Source: Congressional Research Service (via U.S. Department of State Foreign Press Center)
The UAE’s relatively open borders and economy have won praise from advocates of expanded freedoms in the Middle East while producing financial excesses, social ills such as human trafficking, and opportunity for Iranian businesses based there to try to circumvent international sanctions. The social and economic freedoms have not translated into significant political change; the UAE government remains under the control of a small circle of leaders, although it allows informal and some formal citizen participation to supplement traditional methods of consensusbuilding. To date, these mechanisms, economic wealth, and reverence for established leaders have enabled the UAE to avoid wide-scale popular unrest. Since 2006, the government has increased formal popular participation in governance through a public selection process for half the membership of its consultative body, the Federal National Council (FNC). But, particularly since the Arab uprisings of 2011-12, discontent has risen somewhat over the unchallenged power and privileges of the UAE ruling elite as well as the government strategy of spending large amounts of funds on elaborate projects that cater to expatriates and international tourists. The leadership has resisted any dramatic or rapid further opening of the political process, and it is becoming increasingly aggressive in preventing the rise of Muslim Brotherhood-linked Islamist as well as secular opposition movements. The crackdown is drawing increased criticism from human rights groups.
On foreign policy issues, the UAE—along with fellow Gulf state Qatar—has become increasingly assertive in recent years—a product of the UAE’s ample financial resources and its drive to promote regional stability. The UAE has joined the United States and U.S. allies in backing and then implementing most international sanctions against Iran, causing friction with its powerful northern neighbor. It has ordered the most sophisticated missile defense system sold by the United States, making the UAE pivotal to U.S. efforts to assemble a regional missile defense network directed primarily to counter Iran’s expanding missile force. The UAE has deployed troops to Afghanistan since 2003 and pledges to keep some forces there after the existing international security mission there ends in 2014. Since 2011, it has sent police to help the beleaguered government of fellow Gulf Cooperation Council (GCC) state Bahrain, supported operations against Muammar Qadhafi of Libya, joined the GCC diplomatic effort that brokered a political solution to the unrest in Yemen, and financially backed rebels in Syria. It gives large amounts of international aid, for example for relief efforts in Somalia.
For the Obama Administration and many in Congress, there were early concerns about the UAE oversight and management of a complex and technically advanced initiative such as a nuclear power program. This was underscored by dissatisfaction among some Members of Congress with a U.S.-UAE civilian nuclear cooperation agreement. The agreement was signed on May 21, 2009, submitted to Congress that day, and entered into force on December 17, 2009. Concerns about potential leakage of U.S. and other advanced technologies through the UAE to Iran, in particular, have been largely alleviated by the UAE’s development of strict controls, capable management, and cooperation with international oversight of its nuclear program.
Source: Congressional Research Service (via U.S. Department of State Foreign Press Office)
The Arab League, an umbrella organization comprising 22 Middle Eastern and African countries and entities, has maintained an official boycott of Israeli companies and Israeli-made goods since the founding of Israel in 1948. The boycott is administered by the Damascus-based Central Boycott Office, a specialized bureau of the Arab League.
The boycott has three tiers. The primary boycott prohibits citizens of an Arab League member from buying from, selling to, or entering into a business contract with either the Israeli government or an Israeli citizen. The secondary boycott extends the primary boycott to any entity world-wide that does business in Israel. A blacklist of global firms that engage in business with Israel is maintained by the Central Boycott Office, and disseminated to Arab League members. The tertiary boycott prohibits an Arab League member and its nationals from doing business with a company that deals with companies that have been blacklisted by the Arab League.
Since the boycott is sporadically applied and ambiguously enforced, its impact, measured by capital or revenue denied to Israel by companies adhering to the boycott, is difficult to measure. The effect of the primary boycott appears limited since intra-regional trade and investment are small. Enforcement of the secondary and tertiary boycotts has decreased over time, reducing their effect. Thus, it appears that since intra-regional trade is small, and that the secondary and tertiary boycotts are not aggressively enforced, the boycott may not currently have an extensive effect on the Israeli economy.
Despite the lack of economic impact on either Israeli or Arab economies, the boycott remains of strong symbolic importance to all parties. The U.S. government has often been at the forefront of international efforts to end the boycott and its enforcement. Despite U.S. efforts, however, many Arab League countries continue to support the boycott’s enforcement. U.S. legislative action related to the boycott dates from 1959 and includes multiple statutory provisions expressing U.S. opposition to the boycott, usually in foreign assistance legislation. In 1977, Congress passed laws making it illegal for U.S. companies to cooperate with the boycott and authorizing the imposition of civil and criminal penalties against U.S. violators. U.S. companies are required to report to the Department of Commerce any requests to comply with the Arab League Boycott.
The current list of countries that request U.S. companies to participate or agree to participate in boycotts prohibited under U.S. law includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen.
This report provides background information on the boycott and U.S. efforts to end its enforcement. More information on Israel is contained in CRS Report RL33476, Israel: Background and U.S. Relations, by Jim Zanotti.
Country Analysis Brief: United Arab Emirates
Source: Energy Information Administration
Since declaring independence from the United Kingdom in 1971, the United Arab Emirates (UAE) has relied on its large hydrocarbon endowments to support its economy, though through concerted efforts over the last several decades that is beginning to change. While the UAE is making notable progress in diversifying its economy through tourism, trade, and manufacturing; in the near-term oil, natural gas, and associated industries will continue to account for the majority of economic activity in the seven Emirates (Abu Dhabi, Ajman, Al Fujayrah, Dubai, Ras al Khaymah, Sharjah, and Umm al Qaywayn).
On the strength of its hydrocarbon sector the UAE is one of the world’s wealthiest nations, with a GDP per capita (at purchasing power parity) estimated at $48,158 in 2011 ranking it eighth in the world in 2011 (directly behind the United States). Beyond the hydrocarbon economy—which continues to account for approximately 80 percent of total government revenues—the UAE is becoming one of the world’s most important financial centers and a major entrepôt in the Middle East. Investments in infrastructure and technology, and the development of projects such as the Khalifa Industrial Zone Abu Dhabi (KIZAD) and other economic “free zones,” continue to provide the UAE with insurance against oil price declines and global economic stagnation.
Since the nadir of 2009, the UAE solidified its economic portfolio, but it continues to rely on its vast hydrocarbon resources for the majority of its economic activity. Recovering oil prices and robust trade growth have buoyed the economy, and forecasts expect modest growth of 2.3 percent in 2012. This figure could change significantly if the geopolitical pressures of the region worsen—for example, through an expansion of international sanctions on key trading partner Iran—or oil prices decline due to economic slowdowns in developed economies. The UAE is likely to be in a better position to cope with such disruptions than most of its neighbors, but its economy is still heavily dependent on its hydrocarbon resources. The diversification of its economy should continue over the next several years, but for economists studying the UAE the most important indicator to watch remains the price of crude oil.
Introduction:Arab populations have many similarities and dissimilarities. They share culture, language and religion but they are also subject to economic, political and social differences. The purpose of this study is to understand the causes of the rising trend of diabetes prevalence in order to suggest efficient actions susceptible to reduce the burden of diabetes in the Arab world.Method:We use principal component analysis to illustrate similarities and differences between Arab countries according to four variables: 1) the prevalence of diabetes, 2) impaired glucose tolerance (IGT), 3) diabetes related deaths and 4) diabetes related expenditure per person. A linear regression is also used to study the correlation between human development index and diabetes prevalence.Results:Arab countries are mainly classified into three groups according to the diabetes comparative prevalence (high, medium and low) but other differences are seen in terms of diabetes-related mortality and diabetes related expenditure per person. We also investigate the correlation between the human development index (HDI) and diabetes comparative prevalence (R = 0.81).Conclusion:The alarming rising trend of diabetes prevalence in the Arab region constitutes a real challenge for heath decision makers. In order to alleviate the burden of diabetes, preventive strategies are needed, based essentially on sensitization for a more healthy diet with regular exercise but health authorities are also asked to provide populations with heath- care and early diagnosis to avoid the high burden caused by complications of diabetes.
Liberalizing Monarchies? How Gulf Monarchies Manage Education Reform
Source: Brookings Institution
With the onset of the Arab uprisings, Gulf monarchies face increased pressure on their traditional ruling balance. Gulf Arab oil monarchies have traditionally been resistant to political reform, and their reaction to the Arab spring has largely followed suit. To focus solely on political liberalization, however, is to ignore ambitious societal and bureaucratic reforms that have been launched in recent years. In many ways, the processes and pressures involved in reforming the state’s “soft institutions” – whether due to pressure from political elites, citizens, or the international community – offer important lessons for broader institutional reform in these cautiously liberalizing monarchies.
This paper focuses on one of such institution—the educational sector—and analyzes the extent to which reform in that sphere can provide models for wider liberalization. Education reform in the Gulf is a politically charged and socially sensitive endeavour with potential winners and losers among various co-opted groups. Looking at the experiences of three Gulf states—Saudi Arabia, Qatar, and the United Arab Emirates—the study seeks to consider how successful these monarchies have been in transitioning from highly centralized and rigid bureaucracies to more responsive, innovative, and dynamic systems.
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United Arab Emirates: 2011 Article IV Consultation—Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion
United Arab Emirates: 2011 Article IV Consultation—Staff Report; Staff Supplement; Public Information Notice on the Executive Board Discussion (PDF)
Source: International Monetary Fund
Economic prospects. Nonhydrocarbon GDP growth is projected to increase from 2.1 percent in 2010 to 3.3 percent in 2011, led by strong tourism, logistics, and trade in Dubai; and large public investment spending in Abu Dhabi. Nevertheless, the real estate overhang and short- term refinancing needs from overleveraged Government-Related Entities (GREs) weigh on the near-term outlook. Despite higher international food prices, the CPI inflation rate is expected to remain moderate at 4.5 percent, as rents continue to decline.
Risks to the outlook. The unfolding turmoil in the Middle East and North Africa poses downside risks. The re-pricing of risk in the region could result in more difficult financial market conditions. On the positive side, there are indications that the United Arab Emirates (U.A.E.) may benefit from increased tourism and investments looking for diversification within the region. Higher oil prices are also benefiting the U.A.E. as a hydrocarbon exporter, though if sustained, they may affect the recovery if demand from Asia falls.
Supporting the recovery in the short term. Given the still fragile economic recovery, macroeconomic policies in 2011 should support domestic demand and respond to potential economic spillovers from the unfolding events in the region. The government should adopt a neutral fiscal stance in 2011, and expand spending in case the regional unrest starts affecting the economy. The central bank should be prepared to provide liquidity if the re-pricing of risk in the region were to trigger a reversal of the recent bank deposit inflows.
Mitigating the risks posed by quasi-sovereign entities. GREs have contributed significantly to U.A.E.’s economic growth. Nevertheless, the recent bailouts, the size of Dubai’s GRE debt, and the significant short- and medium-term roll-over needs call for containing the risks posed by these entities. This entails better governance, as well as assessing, monitoring, reporting, and disclosing GRE contingent liabilities in government accounts. Containing GRE borrowing is key for fiscal sustainability at the emirate level.
Securing financial stability. The banking sector remains resilient to shocks, thanks to high capital and strong earnings. Although nonperforming loans have doubled since the crisis, banks have increased provisioning. In light of the ongoing restructuring of Dubai GREs, the central bank should continue to ensure that banks provision adequately, monitor the performance of restructured loans, and encourage banks to retain more earnings to handle potential risks in the medium term.
Managing the economy over the cycle. The recent boom-bust underscores the need for strong demand management over the economic cycle. Under a pegged exchange rate regime, this requires mutually-supportive countercyclical fiscal and macroprudential policies; and the federal structure of the U.A.E. makes close coordination between the various governments imperative.
Improving the statistical framework. With data availability underpinning good policy- making, more progress is needed for timely compilation and dissemination of key statistics.
Country Specific Information: United Arab Emirates
Source: U.S. Department of State
The United Arab Emirates (UAE) is a federation of seven emirates, each with its own ruler. The federal government is a constitutional republic, headed by a president and council of ministers. Islamic ideals and beliefs provide the foundation of the country’s conservative customs, laws, and practices. The UAE has a modern and generally well-developed infrastructure, and tourist facilities are widely available. Read the Department of State’s Background Notes on the United Arab Emirates for additional information.
Background Note: United Arab Emirates
Source: U.S. Department of State
The United States has enjoyed friendly relations with the U.A.E. since 1971. Private commercial ties, especially in petroleum (the U.A.E. is the only GCC state to allow private-sector participation in its oil and gas sector), have developed into friendly government-to-government ties, which include security cooperation. The U.A.E. is the United States’ single largest export market in the Middle East and North Africa region, with $14.4 billion in exports in 2008 and more than 750 U.S. firms operating locally. There are nearly 50 weekly non-stop flights to the U.A.E. from six U.S. cities. U.A.E. ports host more U.S. Navy ships than any port outside the U.S. The United States was the third country to establish formal diplomatic relations with the U.A.E. and has had an ambassador resident in the U.A.E. since 1974.