When regulators began discussing adjustments to the European Union’s Artificial Intelligence Act of 2024, mere months after its passage, it was a clear sign of the regulatory challenges in this sector. The comprehensive legislation was the first of its kind, and even seasoned regulators like the EU were struggling amid political and corporate pressure, unable to set realistic and effective measures to guide rapid advances in AI technology. For observers in the Gulf, these challenges were a warning sign of the urgent need to balance innovation with risk management.
The AI industry has already become a key part of innovation and economic diversification plans in the Gulf, with countries such as Saudi Arabia, the United Arab Emirates, and Qatar investing heavily in AI infrastructure and capabilities, while positioning themselves to be important nodes in the international AI network. Yet while the bourgeoning AI sector is essentially a competitive race, with no one wanting to hamstring themselves, no one is exactly sure where the race is leading to either, or what will happen—to their economies, labor markets, societies, etc.—along the way.
Accordingly, regulations need to be flexible enough to enable growth and provide opportunities for pursuing competitive advantage. However, trajectorial uncertainty, market pressures and unresolved debates about what aspects of AI need to be tamed make regulatory clarity unlikely. This difficulty is not accidental—it stems from the structural inability of existing political and economic systems to respond quickly and efficiently to rapidly evolving technologies. Therefore, governance will remain contested and fragile as long as forces driving development do not align with accountability needs.
The Gulf’s AI Moment
AI regulation is an urgent matter in the Gulf region, characterized by the intersection of rapid AI adoption with concentrated authority. National strategies such as Qatar’s National Artificial Intelligence Strategy 2019, the UAE’s National AI Strategy 2031, and the Saudi National Strategy for Data and AI solidify long-term objectives to secure regional leadership in AI infrastructure and services. Newly established AI institutions and multi-billion-dollar investments in the sector signal political commitment to use AI for long-term economic transformation and modernization.
AI has already brought substantial transformations in critical areas of Gulf economies, including energy, transportation, education, and healthcare. In the financial services sector, AI is deployed to enhance risk assessment and compliance, contributing to economic confidence and institutional transparency. Public administration, where AI is used to power chatbots, predictive analytics, and smart city solutions, is another example of the tangible effect on Gulf economies.
These advances have been enabled by the Gulf states’ flexible governance models, which allow for the rapid deployment of AI innovations. At the same time, as wide-scale AI adoption increases, so does uncertainty over the long-term effects of this disruptive technology and its potential effect on the achievement of national plans.
Why Governance Gets Stuck
Three structural obstacles are the main barriers to AI governance in the Gulf region and beyond. First, AI technologies are characterized by profound uncertainty and lawmakers often barely understand them. AI is a behavioral technology that does not always follow predictable, pre-established logic. Even well-intentioned AI technologies may produce harmful outcomes once deployed at scale or as they evolve over time. Regulators are therefore expected to govern unpredictable and opaque systems whose long-term effects remain difficult to assess.
Second, the technology is too fast-moving. The development cycles of AI technologies take months, while regulations are developed to cover the span of years. Traditional policy cycles—including stakeholder consultation, policy drafting, implementation and assessment—are ill-suited for AI regulation. Gulf governments face a trade-off between acting quickly at the risk of introducing superficial policies and delaying action at the cost of relevance.
Third, AI regulatory regimes are not isolated. Cross-border and cross-sector issues of security, privacy, consumer protection, and others require multi-level coordination. Such coordination remains difficult in the absence of a unified international AI governance framework. Yet there is no pause button to get everyone on the same page.
In the Gulf states, these governance challenges are closely linked with unique local hurdles. Their centralized governance is ill-matched to the needs of the technology sector, which defies control. Additionally, the Gulf states’ ambition to lead globally in the AI sector is tempered by a limited talent pool and infrastructural limitations, increasing reliance on external resources and investment.
The Pressures of Political Economy
The growing involvement of AI companies in governance has already slowed policy-development progress in the EU. Similar dynamics are observed globally, including in the Gulf region. Major tech firms pressure decision-makers to design policies favorable to them, not necessarily to consumers or the economy as a whole. They emphasize future profits and technological breakthroughs while downplaying risks and accountability concerns. These firms’ resources and political influence allow them to be one step ahead: fund and create new AI systems before regulators can fully grasp their implications.
In the Gulf states, corporate interests are intertwined with those of the government, which creates unique risks. Local governments partner with global tech firms or invest heavily in state-backed tech businesses. For example, Qatar has established Qai under the Qatar Investment Authority and committed billions of dollars to strategic AI infrastructure investment partnerships, alongside major investments across other Gulf states. These moves reflect how state resources are being channeled strategically into the sector. When public-private collaboration is so tight and competition so stiff, any attempt to regulate the AI sector inevitably strains strategic partnerships.
Gulf policymakers are therefore wary that strict rules may channel AI investment elsewhere. Therefore, regulatory frameworks must balance oversight with the need to maintain access to technology and investment in a sector increasingly tied to economic objectives.
In a world where AI is becoming a source of national power, governance is seen as a security matter. Countries that harness AI innovation can gain economic and political leverage, while AI norm-setting can enhance their soft power projection. In a region as competitive as the Gulf, the need to assert leadership overrides AI’s potential safety issues. These include infrastructural vulnerabilities arising from overreliance on foreign tech companies that operate data centers or provide essential hardware and technologies for Gulf AI infrastructure. For Gulf states navigating complex geopolitical alignments, the pressure to maintain technological access and avoid dependence shapes AI policy as much as any domestic consideration.
The Timing Trap
Gulf decision-makers face a universal dilemma: whether to introduce AI regulations now, based on incomplete knowledge, or to wait, letting the sector develop without the accountability and transparency it needs. Both options carry significant risks. Moving too fast may stall sector growth, which can delay Gulf countries’ ambitious economic diversification plans. However, being complacent is no less fraught.
The window of opportunity for AI governance is narrowing. Once AI systems are embedded in Gulf states’ critical infrastructure and business processes, altering governance frameworks becomes more difficult. Moreover, governance considerations are affected by the fact that AI investments, partnerships, and talent development need to be secured now to guarantee long-term competitiveness.
Concerns over potential delays or missteps in AI governance are not unique to the Gulf. Risks of moving too fast, such as systemic failures or increased dependencies on foreign technology providers and critical digital systems, apply to anyone seeking better AI regulation. However, the Gulf’s urgent need to diversify the economy away from oil significantly raises the stakes. Here, the promise of the post-oil, technology-based economy collides with entrenched governance challenges stemming from persistent talent shortages and capacity constraints.
Global Implications
The structural nature of AI governance means that obstacles faced by the Gulf states also apply to other countries considering AI regulation. The struggles faced by the EU and the Gulf point to the same conclusion: regulatory gaps are caused less by political inertia than by the inherent ambiguities and unpredictability of the AI technology.
Policymakers recognize the stakes and risks associated with regulating the AI sector, but there is little they can do with the pacing problem and the lack of cross-border consensus. Since there are no international institutions that can serve as constraining, unbiased regulatory actors, states are left to navigate governance amid competitive pressures.
Governing the AI sector requires coordination and extensive balancing of potential risks and benefits, which are difficult to achieve with the current political and economic structures. AI governance may therefore remain contested and sporadic, with implications for accountability, security and privacy.
The case of the Gulf states that are currently competing for AI leadership highlights numerous structural impediments. The tension between the desire to give major technology players as much freedom as possible to achieve national goals, on the one hand, and the risk of losing control of the fast-developing industry, on the other, is unlikely to be resolved quickly or easily.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of the Middle East Council on Global Affairs.
