UAE: Looking inwards

31 October 2003
Abu Dhabi may be the capital and the seat of real power and wealth within the UAE but, as usual, it is Dubai that has been grabbing the headlines. For the few that missed it, the emirate played host to the annual meetings of the board of governors of the IMF and World Bank in late September. As Dubai showed its best side to the massed ranks of the world's media, the event was an interesting showcase of the progress made by the UAE in the past three decades.

Given the federation's demographic structure and the distribution of wealth, the uneven rate of development in the seven emirates has been marked. For most of the period, the two main variables in the equation have been Abu Dhabi's oil resources and Dubai's growth as a commercial, transport and tourism hub. But in recent months, some of the other emirates - unable to emulate Abu Dhabi - have been borrowing a handful of Dubai's more high-profile concepts.

Mimicking the Palm islands and Global Archipelago, Ajman and Ras al-Khaimah have both recently announced their own ambitious plans for offshore tourism projects. The more advanced is the $5,000 million Amber islands development in Ajman.

Other infrastructure development projects are also under preparation in the Northern Emirates. Between them, Ajman, Sharjah and Fujairah are spending over $800 million on building new or expanding old airports (see pages 48-49). Ajman is also moving ahead with the Gateway commercial project and a new 220-room beach hotel. In Ras al-Khaimah, the new crown prince, Sheikh Saud bin Saqr al-Qassemi, has encouraged the Ras al-Khaimah (RAK) Gas Commission in its negotiations over the import of natural gas from Oman to fuel the expansion of RAK Ceramics and other proposed industrial ventures.

But for all the stirrings in the north, the critical mass of economic activity will not shift from Abu Dhabi and Dubai, and both remain true to their character. There is a renewed focus in Abu Dhabi on real estate initiatives, but there is also a familiarity about the projects themselves. They range from the construction of a new oil and gas city to the setting up of a new government body to oversee the development of Lulu island into a tourism resort. Some $540 million alone will be spent on the infrastructure works for the proposed new city, expected to be home to international oil service companies and other firms engaged in the emirate's hydrocarbon sector. The project has the full support of foreign oil companies. Further evidence of the government's desire to boost the real estate sector in Abu Dhabi can be found in the plans drawn up for the reactivation of the Khalifa Committee.

But no matter how rapidly these developments are pursued, real estate projects in Abu Dhabi will continue to be dwarfed by the ambition up the coast in Dubai.

On 21 October, Sheikh Mohammed bin Rashid al-Maktoum, Dubai's crown prince, unveiled yet another tourism venture: the $5,000 million Dubailand project, considered by some to be the Disneyland of the Middle East. Brushing aside doubts about the future of the several other infrastructure development and real estate projects being carried out in the emirate, he said: 'Some of you doubted the success as you viewed the projects individually. What I have achieved until now is just 10 per cent of what I plan to do for the emirate.' On the back of projects such as the Burj Dubai, Hydropolis hotel and the Atlantis resort, there is no doubting the scale or the intention.

Whatever the future of Dubai, from the federal perspective, political developments in Abu Dhabi are of paramount importance to all seven emirates. And there have been movements.

In early October, President Sheikh Zayed bin Sultan al-Nahyan appointed Minister of State for Foreign Affairs Sheikh Hamdan bin Zayed al-Nahyan, as a new deputy prime minister (PM). The decree neither specified the role of the present incumbent Sheikh Sultan bin Zayed al-Nahyan, nor gave any reasons for the new appointment.

As is usually the case in Abu Dhabi, speculation over the causes of the new moves ranges widely. Some Diwan watchers say Sheikh Sultan's standing has been impacted by the mid-summer closure of the Abu Dhabi-based Zayed Centre for Research & Follow-up, which he headed. The US had lodged a protest about the institution, asserting that it had increasingly become a centre for anti-Zionism, and the tension raised is said to have contributed to the refusal by the US' Harvard University to accept a grant made by Sheikh Zayed. Other observers offer a more prosaic explanation by pointing to some of the delays faced in projects being carried out by the Works Department, also headed by Sheikh Sultan.

Whatever the reasons, Sheikh Hamdan's elevation has fuelled speculation in Abu Dhabi's political circles over the succession issue. 'It is still unclear why he [Sheikh Zayed] opted for Sheikh Hamdan [his fourth son] over the elder brother [Sheikh Mohammed bin Zayed],' says a Western diplomat. 'This cannot be the last say. There seems to be a firm understanding that Sheikh Mohammed [bin Zayed] will be made the crown prince or deputy ruler [of Abu Dhabi] once Sheikh Khalifa [bin Zayed al-Nahyan, the current incumbent] takes over the presidency.'

The speculation has undoubtedly been amplified by the ill health of Sheikh Zayed. Thought to be in his late 80s, the president has spent the autumn in London recuperating after an operation to remove gall stones. 'There is a great deal of jockeying for position,' says the diplomat.

The opaque nature in which power is wielded - as well as issues such as the succession question - have served to underscore the growing gulf between the UAE and its regional neighbours on the question of political evolution. The 13 October announcement that municipal elections were coming in Saudi Arabia left the UAE in a minority of one for failing to embrace some form of elected representational system. Elsewhere, the pace is quickening. Doha has its new constitution and will be having elections in the first half of next year; on 4 October, Oman staged its first elections for its Majlis al-Shoura; on 24 October, Bahrain celebrated the anniversary of the elections for its new parliament; and Kuwait's newly elected National Assembly has reconvened for a potentially radical reforming session. While there are no signs of civil unrest and few clamouring shouts for democratic elections in the UAE, the policymakers will be aware that they are swimming against the US-encouraged tide.

The absence of pressure for political reform underlines that the authorities have in the main successfully met the population's economic expectations. UAE nationals enjoy one of the highest standards of living in the Gulf, a per capita income on a par with developed nations and a generous welfare state. And with one of the most diversified economies in the region, the outlook is bright.

As the UAE prepares to celebrate its 32nd birthday on 2 December, the authorities will be as aware of the benefits of diversity as they are of its handicaps.

Exchange rate: $1=AED 3.67

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