Last week, news reports indicated the Commerce Department might restrict exports of artificial intelligence-focused semiconductor chips to the United Arab Emirates (UAE) and other countries. This followed a leak earlier this year that national security experts in the administration are quietly conducting a broader review of licenses proposed by Microsoft for consummation of its deal with G42, the UAE data center behemoth.
These potential restrictions reflect a deep ambivalence within the Biden administration on export of AI technology and the $1.5 billion G42 deal specifically. How the administration resolves this dispute will have an impact U.S. counter-China strategy, the U.S. posture in the Middle East, and American AI competitiveness. We think a forward-leaning approach toward foreign partnerships would best advance US AI dominance.
The AI foreign policy fight among China hawks boils down to the following: one faction in the administration, led by Secretary of Commerce Gina Raimondo, believes the U.S. must give foreign partners access to our AI technology to deny Chinese dominance in this space. This includes everything from high-tech routers and network switches to railways ferrying critical minerals, such as copper, from African mines.
President Joe Biden's scheduled visit to Angola in December reflects the priority placed by this administration on massive investment in the Lobito Corridor in Africa to stem Chinese influence and specifically facilitate Western control of copper.
The other faction, led primarily by the Department of Defense and the National Security Council Technology directorate, stresses the danger of sharing America's most advanced technologies widely and counsels caution.
Raimondo's negotiation earlier this year for Microsoft to invest in G42 is the center of the battle. The Emiratis seek a "marriage" with the U.S. over artificial intelligence, and Raimondo's agreement requires G42 to "rip and replace" Chinese equipment with Microsoft infrastructure and sever ties with Chinese investors. The G42 deal also gives Microsoft access to global markets, like Kenya, where G42 is expanding and where experts believe AI could help address extreme poverty, and provides Biden an opportunity to deepen U.S. ties in the Gulf at a moment China is making significant regional inroads.
On the other side of this debate are national security experts concerned about China getting access to advanced U.S. chips through Middle Eastern data centers. According to press reports, several national security officials slowed the issuance of licenses to Nvidia and other chipmakers to the Middle East to conduct "a national security review of AI development in the region," and Microsoft continues to wait for export licenses for its chips to execute the G42 deal.
These officials advocate for a go-slow approach to "develop a comprehensive strategy around how the advanced chips will be deployed overseas," and they are likely animated by stories of China getting access to advanced Nvidia chips via rental agreements with Oracle. Several congressional lawmakers recently amplified these concerns and called for a probe into the Microsoft deal.
According to this group, allowing companies like G42, which only months ago was Chinese-partnered, access to the crown jewels of U.S. technology, is short-sighted. They want greater comfort on how these chips will be used and, according to a recent Financial Times editorial, fear that "Gulf nations are connected to China at the hip."
While the Raimondo approach presents risk of tech leakage, the "go slow" approach defies market realities and, ultimately, might undermine the exact objectives its advocates seek to advance. Fundamental to the protectionist approach is a belief that the U.S. can maintain control over its technology while preserving market position, but these objectives are contradictory. Slowing U.S. exports could ultimately push consumers toward Chinese technology. Countries like the UAE could settle for "good enough" Chinese solutions if they cannot access superior U.S. technology.
Moreover, the UAE has made clear it is open to whatever restrictions the U.S. suggests, and, for Raimondo, there are ways to mitigate leakage of U.S. technology while deepening ties to the Gulf.
Even if the administration ultimately grants the Microsoft licenses for G42, the debate over AI exports will spill into future administrations as new technologies and potential partnerships arise. A Harris or Trump administration will likely have to reconcile questions such as foreign companies like MGX acquiring a stake in U.S. companies. Meanwhile, China will not stand idly by while the U.S. irons out its export policies. Rolling the dice now on partnerships like the G42 deal could be critical to ensuring U.S. dominance. The US should seize this opportunity.
Daniel Silverberg is a managing director at Capstone and a senior adjunct fellow at the Center for New American Security. Elena McGovern co-leads Capstone's national security practice.
The views expressed in this article are the writer's own.
English (US) ·