United Arab Emirates country brief
The United Arab Emirates (UAE) is situated in the Southeast of the Arabian Peninsula in Southwest Asia on the Arabian Gulf, bordering Oman and Saudi Arabia while Pakistan and Iran lie to the north on the Arabian Sea. In December 1971, the UAE became a federation of six emirates — Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Quwain, and Fujairah, while the emirate of Ras Al Khaimah joined the federation in 1972. The capital city is Abu Dhabi, located in the largest and most economically dominant of the seven emirates. Abu Dhabi is investing heavily in educational institutions, such as the Sorbonne and New York University campuses, and cultural and sporting attractions such as the Formula One racing track, Ferrari theme park, Louvre Gallery and Guggenheim museum, to diversify the economy away from oil and encourage tourism.
Since its Federation in 1971, the UAE has developed rapidly into a nation with modern infrastructure (particularly in Abu Dhabi and Dubai) and one of the highest per capita incomes in the world.
The President of the UAE is HH Sheikh Khalifa bin Zayed Al-Nahyan, who is also Ruler of Abu Dhabi Emirate. The Ruler of Dubai Emirate, HH Sheikh Mohammed bin Rashid Al-Maktoum, is the Vice-President, Prime Minister and Defence Minister.
The UAE federal structure includes a Federal Supreme Council (comprising the Rulers of each Emirate), a Council of Ministers and a semi-appointed Federal National Council with an advisory role. Each Emirate is nevertheless still governed by its own Ruler, with its own local government, and with competition between the emirates for political and economic influence
Located in the heart of the Middle East, the UAE is still feeling the impact of the Arab Spring. Its major foreign policy concerns include regional stability, tensions with Iran and a resolution to the conflict in Syria.
The UAE is a member of the Gulf Cooperation Council (GCC), which also includes Saudi Arabia, Kuwait, Oman, Bahrain and Qatar. It is a member of the Arab League, the Organization of the Islamic Conference, the United Nations, OPEC, the Non-Aligned Movement and the World Trade Organisation. The International Renewable Energy Agency, officially established in 2009, has its headquarters in Abu Dhabi.
The UAE, which is the Middle East’s second largest economy after Saudi Arabia and one of the wealthiest countries in the region on a per capita basis, had an estimated GDP of US$256.5 billion in 2011 and a real GDP growth rate of around 5.2 per cent. The economy is open with a high per capita income and a sizable annual trade surplus. It is dependent mainly on oil and natural gas but successful efforts at economic diversification reduced oil- and gas-based output to 25 per cent of GDP in 2011, while services accounted for an estimated 40.1 per cent. The UAE depends substantially on its expatriate workforce, which made up about 85 per cent of the workforce and 80 per cent of the population in 2011. Free trade zones attract foreign investors by offering 100 per cent foreign ownership and zero taxes.
The government has increased spending on job creation and infrastructure expansion and is opening up utilities to greater private sector involvement. Investment income is also substantial and provides a further element to economic activity.
Abu Dhabi is the Emirate with the vast majority of oil and gas reserves in the UAE. The UAE is the eighth largest producer of crude oil and 18th largest producer of natural gas in the world, with January 2012 reserves estimated at 97.8 billion barrels and 6.09 trillion cubic metres, respectively (ranking eighth in the world for both commodities).
Abu Dhabi has made significant investments into the establishment of aerospace, nuclear power, defence, information technology (micro-processing), petrochemical and clean-tech industries – the latter most obviously represented by the multibillion-dollar initiative to establish “Masdar City”, a low-carbon city outside Abu Dhabi. With regard to its nuclear power industry, The UAE is developing a civil nuclear energy program and plans to build four nuclear power reactors by 2020 with the first scheduled to come on-line by 2017. The UAE has signed supply agreements, and is preparing supply arrangements, with several countries. Ratification of a bilateral Nuclear Cooperation Agreement with the UAE will also permit Australian producers to sell Uranium to the UAE.
Dubai Emirate has diversified into the tourism, exhibitions, events, ICT, re-export and financial sectors. Taking advantage of its position near the head of the Gulf, it has consolidated its historical reputation as a regional entrepôt. Dubai has developed prestige hotels, massive port facilities (including Jebel Ali, which hosts more United States navy ships than any other port outside the United States) and a range of free trade zones to attract both manufacturing and services industries.
Dubai's ambitious economic development suffered a setback in 2009 due to the global financial crisis. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector.
The Financial Crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency. The UAE Central Bank and Abu Dhabi-based banks bought the largest shares. In December 2009 Dubai received an additional $10 billion loan from the emirate of Abu Dhabi, which served to reinforce Abu Dhabi’s status as the pre-eminent of the federation’s emirates.
The UAE economy has recovered from the economic slump of 2009. Within the UAE market, opportunities fall broadly into three areas – consumer, corporate and infrastructure.
In the medium term, the UAE economy will continue to rely on its huge oil and gas reserves – which account for over two-thirds of exports and the bulk of government revenue – to underpin its economic development. Investment income is also substantial and provides a further element to economic activity.
The UAE's strategic plan for the next few years focuses on diversification, delivering long-term development and creating more opportunities for nationals through improved education and increased private sector employment. Diversifying away from oil, upskilling its workforce, and growing inflation pressures are significant long-term challenges for the UAE
The UAE will pursue an expansionary fiscal policy in 2013-17, supported by high oil prices. The fiscal surplus will rise in the second half of the forecast period as the Government reins in spending, averaging 4.8 per cent of GDP in 2013-17.
Only moderate economic growth of about 3.5 per cent in 2013 is forecast, owing to a slower growth forecast in emerging-market economies in Asia and a slowdown in world trade. Growth will average 5.1 per cent in 2013-17.
Inflation, which is estimated to have averaged just over one per cent in 2012, is forecast to remain manageable through 2013-17 at an average of 2.9 per cent a year, in line with global commodity prices.
The current-account surplus is forecast to narrow from 2013-15 as the services deficit widens. The surplus is forecast to widen again from 2016 as the trade surplus is boosted by high oil prices, averaging 4.7 per cent of GDP in 2013-17.
The population is expanding at around 6.1 per cent from 2012-16 as the focus on attracting foreign investment and the drive to diversify away from oil will create new opportunities for growth and continue to attract expatriate workers. The increase in population will be more pronounced during the second half of the forecast period when a number of large-scale projects are expected to come on stream. However, population growth is projected to be higher than real GDP growth in 2012-16, resulting in a decline in real income per head.
Bilateral relations between Australia and the UAE are multi-faceted and growing rapidly. They are underpinned by extensive trade relations, and the UAE is Australia’s largest Middle East trading partner. Australia and the UAE enjoy close defence ties, with the UAE hosting Australia’s Middle East Headquarters at Al-Minhad, and effective law enforcement cooperation, underpinned by agreements on mutual legal assistance in criminal law matters, extradition and an arrangement on counter-terrorism cooperation. Australia values its regular consular talks with the UAE.
The UAE and Australia also share a strong interest in a stable and secure Middle East and Gulf region, and have a shared strategic view on regional security. The Australian Government values high-level dialogue with UAE leaders. Australia and the UAE both participate in an annual Australia-Gulf Cooperation Council Foreign Ministers’ Strategic Dialogue, the first of which was hosted by the UAE in March 2011, and the second of which was hosted by Minister for Foreign Affairs, Senator the Hon Bob Carr, in July 2012.
The UAE has hosted a number of high-level Australian visitors in recent years, including Governor-General Ms Quentin Bryce AC CVO (in 2010 and 2012) and former Prime Minister, The Hon Kevin Rudd MP, in 2011. Senator the Hon Bob Carr, Minister for Foreign Affairs, visited the UAE in August 2012, signing a Nuclear Cooperation Agreement with his counterpart, Sheikh Abdullah bin Zayed Al-Nahyan, UAE Minister for Foreign Affairs.
In 2012 and 2013, other senior bilateral visits included the Defence Minister, the Hon Stephen Smith MP, Minister for Agriculture, Fisheries and Forestry, Senator the Hon Jo Ludwig, Minister for Infrastructure and Transport, the Hon Anthony Albanese MP and Parliamentary Secretary for Foreign Affairs the Hon Richard Marles MP.
There have been a number of State government visits, including the NSW Premier (May 2012) and the Victorian Minister for Innovation, Services, Small Business, Tourism and Major Events, Louise Asher, who led business ‘Supermissions’ of over 100 companies in each of February 2012 and February 2013, and the Western Australian Minister for Agriculture and Food (February 2012). In December 2012, an Australian Gulf Council trade mission led by Mr Mark Vaile and Ms Anna Bligh visited the UAE – having previously also visited in February 2012.
The most recent official senior UAE visitors to Australia were Minister for Foreign Trade, HE Sheikha Lubna Al Qasimi, in June 2012, and Foreign Minister, HE Sheikh Abdullah, Minister for Foreign Affairs, who addressed CHOGM Foreign Ministers in Perth as a guest of former Prime Minister Kevin Rudd in October 2011.
People-to-people contacts have expanded rapidly on the back of the strong growth of direct air links, including 126 flights per week between the UAE and Australia, now that the Qantas/Emirates Strategic Alliance is operational. Over 15,000 expatriate Australians live and work in the UAE, and there are over 300 Australian companies based in the UAE. In 2012, over 1,000 Emiratis enrolled to study in Australia. UAE nationals have access to online tourist visa applications. This significantly improves visa processing times and access to visa services in the UAE.
Bilateral economic and trade relationship
Australia's profile in the UAE is high. There is increasing recognition of Australian companies, institutions and capabilities. The activities of Australian companies in the UAE include steel trading, building, construction and financial services, banking services, materials and equipment, agricultural supplies and services, industrial minerals, dairy products, marine manufacturing, education and training services, sports and recreation, health services, livestock, oil field supplies, courier and freight services. Many use Dubai as a regional base in view of its world-class transport, financial and communications infrastructure. Growing attention is also being paid to Abu Dhabi's similarly impressive infrastructure and services on offer, particularly after Dubai’s financial difficulties during the Global Financial Crisis
The bilateral relationship continues to have a strong commercial focus. In 2011-12 two-way merchandise trade between Australia and the UAE was worth over $5.9 billion. Of this, Australian exports to the UAE were nearly $2.22 billion, while imports were nearly $3.73 billion, including crude petroleum imports worth $3.19 billion. Highly complementary economies produce a good fit. Australia's advanced engineering capability is ideal for the UAE's huge infrastructure programs. Australian small-and medium-sized enterprises offer world class services that can be readily adopted by the UAE government and private sector.
While the bilateral business relationship is strong and growing, our differing legal and political norms can have unexpected impacts for Australian businesses in the UAE trade environment.
Australia's major merchandise exports are a combination of primary products and elaborately transformed manufactures (ETMs). Eight out of the top 20 exports to the UAE in 2012 were ETMs, constituting over 20 per cent of Australia's total exports to the UAE. For example, since 1996, passenger motor vehicles (PMVs) have been exported to the UAE, worth $199 million in 2011-12, which makes the UAE Australia's second largest market for PMVs in the Gulf. Other notable ETM exports in 2011-12 included processed iron and steel, vehicle parts and accessories, telecommunications equipment and parts, office machines, paper and paperboard and medicaments (including veterinary). Meat (other than beef), vegetables, wheat, food products, beef and barley were the lead primary product exports.
The UAE is Australia's third-largest education market in the Middle East with 1,000 students enrolled in 2012.
Bilateral free trade agreement negotiations between Australia and the UAE began in 2005 and made substantial progress, but were subsumed into broader GCC-wide negotiations in 2006 following a change in GCC policy. Four rounds of negotiations have been held, the most recent in June 2009. Subsequently, the GCC suspended all FTA negotiations, including with Australia, pending a review of its FTA policy. Australia remains committed to resuming mutually beneficial FTA negotiations with the GCC.
Austrade manages the Consulate-General in Dubai (headed by the Consul-General and Senior Trade Commissioner) and including Australian officers representing the Department of Immigration and Citizenship, the Australian Federal Police and the Department of Agriculture, Fisheries and Forestry.
The Council for Australian-Arab Relations (CAAR) is working to broaden and deepen relations with Arab countries, including the UAE. The Australian-Arab Chamber of Commerce and Industry is active in promoting Australian business in the Gulf.
The Australian Ambassador to the UAE, also with accreditation to Qatar, is based at the Australian Embassy in Abu Dhabi while the Australian Consulate-General is in Dubai. Four State government offices, representing New South Wales, Queensland, Western Australia, and Victoria are also based in the UAE.
Updated April 2013