U.S. President Donald Trump and UAE President Mohamed bin Zayed Al Nahyan discuss AI cooperation in Abu Dhabi, UAE. White House photo.
The United States’ Precarious AI Strategy in the Middle East
The United States is aggressively promoting the diffusion of artificial intelligence to the United Arab Emirates and Saudi Arabia to counter Chinese influence in the Gulf. As it does so, Washington must balance concerns that AI cooperation with Gulf states will risk technology and data transfers to China with concerns that restricting exports will lead to Beijing’s AI dominance in the region. Washington must take further steps to ensure data security and to mitigate technology transfer, including strengthening sanctions enforcement and clarifying security and reporting requirements in its AI agreements.
Saudi Arabia and the UAE are home to growing AI industries. Both countries are leveraging state funds to support new AI firms like the Saudi company HUMAIN and the Emirati company G42. The Saudis and the Emiratis have also sought investment and technological assistance from the world’s two leading AI powers, the United States and China. However, the Biden Administration approached AI cooperation with Riyadh and Abu Dhabi with trepidation due to their close ties with the PRC. Following reports in 2022 that G42 was transferring advanced American semiconductors to China, including semiconductors that were allegedly used to enhance Chinese missiles, Washington pressured G42 to divest from Chinese businesses. The Biden Administration also issued a rule that would cap the number of semiconductor exports to the region.
However, semiconductor export controls have been undermined by pervasive smuggling networks that have proven highly difficult for Washington to combat. And while export controls have slowed down Chinese AI development, they may also be counterproductive to U.S. goals. Beijing responded to these measures by pushing domestic industries to improve semiconductor manufacturing and build out an indigenous AI stack. Those broad export controls also ceded influence in the Middle East’s AI sector to China. The PRC’s “Artificial Intelligence+” strategy emphasizes embedding its AI in infrastructure systems like security apparatuses, urban landscapes, and industrial processes. Chinese systems deployed in the Gulf would thus allow it to leverage foreign infrastructure and conduct surveillance in the region.
The Trump Administration has instead aggressively pursued the expansion of American AI technology in the region, quickly rolling back export restrictions. Like G42, HUMAIN has pledged to divest from China to win U.S. trust and investment. In addition, Washington’s AI cooperation agreements with Riyadh and Abu Dhabi have emphasized security requirements and security cooperation. The Bureau of Industry and Security (BIS) has also implemented security and reporting requirements as part of recent approvals for semiconductor sales to the Gulf.
However, security and reporting requirements of U.S.-Gulf AI agreements remain unclear, and BIS is short on resources to carry out enforcement of these requirements. In 2025, the Bureau experienced layoffs and its budget was slashed by $20 million. This was after reports that BIS was already chronically underfunded and understaffed – in 2022 the Center for Strategic and International Studies estimated that BIS needed $25 million in extra funding to modernize and fulfill its mandate. In addition, reports of alleged and confirmed business deals between Gulf leaders and Trump family entities raise concerns that conflicts of interest are inhibiting full consideration of national security risks.
To address these issues, BIS should clarify what security and reporting requirements are necessary for Saudi and Emirati firms to access U.S. AI technology and investment. These requirements could follow those proposed by AI security experts at the Carnegie Endowment for International Peace, including adherence to U.S. cybersecurity standards, reporting of security measures, and closure of export control loopholes. To ensure that BIS can meet the enforcement burden, Congress should approve or approximate the Department of Commerce’s request to increase the FY2026 BIS budget from $171 million to $303 million.
If the United States continues its AI cooperation with the Middle East without properly guarding against national security concerns, it will risk American data and advanced semiconductor transfer from the Gulf to China. However, if the United States clarifies the reporting and security requirements referenced in its Middle East AI agreements and provides additional funding for BIS, the United States can continue its strategy to compete with China on AI in the Middle East while mitigating national security risks. As the United States and China vie to expand their AI footprints in different regions, it is crucial that Washington engage partner countries with the proper tools and procedures. If not, it may shoot itself in the foot in its eagerness to outpace Beijing.
