Leveraging Gulf AI Ambitions for US Strategic Objectives

Summary

• What’s happening: The United Arab Emirates and Saudi Arabia are investing billions to cement their place in the global AI supply chain.
• So what: The two Gulf states are also hedging between the US and Chinese AI ecosystems, giving them power to shape or obstruct American AI objectives.
• Clear-eyed engagement: The US should step up its collaboration with the UAE and Saudi Arabia, while enforcing strict safeguards on advanced chip exports and data center security. 

While the US and China lead the world in the development of frontier AI, two ‘geopolitical swing states’ are playing increasingly significant roles in the AI supply chain. 

The United Arab Emirates (UAE) and Saudi Arabia have massive sovereign wealth funds, cheap energy, and a strategic need to diversify beyond oil. These factors have incentivized both countries to invest heavily in AI companies and infrastructure, both domestically and in the US, China, and elsewhere. 

With these investments, the UAE and Saudi Arabia are developing enough influence to contribute to or obstruct American AI objectives. Active engagement with the Gulf states should therefore be an essential part of US AI policy and diplomacy. 

United Arab Emirates

The UAE has adopted an aggressive pro-growth strategy to AI governance. Rather than imposing new regulations, it is prioritizing government capacity building and establishing strategic partnerships with leading companies and Western governments by allowing rapid permitting for data center infrastructure build-out.

The UAE has also supported the development of two large language models – Falcon and Jais. These open-source and Arabic-speaking models help attract regional research talent while also giving the UAE considerable influence over developer practices across the Arabic-speaking world. 

Possessing some of the world’s largest sovereign wealth funds (with over $1.5 trillion in assets), the UAE has become a major investor in Western AI companies. As one example, MGX, a $10 billion Emirati AI-focused fund launched in February 2024, has invested directly in OpenAI and in the company’s Stargate Project in the US.

In addition to building financial ownership stakes in American AI companies, the UAE is also permitting the rapid build-out of massive domestic infrastructure, such as the planned Stargate UAE, a 1 gigawatt supercomputing cluster, and another 5 gigawatt AI supercomputing cluster in Abu Dhabi.

Saudi Arabia

Saudi Arabia has launched an ambitious pro-growth AI strategy funded by oil revenues, advancing its Vision 2030 economic diversification plan.

The kingdom boasts some of the world’s most affordable oil, gas, and solar energy – ideal for powering new data centers. Combined with its strategic geographical location connecting Europe, Asia, and Africa, this positions Saudi Arabia as an attractive AI infrastructure hub.

Saudi commitments to AI infrastructure have exceeded $100 billion, making the kingdom one of the largest global AI investors. This massive capital is attracting Western technological partners, such as Google Cloud and AWS, to launch government-approved infrastructure projects within the country. 

Playing both sides

However, both Saudi Arabia and the UAE are walking a tightrope between the US and China.

In efforts to appeal to US decision-makers, Saudi Arabia’s flagship AI company HUMAIN promised not to purchase equipment from China’s Huawei, and Emirati officials reportedly claimed to be ‘decoupling’ from China. Yet each country still has numerous investments in and linkages to the Chinese tech ecosystem.

G42, a major UAE AI investment fund, was prompted by the US in 2024 to divest from its Chinese holdings – but simply transferred these investments to an Emirati royal-owned fund, Lunate. Lunate has since built a 35.5% investment in Alibaba, one of China’s largest AI companies.  

On the Saudi side, sovereign wealth funds have been consistently investing in the Chinese AI ecosystem and even in US-sanctioned companies, such as surveillance company Dahua Technologies. In 2023, Huawei promised to invest $400 million in Saudi cloud infrastructure over 5 years and launched a data center in Riyadh.

These partnerships are transactional, not ideological. Both Gulf states are hedging their bets between US and Chinese AI power.

This has implications for US chip exports to the region. The US decision in November 2025 to export $1 billion worth of NVIDIA’s ultra-high-end GB300 chips to G42 and HUMAIN brings the risk of diversion of these chips into China. Notably, the GB300 is more powerful than the H200 chip recently approved for export to China, despite significant opposition from Congress on national security grounds.

How the US can engage

The US should be clear-eyed about the risks of exporting advanced chips and AI models to the UAE and Saudi Arabia. The US should also be careful to ensure that proper security and governance conditions are in place for new data center infrastructure in the region.

To protect American strategic interests while leveraging partnerships with the Gulf countries, US policymakers should:

‍1. Strengthen cooperation 

The US should deepen AI cooperation with the Gulf states as their significance in the AI supply chain grows. 

First, the US could build on existing security cooperation in other domains. As an example, the US Department of Defense could establish pilot information-sharing initiatives with Gulf partners focused on preventing frontier AI threats, such as AI-led cyber attacks.

Second, the US could explore joint investment programs to channel the Gulf states’ unique capital abundance towards American AI priorities. For instance, the Department of Commerce could facilitate partnerships between the US Investment Accelerator, American private sector funds, and the UAE and Saudi Arabia’s respective sovereign wealth funds. 

‍2. Secure AI infrastructure and innovation

To ensure the UAE and Saudi Arabia appropriately secure US AI innovation, the US Department of Commerce could require Emirati and Saudi data centers to adopt US-specified risk mitigation measures. The Gulf states’ continued access to advanced chips would be contingent on their verified compliance with these measures.

Such mitigation measures could include penetration testing of the data centers, pre-deployment red-teaming of US AI models developed on Gulf state infrastructure, and Know Your Customer monitoring practices for users of the data centers. Given the massive scale of the planned chip exports, the Department of Commerce could also require periodic audits of chip deployment and end-use to prevent diversion.

To encourage compliance, the US Bureau of Industry and Security (BIS) must be enabled to better monitor chips used in UAE and Saudi data centers. Some of the recent boost to BIS funding should arguably be put to this end.

Making the most of Gulf ambitions

Partnering closely with the UAE and Saudi Arabia makes sense for furthering American national security and economic interests. Energy, data center capacity, and capital investment are all bottlenecks for AI development, and the UAE and Saudi Arabia are uniquely positioned to help.

The UAE and Saudi Arabia will continue to make AI a national priority – regardless of whether the US partners with them. If the US does not step up, China and others will fill the gap.

The US can’t afford to lose a foothold in an increasingly important part of the global AI supply chain. Nor should it allow American investments in the region to further the AI ambitions of its competitors. 

‍Read our full paper here.