How Oil Revenue Shaped Political Stability in the UAE

There has been a great deal of speculation in the U.S. and the broader ‘Western’ world
about the prospects for Democracy in the Middle East. Arguments have been put forward that
Islamic culture is incompatible with democracy. These have largely been dismissed, but in their
place, other explanations for the seeming deviation of the Middle East from the‘natural’
economic and political evolution toward Western-style democracy. Two of the more prominent
explanations that have been put forward are the ‘resource curse’ hypothesis and the ‘rentier state’
hypothesis. The resource curse hypothesis predicts that countries with a high level of dependence
on the export of a single natural resource will be economically stunted and unstable. The ‘rentier
state’ hypothesis predicts that states with high per-capita income from natural resources – or
another source of income not rooted in diffuse economic activity and development – will be able
to successfully placate or buy off potential opposition, thereby maintaining stability and
preserving autocratic rule. While it is not the position of this paper that democracy is a natural
peak in an evolutionary vision of governance or that the persistence of autocratic government is
necessarily needs a special explanation, it may be useful to understand why a specific type of
autocratic governance has proven effective in a specific socioeconomic context and try to
anticipate how changes in this context might affect the government’s role in society and its form.
More specifically, this paper argues that revenue without the need for taxation is a
prerequisite for many of the underlying sources of the monarchy’s strength in the UAE and the
acquiescence of the citizenry. Therefore, when oil revenues decline past a certain point – it is all
but impossible to accurately predict where this point might be – movement toward
democratization and expanded citizenship become far more likely. Finally, while political
changes become more likely, they are anything but certain, due to the political and economic
capital banked by the ruling family since the influx of oil revenues – which should continue to
1

build for fifty years or more before oil revenues decline significantly – and the striking
competence and savvy evident in both the current leadership and their likely successors.
With this purpose in mind, this paper will briefly consider the context of the broader
Arabian Gulf, then discuss the early history of the region that would become the UAE and the
early years of the federation. Next, the structure of the government at the federal and emirate
levels will be examined and the significance of this structure will be explained. At this point, the
importance of oil to the economy and political and social status quo will be illustrated and some
factors that have the potential to mitigate the impact of the transition to a post-oil country will be
introduced. Having established the contextual factors affecting possible political change, the
importance of the continued performance of the government and the personal integrity of future
leaders will be introduced as the last key factor determining whether political change will take
place, what direction any changes will take and how far changes might go. Finally, with this all
important factor in mind, some attention will be given to the UAE’s future leadership prospects
or the apparent queue of leaders in the UAE today.
The Western coastline of the Arabian Gulf is among the last regions in the world
dominated by traditional monarchies which, for my purposes, are governments in which the
monarch is still the center of political power. It is also richer in hydrocarbons than any other
place on earth. Moreover, largely due to the immense concentration of hydrocarbons, the
monarchies in this area are prosperous, stable, pacific and in some ways more liberal than many
of their democratic neighbors.
Hydrocarbon wealth, however, is neither the beginning nor the end of the story of the
successes of the members of the Gulf Cooperation Council. There have been numerous examples
2

of countries rich in natural resources that remained mired in poverty, that descended into some of
the bloodiest civil wars and that saw incompetent government succeed incompetent government
for decades. The GCC countries, however, have long established, stable governments that have
overseen decades of vast socioeconomic development, culminating in diversification away from
the primary sector foundation of the economy. In contrast to many resource-rich states, the
countries of the Gulf have distributed wealth and benefits widely throughout the citizen base, to
the extent that, in many countries, one may scarcely find an impoverished citizen.
Among these countries, the United Arab Emirates stands as a prime example of these
trends. The UAE is among the wealthiest, the least democratic, and the most liberal of the GCC
countries, has been extremely successful in the early stages of diversification, has one of the
smallest populations and has the largest proportion of foreign workers. It has also been among
the most stable and has probably had the best leadership. The UAE exemplifies just about all the
factors operant in and unique to the GCC countries and for that reason, the UAE makes an ideal
case study for trends in the wider region. 1
In the late 18
th
and early 19
th
centuries, there was a great deal of competition between
the Qasimi and Bani Yas tribal confederations – present day rulers of Sharjah and Ras al
Khaimah on the one hand, and Abu Dhabi and Dubai on the other – over dominance of the area
now known as the UAE. The Qasimi were a naval power, even controlling areas of modern-day
Iran, while the Bani Yas were a land power. Initially, the Qasimi confederation, backed by the
1 Nonneman, Gerd. “Political Reform in the gulf Monarchies: From Liberalization to Democratization? A
Comparative Perspective.” In Reform in the Middle East Oil Monarchies. Ed. Anoushiravan Ehteshami and Steven
Wright 3-45. Reading: Ithaca Press, 2008. The GCC countries as a group are wealthy, undemocratic, liberal relative
to regional norms or standards, have tiny populations, and are necessarily extremely dependant on expatriate labor.
3-5, 13-18.
3

Saudis, was marginally stronger than the Omani-backed Bani Yas. However, the Qasimi’s trade
activities – and allegedly piracy – in the Arab Gulf were seen by the British as a threat to their
own trade supremacy in the Indian and Persian markets and the British eventually assaulted
them, signing treaties with the tribal leaders in power at the time.2
These treaties forbid
aggression on the seas, froze to some extent what had been a fluid system of shifting alliances
and dominance, and eventually limited foreign policy and trade.3
As the treaties did not limit
land-based aggression, moreover, they gave the Bani Yas the upper hand.4
The history of the trucial states in the 19
th
and early 20
th
centuries is important to an
understanding of the development of the UAE as a state. Previously, the economy in the region
was characterized by pastoral agriculture and the growing of dates in the interior and some
fishing, pearling and trading on the coasts. There was some seasonal migration, with groups
moving to the coasts during the agricultural off season. 5
In the 19
th
century, however, the
establishment of settlements like Abu Dhabi and Dubai, and their subsequent primacy over the
interior, signaled a shift in the local economy. With access to European markets, pearling became
2 Davidson, Christopher M. Abu Dhabi: Oil and Beyond. New York: Columbia University Press. 7-24.
Davidson, Christopher M. 2008. Dubai: The Vulnerability of Success. New York: Columbia University
Press. 17, 18.
Kéchichian, Joseph A. Power and Succession in Arab Monarchies: A Reference Guide. Boulder: Lynne
Rienner Publishers. 290-293.
3 Rugh, Andrea B. The Political Culture of Leadership in the United Arab Emirates. New York: Palgrave
MacMillan. 20.
Davidson, Dubai, 17-18.
4 Davidson, Abu Dhabi, 11.
5 Rugh, Political Culture, 6.
Davidson, Christopher M. The United Arab Emirates: A Study in Survival. Boulder: Lynne Reinne
Publishers. 6.
Davidson, Abu Dhabi, 6-7.
4

increasingly profitable, to the point of dominating local economies.6
Early on, then, the economy
of the trucial states was extractive and resource-based. Significantly, the specifics of this earlier
resource dependence were quite different from oil. Pearling was a diffuse activity, requiring
some capital outlay, but little technological input – much like the alluvial diamond mines in
Sierra Leone. In fact, the trade exclusivity treaties signed with Britain effectively prevented the
diffusion of more efficient pearling technologies when they became available at the turn of the
century, allowing local producers to be out-competed by cultured pearls from East Asia, and
eventually contributing to the crash of the local economy.7
Significantly, in this era, the Trucial Coast suffered from many of the political and
developmental deficiencies related to their resource wealth. The internal politics of the various
states were unstable and violent.8
The wider region was conflict ridden, with shifting alliances
and rulers jockeying for control over pearl beds and interior tribes.9
The area was
developmentally stunted. As late as the 1960’s Abu Dhabi was still a collection of reed huts with
no paved roads.10
Income from pearling and, later, landing rights agreements and oil concessions,
was poorly distributed and in the 1950’s there were popular movements in Dubai – which was
probably the least underdeveloped of the future emirates, due to its free trade policies.11
Declines
6 Rugh, Political Culture, 7-8.
Davidson, United Arab Emirates, 6.
8 Davidson, Abu Dhabi, 26, 28-30.
9 Ibid 4-24.
Davidson, United Arab Emirates, 15-16.
11 Davidson, Dubai, 67-98. Dubai, early on, offered extremely low taxes, free land and other incentives to
lure disgruntled merchants and smugglers from Iran/Persia and from other emirates along the Arabian Gulf coast.
There were several waves of Iranian and Indian merchant influxes as a result.
5

in pearl revenues – which began in the late 19
th
century and reached desperate levels during the
great depression and the World Wars – wrecked Abu Dhabi’s economy.12
When rulers could not
pay allowances to family members and tribal leaders, important tribes relocated to other emirates
or gave their allegiance to rival groups like the Saudis, territory was lost or became contested, the
ruling family lost prestige and internal challenges emerged.13
Dubai, which had diversified,
becoming a center for trade, fared far better in the early and middle 20
th
century.14
The British policy toward the trucial states from the 19
th
to the mid 20
th
centuries was
one of indirect control. Essentially, they left existing power structures in place and focused their
energies on maintaining trade exclusivity, control over foreign policy and regional stability, in
order to make money and encourage prosperity, without investing too much in the region.15
After
WWII, however, even this limited involvement in the affairs of other countries grew unpopular
in British politics. Nevertheless, the British mission continued in the Gulf until 1971. Though, in
some ways, the groundwork for withdrawal was laid in the 1950’s and 1960’s, when Britain
began loosening the requirements for trade exclusivity and allowing the various emirates to sign
oil concessions with other states, the British announcement, in 1967 of a four-year deadline for
withdrawal from the region came as a shock and was unpopular along the trucial coast.16
Sheikh
13 Ibid, 13, 17, 27.
14 Davidson, Abu Dhabi, 25, 33, 37.
15 Davidson, Dubai, 17-22.
16 Davidson, Abu Dhabi, 54-56.
6

Zayed of Abu Dhabi, in fact, offered to pay the British to stay, as they were an important
stabilizing force in the region and were crucial in protecting the region from Iran and the
Saudis.17
Nevertheless, with the British withdrawal looming, Sheikh Zayed and Sheikh Rashid of
Dubai rushed to throw together a long discussed union of the nine trucial states – at this time,
discussions included Qatar and Bahrain. For a number of reasons – including concerns about
Saudi Arabia and Iran – Qatar, Bahrain and Ras al-Khaimah declined to join the union.18
The United Arab Emirates was formed in 1971 when the emirates of Abu Dhabi, Dubai,
Sharjah, Ajman, umm al-Qawain, and Fujairah agreed to a political union headed by a Supreme
Council presided over by Sheikh Zayed of Abu Dhabi and composed of the rulers of the six
emirates. When Ras al-Khaimah joined in 1972, this was expanded to seven members.19
Ras al-
Khaimah and Dubai, however, have been wary of a union completely dominated by Abu Dhabi
and their huge oil revenues and the UAE was established with a loose provisional constitution
that essentially gave each emirate control over their own economy, defense, and important
government functions like health and education.20
This flexibility has been useful in some
respects, as it has allowed for greater innovation economically, but it has caused a number of
very serious, even existential problems as well.
The federal government of the UAE is composed of executive, legislative and
consultative branches. The executive, the Supreme Council of Rulers has the ability to rule by
17 Ibid, 60.
18 Ibid. This whole situation is far too complicated to discuss within the scope of this paper, but the fear of
eventual dominance by Abu Dhabi was among the concerns. Davidson explains some of the concerns on pages 58-
61.
19 Ibid, 60.
20 Ibid, 61-62.
7

decree and is the ultimate political power in the country. Most policies are made, however, in the
Council of Ministers whose membership has been reapportioned several times, but currently has
20 ministers and 5 ministers of state, appointed by the Supreme Council and pulling members
from each emirate in rough proportion to their political power. Each minister heads a branch of
the federal bureaucracy, in addition to their legislative function. Similarly, the Federal National
Council, a consultative body with 40 members, is apportioned according to the relative political
importance of the emirate, in accordance with the constitution, with Abu Dhabi and Dubai each
supplying 8 members, Sharjah and Ras al-Khaimah each supplying 6 and the other three
supplying 4 members each. The FNC has little real political power as it is not empowered to
draft or pass legislation. Its role, rather, is to advise the COM, and its advice is of questionable
political relevance. Generally, recommendations conform to the pre-existing concerns of the
COM and these have been ignored in some instances if they differed significantly from the COM
position.21
In practice, Abu Dhabi maintains more or less tight control over the federal government,
as the ruler of Abu Dhabi is perpetually elected head of the SCR and is more or less in charge of
the composition of the COM – whose membership heavily favors Abu Dhabi, with seven
ministers coming from the Abu Dhabi ruling family, thee additional important ministerial
positions coming from Abu Dhabi, and at least two members from other emirates believed to be
unofficially in the Abu Dhabi camp. In addition, the federal budget is drawn almost entirely from
Abu Dhabi’s oil revenues, especially as the other emirates have become net importers of oil in
21 Davidson, United Arab Emirates, 188-194.
Davidson, Abu Dhabi, 126-128
Kéchichian, Power and Succession, 284-286.
8

the last two decades.22
Parallel to the federal government are the governments of each of the emirates, which
largely mimic the structure of the federal apparatuses. Using Abu Dhabi as an example, the
government is led by a hereditary ruler, who has ultimate decision-making authority and the
ability to rule by decree, but most decisions are made in a legislative body, in Abu Dhabi, this is
the AD Executive Council, a group of 19 ministers appointed by the ruler, each heading a branch
of the bureaucracy. A National Consultative Council also exists to advise the Abu Dhabi
Executive Council. The NCC is composed of 40-55 members appointed by the ruler, mostly from
non-senior sections of the Bani Yas and other well-respected tribes. The Executive Council and
NCC perform largely the same functions at the emirate level as the COM and FNC in the federal
government.23
The structure of Dubai’s government is similar to this model as well, except for
the absence of a consultative council in Dubai.24
In addition to formal government structures are a mix of traditional and modern forms of
direct political participation which bolster support for the existing government structures and
potentially provide a means of satisfying or tempering future pressure for democratization.
Specifically, the various sheikhs of the ruling families and also the sheikhs placed in charge of
outlying cities within emirates, like al-‘Ain, have individual majalis in which private citizens
have direct access to members of the ruling families.25
Dubai is also experimenting with e-
22 Davidson, Christopher M., "The United Arab Emirates: Prospects for Political Reform." Brown Journal of
World Affairs 15, no. 2 (Spring2009 2009): 117-127. Business Source Complete, EBSCOhost (accessed December 9,
2009). 121.
Davidson, Prospects, 119-120
24 Davidson, Dubai, 158-159
25 Ibid.
9

governance, allowing for greater accountability and interaction between government and
governed. A number of prominent UAE sheikhs even have their own facebook pages, allowing
for instant, effective communication from the government to its citizens and the world and
allowing for instant, anonymous feedback.26
These types of direct communication between the
ruling families and the locals they govern bolsters support to a great extent and could
conceivably absorb any desire for electoral politics.
One problem caused by the relative disunity of the UAE early on was an unwillingness to
cooperate on foreign policy. The UAE, for instance, is a member of OPEC but, as mentioned
earlier, individual emirates control their own hydrocarbon industries, leading to difficulties in
meeting OPEC production quotas. Unable to rein in production in Dubai and Sharjah, the UAE
consistently overproduced – causing oil to be undervalued – until the reserves in these emirates
began to decline.27
This caused political tension with Iraq and other exporting nations.28
Further
enflaming political tensions, during the Cold War, with the other seven emirates supporting the
West, Ras al-Khaimah sought Soviet support as a potential breakaway state. Later, during the
Iraq-Iran war, RAK offered to allow Iraq to establish airbases on their territory in return for
independent recognition. The other six emirates, meanwhile, were split, half supporting Iraq and
half supporting Iran. This led to a great deal of strain on the federal government from the
embarrassment of not being able to control its own foreign policy and from pressure from the
Arab world to toe the line. Likewise, support for Desert Storm and the invasion of Afghanistan
26 Davidson, Abu Dhabi, 154
27 Davidson, Dubai, 228.
28 Ibid, 229. As evidence of the seriousness of this issue, Iraq eventually invaded Kuwait, in part due to their
overproduction.
10

was mixed.29
In addition to the foreign policy implications of disunity, has been the duplication
of institutions at the federal and emirate levels, wasting resources and causing legislative
inefficiencies, especially delays in legislation as, often, when federal legislation is passed, there
must subsequently be enabling legislation at the emirate level before it may take effect. To
prevent this, there is an otherwise unnecessary amount of informal consultation between the
parallel institutions as a bill is being drafted, which also extends the amount of time it takes to
pass legislation.
Attempts at centralization have also led to instability in the past, as Dubai, RAK and
UAQ have been particularly wary of being dominated by Abu Dhabi. When Sheikh Zayed
attempted to centralize the government and improve revenue sharing in 1976, for example,
Dubai threatened secession. Likewise, when Abu Dhabi’s military was merged with the national
military in 1978, Dubai, Ras al-Khaimah and Umm al-Qawain seceded. Again, later in 1978,
when there was a push, independent of Sheikh Zayed, for greater federal unity and a stronger
FNC, including a signed petition addressed to the SCR and popular demonstrations, the same
three emirates pulled out of the union.30
Progress has been made, however, as Dubai allowed
their armed forces to merge with the federal army in 1996 and the provisional constitution was
made permanent. In addition, a recent survey shows that a majority of UAE nationals from each
of the seven emirates now self-identify as Emirati, rather than giving an emirate-specific
response – everywhere but Dubai.31
Disunity, however, has also caused some hiccups in the economic development of the
30 Ibid, Abu Dhabi, 61-68.
11

country. Specifically, there has been a problem with the duplication of investments by the various
emirates and by the individual emirates and the federal government. Despite the small
geographical and demographic size of the UAE and the existence of large international airports
in Dubai, Abu Dhabi and Sharjah, for example, Ras al-Khaimah, Al-Ayn and Fujairah built their
own international airports. This has also been a problem with redundant factories, airlines, and
investments in infrastructure in general.32
Furthermore, the lack of consistent legal and regulatory
practice across the various emirates makes foreign investment more complicated and less
appealing and individual emirates’ financial dealings of have tarnished the reputation of the UAE
as a whole. There is no centralized transportation authority, either, resulting in inefficient public
transportation between emirates, to the point that until the 1990’s there was still no road
connecting Abu Dhabi and Dubai and, to this day, buses will run from one emirate to the other,
then turn around and return empty.33
Nevertheless, when oil revenues began truly flooding the country in the early 1970’s, Abu
Dhabi and Dubai had dynamic leaders in Sheikh Zayed and Sheikh Rashid, both of whom had
the benefit of learning from past rulers’ mistakes and limited successes during and after the pearl
boom. They and their successors seem to have put this experience to good use. From the outset,
the leadership of the UAE invested heavily in physical and human infrastructure well in advance
of demand, building state-of-the-art airports and seaports, a national school system, universities,
roads, bridges, factories, hospitals and housing.34
They have distributed benefits to citizens
through free housing and land, free healthcare, free education through university, scholarships to
32 Davidson, Dubai, 225.
33 Ibid, 224.
34 Ibid, 106-134.
12

study abroad, government jobs and direct transfer payments.35
They have hedged against a
decline in oil revenues through sovereign wealth funds making long-term investments overseas,
largely in developed countries.36
They have sought to enhance the competitiveness and size of
fledgling industries by attracting skilled laborers from overpopulated countries and by creating
strategic partnerships with well-established foreign firms, essentially purchasing expertise in
order to accelerate development, diversification and modernization.37
What has ultimately
emerged from this process is one of the wealthiest countries in the world, with a built-in upper
class of citizens growing rich off the export of oil and the labor of foreign workers – who still
make better wages and enjoy better benefits than are available in their home countries.
Put another way, oil wealth allows the government to operate as a distributor of benefits
rather than an extractor and redistributor of resources which simultaneously creates an
environment in which, with nothing tangible invested in government, citizens do not feel entitled
to input as to how government is run or where resources are spent, and citizens are grateful for
the benefits the government provides. In addition, the relationship of a government doling out
benefits to its citizens from a vast, but finite, pool of resources creates a situation in which the
need to restrict citizenship to a select few, an in-group, is fairly obvious as a means of
maximizing the benefits to current citizens.38
For example, healthcare is completely free for all nationals, including free prescriptions;
35 Ibid, 148-151.
36 Ibid, 103-105.
38 Davidson, United Arab Emirates, 74. Frauke Heard-Bey is quoted as saying: “Every UAE national…by
virtue of not being a part of the non-national majority, has a vested interest in the continued integrity of the
traditional society with tribal shaykhs and rulers at its apex. Being part of this structure is the basic reason why a
national family is able today to lead a life in which poverty has been left behind.”
13

education, from the earliest grades through post-graduate studies is completely free, including
textbooks and new laptops for college students; free housing is regularly provided to lower-
income nationals, often large villas. Through the 1990’s public sector employment, with a good
salary and benefits that would be unthinkable for most Americans, was all but assured for
nationals – even today, employment in a government job or one of the parastatals is readily
available. Emirati entrepreneurs, in addition, are given soft loans to start businesses – even in the
private sector, moreover, preferential treatment is shown to Emiratis seeking loans.39
They are
also eligible to receive free plots of land for commercial buildings and farms – some are even
handed the keys to fully equipped farms. Moreover, all foreign companies operating in the
Emirates are required to have an Emirati business partner who is to control no less than 51% of
the capital.40
Again, the continuation of this system of distribution is predicated on maintaining a
small, distinct national population, separate from the millions of immigrant workers.41
Emiratis
would be unlikely, then, to protest too loudly over their disenfranchisement even if they were
unsatisfied, lest their calls for representation and political rights spread to the vast immigrant
population and dilute the citizens’ package of benefits by expanding the citizen pool.
These revenues also fund development projects, creating high paying jobs that
simultaneously create an all-but-inexhaustible supply of foreign workers, allowing the state to
simply deport and replace workers that demonstrate politically, and placate workers with benefits
they could not hope for in their home countries. These development projects, of course, create
more income for nationals as well and enhance the image of effective government, further
39 Davidson, United Arab Emirates, 73-77.
14

building support within the citizen base. The huge government revenues also allow for a number
of high-powered bureaucratic positions in both the distributive apparatus and in the government
and quasi-government apparatuses that control the outlay of revenue for development and
overseas investment. These positions are used effectively to placate potential political rivals and
cement relationships with allies.42
Finally, the importance of the region to the global economy as
a source of crude oil all but guarantees superpower support against any aggression from without
or within.
Especially important is that the government manages to finance the benefits mentioned
above, the investments in infrastructure, modernization, and diversification, and its basic
functions, and salaries largely without resorting to taxation – except for parking meters in Dubai.
The government’s budget is drawn from oil revenues. This fact has a huge impact on the
perception of government. Were the government to make an ill-advised investment, for example,
it would not be perceived as having wasted citizens’ money. When the government distributes
money, houses and the like to less well-off Emiratis or gives generous foreign aid, the
government is not seen as wasteful or as indulging in ill-advised social welfare practices with
money taken from richer Emiratis. Rather, it is seen as an act of generosity. Government
spending is seen differently than in many countries, as it is perceived to be spending its own
money. For this reason, it is not seen as unjust or arbitrary for the government to spend without
popular consultation through elections. Consultation is not necessary when spending one's own
money. Of course, this system of spending and distributing without taxation is dependent on
government access to large revenue streams independent of its citizens’ productivity. One would
expect, then, that the eventual decline in oil production would fundamentally change the role of
15

the government in society, possibly to the extent that greater popular political participation
becomes desirable.
Since its inception, however, the government of the UAE has banked a number of
resources that may allow it to survive the sunset of oil production without significant structural
change. One of the more important resources the UAE ruling establishment has is its record of
astute governance. The rulers have literally transformed the country from one with barasti reed
houses and no schools, to one with the largest skyscraper in the world, modern roads, ports and
airports, one of the highest standards of living in the world and good health and educational
systems in less than fifty years, the majority of the work being done since the inception of the
federation and the onset of otherworldly oil revenues in the early 1970’s.43
Moreover, these
accomplishments have come at a time when many resource-rich countries have utterly failed in
their development efforts.
The country has not only developed economically and socially, however, but has also
struck a balance many Emiratis and outside observers are quite comfortable with between
modernization and globalization on the one hand and cultural preservation on the other. The
UAE has maintained a distinctly Muslim and Arab culture, more specifically a Gulf culture,
despite the influx of foreign workers and tourists, without resorting to extreme government
imposition of religion and cultural values as in Saudi Arabia.
On the same note, to counteract the influence of the constant barrage of foreign images
Emiratis consume through satellite television, the internet, movies, and advertising – and to
promote cultural tourism – the UAE government and the governments of each of the emirates
43 Davidson, Abu Dhabi, 49-54. This sentiment is echoed throughout Davidson’s work and in most of my
other sources.
16

have tried to promote events emphasizing the cultural heritage of the region before oil
exploration. They have built museums, staged poetry recitations, promoted camel racing, held
falcon hunting demonstrations and, in general, have tried to enhance the awareness of the
cultural legacy of the country. In addition, the government has been keen to promote Islam by
building mosques, both locally and internationally, paying the salaries of the ulema and inviting
Islamic scholars to lecture on the most current debates in Islam. Moreover, the government has
also donated land for the building of Christian churches and has been intent on promoting
interfaith dialog. Overall, there has been an official emphasis on promoting the cultural,
historical and religious legacy of the region in such a way as to enhance the legitimacy of the
rulers and the quality of the citizens. 44
The most impressive of the resources, however, are the immense sovereign wealth funds
amassed by individual emirates – mostly Abu Dhabi and Dubai. Abu Dhabi in particular has a
number of sovereign wealth funds, the largest of which, the Abu Dhabi Investment Authority, has
close to $1 trillion in assets.45
Dubai also has sovereign wealth funds in excess of $100 billion,
according to Davidson.46
Abu Dhabi’s wealth funds, moreover, have been growing by an average
of 10% per year, well over global inflation. Given the small population of the UAE and the even
smaller citizen population – the UAE has less than 5 million people, over 80% of which are
Lawson, Fred H and Hasan M. al-Naboodah. “Heritage and Cultural Nationalism in the United Arab
Emirates.” In Popular Culture and Political Identity in the Arab Gulf States, ed. Alanoud Alsharekh and Robert
Springborg, 15-30. London: London Middle East Institute SOAS, 2008.
45
Davidson,
Abu Dhabi, 73-76. The emirate also has a number of smaller, more specialized funds. The
Abu Dhabi Investment Company: $15 billion, International Petroleum Investment Company: $14 billion and
Mubadala: $10 billion – which together bring the value of AD’s sovereign wealth investments to well over $1
trillion.
46 Ibid, 73.
17

immigrants and non-citizens – and given that the emirate is believed to have enough oil to
continue production at current levels for the next 90 years, the continued growth of these funds
could eventually provide a revenue stream large enough to replace oil’s contributions to the
federal government and the government of Abu Dhabi, though this possibility is entirely
dependent on the success of the investments relative to inflation and population growth.i
This
revenue stream is similar to oil, moreover, in that it is removed from the productivity of the
citizens and is entirely controlled by the government and the ruling families. The wealth stored in
these investment funds could ultimately mean the long-term sustainability of the entire system of
distributive government in the UAE, making the decline in oil revenues a non-factor, socially,
economically and politically – though it is tough to predict the success of such large investments,
global inflation and population growth fifty-plus years in advance.
Nevertheless, the economic and social changes that will accompany the UAE’s transition
from an economy based on the export of oil to a more diverse economy are likely to change the
government’s role in society. As the economic activity of locals broadens to embrace more
entrepreneurship and as state-owned enterprises and parastatals are privatized, for example, the
government will have to expand its regulatory role in ways that might be unpopular to portions
of the business community. Likewise, the society itself is changing in the UAE, due to increasing
contact with and influence by foreigners. To date, the government has done an admirable job in
managing these interactions, but the potential is there for some of the negative elements in rich,
Western countries to penetrate UAE society. If a significant drug problem developed, for
example, how would this affect the government’s interactions with its citizens? Moreover, minus
explicitly negative developments, there is the potential for a sizable generation gap as well.47
If a
47 Rahman, Nadia. “Place and Space in the Memory of United Arab Emirates Elders.” In Popular Culture
and Political Identity in the Arab Gulf States, ed. Alanoud Alsharekh and Robert Springborg, London: London
18

generation of Emiratis becomes truly Westernized, it could pose problems for the government in
that it would need to satisfy the older generations – who would likely be upset at the cultural
change and would want the government to take action – without alienating the younger cohort.
Likewise, the diversification strategies themselves might lead to a loss of legitimacy
resources. As Davidson argues, some of the economic strategies embraced by Dubai have the
potential to upset the more intangible legitimacy resources stockpiled by the government, namely
the “patrimonial, cultural and religious resources.” Specifically, many of the developments in
Dubai are aimed at catering to Western tastes. There are prominent advertisements featuring half-
naked women, foreign ownership of property is growing, and religious rules are being enforced
less frequently, potentially alienating more conservative Emiratis.48
In addition, many of the
strategies pursued by Dubai have been risky in an economic sense, exposing the government to
potentially embarrassing failures, illustrated by the highly publicized default of one of Dubai’s
parastatals on a loan.49
Incidents like this threaten the overall image of Dubai as a safe
investment and, therefore, the development paradigm of Dubai, which is highly dependent on
FDI – though, given the current economic situation, it is unlikely to cause long-term damage.
More importantly, however, these situations also make the government look less competent and
Middle East Institute SOAS, 2008. 31-39. This is already an issue to some extent, but could be much worse. Many
of the sources mention this as a potential issue.
Mourtada-Sabbah, Nada et al., “Media as Social Matrix in the United Arab Emirates.” In Popular Culture
and Political Identity in the Arab Gulf States, ed. Alanoud Alsharekh and Robert Springborg, 121-142. London:
London Middle East Institute SOAS, 2008.
48 Davidson, Christopher M., "THE EMIRATES OF ABU DHABI AND DUBAI: CONTRASTING ROLES
IN THE INTERNATIONAL SYSTEM." Asian Affairs 38, no. 1 (March 2007): 33-48. Academic Search Elite,
EBSCOhost (accessed December 9, 2009).
Davidson, Christopher M., “The Impact of Economic Reform on Dubai.” In Reform in the Middle East Oil
Monarchies. Ed. Anoushiravan Ehteshami and Steven Wright 153-180. Reading: Ithaca Press, 2008.
49 Davidson, Christopher M., “Dubai: Foreclosure of a dream.” Middle East Report, vol. 38 no. 2 (summer
2009): 8-13. (accessed December 08, 2009). Davidson is speaking more generally about the damage caused to DXB
by the credit crisis. Also, DXB has since been bailed out by AD.
19

have the potential to erode the most important of the UAE’s legitimacy resources. Importantly,
Dubai has pursued a more aggressive development plan than Abu Dhabi because Dubai has
largely run out of oil – it is now a net importer. Though Abu Dhabi has another 90 years to
prepare for the end of its oil boom, it is entirely possible that this emirate, and the country as a
whole, will be forced to pursue some of these same strategies as oil revenues decline. The loss of
oil revenues, then, could expose the UAE leadership to greater criticism as they seek to find
alternative bases for the economy.
At the same time, given the myriad problems associated with disunity between the
emirates discussed earlier – including duplication of investments, uneven economic
developments between the emirates, the overlapping of federal and emirate institutions and the
delays in developing inter-emirate infrastructure – and the importance of diversification,
continued development and continued good government, further centralization is both absolutely
necessary and altogether likely for the purposes of unified economic planning and better
international relations. Centralization, however, could pose problems in the current UAE
political system. As it stands, Abu Dhabi dominates the federal government of the UAE.
Importantly, however, the other emirates still have a great deal of input, at least nominally, in the
federal government. The rulers of Dubai, Sharjah, Umm al-Quwain, Ras al-Khaimah, Fujairah
and Ajman still control much of the day-to-day governance in their respective emirates. Their
ruling families, while not democratically elected, are still seen as representatives of the interests
of the citizens and they are still fairly accessible to their citizens through majalis and, in some
emirates, e-governance.50
In most cases, the ruling tribal federation is the largest tribe in the
emirate. There is a feeling, then, that citizens have some input in governance. If, however, the
50 Davidson, United Arab Emirates, 198-199
20

government of the UAE were to be centralized, there is the potential for groups outside of Abu
Dhabi, especially the groups currently in power in these emirates, to feel disenfranchised. This is
especially likely in Dubai, which has traditionally made liberal use of the wide latitude granted
the Al-Maktum family by the current federal arrangement, especially in economic matters – to
the point of passing emirate-level legislation directly in violation of federal statutes. A potential
remedy to this situation might be limited democratic reforms – though, again, exemplary
performance by a newly centralized UAE government, the extension of high level bureaucratic
positions and the extension of generous benefits to citizens from the other emirates might well be
enough to satisfy local power groups.
Overall, the prospects for the maintenance of the status quo hinge on the performance of
government. The resources are there for the government to finance itself indefinitely, given
sound decision-making, and there is no reason why the government should not be able to
maintain a small local population quite well. At the same time, the potential for movement
toward true democratization is there, especially post-oil, if the ruling families become corrupt or
incompetent. The last step, then, in examining the potential for democratization in the UAE post
oil is to examine the prospects for the future leadership of the state.
The presidency of the UAE was filled, from its inception in 1972 until 2004, by Sheikh
Zayed bin Sultan Al-Nahyan of Abu Dhabi. Upon his death, the UAE experienced its first
succession and Sheikh Zayed’s eldest son, Sheikh Khalifa bin Zayed Al-Nahyan ascended to the
position of ruler of Abu Dhabi and president of the UAE. The process of succession in the UAE
is hereditary but has not always conformed to primogeniture.51
Rather, though succession is
51 Davidson, Dubai, 144-147. Dubai did, somewhat, for a long time, until the succession of Sheikh
Muhammad. A return to primogeniture does not appear likely in Dubai.
21

restricted to members of the senior branch of the ruling family, usually a brother or son of the
previous ruler, the succession is determined by who is perceived to be the best candidate for the
job based on support within the ruling family, the broader ruling tribal confederation and
prominent non-ruling tribes, ii
experience in senior bureaucratic positions, charisma, education
and other factors. In theory, this method of succession all but ensures the succession of a
competent ruler – especially so, given that most of the UAE’s ruling Sheikhs have had multiple
wives and a number of sons and brothers to choose from. Unfortunately, the intensity of the
competition also led to bloody succession disputes until the 1930’s. However, the recent history
of the UAE, especially the most recent succession in Abu Dhabi, has introduced a number of new
elements to the succession process that further enhance the stability, legitimacy and competence
of the ruling families, especially those of Abu Dhabi and Dubai.
Foremost among developments enhancing the effectiveness of the UAE’s ruling elite has
been the blossoming of the bureaucratic structures in the country and individual emirates since
the 1970’s, as the country has modernized and distributed oil revenues. These bureaucracies are
simultaneously vehicles through which potential leaders gain experience in governance and
through which rivals to power are incorporated into the decision-making structure of the
government.52
Positions on the board of the gargantuan sovereign wealth funds, parastatals like
Mubadala or any of a number of ministries, then, prepare young members of the ruling line to
lead the country, they enhance the credentials and the legitimacy of potential heirs to the position
of ruler and they provide a means of placating candidates who have been passed over by
allowing them alternative means of influence and prestige. In addition, the position of crown
52 Ibid, 138-144; 158-163.
22

prince was introduced in the 1970’s in Abu Dhabi and Dubai, allowing the most prominent
candidate for succession to handle many of the day-to-day responsibilities of ruling, build
popular support and distance themselves from their brothers, half-brothers, nephews and uncles
in the pursuit of eventual succession.53
This led to fairly routine successions in both Abu Dhabi
and Dubai in the 1990’s despite the overwhelming stature of the rulers being replaced – Sheikh
Zayed of Abu Dhabi and Sheikh Rashid of Dubai were legendary leaders in the region. The
successors, Sheikh Khalifa and Sheikh Maktoum bin Rashid Al-Maktoum, already had decades
of governing experience – Sheikh Khalifa, for example, had essentially been in control of Abu
Dhabi’s military, oil policies, sovereign wealth funds, and domestic and international wealth
distribution mechanisms, in addition to important federal positions since the early 1970’s – and
have proven themselves as capable rulers in their own right since their succession.54
When Sheikh Khalifa succeeded his father, a sort of compromise was made with other
important members of the bani Zayed.iii
Sheikh Muhammad was named crown prince, putting
him in line for succession, and a number of Sheikh Khalifa’s half-brothers were placed in
prominent bureaucratic positions. A very similar arrangement was made in Dubai when Sheikh
Maktoum succeeded his father in 1990 and he has since been succeeded by his crown prince and
younger brother.55
Sheikh Muhammad Al-Nahyan has since built an impressive portfolio of
53 Ibid, 138-144
54 Davidson, Abu Dhabi, 61-68, 96-102. Sheikh Khalifa had been the Wali of Al-Ayn from 1966-1967, the
leader of the Abu Dhabi Defence Force from 1969 - 1978, the deputy supreme commander of the Union Defence
Force from 1978 to 1996, the UAE Armed Forces from 1996-2004, the Prime Minister, Minister of Defense, and
Minister of Finance from 1971-1973, Deputy Prime Minister from 1973-1977, Crown Prince since 1971, chairman
of the ADIA, the Supreme Petroleum Council and the Abu Dhabi Fund for Development and the directorship of the
Abu Dhabi Department for Social Services and Commercial Buildings.
55 Davidson, Dubai, 144-145. Sheikh Maktoum has since been succeeded by his crown prince, his half-
brother Muhammad bin Rashid Al-Maktoum, who had also built an impressive portfolio of accomplishments and
who has also been a very effective ruler, notwithstanding the fallout from the recent economic crisis.
23

accomplishments and key positions – he is credited with playing a major role in the
modernization of the UAE armed forces and in supervising an important natural-gas project with
Qatar; he was the commander-in-chief, third in command, of the UDF and UAE armed forces
from 1993-2004, has been the Deputy Supreme Commander of the UAE armed forces since
2004, has been the chairman of the Abu Dhabi Executive council since 2004, is the chairman of
the Mubadala Development Corporation and is seen as the leader of Abu Dhabi’s ‘New
Economy.’ In addition, he has the support five full-brothers, all of whom have influential
positions in either the emirate-level or federal government and in the economy.iv
While Sheikh
Muhammad is seemingly secure in his succession of his older half-brother, it is extremely
unclear who he would name crown prince, as his own sons are still young, he would seem
unlikely to name one of Khalifa’s sons as his successor, and his many younger brothers are
growing increasingly influential. Nevertheless, there are a number of experienced and capable
candidates in the ruling line already and it is likely that whoever emerges, for at least the next
couple successions, will continue the trend of competent rulership.
Having discussed – albeit briefly – the history of the region, the structure of the UAE
government, the importance of oil income and the potential impact of its loss, the other resources
the UAE can draw on to mitigate the impact of the loss of oil revenues, and the importance of
and prospects for continued performance of the government of the UAE at a high level, the
position of this paper is that movement toward democratization and expanded citizenship will
become more likely when oil revenues decline as a key source of strength for the UAE
government. This process, however, is anything but simple or predictable at this time. Rather, the
potential for democratic change or expanded citizenship depends on the intersection of an almost
infinite number of interrelated factors. The continued growth of the of the gargantuan sovereign
24

wealth funds controlled by the government of Abu Dhabi relative to inflation and the growth in
the immigrant and citizen population of the UAE is a potentially important factor, as is the
decision on how best to use these funds. The political context in the broader international
community – though beyond the scope of this paper – could be vitally important. Any move to
centralize the government of the UAE or the secession of a member could have a tremendous
impact on the development of the government. The needs of the constantly evolving economy as
it diversifies away from oil will be a key consideration. Unrest in the large immigrant population
could spur, retard or develop as a result of a democratic movement – though, unfortunately, space
did not allow for a full discussion of this possibility. In the end, the continued success of the
rulers of the UAE is all-important and, while the political system seems to promote the
succession of competent rulers, the competence of future leaders is never something that can be
predicted with any certainty.
This paper, then, is limited in a number of important ways. The most obvious limitation is
that this is a discussion approximately ninety years in advance of a problem. It is difficult enough
to predict the internal and external political and economic context discuss how a foreseen
problem might develop a year or five years from now, with all the potential for changes in the
political and economic context, both internally and externally in that span. To predict the context
ninety years from now is almost beyond the realm of speculation. Likewise, the limitation of
space is fairly obvious. A twenty-five page paper cannot hope to fully discuss all the relevant
economic, social and political factors affecting something so complex as a change in the basis of
an economy leading to a change in the political system. Even with the focus narrowed to
primarily domestic factors, there was simply too much ground to be covered. While this paper is
anything but definitive and is probably grossly premature, however, it does serve the purpose of
25

defining what some of the issues affecting the evolution of the UAE political system might be
and in doing so, it provides a rhetorical framework through which future developments in the
UAE might be examined and sets the table for more in-depth examinations into the issue in the
future.
26

i For example, if AD were to run out of oil today, assuming a 10% return and a fairly high global inflation rate of
5%, AD could afford to distribute almost $10,000 per UAE resident or $50,000 per citizen of the UAE or $250,000 for every
citizen of AD, in theory forever. Taxation would become necessary, if AD wished to bankroll the UAE government, but
would still be limited. With 90 years to grow these funds, good management and controlled population growth could
easily be expected to produce a pool of resources capable of sustaining the current system of government largesse
indefinitely (these funds, at current growth rates, should double in real value every 20 years).
ii In addition to personal characteristics, this can be affected greatly by one’s wife or wives, one’s birth mother,
one’s birth order, the influence of one’s maternal brothers compared to one’s half-brothers, and a number of other
familial factors.
iii Sheikh Zayed’s sons are collectively referred to as the bani Zayed.
iv The sources looked at for this paper almost unanimously conclude that full-brothers in this culture are much
closer and more likely to support one another, as they are usually raised in the same household.

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