The UAE has comfortably chewed more than it was expected to bite.
For most countries, the past few years have been of uncertainty in politics, turmoil in economics and of disappointment for the public - but not the United Arab Emirates. The UAE, in fact, seems to be in the middle of an economic boom, defying all trends from other nations. Dubai remains flooded with multi millionaires and billionaires, and the seven emirates can boast of having more millionaire immigrants than anywhere in the world. The nation’s economy grew 3.7% in the first half of 2023 compared to the same time period in 2022. Surprisingly, non oil-related sectors grew by 5.9%.
This statistic provides us with one of the major reasons for the UAE’s miraculous growth. The Emirates hold more oil than Russia, and have the third highest oil to citizen ratio in the world, after Guyana and Kuwait. As a result, a newly independent UAE in 1971 had all the ingredients to be a major oil financed state. However, what differentiated the Emirates from its similar petrostate neighbours was an early push to diversify its economy.
This practice was started by Dubai, which did not have massive oil reserves, by lowering, and at times abolishing, certain taxes and building special economic zones to attract foreign business. This proved to be successful, and was soon implemented in each of the other six emirates. In fact, even Saudi Arabia seems to have taken inspiration from the Emirati model. The UAE has only pursued this further, taking several steps to attract even more investors and business, from both the west and the east.
An interesting example is the weekend in UAE. The two day holiday was recently shifted from Friday and Saturday to Saturday and Sunday, to be aligned with the rest of the world. Some felt that Friday should still be kept a holiday, and this has resulted in one of the emirates pushing for just a four day week. Several other rules have been relaxed as well: unmarried couples are now allowed to stay together, and foreign entrepreneurs being allowed to set up shop in the Emirates without an Emirati partner/co-founder.
In addition to making the region attractive to foreigners, the UAE has also started funding several developing nations in North Africa and the Middle East. The Emirates seem keen on having a strong global influence, and are using economic deals, such as a recent free-trade pact with India as a means to achieve this agenda.
However, at the end of the day, the UAE is a monarchy and dictatorship. As a result, some of its campaigns, launched to extend its influence by its rulers, have gone wrong. A prime example is the Sudan civil war, where the Emirates find themselves at odds with allies like the United States, and backing a militia accused of genocide. This backing has also led to UAE ports and markets being used to sell and distribute commodities such as gold for such militias, which in turn funds their violence.
Still, setting certain questionable alliances apart, the monarchy has been quite successful in most of its decisions. A sector where its open minded
ness and readiness for the future was showcased was the new AI and computer science area. The state’s open source large language model, Falcon, was released shortly after the AI boom last year. Many believe that the LLM is better than Meta’s product (Llama 2) - a statement one doesn’t get to see often.
The UAE has done well to slowly move away from an oil dominated economy, but such a shift does not come without consequences. The state has increased and introduced new taxes, and this has led to a slightly disgruntled public. Slowly, Emiratis will have to join the private sector as skilled workers, a quality which many lack due to years of negligible taxes and oil money. The UAE will have to make sure that the transition is smooth, and will have to ensure that its youth and workforce are on par with those in the West. As of now, they lag behind by a lot.
The state has moved on well, but now the public must follow.