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KSG Exec Brief: AI and Geopolitical Risk Convergence in the UAE
The Chip War comes to the Middle East
The Emirates is emerging as a digital hub at the center of converging geopolitical and strategic technology trends. Firms should re-assess their operational and technical risks given a changing policy and threat environment.
This week saw a pair of stories that highlight the evolving strategic and technology risk landscape in the UAE and across the Middle East. Just as a leading Emirati technology firm launched an Arabic large-language model locally trained on US-manufactured supercomputers in Abu Dhabi, it was reported that the Biden administration had instructed Nvidia and AMD to curtail GPU sales to the UAE and Saudi Arabia, out of concern that such sales may undermine the export controls limiting China’s access to these advanced chips.
These recent moves come in the context of (1) an intensifying technology arms race between US and China over the AI value chain, (2) US consternation over sovereign investment flows and shifting geopolitical and military alignments between KSA/UAE and Beijing, and (3) increasing concern by US policymakers and security officials that China’s information and communications technology (ICT) penetration in the region poses strategic risks to US interests.
Moreover, recent US policy actions suggest the risk calculus over keeping regional relations warm and limiting impacts to US firms has tipped in favor of security prerogatives.
For western firms already in the region or contemplating operations, KSG sees at least two key dimensions of acute risk:
Cybersecurity/Eavesdropping Risk: Many Middle Eastern nations have been eager customers of PRC ICT equipment, creating telecoms infrastructure that leaves western firms’ regional networks vulnerable to interception. Also, many of these countries have invested heavily in offensive cyber capabilities, recruiting morally ambivalent operatives from a range of both advanced western and US adversary intelligence services to suppress dissent and support collection against strategic targets, including western firms and individuals.
Technology Transfer/Sanctions Risk: Many western investment and technology firms perceive the technology transfer risk from a deal/partnership with a UAE counterparty to be lower than that with a PRC counterparty. While these risks are not the same, they are converging as PRC investment and intelligence activities in the region attempt to bypass US tech controls and firms alert to the risks of direct PRC joint ventures. As these activities continue and scale, the risk of sanctions on related entities in the region also grows.
KSG assesses that these tightly coupled cybersecurity, technology, and policy risks to western firms in the Middle East will continue to increase. The ability to roll out surveillance and censorship on behalf of other countries is a crucial differentiator for PRC-made kit. That same visibility jeopardizes firms’ secrecy. IP stored in local data centers is also at risk, as are communications in countries where rules on encryption risk eavesdropping.
Further, as the marketplace for AI services and platforms matures in the region, corporate decisions over related product integration, solution delivery, and local partnerships will become more fraught.
AI governance, risk, and compliance approaches must take these converging risk vectors into account. To this end, KSG conducts strategic threat modeling to help our clients drive improved enterprise security postures in high-risk geographies.
For more information or assistance on these issues, please reach out to firstname.lastname@example.org.
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UK’s November AI Summit Likely to Include China: Downing Street is reportedly considering involving China in a landmark artificial intelligence summit this November, despite likely objections from US, EU, and Japanese partners. Meanwhile, the China-led BRICS group recently announced a “study group” on AI collaboration and governance.
Japan Poised for Record-Setting Defense Budget Amid Regional Tensions: The Defense Ministry requested an unprecedented $52 billion in spending for 2024—part of Prime Minister Fumio Kishida's plan to boost military spending by nearly $270 billion over five years.
Explaining China’s Economic Slowdown: An expert breaks down the forces at play: “The Chinese investment-led model ran out of steam quite a few years ago but it’s been kept going because there’s been a reluctance to try to shift from investment to consumption…There’s no evidence [Beijing] will engage in any imaginative change.”
Japan’s Cybersecurity Agency Breached by Chinese Hackers: Following revelations in early August of major breaches of its defense networks, Japan’s NISC has itself been infiltrated by state-backed actors for as long as nine months. The revelations come amidst Tokyo’s deepening military cooperation with the US and regional allies.
UK’s Cyber Agency Warns of Threat from AI Flaws: Large Language Models (LLMs) are vulnerable to “prompt injection” attacks, wherein an automated chat interface could be manipulated to elicit sensitive information like banking or health data.
FBI, International Partners Dismantle Long-Running, Wide-Ranging Botnet: The Qakbot infrastructure—over 700,000 computers worldwide linked to at least 40 known ransomware and other cyberattacks—was infiltrated by the FBI, which subsequently deployed an uninstall command to compromised devices.
Strategic and Emerging Technology
Graphene Chips Promise Low-Cost Water Monitoring: Engineers have developed a path to mass-manufacture high-performance graphene sensors that can detect heavy metals and bacteria in flowing tap water, potentially for as little as $1 each.
Researchers Demonstrate “Droplet Battery” for Small Bio-Integrated Devices: A range of potential therapeutic devices, implants, and microrobots that interact with cells and tissue are within closer reach, as Oxford researchers produced an electrical current using nano-sized droplets of a conductive gel at low temperatures.
Western Opposition to Draft UN Cybercrime Treaty Grows: The impasse stems from a Russia-China-led block of states seeking an expansive definition of “cybercrime,” and a Western push for a more circumscribed approach. Microsoft this week voiced the first major commercial opposition to the current draft.
US Congressional Committee Chair Questions CISA on Collaboration: At issue is whether the Joint Cyber Defense Collaborative—a public-private partnership helmed by CISA—is cooperating or competing with energy and financial sector partnerships, the ETAC and ARC, respectively.
US Copyright Office to Study AI Impacts on Law: Amidst a flurry of infringement claims and rapid advances in generative AI, the office is seeking public comment through October 18. The study will examine the legal implications of training models, the copyrightability of synthetic content, infringement liability, and identity concerns.