Why the Gulf is key to winning the AI arms race
The once oil-driven economies are becoming key players in artificial intelligence politics.
“The AI future is not going to be won by hand-wringing about safety. It will be won by building—from reliable power plants to the manufacturing facilities that can produce the chips of the future.”
The above remark was made by Vice President JD Vance during his speech at the February 2025 Artificial Intelligence Action Summit in Paris.
This statement marked a turning point in American technology policy. The previous Biden-Harris administration’s artificial intelligence (AI) policy had taken a safety-centric approach, focusing on restrictions on AI development both domestically and abroad.
A notable outcome of Biden’s policy was the Framework for Artificial Intelligence Diffusion (commonly referred to as the AI diffusion rule), a comprehensive export controls scheme for AI technology. Key elements included:
Licensing for international organizations to acquire U.S.-made chips and build large data centers using American technology.
A three-tier licensing model for countries: Tier 1 (no or minimal limits); Tier 2 (Presumption of approval until certain caps are reached); Tier 3 (Strict denial policies).
Retention clause: Authorized data centers were required to keep at least 75% of controlled chips within the U.S. or allied nations.
Although enacted in the final days of the Biden-Harris administration, the Trump-Vance administration scrapped the framework in May, signaling a bolder, innovation-first approach to AI—one that prioritized advancement over caution.
This shift became increasingly evident during President Donald Trump’s visit to the Gulf Cooperation Council (GCC) in May 2025, where he toured Saudi Arabia, the United Arab Emirates (UAE), and Qatar.
The visit deepened commercial ties between the U.S. and the Gulf, resulting in various memorandums of understanding, trade agreements, and investment deals totaling over $1 billion across multiple industries.
Had this visit taken place two or three decades ago, the primary industry of focus would have been oil—the Gulf’s leading resource.
While energy-related agreements were signed—Saudi oil giant Aramco announced 34 new agreements with American firms—AI and the broader tech sector took center stage during Trump’s trip.
Highlights from the visit include:
The launch of HUMAIN: A Saudi-based AI organization backed by the Public Investment Fund (PIF), which also announced a strategic partnership with U.S.-based NVIDIA.
500,000 yearly NVIDIA chips agreement: The UAE secured the right to import half a million of NVIDIA’s most advanced AI chips annually starting in 2025.
Quantinuum joint venture: U.S.-based quantum computing firm Quantinuum announced a partnership with Qatar’s Al Rabban Capital.
Though the trip was primarily business-centric, an underlying geopolitical thread connects these agreements. As AI technology continues to advance, so too do concerns over its misuse by rogue states. This concern was a core justification behind the AI diffusion rule, which banned sales of American AI technology to hostile nations (ex. Iran, classified as Tier 3).
From geopolitical analysts to technologists, many have warned of an impending AI arms race between the U.S. and its rivals—most notably China—evoking parallels with the nuclear arms race of the Cold War.
As advancements in AI continue, it will be critical for the U.S. to foster ties with nations eager to support responsible and innovative AI development. Fortunately for Washington, the Gulf states are ready to do just that.
While oil has long been the hallmark of Gulf Cooperation Council economies, several Gulf countries—most notably Saudi Arabia, the UAE, and Qatar—have in recent years taken significant steps to diversify their economies.
This economic diversification began with Abu Dhabi’s investments in tourism, as the emirate transformed Dubai into a global hub and major tourist attraction. Doha quickly followed suit, culminating in hosting the 2022 FIFA World Cup.
Now, Riyadh is launching its own diversification campaign under the banner of Vision 2030—an ambitious economic development strategy aiming to grow sectors such as tourism, sports, entertainment, and technology.
A critical component of these efforts is support from each state’s sovereign wealth fund (SWF). These funds have been instrumental in financing both domestic and international projects, accelerating each country’s push into emerging markets.
The Saudi Public Investment Fund (PIF), for example, signed multiple multibillion-dollar agreements with American firms during Trump’s visit, totaling up to $12 billion in investments.
From personal experience, I recently traveled to Riyadh to attend the 2025 Sports Investment Forum, a gathering of sports investors, conglomerates, and startups from both Saudi Arabia and abroad—with a particular emphasis on tech-driven innovation.
Emerging technologies—especially AI—have captured the attention of Gulf investors due to their broad sector applicability.
For instance, amid regional tensions sparked by conflict between Israel and Iran, Dr. Sultan Ahmed Al Jaber, CEO of the Abu Dhabi National Oil Company, traveled to Washington to attend the second edition of ENACT—an annual conference that brings together leaders in energy and emerging technologies. This points to how AI development is becoming an ever-increasing foreign policy priority for the GCC, even as the wider Middle East continues to face geopolitical calamity.
Although many U.S. allies are investing in AI, the Gulf states stand out as particularly attractive partners for several reasons:
Strategic Market Location: Situated along key maritime routes bridging Asia and Africa, GCC partnerships would enhance America’s role in global AI proliferation.
Rising Youth Population: Gulf states—especially Saudi Arabia—are experiencing a demographic boom, with one of the most educated youth populations in the region. That youth drives innovation.
SWF Backing: Continued support from sovereign wealth funds like the PIF ensures a stable stream of capital, even in volatile markets.
Given these advantages, if the Trump-Vance administration is committed to maintaining U.S. dominance in AI, deepening collaboration with the GCC will be critical—both for business development and for geopolitical influence.
The U.S. should focus on the following priorities:
Deepen current agreements with the Gulf and secure new ones, especially those involving SWFs.
Enable the shipment of cutting-edge American chip technology to the Gulf. Under the AI diffusion rule, GCC countries were excluded from Tier 1 status. Given their recent investment push and their role as critical non-NATO allies, they should now be reclassified as Tier 1 nations, if a new framework is created.
Encourage the Gulf to divest from Chinese technology. As Chinese firms aim to expand influence in the Gulf, the U.S. should offer strategic alternatives—convincing GCC-based entities to pivot from Chinese tech in exchange for comparable partnerships with American firms.
What do you think is the future for U.S.-Gulf cooperation in AI? Will the GCC lead the way in new technological developments? What role will China play? Let me know down below!