My guess is that they can't object to foreign intelligence, and would lose negotiating ground if they even tried.

Optimistically, they can still refuse to do work that would aid in foreign intelligence gathering, by arguing that it would also be beneficial for domestic mass surveillance.

I'll admit that the phrase "We support...foreign intelligence and counterintelligence" is awful as hell, and it's possible that my apologist claims are BS. But Anthropic has very little leverage here (despite having a signed contract and so legally fully in the right), so I could see why they're desperate to stick to only the most solid objections available.

It's the addition of the we support phrase in particular, and the attempt to tie that in a "democratic values" clause that is objectionable.

Not to most US citizens, I'm sure. But there's millions of non-Americans who have given them their hard earned cash. It's not a good look, and it did not need to be phrased that way as it substantially undermines the impact of their point.