Dubai, United Arab Emirates — Local newspapers here recently ran the headline, "Cabinet approves 70 per cent salary hike for federal civil servants in 2008." This marks the highest pay raise in the young history of the UAE federation and it is just one indication of how fast prices, especially those of real estate, have skyrocketed in recent years.
Despite substantial increases in government spending – mainly on education and health and reaching 66 percent in the case of health — the UAE has set its fourth consecutive deficit-free federal budget for 2008.
Over the past 30 years, infrastructural and capital development in the UAE have been phenomenal; today, you can see new construction going up everywhere you look. But the key question is; can this be sustained?
Oil revenues have continually increased as the price per barrel hovers around $100; but even this windfall could backfire, leading to global inflation and followed by a predicted deep recession. Are the economies of major oil-producing countries like the UAE diversified enough to withstand such a recession? This remains to be seen, especially with a growing number of economists predicting not if such a recession will happen, but when.
Despite such cautionary predictions, the UAE is a 20th-century success story about small developing nations pooling their resources to benefit all of their citizens. The seven states comprising the United Arab Emirates are: Abu Dhabi and Dubai (the two largest), followed by Sharjah, Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain.
From the late 1970s the UAE economic boom created a widespread regional labor market. Today, more than 85 per cent of the federation’s population of 3,000,000 includes guest workers, mostly from India, Pakistan and Bangladesh. Among this group, however, more than 30 other nationalities are also represented. Most Canadians working here are, for example, professionals such as university professors, school teachers, or medical personnel.
Arab nationals are in fact a minority in the UAE. Ironically, flights from many cities on the Indian subcontinent take less than the three-hour flight to Egypt, which is the most-populated Arab country. But even before the age of rapid air travel, there are historical records of trade between Gulf Arab states and India going back thousands of years.
With the diversity of UAE visitors, it is not surprising to see many major world religions represented here. In addition to the mosques serving its majority Muslim population, there are also Christian churches, Hindu temples and Sikh gurdwaras.
The UAE’s highly-skilled population base is shown in the increased number of new universities, both private and government-run. Many foreign universities, including the University of Waterloo, have also established, or are planning, satellite campuses here to fill the competitive demand for advanced learning in general education and research technologies – areas in which the UAE government has shown strong interest in recent decades.
I visited a start-up technology park whose planners hope to attract leading multinational companies from India, Japan, Malaysia, United States, Canada and the European Community for computer software and hardware research and development. This new park – appropriately named the Dubai Silicon Oasis (emulating California’s famed Silicon Valley) — is being designed as a fully self-sufficient community, with nearby housing, schools, shopping malls and other essential services.
Another UAE claim to fame is the Burj Dubai (Dubai Tower), which when completed in 2009 will replace Canada’s CN Tower as the tallest free-standing structure in the world. Costing $4 billion, the Burj Dubai will be at the centre of an even larger development project called Downtown Burj Dubai, costing an additional $16 billion.
Other mega-construction projects include the future completion of the Dubai World Central International Airport (the most expensive airport ever built), and a series of five artificially created Gulf islands across from the city of Dubai. One of these island complexes, which is really an enormous archipelago of small islands, is called The World: when seen from above, it resembles a giant assembled puzzle of our entire planet.
But how did this amazing success story move from seven little-known and practically ignored tiny desert Gulf states to the world-class federation of today? The vision of a political, cultural and economic union among these once-isolated emirates is credited to founding UAE president Sheikh Zayed bin Sultan Al Nahyan, who became the ruler of Abu Dhabi in 1967. He died on November 2, 2004.
On December 2, 1971, following the end of British occupation of their countries, the rulers of the seven emirates formed a collective union.
That date every year is now celebrated as the UAE’s National Day.
According to its constitution, the UAE presidency is the hereditary post of the Al Nahyan family of Abu Dhabi, while the premiership is held by the Al Maktoum family of Dubai; both families represent the federation’s largest states.
UAE’s Supreme Council comprises the local rulers of all seven emirates, who elect the federal cabinet. An appointed 40-member Federal National Council, drawn from all the emirates, reviews all proposed laws.
In accordance with the Constitution, the UAE’s Supreme Council of Rulers elected Khalifa bin Zayed Al Nahyan (ruler of Abu Dhabi) as the current President, while Shaikh Mohammed bin Rashid Al Maktoum (ruler of Dubai) serves as Vice-President and Prime Minister.
Despite appearing to be a political and economic Cinderella-story among developing nations, the UAE is not without its problems and most of them are directly related to growing pains.
Economic growth, largely stimulated by government spending, has not created the expected numbers of much-needed career opportunities for a highly educated and sophisticated young generation. Many youth are turning to the volatile and uncertain world of full-time stock market speculation as their primary occupation. Unemployment, or under-employment, among a rich younger generation can lead to social instability. Moreover, huge investments in foreign companies in the U.S. do not create local wealth; and with the weakening of the American dollar, the value of such investments is rapidly eroding.
Another concern is that the ratio between women and men among UAE nationals is severely imbalanced, with some experts reporting a disparity as high as 4 to 1. Among nationals, the divorce rate is also high, at 30 percent. Financial pressure has been cited as a key factor, along with incompatible education levels between couples. Among expatriates, however, divorce and separation rates are even higher, as most leave their spouses behind in their home countries.
Water scarcity is another huge problem facing this largely desert-constructed urban conglomerate and de-salinization plants cannot meet even a fraction of its growing demand for fresh and potable water. There is little in the way of any directly sustainable natural resources, such as arable land or natural rainfall; this means virtually all food consumed in the UAE must be imported.
It seems the rich have their problems too.