China, the US, and the battle over technology in the Middle East

The United States is changing the way it deals with China's technology statecraft in the Middle East. The recent Microsoft-G42 agreement provides a new model for technology competition that helps secure U.S. technology while meeting partner demands.

China's involvement in the Middle East is closely intertwined with its broader global competition with the United States, which is increasingly becoming a serious contest for great power supremacy. Technological innovation has been a flashpoint in this struggle, and this conflict has led to what is commonly referred to as “technological decoupling”: reducing asymmetrical dependencies and, in some cases, disentangling the technological and cyber realms. We are promoting mutual step-by-step measures aimed at advancing the process. absolutely. As the effects of this process continue to unfold, the Middle East is drawn into the conflict between China and the United States and is increasingly playing a key role.

As U.S.-China competition intensifies, some regional actors are choosing to articulate strategic collaboration on key technologies such as 5G, artificial intelligence (AI), and unmanned systems, and this trend This is illustrated by mid-month Microsoft-G42 trading. In it, the US tech giant agreed to invest $1.5 billion in an Abu Dhabi-based technology holding company that is experiencing growth in the AI ​​market. The agreement's scalability, governance, and guardrails make it a governance model that can be used with other Gulf countries regarding AI collaboration.

Technology as a driving force for the new Middle East

Although there is still a strong perception that the Middle East is an energy-dependent region, a generational shift is occurring to move the economy away from dependence on hydrocarbon exports. Technology plays a key role in driving this new Middle East. For many years, the region's technological landscape has been heavily influenced by its economic and geopolitical entanglements with the United States and Western countries. However, with the return of great power competition and the Middle East's concerted efforts to foster greater economic and technological independence, these dynamics are undergoing gradual but profound changes. China is becoming increasingly integrated into the region's technology ecosystem, much to the chagrin of the US government.

As the United States continues to closely monitor China's technological influence over key partners in the Gulf region, one company in particular has caught the attention of U.S. officials. That is UAE's G42. Founded in 2018, the UAE technology holding company describes itself as dedicated to advancing AI capabilities and adoption within the UAE and beyond. G42 companies cover a wide range of industries, but all feature AI as a core aspect of their business. For example, G42 Holdings' AIQ focuses on developing and commercializing AI products for the energy industry, while Bayanat and his M42 apply AI to geospatial intelligence and healthcare, respectively. G42 also has a strong investment arm, which it uses to acquire stakes and secure joint ventures with foreign technology companies. The company has extensive relationships with Chinese technology companies, including partnerships with Huawei and BGI Genomics, raising concerns among some U.S. officials about data privacy and security. The company has also invested heavily in Chinese companies such as ByteDance, and operates a $10 billion investment fund out of its Shanghai office.

The G42's engagement with China should be understood in the light of two main factors. One is the UAE's pursuit of technological leadership in preparation for the post-oil era, and the other is China as a formidable technology power with the ability to produce and share critical technologies more affordably. It is the rise of Acquire intellectual property and establish joint ventures. Rather than being driven by ideology, these factors reflect Abu Dhabi's pragmatic response to a changing world order and evolving technological landscape. However, given the rapidly changing bipartisan consensus in Washington regarding Beijing, any cooperation with China is considered unacceptable and unacceptable in today's political climate.

Based on leaks coming out of Washington, it appears that significant efforts are underway to address the G42 situation. Policymakers see Emirati companies as proxies for a new digital order in which China is increasingly integrated into the technology ecosystems of U.S. allies. It is believed that if it does not take action early, the US government may lack the power and influence to influence this trend in the long run. The United States and the UAE have been engaged in discussions on this issue, as evidenced by the visit of Sheikh Tahnoun bin Zayed, National Security Adviser to the President, to Washington, D.C., and the visit of Secretary of Commerce Gina Raimondo to Abu Dhabi. In response to these discussions, the G42 began phasing out Chinese technology. The 42X Fund, G42's $10 billion technology investment arm, announced it had “exited all investments in China.” Summarizing his UAE perspective, G42 CEO Peng Xiao said: [previous] Our partner in China. ”

Microsoft's recently announced $1.5 billion investment in G42, also chaired by influential royal Sheikh Tahnoun, reflects the changing landscape of global technology cooperation. This substantial undertaking highlights more than just Microsoft's strategic commitment to AI, but also the strategic alignment of UAE and US technologies as we navigate the growing great power competition between the US and China. It also emphasizes Abu Dhabi's choice to let Additionally, the move is in line with reports that Sheikh Tahnoun, during a diplomatic visit to Washington, expressed his desire to promote a framework for cooperation on AI.

The significance of the Microsoft-G42 agreement strongly suggests that the UAE is in a better position vis-a-vis China than it is vis-à-vis China in its continued efforts to survive the fierce competition between Washington and China. . Indeed, the deal signals Abu Dhabi's choice to align with Washington on key technologies by replacing Chinese hardware and partnering with US tech giants like Microsoft. As previously mentioned, the deal includes a “first-of-its-kind” Intergovernmental Assurance Agreement (IGAA) between the two companies, which itself requires close and likely lengthy discussions with both the U.S. and UAE governments. This is the result. IGAA builds on Microsoft and G42's commitment to strengthen the security and compliance framework of their shared international infrastructure, while committing to compliance with U.S. and international laws and regulations regarding trade, security, responsible AI, and business integrity. We will officially conclude the contract. As part of the deal, Microsoft Vice Chairman and President Brad Smith will join his G42 board of directors, giving him more insight into his G42 operations, plans and future trajectory. It will look like this.

A blueprint for engagement

In my recent testimony before the U.S.-China Economic and Security Review Commission, I argued that this agreement serves as a blueprint for engagement with other partners. This strikes a balance between protecting U.S. critical technology and helping partners develop their own capabilities. If we cannot provide these technologies, our partners may turn to Beijing to obtain what they deem necessary for national development. Viewing the Microsoft-G42 agreement as a blueprint for further cooperation goes beyond traditional views of the Gulf economy and formally recognizes the significant digital transformation underway in the UAE and the broader Gulf region. It will also happen. Furthermore, this underlines my recommendation on the need for a comprehensive framework for technology engagement with the UAE and Saudi Arabia. Such a framework should include critical technology conversations around compliance and licensing. Additionally, the United States will need to establish scientific cooperation through working groups and workshops to develop a common research agenda and fund joint science projects.

It is premature to call such commercial partnerships “AI alliances,” given that each country, including the UAE, pursues its own interests by pursuing technologies it deems important to its security and national development. be. Nevertheless, accepting guardrails, while quite different from forming a full-fledged alliance, is a mutually beneficial step forward in technology cooperation for the United States, the UAE, and other partners in the region.

Mohammed Soliman is director of MEI's Strategic Technology and Cyber ​​Security Program and a member of McLarty Associates' Middle East and North Africa practice. His work focuses on the intersection of technology, geopolitics, and business in the Middle East and North Africa.

Photo by Waleed Zein/Anadolu, Getty Images