The CIA Operative Who Spied on the U.A.E.—and Played a Role in Its AI Win
While conducting espionage against powerful sheikh’s tech company, Jonny Gannon helped Gulf country quash Washington suspicions about China ties
Jonny Gannon had one final mission.
The longtime CIA operative had exfiltrated the families of spies from the most repressive of Middle Eastern regimes and tattooed the word “ARGONAUT,” an homage to seafaring heroes from Greek mythology, across his right forearm. By 2023 he had a Washington desk job with a rank equivalent to an Army two-star general.
That’s when the director tapped him to return to the field.
His assignment: Find out whether the “spy sheikh” could be trusted with some of America’s most cutting-edge technology.
Sheikh Tahnoon bin Zayed Al Nahyan, the national security adviser of the United Arab Emirates, was planning to build one of the world’s biggest artificial-intelligence hubs—and he had the financial firepower to do it. With a war chest estimated at $1.4 trillion, Tahnoon was seeking approval for the country’s AI champion, G42, to import state-of-the-art Nvidia chips.
But high-level officials in Washington worried Beijing was making intelligence inroads into the U.A.E. The U.S. had learned from intercepted communications that China was aiming to use its relationship with G42 to steal American technology and AI algorithms, according to people familiar with the matter. G42’s chief executive, Peng Xiao, had renounced his American citizenship, a prerequisite for acceptance into the inner circle of the Emirati government.
Gannon arrived in the U.A.E. capital Abu Dhabi on a commercial flight, sliding into a fake U.S. Embassy job that obscured his true position, CIA station chief.
Less than a year later, Gannon returned to Washington, this time on the Emirati royal family’s private Boeing 787. He was accompanying Sheikh Tahnoon, the brother of the U.A.E.’s ruler.
In classic spycraft, CIA officers steal information in the shadows from a foreign country to inform Washington policymakers. At the dawn of the AI era, Gannon was instead tasked by the highest levels of the Central Intelligence Agency with courting a foreign commercial player poised to be at the center of a new global scramble for power. He ended up both spying on G42 and also helping the U.A.E. clean up the troubling issues he discovered, according to accounts of his activities provided to The Wall Street Journal.
By the time of the June 2024 flight, Gannon had relayed advice to Tahnoon for more than six months on what it would take for the company to get in Washington’s good graces. Tahnoon was now on his way to make the case in person.
It worked—up to a point. Instead of cutting off the Emiratis, the Biden administration created a way for them to obtain the chips they needed, even if the path was strewn with bureaucratic hurdles.
In essence, the U.A.E.’s campaign—including wooing U.S. officials over tea, dates, and the occasional trip on a yacht or a private jet—reshaped a critical Washington debate from whether to allow the small desert country to become an AI power at all, to just how quickly to speed it along.
Donald Trump stepped on the gas. Days before his inauguration, Tahnoon and co-investors committed to a $500 million investment into Trump’s crypto company, World Liberty Financial.
The Trump administration soon decided to broaden the U.A.E.’s access to the most advanced AI chips, including allotting a portion specifically to G42. Last week, the administration went further, announcing it was temporarily lifting caps on G42’s access to U.S. chips, a major win for the country and for Tahnoon.
A person familiar with the matter said the World Liberty investment wasn’t discussed with Trump and that Tahnoon is a “significant investor” in crypto businesses. The White House has denied conflicts of interest, and World Liberty has said the investment had nothing to do with the administration.
Gannon’s role in the Biden-era transformation, revealed here for the first time, roiled the U.S. national security community, which wielded his insights as they battled over whether to help the U.A.E. become a new global AI contender.
His supporters, often officials who helped America wage the global war on terror and remembered the help Abu Dhabi had offered in fighting Islamic State, saw Gannon’s outreach as a necessary step to reward a critical security ally, and help keep American tech giants in one of the world’s largest AI projects. The U.A.E. was a geopolitical swing state worth bringing further into the American orbit, they argued.
On the other side were national security officials more focused on China, who feared America could be offshoring its most powerful new source of dominance to an adversary. The detractors were nervous that Gannon was obscuring clearcut evidence that both G42 and the U.A.E. shouldn’t be trusted. They believed he had “gone native,” and was helping set the stage for America to surrender its advantage in the defining geopolitical contest of the century.
In dozens of hours of interviews with the Journal, more than 30 current and former diplomatic, national security, White House and intelligence officials painted a picture of an emerging diplomatic gray zone that blended spycraft, diplomacy and commercial lobbying over the future of a new technology arms race. Some former administration officials said the debate over G42 fueled more rancor among Biden policymakers than almost any other issue.
In a statement, G42 said it had improved its compliance and security measures, and that it had gained access to U.S. technology through Washington’s formal regulatory process.
The Chinese embassy in Washington said the U.S. hyped and fabricated claims that China’s tech achievements are made through theft to undermine cooperation between Chinese companies and their international partners.
Surveillance state
G42’s chief executive complicated the picture. Born in China, Peng Xiao went to college in Hawaii in the 1990s. He became chief technology officer for MicroStrategy, a Northern Virginia business-intelligence company.
In 2015, Xiao came to the U.A.E., where he ran the AI division of cybersecurity firm DarkMatter. To the outside world, DarkMatter aspired to become a Middle East tech giant. In reality, it was created to help the Gulf state spy on geopolitical rivals, activists and journalists, with the help of former U.S. National Security Agency hackers, U.S. prosecutors later found. Xiao’s unit tried to blanket the country with surveillance, using AI to analyze the video, communications and location tracking it scooped up to predict civil unrest before it took root, according to former employees of the company.
As several of the U.S. contractors worked on Xiao’s project, they realized they were actually spying on Americans, former employees said. The tip-off: Some of the voices they intercepted had southern accents. They reported the effort to the FBI.
At the time, Xiao’s unit was also developing deep ties with China. Many of Xiao’s staff members were from the country and the executive opened affiliated offices there, the former employees said. Xiao publicly signed a deal with Huawei to develop AI tools that would help authorities monitor cities.
The company went defunct after a 2019 FBI investigation that led to some of the American employees admitting they had violated export laws by hacking into Apple’s iPhone cloud servers in the United States. Xiao and his staff spun off his unit into what became G42.
With billions of dollars in support from Tahnoon, G42 grew into a 22,000-person company aiming to become the largest AI firm in the world.
As the global Covid-19 pandemic raged, Xiao inked a deal with Chinese genomics company BGI to create one of the largest testing labs in the world. A Chinese official proclaimed a “historic and special era” of Beijing’s cooperation with the U.A.E.
Back in Washington, at a 2023 meeting of senior deputies across the executive branch, one five-minute agenda item set things in motion.
OpenAI had just released ChatGPT, triggering a new global race in artificial intelligence. American companies including Nvidia had a stranglehold on the most advanced chips that the U.A.E. needed to supercharge its AI capabilities.
Worried about G42’s growing China ties, officials discussed putting the company on a blacklist controlled by the Commerce Department that blocked access to American technology.
Commerce’s undersecretary for security, Alan Estevez, started the bureaucratic process for the blacklist, but got a call redirecting the path.
His boss, Commerce Secretary Gina Raimondo, had discussed the plan with others, who had decided they needed to slow down given that G42 was a state-backed company and the administration needed Emirati assistance on other issues.
Estevez travelled to Abu Dhabi in the spring of 2023, meeting with Tahnoon’s chief of staff at his villa, and visiting G42’s headquarters. He saw Chinese gear on site, but came away impressed with the seemingly world-class level of the company’s operations. Estevez later raved about Xiao’s sophistication, telling others it was like talking to Dario Amodei, the co-founder of groundbreaking AI company Anthropic.
He visited Tahnoon’s seaside palace at dusk, strolling its verdant gardens alongside the sheikh, whose eye condition causes him to wear sunglasses all the time. Tahnoon, known as a committed futurist, was training an entourage of his own AI agents to manage his personal affairs.
“You have a choice,” Estevez told the sheikh, laying out the option of either working with the American tech giants, or their Chinese counterparts, but not co-mingling the two at the highest level of the technology. “I get it,” Tahnoon replied, signaling for tea and dates to break the Ramadan fast. Over a dinner that included multiple salad courses and lobster tail, the men discussed recent books they read. Among them: “Chip War,” the 2022 account of the geopolitical battle to control microchip technology.
In June, Tahnoon came to Washington, and Estevez met him again, this time at a McLean, Va. mansion Tahnoon owned, on a cliff overlooking the Potomac river. Estevez presented Tahnoon, who was in jeans and flip-flops, with a list of the U.S. government’s demands. It included an outside auditor that would vet G42’s compliance.
“I can do all of these things,” Tahnoon said.
The next day, Tahnoon visited the Commerce Department to meet with Raimondo and described his motivation. His Bedouin ancestors earned great wealth pearl diving—until foreign farmed pearls tanked the market and left the local economy in shambles. This time, the Emiratis wanted to build an economy that would outlast its oil wealth, and AI was its future bet, he said.
Estevez returned to Abu Dhabi to check on G42’s progress, and came away convinced the company was on the right track. Later, he went back to Tahnoon’s palace, where the pair watched the Tour de France bike race together, on a television as big as the wall.
Overcoming skepticism
Other national-security officials tried to pump the brakes.
One was an intelligence staffer on Biden’s national security council, Maher Bitar. Spurred by the federal investigations into Xiao’s earlier company, Bitar had helped lead a White House push against spyware makers and the use of American hackers-for-hire. A Palestinian-American with a quiet intensity that some colleagues viewed as didactic, Bitar argued that any new U.A.E. deals could end up backfiring in the ways offshoring manufacturing had initially been viewed as a boon to the American economy only to have devastating results.
On the other side of the argument were people like Brett McGurk, a White House Middle East adviser who had for years quietly worked with Emirati security services to fight terrorism and rein in Iran. Seen by colleagues as a soft-spoken yet brutally pragmatic operator, McGurk argued that whatever quibbles Washington might have with the U.A.E., cutting its access to American technology would only shove the Gulf State into China’s arms.
To get to the ground truth behind these arguments, the CIA turned to Gannon.
Within the agency, the U.A.E. station had come to be seen as a sleepy posting. In recent years, intelligence reports from the tiny country had petered out. Now with the G42 issue looming, the agency’s director, William Burns, needed a top field officer who could manage the conflicting goals of running aggressive spying operations and repairing relationships with the leaders of an important ally. Senior officials saw Gannon as uniquely suited for the role: a natural empath with an unusual ability to connect with people, and who had experience running hard-edged operations against America’s most critical targets.
Burns helped burnish Gannon’s credentials, personally telling the prince that the operative was the American in the room as Israel negotiated with Hamas to release its hostages in the aftermath of the Oct. 7 attack. Gannon did the rest, bonding with Tahnoon over their shared love of the grappling martial art Brazilian Jiu-jitsu. (Tahnoon was a blackbelt while Gannon ranked just one level above beginner.)
Intelligence reports of G42’s China connections kept flowing to Gannon, according to people familiar with the matter. Several company staffers, the CIA learned, were in touch with Chinese-state owned companies.
Gannon met with Xiao and delivered a message. Washington was very concerned about G42 but the station chief could be an open-minded conduit. The two grew close, sharing a taste for expensive liquor and Greek philosophy, as Gannon helped the CEO understand U.S. concerns. Xiao told him Washington could have access to G42’s data centers and staff, and could ask any questions it wanted to verify that the company was cutting its China ties, people familiar with the matter said.
With his bosses’ backing, Gannon took it one step further, the people said: When spying operations revealed evidence that appeared to contradict Xiao’s commitment, the CIA officer gave quiet hints about the issues to Xiao or U.A.E. officials such as Tahnoon.
The CIA would soon find the issues had disappeared. The company put together a slide deck that said it had removed $150 million worth of Huawei equipment from its systems.
Gannon flew back to Washington to brief scores of senior officials including Raimondo and McGurk on his findings—an unusual role for a station chief.
Some U.S. officials remained unconvinced. Over the years, they had gotten fed up with the U.A.E. for what they viewed as duplicitous behavior. It felt like gaslighting, for example, when the Emiratis denied to Washington that Beijing appeared to be building a secret military facility near Abu Dhabi, despite information the site included a basketball court with flags of the Chinese military and the Communist Party printed on the floor.
Now they worried that Tahnoon was again playing a fast one. They pressed Gannon about continuing contact between G42 and Chinese state companies, drawing on skeptical CIA analysts who shared their view. The contacts didn’t show Xiao was betraying his commitments, Gannon replied, arguing the employees in question were lower-level staff, who may have operated without Xiao’s knowledge. He had seen no proof that Xiao was a Chinese agent, as some suspected.
Within the national security council, the camp that wanted the U.A.E. to eventually get access to U.S. chips generally didn’t trust the CIA analysts, according to people familiar with the matter. They would phone Gannon and ask for his personal take on the assessments. They would also direct him with specific requests for what to bring to Tahnoon.
The dispute came to a head when Tahnoon visited Washington in June 2024, with Gannon in tow. Americans from both camps, along with Gannon, gathered at Tahnoon’s McLean mansion, and took their seats in his living room couches. Xiao gave a presentation on Chinese AI technology, being developed by DeepSeek, that he said would pose an imminent threat to American dominance in the field without G42’s help, according to people with direct knowledge.
Xiao’s reveal drove the Americans to openly lambast each other, as one official dismissed Xiao’s assessments, only to be contradicted by colleagues. The Emiratis looked on as the Washington crowd bickered.
Seven months later, when the tool was released, its advances sparked a freakout in Silicon Valley, causing tech stocks to plummet.
‘All the chips they wanted’
A week before Biden left office, his team put in place the framework for the Emiratis to access chips. U.A.E. officials criticized it as overly restrictive, but it opened the door for what was to come.
For champions in the Biden administration of G42 getting access to U.S. chips, the push helped the U.A.E. to side with Washington by ridding itself of Chinese tech. One senior official who helped craft the rule said: “I would have given them all the chips they wanted.”
In May 2025, two years after G42 was nearly put on the U.S. blacklist, the world’s tech luminaries including OpenAI’s Sam Altman and Nvidia’s Jensen Huang gathered in Abu Dhabi to sign on to help G42 build one of the the world’s largest AI hubs, dubbed Stargate UAE.
“We’re transforming a bold vision into reality,” Altman said.
The fruits of Tahnoon’s push are visible in the form of a massive construction site on a sandy patch of land miles from central Abu Dhabi, where thousands of laborers are working day and night. They are building the nerve center of Abu Dhabi’s AI efforts, set to be packed with the latest U.S. chips.
Gannon, who left the CIA last year, has maintained his relationships in the U.A.E, travelling there frequently to make introductions between American executives and Emirati security officials. He has helped national security contractors win consulting contracts with Emirati security services and court another prospective client: G42.
McGurk, too, has turned into something of a rainmaker for business deals in the U.A.E. He’s an adviser to Cisco, whose chief executive publicly thanked McGurk for his help in landing a deal on G42’s massive Stargate project. At a conference hosted by the tech company in February, McGurk said the debate around Emirati access to U.S. tech was an intense one during the Biden years.
“What worries me in Washington sometimes is that there is a zero-sum dimension to this conversation in some quarters,” he said.
