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History


The origins of the country lie in a truce signed in 1820 between nine Arab sheikhdoms in the area. Called the General Treaty of Peace, the treaty was imposed by the British, who were keen to exploit the trade passage through the Gulf to India. As a result of the growing trade relationship with India, the British looked to obtain dominance over the region and bring an end to piracy in the area. Fights between the British and the powerful Qawasim, a maritime tribe based in Ras al-Khaimah and Sharjah had been frequent and after decades of unrest, a major offensive by the UK in 1819 led to the destruction of the Qawasim fleet and the occupation of its main ports, paving the way for the new treaty.

The first traces of hyrdrocarbons were discovered in the Bab field in 1954

By 1853, after various modifications made in response to the sheikhs’ disinclination to adhere to treaty terms, it was renamed as the Treaty of Peace and Perpetuity, which allowed for British arbitration of disputes among the sheikhs. The territory it concerned came to be known as the Trucial Coast, a name it retained until 1971. The subsequent years of peace allowed its pearl industry to flourish. It is estimated that by the turn of the 20th century, 4,500 boats manned by 30,000 men were owned and operated by the sheikhdoms. Historian Richard Le Baron Bowen says the industry was valued at $1,500,000 at its peak in 1896, with approximately 70,000-80,000 workers.

Arabian pearls were traded worldwide, mainly through India and Europe, but their worth began to decline in the 1920s when Japanese cultured pearls entered the market. The industry was further hit by a fall in demand as a result of the Great Depression, which began in 1929, and the Second World War. By 1949, Le Baron Bowen estimates that only 530 pearl boats remained and the value of the industry had fallen to $200,000.

Throughout the 1930s, the world’s oil exploration giants turned their attention from Iraq to the lower Gulf. By 1939, Petroleum Development (Trucial Coast), made up of the UK’s BP, Anglo/Dutch Shell Group, France’s Total, ExxonMobil of the US and Partex of Portugal, had signed an exploration agreement with Abu Dhabi, drilling the first well at Ras Sadr in the northeast of the emirate in 1951. The first traces of hydrocarbons were discovered in the Bab field in 1954. Offshore exploration had also begun under BP subsidiary Abu Dhabi Marine Areas and in 1958 enormous quantities of oil were discovered at Umm Shaif, which went into production in 1962. Once oil was discovered, it was necessary to determine the boundaries of the separate sheikhdoms to prevent each ruler laying claim to his neighbour’s territory.  Eventually, the borders of the seven emirates that constitute the present-day UAE were drawn.

With the pearling industry in decline, the Trucial states began exploring other trading options. During the 1950s and 1960s, Sheikh Rashid bin Saeed al-Maktoum – first as regent, then as ruler of Dubai – developed shipping facilities along Dubai Creek, the first steps in establishing the emirate as a centre of regional trade and logistics.

Just as the energy industry began to take off in the Trucial states, the British announced their withdrawal from the area. The ruler of Abu Dhabi, Sheikh Zayed bin Sultan al-Nahyan, acted fast in a bid to strengthen the ties between the states, calling for a new federation that also included Qatar and Bahrain. Initially, an agreement was only reached between the six rulers of Abu Dhabi, Dubai, Ajman, Sharjah, Umm al-Quwain and Fujairah and on 2 December 1971 the UAE was formed. Further negotiations ensued and Ras al-Khaimah joined the federation two months later. Qatar and Bahrain elected not to join, in part due to the distance between the territories.

The UAE is a member of the UN, the Arab League and the GCC, a six-member economic, political and military grouping, formed in 1981, which also includes Saudi Arabia, Kuwait, Oman, Bahrain and Qatar.


Overview


The seven emirates that make up the UAE are Abu Dhabi, Dubai, Ajman, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.

The states maintain a high level of autonomy, but the UAE as a whole is governed by the Supreme Council of Rulers, composed of the seven emirs, who appoint a prime minister and cabinet.

HH Sheikh Zayed bin Sultan Al-Nahyan, the principal architect of the seven emirates, was the ruler of Abu Dhabi and president of the UAE for over 30 years from 1971 to 2004.

He was succeeded by HH Sheikh Khalifa bin Zayed Al-Nahyan who maintains the role today. His brother, HH General Sheikh Mohamed bin Zayed Al-Nahyan, is the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces of the UAE.

On 4 January 2006, HH Sheikh Mohammed bin Rashid Al-Maktoum became the ruler of Dubai following the death of Sheikh Maktoum bin Rashid A- Maktoum.

The members of the UAE Supreme Council also elected Sheikh Mohammed as the UAE’s vice president and prime minister.

There is a large economic imbalance between Abu Dhabi and Dubai and the five poorer northern emirates.

While Dubai’s activities may generate more headlines in the media, Abu Dhabi is the economic powerhouse among the emirates, owing to the fact that it possesses the lion’s share of hydrocarbon reserves.

Accounting for 90 per cent of UAE oil and gas production, Abu Dhabi has more than 90,000 million barrels of recoverable crude and the world’s fifth largest deposits of natural gas.

Consequently, it remains the lead contributor to the federal budget and therefore the five northern emirates have been heavily dependent on Abu Dhabi for upgrading their infrastructure.  

Despite the diversification efforts of the country, the UAE economy remains heavily dependent on oil and on foreign labour, especially in the private sector where roughly 90 per cent are expatriates.

An Emiratisation drive is in progress, which has been successful in some sectors, but had limited success overall.

The government is keen to increase private sector involvement in the economy. Several independent water and power projects (IWPPs) have already been successfully implemented.

In foreign affairs, the UAE has a longstanding territorial dispute with Iran over three Gulf islands, Abu Moussa, Lesser Tunbs and Greater Tunbs, which Iran has occupied since 1971, but there are signs of a thaw in relations.




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