On the southeastern portion of the Arabian Peninsula, south of the states of Bahrain and Qatar, and bordering the kingdoms of Saudi Arabia and Oman to the west and the east respectively, lies the federation of United Arab Emirates. The federation comprises of seven emirates, ruled from the capital of Abu Dhabi.
The population of UAE is estimated to be around 2.8 million and 3 million - more than three-quarters of which areforeigners/non natives. Approximately 85 percent of the people residing in UAE live in cities that straddle the country's Persian Gulf coastline. The three largest emirates i.e. Abu Dhabi, Dubai, and Sharjah collectively account for 84.3 percent of the population. Irrespective of the concentration and location UAE boosts the most diverse demographics of all the Arab nations.
Before 1971, UAE was known as Trucial Oman or Trucial States, in reference to a 19th-century truce between the British and local Arab leaders. In essence, the real political and economic history of UAE started with the discovery of petroleum. Oil was first discovered off the coast of Abu Dhabi in 1958. This was followed by discovery of onshore petroleum in 1960. The abundance of wealth pushed Abu Dhabi, which was also the largest of the seven sheikhdoms, to take the lead in Trucial politics, and gradually become the dominant sheikhdom.
In January1968 the United Kingdom announced its intention of withdrawing from the region. The imminent withdraw of a once mighty colonial power forced the Trucial states to heighten their efforts for a formal union.
On December 2, 1971, the Sheikhdoms of Abu Dhabi, Dubai, Sharjah, Umm al-Qaiwain, Ajman and Fujairah signed the pact to become the federation of United Arab Emirates (UAE) - Ras al-Khaimah, joined the United Arab Emirates in February 1972. At independence Sheikh Zayed Bin Sultan Al Nahyan, ruler of Abu Dhabi,took office as the first President of UAE, while Sheikh Rashid bin Saeed Al Maktoum, emir of Dubai, became the Vice President and Prime Minister.
At the time of independenceUAE had a population of less than 180,000 inhabitants, living insmall cities and villages near the costal belt. There was little education or social cohesion and most of the people lived a Spartan existence. Moreover at the time of independence UAE's economic was in a state of transition. The traditional drivers of economy such as fishing, pearl diving and trading were on a decline, and were being fast replaced by the raising oil and gas sector. The new industry was not only bringing in wealth, but was also attracting a large influx of foreign laborers and expatriates. In other words it can be said that petroleum was the driver, which pushed UAE from being a medieval desert kingdom to become the jewel of Middle East.
Of the three largest emirates of UAE, Dubai is by far the most famous. In recent decades the city has emerged as a global center and international business hub mostly because of government policies. The scarcity of oil pushed Dubai's government to diversify from an oil-reliant economy to one that is dependent on service and tourism. It is interesting to note that by the year 2004-2005 Dubai was drawing most of its revenue not from oil& gas, but from tourism, real estate, and financial services.
The focus on tourism made property more valuable and thus resulted in high property appreciation. Expensive hotels and mega projects such as Emirates Towers, Palm Jumeirah, and Burj Khalifa became a norm for the city. Foreign investors, looking for a fast buck, invested heavily in Dubai real estate. Unfortunately the honeymoon did not last! The 2008-2009 American Subprime mortgage crises along with the credit crunch crippled Dubai's debt based economy, and ruined hundred of local businesses in its wake. By February 2009 Dubai's foreign debt was estimated at $80 billion, and the sheikhdom was set to default on its monthly interest payments.
When all seemed lost and grim, Abu Dhabipledged support for the below par economy of Dubai. The oil rich emirate in conjunction with the central bank of UAE put up $10 billion dollars to help ease fears of Dubai's debt default.
Since the bailout the sheikdom of Dubai is gradually getting back on its feet, through government policies, debt restructuring and austerity drives.