Overview of the United Arab Emirates (UAE)
By the early twentieth century, a number one supply of financial exercise was the pearl commerce. Nevertheless, World Struggle I, the Nice Despair, and the Japanese invention of the classy pearl resulted in a major weakening of the pearling business. The heavy taxation on pearls imported from the Gulf following World Struggle II by India induced its irreversible decline. In consequence, some turned to fishing. However, with little schooling and no roads or hospitals, the long run regarded bleak. By the Thirties, the primary oil firm entered the area and commenced conducting surveys round Abu Dhabi. In 1962, Abu Dhabi exported its first cargo of crude oil that may play a necessary function within the UAE’s improvement.
For the reason that 1820s, the English had maintained a presence on this area. In 1853, Britain intervened within the space as a result of pirate threats and made a everlasting truce to offer safety and oversight of the international coverage. It was explicitly understood that Britain wouldn’t colonize the world. This settlement was made with a gaggle often known as the Trucial States, which have been a group of sheikdoms within the Persian Gulf. The Trucial States, additionally known as the Trucial Colony, was composed of present-day Bahrain, Qatar, UAE and Oman. Following a interval of Arab nationalism and anti-British exercise starting within the Nineteen Forties and Nineteen Fifties, the British finally relinquished administration of the area in 1971.
On December 2, 1971, the UAE was created by uniting seven of the Trucial States beneath a unified Structure: Abu Dhabi, Dubai, Sharjah, Ajman, Umm al Qaiwain, Ras al-Khaimah and Fujairah. Abu Dhabi is the most important of the previous territories and is the federal capital. Dubai is second largest of the emirates and is the principle port, industrial middle, and airport hub. The 5 different emirates are smaller areas that understand political and financial advantages by way of alliances with the bigger neighbors, Abu Dhabi and Dubai. All seven states are dominated by Sunnis.
The UAE is taken into account by some to be an autocracy, which is a type of authorities through which one particular person possesses limitless energy. There was even much less political reform on this nation than in different Gulf States, even Saudi Arabia. Worldwide non-governmental organizations (NGOs) have ranked the UAE as having among the many least free political programs on the earth. Particularly, such research have highlighted the existence of the ‘sheikh’s dilemma’ within the UAE, through which financial however not political reform is pursued. To keep up peace, a ‘ruling cut price’ is applied the place the UAE authorities distributes oil wealth equitably, whereas additionally fastidiously exploiting a variety of ideological, spiritual, and cultural sources. Others merely state that the UAE reveals a monarchical presidency led by ruling households on neo-patrimonial traces.
Following the British withdrawal, Sheikh Zayed bin Sultan Al Nahyan grew to become the primary president. Sheikh Zayed, as soon as Emir (or ruler) of Abu Dhabi, dominated as UAE’s president for over thirty years till his loss of life on November 2, 2004. Resulting from oil wealth, Sheikh Zayed grew to become one of many richest people on the earth with an estimated web value in extra of $24 billion (USD). Following his loss of life, the eldest son of Sheikh Zayed, Sheikh Khalifa bin Zayed Al Nahyan grew to become President of the UAE. Sheikh Khalifa is the world’s third richest member of a royal household, with an estimated web value of $19 billion (USD). The presidency of UAE is determined by a vote by the Federal Supreme Courtroom (FSC), a governmental entity within the UAE slightly than by way of an electoral or well-liked vote. Political events are strictly prohibited.
The UAE’s highest authority is the Supreme Council of Rulers (SCR). The SCR is given energy to provoke coverage and reject legal guidelines which have been beforehand handed. Seven hereditary rulers and generally their crown princes and closest advisors have management of this governing physique. Subordinate to the SCR is the Federal Council of Ministers (COM). The majority of UAE’s insurance policies and each day affairs are formulated by the COM, which meets extra steadily and formally than the SCR. The judicial department of presidency is run by the Union Supreme Courtroom. Judges are appointed instantly by the UAE president.
The FSC is the very best constitutional authority within the UAE and has each legislative and government powers. Overseeing the FSC are the rulers from every of the seven emirates. Along with the FSC, there are each secular and Islam courts in all seven emirates. The secular courts within the UAE rule on felony, civil, and industrial issues. Household and spiritual disputes are heard within the Islamic courts. Every emirate has their very own authorities with municipalities and departments.
There’s a excessive diploma of political stability within the UAE, and it’s the solely Arab state to have a working federal system that withstood the check of time. Moreover, there are lots of ladies in all ranges of presidency. This can be a optimistic reflection on the UAE given its Center East location.
Sheikh Zayed had a international coverage to not use pressure over compromise and to develop into a significant donor of abroad support, reminiscent of infrastructure improvement and humanitarian aid.
Sheikh Kahlifa developed a international coverage of non-interference within the inner affairs of different international locations. He additionally supported the pursuit of peaceable resolutions of disputes. The UAE has offered help to the Iraqi Authorities within the type of debt forgiveness and is a powerful advocate of instilling peace within the Center East with assist primarily from the USA. As well as, the UAE promotes intercultural and interfaith dialogues with the first objective of mitigating misunderstanding between faiths and cultures with the idea that such misunderstandings are used as leverage by terrorists and those that harbor them.
There may be sturdy help within the UAE for worldwide establishments such because the United Nations. The UAE signed or ratified legal guidelines to guard the rights of individuals with disabilities and hosted conventions to eradicate torture and cruelty in punishment, suppression of nuclear terrorism and combating human trafficking. Illicit medication are one other downside, as its proximity to South Asia makes it a drug transshipment level for traffickers. Moreover, being a significant monetary middle, the UAE is liable to harboring cash laundering schemes. The worldwide neighborhood is searching for the UAE authorities to implement controls to mitigate these issues. The UAE can also be a supporter of peaceable resolutions in Palestinians with the help of the Gulf Cooperation Council (GCC).
Disputes have existed between the UAE and Iran over the possession rights to 3 UAE-based islands. These disputes date again to 2003 when Oman and the UAE signed and ratified boundary agreements for the whole border. Failing to publish the settlement and detailed maps of alignment gave Iran the chance to dispute the Tunb and Abu Musa Islands. In October 2009, Iran signed a Memorandum of Understanding to determine a joint fee between itself and the UAE. Moreover, the UAE has concern over Iran’s nuclear program. As soon as long-time tensions between Saudi Arabia and the UAE have additionally abated. The largest menace to the UAE is an inner regime failure, which might collapse the GCC army.
The UAE’s international support coverage is predicated on the Islamic philosophy of extending a serving to hand for the needy to satisfy an obligation of all Muslims. Wealth from oil and fuel gives the UAE with the technique of serving to much less lucky international locations. Organizations such because the UAE Crimson Crescent, which gives emergency aid, play an essential function in such efforts.
Relations with the USA have been well-maintained and unified with the objective of sustaining a powerful alliance with safety and financial pursuits, together with stability within the Center East and the dependable provide of power to world markets. The UAE is the most important importer within the Arab World of US items at $144 billion (USD) in 2008. Over 750 US corporations have a presence within the UAE, together with Bechtel, ExxonMobil, Starbucks and Chilly Stone Creamery. (The World Factbook 2009, 15) Following the worldwide recession, the UAE has tried to insulate the native financial system whereas working with multilateral establishments, such because the Worldwide Financial Fund (IMF) and on a bilateral foundation to assist international locations most significantly impacted.
One setback for the UAE is the extreme repression of freedom of speech. There are controls proscribing the media from criticizing or questioning the actions of coverage. The UAE authorities pushed new media legal guidelines previous a primary legislative hurdle on January 20, 2009, which might prohibit the liberty of press. Any journalist who criticizes the royal household or publishes info that’s damaging to the financial system, Islam, or UAE residents is fined as much as 1,000,000 Emirati Dirhams (AED). The utmost wonderful is equal to about $270,000 USD. Imprisonment can also be doable, however not often enforced, because the business practices self-censorship. Censorship has additionally been exercised by the UAE authorities. Censoring media on UAE’s jail affairs, democratization efforts, and criticism of the ruling household is seen as repressive to the rights of UAE residents.
For example, the UAE doesn’t take part in a chapter course of as in lots of Western nations. Debtors unable to satisfy such obligations are despatched to a debtor’s jail and this has been an more and more occurring affair because the begin of the worldwide monetary disaster. Many questions have been raised concerning the moral nature of this observe, in addition to the extent of humane therapy at such services.
Property rights within the UAE are about forty % under the worldwide common, in line with the Heritage Basis, as a result of appreciable affect the ruling households train on the judiciary. Corruption and incompetence within the system isn’t challenged. All land in Abu Dhabi is government-owned. Foreigners might get hold of mortgages in Dubai. The UAE leads the area within the safety of mental property rights.
The inhabitants of the UAE is anticipated to develop from 4.76 million in 2008 to five.06 million in 2009, a 6.31 % annual development price. The UAE is extraordinarily reliant on expatriates in its workforce. As of 2007, there have been an estimated 3.62 million non-UAE nationals versus 864,000 UAE-born nationals. Most labor points concern expatriates, particularly among the many unskilled phase. Addressing these points is an ongoing improvement.
In the identical yr there have been an estimated 3.08 million males and 1.4 million females. Whereas Arabic is the official language, English is most popular within the worldwide enterprise neighborhood of the UAE. Islam is the official faith of the UAE, however all religions are tolerated.
UAE nationals are described as being tolerant, forward-looking people who preserve a powerful sense of custom. There’s a excessive lifestyle that’s shared by many, together with a well-developed schooling system and well being providers. There are over sixty private and non-private universities within the UAE. The illiteracy price is roughly seven %.
The UAE authorities helps efforts to develop human providers, particularly to help within the empowerment of girls and for social welfare packages. Roughly thirty % of the UAE workforce is comprised of girls. Whereas migrants primarily put on Western-style clothes outdoors of labor, the UAE nationals primarily put on conventional clothes in most settings for cultural causes and to tell apart themselves from foreigners. Fast developments in healthcare services have drastically lowered toddler mortality (to roughly eight out of each 1,000 births in 2008) and raised the common life expectancy age within the UAE (to seventy-seven for males and eighty for ladies). Social safety providers amounted to over $600 million (USD) in 2008, offering monetary help to just about 38,000 folks.
The UAE sought to modernize beneath President Sheikh Zayed. As we speak, the nation advantages from a vibrant free financial system with a major annual commerce surplus. Reform of property legal guidelines has led to a growth in actual property and tourism, particularly inside Dubai. Tourism is anticipated to extend to 11.2 million vacationers to the UAE in 2010.
Utilizing such efforts as free commerce zones, the UAE has been in a position to efficiently diversify away from dependence on oil and fuel exports. Free commerce zones appeal to important international funding given the motivation of one-hundred % international possession and tax-free income, creating hundreds of jobs and facilitating a expertise switch. In 2007, the direct international funding (DFI) into the UAE was the very best within the area, at round $19 billion (USD). Two of the most important free commerce zones within the UAE are the Dubai Media Metropolis and Jebel Ali Free Zone. For example, Jebel Ali Free Zone, a container port terminal, transports over eight million containers of cargo every year and was anticipated to succeed in $180 million in income in 2007. That is greater than all of India’s ports mixed.
The GDP within the UAE was roughly $199 billion (USD) in 2007 utilizing present costs, which represented a 5.2 % annual development price and is roughly 115 occasions bigger than its GDP in 1971. Main industries are oil and fuel, petrochemicals, aluminum, cement, ceramics, ship restore, prescribed drugs, tourism, transport, actual property and monetary providers. Whereas many personal corporations function six days every week, the federal government establishments reserve Friday and Saturday as days off.
In 2007, the UAE financial system was ranked the twenty-ninth best financial system out of forty superior economies in a research. This places the nation nicely forward of every other Center Jap nation. Based on the research, a few of the strengths of the UAE included a authorities surplus, low nationwide debt and a excessive nationwide financial savings price. A few of the weaknesses embody uneven efficiency, an absence of innovation and entrepreneurship and excessive inflation, which unofficially has been as excessive as fifteen %. Actually, the UAE is now the second largest Arab financial system, behind solely Saudi Arabia.
Financial development is anticipated to sluggish because the nation continues to mature and stabilize. A number of severe points hinder the continued UAE financial enlargement. The property market all through the nation has points reminiscent of undertaking delays and financial institution funding shortages. Partially completed industrial buildings will be discovered primarily in Dubai and Abu Dhabi, and to a lesser extent within the different 5 emirates The current decline in gas costs has had implications on the UAE price range regardless of efforts to diversify. Moreover, the UAE authorities is implementing extra stringent lending tips for people and firms, whereas UAE banks are decreasing publicity to international debt. The UAE had a price range surplus in 2006 of 211.3 billion AED. In 2007, the price range surplus elevated to 236.15 billion AED.
Regardless of the efforts by the UAE to develop into much less depending on pure sources as a income, petroleum and pure fuel exports proceed to play an essential function within the financial system. UAE primary export companions are Japan, China, and Iran. Imports into the UAE are largely equipment and transport gear, chemical compounds and meals. Its primary import companions are the European Union (Germany, UK and Italy), China, India, the US, and Japan. In 2006, the UAE had a commerce surplus of 132.38 billion AED and a commerce surplus of 135.94 billion AED in 2007.
To help the banks, the federal government is engaged on establishing ensures of banking deposits and supporting low rates of interest. Additionally, main infrastructure initiatives are being initiated presently to lock in financial savings as a result of financial downturn. Company governance and transparency requirements are rising within the UAE as of late to instill worldwide investor confidence in its fairness markets.
The AED is presently pegged to the USD at 3.673 AED to each USD. The peg was established within the late Eighties; the present peg was established in 2002. This technique may work nicely for the UAE as a result of one of many nation’s main sources of income is oil, which is denominated in USD. Nevertheless, this additionally makes the UAE topic to any and all forex actions within the USD relative to different currencies. One of many main drawbacks of this trade price coverage is the impact of excessive inflation within the UAE.
There have been a number of classes realized within the UAE following the latest world recession. First, leaders in each the private and non-private sectors took word of the correlation and interconnectedness of worldwide market gamers. Secondly, cautious research was undertaken to guage the re-recessionary influence on the UAE financial system of oil worth declines. Regardless of slowing development, the UAE nonetheless has one of many quickest rising economies on the earth. One of many primary drivers of financial development and employment creation on this nation has been the consistency of fastened capital funding from the federal government, public establishments, and personal entities. 4 major sectors are attracting funding and offering financial enlargement within the UAE: hydrocarbons, manufacturing, transportation and communications and actual property.
Dubai performs a strategic function in the way forward for the UAE. For the reason that starting of the 20 th century, Dubai had develop into the premier buying and selling submit of the Persian Gulf. As we speak, it’s a huge metropolis with a inhabitants in extra of two million folks. The preliminary catalyst for the emirate was oil wealth, which was used to put money into infrastructure and facilitated fast socioeconomic developments beginning within the Seventies and Eighties. A pioneering mannequin was then launched to create a post-oil financial system primarily based on various industrialization and a wide range of specialist free zones. The various industrialization included such sectors as industrial infrastructure, gentle import-substitution, promotion of luxurious tourism and a freehold actual property market.
Abu Dhabi, UAE’s political capital, has at the least ten % of the world’s confirmed hydrocarbon deposits and over ninety % of UAE oil exports. By oil-based revenues flowing into the nation, the Abu Dhabi Funding Authority (ADIA) has shaped to develop into the most important sovereign wealth fund (SWF) on the earth. ADIA has groups of international consultants that scour the globe for a wide range of funding alternatives within the developed world, reminiscent of a five-percent stake in Fiat-controlled Ferrari, Southeast Asian rising markets, and different creating international locations (reminiscent of investments in Libya’s vacationer infrastructure) which can be anticipated to have substantial future development.
Over the subsequent ten or extra years, the UAE and GCC members as a complete are anticipated to obtain a windfall from a powerful demand-side power stimulus due primarily to the fast financial developments in Brazil, Russia, India and China (BRICs). The BRICs have been first acknowledged by a workforce of economists and different researchers at Goldman Sachs and, in line with their predictions, the BRICs will exert appreciable pricing strain on world power markets over at the least the subsequent decade as a result of their fast financial improvement. If this takes place, the UAE will be capable to maintain excessive funding ranges and robust welfare-enhancing financial development. Resulting from present regional instability and durations of regional violence, which is among the many worst on the earth, the UAE’s full financial potential from this situation will unlikely be reached. Nonetheless, the UAE and the remainder of the GCC have a chance within the coming a long time to develop into probably the most affluent areas on the earth.
Regardless of spectacular financial development and improvement, areas of vulnerability inside the financial system of the UAE exist. Social welfare programs have tied the federal government to burdensome distributive practices, which might bread an unproductive mentality among the many native inhabitants. Secondly, many new sectors are particularly reliant on international funding and an increasing expatriate workforce. For example, Dubai has succumbed to not solely globalizing but in addition seems to be Westernizing. Taboo industries for the UAE have been established in Dubai to cater to international residents. They embody evening golf equipment, film theaters and bars.
The opposite 5 emirates outdoors of Abu Dhabi and Dubai lack in financial improvement and development potential. Ajman and Sharjah are each resided in by Dubai employees searching for cheaper lodging. Ajman has nice stability, with solely 4 rulers since 1900. Sharjah is a metropolis of studying and the humanities, representing the cultural capital of the Arab World and has over twenty museums. Umm al-Qaiwain is the second smallest emirate and is comparatively unproblematic and politically secure. Nevertheless, the emirate’s stance on alcohol has created rifts with the UAE rulers. Umm al-Qaiwain licenses the best to promote and eat alcoholic merchandise, like Dubai, but in addition operates hug outlets at seaside resorts. Residents on this emirate depend on fishing and cultivating palm bushes as major sources of earnings. Umm al-Qaiwain is present process an architectural renaissance and is quickly creating. Fujairah is the one emirate on the jap aspect of the UAE alongside the Gulf of Oman and has lowly standing within the nation’s improvement course of. If it is ready to overcome this example, Fujairah has the potential to develop into an essential various port of Dubai and the remainder of the UAE.
The emirate advantages from nice stability and good neighbor relations. Ras al-Khaimah has skilled instability over the previous couple of a long time and is anticipated to have extra inner issues over the close to future. It’s not oil wealthy nor close to Dubai, however is a vital provide of labor into Dubai.
Monetary regulation is considerably advanced within the UAE. The DIFC has its personal regulator, the DFSA, and its personal civil and industrial legal guidelines. The remainder of the UAE monetary system is regulated by the Central Financial institution of the UAE, The Emirates Securities and Commodities Authority (ESCA) and the Ministry of Financial Planning (MEP).
The Central Financial institution of the UAE is granted a normal energy to create guidelines governing all issues that fall inside its authority. Many of the Central Financial institution’s energy focuses on setting financial coverage and financial institution regulation, slightly than regulating the securities market except it regards anti-money laundering practices.
There isn’t a formal bond market within the UAE. To ensure that corporations to challenge debt, they need to checklist the bond providing on a special trade (such because the London Inventory Change), by way of bond sellers in industrial banks or by way of personal placements on to traders.
Of the seven emirates within the UAE, Dubai has been hit the toughest by the worldwide monetary disaster. The risky state of affairs in Dubai has affected the entire nation and, coupled with a fall in oil costs, the IMF estimate a 3.3 % contraction within the UAE in 2010. Alternatively, UAE officers have expressed optimism concerning the nation’s future in an try to instill confidence within the UAE financial system.
The GCC states, search to develop into a regional monetary hubs. Limitations to reaching this objective have risen because of the Dubai World disaster and the UAE’s response. Worldwide confidence within the potential of GCC to restructure their money owed have been questioned as world traders categorical concern over problems with transparency, accountability and good company governance. On the coronary heart of the problem is the area’s fame for good governance. An much more severe improvement is whether or not such issues are symptomatic of a deeper development. It’s anticipated that worldwide traders will topic the Gulf states to a far better stage of scrutiny sooner or later.
UAE government-produced analysis on the financial outlook in 2009 acknowledged that challenges lay forward as a result of monetary disaster and world financial downturn, however emphasizes the nation’s sturdy basis through which to face up to such challenges. The massive present account surplus, estimated at $285 billion (USD) in 2008, and the federal government’s giant managed abroad belongings is anticipated to defend the UAE from a pointy downturn. Nevertheless, commerce and related industries are anticipating a slowdown in exports sooner or later. One optimistic key prospect from this downturn is the anticipated decline in inflationary pressures within the UAE as a result of a fall in delicate and exhausting commodity costs.
Liquidity within the banking sector is a matter that’s receiving shut consideration by authorities officers within the UAE, as non-Abu Dhabi primarily based banks look like undercapitalized following a collection of revenue falls. The property market, particularly in Dubai, could be very weak and precipitated by detrimental sentiment and a brief provide of funding. Future building initiatives are unsure as leveraged property corporations battle to acquire new capital. Public-funded infrastructure initiatives, however, are anticipated to proceed to expertise sturdy development. For example, building on Dubai’s Al Maktoum Worldwide Airport would be the world’s largest aviation hub when completed in 2015.
The UAE authorities literature emphasised that the federal government is not going to let any main agency fail. Moreover, it was highlighted that almost all main corporations in main sectors reminiscent of property, banking and transport are both wholly or partially government-owned and, as such, their money owed have an implicit authorities assure.
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