Could digital embassies solve the Gulf’s cloud backup problem?

Governments from Abu Dhabi and Riyadh to Cairo are increasingly worried about control of their countries’ data as more and more corporate and state services disappear into the cloud.

But having the servers on your soil only gets you so far, as the war in Iran has shown. Gulf AI projects still depend heavily on American chips and software, as we note in this morning’s Lede (above), and keeping services running through a war adds another wrinkle — somewhere safe to which you can “fail back” if a data center is taken offline by the conflict, as happened to Amazon Web Services earlier this year in the UAE and Bahrain.

Governments and regulated industries can’t move as freely as many private-sector companies. Banking, healthcare and public-service workloads need arrangements that preserve security and control, Rihla Research and Advisory CEO Jesse Marks tells EnterpriseAM Infrastructure. A financial institution just doesn’t have the same flexibility to spin up a server in France that, say, an HR consultancy would.

Data sovereignty rules in Egypt, the UAE, and Saudi risk stifling innovation. Look no further than Egyptian banks, which are having to work with open source LLMs on local hardware using tiny clusters of imported GPUs rather than global-quality data centers abroad.

One workaround now gaining traction is a “digital embassy” — agreements that would allow specific data centers in a specific country to process data under the home country’s legal authority.

No Gulf state has one yet, Marks says. He expects simpler emergency agreements with trusted countries could come first. Some have suggested starting the process with cloud continuity drills and shared data classification rules along with “trusted backup capacity in the United States, India, Singapore, Turkey, and selected European markets,” says Yasir Atalan, deputy director of the CSIS Futures Lab.