They can, and I'm sure they want to and will try very hard. But there are a number of major problems which will emerge and will carry the whole project directly to hell.
1. There's a lot of countries out there, anyone can join any instance that's based anywhere. Smart countries will not enforce rules because they'd prefer to collect sigint, dumb countries will push all of their instances away...
2. Once you create a mechanism for censorship, everyone starts piling on to try to get Their Special Thing censored. If it's Germany, they're gonna have Israel breathing down their neck to add "Free Palestine" to the CSAM filter. This is going to create nuclear levels of butthurt in the canceldon/fediblock extreme left zone.
tl;dr invest in popcorn
