How US midterm politics could threaten Gulf AI ambitions

A Trump administration deal that gave a major boost to the Gulf’s sweeping AI ambitions is still roiling US Democrats more than half a year later, signaling trouble if and when the party seizes power in Washington as voters hurtle toward midterm elections this coming November.

Democrats almost certainly can’t kill the deal, which okayed the sale late last year of 35k advanced artificial intelligence chips apiece to Saudi Arabia’s Humain and the UAE’s G42, both state-backed AI champions, helping launch the construction of gargantuan AI-focused data centers in each nation. The Trump administration went a step further on 10 July, granting the UAE access to advanced chips without an export license, which will make future sales to G42 and other approved entities far easier.

Some in the Trump administration raised red flags about the July designation of the UAE as a “major defense partner.” Politico reported earlier this week that career staff at the Commerce Department had earlier warned that allowing the Emirates easier access to Nvidia chips and other tech “made it more likely the technology would get into the hands of [US] adversaries.”

Democrats are threatening investigations if they win control of Congress in November — focused on the risk that advanced chips could be diverted to China’s military, and on whether the Trump family’s financial interests shaped the approvals. Central to those claims: a USD 500 mn investment in World Liberty Financial, the Trump family’s cryptocurrency venture. The Wall Street Journal reported in January that Aryam Investment 1 — an Abu Dhabi firm the paper claims is backed by Sheikh Tahnoon bin Zayed Al Nahyan bought a 49% stake in the company days before Trump’s inauguration. Sheikh Tahnoon is the UAE’s national security adviser and chairman of the boards of both G42 and MGX, the sovereign-backed investment fund that focuses extensively on AI. World Liberty confirmed the transaction, denied that Trump or special envoy Steve Witkoff had any role in it, and has called any link to chip policy “100% false.”

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 in the House) and can hand the opposition control of Congress — throttling or accelerating a president’s agenda for the last two years of his term. Voters go to the polls on Tuesday, 3 November.

If a Democrat wins the presidency in 2028, the party could clamp down on future deals — either by refusing to sell the highest-powered Nvidia chips to Gulf nations or limiting access to the most powerful and up-to-date AI models. That would be a significant blow to countries including the UAE, Saudi Arabia, and Qatar that have put AI and exportable computing power at the center of their economic policies as they continue to diversify away from oil. Saudi Arabia and the UAE have both projected that AI will contribute USD 100 bn or more to their economies by the early 2030s, or around 13% 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 Enterprise request for comment.

“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,” Sen. Mark Warner, a Democrat from Virginia, tells EnterpriseAM. “Instead, the Trump administration has predicated these engagements on transactionalism,” says Warner, the top Democrat on the Senate Intelligence Committee.

Warner isn’t the only one raising a red flag: Sen. Elizabeth Warren, the top Democrat on that chamber’s banking committee, blasted the US Commerce Department’s decision to remove licensing requirements for chip shipments to the UAE, accusing the administration of ignoring “concerns about the diversion of sensitive technology to China and other national security risks.” 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 deal.

“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 from California, the top Democrat on the House Foreign Affairs Committee panel with jurisdiction over South and Central Asia, tells EnterpriseAM.

The Democratic push comes as the Trump administration already seems to be rethinking its early laissez faire approach to AI — which could complicate the Gulf’s ambitions. The administration abruptly ordered Anthropic, a leading US AI lab, last month to block foreigners’ access to two of its most advanced models, Fable 5 and Mythos 5, citing security concerns. The company also blocked domestic access to the models to ensure compliance with the order. The administration — which is also in a legal battle with Anthropic over how its systems can be used in warfare and domestic surveillance — allowed the models back on the market a few weeks later after the company added new safeguards, the New York Times reported. The administration also moved last month to mandate government testing of AI models before they’re publicly released to root out cybersecurity concerns.

The push 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 bns in US AI companies, including OpenAI, Anthropic and xAI. At one point, Trump was reportedly considering selling the UAE c. 500k advanced Nvidia chips per year — 100k of which would go to G42 — though that deal was never finalized. 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.

It might not just be Democrats urging tighter export rules in a couple years. Republicans have historically been just as anxious as Democrats about sensitive US technology leaking into Chinese hands, though they’ve held their tongues as Trump took a less restrictive approach. That could change once Trump is out of office or if his hold on the party loosens.

“There are a number of Republicans unhappy with Trump’s policy,” William Reinsch, a former US Commerce Department official who was in charge of export control policy during the Clinton administration, tells EnterpriseAM.

Democrats and Republicans might cooperate to pass legislation to restrict AI cooperation with the Gulf, Wreinsch says. More likely, they could persuade Trump to add additional safeguards without direct legislation. “He 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,” Wreinsch says.

At the core of the debate is whether the US or China leads the world in the development of advanced artificial intelligence. Washington and US industry were spooked last week after Z.ai released Kimi K3, a massive open-weights model that performs on par with Anthropic’s Fable 5 on some tasks. The Trump administration has broadly 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.

The Biden administration, which was far more cautious about selling AI chips abroad, created a tiered system that authorized more or less AI sharing with nations based on the risk of that technology leaking to China or other US adversaries. The Trump administration rescinded that rule before it took effect.

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 US government agency that wrote technical specifications for 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.

(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; Prosperity 7, Aramco’s captive VC arm, owns shares of Z.ai — formerly known as Zhipu — which makes GLM 5.2, another Chinese open-weights model that’s made headlines this summer.)

US AI companies outpace their Chinese rivals in private AI investment, but strong government funding has allowed China to keep pace on actual technology development. Stanford University’s Human-Centered Artificial Intelligence center estimated earlier this year that the performance gap between the top US and Chinese models was just 2.7%.

SOUND SMART- China has also focused on offering an “open-weights” version of AI, which may ultimately prove more attractive to users in many countries and industries. Unlike the closed models offered by OpenAI and Anthropic, open-weights models allow consumers to fine tune the AI system’s operating procedures — and hence how it answers questions and approaches tasks — to their own needs. Most open-weights models are also open source, meaning anyone can take the models and run them in their own data centers.

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 midterm elections, 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 US firms may be more dependent on Gulf capital.

“We’re talking about 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, 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.

“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, 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 US 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, head of technology research at Freedom Capital Markets, tells EnterprisAM.

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. Both nations have suffered strikes against their military, industrial and energy infrastructure since the war picked up again this month and Saudi Arabia has endured strikes against its oil tankers by Tehran-backed Houthis in Yemen.

The Trump administration announcement this month 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.”

“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, a Gulf business analyst and Director of Khalij Economics, tells EnterpriseAM.

Finally, the more time passes, the less leverage the US government 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 next US 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,” Freedom Capital Markets’ Meeks says. “Down the road, we can expect Huawei to have a chip every bit as good as Nvidia.”