingness to embrace uncertainty and take calculated risks in service of renewal and growth. Corporate leaders willing to make bold investments and engage in modern public-private collaborations, much like their American and Asian peers, stand to reap the rewards for acting decisively and with greater urgency.   Europe’s global competitiveness is ultimately a function of individual companies making a material difference, particularly large corporations and dynamic scale-ups. And it doesn’t require many acting boldly to have a disproportionate impact. In examining a sample representing about 15 percent of the U.S. economy, the McKinsey Global Institute found that more than two-thirds of productivity growth between 2011 and 2019 was driven by just 44 ‘standout’ companies. Meanwhile, 13 standout companies drove a similar proportion of the German sample’s productivity growth during the same period. These highly valued ‘outliers’, together with differences in growth and return on invested capital, underpin much of the valuation gap between European companies and their international peers, as highlighted in research we conducted on UK capital markets.   The status quo is not tenable.  Since the global financial crisis, Europe has endured a prolonged slump in private investment that has been especially pronounced in future-shaping industries. In the past five years alone, our analysis found that companies with headquarters in the United States have invested €2 trillion more in digital technologies such as artificial intelligence (AI) than their European peers. And in traditional manufacturing industries, China is out-investing Europe at a rate of 3:1.  > This investment gap not only stifles European economic growth, but prevents > the continent from inventing, developing and deploying the technologies it > needs to increase productivity and drive prosperity.  And the need to boost investments is growing: when the landmark Draghi report on European competitiveness was released in 2024, it estimated that an additional €800 billion needed to be mobilized annually to start closing the continent’s competitiveness gap. With the required additional investment in defense, that figure is now estimated to be €1.2 trillion annually for the next five years.  Of course, the regulatory landscape is also important. The positive news over the past year is that the European Commission has implemented dozens of initiatives, from regulatory simplification to streamlining and enhancing funding and market-creation mechanisms, as well as preparing to propose a ‘28th regime’ to make it easier for companies to scale across its 27 member states. Governments are also stepping up, with growth in strategic public investment in technology, energy and defense capabilities creating tailwinds for private investment. For instance, Germany amended its constitution to exempt defense spending above 1 percent of GDP from its debt brake and established a €500 billion fund to support infrastructure and climate-neutral investment. Similar programs are taking shape in France, Italy, the Netherlands and the Nordics.  But, while private sector activity shows some signs of acceleration, more is needed. Driving Europe’s economic vitality requires the emergence of standout companies, acting both individually and in close collaboration with the public sector. Without it, Europe risks another decade of ‘secular stagnation’: sluggish real GDP growth of around 1 percent annually as excess savings and a dearth of investment depress aggregate demand and push interest rates back to near zero.  > So, what does it take to show more entrepreneurial courage? Informed by our > global research and what we see standout firms doing, our research highlights > a range of actions leaders could explore.  One example is making broader ecosystem plays, such as semiconductor company ASML joining with the Dutch government and regional partners to launch Project Beethoven, a €2.5 billion public-private investment to ensure ASML’s continued presence and expansion of the broader microchip cluster in Eindhoven. Another is re-inventing potential stranded assets to position them for the industries of the future, illustrated by the range of European utilities converting or marketing former coal and gas power plant sites for hyperscale data centers. And a clear one is radical adoption of AI and automation technologies, which MGI’s research shows could add up to 3.4 percentage points to annual productivity growth globally through 2040.  > Europe has an opportunity to take steps to decisively alter its competitive > trajectory.  But while public sector leaders can lay the foundations necessary to accelerate investment and growth, the continent’s leading companies are distinctly positioned to amplify this and make a critical contribution to the continent’s prosperity, security and strategic autonomy. There’s growing consensus on what needs to be done. What’s now needed is a hefty dose of entrepreneurial courage to act.

Flynn Coleman is an international human rights attorney. She is a visiting scholar in the Women, Peace, and Leadership Program at Columbia University’s Climate School and the author of “A Human Algorithm.” Roman Oleksiv was 11 years old when he stood before the European Parliament and, in a calm voice, described the last time he saw his mother. She was under the rubble of a hospital in Vinnytsia, Ukraine, hit by a Russian missile in July 2022. He could see her hair beneath the stone. He touched it. He said goodbye. That’s when Ievgeniia Razumkova, the interpreter translating his words, stopped mid-sentence. Her eyes filled with tears, she shook her head. “Sorry,” she said. “I’m a bit emotional as well.” A colleague then stepped in to finish, as Ievgeniia, still crying, placed her hand on the boy’s shoulder. He nodded and continued on. That moment is what makes us human. A translation algorithm would not have stopped. It would have rendered Roman’s testimony with perfect fluency and zero hesitation. It would have delivered the words “the last time I saw my mother” just as it would the sentence “hello, my name is Roman.” Same tone. Same rhythm. No recognition. Today, we are building a world that treats translation — and increasingly everything else — as a problem to be solved. Translation apps now handle billions of words a day. Real-time tools let tourists order coffee in any language. Babel, we are told, is finally being fixed. All of this has its place. But translation was never just a technical challenge. It is an act of witnessing. An interpreter does not merely convert words from one language to another. They carry meaning across the chasm between us. They hear what silences say. They make split-second ethical and semantic decisions over which synonym preserves dignity, when a pause holds more truth than a sentence, whether to soften a phrase that would shatter a survivor. When Ievgeniia broke down in Strasbourg, she was not failing. She was doing her job. Her face told a room full of diplomats what no algorithm could: “This matters. This child’s suffering is real. Pay attention.” I have spent years working in international human rights law, war crimes tribunals, genocide prevention — all the imperfect architecture we try to rebuild after atrocity. In these spaces, everything hinges on language. One word can determine whether a survivor is believed. The difference between “I saw” and “I was made to see,” or between “they did this” and “this happened.” Roman Oleksiv has undergone 36 surgeries. Burns cover nearly half his body. He was 7 years old when that missile hit. And when he described touching his dead mother’s hair, he needed someone in that room who could hold the weight of what he was saying — not just linguistically but humanly. Ievgeniia did that. And when she could not continue, another person stepped forward. There is a reason interpreters in trauma proceedings receive psychological support. The best ones describe their work as a sacred burden. They absorb something. They metabolize horror, so it can cross from one language to another without losing its force. Interpreters are not alone in this either. There are moments when trauma surgeons pause before delivering devastating news, journalists choose to lower their cameras, and judges listen longer than procedure requires. These are professions where humanity is not a flaw — it is the point. This is not inefficiency. It is care made visible. Algorithms process language as pattern, not communion. They have no understanding that another mind exists. They do not know that when Roman said goodbye, he was not describing a social gesture — he was performing the final ritual of love he would ever share with his mother, in the rubble of a hospital. Translation apps do serve real purposes, and generative AI is becoming more proficient every day. But we should be honest about the trade we are making. When we treat human interpreters — and any human act of care — as inefficiencies to be optimized away, we lose that pause before “the last time I saw my mother.” We lose the hand on the shoulder. We lose the tears that say: “This child is not a data point. What happened to him is an atrocity.” My work studying crimes against humanity has taught me that some frictions should not be smoothed. Some pauses are how we recognize one another as human. They are echoes in the dark, asking: “I am still here. Are you?” When an interpreter breaks, they are not breaking down. They are breaking open — making room for unbearable truth to enter, and for all of us to see it. Roman deserved someone who could help us stand in his deepest pain, so that we might all lift it together. A machine could not do that. A machine, by design, does not stop.

The Trump administration is lashing out at foreign laws aimed at clamping down on online platforms that have gained outsized influence on people’s attention — while trying to avoid launching new trade wars that could threaten the U.S. economy. Over the past month, U.S. officials have paused talks on a tech pact with the United Kingdom, canceled a trade meeting with South Korean officials and issued veiled threats at European companies over policies they believe unfairly penalize U.S. tech giants. Several tech policy professionals and people close to the White House say the recent actions amount to a “negotiating tactic,” in the words of one former U.S. trade official. As talks continue with London, Brussels and Seoul, the Office of the U.S. Trade Representative is pressing partners to roll back digital taxes on large online platforms and rules aimed at boosting online privacy protections — measures U.S. officials argue disproportionately target America’s tech behemoths. “It’s telegraphing that we’ve looked at this deeply, we think there’s a problem, we’re looking at tools to address it and we’re looking at remedies if we don’t come to an agreement,” said Everett Eissenstat, who served as the director of the National Economic Council in Trump’s first term. “It’s not an unprecedented move, but naming companies like that and telegraphing that we have targets, we have tools, is definitely meaningful.” But so far, the administration has shied away from new tariffs or other aggressive actions that could upend tentative trade agreements or upset financial markets. And the new tough talk may not be enough to placate some American tech companies, who are pressing for action. One possible action, floated by U.S. Trade Representative Jamieson Greer, would be launching investigations into unfair digital trade practices, which would allow the administration to take action against countries that impose digital regulations on U.S. companies. “I would just say that’s the next level of escalation. I think that’s what people are waiting for and looking for,” said a representative from a major tech company, granted anonymity to speak candidly and discuss industry expectations. “What folks are looking for is like action over the tweets, which, we love the tweets. Everyone loves the tweets.” Trump used similar investigations to justify raising tariffs on hundreds of Chinese imports in his first term. But those investigations take time, and it can be years before any increases would go into effect. Greer has also been careful to hedge threats of new trade probes, stressing they are not meant to spiral into a broader conflict. Speaking on CNBC’s “Squawk Box” last week, he floated launching a trade investigation into the EU’s digital policies, but said the goal would be a “negotiated outcome,” not an automatic path to higher tariffs. “I don’t think we’re in a world where we want to have some renewed trade fight or something with the EU — that’s not what we’re talking about,” Greer said. “We want to finish off our deal and implement it,” he continued, referring to the trade pact the partners struck over the summer. Greer also raised the prospect of a trade probe in private talks with South Korea earlier this fall, saying the U.S. might have to resort to such action if the country continues to pursue legislation the administration views as harmful to U.S. tech firms. But a White House official clarified that the U.S. was not yet considering such a “heavy-handed approach.” Even industry officials aren’t certain how aggressive they want the Trump administration to be, acknowledging that if the U.S. escalated its fight with the EU over their tech regulations, it could spark a digital trade war that would ultimately end up harming all of the companies involved, according to a former USTR official, granted anonymity to speak candidly. President Donald Trump has long criticized the tech regulations — pioneered by the European Union and now proliferating around the globe. But he’s made the issue a much more central part of his second-term trade agenda, with mixed results. While Trump’s threat to cut off trade talks with Canada got Prime Minister Mark Carney to rescind their three percent tax on revenue earned by large online platforms, his administration has struggled to make headway with the EU, UK and South Korea in the broader trade negotiations over tariffs. The tentative trade deal the administration reached with the EU over the summer included a commitment from the bloc to address “unjustified digital trade barriers” and a pledge not to impose network usage fees, but left the scope and direction of future discussions largely undefined. The agreement fleshed out with South Korea this fall appeared to go even further, spelling out commitments that regulations governing online platforms and cross-border data flows won’t disadvantage American companies. But none of those governments have so far caved to U.S. pressure to abandon their digital regulations entirely, and the canceled talks and threatening social media posts are a sign of Trump’s growing frustration. “You won’t be surprised to know that what we think is fair treatment and what they think is fair treatment is quite different and I’ve been quite frankly disappointed over the past few months to see zero moderation by the EU,” Greer said Dec. 10 at an event at the Atlantic Council. Last week, Greer’s office amped up the rhetoric further, threatening to take action against major European companies like Spotify, German automation company Siemens and Mistral AI, the French artificial intelligence firm, if the EU doesn’t back off enforcement of its digital rules. The threat came a week after the EU fined X, the company formerly known as Twitter, $140 million for failing to meet EU transparency rules. Greer’s office also canceled a meeting planned for last Thursday with South Korean officials, as South Korean lawmakers introduced new digital legislation and held an explosive hearing on a data breach at Coupang, an American-headquartered e-commerce company whose largest market is in South Korea. The South Korean Embassy denied any relationship between the Coupang hearing and the cancellation of the recent meeting. “Neither Coupang’s data breach, the subsequent investigation by the Korean government, nor the National Assembly’s hearing played a role in the scheduling of the KORUS Joint Committee,” said an embassy official. The canceled meetings and frozen talks are significant — delaying implementation of bare bones trade agreements and investment pledges inked in recent months. But the Trump administration has shown little interest in blowing up the deals its reached and reapplying the steep tariffs it threatened over the summer, which could trigger significant retaliation and, as concerns about affordability and inflation continue to simmer in the U.S., prove politically dicey. Launching trade investigations at USTR or fining specific foreign companies could be a less inflammatory move. “What is happening is that these issues are starting to come to a head,” said Dirk Auer, a Director of Competition Policy International Center for Law & Economics, who focuses on antitrust issues and recently testified before Congress on digital services laws. “At some point the administration has to put up or shut up. They need to put their money where their mouth is. And I think that’s what’s happening right now.” Gabby Miller contributed to this report.

U.S. President Donald Trump’s aggressive move to block states from regulating artificial intelligence is splitting the tech lobby — and steering its frustration squarely toward David Sacks, the president’s top AI adviser. Sacks, a San Francisco-based investor, largely wrote the executive order Trump signed last week that throws the legal and financial power of the federal government against state AI laws. A controversial move even within the GOP, it was a major win for Sacks, who also acted as its biggest promoter within the White House. Standing next to Trump last Thursday as the president signed the order, Sacks touted its importance. “You’ve got 50 states running in 50 different directions — it just doesn’t make sense,” he said. “We’re creating a confusing patchwork of regulation, and what we need is a single federal standard.” Tech companies largely agree with that view. But they and their lobbyists worry the order — and Sacks’ bulldozing style — have set their interests back by creating new friction in Congress, and derailing a national strategy that recently notched a big win in California. More than half a dozen people closely involved with the issue in Washington told POLITICO that Sacks undercut the tech industry’s effort on Capitol Hill to craft a more permanent federal solution on state AI rules, instead ramming through unilateral action that could turn AI law into a national political fight. “He’s made it a lot harder,” said Brad Carson, president of Americans for Responsible Innovation, an organization pressing Washington for new rules on AI. “Thanks to the preemption fights, you have kids’ safety groups, you have Republican governors, Republican [attorneys general], you have Marjorie Taylor Greene denouncing it. It’s become a thing,” said Carson. “And that’s all because of, really, their efforts just to jam everyone.” Carson’s organization, funded by progressive groups like the Omidyar Foundation, is generally seen as opposed to the tech lobby. But in interviews for this article, numerous people in and around the AI industry said they agree with his claim that Sacks’ order undercuts the congressional effort to preempt state AI rules — and given its tenuous legal status, may not even protect them from state rules in the meantime. “Businesses don’t like uncertainty, OK?” said Bilal Zuberi, founder and managing partner at venture capitalist firm Red Glass Ventures. “And this is an uncertain future for any EO.” The escalating concern about Sacks’ strategy — especially his approach to Congress — shows how the hard-charging, maximalist ethos of the tech billionaires surrounding Trump continues to clash with the cautious give-and-take that has historically led to major legislative wins in Washington. In a statement to POLITICO, a senior White House official framed the executive order as a strategic play to spur Capitol Hill into action. “As the President said, if Congress didn’t act, he would,” said the official, granted anonymity to discuss the administration’s strategy candidly. The official called the order “a big step forward for AI in the United States from facing a patchwork of regulations” — but also said that the administration still wants to work with Congress and that it “incorporated significant feedback in the last few weeks” on the order. TWO WINS, AND A QUICK BACKLASH Sacks is an Elon Musk confidant who had spent little time in Washington before snagging a top White House job overseeing AI and crypto policy. His work as a Silicon Valley investor has also raised concerns about potential conflicts of interest. He serves as a special government employee, a distinction that caps his work at 130 days over a year-long period. He has previously notched two major wins in Washington, helping push through a pro-crypto law and weakening restrictions on microchip sales to China, which benefited the California chipmaking giant Nvidia. But on state AI laws, Sacks’ push for an executive order interrupted the political momentum that industry had been building for a compromise approach. Most notably, Big Tech had hashed out a victory in California, where Gov. Gavin Newsom signed an AI safety law largely supported by the industry, its Democratic critics and pro-business Republicans. Many in the AI lobby had hoped to ride that current into Washington with a new strategy to cut a deal for a federal law that both Democrats and Republicans could support. But that era of good feelings ended when Trump signed the order last week, threatening to deploy the Department of Justice directly against California and other states moving to regulate AI, some of them Republican-led. Within minutes of the order’s signing, Newsom shot back: “President Trump and Davis [sic] Sacks aren’t making policy — they’re running a con.” Other Democrats also piled on, with some on Capitol Hill pledging to introduce bills that would repeal the order. Florida Gov. Ron DeSantis, a Republican, said Monday that his state “has a right” to regulate AI and predicted Florida “would be well positioned to be able to prevail” in any legal challenge. Carson said the order is “only going to embolden a lot of people more on the other side of this question, Republicans included, to do something.” “Do you think Gavin Newsom is going to say, ‘I’m not going to push AI?’ Carson asked. “He may be more eager to do it now than ever.” WHAT WENT WRONG The political breakdown threatens to further undermine the tech lobby’s preferred approach to blocking state AI laws — a deal, passed by Congress, that could bring skeptical lawmakers on board by preempting state regulations in exchange for new federal rules on kids’ safety and frontier AI models. An effort to craft such a deal and insert it into a must-pass defense bill fizzled earlier this month. In looking at what went wrong, six people familiar with the negotiations — industry representatives, AI experts and others involved in talks on Capitol Hill — identified the White House’s aggressive and uncompromising posture. And they pinned that approach largely on Sacks, who the Trump administration has entrusted with the AI acceleration portfolio in Washington. Like many others in this report, these people were granted anonymity to speak candidly about sensitive discussions on a top industry priority. “This was the best opportunity, possibly in the entire Trump administration, to get [state AI] preemption done,” said one person familiar with the defense-bill negotiations. “Most people thought a compromise on policy would be necessary to make it happen. David was unwilling to make that compromise, so we are where we are — and for now, preemption is on life support.” A Trump administration official also told POLITICO that there is “frustration” at multiple agencies over Sacks’ effort to “rush” state AI preemption. Sacks “was very successful in the private sector, [but] he doesn’t understand how government works,” said another person familiar with talks around the AI preemption push. “He doesn’t understand how to build coalitions. He doesn’t understand how to concede on minor things in order to get a win, and he just tries to bulldoze everybody.” A WINDOW OPENS — AND SLAMS SHUT Since AI began its meteoric recent growth, Congress has done little either to rein in the technology or promote it. States, however, have stepped into that gap: Legislators in both parties have introduced AI bills in all 50 states, and this year adopted dozens of new laws in states as diverse as California, Texas, New York and Utah. The industry has been pushing for a moratorium on state laws until a streamlined national regime can be put in place. This summer, a Republican attempt in Washington to insert such a provision into the One Big Beautiful Bill Act crashed and burned in a 99-to-1 Senate vote. In the wake of that failure, tech lobbyists began pulling together the contours of a deal on preemption that they believed could attract Democrats and some concerned Republicans on Capitol Hill. The tech lobby would get its ban on most state AI laws, while Democrats and tech-skeptical Republicans would receive new child safety protections as well as rules on frontier AI models. The defense bill eventually emerged as the most likely vehicle for that compromise. “Right before Thanksgiving, there really was, in an odd way, an aperture for negotiation,” said one top representative for the AI industry. But that representative, as well as other people familiar with the preemption talks, said Sacks’ reluctance to pressure House Majority Leader Steve Scalise (R-La.) or other lawmakers to compromise helped sink a major opportunity for the AI sector. In fast-moving legislative maneuvers like this one, the White House often plays a key role by pressing Congress to compromise. But people familiar with the talks said Sacks had little interest in granting concessions to Democrats or skeptical Republicans — preferring instead to jam Congress by unilaterally preempting state rules with an executive order. The industry representative said the message Sacks delivered to Congress — that Republicans shouldn’t negotiate, but instead just ram preemption through — caused the effort to fizzle out. “He has been probably more intransigent, with people saying to him, ‘No, David, we actually have a chance here,’” the representative said. “‘It’s so hard to pass bills in Washington. We actually have a moment. Let’s just go and figure this out.’” Several people stressed that the failure to preempt state AI laws via the defense bill wasn’t Sacks’ alone. They said Scalise was already wary of a compromise on state AI preemption, as were influential AI safety groups and some Democratic lawmakers. A senior official in Scalise’s office said the House majority leader was open to some kind of a defense-bill compromise on preemption, but that key Democrats failed to engage. Washington Sen. Maria Cantwell, the top Democrat on the Senate Commerce Committee, disputed that characterization, telling POLITICO that her office “had talks all summer” about preemption and “even met with David Sacks.” “We were like, here’s what we need to do,” Cantwell said in early December. “And then all of a sudden, out of nowhere, comes this push to put it in the [defense bill].” One person familiar with the defense-bill negotiations said Sacks and the White House could have pressed both sides to make a deal — but chose instead to pull away from Congress and pursue an executive order. “Everyone was looking for leadership here,” the person said. “We’re in one of those situations where we’re asking, ‘Who’s in charge?’” AN UNWELCOME ORDER If Sacks’ reluctance to compromise weakened the congressional effort to find common ground on preemption, his drafting of a new executive order — one that mostly circumvents Congress and promises to turn state preemption into a court battle — finished it off earlier this month. Multiple people said they believed Sacks saw the order as leverage over Congress, and expected it would force the hand of AI-skeptical lawmakers to approve state preemption. “I think his calculus was, ‘We should show that we’re going to take action unless Congress does,’” said one AI policy expert familiar with the negotiations. But the plan backfired. In late November, a draft of the order leaked — and its brute-force approach sparked a flood of public pushback from Democratic legislators and state governors, including Republicans. The AI expert said the draft order caused both sides to “dig in their corners, double down on the positions they were holding.” It was a predictable outcome for Washington veterans, who had believed that any White House attempt to strongarm Congress would sabotage a compromise. The executive order signed by Trump last Thursday is meant to help industry by limiting states’ ability to regulate AI. But most tech lobbyists believe the order is on shaky legal ground, providing scant relief from state rules even as it puts a congressional compromise further out of reach. “I welcome the consistency of having one single rulebook,” said Dorna Moini, CEO of Gavel, an AI and automation suite for lawyers. “But the reality is that the uncertainty isn’t reduced. It’s whiplash, and now there is this chaos as to whether the preemption is going to be valid.” “This needs to be done by Congress,” said one tech lobbyist last Thursday, predicting legal challenges to actions taken under the executive order. After POLITICO contacted the White House for this report, two tech firms reached out to praise one aspect of the order, its call for Congress to preempt state AI laws. “The EO helps underscore the urgency of getting this done correctly,” said Luther Lowe, head of public policy at San Francisco-based venture capitalist firm Y Combinator. Lowe expressed a desire to “work with Congress to make sure this is done correctly.” In a statement, Chris Lehane, head of global affairs at OpenAI, said his company is “aligned with the Executive Order’s clear language about the need for federal legislation to establish a national framework as an important step towards helping to set up the much needed federal legislation in 2026.” Neither Lowe nor Lehane addressed the meat of the executive order, which directs federal agencies to target states that pass AI laws. CAN THE WHITE HOUSE GET TO ‘YES’? A handful of lobbyists and industry-friendly experts defended Sacks for this report. “I’m not worried about Sacks’ chops in terms of his ability to navigate Congress and get things done,” said Collin McCune, head of government affairs at venture capitalist firm Andreessen Horowitz, which has close ties to the Trump White House. McCune noted that Sacks “pushed through an incredibly complicated, historic crypto bill — that was his first thing out of the gate.” But others are now wondering if Sacks has become a liability in the AI industry’s quest to preempt state AI rules. And if Sacks refuses to bless a viable legislative deal on preemption, some say he should be sidelined. “He either does have to go, or he has to do the world’s biggest PR campaign,” said one person familiar with the preemption talks in Washington. “He will have to do a real tour across town, and really change his attitude in a way that would surprise me if he were able to pull it off.” There are some early signs that Sacks may moderate his take-no-prisoners approach to a state AI moratorium. Sacks recently convened a special meeting with GOP governors and staff where he sought to assuage their concerns that the executive order would undermine states’ ability to protect kids online, according to one person familiar with the conversation. The final order was slightly softened from its earlier draft, including a carveout that lets states regulate AI’s impact on kids. And at the signing ceremony for the order, Sacks pledged to “work with Congress” to “define [a] framework” for AI. Still, many in industry remain unconvinced that Sacks — or Trump — are ready to compromise. At a White House holiday party earlier this week, the president indicated that he hopes Congress will codify his executive order on state AI laws. “But even if we can’t, it’s good for three years and two months,” Trump added. As the new year approaches, the AI industry is watching the White House closely. “Can they reach a deal on a legislative framework, and can they keep the aperture for a deal open?” the top industry representative asked. “Or does the administration continue to do things that poison the well?” Cheyenne Haslett contributed to this report.

Romania’s Defense Minister Ionuț Moșteanu resigned Friday over false claims on his resume, marking the second time in recent weeks that a NATO country close to Russia has had to change its defense leadership. “Romania and Europe are under attack from Russia. Our national security must be defended at all costs. I do not want discussions about my education and the mistakes I made many years ago to distract those who are now leading the country from their difficult mission,” he said. According to local media, Moșteanu wrote in his official resume that he graduated from Athenaeum University in Bucharest even though he never attended the school. He also added the Faculty of Automation at the Polytechnic University of Bucharest to his CV despite dropping out. Moșteanu’s resignation just months into the job follows the ousting of Dovilė Šakalienė as Lithuania’s defense minister over a dispute about the Baltic country’s defense budget — and as Europe mulls how to respond to intensifying Russian hybrid attacks. Romania’s Economy Minister Radu Miruță is expected to take over the defense portfolio on an interim basis, the government said. Moșteanu’s departure comes with Romania facing regular Russian drone incursions. Bucharest is also 48 hours away from a deadline for EU countries to submit a plan to the European Commission for how they will spend money from the EU’s loans-for-weapons SAFE program. Romania is set to be the second-largest beneficiary of the scheme, in line for a €16.6 billion pot of cash.

At New York Climate Week in September, opinion leaders voiced concern that high-profile events often gloss over the deep inequalities exposed by climate change, especially how poorer populations suffer disproportionately and struggle to access mitigation or adaptation resources. The message was clear: climate policies should better reflect social justice concerns, ensuring they are inclusive and do not unintentionally favor those already privileged.  We believe access to food sits at the heart of this call for inclusion, because everything starts with food: it is a fundamental human right and a foundation for health, education and opportunity. It is also a lever for climate, economic and social resilience.  > We believe access to food sits at the heart of this call for inclusion, > because everything starts with food This makes the global conversation around food systems transformation more urgent than ever. Food systems are under unprecedented strain. Without urgent, coordinated action, billions of people face heightened risks of malnutrition, displacement and social unrest.   Delivering systemic transformation requires coordinated cross-sector action, not fragmented solutions. Food systems are deeply interconnected, and isolated interventions cannot solve systemic problems. The Food and Agriculture Organization’s recent Transforming Food and Agriculture Through a Systems Approach report calls for systems thinking and collaboration across the value chain to address overlapping food, health and environmental challenges.   Now, with COP30 on the horizon, unified and equitable solutions are needed to benefit entire value chains and communities. This is where a systems approach becomes essential.  A systems approach to transforming food and agriculture  Food systems transformation must serve both people and planet. We must ensure everyone has access to safe, nutritious food while protecting human rights and supporting a just transition.   At Tetra Pak, we support food and beverage companies throughout the journey of food production, from processing raw ingredients like milk and fruit to packaging and distribution. This end-to-end perspective gives us a unique view into the interconnected challenges within the food system, and how an integrated approach can help manufacturers reduce food loss and waste, improve energy and water efficiency, and deliver food where it is needed most.   Meaningful reductions to emissions require expanding the use of renewable and carbon-free energy sources. As outlined in our Food Systems 2040 whitepaper,1 the integration of low-carbon fuels like biofuels and green hydrogen, alongside electrification supported by advanced energy storage technologies, will be critical to driving the transition in factories, farms and food production and processing facilities.   Digitalization also plays a key role. Through advanced automation and data-driven insights, solutions like Tetra Pak® PlantMaster enable food and beverage companies to run fully automated plants with a single point of control for their production, helping them improve operational efficiency, minimize production downtime and reduce their environmental footprint.  The “hidden middle”: A critical gap in food systems policy  Today, much of the focus on transforming food systems is placed on farming and on promoting healthy diets. Both are important, but they risk overlooking the many and varied processes that get food from the farmer to the end consumer. In 2015 Dr Thomas Reardon coined the term the “hidden middle” to describe this midstream segment of global agricultural value chains.2   This hidden middle includes processing, logistics, storage, packaging and handling, and it is pivotal. It accounts for approximately 22 percent of food-based emissions and between 40-60 percent of the total costs and value added in food systems.3 Yet despite its huge economic value, it receives only 2.5 to 4 percent of climate finance.4  Policymakers need to recognize the full journey from farm to fork as a lynchpin priority. Strategic enablers such as packaging that protects perishable food and extends shelf life, along with climate-resilient processing technologies, can maximize yield and minimize loss and waste across the value chain. In addition, they demonstrate how sustainability and competitiveness can go hand in hand.  Alongside this, climate and development finance must be redirected to increase investment in the hidden middle, with a particular focus on small and medium-sized enterprises, which make up most of the sector.   Collaboration in action  Investment is just the start. Change depends on collaboration between stakeholders across the value chain: farmers, food manufacturers, brands, retailers, governments, financiers and civil society.  In practice, a systems approach means joining up actors and incentives at every stage.5 The dairy sector provides a perfect example of the possibilities of connecting. We work with our customers and with development partners to establish dairy hubs in countries around the world. These hubs connect smallholder farmers with local processors, providing chilling infrastructure, veterinary support, training and reliable routes to market.6 This helps drive higher milk quality, more stable incomes and safer nutrition for local communities.  Our strategic partnership with UNIDO* is a powerful example of this collaboration in action. Together, we are scaling Dairy Hub projects in Kenya, building on the success of earlier initiatives with our customer Githunguri Dairy. UNIDO plays a key role in securing donor funding and aligning public-private efforts to expand local dairy production and improve livelihoods. This model demonstrates how collaborations can unlock changes in food systems.  COP30 and beyond  Strategic investment can strengthen local supply chains, extend social protections and open economic opportunity, particularly in vulnerable regions. Lasting progress will require a systems approach, with policymakers helping to mitigate transition costs and backing sustainable business models that build resilience across global food systems for generations to come.   As COP30 approaches, we urge policymakers to consider food systems as part of all decision-making, to prevent unintended trade-offs between climate and nutrition goals. We also recommend that COP30 negotiators ensure the Global Goal on Adaptation include priorities indicators that enable countries to collect, monitor and report data on the adoption of climate-resilient technologies and practices by food processors. This would reinforce the importance of the hidden middle and help unlock targeted adaptation finance across the food value chain.  When every actor plays their part, from policymakers to producers, and from farmers to financiers, the whole system moves forward. Only then can food systems be truly equitable, resilient and sustainable, protecting what matters most: food, people and the planet.  * UNIDO (United Nations Industrial Development Organization)  Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Tetra Pak * The ultimate controlling entity is Brands2Life Ltd * The advertisement is linked to policy advocacy regarding food systems and climate policy More information here. https://www.politico.eu/7449678-2

European Commission President Ursula von der Leyen wants the EU to help front-line countries monitor and defend their borders against potential Russian aggression — backing a long-standing request from Poland and Baltic nations. “There is no doubt: Europe’s eastern flank keeps all of Europe safe. From the Baltic Sea to the Black Sea. This is why we must invest in supporting it through an Eastern Flank Watch,” she told European lawmakers in her State of the Union address Wednesday morning. “This means giving Europe independent strategic capabilities. We must invest in real-time space surveillance so that no movement of forces goes unseen. We must heed the call of our Baltic friends and build a drone wall,” the German politician added. Von der Leyen’s comments came only a few hours after Poland scrambled fighter jets to shoot down Russian drones that entered its airspace. Back in June, Romania also sent warplanes to monitor Russian drones approaching its border. Wednesday’s incident over Poland has been perceived by Western allies as a way for Russian President Vladimir Putin to test NATO’s defenses. Front-line countries — especially Poland, Estonia and Lithuania — have long called for the EU to contribute financially to the defense of their borders. They argue their efforts will protect the bloc as a whole against any attack from Russia, as military and intelligence top brass have warned in the past that Putin could target Baltic nations or Poland to test NATO’s mettle. They have successfully pushed for money from the EU’s loans-for-weapons SAFE scheme to be easily available for items including drones and anti-drone systems. Warsaw launched a project last year dubbed East Shield that aims to strengthen the Polish border with Russia and Belarus, while Baltic nations are starting to teach children to build and fly drones. Countries such as Lithuania are also behind the idea of a “drone wall,” which they see as a permanent presence of unmanned aerial vehicles on their borders to monitor threats. A few days before giving her State of the Union address, von der Leyen went on a front-line state tour that took her to countries including Finland, Estonia, Lithuania, Latvia and Poland. “Last week, I saw this for myself when I visited front-line member states. They know best the threat Russia poses,” she told European lawmakers on Wednesday. Von der Leyen also announced the EU will enter into a so-called Drone Alliance with Ukraine and front-load €6 billion from the G7-led Extraordinary Revenue Acceleration (ERA). Russia’s war in Ukraine has highlighted the importance of drones in warfare — they can be used for surveillance purposes and as lethal weapons to reach remote or dangerous areas. Ukraine is widely perceived as being innovative with the technology, namely through the use of AI and automation. Von der Leyen gave few details about the defense road map she has to present to EU leaders in October, but did say she wants to launch a so-called European Semester of Defence to monitor capitals’ progress in military buildup.