UAE: Between a Rock and a Hard Place

By John T. Haldane

A federation formed in 1971 of seven small principalities—Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al-Qaiwain, Ras Al-Khaimah, and Fujairah—the United Arab Emirates (UAE) occupy the south-western shores of what the Pentagon now calls the Arabian Gulf, and the State Department still calls the Persian Gulf. With a population of only 1.6 million, some 20 percent of whom are UAE citizens, the federation, with 32,000 square miles, is roughly the size of Maine.

Still largely untouched by the seven-year Iran-Iraq war, the emirates have continue to sell crude oil to those West European and Japanese customers who do not want to send their tankers into the dangerous northern waters of the Gulf.

Oil was first exported from Abu Dhabi in 1962 and from Dubai in 1969, making the UAE a relative newcomer to the ranks of Gulf oil producers. Four emirates—Abu Dhabi, Dubai, Sharjah and Ras Al-Khaimah—are now oil producers, and the UAE's proven reserves are estimated at 32 billion barrels, sufficient to last nearly 70 years at current levels of production.

Since the sharp rise in petroleum prices in 1973, the UAE's economic growth has been almost unprecedented in world history, as its leaders have used their petrodollars to transform disparate and impoverished oasis towns and cities into a unified, prosperous, and strikingly modern state.

Now, however, all seven small emirates watch with increasing concern as Iran, Iraq, their larger Arab neighbors, the United States, and the Soviet Union all match wits and power in and around the Gulf. One of the emirates, Dubai, has had a long history of profitable trade with Iran and would like to see it continue. In 1986, more than 7,000 dhows, motorized versions of the ancient sailing ships of the Arabs and Persians, left Dubai harbors bound for Iran, carrying goods valued at more than $325 million, according to official UAE figures. Statistics published recently in a Dubai newspaper show exports running at a high annual rate of more than $400 million. Observers say that the actual value of these exports, which may include arms and other smuggled goods, probably is much higher. Because much of this sea-borne cargo consists of re-exported foodstuffs, food animals, manufactured goods, and machinery and transport items, as much as 70 percent of Iran's non-petroleum imports may come from the UAE. This trade has been going on for centuries, and for decades it has played a major economic role in Dubai and also in the emirate of Fujairah, which touches on the shores of the Gulf of Oman as well as the Persian Gulf.

Antiship Mines Concern UAE Leaders

Like Dubai, Fujairah is concerned about reports of antiship mines off its harbors. With no known oil fields, Fujairah depends on revenues generated through its port facilities. One floating mine blew up a small supply boat off Fujairah's Gulf of Oman port of Khor Fakkan on August 15, and five other mines were discovered the same day. The bay beyond the port has been a gathering place for tankers and other ships going in and out of the Persian Gulf, and nearly 60 ships were anchored off Fujairah at the time of the explosion.

The presence of mines in this area is a serious and unsettling development because it is the first time in the Iran-Iraq war that mines have been found near the entrance of the Straits of Hormuz, which control entrance to and exit from the Persian Gulf. In the face of such threats, presumably from Iran, the UAE leaders are surveying the vulnerability of their offshore network of oil fields, pipelines, and tank farms. Last November, three French technicians were killed when Iran bombed an oil platform operated by Abu Dhabi's national oil company.

The confrontation between Iranian "pilgrims" and Saudi police in Mecca in August has reinforced perceptions in the UAE that Iran is a neighbor too prickly to accommodate and too big to defy.

Roughly five percent of the inhabitants of the emirates are Shiite. This gives them religious ties to Shiite Iran, although their linguistic ties are to their fellow Arabs. Although the percentage of UAE Shiites is negligible compared to the 30 percent in Kuwait and some 60 percent in Bahrain, the UAE Shiites are concentrated in two emirates, Dubai and Sharjah, because of a combination of old trade and migration patterns. While there have been no problems so far, the presence of Iranians and Shiites in the UAE is a good reason for seeking to maintain good relations with Iran, whatever the provocation from the Tehran government.

As one diplomat with long experience in the area put it: "The business of Dubai is business, and a large chunk of that business is with Iran. It is no surprise that the farther you get down the Arabian Peninsula, the closer the ties are to the Iranians."

Some experts believe that Iran lacks military sophistication, especially in its navy and air force, to mount an attack across the Gulf. "I don't think the Iranians would use conventional armed force," said Nadav Safran, a Middle East specialist at Harvard University. "They have means that are much more effective than traditional armed forces—subversion, terrorism, sabotage. They are already using these tactics."

UAE leaders share the preoccupation of other Arab states in the region with the problem of how to respond to Iranian intimidation under the guise of Iran's confrontation with the United States.

If the UAE, Kuwait, Bahrain, Qatar, Saudi Arabia, and Oman were sure the US Navy is in the Gulf to stay, they would feel more confident. Meanwhile, all are bracing themselves for heavy weather in the Gulf, in the hopes that with a firm hand on the tiller and an eye to the prevailing winds and currents, they will successfully ride out the storm.

John T. Haldane is a Middle East specialist who has served as a Foreign Service Officer in Baghdad, Cairo, and Beirut, and as an international economist in the Departments of Commerce and Treasury.