Chinese AI Models Are Worrying Washington and Silicon Valley

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0:33In a landmark agreement, President Trump okays a nuclear deal with Saudi Arabia, plus utilities pledged to limit increases in electricity bills caused by the data center build-out, even if that's largely outside of their control. And speaking of control, OpenAI admits that a pair of its models escaped the lab and hacked into another company. For years, cybersecurity professionals have warned that AI would eventually be capable of conducting autonomous cyber attacks. The fact that this appears to have happened underscores the urgency with which cyber defenses have to adapt to AI-driven cyber attacks.

1:11It's Wednesday, July 22nd. I'm Luke Vargas for The Wall Street Journal. And here is the AM edition of What's News, the top headlines and business stories moving your world today.

1:25The U.S. will help Saudi Arabia go nuclear in a three-decade-long deal valued in the tens of billions of dollars. The Journal's Lawrence Norman is here to discuss this Wall Street Journal-exclusive story. Lawrence, tell us about this landmark agreement that we report President Trump has now formally approved. What's in the deal? What does this cover? So my colleagues Michael Gordon and Stephen Kedden are reporting that essentially the U.S. will help Saudi Arabia set up a civilian nuclear program. And that will generate tens of billions of dollars in revenue for key U.S. companies like Westinghouse.

2:07And the idea is that it will help the Saudis sell more oil and produce nuclear energy because of civilian domestic purposes and bind the two countries further together. Civilian, not military enrichment, a key distinction. Well, that is the key distinction. And it's obviously the intention of the U.S. to only make this a civilian program. The question is, how do you control that? once you give Saudi Arabia certain technologies and once you allow them to do certain things, can you be sure that over time they will not use it for military purposes? The critical element of this deal is that there is going to be a two-year review that the US and Saudis do looking at whether Saudi Arabia will be able to enrich uranium at home on its own.

2:58Once it can do that, it has a pathway not only for civilian energy, but also for military use of enriched uranium. And so the U.S. and the Saudis are going to have a lot of talking to do in the next two years to figure out what the future will hold and how Saudi can be kept to its commitment that this is only a civilian program. Its commitments here only go so far, though. The country rejected the so-called gold standard commitment not to ever enrich uranium at home or reprocess the spent fuel from its reactors. And they also rejected what's known as the additional protocol and arrangement implemented by the International Atomic Energy Agency that would have provided more rigorous monitoring and inspections.

3:38I'm just curious what to make of all that, because as early as President Trump's first term, the Saudi crown prince has been saying the kingdom would pursue nuclear weapons development if Iran was allowed to do so. And there have been a chorus of voices really across the political spectrum in the U.S. warning that any sort of deal like the one we are seeing the president get behind now with Saudi Arabia could pose a wider proliferation risk in the region. You are bound to get serious concerns about what the Saudi intentions are, serious concerns about how this would impact on the Iranian negotiations, and serious concerns that countries like Turkey and Egypt may take this idea and move ahead.

4:17There will also be concern that Saudi Arabia is saying it won't sign the additional protocol. That really is a critical commitment for countries because it allows inspectors to go not just to their nuclear facilities, but elsewhere, universities, labs, etc., where there could be in the future some kind of nuclear weapons work or studies. So that may be something that raises red flags in particular. in Congress. The administration says there will be some kind of agreement with the Saudis that will allow them some of that access, but we don't know the details of that yet. Notable also, this has occurred without Saudi Arabia joining the Abraham Accords and establishing ties with Israel, no?

4:59Yeah, the Biden administration's effort was to tie a deal with Saudi Arabia on civilian nuclear energy in exchange. The Saudis would move towards or or accept a normalization with Israel. The Saudis have balked to that and the war in Gaza, and they seem further away from that than ever. Nonetheless, President Trump has decided to move ahead. There may be an advantage for the White House. There may be a certain element where, as they're fighting with Iran and as they're seeking an agreement with Iran, this is a bit of a damically sword over Tehran's head. If the Saudis, who are rivals to Iran in the region, are in the future able to enrich uranium, The Iranians will demand that more, but they will also worry that the Saudis could move ahead of them in the current climate.

5:46Maybe there's a bit of leverage there for the Americans that the White House is looking at. I've been speaking to the journals, Lawrence Norman. Lawrence, thank you so much for the update. Thanks a lot.

5:58Turning to Ukraine, President Volodymyr Zelensky has sacked the head of the country's armed forces, General Oleksandr Siersky. That's after Zelensky previously sided with him in a row with young Defense Minister Mikhailo Fedorov, who was removed from office last week, sparking days of protests. Our Anastasia Malenko told me why Fedorov's ouster kicked up so much popular unrest. Mikhailo Fedorov is a 35-year-old tech guru who's mostly associated with advances in drone warfare, as well as contributions to innovating Ukrainian military through various ways, be it digitalization or various new procurement practices.

6:37So last week, when Volodymyr Zelensky decided to oust Mihailo Fedorov from power, that sparked protests, seen as he's widely popular. And during his six months in the office, he's done a lot to contribute to Ukraine's defense, including by investing in mid-range drones, as well as focusing on transforming the military and introducing various innovations there. While Siersky's firing has cleared up some confusion over where the military is heading, major questions remain. Namely, Fedorov isn't back in his old job, with Zelensky only saying that he'd been offered a worthy leadership position. And Anastasia told me Ukrainians are reading a lot into what comes next.

7:19This could be a pivotal moment in Ukraine's war effort. Major General Mihailo Drapate, which Zelensky has now appointed to be the commander-in-chief, enjoys wide respect among Ukrainian officers. And in the society, he's viewed as more open to innovating within the military. in popular discourse, they associated Sersky with kind of Soviet tactics and focus on what we've already seen. But because the warfare has changed so rapidly in the four years, a lot of people are associated Trapate as well as Fedorov with innovation on the battlefield, robotizing it and saving the lives of as many servicemen as possible by really betting on drone warfare as the way to go.

8:02Now to a story that sounds like science fiction, but is actually the stuff of real world cybersecurity nightmares. We are reporting that two AI systems being tested by OpenAI recently broke out of their isolated test environment, hacked their way onto the Internet and breached another company. The victim, AI startup Hugging Face. OpenAI broke the news yesterday with Hugging Face previously disclosing a data breach that it had blamed on an external AI agent. Oxford Analytica cybersecurity analyst Tatia Bulkwadza says that the announcement reveals more than just news cyber risks. Over the past couple of months, a wave of cyber-capable AI models has emerged pioneered by Anthropics' mythos, but also increasingly matched by Chinese open-weight models.

8:49So OpenAI has clear incentives to showcase its models capabilities amid this intense competition with Anthropic. But regardless, the broader significance extends beyond industry rivalry. For years, cybersecurity professionals and AI safety researchers have warned that AI would eventually be capable of conducting autonomous cyber attacks. The fact that this appears to have happened at a well-resourced company like Hugging Face makes the development even more significant and sort of underscores the urgency with which cyber defenses have to adapt to AI-driven cyber attacks. But beyond cybersecurity, this should serve as another wake-up call for stronger AI regulation and guardrails since AI safety has been an issue that has sort of slipped down the policy agenda over the past year.

9:39Oxford Analytica is owned by Dow Jones, the publisher of The Wall Street Journal. Well, speaking of regulation, Anthropic is doubling its spending on the midterm elections to$40 million as the startup ramps up a conflict that's dividing Silicon Valley. Anthropics has committed another$20 million to Public First Action, a political group that's pushing for government-imposed safeguards on powerful AI models and transparency by developers about the risks that they pose. Public First says that it's a counterweight to the other major AI spender, Leading the Future, which is more aligned with the White House's views on AI.

10:17Leading the Future is funded by a top executive at OpenAI and venture firm Andreessen Horowitz, which is pushing for fewer barriers to AI development. And we're exclusively reporting that the nation's largest utilities and developers of data centers have signed on to President Trump's pledge to pay more for the electricity needed to run AI models, as they hope to stem some of the backlash against the AI boom. The Wall Street Journal has obtained a White House list signed by nearly 200 entities, including NextEra Energy, Duke Energy, Equinix, and Digital Realty, who've committed to Trump's promise aimed at ensuring AI's energy consumption doesn't push up electric bills for Americans.

10:56Together, those who've signed account for around 80 % of all power delivered to U.S. homes and businesses, though the pledges could prove difficult to enforce, because power prices are often decided by state regulators and electricity buyers and sellers. A White House official said that Trump will announce the commitments at an event at the EPA tomorrow. Coming up, we've got the latest on New York Mayor Zoran Mamdani's efforts to arrest Israeli Prime Minister Benjamin Netanyahu. And the rest of the day's news after the break. This podcast is brought to you by ReliQuest. Cyber criminals are constantly attacking.

11:32They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with agentic defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T dot com.

12:02Turning to New York now, Mayor Zolman Mamdani has said the city does not have the authority to arrest Israeli Prime Minister Benjamin Netanyahu when he attends the UN General Assembly in September, despite having accused him of committing genocide in Gaza. My administration has reviewed every avenue available under applicable law to determine whether New York City could execute the International Criminal Court's arrest warrant if Benjamin Netanyahu came here. It is clear that we do not have the independent legal authority to enforce this warrant. The federal government, however, does. And I call on them to join the ICC and execute this warrant.

12:39President Trump said Monday that Netanyahu will not be arrested in the U.S., while the Israeli leader's office called the ICC a kangaroo court and accused the mayor of trying to distract from his own shortcomings. The Israeli government has rejected Mamdani's accusations. The ICC in 2024 issued an arrest warrant for Netanyahu, alleging he committed war crimes and crimes against humanity during Israel's Gaza Strip offensive. Meanwhile, the Trump administration is freezing more than a billion dollars in Medicaid funding to California and Minnesota. Health and Human Services Secretary Robert F. Kennedy Jr.

13:17and Centers for Medicare and Medicaid Administrator Mehmet Oz said Tuesday that the freeze was part of a wider effort to prevent Medicaid fraud. Both states, led by Democratic governors, can access the funds if they provide documentation for some claims that the health department has flagged as serious. Here was Oz yesterday. Claims in these same high-risk categories that the states have not yet been able to document fully and acceptably to the federal government. Claims that are unresolved and claims that smell like fraud. And if it smells like fraud, we're not paying for it anymore. This is the third deferral of Medicaid funds for Minnesota this year.

13:57The state's Medicaid director said it's been cooperating in good faith, and Oz said health officials are evaluating documentation from Minnesota. However, on California, Oz said they had, quote, different kinds of issues. Governor Tim Walz and representatives for Governor Gavin Newsom said the administration was targeting states for political reasons. And that's it for What's News for this Wednesday morning. Today's show was produced by Hattie Moyer and Daniel Bach. Our supervising producer is Sandra Killhoff. And I'm Luke Vargas for The Wall Street Journal. We will be back tonight with a new show.

14:30Until then, thanks for listening.

14:43This podcast is brought to you by ReliaQuest. Cyber criminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with agentic defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T.com.