Bahrain, alongside other GCC countries, remains well positioned to play a major role in the development and implementation of artificial intelligence (AI), despite the impact of Iranian attacks targeting data centres across the region.
This is among the key findings of a working paper titled ‘Gulf States Retain Advantages in the AI Race Despite War’ authored by Edward P Djerejian Centre for the Middle East nonresident fellow Justin Alexander and published by US-based Rice University’s Baker Institute for Public Policy.
“Despite the short-term uncertainties resulting from the war, the Gulf remains well-positioned to become a major hub in a multipolar AI landscape,” the report noted.
“The region’s strengths – leadership commitment, investment capacity, abundant and reliable energy, strategic geography, agile regulation, and diversified international partnerships – provide a foundation few countries can match.
“AI directly supports the region’s long-term goals of economic diversification, productivity enhancement, and the creation of high-value jobs for nationals.”
The global AI race is generally positioned within a ‘US vs China’ narrative, however Bahrain, Saudi Arabia, the UAE, Qatar, Oman and Kuwait are also investing heavily in AI as part of their economic diversification plans.
The GDN reported last year that the Labour Fund (Tamkeen), under the direction of the Prime Minister’s Court Minister and Tamkeen board chairman Shaikh Isa bin Salman bin Hamad Al Khalifa, launched a national initiative to train 50,000 Bahrainis in AI skills by 2030.
The kingdom also became one of the first in the region to introduce legislation to govern the regulation of AI, with a Shura Council-approved law introduced in April 2024.
“At first glance, this may be surprising because the Gulf states have historically been associated with natural resource extraction rather than technology,” Mr Alexander added.
“However, the region has prioritised technology for decades, and its natural resources and the capital they generate are making the region a major centre of AI infrastructure and investment at home, in the US and globally.”
A key indicator of this digital proritisation strategy, highlighted within the report, is Bahrain’s adoption of a national ‘Cloud First’ strategy in 2017, helping it to attract Amazon Web Services to open the region’s first hyperscale cloud data centre in 2019.
Saudi Arabia, Qatar and UAE’s Abu Dhabi have been highlighted as the regional leaders in AI, and Mr Alexander noted, in the report, that the current approach is competitive rather than co-ordinated.
However, last month, parliamentarians in Bahrain called for a collaborative approach, calling on the government to work with other GCC nations to develop a comprehensive and unified AI strategy covering education, governance, ethics, innovation and private sector partnerships.
This would allow GCC countries to pool surplus capital, which was identified as a key enabler for AI growth in the region by the report.
“Over the next few years, AI build-out will require large and front-loaded capital investment for computer hardware, data centre infrastructure, and software development.
“Even the world’s largest companies are struggling to mobilise the financing that they need to compete in the AI race. They are leaning heavily on borrowing.
“However, the GCC stands out as a region that exports large quantities of capital, and its sovereign wealth funds have the capacity to provide significant contributions to the capital demands for data centre construction at home and globally, as well as make equity investments in capital-hungry AI companies.”
AI has the potential to support economic diversification plans through infrastructure and companies, with broader implications including reduced human capital barriers to implementing advanced manufacturing, streamlining systems to facilitate tourism, and optimising agritech needed to expand domestic food production.
However, the ongoing geopolitical tensions which began on February 28 pose significant challenges and will require Bahrain and other countries to adapt to new risks.
According to Mr Alexander, in a ‘historic first’, targets during the conflict included data centres across the region.
“The most direct impact of the war is the realisation that data centres can be viewed as dual-use military targets, and vulnerable ones at that,” he added.
“In response to these threats, there is likely to be interest in hardening new and existing data centres.
“This will include anti-drone defence systems and possibly changes to the physical structure of the centres.”
Another defensive measure, according to the report, could be locating data centres underground, which would also offer added cooling benefits. These measures will increase the cost of doing business but may be necessary, given their potential vulnerability and importance to daily life.
Mr Alexander noted that while the war and recovery efforts may temporarily reduce the availability of capital, they may, in some ways, have strengthened commitment to AI. This is because the shock to the hydrocarbon sector has highlighted the need for economic diversification, while the growing use of AI in modern warfare underscores the sector’s strategic importance.
naman@gdnmedia.bhs
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