UAE - The Challenge.

If Shaikh Muhammad bin Rashed is to do his job properly, he will have to encroach on those Abu Dhabi affairs which affect the UAE. This is a federation. There are divisions of labour and there are consequences. While the relationship between the two Muhammads appears solid, there was a first warning from the Abu Dhabi crown prince over the cabinet's line-up, when it came to the leading emirate's contribution to the federal government. That warning did not go down well as far as the new UAE prime minister and vice president was concerned. The warning meant the challenge of a potential power-struggle.

Although Shaikh Muhammad bin Rashed acted swiftly not to upset the Abu Dhabi crown prince, the new ruler of Dubai is known for being authoritative and firm. He can be dangerously stubborn as well and may, eventually, take on the crown prince and his full-brothers, if necessary. There will come the diplomatic skills of Shaikh Khalifa bin Zayed, which are yet to be developed as well as tested within the Abu Dhabi context and taking the federation into consideration at the same time.

In forming his UAE cabinet, the new prime minister did draft in some of his closest aides. For example, Shaikh Muhammad made Muhammad al-Gergawi, secretary-general of Dubai's Executive Council, minister of state for cabinet affairs. Thus Gergawi the key man in setting agendas for UAE cabinet meetings and for speaking on behalf of the government - with the UAE no longer having a ministerial portfolio for the information sector.

Shaikh Muhammad does not hang around. As soon as issues threatening Dubai's growth have surfaced, he has been quick to address them. While the introduction of rent caps at the end of 2005 may not have resolved the issue, it showed that he was determined to tackle the challenges facing the emirate. But he had done the same for the other emirates since becoming UAE prime minister.

His no-nonsense approach is already being felt at a federal level. After making an unannounced visit to Umm al-Qaiwain in late February, Shaikh Muhammad was appalled to find the local government offices in disarray. Within hours he ordered a review of the situation.

Dubai's track record of getting things done is remarkably good and this will benefit the UAE. Shaikh Muhammad's authority as UAE prime minister is huge and there is an expectation he will bring the form of government he has developed in Dubai to the rest of the UAE.

He will also help speed up things in the UAE capital, Abu Dhabi. In 2005, Abu Dhabi unveiled a host of plans, nearly all involving some private sector participation, to diversify the capital's economy. It outlined at the end of the year an ambitious industrialisation initiative to allow 100% foreign ownership in Abu Dhabi's specialised economic zones. As many as 30 special industrial zones in various clusters ranging from metal, chemical and petrochemicals to food processing industries, construction and building materials are in the pipeline.

Shaikh Muhammad's vibrancy is seen as a natural extension of previous legacies. Shaikh Tareq bin Faisal al-Qasimi, chairman of Sharjah's Economic Development Department, was recently quoted as saying: "There is a certain policy that [the late] Shaikh Zayed bin Sultan al-Nahyan has set. What we are seeing is a continuation of that policy. Shaikh Zayed [who died in late 2004] committed himself to building the country from nothing and we believe what we are seeing now is merely a modernisation of that vision".