Upon escaping from Qatari soldiers, Dagan Shah discovered lost Rigellian technology. He used his powers to transform three scientists into his servants, then began creating and selling extremely powerful weapons to local terrorist groups. Created in such a way that made reverse engineering lethal to those who tried, Shah created a lucrative arms business for himself, taking in money and food which he used to fund a separation of an area along the border of Libya and Egypt which he dubbed "Sharzhad" upon terraforming a section of the desert.
When Red Hulk and Machine Man came to investigate Sharzhad, Shah met them disguised as Arabian Knight (who had been sent by Captain Steve Rogers to investigate Dagan Shah), letting them into the force field-protected Sharzhad and accompanying them to the palace. Once there, he revealed himself as Shah and imprisoned the two while revealing that he had also captured the real Arabian Knight. Using his enhanced powers, he probed Red Hulk's mind to find that outside forces had a hand in sending Red Hulk to him. Flying to Cairo, he threatened the populace, saying nothing would stop him from creating and controlling Sharzhad. Returning, he attacked the recently escaped Machine Man and Red Hulk, ripping Machine Man in two.
Red Hulk and Machine Man's fight with Dagan Shah was brought to an end when General Reggie Fortean arrived to break up the fight. Reggie informed Red Hulk that Sharzhad had been officially recognized as a nation by the Arab League, and that Red Hulk was trespassing on foreign soil. With Dagan Shah informing Red Hulk that he had two minutes to leave, Red Hulk reluctantly released him and left the new nation.