Europe is organising itself out of competitiveness

The deeper problem of Europe as diagnosed in the Draghi report is institutional: Europe has become increasingly capable of governing individual policy fields while losing the capacity to govern the system that connects them, writes Dr. Glenn Agung Hole.

Dr. Glenn Agung Hole is an institutional economist and Associate Professor at the University of South-Eastern Norway. He is also Honorary Professor in Kazakhstan and holds Visiting Professor appointments in North Macedonia, Albania and Tanzania.

Europe does not suffer from a shortage of strategies. It suffers from too many strategies that have never been forced to coexist in the same institutional reality.

The European Union wants to decarbonise industry, lead in artificial intelligence, strengthen defence, secure critical minerals, deepen strategic autonomy and preserve its social model. None of these ambitions is inherently contradictory.

The problem is that they are too often designed and implemented as separate policy domains.

Mario Draghi diagnosed much of this in his landmark report on European competitiveness. He identified fragmented capital markets, high energy costs, insufficient innovation and persistent barriers inside the Single Market, while estimating that Europe requires €750–800 billion in additional annual investment to meet its ambitions.

But beneath the investment gap lies a deeper problem.

Europe has an institutional coordination gap.

Artificial intelligence illustrates it perfectly. AI is commonly discussed as technology policy. Yet competitive AI requires enormous computing capacity. Computing requires data centres. Data centres require abundant and reliable electricity. Electricity requires generation, grids, permitting and capital. Technological leadership requires engineers, universities, researchers and businesses capable of commercialising knowledge. Strategic autonomy additionally requires minerals, supply chains, transport infrastructure and industrial capacity.

These are not separate systems.

They are one system.

Yet European governance frequently treats them as separate administrative responsibilities. An energy regulator can make a rational energy decision. A climate authority can pursue a rational emissions objective. A competition authority can defend a rational competition principle. A finance ministry can rationally minimise fiscal exposure.

Every decision can be defensible within its own institutional mandate while the combined result is expensive energy, delayed infrastructure, insufficient investment and companies that struggle to scale.

The failure emerges at the interfaces.

This is the difference between administrative capacity and strategic capacity.

Europe possesses extraordinary administrative capacity: sophisticated institutions, professional bureaucracies, universities, capital and regulatory competence.

Strategic capacity is something different. It is the ability to convert these individual assets into coherent national and continental capability.

Norway demonstrates that this problem extends beyond the EU itself. It is one of the wealthiest and most institutionally developed countries in Europe, yet the OECD continues to identify weak productivity growth, administrative burdens and complex approval structures involving multiple authorities pursuing different objectives. In energy specifically, the OECD has recommended reducing the number of authorities involved in approving new generating capacity.

Norway is not short of capital, educated people or political ambitions.

It faces an institutional conversion problem: how to transform resources into productive and strategic capacity.

This is why Kazakhstan deserves more European attention.

The lesson is not political imitation. Kazakhstan and the European Union have different political traditions, institutions and democratic structures, and Kazakhstan has its own governance and implementation challenges.

What is worth studying is something much more specific:

the architecture of strategic thinking.

Kazakhstan is increasingly treating energy, artificial intelligence, nuclear power, data centres, universities, technical skills, research, infrastructure and industrial development as components of the same capacity-building system.

Consider nuclear power.

Kazakhstan is not approaching nuclear energy simply as another electricity-generation technology. Its nuclear strategy envisages at least three nuclear power plants operating by 2050, with further capacity possible as electricity demand grows. The objective is explicitly connected to energy security, technological independence and the creation of a wider nuclear industrial cluster.

That matters because Kazakhstan is simultaneously expanding its ambitions in artificial intelligence and computing.

President Kassym-Jomart Tokayev has explicitly connected digitalisation and AI development with the need for new electricity generation. Kazakhstan is planning dedicated data-centre capacity around areas where energy is available, including a proposed “Data Center Valley” linked to the energy resources of the Ekibastuz basin.

The logic is straightforward: there can be no serious AI strategy without an energy strategy.

But Kazakhstan is going further.

Energy infrastructure without human capital would merely create physical capacity. The country is therefore simultaneously building educational and scientific capacity around the same technological transition.

A new National Research University of Artificial Intelligence in Astana is scheduled to begin teaching in September 2026. It is being integrated with Astana Hub and the Alem.ai International Artificial Intelligence Centre, giving students and researchers access to computing infrastructure, cloud services and the wider technology ecosystem. Its educational model explicitly combines AI with other disciplines through an “AI+X” approach.

At the same time, Kazakhstan has rapidly internationalised its university system. The government reports a network of around 40 foreign university branches and partnerships, with approximately 85 per cent of programmes concentrated in high-technology fields including AI, cybersecurity, engineering and the natural and technical sciences.

This reaches directly into nuclear capacity.

The Almaty branch of the National Research Nuclear University MEPhI produced its first graduates in 2026, specifically contributing to the pool of specialists required for nuclear energy and other knowledge-intensive industries.

This is the point Europe should examine.

Kazakhstan is attempting to connect:

uranium and energy resources to nuclear power;
nuclear power to reliable electricity;
electricity to data centres;
data centres to artificial intelligence;
AI to universities and research;
universities to engineers and technological competence;
and technological competence to industrial development and national competitiveness.

Not every project will succeed. Implementation should be scrutinised. But the systemic logic is difficult to ignore.

Europe often moves in the opposite direction. It discusses AI in one institutional arena, nuclear power in another, electricity grids in another, universities in another, industrial policy somewhere else and competitiveness at the end of the process.

Kazakhstan increasingly begins with the question: what capabilities will the economy require, and what complementary institutions and infrastructure must exist to make them possible?

That is a fundamentally different starting point.

The Draghi agenda will therefore fail if Europe treats competitiveness as another programme to be placed on top of an already fragmented institutional architecture.

Europe does not primarily need another strategy.

It needs mechanisms forcing policymakers to assess the cumulative consequences of decisions across energy, taxation, industry, capital, universities, infrastructure, technology and security before those decisions collide in the real economy.

This is not an argument for weaker environmental ambitions, weaker democracy or less regulation. It is an argument for greater institutional capacity to understand consequences.

Europe still possesses enormous advantages: capital, universities, scientific knowledge, infrastructure, democratic legitimacy and one of the largest markets in the world.

But resources do not automatically become competitiveness.

Knowledge does not automatically become technology.

Technology does not automatically become industry.

And political ambition does not automatically become strategic capacity.

All of them require institutions capable of connecting one capability to another.

Draghi diagnosed the symptoms of Europe’s competitiveness crisis.

The deeper question is now institutional.

Europe does not need another strategy telling it what it wants to become. It needs institutions capable of ensuring that everything it already wants does not work against everything else.

Caption: Ale.ai is center of attraction for the global AI community, playing a key role in shaping a new generation of leaders in high technology. The center will become a catalyst for innovation, creating opportunities for experience exchange, research development, and implementation of advanced solutions. [Photo credit: Georgi Gotev]