Gulf States Reach AI Crossroads

By Piercamillo Falasca

A clear divide is emerging between how Saudi Arabia and the UAE approach artificial intelligence (AI)—reflecting the intense competition between the United States and China over this transformative technology. Abu Dhabi is focusing on the major AI players in the US, while Riyadh is reducing AI investments in the US and putting more emphasis on cooperating with Beijing.

The GCC states are pursuing a balanced foreign affairs approach — particularly between China and the US — however, Washington is increasing pressure on the Gulf states regarding AI, fearing that sensitive Western technology could make its way to China via the Gulf. In August 2023, the US imposed restrictions on exporting AI chips to ‘unnamed Middle East countries’ due to these concerns.

Over the past year, the UAE, in particular, has clarified its position. In February 2024, UAE-based G42 exited its China investments under US pressure. In April, Microsoft invested $1.5 billion (USD) in G42, announcing a collaboration on AI technologies and services. G42 is part of the business interests of UAE national security advisor Sheikh Tahnoun Bin Zayed Al-Nahyan (TBZ), who also chairs the UAE’s AI and Advanced Technology Council (AIATC) and the newly established MGX, focusing on AI infrastructure. UAE minister of state for AI and the digital economy Omar Sultan Al-Olama described a ‘marriage’ between the UAE and the US over AI developments in an interview with the Financial Times on 4 June where he emphasised the need for coordination with US players and reassurances to the US regarding frontier technology.

Saudi Arabia is moving in a different direction. In 2023, Saudi Aramco-backed venture capital fund Prosperity7 Ventures sold its stake in the US AI start-up Rain Neuromorphics under US pressure. Prosperity7 has several Chinese companies in its portfolio and offices in Beijing and Shanghai. Recently, it invested in Chinese generative AI start-up Zhipu AI as part of a $400 million fundraising round. Further illustrating Saudi-Chinese technology cooperation, Hong Kong-based PC maker Lenovo issued $2 billion in convertible bonds to Alat, a subsidiary of Saudi Arabia’s Public Investment Fund, on May 29. Lenovo plans to establish a Middle East and Africa headquarters, a research and development centre, and a manufacturing facility in Riyadh, aligning with Crown Prince Mohammed Bin Salman’s Vision 2030.

China is eager to strengthen technology ties with the Arab world. At the opening of the China-Arab States Cooperation Forum in Beijing on 30 May, President Xi Jinping announced plans to build ten joint laboratories with Arab partners, focusing on AI, life sciences, and low-carbon development. Xi’s remarks suggest Beijing is resisting US pressure over AI partnerships. Xi also proposed developing a joint space debris observation centre and an industry and investment cooperation forum with Arab partners, emphasising energy sector cooperation. He announced that China would host the second Arab-China summit in 2026, following the inaugural event in Riyadh in December 2022. The Beijing event highlighted China’s focus on economic ties with the region while avoiding deep political entanglements. Xi pledged CNY500 million ($69 million USD) in emergency humanitarian assistance for Gaza. In March 2023, Beijing brokered a diplomatic rapprochement between Saudi Arabia and Iran.

Ahead of the forum, Chinese Ministry of Foreign Affairs spokesperson, Mao Ning, stated (29 May) that China had signed Belt and Road cooperation documents with all 22 Arab states and implemented over 200 projects under Xi’s programme. Additionally, 17 Arab states are now members of the Asian Infrastructure Investment Bank. A free trade deal between China and the Gulf Cooperation Council (GCC) is also under discussion, with about 90% of the terms agreed upon.

The rising diplomatic battle over AI deals highlights the difficulty of separating global political considerations from economic and business relations. Greater AI cooperation is particularly sensitive, given longstanding US suspicions about Chinese influence in AI initiatives in the Gulf.

The Gulf states’ nuanced approaches to China follows a period of relative calm regarding deeper geopolitical divides between the world’s two economic superpowers. This is despite the potential impact on their longstanding US security alliances and China’s growing hard power interests in the region. With AI’s strategic implications and the crucial role of Gulf capital in its development emerging as a litmus test for shifting geopolitical perceptions. These developments suggest that middle powers may eventually need to make difficult choices between major players, with or without AI’s assistance.

Eid Al Adha

By Daniela Palumbo

Eid Al Adha, also known as the ‘Day of Sacrifice,’ is among the most significant holidays on the Islamic calendar and is enthusiastically embraced in the GCC countries—as well as throughout the rest of the Middle East. This holiday commemorates the Prophet Ibrahim’s willingness to sacrifice his son as an act of obedience to God. An angel then arrived to prevent the sacrifice and, instead, a ram was sacrificed. Eid Al Adha symbolises faith, devotion and the spirit of giving. Eid Al Adha is a public holiday that offers to everyone a well-deserved break. The exact dates of the holiday are determined by the Islamic lunar calendar and the sighting of the moon; it is usually a four or five days break. During Eid Al Adha, families gather to perform the special Eid prayer, which usually takes place in large mosques and open prayer fields. After the prayers, the ritual of Qurbani — which means sacrifice — takes place, in which animals such as sheep, goats or cows are sacrificed and the meat distributed to all, embodying the festival’s essence of sharing and compassion. The celebration is also an occasion for cultural reinforcement and social cohesion as streets and houses are often decorated and there is a celebratory atmosphere.

Eid Al Adha also has a remarkable impact on the economy, particularly on the consumer and tourism sectors. Shopping centres and markets see a surge in activity as people buy new clothes, gifts and household items ahead of the festivities. Hotels and leisure facilities offer packages and special events, attracting both residents and tourists. In addition, many residents take the opportunity to visit family members and, as a result, airports and public transport systems see an increase in traffic.

Eid Al Adha, in the Gulf countries and the Middle East in general, is a time of deep religious observance, cultural celebration and community spirit. It is a testimony to the rich cultural heritage and sense of unity among the people offering the opportunity to reconnect with their faith and traditions, while contributing to the countries’ vibrant social and economic lives.

The Dynamics of Succession in Kuwait

By Daniela Palumbo

The recent string of successions in Kuwait, following the 2020 passing of the late Emir Sabah AlAhmad Al-Sabah, have crucial geopolitical implications for the Gulf region…and beyond. Kuwait is a small but strategically vital country in the Gulf region that has historically played a central role in regional politics and global energy markets. The death of Emir Sabah Al-Ahmad Al-Sabah and the subsequent accession (and passing) of Sheikh Nawaf Al-Ahmad Al-Sabah, marked a period of transition which is now settling into the old model of the Al-Sabah family — which has ruled Kuwait since the mid-18th century — which combines traditional leadership with modern state institutions. Sheikh Sabah Al-Ahmad Al-Sabah (who ruled from 2006 until his death in 2020), was known for his high level of diplomatic skills and his governance was characterised by a relatively stable political environment, with positive economic policies and active foreign diplomacy.

This tradition carried on to the period of Sheikh Nawaf Al-Ahmad Al-Sabah, who was 83 at the time of his ascension. Although his time as Emir of Kuwait was short, he maintained the good standing and clear diplomatic vision of Kuwait. His death in 2023 deeply impacted the country and region.

The 2023 succession of Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah while, again, maintaining the general direction of Kuwait also brings important new opportunities for the country. Known for his extensive experience in Kuwait’s security apparatus and his role as Deputy Chief of the National Guard, Sheikh Mishal is expected to maintain the political stability fostered by his predecessors. The relationship between the ruling Al-Sabah family and the elected parliament that represents a wide tent of interests is based on striking a delicate balance. Shaikh Mishal’s approach to legislative reforms and dealing with demands for greater political freedoms and anti-corruption measures will be crucial. Moreover, build on Sheikh Nawaf’s focus, steps towards economic reforms and initiatives to promote private sector growth are continuing and Sheikh Mishal is focused on Vision 2035–Kuwait’s long-term development plan that aims to transform the country into a regional financial and trade hub.

Kuwait’s foreign policy continues to be characterised by a careful balancing act between the major powers with the US remaining a key ally, with strong military and economic ties. At the same time, Kuwait has sought to maintain good relations with other influential nations, including China and Russia—a critical aspect of Sheikh Mishal’s foreign policy priorities. This is in addition to the reinforcement of Kuwait’s position in the GCC and its supporting role for NATO.

All in all, the succession of Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah marks a new chapter for Kuwait, as his leadership will be decisive in shaping the country’s future trajectory and for ensuring the safety, prosperity and unity of Kuwait.