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| Jacob Helberg |
A top U.S. economic diplomat issued a stark warning to European lawmakers on Tuesday, arguing that the European Union’s aggressive regulatory framework is acting as a stranglehold on the continent’s economy and risks alienating its most vital allies in the race against Chinese technological dominance.
Speaking from the U.S. State Department’s European Regional Media Center in Brussels, Jacob Helberg, the Under Secretary of State for Economic Affairs, characterized Western Europe’s prolonged economic stagnation not as a policy disagreement between allies, but as a "civilizational emergency."
"Western Europe has not had meaningful economic growth in over a generation," Helberg told reporters. "We see a quietude in a lot of European corridors, almost like a resigned shrug, as though 0 percent growth in a world growing at 3 percent is simply a normal part of the European condition. We really see that as the soft defeatism of perpetually lower expectations."
The AI Act and DMA: Targets of U.S. Frustration
Helberg’s briefing focused heavily on the EU's digital rulebook, taking direct aim at the bloc's flagship AI Act and the Digital Markets Act (DMA).
While the U.S. has previously expressed concerns over European tech regulations, Helberg elevated the rhetoric, arguing that the AI Act does not actually protect European citizens. Instead, he claimed, it "protects the European market from foreign AI companies while ensuring that European AI development remains permanently behind."
The diplomat reserved his harshest criticism for the DMA, which he identified as the single biggest impediment to transatlantic economic cooperation. The legislation, designed to curb the power of Big Tech gatekeepers, has resulted in billions of euros in fines against U.S. companies. Helberg warned that the punitive measures are achieving the opposite of their intended effect.
"The fines were on American companies, but the people who actually pay the cost of these regulations are European citizens," he said, noting that the regulatory environment has built an international reputation for Europe being "unhospitable to private investment."
Helberg hinted at potential retaliatory trade friction if the EU issues another round of DMA fines against American firms, though he expressed optimism that ongoing negotiations led by the U.S. Trade Representative could defuse the situation.
Europe's Stalled Entry into the 'Pax Silica' AI Coalition
The briefing highlighted growing friction over "Pax Silica," a U.S.-led coalition designed to secure the global artificial intelligence supply chain. The European Commission recently failed to secure a negotiation mandate to join the pact by a March 27 deadline.
Helberg clarified that repealing the AI Act is not a strict precondition for Europe to join the coalition. However, he emphasized that the U.S. requires a "pro-innovation agenda" from its partners, pointing to a recent joint statement on AI with India as a model.
He framed participation in Pax Silica as fundamentally in Europe’s interest, noting that European nations, specifically highlighting German industrial machinery and Dutch semiconductor giant ASML, possess critical, highly strategic assets for the AI supply chain. Helberg is scheduled to meet with ASML executives in the Netherlands on Wednesday. However, he declined to comment publicly on whether the U.S. is satisfied with current export restrictions on the company's sales to China.
A Race Against Chinese Dominance
Helberg’s remarks underscore a growing anxiety in Washington that regulatory-heavy democracies are ceding the future of technology to geopolitical rivals. Referencing the recent Draghi report on EU competitiveness, Helberg noted that Europe missed the digital revolution of the 2010s, losing out on cloud infrastructure, platforms, and foundational AI models and is now accruing a lag in the AI era that could take a generation to undo.
When asked if visible fractures in the U.S.-EU relationship could create openings for adversaries like China and Russia to exploit, Helberg pivoted back to economic alignment. He argued that being silent about Europe's economic decline would be "a form of abandonment," stressing that the U.S. wants a strong Europe because it is fundamentally in the American interest.
"We are concerned about Europe drifting farther and farther out onto the periphery of the global economy, and ultimately the periphery of history," Helberg said. "And we don’t want that to happen."
Helberg, who noted his mother previously worked at the European Commission and expressed deep personal affection for the European project, is scheduled to expand on these themes in a highly anticipated speech at the German Marshall Fund in Brussels later Tuesday afternoon.
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