THE UAE - The Challenge Of Globalisation - Part 19.

The seven UAE emirates, known as the Trucial States during British colonial days, have a long history of commerce and entrepreneurial activity. Soon after gaining their independence from the British, the rulers of these emirates - in particular the late Shaikh Rashid Al Maktoum of Dubai and Shaikh Zayed Al Nahyan of Abu Dhabi - recognised the virtues of opening up their emirates as commercial hubs based on huge oil wealth in the case of Abu Dhabi, and on entrepreneurial skills in the case of Dubai. The UAE had begun opening up to free trade, encouraging the relatively free movement of labour, and forming joint business ventures long before it became a necessity as part of the globalisation trend that has been sweeping the world following the collapse of the Soviet Union in 1991.

As a result, the UAE can claim to be the most globalised country in the Middle East. By contrast, most other governments of the Middle East were largely unprepared for the economic and political impact of globalisation. When the trend became clear by the mid-1990s, the UAE was already well on its way to becoming globalised - at least economically, with Dubai leading the way and the other smaller emirates - Sharjah, Ras Al Khaimah, Ajman, Fujairah and Umm Al Quwain gradually following suit. Extremely oil-rich Abu Dhabi could afford to pick and choose those aspects of globalisation it regarded as being useful, while it retained a slightly aloof approach as the capital of the federation.

The reality is that Abu Dhabi, the wealthiest member of the union by far, has sufficient cash reserves to tide over any problem it or any of the other emirates may face - of course, after very diplomatically extracting a political price. Thus there is not much likelihood of the federation facing an economic crisis in the foreseeable future, so long as oil and gas remain the major sources of energy and so long as economic policies are relatively prudent.

On the external security front, the UAE's safety is assured by a number of defence treaties with the key Western powers - the US, Britain, France - and a close defence procurement relationship with a number of other nations as well. In addition, there is huge commercial stake in the stability of the UAE from powers as diverse as the USA, the EU, Japan, China and India - all of whom have billions in trade with the UAE. None would permit any outside regional power to challenge the stability of the union by military or other means.

The result of this combination of economic prosperity, domestic political stability and guaranteed external security is a federation that is in some ways a "buffet" of socio-economic choices. With every personal need taken care of, UAE citizens who may find the relatively liberal lifestyle of Dubai to be too permissive could easily opt for the more conservative approach in Abu Dhabi - or vice versa. With most citizens enjoying a per capita income that would be considered high even in Western societies, there is little room for dissatisfaction caused by poverty or related problems.

Moreover, during the past two decades there has been a change in the mindset of people in the UAE, largely because of the positive role played by Dubai in emerging as a regional business centre despite its relatively poor hydrocarbon resources. Indeed, the example set by Dubai is acting as a source of inspiration for Abu Dhabi as well. Trying to emulate Dubai's success, the smaller emirates are all pressing ahead with various non-oil ventures, be that in the tourism sector, transhipment or free trade zones.

Unlike most other countries in the region, or developing states in general, the UAE emirates increasingly do not see globalisation and liberalisation as "challenges" to overcome, but as "opportunities" from which they can benefit. From their perspective, liberalisation is equivalent to modernisation and they are prepared to do this without compromising their core cultural values and traditions, while tolerating those of others - especially those of the millions of expatriates working in the federation.

Leading the charge in terms of such attitudes are the younger generation of UAE decision makers, directly related to the ruling families, who have mostly been educated in Western universities. The result of their input is that the UAE emirates are embarking on ever more ambitious commercial and infrastructure ventures. Free zones are being set up and existing ones are continuously being modernised, and the diversification of the industrial base is gathering pace through joint ventures with foreign business partners.

Crucially, maximum efforts are being made to plug in to the latest in Internet technologies, with Dubai setting the pace in this regard as well. In view of a high level of PC and Internet penetration among the resident population of Dubai, the emirate is well on its way to becoming one of the most successful e-governments in the world.

Apart from the facilities to get much of the bureaucratic work done online, saving both time and money for both the government and Dubai residents, gradually opinion based activities online would also lend a greater degree of public participation in the emirate's decision making - by allowing the rulers to have a better sense of public sentiment on key socio-economic issues (see following articles).