Emirates: Dubai - COUNTRY PROFILE
The United Arab Emirates (UAE) lies on the southern shores of the Arabian Gulf, nearly stretching to the Straits of Hormuz in the north. In the south and west, the emirates border Saudi Arabia, and Oman is to the east. Except for the emirate of Fujairah on the Gulf of Oman, most of the country is focused on the Arabian Gulf coast. The emirate of Abu Dhabi is the largest of the seven, occupying around 87% of the total land area. Most of Abu Dhabi is a sand desert, whereas the other emirates are all mixtures of semi-desert and scrubland, with some mountainous terrain in the east of the country towards the border with Oman. The climate can be very harsh. In summer, temperatures reach the high 40s C and with paralysing humidity levels on the coast.
Oil was first discovered in Abu Dhabi in 1958, followed by further discoveries in Dubai and Sharjah. Offshore oil exports began in 1962 and onshore exports a year later. In just four decades, the revenues from oil and gas have transformed the pearl-diving communities of Abu Dhabi and Dubai into two of the wealthiest cities in the world, where gleaming high-rises soar from a false oasis of lush gardens and palm-lined avenues.
The unexpected death in January 2006 of Sheikh Maktoum bin Rashid Al Maktoum, the ruler of Dubai and vice president and prime minister of the UAE deprived the country of a second leader in as many years. In November 2004, the population mourned the death of Sheikh Zayed bin Sultan Al Nahyan, Abu Dhabi's long-time ruler and President of the UAE.
Sheikh Maktoum had presided over Dubai’s growth after the death in 1990 of his father Sheikh Rashid bin Said, who was responsible for laying the foundations for the modern city. Sheikh Zayed was instrumental to the formation of the UAE in 1971 and is credited with adeptly guiding the oil-producing state through decades of peace and stability.
Maktoum and Zayed were widely admired and respected both locally and internationally for the fair way in which they distributed the country's wealth and for their skilful diplomacy.
Sheikh Mohammed bin Rashid, the high-profile younger brother of Sheikh Maktoum, who has been widely acknowledged as the de facto day-to-day decision maker in the emirate in his previous role as the crown prince, assumed the rule of Dubai and was elected vice-president and prime minister of the UAE, while Sheikh Khalifa bin Zayed Al Nahyan, Zayed’s oldest son, became ruler of Abu Dhabi and was elected President of the UAE.
Each of the emirates is headed by a hereditary ruler, and these form the UAE's Supreme Council of Rulers, itself headed by the President. The presidency is renewable every five years through a vote in the Council. Sheikh Zayed bin Sultan Al Nahyan held the presidency from the formation of the UAE up until his death in November 2004.
The Council of Ministers (or Cabinet) forms the executive authority of the federal state. A prime minister, chosen by the President in consultation with his six other colleagues in the Supreme Council of Rulers, heads the Cabinet. The prime minister selects the Cabinet's ministers from any of the seven emirates, the more populous emirates generally providing the greatest number of ministers.
The Federal National Council is a 40-member, consultative and legislative body, to which the Council of Ministers refers. Each emirate appoints a certain number of members, eight each in the cases of Abu Dhabi and Dubai.
In 1981, the UAE helped found the Gulf Cooperation Council (GCC), together with five other Gulf countries: Bahrain, Kuwait, Oman, Saudi Arabia and Qatar.
Major Political Players
Sheikh Khalifa bin Zayed Al Nahyan: Ruler of Abu Dhabi and President of the UAE.
Sheikh Mohammed bin Rashid Al Maktoum: Ruler of Dubai, vice-president and prime minister of the federation.
Sheikh Sultan bin Mohammad Al Qasimi: Ruler of Sharjah.
Sheikh Saqr bin Mohammad Al Qasimi: Ruler of Ras al-Khaimah.
Sheikh Humaid bin Rashid Al Nuaimi: Ruler of Ajman.
Sheikh Hamad bin Mohammed bin Hamad Al Sharqi: Ruler of Fujairah.
Sheikh Rashid bin Ahmed Al Mualla: Ruler of Umm al Qaiwain.
Precise population figures are difficult to gauge owing to a lack of reliable statistics. Estimates taken from censuses, past population figures and extrapolation put the figure above 5m, but the official number is 4.3m, of which just 600,000 (12%) are local and the rest expatriate. The continued influx of foreign workers swelled the population by an estimated 7% in 2003. A minority local population is not unusual in the Gulf region, but the proportions in the UAE are greater than in other countries. It is clear, however, that the national community is growing, which is causing some pressure on employment.
Accurate employment figures are also hard to come by, but only around 5% of the national workforce is registered as looking for work, far lower than other GCC countries, such as Bahrain and Oman. This is largely because the country's considerable hydrocarbon wealth allows the public sector to employ a far greater proportion of the native labour force. The policy of emiratisation demands that many private companies retain a minimum quota of nationals on the payroll. The local population, therefore, tends to expect comfortable white-collar jobs in managerial roles whether or not they are qualified for such positions. Moreover, there are far more women looking for jobs these days, according to the official numbers of registered UAE national jobseekers.
The expatriate population, especially those from South Asia and the sub-continent, carry out the majority of the manual labour – from construction, through manufacturing, to engineers on the oil fields. It is estimated that over 1m Indians alone are living and working in the UAE. There are also around 450,000 Pakistanis and many people from Bangladesh and Afghanistan. Workers from the Indian sub-continent often face long waits for work permits in the UAE. The country offers far better opportunities than are available in their homelands, although without a national minimum wage, there have been reports of abuse and exploitation. Most of the money earned by these expatriates is sent home, as only workers who earn above a certain threshold are entitled to bring their wives and children with them. Most of the expatriates working in private households are from further afield, such as Sri Lanka, Thailand and the Philippines. Women are more prevalent in this sector than others. Since it is mandatory for all children to attend school at primary and secondary levels, the UAE has a fairly strong literacy rate at 78%. Despite this high literacy rate, public schools have been falling well behind the private sector, which now accounts for 50% of pupils.
Standards are also starting to slip in some public hospitals, many of which were built in the 1970s or early 1980s and have never been fully renovated. The Khalifa Hospital and the new Central Hospital, which have both been kitted out with the latest equipment and are operated by highly competent staffs, demonstrate that financing is available for the public health sector. Both of these hospitals, however, are reserved only for nationals.
The vast majority of the local population is Sunni Muslim, although there are a very small number of Shiite families, mainly in Dubai. The numbers are so small that no tension arises between these communities. Most of the imported labour is also Muslim, although this is by no means a pre-requisite. There are many expatriate Christians as well, especially from the South Asian islands and from Europe. Islam is the official religion of all seven Emirates and the federal UAE. The government generally adheres to the principle of religious tolerance, and freedom of worship is enshrined in the federal constitution provided that religious practices do not conflict with public policy or violate public morals. There are several Christian churches across the country, often right next to mosques.
Despite efforts to diversify, the UAE remain to a large extent dependent on income from hydrocarbons. Current estimates put total UAE production at about 2.2m bpd, which could rise to 4m bpd in the long term. Oil and gas provided over 30% of gross domestic product (GDP) in 2003 and 2004, and should be even greater in 2005. Hydrocarbon exports rose to $29.6bn in 2003, accounting for around 90% of total exports and are expected to average around $35bn in 2004 and 2005. A growing non-hydrocarbon sector, however, driven particularly by Dubai, means that the UAE remains one of the least oil-dependent nations in the GCC.
Oil dependence can cause major problems in a country's economy, not least because it is a finite resource, but also because it pegs the success of the economy to the price of a barrel of oil. The UAE did not suffer as badly as some other Gulf countries from the last drop in oil prices in the late 1990s, but the reduction in national income did have a negative effect in sectors that rely heavily on government spending, such as construction. On the back of recent surges in the price of oil, however, the economic picture for the UAE has changed dramatically and the economy grew strongly in 2004 and 2005.
Abu Dhabi and Dubai are the economic powerhouses of the UAE, with Abu Dhabi contributing 61.1% of GDP and Dubai 24%. Abu Dhabi holds 94% of the UAE's total oil and gas reserves, which account for almost 10% of the world's total and are predicted to last about another 100 years.
Dubai and the northern emirates, on the other hand, have relatively little oil. Dubai's reserves are only expected to last about another ten years. MEES figures suggest that Dubai is currently exporting 170,000 bpd, down from a high of around 400,000 in the late 1980s. As a result, Dubai has spearheaded attempts to diversify the economy and encourage private sector activity. Dubai has a strong base in trade, especially re-export through its free zones. Much of the UAE manufacturing industry is also located in Dubai, the biggest of all being Dubai Aluminium (Dubal), which is said to account for 9% of Dubai's GDP. The concept of free zones, in which 100% foreign ownership is allowed, has taken off in the UAE. The first was the huge Jebel Ali Free Zone, located just south of Dubai city.
Dubai's success in creating a non-oil sector, which currently accounts for 93% of the emirate's GDP, has prompted the other emirates to flirt with a similar market-friendly approach. Although it started slowly, Abu Dhabi has been pushing ahead with the privatisation of many of its state-run utilities and industries.
Many of the emirates have found that the development of a tourism industry is their best chance for diversification. Dubai, again, continues to be the leader in this field, punctuated by multibillion dollar projects such as the Burj al-Arab hotel, and offshore reclaimed land projects, including the Palm series and The World islands. It has also been the trailblazer in retail tourism, attracting millions of people for shopping festivals held several times throughout the year.
Abu Dhabi boosted its nascent tourism industry by building its own iconic hotel, the Emirates Palace, and is designating a few areas for real estate and resorts. Ras al-Khaimah and Fujairah are also opening up their land to tourism development, taking advantage of their mountains and beaches to attract visitors. Sharjah has promoted its museums and cultural sites, and in the past has attracted families and traditional vacationers because of the emirate’s conservative values.
Overall, the northern emirates are weaker economically than Abu Dhabi and Dubai. Sharjah is somewhat of an exception as it accounts for 12% of the UAE's manufacturing and does have some oil and gas, which it supplies to Dubai. Generally speaking, they are dependent on the federal system, receiving considerable financial help from Abu Dhabi.
The UAE's banking sector has enjoyed a run of profitable years, and in January 2005, the National Bank of Abu Dhabi (NBAD) announced profits above of Dh1bn ($272m) for the first time in its history. The combined assets of the UAE's 47 banks (21 national banks and 26 foreign banks) totalled $100bn in 2003. Dubai is attempting to put the UAE on the international financial map by embarking on the ambitious Dubai International Financial Centre (DIFC), a “free zone” striving to achieve global best practice complete with its own regulator and court system.
The UAE's capital markets have also undergone rapid growth and development in recent years. The UAE operated an informal over-the-counter (OTC) market for years, but a crash in the late 1990s prompted the creation of more formal markets in both Abu Dhabi and Dubai. A raft of IPOs throughout 2004 and 2005 has increased the market capitalisation considerably, and the two markets are linked electronically to create, essentially, one market with two floors. Besides the general upward trend of the domestic markets, two international financial bourses opened in Dubai in 2005. The DIFC launched the Dubai International Financial Exchange (DIFX) in September, while the Middle East’s first gold exchange, Dubai Gold and Commodities Exchange (DGCX), started in November.