Gulf countries and the innovation game

The Gulf monarchies have a new ambition: to transform themselves into advanced technology exporting countries in the medium to long term. To also strengthen themselves in the defence sector. On the other hand, the competition for global leadership is played out, to a great extent, in the field of technology and artificial intelligence (AI): Saudi Arabia, the United Arab Emirates (UAE) and Qatar do not want to be second fiddle. In addition to national prestige, there is a political reason: technological autonomy would allow the Gulf to escape the uncomfortable rivalry between the United States and China, now a continuing element of American foreign policy. In the Gulf, technology and AI are already reshaping geopolitics and defence. A recent analysis by the Institute for International Policy Studies (ISPI), 'Towards a Tech Exporting Gulf: How the AI Revolution is Reshaping Defence and Politics in the GCC States', in collaboration with three study centres in the Arab Emirates, the Anwar Gargash Diplomatic Academy, the Emirates Policy Center (both in Abu Dhabi) and the Dubai Public Policy Research Centre, explores the issue, with a look at Europe. In the Gulf, tech investments have been growing for a decade, driven by non-oil diversification: there are the financial, energy (including renewables) and mining resources (also through foreign agreements) to produce technology. The real challenge, however, is to train human capital, i.e. a generation of national experts: only in this way can Riyadh, Abu Dhabi and Doha transform themselves from importers to exporters of technological innovation. The opening of headquarters and academies of Apple, Microsoft and Huawei in Saudi Arabia was an essential step to transfer expertise: but it cannot be the destination. Monarchies should expand the promising 'technological literacy' of young local companies by enhancing university and specialisation courses as well as public-private partnerships. The Gulf Arab capitals are aware of the growing technology-defence nexus and the impact on industry, infrastructure and maritime security. Bahrain is using AI to monitor coastal security; the UAE's Satgate project combines satellites and AI systems for maritime and port security; Saudi Arabia has built the first 'Saudi-made' police vehicle, electric and with AI. However, the road to a technology-exporting Gulf still needs partners. However, the polarised international context poses a dilemma: how to combine technological goals and geopolitical balances? So far, Riyadh and the others have navigated by sight between Washington and Beijing, ultimately favouring the Americans. In 2024, the agreement between Microsoft and the Emirati AI company G42 unlocked the designation of the Emirates as a 'major defence partner' of the United States. Trump's recent trip to the Gulf promises a green light for semiconductor exports to Arabia and the Emirates: an alliance in which chips are the new oil. For the monarchies, technological and defence cooperation between middle powers is a complementary option to Washington. With India, South Korea and Brazil, but also in the Gulf: in just a few months, Barzan Holdings (Qatar) and SAMI (Saudi Arabia) signed a collaboration in the defence industry, followed by Barzan Holdings and the conglomerate EDGE (Emirates). Cooperating in the construction of defence systems means sharing technical expertise, overcoming political misunderstandings and rivalries - an important step. The European Commission's Readiness 2030 plan can also encourage forms of cooperation between European and Gulf defence industries. Of course, monarchies do not fall under the current eligibility criteria of the European Armament Fund. However, in addition to bilateral agreements, there are already high-tech synergies, such as the robotics projects of the Emirati EDGE, which controls the Estonian Milrem Robotics, or the agreement between the Qataris of Barzan Holdings and Fincantieri to develop an anti-drone radar. Increasingly, Europe and the Gulf share common economic interests, as evidenced by the presence of many companies including Italian SMEs, and then there is IMEC, the India-Middle East-Europe Economic Corridor, which tomorrow will require a coordinated security network. Chasing great technological ambitions, the monarchies are redrawing the global balance as of today.

Ispi Senior Associate Researcher and Aseri Lecturer