Key Takeaways
- The United States is leading Pax Silica, a coalition centred on securing AI’s physical foundations (chips, minerals, energy, computing).
- China has launched the World AI Cooperation Organisation (WACO), an intergovernmental body focused on AI governance, cooperation and institutional coordination.
- The European Union, after initially standing apart, joined Pax Silica in mid‑2026 while simultaneously pursuing its own AI sovereignty agenda through the AI Act, the AI Continent Action Plan and the Chips Act 2.0.
- Europe’s AI ambitions are hampered by foreign ownership of much of its new infrastructure and by capital flows that favour U.S. firms.
- Analysts see three possible trajectories for the EU: maintaining a dual role (managed duality), contributing to two rival blocs, or prompting further fragmentation of the global AI order.
- Overall, the emerging AI order is not bipolar but rather a split where infrastructure is organised through one coalition and governance through another, with technological sovereignty increasingly becoming a national project.
The Reshaped Geopolitical Chessboard
Artificial intelligence has moved from a technical novelty to a central piece of global power politics. As Elena Yurieva observes, the post‑Cold‑War balance that was already shaken by Russia’s war in Ukraine has been further destabilised by AI, giving states “new pieces to move: computers, chips, models and the infrastructure required to sustain them.” The world is now searching for a new equilibrium among the United States, the European Union and China.
Pax Silica: The U.S.-Led Infrastructure Coalition
In December 2025 the U.S. State Department unveiled Pax Silica, a coalition of allied nations dedicated to “securing the physical foundations of AI: semiconductors, critical minerals, energy and computing infrastructure.” By its second summit in June 2026 the initiative had grown to 24 signatories. U.S. private AI investment surged to $285.9 billion in 2025, more than 23 times the $12.4 billion poured into China, although analysts caution that private‑investment figures alone understate China’s total spending because of extensive state‑guided funding.
China’s Counter‑Move: The World AI Cooperation Organisation
While Washington built Pax Silica, Beijing pursued a different route. On 17 July 2026, in Shanghai, China announced the World AI Cooperation Organisation (WACO), described as “the world’s first intergovernmental organisation devoted specifically to AI.” WACO launched with 29 founding members and is built around governance, international cooperation and institutional coordination, offering a rival platform to the U.S.-led infrastructure bloc.
Europe’s Hesitant Entry into Pax Silica
The European Union initially observed Pax Silica’s launch from a distance and declined to sign. However, after prolonged deliberation and the resolution of internal disagreements with France, the EU authorised the European Commission to sign the Pax Silica Declaration on 23–25 June 2026. U.S. Secretary of State Marco Rubio had framed the coalition as a “global consortium” covering “all of the elements the AI supply needs,” stressing that U.S. leadership “is not permanent.” The Commission’s own announcement argued that EU membership was “compatible with, even supportive of, the technological sovereignty package” it had adopted weeks earlier, including the Chips Act 2.0. Whether that framing will hold up under the realities of coalition membership remains an open question.
Europe’s Quest for AI Sovereignty
Even as it joined Pax Silica, the EU continued to shape the regulatory environment for AI. The EU AI Act remains “the world’s first comprehensive binding legal framework for artificial intelligence.” Complementing this, the AI Continent Action Plan has mobilised €200 billion through its InvestAI initiative, with cumulative data‑centre investment projected at €176 billion by 2031. The EU Council had already adopted its Declaration for European Digital Sovereignty in November 2025, a month before Pax Silica launched, signalling a clear intent to build autonomous capacity.
Infrastructure Reality: Foreign Ownership Persists
Despite ambitious plans, much of the physical infrastructure now rising on European soil remains under non‑European control. Notably, Microsoft and Nscale are constructing a gigafactory‑scale AI campus in Sines, Portugal. Analysts conclude that Europe’s first gigafactory‑scale facilities are unlikely to be EU‑funded, EU‑owned, or built around European frontier‑model developers.
Capital Flows: A Transatlantic Tilt
The pattern extends to investment. EU‑based private equity and venture‑capital firms invested $6.8 billion in local AI companies in 2025, but they sent almost as much—$6.21 billion—into AI firms in the United States. Large American investment houses have already formed partnerships with OpenAI and Anthropic, whereas European firms, with few exceptions, have not established comparable ties. This capital outflow underscores the difficulty of achieving genuine technological sovereignty when financial flows gravitate toward the U.S. ecosystem.
Possible Futures for the EU’s Dual Role
Analysts outline three scenarios for how the EU might navigate its position:
- Managed Duality – The EU stays formally inside Pax Silica while continuing to invest in its own AI sovereignty, infrastructure and technological base. The key uncertainty is how Pax Silica’s partners will view this dual stance over time.
- Two Competing AI Camps – Depending on how the rest of the world interprets China’s WACO initiative, the EU’s actions could accelerate the expansion of either bloc, with some states potentially joining both coalitions simultaneously.
- Fragmentation – Some countries may opt to build their own regional alternatives based on governance, technology, or a mix of both, further splintering the global AI order.
Which path prevails remains uncertain, as does the relative influence of the emerging coalitions.
The Bigger Picture: A Split Order, Not a Bipolar One
At first glance the developments suggest a bipolar model—Washington’s infrastructure coalition versus Beijing’s governance bloc. Yet a closer look reveals a more intricate reality. Instead of converging toward a common institutional framework, “the international system is moving in the opposite direction.” Infrastructure is being organised through one coalition (Pax Silica), governance through another (WACO), while technological sovereignty increasingly becomes a national project.
A single international institution that could coordinate both technological development and governance, grounded in shared principles and mutually accepted limits, would not erase strategic competition. States would still vie economically, scientifically and geopolitically. However, competition inside a shared framework differs fundamentally from competition between rival ones.
Conclusion: The Game Is Still Being Played
The opening moves have been made: the United States has secured its infrastructure coalition, Europe has declared its position—simultaneously engaging with Pax Silica and pursuing sovereign capabilities—and China has unveiled its governance‑centric alternative. The impending maneuvers will not decide who ultimately leads the AI era; they will determine whether the world still agrees on the rules of the game. As the geopolitical board resets, the stakes are not merely about technological supremacy but about the very architecture of global cooperation in the age of artificial intelligence.