International relations are in a constant state of dynamic change; today, Artificial Intelligence (AI) is increasingly influencing these political and economic relationships. There is a clear competition between the US, China, and Europe for AI dominance, as AI can be used as a strategic tool for political power and economic growth. The Middle East is forced to align with one of these powers to secure its future in a rapidly evolving world.
AI as a Tool for Political Power & Economic Growth
The US, China, and European Union are investing heavily in AI research and development (R&D). The competition between these major powers goes beyond technological development, with the aim of using AI-driven technologies in various fields, such as cybersecurity, defense, and economic development. The global AI race is creating a world divided over AI, where countries must align with one of the leading powers to benefit from technological advancements and secure their positions in the international arena. The division is clear in the Middle East, with countries making strategic decisions regarding their AI alliances (Huq, 2024).
Historically, the region has maintained strategic alliances with the United States, but China's rising influence and its investments in AI are changing these dynamics. China's Belt and Road Initiative (BRI) and its focus on technological infrastructure have made it an attractive partner for many Middle Eastern countries who wish to modernize their economies and develop their technological capabilities. According to a report by PwC, AI is projected to contribute up to $320 billion to the Middle Eastern economy by 2030. This impact is driven by several key factors, such as productivity gains, enhanced consumer experiences, and the creation of new markets and industries (PwC Middle East, n.d.).
Productivity Gains
One of the primary ways AI investments can boost the Middle Eastern economy is through productivity gains. Machine learning and automation can streamline processes, reduce operational costs, and increase efficiency across multiple sectors. For example, in the oil and gas industry, AI can optimize exploration and production processes, which is leading to cost savings and increased output. Additionally, in the manufacturing sector, AI-powered automation can enhance production lines, reduce waste, and improve product quality (PwC Middle East, n.d.).
Enhanced Consumer Experience
AI investments have the potential to improve consumer experience, which can drive economic growth by increasing demand for goods and services. In the retail sector, AI can personalize shopping experiences through advanced recommendation systems, improving customer satisfaction, and loyalty. In the financial sector, AI can provide more accurate risk assessments and personalized financial advice, which in turn enhances customer trust and engagement. By improving consumer experiences, AI can boost economic activity and overall consumption (PwC Middle East, n.d.).
Creation of New Markets and Industries
The governments in the Middle East are beginning to recognize the strategic importance of AI, and are investing in its research and development. New markets and industries are thriving in the region. These investments are building new industries, such as AI-driven healthcare, smart cities, and advanced robotics. AI is capable of revolutionizing healthcare by enabling personalized medicine, predictive diagnostics, and efficient healthcare delivery systems. Smart city initiatives can improve urban living through intelligent infrastructure, traffic management, and energy optimization (PwC Middle East, n.d.).
AI's economic impact is evident across various sectors in the Middle East:
Geopolitical Tensions
Saudi Arabia's investment of $40 billion in AI R&D is part of a broader strategy to diversify the country’s economy and reduce the dependency on oil. These efforts reflect Saudi Arabia’s ambition to become a leader in AI within the Middle East, aiming to capitalize on the projected $135.2 billion economic gain from AI by 2030, as stated in PwC analysis. This strategy also aligns with the 2030 vision, which prioritizes technological innovation and economic diversification to ensure long-term economic stability and continuous growth (Kitchen, 2024).
The economic ties formed through AI partnerships are becoming geopolitical alliances. In the Middle East, Saudi Arabia is strengthening its technological partnerships with China, as a result, the US is taking measures to curb its technological advancements by restricting Saudi Arabia’s access to critical AI components (Dutton, 2024).
The AI advancement presents both opportunities and challenges for the Middle East. On one hand, AI development can drive economic growth, create new industries, improve productivity, and generate millions of dollars in revenue. On the other hand, aligning with a particular AI power can have geopolitical consequences, potentially leading to economic sanctions or reduced access to technological resources from the competing powers.
Conclusion
The rapid development of Artificial Intelligence is reshaping global political and economic ties, with major powers like the United States, China, and European Union competing for dominance. The Middle East is facing the challenge of choosing among these powers to secure advanced AI technologies, as the investments promise significant economic benefits, adding up to $320 billion to the region's economy by 2030 through productivity gains, enhanced consumer experiences, and new markets. The economic ties are becoming geopolitical alliances, which are reshaping international relations. The US ban on AI chip exports to Saudi Arabia, due to its partnerships with China, is an example of these changes. As Middle Eastern countries explore these alliances, they must make decisions that balance the economic opportunities AI presents with the long-term geopolitical impacts.
References:
Huq, A. (2024, March 11). A world divided over artificial intelligence. Foreign Affairs. https://www.foreignaffairs.com/united-states/world-divided-over-artificial-intelligence
Kitchen, K. (2024, April 15). Tech tensions and AI boom: A double-edged sword for the Middle East. American Enterprise Institute. https://www.aei.org/op-eds/tech-tensions-and-ai-boom-a-double-edged-sword-for-the-middle-east/
Dutton, J. (2024, May 31). US reportedly slows AI chip exports to Mideast as Saudi Arabia turns to China. Al-Monitor. https://www.al-monitor.com/originals/2024/05/us-reportedly-slows-ai-chip-exports-mideast-saudi-arabia-turns-china
PwC Middle East. (n.d.). The potential impact of artificial intelligence in the Middle East. PwC. https://www.pwc.com/m1/en/publications/potential-impact-artificial-intelligence-middle-east.html
