UAE nuclear test for Obama's America

25 January 2009
The UAE aims to be one of the US' most reliable strategic partners but there are challenges ahead as Obama's administration reviews the UAE-US nuclear agreement.

More by accident than design, the UAE will be the first Arab country to test American attitudes to the Middle East under President Obama.

Less than a week before he was sworn in, the federation's Foreign Minister Abdullah Bin Zayed al-Nahyan signed a nuclear power co-operation agreement with the US. It is the first between America and an Arab state.

The aim had been to get the deal approved before President Bush left office. It will now have to be reviewed by the new administration. Congress, also controlled by the Democratic Party, will then have 90 days to give its own blessing.

The agreement is already provoking a reaction from legislators wanting to pander to American prejudices about the Middle East. There is a depressing precedent.

Exactly three years ago, prominent figures in congress including Hillary Clinton, then senator for New York, unfairly attacked the transfer of the management of US ports to DP World of Dubai as part of its acquisition of P&O.

National interest arguments

They charged that Dubai could not be trusted with the ports' security. The Anti-Defamation League (ADL), one of America's most robust champions of Israel, said the UAE boycott of the Jewish state was grounds to kill the deal. After a thundering row, it was saved when DP World agreed to sell its US port contracts to AIG.

The UAE-US nuclear agreement is strongly backed by the US State Department, ironically now headed by Clinton. It believes that it will consolidate relations with the UAE and send a signal that the US does not oppose nuclear projects in the Arab and Islamic world, provided they are for civilian purposes and are properly supervised.

Plans for the Emirates Nuclear Energy Corporation impeccably address every possible concern. The federation has engaged the International Atomic Energy Agency (IAEA) from the beginning. The contrast with Iran's nuclear provocations could hardly be sharper.

The national interest arguments in favour of America agreeing the deal are strong. But the opportunity for congress to attack the UAE during the debate about its terms may be overwhelming.

Gulf security

The nuclear pact is evidence that the UAE is rising on the American strategic agenda. It follows UAE interest in buying the Terminal High Altitude Area Defence (THAAD) anti-ballistic missile system being developed by the US' Lockheed Martin. The federation was among a handful of potential buyers invited to observe a test of the system in 2007.

Less potentially contentious than the nuclear agreement, a THAAD deal would nevertheless provide wreckers with a fresh opportunity to embarrass the UAE and its American friends.

The UAE's position, on the other hand, is unambiguous. It is committed to strengthening its relationship with the US, which it regards as vital to the security and stability of the Gulf.

This has been made clear in the UAE's response to Israel's attack on Gaza. Its condemnation was nuanced. The federation's doubts about Hamas and other radical Palestinian groups are barely concealed. Its position during the crisis was as close to America's as it could have been.

American investors welcome

Economic connections with the US have been maintained despite the equity crash and slowdown in the US economy. At the end of 2007, the Abu Dhabi Investment Authority (ADIA) bought shares in Citicorp. Suggestions that the UAE should press for an end to the GCC dollar currency peg were dismissed.

American investors are welcomed in all areas of the UAE economy. In March 2006, Exxon Mobil was awarded a 28 per cent stake in Abu Dhabi's Upper Zakum, one of the world's largest offshore oil fields. ConocoPhillips expects to sign a $10bn joint venture sour gas development agreement with the Abu Dhabi National Oil Company (ADNOC) this spring.

The UAE appears determined to become one of America's most important strategic partners. With 10 per cent of world oil, large gas reserves, about $1 trillion in private and public sector savings, the federation is uniquely well-resourced.

Prosperous and tolerant, it is also one of the Middle East's most stable nations. Commanding the routes to and from the Strait of Hormuz, the UAE is vital to the security of Gulf oil exports. And American involvement in the UAE is not a contentious issue.

The federation has made its choice. But it takes two to dance the tango. The White House, congress and the American people will have to make its own choice this spring.

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