November 2012

NOREF Policy Brief

United Arab Emirates country brief

Christopher Davidson

Executive summary

Formed in 1971 following Britain’s departure from to the UAE regime, having occupied three UAE the Gulf, the (UAE) is a islands since 1971 and continuing to alarm the made up of seven , each of UAE with its nuclear programme. which retains traditional powers alongside more formal emirate-level and federal governments. Although the UAE is a wealthy country, often With the bulk of the UAE’s hydrocarbon reserves suffering from “voluntary unemployment” among in the largest , the latter’s its nationals, there is a serious wealth distribution ruling family continues to dominate UAE politics. problem, with poorer parts of the country Although a semi-elected consultative council experiencing poverty. Hydrocarbons remain the exists, this is far from being an effective parliament, mainstay of the UAE’s economy, although there and since the 2011 Arab Spring there have been have been some spirited attempts to diversify into strong calls for greater democracy, which have other sectors, especially in Dubai, which is the led to the imprisonment of more than 50 activists. UAE’s most business-friendly emirate. Externally, Iran remains the most significant threat

Christopher Davidson is a reader in politics at Durham University in the United Kingdom. He was previously an assistant professor at Zayed University in the United Arab Emirates. He is the author of five books on the Gulf states, most recently After the Sheikhs: The Coming Collapse of the Gulf Monarchies. Christopher Davidson United Arab Emirates country brief

The United Arab Emirates (UAE) federation was thousand UAE nationals were, however, eligible formed in December 1971 following Britain’s to vote, and many regarded the first elections withdrawal from the Persian Gulf after a lengthy as farcical. Following the 2011 Arab Spring, period of imperial retrenchment. Originally significant unrest in and Oman, and the envisaged to comprise the nine British-controlled imprisonment of several outspoken UAE political sheikhdoms, including and Bahrain, the prisoners, a second, more comprehensive round UAE federation ended up having just seven of elections were staged for the Federal National members. The two largest and wealthiest of these, Council. But these elections were still not treated Abu Dhabi and Dubai, both possessed significant seriously by most of the population, with voter hydrocarbon reserves and were thus well turnout being less than 30%. Since late 2011 positioned from the beginning to dominate both there have been more-determined attempts by the federation’s economy and political system. opponents to introduce democracy to the UAE, Since the first major oil booms of the 1970s, the with several petitions having being signed and UAE has played host to a substantial number with a large number of bloggers and social media of expatriates, mainly drawn from elsewhere in users calling for a constitutional and the , Iran and South Asia. In recent a fully elected parliament. The regime, however, years the national population has made up less has cracked down on these dissenting voices, than 20% of the total population. But given that having currently taken more than 50 political most expatriates have either no interest in or no prisoners, including academics, human rights possibility of becoming naturalised, they have activists, lawyers and even a judge. Several have had little impact on UAE politics. been threatened with having their citizenship taken away, with one having even been deported The UAE remains one of the purest to Thailand. Nevertheless, the majority of the in the , with each member sheikhdom or national population seem indifferent to political emirate still being ruled by a . The reform, with most apparently appeased by the seven rulers and their appointed crown princes, government’s continuing ability to distribute often a powerful brother or son, together form hydrocarbon rents in the form of free housing, the Supreme Council of Rulers, which is by far public sector jobs, and a number of other generous the most influential institution in the UAE, able benefits and subsidies. to intervene in all government matters and, on occasion, even create legislation through royal The most powerful figures in the UAE are the decrees. The day-to-day running of the UAE is left most senior members of the Abu Dhabi and Dubai to the appointed Council of Ministers. Although royal families: the Al-Nahyan and Al-Maktoum, technocrats hold some ministerial positions, the respectively. These families are offshoots of the majority are still held by royal family members, same tribal federation – the Bani Yas – that has and in particular those of Abu Dhabi and Dubai. dominated the coastline of the lower Persian Gulf Underneath the Council of Ministers there is a since the seventeenth century. Khalifa bin Zayed semi-appointed, semi-elected consultative body Al-Nahyan is the ruler of Abu Dhabi – a position – the Federal National Council – with a certain that automatically carries the honorific title of UAE number of seats allocated to each emirate. Again, president – and his crown prince is Mohammed Abu Dhabi and Dubai receive the largest number bin Zayed Al-Nahyan. The latter is now deemed of seats, even though some of the poorer emirates the most influential of the two, having progressed have substantial populations. from a military career to setting up several key Abu Dhabi government departments and Unlike or Bahrain, the UAE does not successful state-backed corporations. The ruler have much of a parliamentary history, with the of Dubai, Mohammed bin Rashid Al-Maktoum, Federal National Council having only limited has suffered a loss of influence in recent years powers and, on many occasions, being unable following Dubai’s economic difficulties and its to comment on key legislation. From 1971 its accepting of significant bailouts from Abu Dhabi. members were entirely appointed, but in 2006 Nevertheless Al-Maktoum still holds the titles of – following limited calls for reform – half of the UAE prime minister, vice president and minister seats were determined by election. Only a few of defence. It is unclear, however, what powers

2 November 2012 Christopher Davidson United Arab Emirates country brief these offices really have. Other key figures in access the same public sector jobs and there is the UAE include the younger members of the little doubt that these emirates have much less Al-Nahyan family, including prince’s well-developed infrastructure. In some cases, full brothers, Mansour, Saif and Abdullah. The especially in the emirate of Ra’s al-Khaimah, there former is now perhaps the UAE’s most high- are instances of UAE nationals living in poverty- profile businessman, while the latter two hold the stricken circumstances. Meanwhile, in the wealthier ministerial portfolios of the interior and foreign emirates there is a continuing concern over the affairs. The rulers of the poorer emirates have phenomenon of “voluntary unemployment”, with little real influence in federal politics, although large numbers of youths preferring to avoid the they still have significant control over the domestic job market and instead relying on the generous management of their respective emirates. state subsidies. Even with significant investments in the public education system and the creation of The UAE’s main foreign policy and defence state-of-the-art universities, the problem has not priority is ensuring that any Iranian threat is been solved, with various labour nationalisation contained. Iran seized three UAE islands in late schemes having failed. 1971, and these remain a source of bitter dispute between the two countries. In recent years, with The UAE’s economy remains heavily dependent on Iran’s current nuclear programme and the UAE’s hydrocarbons, with little significant diversification strictly civilian nuclear programme built with South having occurred. Although headline figures of Korean assistance, tension has increased. A gross domestic product contributions seem to number of UAE officials have made inflammatory indicate a robust manufacturing sector, in reality remarks about how the U.S. should respond to most of this consists of heavy industries in Abu Iran, and it seems likely that the UAE and Iran will Dhabi (such as plastics, fertilisers, chemicals, etc.) remain at loggerheads. Given Dubai’s historical that rely on the UAE’s comparative advantage of role as a regional free port and its substantial having access to cheap, abundant energy. Dubai, number of Iranian residents, its foreign policy nevertheless, has been something of an exception. on Iran has usually been softer; however, given With dwindling hydrocarbon reserves, it launched the emirate’s declining influence, it now probably a programme of wholesale diversification in the has little option but to follow Abu Dhabi’s more 1980s, beginning with “free zone” parks to entice hawkish line. The UAE remains committed to foreign companies to establish themselves in the maintaining good relations with the Western emirate with as little red tape as possible. Since powers, which it continues to look to for military then the emirate has built up significant tourism protection. Undoubtedly, its leaders are mindful of and real estate sectors. Having overstretched the 1990 Kuwait invasion and that country’s 1991 itself in the lead-up to the global credit crunch liberation by a Western-led force. Thus, in addition in 2008, the real estate sector mostly collapsed to sourcing billions of dollars worth of armaments in 2009 and remains in a depressed state. The each year from the U.S., Britain and France, the emirate, however, still possesses some of the UAE also invests heavily in these economies best port and airline infrastructure in the Middle as part of its “soft power” strategy. Following East. the South Korean nuclear arrangement and several high-profile investments in , there In the near future the UAE will continue to invest is compelling evidence that the UAE is beginning in its hydrocarbons sector, with demand from to “look East”. However, this is primarily a trade China and other East Asian states expected relationship, and it is improbable that the Eastern to increase. Significant investments are also powers will assume any role in UAE security. being made in high-technology manufacturing, often in partnership with leading international The UAE does not suffer from significant sectarian companies. Meanwhile, its existing interests in divisions in its population, with most nationals seaports, airports, airlines, and other transport being Sunni rather than Shia. However, divisions and communications infrastructure are likely to exist in society between the wealthier emirates consolidate its “entrepot” position in the region. and the much poorer “northern emirates”. There Dealing with a backlog of poor real estate are frequent complaints that northerners cannot investments will remain problematic, with Abu

November 2012 3 Christopher Davidson United Arab Emirates country brief

Dhabi having to continue to bail out Dubai’s accumulated debts and even having to nationalise some of its own real estate companies.

4 November 2012