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Thursday, March 17, 2011

The United Arab Emirates (UAE): Issues for U.S. Policy

Kenneth Katzman
Specialist in Middle Eastern Affairs

The UAE’s relatively open borders, economy, and society have won praise from advocates of expanded freedoms in the Middle East while producing financial excesses, social ills such as prostitution and human trafficking, and relatively lax controls on sensitive technologies acquired from the West. The UAE government is authoritarian, although it allows substantial informal citizen participation and consensus-building. The openness of its society and its economic wealth have allowed the UAE to largely avoid the popular unrest in the Middle East thus far. What could cause full change that is the perception that members of the elite (the ruling families of the seven emirates and clans allied with them) routinely obtain favored treatment in court cases, obtain access to lucrative business opportunities, and exert preponderant influence on national decisions.

Until now, political reform has been limited and halting. After several years of resisting electoral processes similar to those instituted by other Gulf states, and despite an absence of popular pressure for elections, the UAE undertook its first electoral process for its consultative “Federal National Council” in December 2006. The process was criticized as far from instituting Westernstyle democratic processes, because the electorate was limited to about 1% of the citizenry, and it voted for only half of the membership of the body. The other half of the body continues to be appointed. Possibly to try to head off any unrest, in March 2011 the government altered rules for the September 2011 election process that will allow more citizens to participate in the voting. The government has not announced an expansion of the FNC’s powers, which some intellectuals seek.

Partly because of substantial UAE federal government financial intervention and ample financial reserves, the political and social climate remained calm through the 2008-2009 global financial crisis and recession. The downturn hit Dubai emirate particularly hard and called into question its strategy of rapid, investment-fueled development, especially of luxury projects. Many expatriate workers left UAE after widespread layoffs, particularly in the financial and real estate sectors, and the decline affected property investors and the economies of several neighboring countries, including Afghanistan. The downturn also touched Afghanistan in the form of major losses among large shareholders of Kabul Bank, Afghanistan’s largest private banking institution. At the outset of 2011, however, some economists were becoming more optimistic that Dubai emirate was poised for a rebound.

For the Obama Administration and many in Congress, there are 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, and submitted to Congress that day. It entered into force on December 17, 2009. However, U.S. concerns about potential leakage of U.S. and other advanced technologies through the UAE to Iran, in particular, are far from alleviated. For details and analysis of the U.S.-UAE nuclear agreement and legislation concerning that agreement, see CRS Report R40344, The United Arab Emirates Nuclear Program and Proposed U.S. Nuclear Cooperation, by Christopher M. Blanchard and Paul K. Kerr.

Date of Report: March 10, 2011
Number of Pages: 18
Order Number: RS21852
Price: $29.95

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