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- [00:01]
Eamonn
So good, so good, so good.
- [00:03]
Thomas Small
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Thomas Small
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Eamonn
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Thomas Small
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- [02:23]
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- [02:27]
Thomas Small
Hello, dear listeners. Welcome back to Conflicted. I'm Thomas Small and the Oracle of Arabia. None of this Oracle of Arabia stuff. I don't want to go that because every time you get something wrong, people will be like, what? He's not the Oracle of Arabia.
- [02:44]
Eamonn
Well, you know, in a predictable world, I am the Oracle of Arabia. And in the unpredictable Trumpian world, I am the hopeless Oracle of Arabia.
- [02:56]
Thomas Small
Well, you know, I guess as the ancient oracles of Greece probably would have said, buyer beware. Because even oracles aren't right all the time. Anyway, welcome back to Conflicted, everyone. Today we only going to talk about Iran a little bit. Can you believe it, Eamonn? Our focus is instead going to be on the AI arms race that has been launched in the Gulf and of course is part of the larger global AI arms race which is slowly changing the whole world.
- [03:30]
Eamonn
Indeed. And this is why I think since everyone is sick and tired of the hormones strait and energy and oil and traditional industries, actually, you know, people will find it extremely entertaining when we talk about AI in a context that is Arabian.
- [03:47]
Thomas Small
I hope so, Eamonn. I must say this is not my comfort zone at all. I don't have the sort of brain that can understand things like this. A bit like economics, my brain just stops working. So once again, Thomas gets to play the dummy and I rely entirely on you to make this intelligible both to me and to the dear listeners.
- [04:07]
Eamonn
If anything, Thomas, this is also our out of my comfort zone. You know, at the end of the day, anything with intelligence in it is out of my comfort zone.
- [04:16]
Thomas Small
Wow. You know, one great achievement of the Iran war, Eamon has been humbling you.
- [04:22]
Eamonn
Exactly. You know, as I say to many of my Iranian friends, like basically I am, you know, eating not a humble pie, but a humble kebab. Chill Sultani mahsos.
- [04:35]
Thomas Small
Right, the AI arms race. Let's get right into it.
- [04:44]
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- [04:44]
Thomas Small
And I said we're not going to talk about Iran that much, but we are going to talk about Iran and the Iran war a little bit because in early March of this year, the 1st of March, I think it was, a drone struck Amazon Web Services infrastructure in the UAE and in Bahrain. Two facilities in the UAE were directly struck and a Bahrain facility was damaged after a drone landed nearby. It wasn't huge damage, not hugely destructive, but it was damaged. It required Amazon to redirect Cloud services from those facilities elsewhere while they dealt with the situation. But it was a sign of the increasingly strategically important dimension that these sorts of facilities will play, are playing. And it's a sign that already the Gulf has laid itself open to that kind of strategic competition, the competition over cloud computing, huge data centers, all this stuff. It is topical from that point of view.
- [05:50]
Eamonn
There is no question in my mind that many of the Gulf leaders, including MBZ and mbs, are looking at artificial intelligence as the new frontier and they want to be the pioneers for that in the region. And there is an arms race at the moment between the UAE and Saudi Arabia for who would corner the Middle east market when it comes to AI. Because if you look at the role AI plays in many sectors, you will understand that this would work wonder for any Middle Eastern power that would wield the upper hand when it comes to AI. Give you an example here. When it comes to defense, AI could do the following. One, integrate most of the data, whether it's open source, radar, signal intelligence, human intelligence, everything, and predict the patterns of attacks from an enemy, the direction of travel for drones and missiles, the potential targets, and then improve the accuracy rate of the interceptions. So in itself, that is the reason why the UAE had far greater, far greater interception rate than Saudi or Kuwait or Bahrain or, or Qatar. It's the implementation of the early models of AI because they don't just rely on the big four, you know, by the way, like, just like the accounting firms, like, you know, they have Big four, we have the Big four AI and we'll talk about them later. But the UAE also is relying on new startups, the AI unicorns. And I will come to that. So that's the first thing in defense. In defense also, it will improve the production of weapons and ammunitions in a way that never seen before. I was invited into a presentation by one AI military company which I will not name for confidentiality reasons. And what I saw there was something to behold. And what was that? AI enabled 3D printing of Tomahawk cruise missiles, bombs and ammunitions. You know, being 3D printed entirely, you know, and from 80 components into three components. Only if you see ammunitions in a smart bombs and many other spare parts of aircrafts and other military equipments being produced at 400 up to 550% the usual rate in a factory. So if a Factory is producing 20 Tomahawk cruise missiles, let's say like in a month, it could produce 100 easily. You know, it could take the production level so high for the Purpose of replacement. There is another AI company in which also I was invited to the presentation, which has a system in which it can absolutely, absolutely read the facial expressions, the linguistic choices in many different languages, you know, of suspects while they are being interrogated.
- [09:17]
Thomas Small
Creepy, even. Creepy. It's like Minority Report here. I don't like this at all.
- [09:22]
Eamonn
But. But what I saw was, you know, it's like game changing. So it helps with predicting, you know, targets to be hit. It also helps. And this is why, you know, anthropics and Claude Amin was involved in some controversy in Iran during the picking of the targets. But actually, most of the targets were picked up by artificial intelligence. And, you know, this is why, you know, not only like in Amin, you can protect your own targets, vulnerable targets, but also you can designate targets, you know, at the other side, you know, and shoot at them. So AI is now more than anything like, I mean, a cutting edge technology that is being developed for the purpose of national security, defense and intelligence, and even law enforcement in the region.
- [10:18]
Thomas Small
But that raises the question then, Eamonn, if, as you say, this AI technology has all of these defense capabilities and that the UAE is using those capabilities and used them during the war with Iran, then does this mean that when Iran targeted the AWS facility, that that was in fact a legitimate military target? This is a new problem for international law and the law of war. Are these AI data centers? Are the data centers that power this AI technology, given that it is used for defensive and offensive purposes, is it a legitimate target in war? Or is it more like an electricity substation or a desalination plant? Is it civilian architecture? Since often these facilities are also powering our, you know, our civilian use of the interwebs.
- [11:06]
Eamonn
I think international lawyers are gonna have, you know, open discussion on this. Absolutely, you're right. I don't think they are purely civilian targets anymore. They are not purely civilian because why? It's a dual use. AI is a dual use. And therefore, if you have an AI data center that is actually actively selecting targets to be hit against the other enemy, or it is deliberately used to weaken the deterrence factor of the enemy. The enemy sends in missiles and drones, but they are all intercepted. It's like what's happening here. So concentrating more than 100 drones on one AI center just to knock it out shows that the Iranians understood early on how important this. And funny enough, I will tell you an anecdote here which you will like. AI now in the uae, has now come up with a design for an AI data center. That is invulnerable, that is totally protected against drone attacks. So by creating a data center, but with a lot of the design from outside, beautiful geometric connected orbs and bars that are absolutely creating like a net, but beautiful net around the data center. So no matter how much drones you send against it, even if they pass the first and second and third and fourth layer of defense, actually once you hit, you're going to hit the shell surrounding the center.
- [12:50]
Thomas Small
What a world we're creating. Eamon. Another thing that the attack on 1 March reminded dummies like me is that though we talk about the cloud and we think of these hyper new technologies as existing in some kind of disembodied, purely digital space or something, because we encounter it on our computers, of course, it all boils down to physical infrastructure and it always will. So I think that that is a big part of the story that we want to tell about the way the Gulf is investing in and getting involved in the global AI arms race. And so I think we should just quickly explain how the AI economy is physically structured. This is my best way of doing it. Eamon. See what you think. Obviously, like all economic activity, like all industry at base is capital. This is money. Money required to build data centers, to buy very expensive, very powerful processors, to fund the models, the AI models like ChatGPT, Anthropic and all their different models to fund those developers. So you need money, obviously the Gulf has a lot of that. Then you need energy, you need a continuous and reliable supply of electricity, basically. I mean, we're talking huge amounts, major power generation infrastructure. And the Gulf has a lot of that.
- [14:19]
Eamonn
Absolutely.
- [14:20]
Thomas Small
Then you need land for huge data centers. I mean, these facilities are massive, Eamonn. Massive. So you need land. Some countries in the Gulf, well, really one has a lot of that. But these things need to be cooled down. That is for the Gulf of challenge, of course. But these big centers do need to be cooled down. I think it remains to be seen whether the very, very hot temperatures in the Gulf, especially in the summer months, are going to be a challenge for this. Then you need semiconductors. They tend to be manufactured elsewhere in Taiwan, but some other places. Then you have cloud infrastructure systems connecting all these processors, all the storage, the different networks with customers and things. So the cloud infrastructure, which is physical at base, then you have the different models, then you have the different ways those models can be applied. Government can use them for some things, medicine will use it for some things, finance uses it for some things. And finally you have finally finally, you have actual human beings who are becoming increasingly less important in this whole system. But you have human beings, engineers who design the things or at least sitting back baffled as AI starts designing it themselves. So that, I think is my best way of explaining the physicality of this industry, which is nascent but growing. And like everything that exists in the physical world, there are always constraints. And the Gulf has some benefits, but has some detriments as well. What do you think? Is that a good way of introducing the subject?
- [15:52]
Eamonn
You have summarized it perfectly well. It's exactly what you said. Like, you know, money. That's what the Gulf got is money. What the Gulf got is extra energy. And the most important part of it is the cheap energy. When I tell people, I mean generally when people come to me and say, you know, Ayman Lakina, I mean, we're planning to build the data center. And by the way, I'm not talking about just only Americans coming. I mean, we're talking about Indians, you know, we're talking about French, we're talking about British and German, you know, tech companies and saying like, you know, we want to build a data center. And the question is, they are asking me, could you or your company negotiate for us Lacking amin some sweet deals, like in a way on power because Saudi Arabia, uae, Oman, these places, they have plenty of natural gas. Natural gas is exceptionally expensive in Europe and in India. In India, you're lucky to get something like 27 or 30 cents per kilowatt, you know. So when I tell them, well, in Oman I can get you a deal like, you know, basically for 4 cents for kilowatts, it's like what I say, yeah, actually in Saudi Arabia is like in a 3.3 cents even like in the basically per kilowatt. And it's like the mind, it's like cannot process it. Like they say, like, you know, these are game changing numbers. You're talking about reducing our electricity cost by almost eight in a times factor. Like, I mean, you really, really like, I mean, you are reducing it by 80, 90%. So where do we sign on that? You know, it's like, hold on here. And I said to them, yeah, not too fast, like, you know what I mean? There are other certain regulatory issues because before even, you know, you put the first shovel on the ground, you have to agree the rates and everything and all of that.
- [17:45]
Thomas Small
But that brings up another thing that countries like Saudi Arabia and the UAE have because they are, you know, authoritarian systems. They are not tied by some of the constraints that more democratic Countries are tied under, because these data centers are vast, the amount of development it takes to get them approved. Can you imagine the regulatory hurdles, the different committees, the different interests that could get involved. In a country like Britain, who wanted to build something like this, it would be almost impossible. Whereas in the Gulf, all it takes is a couple of shakes to just shake on it and it'll happen.
- [18:19]
Eamonn
Yeah, just shake your money, man. But in all seriousness, there are other considerations also, like the fact that if you are there putting most of the data there and if you want to do something with that data that might contradict some of the regulations in the EU or North America, Canada and the us you could easily do it because the regulations for high tech in the UAE and to some extent in Oman and Saudi Arabia are so attractive. You know, far less regulation, you know, far less like, I mean, you know, as long, as long as the data and the source remain within the confines of the country, they really don't care what they do with it. And another thing also, I mean, you have to take into account here, you know, apart from the regulatory, you know, space, the money, the power, you have to take into account the fact that the infrastructure, when I'm talking here about the high speed fiber optic infrastructure within the GCC is just second to none. When people visit me here in the UAE and they stay in my home and they connect to the WI Fi and they say, goodness gracious, like you know how fast this thing is. And I say, yeah, I mean, welcome to the uae. And that is also an important factor. The infrastructure in Saudi, Oman, uae, Kuwait, Qatar, I mean, you know, the fiber optic infrastructure is second to none.
- [19:56]
Thomas Small
Okay, so let's talk about the AI arms race. From my analysis, Eamon, there are basically four overlapping arms races going on. The first is UAE versus Saudi Arabia for Gulf leadership in that arms race. The second is the United States versus China in a competition for technological alignment globally. Yes, along with standards. The third is a race between the big four that you mentioned. OpenAI, Anthropic, XAI, now SpaceX and other companies. So there's a race there. And finally a fourth arms race in the region between different military actors. Israel's involved, seeking AI advantages across like intelligence, drones, cyber warfare, et cetera. Iran's even in there. So those are the four overlapping races. Let's start with that first one. The UAE versus Saudi Arabia. The uae, by a huge margin, launched into the race much earlier than anyone else in the region. I think as early as 2017.
- [20:52]
Eamonn
Absolutely. Don't forget that G42 or group 42 which belongs to the Abu Dhabi Sovereign wealth fund such as ADQ and Mubadala and ADIA. These between all three, like almost $2 trillion of assets. I mean this is just gigantic money. This is when we get to ridiculous money. So the first thing is that they got in earlier, much earlier than the Saudis. That's the first thing. The second thing is the fact that the Emiratis just have more liquidity. You see the Saudis as a nation, they are blessed with $48 trillion of natural wealth, oil, minerals, everything you can imagine. The Emiratis got far less than that, maybe 9 trillion. But the Emiratis are only 1.1 million individuals. The Saudis are 26 million citizens. And so the pie is divided far into smaller pieces in Saudi while it is bigger pieces in the uae. So the UAE have a lot of surplus cash to actually spend on investment. The Saudis are always extremely asset rich but in a liquidity tight, you know, and between you and me, that liquidity crisis is, you know, a crisis of their own making, to be honest. Like anybody don't want to go into there. The Emiratis however are smarter a little bit, you know, basically on the question of having more liquidity. So first they got in before the Saudis. Second, they have more liquidity than the Saudis.
- [22:23]
Thomas Small
More money to invest, yes, but the
- [22:25]
Eamonn
Saudis have something else like you know, basically that the UAE don't have, which is more abundance of natural gas. That's one. Second is the fact that they have that kind of prestige. It's like we're bigger. We are also basically more or less sitting in the middle for all of these fiber optic infrastructure to go through and all of that. Look who I would bet on. And my heart always bet on the Saudis because my heart always laksheir, you know, reside in Khobar, you know, my birthplace, my childhood playground and all of that. But my mind bet on the Emiratis and especially on one person who seems to have got it right from the beginning, the man who founded G42 and then after that all the other funds that invest in AI, especially the new fund, 50 billion doll fund is called MGX, which is spun off from ADQ. And he is Sheikh Tahnun Bin Zayed, let's call him TBZ from now on. And Sheikh TBZ is, he is the younger brother of mbz, the president of the uae. And most importantly he is also the head of most of the sovereign wealth funds in Abu Dhabi. And of course he is the National Security Advisor of the uae.
- [23:55]
Thomas Small
So a guy that most people haven't heard of, tbz, but he is clearly very influential, very powerful inside the Emirates.
- [24:02]
Eamonn
He is very powerful inside the Emirates. But the most important thing is that since national security is under his purview, it's very clearly he treats AI as a matter of national security, which proves that it is useful in the armrest.
- [24:16]
Thomas Small
Okay, well, one thing that I don't really quite get is why do we have to think of the AI race in the Gulf to be sort of zero sum? Like it's either gonna be the Emirates or Saudi. They both have strengths, they both have weaknesses, they're both going to generate a massive industry in AI services, AI infrastructure. So, you know, they can both win, surely.
- [24:38]
Eamonn
Exactly. For me, like basically I see it as a, not an arms race, but so much as a commercial competition. The more they are outsmarting each other or out funding each other and out investing each other, the better, to be honest.
- [24:54]
Thomas Small
Okay, to be more specific, the two countries are adopting different strategies. The first is that the UAE strategy, basically it has adopted a kind of diversification strategy. It has invested heavily across a range of companies and a range of technologies. It's sort of using that liquidity that it has to make bets across the board, like a kind of wise gambler, if you like. So it's like a state run strategic holding company more than anything else. Whereas from what I've understood, Saudi is trying to create something like an Aramco of AI, a more national concern that is not centrally managed because Aramco has a huge amount of autonomy. That's why it's so successful. So it's not that they want to like centrally control it, but they want it to be more subject to state, state control. How do you make sense of that difference, Eamon? Since obviously the Emirates, you know, it's part of their national security strategy. So they're going to control, but they have different strategies.
- [25:57]
Eamonn
Exactly as you said for the Saudis, they are creating an Aramco for AI in the uae. They are investing in each project on its own merits. So they are dividing the projects according to their use in the economy. For example, for defense, it would be more anthropic. And just like there used to be the Internet of things, you remember the Internet inside your tv, the Internet inside your fridge, the Internet inside. You know, I even have an air fryer that actually like I can control from my iPhone, like, you know, so it's the Internet of things now, Project Prometheus, you know, which is Jeff Bezos, you know, you know, side project, but huge side projects. It's like in a 122 billion in a dollar side project. And there is an investment, of course, like, you know, basically from the UAE in it. It is the AI of things. So we move from the Internet of things to the AI of things. And what things we're talking about really big things, such as the water desalination plants, the energy facilities, we're talking about hospitals and all of that. So there is a competition between both Project Prometheus and of course Anthropics, who are way ahead of them in that regard. And of course the big four, we have Prometheus, Anthropic, OpenAI and XAI, which now is part of SpaceX for Elon Musk. All of these have tremendous computing power, tremendous different tools to be used. The Emiratis are investing in these tools and they are running them in the uae, each separately. Saudi, however, no. They established Humane.
- [27:37]
Thomas Small
Humane was established in May 2025. It is owned by the Public Investment Fund of Saudi, the piff, the pif, and it is chaired by mbs. A sign, I think, of this slightly different approach. It's a little bit more controlled.
- [27:54]
Eamonn
Humane is a AI Aramco, as you say. And their responsibility is to be the country's sourcing authority for AI. And then from there they distribute the products according to the suitability for each industry within Saudi Arabia, whether it is energy, whether it is health, whether it is crowd control. In Hamakah during the Hajj, one of the reasons why this hajj was most successful, it is the first hajj with AI in it. So it was the first AI Hajj.
- [28:29]
Thomas Small
You know, you'd think, why are the Saudis adopting this kind of strategy? It seems on paper that the Emirate strategy is potentially more productive, potentially more creative. It's basically letting these four big companies develop things more or less kind of on their own, and then what works they'll adopt and what doesn't work, they won't adopt. Whereas it seems from that description that Saudi is trying to kind of pick winners before they've even been developed or something.
- [28:55]
Eamonn
Well, that all goes down to the founding culture. I mean, basically Saudi Arabia is a centralized governance and economy, while the UAE is 7 emirates. You see, there's a federalized, as a decentralized system. To some extent. Each country adopts the AI strategy that benefited. But when it comes to national security and defense, you know, you can see here that that belongs to Sheikh tbz, Sheikh Tahnumin Zayed in the UAE and in Saudi Arabia. Also at the same time there is the National Security and the Cyber Warfare and Cyber Security center which is shared by MSA Adelaide who is like in National Security Adviser of Saudi Arabia. So amazingly they might seem different when it comes to the commercial civilian and semi civilian and semi military users and intelligence users of the AI. When it comes to defense and national security, it seems that the National Security Advisor of the uae, Sheikh TBZ is in control and also on the part which is purely national security and defense, it is under the control of the National Security Advisor of Saudi Arabia, the Minister Mosad Ehban. You see, it's similar.
- [30:13]
Thomas Small
It's similar. It shows that underlying all this investment in AI are national security calculations. Let's have a quick commercial break and when we get back we'll discuss more of the global strategic outlook. We'll be right back.
- [30:32]
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- [32:02]
Thomas Small
We're back. We're talking about AI and the AI arms race in the Gulf Eamon. First, let's just summarize a bit the larger the global dimension of this. You know I said that it's a kind of USA versus China competition. How would you characterize the global perspective on the AI arms race and Then the role that the Gulf states are trying to play in that. Because it does seem that though in recent years, countries like Saudi Arabia certainly, but all the Gulf states to varying degrees, have tried to hedge their bets in this changing world away from American unipolarity, towards something like a new, even bipolarity, possibly, certainly maybe a multipolarity. The Gulf states have been trying to hedge their bets, but when it comes to AI, they seem pretty firmly in bed with the Americans. So explain the global dimension and then how the region sees itself in that, in that struggle.
- [32:59]
Eamonn
I mean, when it comes to AI, and especially when it comes to processors and chips and GPUs and all of that, there is only one country that got the technology for it. Of course Taiwan is ahead of the game when it comes to the semiconductors, but when it comes to the gpu, that's Nvidia. Nvidia is above everyone else. Even the Chinese are desperate to put their hands on some of that technology. However, the Americans might forgive the Saudis for buying some Chinese weapons. The same with the Emirates. The same with no, no problem defense. Okay, we'll forgive you, but never ever high level sensitive technology. No way we will allow the two to coexist in the same environment or in the same ecosystem. No, we will never allow it. And so the choice was very stark in front of the GCC guys. You cannot have Chinese and American AI technology operating within the same ecosystem. It will just lead to considerable leakage of American technology to the Chinese side. And also for the Chinese to develop a backdoor into the American system while building their own Chinese digital firewall to make sure we don't penetrate ourselves into the Chinese technology. And so, so the GCC just made their decision. It was much easier because the might and the power and the money and the technology and the speed of it and the immense R and D resources just in the States. The States got what it takes for any country to develop a considerable AI infrastructure. Without the US they cannot do it. And this is why the arms race between China and the Americans tipped considerably in favor of the Americans because of the gcc. And that also.
- [34:55]
Thomas Small
Wait, wait, wait. Explain that, explain that, explain that. What do you mean?
- [34:58]
Eamonn
Okay, in order for Chinese technology to flourish at home, it needs to be successful abroad. So Huawei couldn't be Huawei, the giant of China without succeeding abroad. BYD couldn't have been successful in China without being successful abroad. Because in China everything is, must be cheaper, must be subsidized, must be like in a sold at a lower Rate like in, I mean, however, you know, when you sell abroad, that's where the real money is. So Chinese manufacturers must export, you know, whether a technology or a product. So here is the issue is the fact that Chinese deep sea and you know, which was touted to be like in the beginning of something amazing and all of that.
- [35:44]
Thomas Small
Yeah, I remember that last year at some point everyone was like, oh, the Chinese have run, you know, run rings around America. The end is near. America's dominance is over.
- [35:54]
Eamonn
Yeah. But again, just like with many other fields in the past, China was imitating rather than innovating. And now we are seeing this in AI, at least for the foreseeable future. The AI race has stepped in favor of the Americans because the GCC did not invest and co invest with the Chinese, and the Chinese could not export their AI in a way that was profitable and to make it actually worth all of the investment from the Chinese government. And also basically the fact that all of this require significant amount of GPUs and processes and semiconductors, which the Chinese don't have the access to. These are extremely restricted by the Biden administration before and this restriction continues under the Trump administration. So according to a very knowledgeable person in AI technology, and he's a former American army senior officer, you know, working, you know, he was working on many programs that are related to AI and the US Military. In a retired last year on the board member of one of the AI companies. I was talking about lacking that. I was invited to the presentation and he said that he estimates, and he is saying it with all the honesty mustered by someone with military integrity. He said, I believe that the Chinese are five years behind. He estimated that the Chinese are five years behind at the moment, but they could close the gap. Considering that the mss, the Ministry of State Security in China, which is massive as a behemoth, that intelligence agency, the mss, is devoting considerable amount of resources just for one thing only, which is to put their hand on the technology to produce these GPUs and to reverse engineer the very few machines, especially the Dutch machines, as they call them, basically, which can absolutely, in a completely sterile environment, create all of these semiconductors for the purpose of like improving their data centers computing abilities.
- [38:12]
Thomas Small
You mean through espionage, the Chinese state security is trying to get its hands on this technology? Yes. What can countries like Taiwan, like the Netherlands and other places, what can they do to defend themselves against Chinese espionage, which I think it's fair to say is very sophisticated.
- [38:29]
Eamonn
It is like, I mean, and you have to Do a lot of things. First of all, you have to deal with first insider threat. You know, how many times we've seen people who were selling secrets to China because the Chinese were always willing to recruit people who are working inside the industry. So always, always the easiest backdoor for the Chinese into these technologies is actually, you know, LinkedIn. I'm not kidding. Seriously, LinkedIn being harvested so, you know, meticulously and diligently by the Chinese to identify people who are working as software developers and engineers, you know, and programmers like, you know, I mean, to actually convince them to betray their own companies and to sell the secrets, like in a.
- [39:14]
Thomas Small
One more reason to hate LinkedIn. Eamon. Honestly, I've never liked LinkedIn.
- [39:19]
Eamonn
Exactly, exactly. I mean, what a failure of a platform. So it's already like, I mean, creating vulnerability. How many Chinese companies and Chinese people you see on LinkedIn? Hardly. So it's unfair, like they know more about us than we know more about them.
- [39:35]
Thomas Small
Well, if we'll just communicate ourselves so openly like that, then they might as well take advantage of it. Maybe the west needs to relearn the value of secrecy.
- [39:46]
Eamonn
Exactly. And that's why it started now to become a custom now that engineers who are moving from traditional companies such as Google or Apple or Amazon or any of the other, like Big Tech, Oracle, whatever, when they move into anthropic OpenAI, SpaceX or whatever, this is where they are encouraged most of the time, depending on their position within the company, not to update their LinkedIn, you know, so just to keep it as it's, you know, frozen in time so they don't identify that you are working for SpaceX or OpenAI or whatever, but only looking for certain positions. If I was a security advisor, you know, to these companies, I would say just encourage your people not to be on LinkedIn and not to be associated publicly with your company, because that will open them like in A four. Not only like in basically the direct approach, but even like, I mean, you know, spyware and, you know, on their phones and on their laptops and on their home routers and all of that in order to steal as much data as possible, you know, so the Chinese are like, I mean, using, you know, a lot of, you know, technological signal intelligence, like, I mean, cyber means of stealing information. And that's why that senior former army officer, he was saying, look, it's five years right now, but this gap could be closing if we. And that's why we have to keep running to make sure they don't catch up with us. And that's why the building of so many data centers within the US is going like crazy. But they are encountering a lot of resistance from populations in the US and this is where the Gulf comes into the picture.
- [41:39]
Thomas Small
Yeah, as we said, it's much easier to get these things built in the Gulf. So it's a very attractive proposition for many reasons, but not for every reason. I do know that those hot summers are going to be a problem. The geostrategic instability at the moment is a huge problem. Eamonn, in all of the kind of research I was doing around the edges for this episode, I was surprised by how little the Iran war and the determination that the Islamic Republic has shown to disrupt any of this technological and economic development in the Gulf, the role that it's playing in making, in destabilizing the situation. So what can the Gulf states do to protect themselves in the face of an Iran that is determined to overturn the apple cart of America's AI dominance?
- [42:30]
Eamonn
Well, first of all, the Iranians are relying a lot on Chinese AI. And so what is happening is just as the Americans and the Soviets competed against each other by supplying warring nations, each one is supplied by either American weapons and the Soviet allies are supplied with Soviet weapons. And let's test the weapons against each other without going into direct war. So now it seems that the AI conflict is going to be between the Chinese supplied Iranian AI against the American supplied GCC AI. And we will see this happening in multiple levels. Cyberattacks, counter cyberattacks. So for example, there was a big cyber attack, you know, by an Iranian linked group, Hanzala, which affected me so much, actually myself. I mean, I had to rely on, you know, the attack was against the uae and I myself lost some of the most important files, you know, and funny enough, I mean, the, you know, the rta, which is the Road and Traffic authority in Dubai, was affected so much. I lost some of the permits, everything. The only thing that was never lost in the system was all the parking and speeding fines I have. It's like, wow, guys, you wiped out all of my permits and my service documents and even my own license was wiped out, but not the fines. So what happened is the Iranians now are having problem withdrawing money from their ATMs. This is happening over the past 72 hours. It's consistent and persistent cyber attack against the Iranian financial system. Where do you think it's coming from? I'm not going to say the gcc. I'm just saying that I say, look, the GCC was attacked, the GCC would retaliate in kind. And this time it's going to hurt more. So now we already seeing the AI wars, not the Star wars, but the AI wars, you know, and there are of course Jedi and Sith here. There are like an, I mean, you know, instead of like there will be the geeks and the nerds, like, you know, I mean, so instead of wielding, you know, lightsabers, like in a way they are wielding, you know, the code sabers and you know, and let me put it, you know, for you here. Like, I mean, in plain terms, we are already seeing the beginning, just the beginning of how AI is going to be disruptive and is going to be used for the purpose, not only basically in disrupting the networks of the other side when it comes to finance and energy and security and electricity and all of these things. No, it's also going to be on the side of the, not the Iranians, but on the side of the GCC, a means to improve their ammunition production through AI enabled 3D printing, which is not with the Chinese. The Chinese didn't come to that yet. This is, I think like in basically where we will see this develop. The Chinese are going to catch up and they will provide, you know, the fruits of that ketchup, most likely tomato ketchup.
- [45:54]
Thomas Small
Goodness gracious, okay.
- [45:56]
Eamonn
To the Iranians. And this is why I believe that this American AI versus Chinese AI, the Middle east is going to be the battleground for it.
- [46:10]
Thomas Small
Well, what about Israel, Eamonn? So in 2017, as we said, the UAE got into AI before anyone else in the region. In 2020, the Abraham Accords were announced and this was part of a larger strategy which the attacks on 7 October upset of integrating the whole region together into a new global trade network. We've talked about that a lot. Part of that was this AI component. AI was a part of the larger strategy and Israel has always played a role in it, especially as regards the Emirates. Now Israel doesn't have a huge amount of capital to invest. It doesn't have very much available land and it doesn't have anything like the cheap energy infrastructure that the Gulf states provide. So, you know, it cannot bring those things to the table. What can Israel bring to the table in the new AI arms race in the Middle East?
- [47:08]
Eamonn
What the Israelis can bring is human capital. That's the most important thing. It's the mines. Israel wasn't called the Mediterranean or the, you know, Middle East Silicon Valley for no good reason. I mean, they are in fact like in Basically the Silicon Valley of the Middle East. They have great minds, they have great engineers, they have great programmers, software developers and writers, code writers. These people are going to be essential to build the infrastructure for AI for the region. And most likely beneficiary out of all of this will be the uae. The UAE will be lucky in a sense, lucky that they will have access to both the US technology and the Israeli technology at the same time. You know, it's the best of both worlds. The Saudis would rely more on the Americans, but they will miss out on the Israeli thing. The Saudis exactly, basically are not that concerned about not having access to that, but that's lacking for political reasons. Again, here is the issue is the fact that Saudis are more reliant on the big four, the ones we mentioned, Prometheus, Anthropic, Xai and OpenAI. The UAE is not entirely reliant on that because the UAE also have vast number. Like, I mean, I could name maybe on the top of my head, I could name 20 startups, big serious startups and unicorn companies that are actually welcomed here because they are providing significant added value, which because of the Saudi lack of liquidity, they will find that the UAE is far more favorable environment because of the regulatory environment, but also because the UAE is valuing each technology on its own merit rather than sourcing it as part of a centralized way to do it. And among these unicorns are Israelis.
- [49:00]
Thomas Small
Yes. And it must be made clear that primarily what Israel is bringing to the table in terms of technological expertise, cutting edge AI technological expertise is within the military domain. It has extremely advanced sort of drone recognition technology using AI and all sorts of advanced systems. So what's converging, especially in the uae, is a kind of threefold network. The United States is providing the technology, let's say at the ground level, you know, working with partners, of course, the chips, the infrastructure, the larger digital infrastructure, the frontier models, et cetera. The Gulf is providing the capital, the electricity, the land, that sort of thing. And Israel is largely providing a large degree of the, of the cyber technology, the intelligence, the military applications of this new, you know, AI stuff. So the three together are creating a very powerful system.
- [50:01]
Eamonn
Exactly. And as for the chips, like, you know, of course, like, and I like them salted, you know, but nonetheless, like, I mean the, you know, you know, the fact that of the matter is that the agreements between the US and the Saudis and the Emiratis enabled both countries to have access to something that was already banned from exporting, which is Nvidia's GPUs, the Emiratis alone got access to 36,000 of them for the purpose of building AI centers here and to enhance the capability of machine learning and to allow the models basically to become learning models, self learning models.
- [50:45]
Thomas Small
Well, Eamon, I mean, there you go. AI is truly going to be a game changer. I don't know what to think about it. I think that it's all pretty creepy.
- [50:53]
Eamonn
Yes.
- [50:54]
Thomas Small
I mean, I remain liberal enough to wonder about putting this kind of technology in the hands not just of, in the Gulf, but a lot of authoritarian governments. I'm sure that they could come up with all sorts of uses for that technology, which may not be to the greater cause of human flourishing, I don't know. But in general, it seems odd to be talking about the Gulf as this place where huge amounts of investment are going to take place, huge amounts of vital infrastructure is going to be built just after we've gone through this really kind of quite devastating Iran war. And just when we're in a period where because of the MOU that Trump signed and because nobody knows what the future holds, we have no idea the degree to which the Gulf states are actually going to be able to retain proper sovereignty even in the face of a more muscular Iran. Now, obviously what you've been saying shows that in the long term, the United States is still strategically invested in the Middle east, especially the Gulf. They will not give it over to a Chinese ally to dominate. They will have to do something, I guess whatever it takes to prevent that. So possibly the AI arms race that's going on now in the Middle east is a sign that what we saw in the Iran war, what we saw the attempt there to push back against Iranian aggression, I guess subterranean aggression through its proxies and whatever, that effort is not over by no stretch of the imagination.
- [52:32]
Eamonn
No, not at all. I mean, at the end of the day, the relationship between the GCC and Iran is not going to go back to what it was prior to the first missile and drone that attacked the GCC on the 28th of February this year. And just to show you how AI is going to be so intrusive, you know, into our lives. You know, recently I've been into, you know, I've listened on Tick Tock just randomly to beautiful song. It was in English, done in the most beautiful poetic, lyrical harmony and I loved it so much. And the, the voice, the voice of the singer was, you know, her voice like, you know, basically was almost like divine, like in a minute. It was beautiful. And you know, it's English lyrics, you know, done so poetically.
- [53:28]
Thomas Small
Okay, Eamon, I know what you're gonna say, buddy. I know what you're gonna say. It was done by AI Exactly.
- [53:34]
Eamonn
Entirely. And I was so surprised, like, I mean it was entirely. The voice, the lyrics, you know, everything. Like, basically. Do you know how you know, the creators of these songs just fed the statements and quotations of Rumi. Of Rumi.
- [53:55]
Thomas Small
He's the great Persian poet from the late middle ages. Rumi. Yeah. Great Sufi poet.
- [54:01]
Eamonn
Exactly. Jaladdin Rumi. Yeah. So Jaladdin Rumi, his poetry was fed into the model and then the model was asked to create songs that are in English based on all of the poetry that was fed that is both relevant to modern day world about self independence and the ability to rise up above challenges in life and all of that. And then it created these songs in Rumi's honor. The AI deliberately did the songs in a pergeonate style of melodies. And my God, I mean, it was just a work of genius. And it's all machine.
- [54:48]
Thomas Small
It wasn't a work of genius. That's not genius. It's inauthentic. It's fake, it's not real, it's not genius. The human mind is more than just some machine that can be represented in. In ones and zeros. Come on. The human spirit is eternal. It's the breath of God. It's not just. We don't live in just a materialist world. And I hate the fact that this, that these freaking computer people can trick us, can trick us into thinking that this is intelligence. It's not intelligence. It's not. Not, not.
- [55:24]
Eamonn
Yes, we are the work of God. And AI is our work. Which makes it the work of God.
- [55:31]
Thomas Small
I don't think so. I don't think so. We can have a discussion later once I've pushed stop record about Antichrist. What the Antichrist might be.
- [55:41]
Eamonn
Amen.
- [55:42]
Thomas Small
We shall see. We shall see. Okay, dear listeners, that's it. AI arms race in the Middle East. I am absolutely dripping from sweat. I didn't say so at the outset, but we are going through a heat wave here in York and I am losing my mind, which is being boiled like scrambled eggs. I am, I'm wilting on the vine here. Oh, you in the Emirates, Eamon, you have air conditioning, whereas we here in England don't get the air conditioning.
- [56:12]
Eamonn
Ah, poor you. Like, well, before the episode, I was offering to go to Amazon and to ship you like a portable air conditioner, but you refuse. What can I do.
- [56:22]
Thomas Small
Oh goodness. Right, dear listeners, that's it. Take care.
- [56:25]
Eamonn
Take care everyone, and stay hydrated.
- [56:28]
Thomas Small
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Eamonn
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Eamonn
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Thomas Small
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Eamonn
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