Rising cyber risk and the struggle for digital and AI sovereignty

Cybersecurity and Digital Sovereignty Battles

Rising Cyber Risks and the Struggle for Digital and AI Sovereignty: New Developments Reshape the Geopolitical Landscape

The global struggle for technological supremacy has entered a perilous new phase, driven by the rapid proliferation of agentic artificial intelligence (AI) systems and an increasingly hostile cyber threat environment. As nations recognize that control over digital infrastructure, AI ecosystems, and critical resources confers strategic dominance, a fierce contest for digital sovereignty has emerged—reshaping geopolitics, amplifying risks, and exposing vulnerabilities with potentially profound consequences.

Escalating Cyber and AI-Driven Threat Landscape

At the heart of this transformation are agentic AI systems—autonomous agents capable of analyzing, deciding, and acting with minimal human oversight. Their deployment across sectors such as energy, transportation, finance, and defense has exponentially expanded attack surfaces, making critical infrastructure more vulnerable than ever.

Rising State-Sponsored Cyber Campaigns

Intelligence agencies worldwide report a sharp increase in sophisticated cyber operations orchestrated by major powers like China, Russia, and North Korea. These actors are executing coordinated campaigns targeting energy grids, financial institutions, and transportation networks, exploiting vulnerabilities within AI models, industrial control systems, and complex supply chains.

Cybersecurity experts emphasize that "the threats in the age of AI are evolving rapidly," noting adversaries’ increasing capacity to exploit weaknesses not only in traditional networks but also within critical infrastructure and industrial processes. The deployment of autonomous AI decision-making introduces risks of miscalculations or unintended escalation—particularly in military or strategic contexts. Malicious manipulation or malfunction of AI-driven systems involved in strategic decision loops could inadvertently trigger conflicts or destabilize entire regions.

A recent video titled "Inside Anthropic's Standoff with the Pentagon and What It Means for Military AI" highlights ongoing tensions between AI developers and military agencies. It underscores the delicate balancing act of harnessing AI’s potential while managing its risks, especially as the Pentagon collaborates with private firms like Anthropic to develop trustworthy, secure military AI systems amid escalating geopolitical competition.

The New Power Struggles: Digital and AI Sovereignty in Focus

Digital sovereignty has ascended to a core element of national security strategies worldwide. Countries are actively taking steps to assert control over AI models, data, and digital infrastructure—aimed at reducing dependence on foreign technology, mitigating foreign influence, and protecting against surveillance and data misuse.

Building Regional Compute Hubs and Diversifying Supply Chains

To counter reliance on dominant foreign firms, nations are establishing regional AI processing centers. For example, initiatives like CoreWeave aim to decentralize AI infrastructure, foster local innovation, and enhance resilience against external disruptions.

Simultaneously, significant investments are being made to diversify supply chains for semiconductors, critical minerals, and advanced hardware:

IMEC, the Belgian research institute, is shifting focus toward semiconductor innovation to reduce dependence on Chinese and Western suppliers amidst ongoing trade tensions.
The India–EU Free Trade Agreement (FTA) exemplifies geopolitical realignment, strengthening cooperation on semiconductor supply chains and critical mineral access. As discussed in "IMEC + India-EU FTA: The Geopolitical Pivot Rewriting Global Trade," such collaborations are reshaping global trade networks and bolstering ambitions for technological sovereignty.

Securing Energy and Critical Resources

Persistent chip shortages and reliance on rare earth minerals highlight the importance of resilient energy and resource supply chains. Countries are investing in Small Modular Reactors (SMRs) and nuclear energy to power AI infrastructure, recognizing that digital sovereignty is intrinsically linked to energy independence.

Given the computational intensity of advanced AI models, energy security has become a strategic priority. Nations see energy dominance, especially through nuclear power, as essential for maintaining technological leadership and supporting AI development.

Strategic AI Development and Governance Challenges

China’s recent launch of Qwen3.5 by Alibaba Group exemplifies its concerted effort to domestically control AI capabilities. This advanced language model signifies China’s ambition to assert sovereignty over its AI ecosystem, especially under trade restrictions and export controls targeting Chinese tech firms.

"Alibaba’s Qwen3.5 exemplifies China’s ambition to establish its own AI ecosystem, reducing reliance on Western models," industry analysts note. This move aims to enhance technological independence and position China as a global AI leader.

Meanwhile, accelerated AI development in Western countries—through initiatives like Anthropic's collaborations with the Pentagon—raises critical governance concerns. The "Inside Anthropic's Standoff with the Pentagon" video underscores tensions surrounding military AI deployment, highlighting debates over trustworthiness, safety, and norms in AI-enabled warfare.

The Need for International Norms

The rapid advancement of agentic AI systems—with their potential military and economic implications—amplifies the urgency of international norms and regulatory frameworks. While China accelerates its domestic AI stacks, Western nations focus on building secure, interoperable frameworks to prevent escalation and ensure responsible innovation.

The governance gap remains a critical challenge. As highlighted in "The United Nations Was Built to Deliver Accountability. Can It Still Do So?", multilateral cooperation is essential for establishing effective norms that balance sovereignty, security, and openness. The current fragmented regulatory landscape hampers progress, underscoring the urgency to accelerate norm-building efforts.

Geopolitical Maneuvers: Japan’s Multipolar Posture, China’s Diplomacy, and European Shifts

Japan’s Emerging Multipolar Strategy

Recent political shifts in Japan underscore a significant realignment—a move toward a more assertive, multipolar foreign policy. Dubbed "Japan’s Multipolar Awakening," this strategy emphasizes cybersecurity, regional cooperation, and digital infrastructure development. Japan aims to balance regional tensions with China and North Korea while strengthening alliances, notably with the United States, to secure its digital sovereignty.

China’s Economic Diplomacy and Influence Operations

China continues leveraging economic diplomacy to expand influence and secure critical resources. The recent "WATCH EXCLUSIVE: Xi Jinping Meets German Chancellor Merz" video captures Xi’s meeting with German Chancellor Merz, emphasizing China’s focus on deepening trade relations and technological cooperation—especially in areas intersecting with AI access and economic sovereignty.

Through bilateral and multilateral partnerships, China seeks to expand AI infrastructure, export technology, and counter Western sanctions. Beijing employs influence operations and trade diplomacy—as detailed in "China's Economic Diplomacy and International Relations"—to gain access to resources, strengthen regional alliances, and counter Western dominance.

Western Sanctions and Divisions

Western nations employ sanctions as tools to impose technological restrictions and limit adversaries’ capabilities. Discussions at the Valdai Discussion Club reveal that the US often seeks to use sanctions to impose technological hegemony, risking retaliatory measures and deepening multipolar tensions.

China, meanwhile, actively exploits divisions within Europe to weaken EU cohesion and advance its strategic interests. A recent analysis, "Germany Calls for Learning from China’s Pragmatism in Global Politics," highlights how Germany and Europe are increasingly adopting pragmatic engagement strategies—balancing cooperation and competition—to navigate the shifting landscape.

Operational Priorities in a Fragmented, High-Stakes Environment

In this complex and rapidly evolving environment, nations must adapt strategically:

Strengthen cyber defenses around AI systems and critical infrastructure to withstand increasingly sophisticated cyberattacks.
Diversify supply chains for semiconductors, hardware, and critical minerals to reduce dependency on volatile foreign sources.
Deepen alliance coordination, exemplified by the U.S.–Japan Extended Deterrence Dialogue (EDD), held at the State Department in Washington, D.C., on February 18, 2026. This framework aims to coordinate deterrence efforts against cyber and AI-enabled threats and set operational norms.
Accelerate international norm-building for AI safety, interoperability, and accountability, critical to preventing escalation and managing risks.

Current Status and Future Outlook

The world now stands at a pivotal juncture. Cyber threats are escalating, and the battle for digital and AI sovereignty intensifies as countries establish regional hubs, diversify supply chains, and develop advanced AI systems to safeguard strategic interests. Meanwhile, normative frameworks remain fragmented, underscoring the urgent need for international cooperation.

Success in this domain hinges on:

Building resilient, secure infrastructures capable of resisting sophisticated cyberattacks.
Diversifying critical resources, especially semiconductors and rare minerals.
Fostering robust alliances to coordinate defenses and set responsible norms.
Managing AI’s risks responsibly while harnessing its innovative potential.

In Summary

The evolving landscape makes clear that cybersecurity, technological sovereignty, and geopolitical strategy are now deeply intertwined. As agentic AI systems grow more autonomous and powerful, control over digital infrastructure and resources will determine which nations lead or lag in the AI age.

Recent developments—such as China’s AI advancements with Qwen3.5, the strategic realignment via IMEC–India–EU collaborations, and security dialogues like the U.S.–Japan EDD—illustrate a world where technology and security are inseparable. The challenge lies in navigating these risks, building resilient alliances, and crafting effective norms—all aimed at managing AI-driven risks and ensuring a stable, secure future.

Looking ahead, the next few years will be decisive. The international community’s ability to cooperate, regulate, and resist geopolitical exploitation will determine whether humanity can harness AI responsibly while maintaining peace, stability, and sovereignty in an increasingly interconnected digital world.

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