How is the United Arab Emirates thriving in a fragmented geopolitical landscape
The United Arab Emirates (UAE) is receiving attention for its ability to thrive in a multifaceted global landscape. Despite having a small population and contributing only a fraction to global GDP, the UAE wields significant influence due to its abundant oil reserves. This wealth allows the country to have a larger impact on the global stage than its size would suggest.
The UAE’s geopolitical position is complex, straddling political and economic divisions. While maintaining a close alliance with the United States, it relies heavily on trade with China. Despite its high GDP per capita, the UAE is often considered part of the global south and has emerged as a hub for Indian and African businesses, earning the nickname “Singapore of the Middle East.” Additionally, the UAE made strides in diplomacy by normalizing relations with Israel in 2020.
Amid ongoing conflicts in the Middle East and global power struggles, the UAE continues to prosper. Its non-oil economy is growing at an impressive rate of nearly 6 percent annually, surpassing Western countries and even outpacing China. This prosperity attracts talent and wealth worldwide, including Chinese traders, Indian tycoons, Russian billionaires, and Western bankers, all seeking stability and success. In 2020, the UAE attracted significant foreign investment for greenfield projects, ranking among the top destinations alongside the United States, the United Kingdom, and India.
The UAE’s success lies in playing to its economic strengths. While it faced setbacks, such as the Dubai debt-fueled construction boom in 2009, the country has capitalized on other advantages. Its port operators oversee sites worldwide, and one notable firm handles around 10 percent of global shipping container traffic. The UAE is also a major investor in Africa, contributing to vital infrastructure development. Furthermore, the UAE has made significant advancements in clean energy with global projects from wind farms in Texas to solar plants in Uzbekistan.
The UAE recognizes the importance of technology and has become a leader in artificial intelligence (AI). Researchers in Abu Dhabi have trained Falcon, an open-source large language model that may surpass some aspects of Meta’s AI capabilities. The country’s strategic geographical location at the crossroads of Africa, Asia, and Europe has enabled it to establish itself as a crucial trading hub. The UAE has prioritized good economic governance and technocracy, further cementing its role as an entrepot.
The UAE’s ability to thrive offers valuable lessons for other nations in a fragmented world. One lesson is capitalising on economic strengths and maximising advantages in various sectors. Another lesson is the importance of welcoming foreign talent, attracting skilled and low-skilled migrants to contribute to the economy. The UAE also prioritizes trade, making deals rather than adopting protectionist measures. Agreements with countries like India and Israel have increased trade and access to technology expertise.
While the UAE has enjoyed success, it has also made controversial choices when seeking influence abroad. It has armed Sudanese militias implicated in atrocities committed in Darfur and backed a warlord in Libya, resulting in losses. The UAE’s involvement in the Yemeni conflict alongside Saudi Arabia has also faced criticism. While the country ensures stability in its domestic business environment, it faces fewer constraints when acting abroad.
Source: The Economist
