“This, I think, is probably the single biggest long-term challenge for the European Union: the technological gap,” he said, adding that “we need to put that at the top of the agenda,” alongside the wars in Ukraine and the Middle East.

European Commission President Ursula von der Leyen has put the issue at the top of her next mandate, bundling the portfolios of “tech sovereignty,” security and defense and putting them in the hands of one of her right-hand officials, Henna Virkkunen. Virkkunen, Finland’s nominee for Commission executive vice president, faces a European Parliament hearing on Nov. 12 to defend her plans. 

Von der Leyen’s choice to bundle tech and security is telling, amid the war in Ukraine, waves of hybrid and cybersecurity threats to digital infrastructure, and global tech supply chains that are being weaponized by the U.S. and China. The message: Technology can help serve the bloc’s security and defense goals.

But Ischinger fears the EU’s plans will fall short: “My optimism is somewhat limited, because I don’t think that government institutions, whether they’re at the national level or at the EU level, can actually do it.”

What’s holding Europe back is the fragmentation of its capital market, the former ambassador said, echoing the analysis of former Italian Prime Minister Mario Draghi in his recent landmark report on Europe’s ability to compete in the world.

“The completion of the Capital Markets Union is probably the single, most essential precondition for getting this right,” Ischinger said.