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Unity Grows from Necessity

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Angus Taverner

Director- Global Affairs

Tag: Dubai economy UAE
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Eight months ago Dubai World surprised global markets: it announced that it was seeking a debt standstill in order to give it time to renegotiate its obligations to its creditors.  The western media went into overdrive, portraying Dubai variously as being on the verge of collapse, being taken over by its larger, wealthier neighbour emirate Abu Dhabi, and as a possible harbinger of a wider global economic collapse a metaphorical flapping of an Emirati butterflys wings that would bring chaos to the world (1).
That Dubai has not collapsed deprives the first speculation of its weight even if the rumour has not disappeared completely.  The butterfly may still flutter but shows little likelihood of triggering global disorder. 
Of greater impact was the copy-cat commentary that ran through the media about sibling rivalry between Abu Dhabi and Dubai and that the economic downturn was giving the larger, more conservative brother, Abu Dhabi, an opportunity to bring its wayward, cosmopolitan brother back into line.  Indeed many of the opinion pieces written over the turn of the year sustained the notion of competition between the individual emirates and declared that Abu Dhabi was poised to reap the rewards of victory.  Thus, last January, when Dubai unveiled the newly completed Burj Dubai renamed as The Burj Khalifa, many foreign journalists interpreted this change as a Dubai act of obeisance or pay-back to Abu Dhabis ruler HH Sheikh Khalifa bin Zayed al Nahyan. 
This interpretation was ignorant of the UAE custom of naming prominent landmarks as tributes to neighbouring Rulers rather than their own-Sheikh Rashid Road in Abu Dhabi is an obvious example (HH Sheikh Rashid bin Saeed al Maktoum was the Ruler of Dubai at the time of independence) as is Sheikh Zayed Road in Dubai (named after an early highly-respected UAE president from Abu Dhabi).
However, the confluence of events at the end of last year and what has happened subsequently suggests that something more subtle and perhaps profound may be under way.  The economic travails of all 7 emirates that make up the UAE federation seem to have brought a strategic decision amongst the Rulers, Crown Princes and their immediate subordinates to strengthen their cooperation at the federal level in certain mattersthat the individual emirates need to share sovereignty in more ways.  
Many historians and long time observers of the development of the UAE since its birth in 1971 seem agreed that the country is moving through an important period of transition.  The size of the UAEs economy makes it second only to Saudi Arabia in the GCC.  It is also a strategic counter to Saudi Arabias more worrying social extremes and the political health of the House of Saud.  Consequently, the UAE has growing influence in Middle East affairs:  a major economic player in the region; an important voice on the Palestinian-Israeli issue; a bulwark against Iranian hegemony; and a key regional ally for the United States, the EU and many emerging powers across Asia. 
In short, the UAE is maturing, growing in international stature and gaining in status as a global economic entity.  The UAE has been far from immune to the global recession.  However, seeing its response as a product a rivalry of emirates is a misperception.  Instead, in facing the economic demands of the past two years, the loose affiliation of Trucial States has proven itself more a unified nation of a single philosophy, strengthened by mutual dependence and driven by the aspiration of future prosperity and development for the entire country.

(1)The butterfly effect is a metaphor that encapsulates the concept of sensitive dependence as an initial conditions in chaos theory:  small differences in the initial condition of a dynamic system may produce large variations in the long-term behaviour of the system.

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