As artificial intelligence (AI) transforms global power dynamics, the U.S. finds itself in a high-stakes race against China to influence emerging AI hubs in the Gulf. Nations like Saudi Arabia and the United Arab Emirates (UAE) see AI as a path to diversify their economies and expand their regional influence. For the U.S., this shift presents both an opportunity to strengthen alliances and a challenge as these Gulf nations deepen their ties with China. In his article The Emerging Age of AI Diplomacy, Sam Winter-Levy explores the intricate dynamics of AI diplomacy in the Gulf, outlining the risks, strategies, and opportunities facing Washington in this new frontier of technology and international relations.
Gulf ambitions: Building an AI powerhouse
AI technology is central to Saudi Arabia’s and the UAE’s efforts to diversify their economies away from oil dependency. Saudi Arabia, for instance, has launched a $40 billion AI investment fund, while the UAE has established a university dedicated to AI, quadrupling its workforce in the field since 2021. Both nations are also positioning themselves as key players in the AI-driven tech ecosystem. The UAE’s tech company G42, for example, has rapidly scaled its operations, supported by investments from U.S. tech giants like Microsoft.
These initiatives signal the Gulf’s ambition to become a global leader in AI, using abundant capital and energy resources to attract the world’s top technology companies. OpenAI’s CEO Sam Altman has explored partnerships with Emirati investors for multibillion-dollar investments in chip manufacturing and data centers, while Amazon recently committed $5.3 billion for data centers in Saudi Arabia. These collaborations suggest that, with the right partnerships, the Gulf states could become critical nodes in the global AI supply chain.
The U.S. opportunity
Washington sees these Gulf ambitions as an opportunity to deepen ties in the Middle East and counterbalance China’s expanding influence. By providing Gulf states access to advanced AI chips and computing resources, the U.S. hopes to incentivize these nations to favor American technology over Chinese alternatives. This approach could support the U.S. strategy of reinforcing an anti-Iran coalition while maintaining influence over global oil exporters who increasingly shape regional power dynamics.
U.S. leverage comes from its control over the export of high-performance AI chips. These chips, essential for advanced AI systems, require U.S. government licenses, and Washington has been cautious about approving large-scale exports. This caution signals to Gulf nations that access to top-tier AI hardware is contingent on their alignment with U.S. interests. However, should the U.S. adopt overly restrictive policies, Gulf nations might turn to China’s tech giants, like Huawei and Alibaba, who are already offering alternatives and are eager to fill any gaps left by American firms.
Gulf hedging
While the Gulf states are interested in closer ties with the U.S., they are unlikely to fully sever their connections with China. China is the UAE’s top non-oil trading partner and Saudi Arabia’s largest oil customer. Chinese firms also provide technologies the U.S. is less willing to share, like surveillance systems, drones, and advanced military technologies. China’s non-interference policy on human rights aligns well with the Gulf states’ preferences, making Chinese partnerships appealing, especially in sensitive areas.
The UAE’s relationship with China is particularly robust; it includes joint air force exercises, Chinese-made drones, and heavy investment in Africa that rivals China’s footprint. While the UAE has reassured the U.S. by divesting from Huawei technology within G42 and implementing strict controls over its AI data centers, it simultaneously manages a China-focused investment fund. This strategic balancing, or hedging, allows the Gulf states to extract concessions from both powers without fully committing to either, reflecting a growing trend among emerging economies seeking autonomy in a multipolar world.
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The risks of AI technology sharing
Despite the potential benefits, sharing advanced AI technology with the Gulf entails substantial risks. Washington must consider that AI infrastructure, if not properly controlled, could enable Gulf states to develop autonomous military systems or invasive surveillance technologies that conflict with U.S. values. Lawmakers and military officials have also raised concerns that Chinese firms, some of which are affiliated with China’s People’s Liberation Army (PLA), might gain indirect access to U.S. technology through partnerships with Gulf entities.
Furthermore, the rapid advances in AI could lead to capabilities that disrupt global stability, including powerful cyber tools or synthetic bioweapons. The U.S. risks losing control over sensitive technology if it relies on Gulf data centers for AI model training. As AI technology becomes increasingly pivotal, the strategic implications of hosting AI infrastructure abroad—especially in politically volatile regions—are becoming clearer. Former OpenAI researcher Leopold Aschenbrenner compared the stakes of sharing AI technology to allowing a “Manhattan Project” to unfold under the control of foreign powers with differing agendas.
A balanced approach
Winter-Levy argues that Washington should avoid imposing blanket restrictions on AI technology exports to the Gulf. While the U.S. must safeguard its most sensitive technologies, it can still engage with Gulf partners by setting strict conditions and monitoring agreements. For instance, the U.S. Department of Commerce recently eased restrictions on AI chip exports to the UAE following the UAE’s compliance with measures like removing Huawei components from its data centers. These measures can be used as models for managing partnerships that balance commercial benefits with national security concerns.
At the same time, the U.S. should not overlook the need for cybersecurity and physical safeguards in Gulf data centers. Washington should negotiate stringent compliance standards, with regular oversight to ensure that U.S. technology isn’t misused or repurposed. Such checks are essential to maintaining U.S. control over frontier AI capabilities while allowing strategic collaborations to flourish. By closely monitoring these facilities and requiring transparency from Gulf partners, the U.S. can mitigate risks without completely forgoing the benefits of these partnerships.
Setting precedents in AI diplomacy
The Gulf offers a testing ground for the U.S. to refine its approach to AI diplomacy, a critical step as AI’s transformative potential reshapes geopolitics. Moving forward, the U.S. will likely face similar challenges in balancing technological collaboration and security in other regions. A well-managed partnership with the Gulf states can establish precedents for AI export policies that preserve U.S. technological leadership without alienating strategic partners.
In the age of AI diplomacy, the U.S. must learn to work within complex regional alliances, accept that other nations will hedge between major powers, and avoid pushing allies toward China. While Washington may not achieve an exclusive alignment from Gulf partners, it can secure a leading role in their AI ecosystems, shaping these relationships through a mix of influence, caution, and strategic flexibility.
Conclusion
AI technology has become a central pillar of modern diplomacy, bringing new opportunities and risks to the U.S.-Gulf relationship. By embracing a balanced approach, the U.S. can foster AI cooperation with Gulf states while protecting its technological edge. This strategy requires Washington to maintain vigilance, enforce compliance, and accept the reality of multipolar engagement. As AI reshapes the global order, the U.S. faces a defining challenge: leading the AI era not just through innovation but through diplomacy that reflects the nuanced realities of an interconnected world.
