Economy of United Arab Emirates

Great oil finds since the 1960's has brought UAE wealth and progress. Still, over the last 20-30 years, UAE's success in the Middle East is largely owned to a national focus on developing alternatives to the oil industries.
This involves very successful programs to turn designated ports of the Emirates into trade centres, development of industries, refining of oil as well as land reclamation.
Land reclamation has made the Emirates self-sufficient of fruits and vegetables. About 6% of the total territory of UAE is cultivated, and agriculture contributes 3% of GDP, employing nearly 130,000 people in 2001. One of the problems of agriculture is the extreme lack of fresh water, but UAE has built up industries of desalination. There is also good fishing outside the coast, bringing in more than 50 kg/inhabitant/year.
Still oil and natural gas is by far the most important to UAEs economy. Yet, it is only in 3 of 7 emirates where oil exploitation is of a major scale, but search of new reserves are going on in all the others.
As much as 40% of national budgets are used on the military forces. The aim of this is internal control, as well as the need of a defence towards Saudi Arabia.
UAE has since long enjoyed a considerable level of trade surplus, although there was a decline in this since the early 1980's, as wells were beginning to run dry. In the late 1990's the trade surplus averaged at about 30 billion dirhams (about 8 billion US$). In the early 2000's, this had increased to between 35 and 40 billion dirhams.
Higher demand from an increasing population and an expanding agricultural sector has caused a dramatic drop in water tables in the UAE; while much water is produced by desalination plants, there has also been a high increase in wells drilled. This has allowed seawater to encroach on lowlands, and many farms have closed down.
UAE's programmes for food production has largely been a great success, and the federation is now self-sufficient with wheat, nearly self-sufficient with fish. However, as fish are concerned, over-fishing has reached a level where it can have grave effects in the near future.
In order to accommodate foreign investments, free zones like Jabal Ali have permitted extensive rights to foreign investors, like the right to 100% foreign ownership, absence of taxes and duties and full repatriation of profits.
UAE has 6 international airports, located to individual emirates (Abu Dhabi has two), in a few cases ridiculously close. Ajman and Umm al-Qaiwain are without international airports. The busiest among them is Dubai, which served 18 million passengers in 2003, aiming at 30 million by 2010. The federation shares the airline, Emirates Airlines.
Trade is done through free-trade zones, especially Jabal Ali and Port Zayed; yet there is a 5% import tariff for all of the emirates, raised from 4% in 2003.
Tourism has been strongly promoted especially since the mid-1990's, the number of visitors passed 1 million in 1993. It is mainly Dubai benefitting from foreign visitors, seeing 2.5 million in 1999. In December 1999 opened the Burj al-Arab, promoted as one of the world's most luxurious hotels and among the tallest.
Dubai has also been promoting the sales of holiday homes, aiming at the wealthiest among foreigners. Four areas of artificial lands have been constructed, three of which are "palms"; Jumeirah, Jebel Ali and Deira. While real estate is expensive on these palms, it cannot be compared to the fourth project, "The World", first called "Globe Archipelago", where islands representing individual states lain out like a world map are sold for between US$15 and 50 million. Although all these projects are off the reach of most visitors, they have strongly helped promote Dubai as the new chic tourist destination.
The Emirati dirham was introduced in 1973, when it replaced the two currencies that were in common use in the emirates, the Bahraini dinar and the Qatar riyal. The official abbreviation is now "AED", changed in 1996 from "Dh". The AED was fixed to the US dollar in 1997, which has caused that the AED has lost its value to other major currencies as the USD has dropped in value (in 1997 1.12 to the ECU, in 2008 1.46 to the Euro).
Following the terror attacks on the USA on September 11, 2001, it became known that money transferred from the Citibank branches of UAE had been used to finance the attacks. Large funds on 62 accounts belonging to 27 individuals and organizations were frozen just weeks after. Measures against secret transactions and money laundering were imposed in October; the hawala system was exempted, a system transferring money to countries without a bank system. Hawala is by many believed to have emerged as the main system for transferring money in connection with international terrorism.


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