The Arab Emirates rethink their strategies

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Built on oil, these Middle Eastern powerhouses are now investing in tourism and trade.

In January 2010, Dubai inaugurated the world's tallest structure: The Burj Dubai, or Dubai Tower. The global financial crisis dimmed the glory of this structure, however, as property values declined and Dubai ran into credit problems. Sheikh Khalifa bin Zayed Al Nahyan, emir of Abu Dhabi and the president of the United Arab Emirates, rescued the project in order to ensure economic stability and growth in the Emirates.

Dubai's slump revealed the challenges of this state built on sand whose oil reserves are expected to dry up within 20 years. Today, 95 per cent of the Arab Emirates' oil is controlled by its largest and most powerful member: Abu Dhabi.

Oil isn't the only answer, however. For years, Dubai has based its growth on commerce and tourism, and attracts more than ten million visitors annually. The collapse of its real estate market briefly slowed its development, but new skyscrapers are again popping up. Meanwhile, Abu Dhabi has accelerated its own pace with new developments to attract foreigners.

Big investments for Abu Dhabi

Abu Dhabi is the largest of the Emirates in terms of land area and oil reserves. It is currently aiming to grow its population from about one to three million by building business and tourism services, the energy industry, and housing for wealthy foreigners.

In 2009, the emirate hosted its first Formula One Grand Prix on the Yas Marina racetrack, which was built over the course of two years on an empty stretch of seaside desert. In addition, Guggenheim and Louvre branch museums are planned as tourism magnets. Another draw is the new mosque, which began receiving visitors in 2007 and is in many ways the world's most opulent.

From pearlfishers to executives

Before the oil and natural gas discoveries of the 1960s placed the Arab Emirates among the world’s richest nations, their economy was based largely on pearl fisheries. The industry taught the locals to become shrewd merchants. The British maintained the Emirates as a protectorate until 1971, and their legacy includes an efficient administrative culture and the wide use of the English language. Britain and Germany are the Emirates' biggest trading partners.

Growth in all seven of the Emirates is based on guest labour. About four million of their five million inhabitants are migrant workers, mainly from Pakistan, India and Southeast Asia.

“The country is run in a systematic way, based on business principles. Stability is the be-all and end-all, because that's what brings in business and tourists,” says a local Finnish businessman who was interviewed anonymously. Thanks to the absence of VAT and income tax, the Arab Emirates are an attractive area for expats.

Building Dubai

With nearly two million inhabitants, Dubai boasts the largest population of the Arab Emirates. Its growth is based on real estate investments - a risky business, as the Burj Khalifa stands in testimony. For example, the first of three planned Palm Islands on Dubai's coast is populated - but The World, a globe-shaped artificial archipelago made of sandbanks, still awaits its builders.

Dubai is also a commercial centre. Jebel Ali is one of the world's fastest-growing free ports and global shipping centres, and a new cargo airport is being built next to it.

The old border disputes between the Emirates have been replaced by economic competition. Although Dubai has pressed the gas pedal harder, Abu Dhabi drives its large engine with lower risks.

Text by Jouko Marttila

A longer version of this article was published in Finnair´s Blue Wings magazine (Oct 2012).

Published October 26, 2012

Category: Finnair Cargo

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