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Thursday, June 30, 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, although not entirely, avoid the popular unrest in the Middle East thus far. Still, there is a public 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 half the membership of its consultative “Federal National Council” in December 2006. Possibly to try to ward off the unrest confronting other Middle East states, in March 2011 the government altered rules for the September 2011 election process that will allow more citizens to participate in the voting. However, the government has not announced an expansion of the FNC’s powers, which some intellectuals seek.

On foreign policy issues, UAE appears has become increasingly assertive in recent years. It has deployed troops to Afghanistan and, in 2011, it has sent police to help the beleaguered government of fellow Gulf Cooperation Council state Bahrain, hosted meetings of the anti- Qadhafi opposition of Libya, attempted to broker a political solution to the unrest in Yemen, and appointed an Ambassador to NATO.

The UAE’s growing assertiveness on foreign policy marks its recovery from 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. Several Dubai banks required financial assistance from the federation government, which has ample financial reserves in the form of sovereign wealth funds, to avoid defaults. 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.

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, expert concerns about potential leakage of U.S. and other advanced technologies through the UAE to Iran, in particular, remain. 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: June 23, 2011
Number of Pages: 20
Order Number: RS21852
Price: $29.95

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