Iraq and other emerging economies face a critical choice: attempt to compete directly in the global AI race by acquiring advanced semiconductors, or build homegrown technological capacity through education and open-source development. According to international trade and sanctions expert Hdeel Abdelhady, the latter approach offers a more realistic path to sustainable economic growth, especially for countries lacking the geopolitical alignment and financial resources of Gulf states like the UAE .

Why the UAE Model Doesn't Work for Everyone?

The United Arab Emirates has become a global AI hub by combining three critical advantages: massive sovereign wealth, strategic positioning as a financial center, and alignment with US geopolitical interests, including normalization with Israel. This convergence has given the UAE access to advanced semiconductor technology and US-backed initiatives like Stargate that other nations cannot easily replicate .

Iraq, by contrast, operates under fundamentally different constraints. The country has a substantial population, significant natural resources, and a historical legacy of strong public education, but lacks the diplomatic relationships and financial capacity that enabled the UAE's rapid tech ascent. Attempting to copy the Gulf state model would likely prove both ineffective and economically unsustainable .

"Countries that lack this particular configuration of assets and relationships cannot simply replicate the model. Iraq's path to attracting sustainable FDI must therefore be tailored to its own distinct circumstances and strengths," stated Hdeel Abdelhady, international trade and sanctions lawyer and scholar.

Hdeel Abdelhady, International Trade and Sanctions Lawyer and Scholar

How to Build AI Capacity Without Advanced Chip Access

• Invest in STEM Education: Strengthen domestic universities and research centers through partnerships with international academic institutions, creating a pipeline of local talent capable of developing AI applications and infrastructure.
• Leverage Open-Source Technologies: Build development strategies around publicly available AI frameworks and tools rather than proprietary systems, reducing dependence on export-controlled advanced semiconductors.
• Develop Strategic Research Partnerships: Establish institutional collaborations between domestic universities and international counterparts to share knowledge and build indigenous technological capacity over time.

This approach reflects a broader economic principle that Abdelhady emphasizes: enforced self-sufficiency, while initially painful, can become a structural asset. Iran offers a compelling historical example. Despite decades of comprehensive sanctions that excluded it from Western financial and technological systems, Iran developed a functioning civilian economy, a domestic defense industrial base, and significant scientific infrastructure .

What Can Emerging Economies Learn From Sanctions Resilience?

The effectiveness of economic sanctions as a foreign policy tool remains mixed at best. Sanctions on Iraq before 2003 degraded military capability but failed to prevent military intervention. A comprehensive embargo against Cuba has not displaced its government. Russian sanctions following the 2022 invasion of Ukraine have not ended the conflict .

Iran's experience reveals why: geographic scale, population size, resource depth, and strong national identity can enable countries to weather external pressure by building indigenous capacity. The policy implication is counterintuitive but significant. Countries that reduce systemic dependence on external financial architecture and develop domestic technological capacity may achieve resilience that integration-dependent models cannot match .

"Enforced self-sufficiency, however painful in origin, can become a structural asset," explained Abdelhady.

Hdeel Abdelhady, International Trade and Sanctions Lawyer and Scholar

This does not argue against international economic engagement. Rather, it suggests that emerging economies should understand the vulnerabilities and dependencies that such engagement creates, and build alternative pathways to technological development that do not rely on access to export-controlled advanced semiconductors .

For Iraq specifically, this means prioritizing institutional development, legal capacity building, and alignment of domestic regulatory frameworks with international financial standards. These foundational investments create conditions for sustainable foreign direct investment without requiring the geopolitical positioning or capital reserves that Gulf states possess .

As the US-China AI race intensifies and export controls tighten, emerging economies increasingly face a strategic choice: compete for scarce advanced technology through geopolitical alignment, or invest in homegrown capacity that, while slower to develop, may prove more durable and resilient over time.