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The Washington Effect? Europe Weighs Pausing the AI Act

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When AI opened a new frontier, the European Union responded by focusing on the technology’s potential dangers. It raced ahead with a new regulation aimed to head off a potential machine apocalypse, killer robots running wild, surveillance tools destroying civil liberties, and automation eviscerating jobs.

The result was a broad, binding AI Act — and a backlash.

Unlike previous European tech regulations about privacy and competition, which spread around the globe, few other countries have followed on AI, considering Europe’s regulation premature. A new European Commission took office committed, unlike its predecessor, to boosting competitiveness and regulatory simplification.

Is this the Washington effect? Even after the Senate’s 99-1 vote to strip a proposed decade-long moratorium on state AI enforcement from President Donald Trump’s One Big Beautiful Bill, the administration continues to nudge federal policy toward light-touch AI oversight. Trump’s January executive order, Removing Barriers to American Leadership in AI, revoked the Biden-era safety mandate and instructed agencies to avoid rules that might impede innovation, just as Brussels debates whether to slow the rollout of its own strict regime.

If the US rushes ahead, will it leave the continent in the dust? European leaders fearing this outcome are calling for a pause and rethink. Although the AI Act’s first bans have been in force since February, deadlines are looming: a voluntary code of practice for powerful AI models by August 2, followed a year later by binding rules for every high-risk system, from AI-driven hiring tools to border-control algorithms.

Several capitals warn that the timetable is no longer realistic. Core technical standards remain mired in draft form, while several member states have not even appointed the national watchdogs needed to police the new regime. The Commission now faces an uncomfortable choice: press on and court chaos, or pause and regroup.

Support for hitting the brakes is gathering pace across the bloc. Swedish Prime Minister, Ulf Kristersson, became the first EU leader to call for a formal timeout. He branded the fledgling rulebook “confusing” without common standards. Czech deputy minister Jan Kavalírek argued that companies need breathing space to comply. Spain’s digital transformation minister, Óscar López Águeda, backed streamlining while rejecting a full rollback: “It’s not about stopping the clock, it’s about synchronizing our clocks,” Agueda said.

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European regulators are attempting to show flexibility, while insisting that they will uphold the AI legislation. “The August 2 deadline will stand and be enforced,” insisted Lucilla Sioli, the head of the EU AI Office at a recent conference on AI governance. At the same time, she added that officials are drafting a simplification package so the later deadlines “don’t bury companies” — particularly small and medium-sized firms — “in red tape.”

Junking the entire regulation remains a step too far. Margrethe Vestager, the former competition chief who steered the AI Act through three grueling years of negotiation, says reopening the text “way too soon” would drain public trust. German European parliamentarian Axel Voss makes the same argument: endless chatter about rewrites breeds uncertainty and chips away at Brussels’ reputation as a serious rule-setter.

Under the most probable scenario, the February bans would stay put, but the obligations for general-purpose AI models due in August and the full high-risk regime (due in August 2026) would slide by 12 to 24 months. High-risk systems decide who is offered a job or a loan, keep the lights on, or influence a doctor’s diagnosis – situations where a flawed model could upend a person’s livelihood or put lives in danger. The AI Act mandates rigorous testing, traceability, and human oversight on such high-risk systems before such applications reach the market.

A delay would allow the new European AI Office to hire inspectors, give time to finish detailed standards, and permit capitals to establish their own supervisory authorities. Politically, it will be credible only if it mandates visible progress on these fronts; otherwise, critics will see it as a concession to industry pressure rather than a genuine bid for improved enforcement.

Europe bet that drafting the world’s first AI law would set global rules. The bloc now must decide: hold the line or call a timeout in hopes of allowing the continent to focus on innovating with the new technology. Neither path offers certainty.

Anda Bologa is a Senior Researcher in Brussels with the Tech Policy Program at the Center for European Policy Analysis (CEPA).

Elly Rostoum contributed reporting from Washington.

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

CEPA Europe’s Tech & Security Conference in Brussels.


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What Research of 3,200 SMEs Revealed

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A new report by the AI Chamber, based on insights from more than 3,200 small and medium-sized enterprises (SMEs) across Central and Eastern Europe (CEE), paints a striking picture of the region’s AI readiness: while over 75% of businesses say they are using artificial intelligence, only 25% are doing so at scale.

Titled How Do SMEs in CEE Find Their Way in the World of AI?, the study maps out how AI is reshaping operational workflows across 11 CEE countries – but also where gaps in leadership, talent, and regulatory awareness are holding many companies back.

The report uncovers four dominant mindsets shaping AI readiness in the region: Practical Optimists, Aware with Barriers, AI Indifferent, and Digitally Withdrawn. These categories reflect more than technological maturity – they reveal how vision, organizational structure, and risk appetite determine success or stagnation.

This report challenges the prevailing myth that AI adoption is simply a matter of access to technology. The decisive factor is organizational maturity – leadership clarity, talent readiness, and strategic intent,” says Tomasz Snażyk, CEO of the AI Chamber.

“CEE’s SMEs could become global frontrunners in applied AI – if supported by the right regulatory frameworks and education initiatives. The opportunity is real. So is the risk of being left behind.”

Tomasz Snażyk, CEO of the AI Chamber

Practical applications dominate, but strategic use remains rare

According to the report, the top three use cases of AI among SMEs in the region are data analysis (40%), automatic translation (35%), and task automation (28%) – indicating a focus on efficiency rather than transformation. More advanced applications like predictive analytics or AI-enhanced product development are far less common.

Notably, Estonia and Poland show more mature use cases, particularly in areas like customer behavior tracking and forecasting – suggesting that a small but growing cohort of regional players are moving beyond basic AI adoption into more data-driven decision-making.

However, only 8% of all SMEs surveyed are ready for an upcoming AI audit – a key requirement under the EU AI Act. In fact, just 39% of AI-using companies report even being familiar with the legislation, dropping to 29% among smaller and lower-tech firms.

Size matters – and so does vision

The data highlights a strong correlation between company size and AI maturity. SMEs with between 50–250 employees are far more likely to use AI strategically, have regulatory awareness, and invest in upskilling their teams. At the opposite end, micro-enterprises (under 10 employees) often lack the capacity, leadership bandwidth, or digital talent to take full advantage of AI opportunities.

Encouragingly, 61% of employees across the region are actively experimenting with AI tools in their day-to-day work. This bottom-up momentum is strongest in Poland and the Czech Republic, pointing to a grassroots wave of innovation that could help close the readiness gap if matched by investment from leadership.

Still, one in four firms has taken no steps to upskill their workforce in AI-related competencies. That training gap is a red flag for policymakers, particularly as generative AI continues to reshape white-collar industries.

Using AI ≠ Using It Well: What Research of 3,200 Regional SMEs Revealed, TheRecursive.com
Presenting Report at Brussels ~ Credit: AI Chamber

Fragmented AI landscape across CEE

Perhaps the most urgent takeaway from the report is the stark digital divide within CEE itself.

  • Estonia emerges as the clear frontrunner, with 67% of companies reporting a positive AI impact and 65% familiar with the EU’s AI Act. Estonian firms also report among the lowest internal barriers to implementation, thanks to strong digital governance and high awareness.
  • Slovakia and Poland also rank high in AI ambition: 70% and 65% of SMEs, respectively, want to expand their use of AI in the near future.
  • In contrast, Croatia, Latvia, and Bulgaria show significantly lower levels of adoption and readiness. In Croatia, nearly a third of SMEs express no interest in using AI at all, while in Bulgaria, over half cite a lack of knowledge as a major barrier.

Even within high-growth markets like Poland, the ambition-execution gap is visible. While over half of SMEs there see AI as a competitive advantage, 35% report no current intent to adopt it, despite employee enthusiasm.

Regional crossroads

The timing of the report is critical. As global investment in AI is projected to soar from $189 billion in 2023 to $4.8 trillion by 2033 (UNCTAD), the world’s economic power centers are already shifting. More than 60% of AI patents and R&D funding are now concentrated in the U.S. and China, putting pressure on Europe—and CEE in particular – to define its AI trajectory.

For the AI Chamber, this moment represents both a risk and an opportunity.

The window for CEE to define its digital future is open – but not indefinitely. The question facing governments, investors, and SMEs alike is no longer whether to embrace AI, but how quickly, how safely, and how strategically it can be done – before the gap with global leaders becomes irreversible.” – concludes Tomasz Snażyk.

Download the Full Report

👉 aichamber.eu/report/how-do-smes-in-cee-find-their-way-in-the-world-of-ai



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Mindsprint enhances ProcureSPRINT™ with Agentic AI to unlock up to 15% in procurement cost efficiencies

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SINGAPORE, July 9, 2025 /PRNewswire/ — Mindsprint, a technology firm offering purpose-built AI-led solutions to modernize enterprise operations, today announced significant advancements to ProcureSPRINT™, its enterprise-grade AI platform designed to optimize procurement operations, accelerate decision-making, and deliver measurable cost efficiencies.

Mindsprint enhances ProcureSPRINT™ with Agentic AI to unlock up to 15% in procurement cost efficiencies

Building on its proven foundation, ProcureSPRINT™ now integrates advanced Agentic AI capabilities, empowering organizations to automate complex procurement processes, enhance supplier collaboration, and unlock hidden value levers that can drive procurement cost reductions of up to 15 percent.

ProcureSPRINT™ is built on a secure, scalable cloud infrastructure and offers a modular, plug-and-play architecture that meets the needs of procurement teams at varying maturity levels. Its Agentic AI-powered recommendation engine provides actionable insights to both operational teams and C-level leaders, ensuring organizations can achieve faster cycle times, improved supplier performance, and greater procurement transparency.

“As enterprises evolve, so must their procurement function. The latest enhancements to ProcureSPRINT™ reflect our commitment to strengthening the platform with advanced AI & intelligent automation to deliver practical insights that help organizations reduce costs, improve compliance, and achieve operational resilience,” said G Venkataramanan (GV), Head of Intelligence Enterprise Operations, Mindsprint. “Our Agentic AI approach allows teams to shift from manual execution to more autonomous, insight-driven procurement, delivering faster outcomes with reduced effort.”

ProcureSPRINT™’s suite of intelligent agents supports every stage of the procurement process, including:

  • The Onboarding Assistant Agent streamlines supplier registration through a self-service portal.

  • The RFx Agent simplifies competitive bidding and reverse auctions.

  • The Deal Advisor Agent provides AI-enabled recommendations for award decisions that maximize savings and minimize risk.

  • The Shipment Sentinel Agent offers real-time visibility into shipments and supplier performance.

In addition, the platform offers an advanced, digitized invoice processing system that supports omnichannel document capture, multi-lingual intelligent data extraction, real-time validation, and seamless ERP integration. Organizations using ProcureSPRINT™ achieve over 70 percent touchless invoice processing, significantly reducing manual workload and processing time.



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Impostor uses AI to impersonate Rubio and contact foreign and US officials : NPR

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Secretary of State Marco Rubio attends a signing ceremony for a peace agreement between Rwanda and the Democratic Republic of the Congo at the State Department, June 27, 2025, in Washington.

Mark Schiefelbein/AP


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Mark Schiefelbein/AP

WASHINGTON — The State Department is warning U.S. diplomats of attempts to impersonate Secretary of State Marco Rubio and possibly other officials using technology driven by artificial intelligence, according to two senior officials and a cable sent last week to all embassies and consulates.

The warning came after the department discovered that an impostor posing as Rubio had attempted to reach out to at least three foreign ministers, a U.S. senator and a governor, according to the July 3 cable, which was first reported by The Washington Post.

The recipients of the scam messages, which were sent by text, Signal and voice mail, were not identified in the cable, a copy of which was shared with The Associated Press.

“The State Department is aware of this incident and is currently monitoring and addressing the matter,” department spokeswoman Tammy Bruce told reporters. “The department takes seriously its responsibility to safeguard its information and continuously take steps to improve the department’s cybersecurity posture to prevent future incidents.”

She declined to comment further due to “security reasons” and the ongoing investigation.

It’s the latest instance of a high-level Trump administration figure targeted by an impersonator, with a similar incident revealed in May involving President Donald Trump’s chief of staff, Susie Wiles. The misuse of AI to deceive people is likely to grow as the technology improves and becomes more widely available, and the FBI warned this past spring about “malicious actors” impersonating senior U.S. government officials in a text and voice messaging campaign.

The hoaxes involving Rubio had been unsuccessful and “not very sophisticated,” one of the officials said. Nonetheless, the second official said the department deemed it “prudent” to advise all employees and foreign governments, particularly as efforts by foreign actors to compromise information security increase.

The officials were not authorized to discuss the matter publicly and spoke on condition of anonymity.

“There is no direct cyber threat to the department from this campaign, but information shared with a third party could be exposed if targeted individuals are compromised,” the cable said.

The FBI has warned in a public service announcement about a “malicious” campaign relying on text messages and AI-generated voice messages that purport to come from a senior U.S. official and that aim to dupe other government officials as well as the victim’s associates and contacts.

This is not the first time that Rubio has been impersonated in a deepfake. This spring, someone created a bogus video of him saying he wanted to cut off Ukraine’s access to Elon Musk’s Starlink internet service. Ukraine’s government later rebutted the false claim.

Several potential solutions have been put forward in recent years to the growing misuse of AI for deception, including criminal penalties and improved media literacy. Concerns about deepfakes have also led to a flood of new apps and AI systems designed to spot phonies that could easily fool a human.

The tech companies working on these systems are now in competition against those who would use AI to deceive, according to Siwei Lyu, a professor and computer scientist at the University at Buffalo. He said he’s seen an increase in the number of deepfakes portraying celebrities, politicians and business leaders as the technology improves.

Just a few years ago, fakes contained easy-to-spot flaws — inhuman voices or mistakes like extra fingers — but now the AI is so good, it’s much harder for a human to spot, giving deepfake makers an advantage.

“The level of realism and quality is increasing,” Lyu said. “It’s an arms race, and right now the generators are getting the upper hand.”

The Rubio hoax comes after text messages and phone calls went to elected officials, business executives and other prominent figures from someone who seemed to have gained access to the contacts in Wiles’ personal cellphone, The Wall Street Journal reported in May.

Some of those who received calls heard a voice that sounded like Wiles, which may have been generated by AI, according to the newspaper. The messages and calls were not coming from Wiles’ number, the report said. The government was investigating.



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