UAE - The Dubai Decision Makers.

Decision making in Dubai is fairly simple. Those in charge of the petroleum sector are a handful of men controlled by the emirate's strongman, Shaikh Muhammad bin Rashid al-Maktoum, who holds several positions apart from his being the local crown prince and the UAE's defence minister.

The UAE's federal super-structure has no authority over the petroleum sector and related industries, be that in Dubai or in the other six member emirates. Each of the emirates has its own government and petroleum department or national oil company (NOC). There is little co-ordination among the seven emirates concerning their petroleum resources.

Dubai is an important oil trading centre. While the emirate's crude oil production has fallen to 80,000 b/d, a new crude oil futures exchange is starting up in Dubai (see APS Review's OMT in omt24-DubaiExchange-Dec12-05).

When one emirate promotes a major industrial project which might seriously compete with a venture already operating in another emirate, contacts and mediation between the two may or may not result in agreement. Such agreement could be that the former party drops the new project in return for a favour, or the latter allows the former to go ahead with the project in return for a favour. Favours could range from equity in the existing venture to a share in the new project, or a concession in another business. Horse-trading and rivalries are elements of an old tribal tradition in this part of the world.

The current UAE Minister of Petroleum and Mineral Resources, Muhammad bin Dha'en al-Hamili, is an Abu Dhabian (see fap5bbUAE-2-Nov28-05). When he attends meetings of OPEC, OAPEC, the GCC or other multilateral institutions, Hamili is formally to be recognised as representing the UAE, which by implication should include Dubai and the others. But in reality this is not the case. Before he makes a commitment in the name of the UAE, he must get instructions from no authority other than Abu Dhabi's Supreme Petroleum Council (SPC). And none of the other emirates would be bound by such a commitment.

Shaikh Muhammad bin Rashid al-Maktoum: Dubai under the Maktoums is more of a family "corporation" than a state. In describing the "corporation", one British expatriate has said the Maktoum brothers function as follows: Shaikh Muhammad, the third and most favoured son of the late Shaikh Rashid, is "the CEO". Shaikh Maktoum, the eldest and the current ruler of Dubai, is the "chairman". Shaikh Hamdan is "the chief of the landed gentry" as well as the treasurer. Shaikh Ahmad, the youngest of the four and in charge of security, is "the playboy" who is often abroad.

The crown prince of Dubai since late 1990 and UAE defence minister since the early 1970s, Muhammad is the day-to-day ruler of the emirate. Chairing the most vital departments, he controls all the sectors in Dubai, and directs the family's lucrative horse-breeding business. His post as federal defence minister is a counter-weight to that of Abu Dhabi Crown Prince Shaikh Muhammad bin Zayed, who is the deputy supreme commander of the UAE armed forces. Shaikh Muhammad bin Rashid holds the rank of general.

Shaikh Muhammad bin Rashid has been close to UAE President and Abu Dhabi's Emir Shaikh Khalifa bin Zayed al-Nahyan, particularly since the Shaikh Zayed died in late 2004. During the Dec. 18-19 GCC summit in Abu Dhabi, Muhammad bin Rashid was the second highest ranking man in the UAE team sitting to the right of Shaikh Khalifa.

Born in 1949, Muhammad received a military education from the Mons Officer Cadet Training College and Sandhurst in the UK. He also studied at Cambridge. He began his career as director of the police and public security in Dubai before the UAE was created. He founded a 6,000-strong army for Dubai. He became UAE minister of defence in 1972.

Before the current boom in Dubai and the rest of the UAE, Muhammad had been somewhat worried since 1997 that, despite the glitz and glitter which characterised Dubai, financially the emirate had been barely breaking even. It had to spend extensively and expand in luxury. To cut costs, in late 1997 he got Dubai's army to be integrated into the federal system of Abu Dhabi. But there was a trade off, as Muhammad asked for and got the following:

Then Abu Dhabi Ruler and UAE President Shaikh Zayed agreed for his emirate to provide Dubai with natural gas by pipeline as from June 2001 at the special price of $1/m BTU. Dubai was running short of gas to supply energy for new development and the situation was getting very serious. In return for this, the UAE Offset Group (UOG), a brainchild of Shaikh Zayed's favourite third son Muhammad bin Zayed who then was the deputy crown prince of Abu Dhabi the UAE chief of staff, later launched a huge project called Dolphin to develop natural gas in Qatar and import it to Abu Dhabi, Dubai, the rest of the UAE, as well as to Oman, Pakistan and India. This gas should replace Abu Dhabi's supplies to Dubai, and Dolphin Energy (DEL) will replace ADNOC as the seller.

Abu Dhabi was to foot almost the entire bill of Dubai's own defence, thus cutting huge costs which until 1997 used to be borne by the emirate. After Muhammad bin Rashid secured long-term benefits for his emirate in return for military integration, he has gradually got Dubai's security forces to be integrated into the federal system. He had little to worry since he was to retain his post as UAE defence minister indefinitely.

UOG, a high-powered venture capital group formed in 1991 and getting investment funds from Abu Dhabi's defence suppliers as part of its offset programme, in October 1998 became Dubai's main partner in a new firm called Emirates Basic Industries Organisation (Sinaat al-Emarat). This was to invest in major petrochemical ventures and heavy industries in Dubai and elsewhere in the UAE and was co-ordinate with Dubai Aluminium (Dubal) before launching any similar venture within the union. In return for co-ordination in planning basic industries, to avoid duplication, UOG was to give priority to Dubai in big offset investments. But no progress has since been announced in that regard.

Since late 2002, however, Dubai has become the most booming of the seven in real estate and construction. Despite rising costs and a shortage of qualified contractors in the Gulf region (see this week's APS Review), Dubai has remained one of the busiest places in the world in terms of construction and real estate development. Hardly a month goes by without the announcement of yet another project being launched in Dubai, which has become a model in the process of diversification of the economy for the other GCC states to follow.

Muhammad has been the effective head of the Dubai Petroleum Department since 1982 and as such he controls the hydrocarbon sector and the related downstream industries. He has acquired wide technical and marketing knowledge of the petroleum business, a complex subject which a few citizens in Dubai could emulate. His key aide in petroleum marketing is a British expatriate, rtd. Brig. Barclay, who works from his UK home most of the time.

"The Boss", as Shaikh Muhammad is known by aides, has keen interest in the financial and business affairs of Dubai, which are the main portfolios of his brother Hamdan. He names the CEOs of businesses which the Dubai government owns or controls. It was at his initiative that Emirates Petroleum Products Co. (EPPCO) was set up in Dubai in 1980 as a products marketing unit.

Likewise, Emirates National Oil Co. (ENOC) was set up in 1993 to invest in upstream and downstream ventures. While the upstream ventures are to be abroad, such as its 69.4% stake in Dragon Oil of Ireland which has two oil producing fields in Turkmenistan, ENOC's downstream activities are located mainly in Dubai and Fuhairah and has a 120,000 condensate splitter in Jebel Ali on stream since 1999.

Muhammad was behind the Jebel Ali free zone, Emirates Airline and various other projects. He was behind the plan, launched at the beginning of 1997, to raise the non-oil sectors' contribution to Dubai's GDP from 81.2% in 1996 to 100% by 2015. He is the chairman of the Dubai Economic Development Department, with its CEO being economist Muhammad Ali Alabbar. Shaikh Muhammad is behind many annual events held in Dubai and attracting a huge number of people, such as the international air shows, conferences and exhibitions, the famous Dubai Shopping Festival, etc. Extensive facilities for such events and a plethora of five-star hotels - the amazing Burj al-Arab which is the world's most luxurious hotel with the world's most expensive suites, is one example - have attracted high profile meetings to Dubai. The annual IMF/World Bank meetings were held in Dubai in September 2003. He has consolidated Dubai's position as a leading sports centre with the moving of Formula One motor racing to the emirate.

On Jan. 27, 2000, Muhammad issued an order granting all GCC nationals "the same rights and responsibilities to practice trade in the emirate as those enjoyed by UAE citizens". Previously no non-UAE national could hold a general trade licence; and GCC nationals were limited to owning one commercial and one residential property. The edict implied regulations covering company ownership could be changed. Until then non-UAE nationals could not own more than 49% in limited liability companies.

Muhammad can be tough and can reach anyone in Dubai. On Feb. 20, 2000 he dismissed the entire management of Dubai courts as, after a surprise visit, he found offices empty and managers absent. The director of the criminal laboratory at Dubai police HQ was also sacked. After his tour, he issued a warning to staff at all government departments, ordering them to abide by official working hours and improve performance. He issued a final warning to the assistant undersecretary at the defence ministry for having been absent from his office before 9.30 am.

Having made the world's free trade Internet City a reality a year later, Muhammad on Oct. 29, 1999 said: "My vision is very simple. In the future, all commercial action will be in cyberspace. But the cyber world will need a ground base on this physical world...and I want Dubai to be the best physical location in the world for any and every virtual company". Among incentives there are 100% foreign ownership and 50-year renewable land leases at low prices, together with blanket exemption on taxes. This zone is housing an internet university and a research and development centre.

He would not stop there, as Shaikh Muhammad rules Dubai through the world's first e-government. This is optimising the day-to-day operations of government departments and giving the residents easy access to public services. Since late 2001, all departments have implemented the initiative which hinges on synergy between government and the private sector. Residents can apply for driving licences, IDs, work permits and trade licences through the internet. Likewise they can file complaints, use credit card numbers to pay, and so forth.

Shaikh Muhammad has a unique passion for horse racing. He and his brothers have some of the fastest thoroughbreds in the world. They have controlled British horse-racing for more than 19 years. Their lucrative racing interests extend to Australia and the brothers are described as the world's most dominant thoroughbred owners. The al-Quoz racing stables are located near Jebel Ali in a cluster of inconspicuous buildings with whitewashed walls and mud-red tiled roofs. The stables now only house some of the finest thoroughbreds in the world, but they are also the headquarters of Godolphin - the Muhammad-inspired racing operation.

After having started up horse-racing in Dubai, Muhammad has moved the horses which did not measure up in England to the Dubai stables since 1993. This has affected horse-racing in Australia. In 1998 he criticised the stud conditions in Britain and hinted he would move the family business out of the UK. This caused a major sensation in Britain, where a big part of the business depends on the Godolphin operations.

In early 2002 London's five-star Hyatt Carlton Tower, part of Muhammad's business empire, came under the management of his Jumeirah Int'l chain of hotels - as the US group Hyatt's 20-year contract to run the 220-room hotel expiring at end-2001 was not renewed. It became the first Jumeirah hotel outside the UAE, where he has built a portfolio of five luxury hotels, a water park and a hospital academy. With his chain including Burj al-Arab, the world's tallest hotel in the shape of a sail - a very expensive enterprise to run, which he gave to Shaikh Zayed as a present -, Jumeirah Int'l is to own and run a many luxury hotels on both sides of Suez.

The Muhammad bin Rashid Techonology Park is one of his projects built on a 3-sq-km site adjacent to Jebel Ali Free Zone (JAFZ). This provides international companies with R&D presence in the region - starting with technologies in water desalination, treatment, energy, oil and gas exploration and insulation. The park's CEO, Shihab Ghanem, is one of Shaikh Muhammad's aides. The park's soft opening took place in 2003. Companies wishing to set up there can build their own facilities under 50-year leases, and the park provides the basic infrastructure.

In March 2002 he made one of this sons, Shaikh Maktoum bin Muhammad, head of the board of directors of another free zone called Dubai Technology, e-Commerce and Media City. Under him are Abdel Hamid Jum'a, CEO of Dubai Media City; and Omar bin Sulaiman, CEO of the Dubai Internet City. The latter are members of the board, along with Vice Chairman Hashim al-Dabal, Ahmad bin Byat and Saeed al-Muntafiq. Bin Byat in March 2002 became the free zone's head, replacing Muhammad Al Gergawi - close to Shaikh Muhammad who has since returned to the executive office of the crown prince. The head of the e-government initiative, tejari.com, is Shaikha Lubna al-Qassimi who is a niece of Sharjah's ruler, now is a minister in the federal government.

Two sons of Shaikh Muhammad, Rashid and Hamdan, attended Sandhurst for one year.

Shaikh Maktoum bin Rashid al-Maktoum: Ruler of Dubai and UAE Vice President, Maktoum is the UAE's premier. He inherited these positions from his father Shaikh Rashid, who died in November 1990. He formed a cabinet on Nov. 20, 1990. Before that, when he was UAE deputy prime minister, he was somewhat disengaged from the affairs of the federal state, devoting more time to his role as crown prince of Dubai. That was because his father had been in a coma for years.

Maktoum and his brothers are a close knit group and all were educated in prestigious institutions in Britain, with Maktoum, Hamdan and Muhammad having graduated from Cambridge. Maktoum's 22-year old son died in a car crash in February 2002 as he was racing in Dubai.

Maktoum had been tipped for the UAE premiership since 1981, when Shaikh Rashid became seriously ill and made him crown prince of Dubai. His style has not changed much, but he has been able to efficiently project an element of continuity into the functioning of Dubai's government and that of the UAE as a whole. On March 25, 1997, he reshuffled the UAE cabinet for the first time since 1990 after lengthy negotiations with the then UAE President Shaikh Zayed bin Sultan al-Nahyan and the union's other rulers. He reshuffled the federal government again in early November 2004, less than 24 hours before Shaikh Zayed died.

The UAE cabinet is the executive authority for the union. The prime minister is chosen by the UAE president in consultation with the other Supreme Council members. The prime minister selects the ministers after consulting with the president, and these are drawn from the seven emirates according to a quota system worked out in the early 1970s.

The more populous emirates have a larger quota of ministers than the smaller entities. Usually, each ruler presents the premier-designate with a list of ministers to fill his quota.

The Supreme Council, of which Shaikh Maktoum is vice president under Shaikh Khalifa bin Zayed, comprises the rulers of the union's seven emirates. This is the top policy-making body for the UAE. It is vested with legislative as well as executive powers, ratifying federal laws and decrees, planning general policy, approving the nomination of the PM and accepting his resignation.

The Supreme Council can relieve the PM from his post upon the recommendation of the president. It elects the president and the vice president for five-year terms, and both may be re-elected.

At an historic meeting on May 20, 1996, the Supreme Council approved an amendment to the union's provisional constitution, making it permanent. The amendment confirmed the city of Abu Dhabi as the capital of the federation.

Parallel to and occasionally interlocking with the federal institutions, each of the seven emirates has its own local government. Although all local governments have been expanded significantly as a result of the UAE's growth since the 1970s, they differ in size and complexity from one emirate to another, depending on a variety of factors such as population, area, and degree of economic development.

Shaikh Maktoum, his brothers and his uncle Shaikh Ahmad bin Said, belong to the "Bani Said" branch of the al-Maktoum family. This consists of the direct descendants of the late Shaikh Said bin Maktoum bin Hasher bin Maktoum bin Buti bin Suhail, who ruled Dubai in 1912-58. The other branches include the Bani Jum'a, consisting of the sons of the late Shaikh Said's half-brother Jum'a.

Born in 1943 as the first son of Shaikh Rashid bin Said and a daughter of a former Abu Dhabi ruler, Shaikh Maktoum got his higher education in Cambridge in 1961-64. He began his career as an assistant to his father and later became deputy ruler and crown prince of Dubai. He became acting ruler in 1982, when Shaikh Rashid fell ill, and ruler as the father died in late 1990.

Shaikh Maktoum is married to a liberal cousin, the attractive Shaikha Boushra bint Muhammad al-Maktoum, who is from another branch of the ruling family. With a strong personality, the shaikha is a famous painter and does not always wear the Islamic veil. One of her brothers has been head of Shaikh Maktoum's office. Their daughter, Shaikha Hessa, is also a famous artist and one of the liberal females in the UAE. In 1996, she held a major exhibition at the Dubai Trade Centre.

About 99% of UAE women receive education and the illiteracy rate among those over 10 is less than 11%. Shaikha Fatima bint Mubarak, the favourite widow of the late Shaikh Zayed, has pioneered the role of the modern woman in the union. She is the mother of the Abu Dhabi Crown Prince and Chairman of the Abu Dhabi Executive Council (local cabinet) Shaikh Muhammad bin Zayed. His younger full-brothers, who are numerous, now hold key posts in Abu Dhabi and the federal structure (see Part 19B).