Oil riches, vulnerability in a new desert state
Abu Dhabi, U.A.E.
More than 50 billion recoverable barrels of oil lie beneath the sands of the United Arab Emirates.Skip to next paragraph
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That fact has made the U.A.E. one of the richest countries per capita in the world. It has also helped make it among the most vulnerable.
With annual oil revenues of more than $15 billion and a government development policy of extending the benefits of oil wealth to every citizen, a land of desert Bedouin and Gulf traders has in the past decade been transformed into the beginnings of a modern society.
But it is a society being built in a volatile region near the strategic Strait of Hormuz oil route and in the shadow of warring Iran and Iraq.
The U.A.E. is therefore forced to work toward development of a credible defense capability. It is doing this by buying advanced antiaircraft missiles and jet fighters from Western countries, and by joining the other wealthy and vulnerable Gulf states in the Gulf Cooperation Council.
But Sheikh Zayid ibn Sultan al-Nuhayan, president of the U.A.E. and ruler of the richest emirate, Abu Dhabi, sees neutrality, diplomacy, and international cooperation as ultimately contributing far more than military might to the stability of the region and his regime.
Since the outbreak of the Gulf war in September 1980, the U.A.E. has maintained diplomatic relations as well as trade links with the unpredictable Shiite Muslim government of Ayatollah Khomeini, while at the same time contributing about $1.5 billion in aid to the Sunni Muslim government of Iraqi President Saddam Hussein.
There are challenges as well on the domestic front.
The construction and development boom of the 1970s saw an increase in the foreign labor force to the extent that the local population is presently outnumbered by expatriates four to one in a total population of 1 million. And because of the low educational level of most of the indigenous population, foreigners will continue to be needed in great numbers run the country.
Despite the current low demand for oil and a production cutback of about 200, 000 barrels a day by Abu Dhabi, construction is continuing throughout Abu Dhabi, and there has been no significant effect so far on the economy as a whole. This, despite projections that the U.A.E. faces a deficit in its federal budget this year. Some development projects have been delayed or reduced in scope, but it appears the only seriously affected sector in Abu Dhabi has been oil. Offshore drilling rigs that a year ago were for hire for $40,000 a day are now available for $22,000 a day. The rate for onshore rigs has also fallen, from $25,000 a day to $15,000 a day.
In Dubai, where construction has for the most part been completed, merchants and traders are riding out a period of stagnation primarily the result of the Gulf war and increased trade restrictions by Iran. Trade with Iran, Dubai's largest market two years ago, is said to be down 75 percent from 1981 levels.
On other fronts, the fallout from the Israeli invasion of Lebanon - and the widespread perception here that the United States could have stopped the Israelis, but didn't - is of concern to Sheikh Zayid, as it is to other moderate Arab regimes friendly with the US. Sheikh Zayid is concerned that, unless the Reagan Middle East peace initiative bears at least some fruit, his government must distance itself from the US.