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Evolving power dynamics in the United Arab Emirates

Chron Wednesday, March 2nd 2016 02:19 AM

 

The United Arab Emirates generated international headlines on Feb. 11 when it appointed ministers of happiness, tolerance and youth, a significant restructuring of federal government positions in this federation of seven emirates. Analysts that delved deeper into the shakeup also deemed it a cost-cutting exercise that reduced the overall number of government ministries in the UAE, which, like its Gulf neighbors, is adapting to low oil prices and sharp falls in revenue. Still other observers cast the reshuffle in terms of a perceived tug-of-war between Dubai, the globally renowned business hub in the Gulf, and Abu Dhabi, where more than 90 percent of the UAE’s oil and gas reserves are located.

 

However, the most significant aspect of the leadership changes was that Sheikh Mohammed bin Zayed Al Nahyan (MBZ), the crown prince of Abu Dhabi, has cemented his position as de facto head of state after years of exercising discreet political influence, often from behind the scenes. It also signaled that he has become far less reticent about acting as such in the continuing absence of his older half-brother, UAE President Sheikh Khalifa bin Zayed, who has not been seen in public since suffering a stroke in January 2014. What has happened is therefore not so much a power play as it is the endgame in a succession process that has been at least a decade in the making, one that until now has occurred more in the shadows than in the spotlight of policymaking.

Although each of the seven emirates that constitute the UAE has its own ruling family, the two most powerful have been the Al Nahyans of Abu Dhabi and the Al Maktoums of Dubai. Since the creation of the UAE in December 1971, political power has, by convention, been exercised by the ruler of Abu Dhabi (as president of the UAE) and the ruler of Dubai (as prime minister). In the early years of the federation, a constitutional crisis between the rulers of Abu Dhabi and Dubai over the relative powers that should be exercised at the federal and emirate levels nearly tore the fledgling UAE apart. The UAE’s resilience was tested again following the November 2004 death of the nation’s founding father, Sheikh Zayed bin Sultan Al Nahyan; the low-key presidency of his son and successor, Sheikh Khalifa; and Dubai’s relatively autonomous position on key domestic and foreign policy issues even as its ruler, Sheikh Mohammed bin Rashid Al Maktoum, simultaneously held the post of UAE prime minister beginning in January 2006.

Two issues in the mid- and late 2000s epitomized the uneasy balance between Dubai and Abu Dhabi at that time. The first was the visceral political backlash from the United States against Dubai Ports World (DP World) after the group acquired a ports management contract in February 2006. DP World (and the Dubai leadership) felt that the federal-level UAE Ministry of Foreign Affairs had done little to protect them from the reputational damage inflicted by opponents in the George W. Bush administration, which sought to portray the UAE as a weak point in the then raging “war on terror.” As a result, Dubai officials explored the possibility of opening international trade offices, a move that would have signaled the death-knell to any possibility for a consistent UAE-wide foreign policy.

The second issue emerged between 2007 and 2009 as Abu Dhabi campaigned hard to secure a “123” nuclear agreement with the Bush administration and gain the United States’ approval to launch a civil nuclear power program. At the same time, Dubai emerged as a potential weak-point in the international sanctions regime being imposed during the volatile, populist reign of Iranian President Mahmoud Ahmadinejad. By the mid-2000s, Dubai was home to more than 400,000 Iranians and some 3,000 Iranian-owned businesses, and Washington, D.C. officials expressed concern at the rapidly-rising re-export trade with Iran that constituted a loophole in the tightening noose of sanctions. Abu Dhabi’s push for the nuclear agreement in the late 2000s heightened the sensitivity of Dubai’s commercial relations with Iran, especially given the possibility that illicit trading in dual-use material could bypass and erode the international sanctions.

But any notion that Dubai might outlast Abu Dhabi in a protracted struggle for influence effectively was settled in 2009 when officials in Abu Dhabi extended two tranches of US$10 billion each to ease the burgeoning debt crisis that briefly threatened briefly to cause financial panic in Dubai. The first “bailout” was a bond purchase by the Abu Dhabi-located UAE Central Bank, while the second package took the form of a direct loan to Dubai by two Abu Dhabi-owned banks. While the sudden renaming of the tallest building in the world from its original Burj Dubai to Burj Khalifa (on its opening day in January 2010) was the most visible manifestation of Abu Dhabi’s newfound leverage over Dubai, Dubai and its ruler have since shed much of the unilateralism of the 2000s and fallen into place behind Abu Dhabi’s leadership, which has pushed a far more assertive regional role for the UAE in the wake of the 2011 Arab uprisings.

Even though Sheikh Mohammed bin Zayed has been the real “power behind the throne” in Abu Dhabi for several years now, he has trodden carefully on the federal stage, mindful of the need to avoid unbalancing Al Nahyan family dynamics as well as inter-emirate relations with Dubai. What is significant is that the government reshuffle aligns with other recent developments in the past three months indicating that these constraints have now been shed. Whereas MBZ used to adopt a fairly low profile when traveling abroad in deference to his presidential half-brother, it was striking how he was treated (and acknowledged) as a head of state during both his December 2015 visit to China and his February 2016 visit to India – something that had not happened before.

Several of the appointments in the reshuffle indicate how MBZ has now stamped his authority over the most important aspects of federal policy. MBZ’s son, Sheikh Khalid bin Mohammed Al Nahyan, became the head of the State Security Department (with ministerial rank), while longtime ally Mohammed Ahmed al-Bowardi became minister of state for defense affairs. Also significant was the appointment of Sultan Ahmed al-Jaber to head the Abu Dhabi National Oil Company, one of the few remaining entities in the UAE that had been operated by people close to Sheikh Khalifa. Al-Jaber, a minister of state for foreign affairs who previously served as the chairman of Abu Dhabi’s flagship low-carbon Masdar City project and as chief executive of Abu Dhabi’s Mubadala sovereign wealth fund, won plaudits for his handling of UAE-Egypt relations. He also looks set to play a critical role in energy policy alongside Suhail Mohammed al-Mazroui, his former deputy at Mubadala and the current minister of energy. Al-Jaber may well set in motion a rationalization of the UAE energy sector and a consolidation of the multiple sovereign wealth funds that contain energy-related portfolios. This work would be done in tandem with the extensive scenario planning MBZ has undertaken in recent months to examine financial options for the UAE at various oil prices, down to US$25 a barrel.

Also of note was that the latest reshuffle was accompanied by an official statement acknowledging that the changes were conducted in consultation with (and approval by) MBZ, whereas previous government reshuffles had been conducted by the ruler of Dubai (in his capacity as prime minister) and rubberstamped by the president. This is a clear signal that MBZ has assumed center stage in political decision-making at the federal (UAE) level, in addition to the emirate (Abu Dhabi) level, and effectively is acting as the UAE president in all but name. Given that Sheikh Khalifa is not expected to recover from his ill-health and could pass at any point, the ruling family appears to have decided to remove any remaining constraints on MBZ, perhaps mindful of the need to portray an image of strong and decisive leadership to avoid any lingering political uncertainty as the UAE grapples with the new era of cheap oil and the delicate economic reforms needed to cushion the transition to a more sustainable post-oil political economy.

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