The pursuit of AI supremacy in the Middle East is not merely a technological competition; it is a geopolitical chessboard where alliances are forged, and decisions have significant consequences. The United States and China, both vying for dominance in AI, view it not only as a technological frontier but also as a matter of national security.

The U.S., recognizing the importance of chip production for national security, is expanding its influence in the Middle East, urging countries to align with its interests. On the other hand, China's growing presence in the region has raised concerns in Washington, leading to scrutiny and restrictions.

The Gulf region is caught in the middle of this AI rivalry between China and the U.S. In August 2023, the U.S. imposed restrictions on shipping high-performance chips from TSMC in Taiwan to the Middle East, aiming to prevent Chinese firms from accessing cutting-edge chip technology through Middle Eastern countries.

UAE's Embrace of U.S. AI Partnership

At the heart of the UAE's AI strategy is a deliberate decision to strengthen ties with the U.S. This strategic partnership is evident in the UAE's divestment from Chinese companies, as reported by the Financial Times. G42, an Emirati AI company and a founding partner of MGX, has sold its shares in Chinese firms, including TikTok owner ByteDance. 42XFund, the $10 billion technology investment arm of G42, has divested from all its investments in China.

This move aims to ensure access to U.S.-made chips by addressing concerns among its American partners, which include Microsoft and OpenAI. "For better or worse, as a commercial company, we are in a position where we have to make a choice," Xiao told the Financial Times. "We cannot work with both sides. We can't."

Meanwhile, the UAE's Minister of State for Artificial Intelligence, Omar Al Olama, described the UAE as a "very strong partner" to the U.S. However, he added that this partnership does not rule out working with Chinese companies.

Saudi Arabia's Diplomatic Tightrope

Saudi Arabia's AI ambitions are intertwined with its Vision 2030, a comprehensive plan aimed at reducing oil dependency and driving economic growth through technology-driven diversification. However, Riyadh faces a delicate diplomatic balancing act as it seeks to maintain its relationships with both China and the U.S.

The recent ban on Saudi Arabia purchasing FTX shares in Anthropic due to national security concerns underscores the complexities Riyadh faces. Anthropic's decision reflects the intricate geopolitical landscape, citing Saudi Arabia's ties with China and its human rights record as factors influencing the ban.

Despite these challenges, Saudi Arabia is deepening its partnership with China, which has not gone unnoticed, drawing scrutiny from the United States and other stakeholders. As Riyadh strives to navigate this geopolitical tightrope, the United States' opposition to Saudi investment in sensitive sectors signals its strategic interests in safeguarding technology and aligning with allies on critical issues.

UAE's AI Leadership

The UAE is making significant strides in the global AI landscape, backed by concrete initiatives and substantial investments. With the National Artificial Intelligence Strategy 2031, the UAE aims to solidify its position as a leading AI innovator.

The UAE's commitment is evident in its financial investments, as seen in the $500 million allocation announced by the Advanced Technology Research Council (ATRC). This investment encompasses two key initiatives: a $200 million endeavor for technology access and the establishment of the Falcon Foundation, and a $300 million nonprofit organization dedicated to developing open-source generative AI models.

Collaborations with industry giants like Mastercard and Cerebras underline the UAE's dedication to advancing AI capabilities. Mastercard's Center for Advanced AI and Cyber Technology in Dubai, inaugurated as part of a collaboration with the UAE government, aims to develop AI-powered financial crime prevention tools.

Saudi Arabia's Rapid AI Investment

While the UAE pioneered AI initiatives with the world's first Ministry of Artificial Intelligence in 2017, Saudi Arabia's ambitious Vision 2030 drives substantial investment in AI. Strategic investments, led by the Public Investment Fund (PIF), underscore Saudi Arabia's commitment to AI initiatives.

The PIF's newly formed entity, Alat, has outlined ambitious plans to invest $100 billion in Saudi Arabia by 2030, aiming to drive economic diversification, generate skilled jobs, and bolster the non-oil economy. Alat's collaboration with various partners, including Dahua Technology and SoftBank Group, exemplifies Saudi Arabia's commitment to leveraging external expertise and resources to advance its AI agenda.

Overcoming AI Barriers in MENA Amid Geopolitical Pressures

In the MENA region, AI adoption faces a dual challenge of navigating geopolitical pressures amidst the U.S.-China rivalry while overcoming inherent barriers. Despite the region's burgeoning AI landscape, sectors like construction lag due to data and expertise gaps, compounded by regulatory hurdles and data storage restrictions.

To bridge these gaps, MENA organizations are ramping up investment in security and risk management (SRM), albeit facing technology infrastructure deficiencies. The UAE's MGX initiative aims to address this by investing in AI infrastructure and advanced training programs, paving the way for MENA to become an AI hub. However, amidst an AI arms race between China and the U.S., MENA grapples with chip design challenges and restricted chip exports.

Despite abundant energy resources which could support the establishment of data centers for AI model training, Gulf states like the UAE and Saudi Arabia require support to develop homegrown chip design capabilities and attract global AI talent. Partnerships with industry leaders like Sam Altman and Masayoshi Son offer potential avenues for bolstering MENA's AI ambitions amidst geopolitical pressures.