Last month saw celebrations marking 10 years of Sheikh Khalifa bin Zayed al-Nahyan’s rule as president of the UAE and ruler of Abu Dhabi. It has been a period of both continuity and change.

The 66-year-old son of the country’s founder and first president, Sheikh Zayed bin Sultan al-Nahyan, took on a country in good health when he came to power on 3 November 2004.

With a rapidly expanding economy (GDP grew by almost 12 per cent in 2003), enviable political stability and an estimated $75bn or more in foreign investments and reserves, the country had created a new model for development in the Gulf. The rise of the UAE’s regional and global profile under Sheikh Zayed had been much lauded, leaving Sheikh Khalifa with large boots to fill.

Despite the momentum inherited from his predecessor, Sheikh Khalifa has faced hurdles to further develop the country both domestically and on the world stage.

Wealth allocation

One of the most important challenges has been to strengthen federal institutions to help raise the standards of healthcare, education and basic amenities for citizens across the seven emirates. The rapid growth of the UAE’s two largest emirates, Abu Dhabi and Dubai, has led to a division of wealth across the federation that the central government must attempt to narrow.

In the $13.4bn federal budget for 2015 – representing about 14 per cent of overall spending in the UAE – almost half of the planned spending has been allocated to service projects and social development and benefits, including healthcare, education and social services.

There has also been investment in the northern emirates under the Khalifa Initiative, launched in early 2011 to focus on improving infrastructure in Sharjah, Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. The UAE pledged $1.6bn for projects in the north, which has included funding the construction of new hospitals, clinics, schools and housing programmes.

“We need a more balanced, equitable and prosperous UAE, and to achieve this, the northern emirates need more investment in infrastructure,” says Abdulkhaleq Abdulla, professor of political science at UAE University. “This is something that needs attention and should have been done a long time ago, but now the attention has heightened.”

On 1 December, the UAE cabinet held its first meeting in Fujairah’s historic fort, in a symbolic gesture to the country’s smaller emirates.

The big two

Abdulla believes the strength of the union largely depends on the closeness of Abu Dhabi and Dubai – emirates that appeared more divided when Dubai was going through its breakneck expansion in 2003-08. Abu Dhabi’s $20bn bailout of Dubai, when the latter was mired in its debt crisis, created a stronger sense of co-dependency between the two emirates that continues today.  

“The federal structure depends on how close Dubai and Abu Dhabi are,” says Abdulla. “That is the key to understand the strength or weakness of the federation and the union. And I have never in my life seen these two coordinate better, work better and complement each other better than they do today.”

The northern emirates investment initiative was seen partly as a response to the protests that swept across the Arab world in early 2011 and saw marginalised populations rising up against their governments and increased the influence of political extremists across the region.

Another response by Abu Dhabi to the rising power of Islamist groups during this period has been a crackdown on political dissent, especially Muslim Brotherhood-linked activities.

More than 100 activists and government critics have reportedly been prosecuted or jailed for national security or cybercrimes offences, with 60 remaining in prison. The country recently issued a new cybercrimes law and released a list of 83 proscribed terrorist organisations, including regional affiliates of the Brotherhood.

Indirect elections

Although Sheikh Khalifa has given calls for outright democracy short shrift, the president has strengthened representative forms of government in the UAE. One of his legacies will be the introduction of indirect elections to the Federal National Council (FNC). The first elections took place in December 2006, when 20 members were elected through a general election.

For the 2011 elections, the electoral college was expanded from 6,000 members to 129,274 to promote political participation among Emirati citizens. However, turnout was a disappointing 28 per cent, leading some to call for an expansion of the powers of the FNC to develop stronger links between the rulers and the people.

“One thing that needs to be done is to have a different FNC – hopefully a fully elected FNC – and universal voting has to be introduced and more legislation has to come,” says Abdulla. “I think they are trying to pursue this, but at a very slow pace. Many would want it to go at a faster pace rather than this gradual, incremental pace we are seeing right now.”

The soft power of the UAE has expanded significantly over the past decade and the country’s global profile is at an all-time high, driven by the visibility of brands such as Dubai’s Emirates Airline and the establishment of annual world-class sporting and cultural events in the country.

Sheikh Khalifa has overseen the establishment of Abu Dhabi as a tourist destination through the development of the Yas Island attractions and the Sheikh Zayed Grand Mosque, which will soon be complemented by the Louvre and Guggenheim art galleries and the Zayed National Museum.

Military prowess

But the emergence of the UAE as a regional military power cannot be underestimated. In August, it was reported the UAE had joined Egypt to carry out bombing raids against militias in Libya. The country’s air force has also joined the international coalition fighting the jihadist group Islamic State in Iraq and Syria (Isis).

The UAE gained widespread media coverage in September when its first female fighter pilot, Mariam al-Mansouri, was involved in air strikes against the militants.

Al-Mansouri has also become the face of one of Sheikh Khalifa’s other aims: the greater participation of women in society.

According to the government, women account for nearly 70 per cent of all university graduates in the country, and fill about 60 per cent of government jobs. This includes four cabinet ministers, the UAE’s permanent representative to the UN, seven members of the FNC – including the first deputy speaker – and 10 per cent of overseas diplomats.

The UAE has become a leader of female empowerment in a region that has been heavily criticised for the marginalisation of women from social and political life. It was ranked the highest in the Middle East and North Africa region in the World Economic Forum’s 2013 global gender gap report (although still relatively low by global standards).

In terms of economic growth, Sheikh Khalifa’s decade in power has been a period of two halves, cut in the middle by the global financial crisis and the resulting property meltdown in Dubai.

The UAE recorded GDP growth of almost 10 per cent in 2007, but in 2010 the economy shrank by 4.8 per cent. Since the crash, the economy has gradually recovered, helped by high crude prices fuelling growth in Abu Dhabi and the resurgence of Dubai’s core sectors, including real estate.

Return to growth

GDP expanded by 3.9 per cent in 2012 and 4.4 per cent in 2013, with another expansion of about 4.4 per cent forecast for this year. The UAE’s economy is unlikely to return to the growth of the pre-crisis boom years, but looks to have recovered to a period of robust expansion.

“Economic recovery has continued at a solid pace, supported by construction, logistics and hospitality,” Harald Finger, the IMF’s head of mission for the UAE, said after a visit in early November. “Ongoing public projects in Abu Dhabi and continued strength in Dubai’s services sectors have continued to underpin growth.”

“Growth in real hydrocarbons GDP has continued to moderate in the context of an amply supplied global oil market,” he added, saying the economy would be supported by strongly performing non-oil sectors.

However, since the IMF concluded its visit in early November, the global crude price has continued to drop, falling to about $70 a barrel after the annual Opec meeting in Vienna concluded on 28 November. A potential sustained period of low oil prices could be the biggest obstacle facing the Abu Dhabi leadership over the coming years and could affect spending plans.

Strong position

While all oil exporting countries will be hit by lower export revenues, the UAE is in a relatively strong position due to its robust finances.

The US’ Standard & Poor’s recently affirmed its AA/A-1+ long and short-term foreign and local currency sovereign credit ratings on Abu Dhabi with a stable outlook, saying “the ratings are supported by Abu Dhabi’s strong fiscal and external positions, which afford it fiscal policy flexibility”.

“The exceptional strength of Abu Dhabi’s net asset positions also provides a buffer to counter the negative impact of oil price volatility on economic growth and government revenues, as well as on the external account,” the ratings agency said.

Sheikh Khalifa inherited a stable, prosperous UAE when he replaced his father in 2004 and has continued to cement the country’s status as a major economic and political power in the Middle East.

With his half-brother, Sheikh Mohammed bin Zayed al-Nahyan, nominated as his successor, the UAE has a strong future leader to continue this momentum.