How US midterm politics could threaten Gulf AI ambitions

A series of Trump administration deals that boosted the Gulf’s outsized AI ambitions is still roiling US Democrats as midterm elections approach on Tuesday, 3 November, signaling trouble could be afoot if the party seizes power in Washington.

Democrats can’t kill the deals, which gave UAE AI champion G42 and its cloud division Core42 access to the most advanced artificial intelligence chips without an export license and approved up to 35K of those chips for Saudi Arabia’s AI champion Humain.

How real is the threat? Republicans are in especially dire shape as the elections approach, with most polls suggesting Democrats will easily win control of the US House and have a good chance of also seizing control of the Senate.

But they’re threatening investigations if they win control of Congress — focused on accusations the deals could leak AI secrets to China and that they don’t sufficiently protect against using AI for surveillance.

Quid pro quo? They also claim the UAE agreement may have been a quid pro quo for a USD 500 mn investment in World Liberty Financial, a Trump family cryptocurrency venture, by the firm Aryam Investment, which is backed by UAE National Security Adviser Sheikh Tahnoon bin Zayed Al Nahyan. Tahnoon, a member of the UAE royal family, is also chairman of the boards of both G42 and MGX, a sovereign-backed investment fund that focuses extensively on AI.

If a Democrat wins the presidency in 2028, the party could clamp down on future chip deals with Gulf allies — either by refusing to green-light new sales of the highest-powered Nvidia chips or limiting access to the most powerful and up-to-date AI models.

Restricting chip sales could be complicated by existing agreements, though. The UAE’s access to top-shelf silicon without an export license expires in April, before Trump leaves office. If the deal is extended, it would be extremely difficult to roll it back before a future expiration date. G42 and Core42 must become US companies by 6 April 2027 or seek fresh authorization to retain license-free chip access.

Any move to limit Gulf chip access would be a significant blow to the region as it aims to shift from oil to computing power as its major export commodity. The consultancy PwC has estimated that AI could add USD 135 bn to Saudi Arabia’s economy and USD 96 bn to the UAE’s by 2030, or roughly 12-14% of GDP. Humain declined to reveal specific requirements of its deal with Nvidia or to say how many chips had been delivered so far. G42 did not respond to an EnterpriseAM request for comment.

Pushing for guardrails: “There is a potential model for US technology collaboration with Gulf partners — but it has to be predicated on technology security, strong protections against misuses of US-origin technology for surveillance or repression, and tangible benefits to the United States. Instead, the Trump administration has predicated these engagements on transactionalism,” Sen. Mark Warner, the top Democrat on the Senate Intelligence Committee, tells EnterpriseAM.

Details:

• Sen. Elizabeth Warren, the top Democrat on that chamber’s banking committee, blasted the US Commerce Department’s decision to give G42 license-free access to advanced chips, accusing the administration of ignoring “concerns about the diversion of sensitive technology to China and other national security risks.”
• Rep. Ro Khanna, a California Democrat, has pledged to investigate that deal as a top member of the House Oversight Committee and a special House committee overseeing US-China policy.
• Top Democrats on the House Foreign Affairs, Intelligence, Armed Services and Oversight committees have urged the Commerce Department’s internal watchdog to probe the Trump family’s financial interests in the agreement.

“Decisions about exports of advanced American AI chips should solely be based on economic competitiveness and national security considerations, and they should certainly never be made to make money for your own business,” Rep. Sydney Kamlager-Dove, the top Democrat on the House Foreign Affairs Committee panel with jurisdiction over South and Central Asia, tells EnterpriseAM.

If Democrats win control of Congress, they might also cooperate on new AI export controls with Republican security hawks, who are concerned about US AI technology leaking to China. “[Trump] probably would not listen to the Democratic leadership, but … he would pay attention to the Republican leadership telling him they're going to support the Democrats on something like this,” William Reinsch (LinkedIn), a former US Commerce Department official who was in charge of export control policy during the Clinton administration, tells EnterpriseAM.

But the Democratic pushback also comes amid a broader intertwining of financial and AI interests that will make any US decoupling with the Gulf highly complicated. Gulf sovereign wealth funds have invested billions in US AI companies, including OpenAI, Anthropic and xAI. More broadly, the president picked the Gulf for the first major international trip of his second term, where he announced USD 200 bn in new US-UAE business deals.

SOUND SMART- Midterms are the US elections held halfway through a president’s term — putting the entire 435-seat House of Representatives and roughly a third of the Senate up for grabs. They double as a verdict on the incumbent (whose party almost always loses seats) and can hand the opposition control of Congress — throttling or accelerating a president’s agenda for the last two years of his term.

The Trump Administration has taken a mostly hands-off approach to AI, urging the major labs to police themselves rather than providing government oversight. His administration has argued that the United States has a better shot at staying ahead in the AI race if it makes the rest of the world dependent on US technology than if it hoards that technology for itself – making Chinese AI more attractive in the process. “I’m not going to stifle growth of something that will be bigger than the industrial revolution,” Trump said during a September speech at the United Nations.

But Democrats and many Republicans argue that this laissez-faire approach could endanger the US — by allowing high-powered AI technology out into the world before it’s sufficiently vetted and by making it easier for China to copy US models.

To be sure, the Saudi and UAE deals don’t ignore security concerns. They include “rigorous security and reporting requirements” aimed, in part, at preventing AI technology from ending up in Chinese hands, according to the Commerce Department, which approved the sales. But the risks of “leakage” to China are inevitably high given the long history of tech partnerships between Saudi Arabia, the UAE, and China — and the Asian giant’s long, documented history of government-backed digital theft.

Decoupling: UAE officials have said they’re “decoupling” from Chinese tech in their AI infrastructure as a condition of AI cooperation with the United States, but the nations remain tightly linked in other areas of technology. That decoupling has included G42 selling off all its investments in Chinese firms. Saudi Arabia has not made public decoupling pledges.

But narrowing the terms of the current chip deal or restricting future ones would create a whole separate set of problems. For starters, even if Democrats sweep the midterms, they couldn’t make major changes until a Democrat is in the White House more than two years from now. By that point, US and Gulf tech firms will be even more interlinked and American firms may be more dependent on Gulf capital.

“We’re talking about USD bns in investments, joint data centers and deep partnerships between American tech giants and Gulf sovereign entities. A future administration would face heavy industry pushback,” Mohammed Soliman (LinkedIn), a senior fellow focused on technology at the Middle East Institute, tells EnterpriseAM.

That means future administrations are more likely to tinker around the edges of chip deals — ramping up security protections and access restrictions — or to restrict access to the latest AI versions rather than cutting off cooperation entirely.

Devil in the details: “The bigger question is not whether controls remain in place, but how aggressively a future administration applies them to third countries and what safeguards it requires for AI-related partnerships,” Leah Siskind (LinkedIn), an AI research fellow at the Foundation for Defense of Democracies, tells EnterpriseAM. “Any Democratic administration is likely to scrutinize technology transfers, cloud access, and chip deployments to ensure they do not create indirect pathways for China to access advanced AI capabilities,” she says.

Plus any moves that hurt the US AI industry are likely to have major repercussions for the broader American economy, which has been mostly stagnant except for AI spending. “AI is such a linchpin for GDP, it’s tough to see putting that at risk,” Paul Meeks (LinkedIn), head of technology research at Freedom Capital Markets, tells EnterpriseAM.

There are also broader geopolitical considerations. Most importantly, Democrats may be wary of punishing Gulf allies after they’ve borne the brunt of Iranian missile and drone attacks during the war with Iran and as they continue to provide a strategic buffer against Iran in the region. The Trump administration announcement about removing license requirements for UAE chip exports specifically cited the nation’s “status as a US major defense partner and its support in advancing US national security interests, including Operation Epic Fury.”

Paying a debt: “Arguably, the severe damage imposed on the Gulf states by this war means that the US is under an obligation to be a supportive ally in the coming years, including facilitating chip exports,” Justin Alexander (LinkedIn), a Gulf business analyst and Director of Khalij Economics, tells EnterpriseAM.

And the damage is far from over: Trump has signaled he intends to renew US strikes on Iran after the midterms, despite the Pentagon’s dwindling stock of missiles. Saudi Arabia is already suffering from a surge in brutal attacks by the Iran-aligned Houthis targeting airports and energy infrastructure, prompting Washington to order non-emergency diplomats out of the kingdom earlier this month.

Finally, the more time passes, the less leverage Washington will have over global AI infrastructure. While US companies are ahead of China in the AI race right now, most experts expect that picture to change — if not by the time the administration takes office in 2029 then quite possibly by 2031 or 2032 when the tranche of Nvidia chips now in service reaches the end of their expected lifecycle. “The AI race is squarely in our favor right now, but the Chinese are super aggressive,” Meeks says. “Down the road, we can expect Huawei to have a chip every bit as good as Nvidia.”