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How middle powers can weather US and Chinese AI dominance

The case for ‘sovereign AI’ strategies

Research paper

Published 16 February 2026

Updated 13 March 2026

ISBN: 978 1 78413 671 0

Image — Conference participants look at a model of the Stargate initiative data centre currently under construction in Abu Dhabi, 3 November 2025. Photo credit: Copyright © Giuseppe Cacace/AFP/Getty Images

Conference participants look upon a model of a data centre under construction in the UAE

Francisco Javier Varela Sandoval

International Strategy Forum Academy Fellow, Digital Society Programme

Isabella Wilkinson

Research Fellow, Digital Society Programme

Alex Krasodomski

Director, Digital Society Programme

Rowan Wilkinson

Research Associate, Digital Society Programme

The dominance of the US and China in AI development poses a significant conundrum for the rest of the world. For middle powers, the establishment of ‘sovereign AI’ strategies, which allow a country to influence, develop and deploy AI technology in line with national interests, may hold the key.

This paper recommends and details four clear approaches that enable middle powers to gain increased control over AI: specializing in a particular part of the global AI supply chain; aligning with one of the AI superpowers; sharing sovereignty with other countries to amplify influence; or hedging against instability by using a range of AI capabilities from different countries.

Global dependencies on US and Chinese technology are unavoidable, but increased sovereignty over the deployment of AI will allow smaller countries to develop their own technological paths that can prioritize the needs of their populations.

DOI: 10.55317/9781784136710

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Summary

Middle powers that fail to secure influence over the development, deployment and governance of artificial intelligence (AI) will likely forfeit control over their economies, societies, political systems and positions in the global economy. ‘Sovereign AI’ capabilities – that is, the extent to which countries can preserve autonomy in their AI policy choices, ensure the growth of AI meets national interests, and avoid creating unhealthy dependencies on external actors – are thus becoming as fundamental to national power as military strength or economic policy.
Today, middle powers face a critical choice: where to compete, where to partner, and where to accept dependency. While these countries cannot match the scale of the US or China in terms of investment and advanced technology, middle powers still have leverage to shape the next decade of AI. Failure to make deliberate strategic choices now could result in the loss of autonomy in an intensifying global AI race.
Middle powers can pursue one of four pragmatic approaches to AI sovereignty. Each involves trade-offs. These paths will shift as the technology evolves:
- Specialize – carve out limited niches in the global AI supply chain that provide leverage and partial autonomy.
- Align – side fully with an AI superpower, accepting deep dependencies in exchange for access and protection.
- Share – pool sovereignty with like-minded countries through blocs and partnerships to amplify collective influence.
- Hedge – cherry-pick capabilities from a diverse range of foreign suppliers, while building national capacity in targeted areas.
Countries must assess their position across eight critical building blocks – data, compute (computational power), advanced models, energy, industry, talent, infrastructure and trust – and determine where they can realistically build capability versus where they must depend on others. In terms of AI, no middle power should expect to operate independently. The critical question is not whether to depend on other nations for AI, but on which nations, to what extent and on what terms.
Current national motivations in pursuing AI sovereignty differ. Some countries prioritize national security, while others focus on economic growth, public service capacity, geopolitical leverage, values alignment or frontier AI leadership. But in this sphere all middle powers share two common challenges: 1) building autonomy and competing for opportunities in the global AI value chain despite limited resources, and 2) strategizing amid uncertainty.
Given the unpredictability of AI trajectories, this paper calls for pragmatic strategy over maximalism. The goal is not independence (as full autonomy remains unrealistic) but strategic flexibility: the ability to switch providers, adapt to disruptions and avoid coercion.
Middle powers that act strategically can secure durable influence over the technologies that underpin their political systems, economies and societies, not to mention their international standing. AI sovereignty will inevitably remain partial for these countries, but efforts in this direction will not be in vain. Those that delay or pursue unfocused strategies risk being left with dependencies they did not choose and ambitions they cannot realize.

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