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The vexation of succession in the UAE

Published by The Straits Times, Singapore on 2004-10-20

WINSTON Churchill, who knew a thing or two about the Middle East - after all, he was the one who unilaterally carved Iraq out of the remains of the Ottoman Empire - once reportedly said about the region: "Rumours can be facts, facts can be rumours. Believe nothing. Or believe everything."

The region - extending from Morocco in the west to Iran in the east - was ricocheting with rumours this week that one of the most revered Arab patriarchs, President Sheikh Zayed bin Sultan Al-Nahyan of the United Arab Emirates, is dying or already dead in a London hospital. The 86-year-old Sheikh Zayed had been suffering from heart disease and renal problems in recent years, but nevertheless maintained a firm grip on the Abu Dhabi-based Al-Nahyan family's control of 90 percent of the UAE's annual oil and natural gas revenues.

This year, those revenues - driven by rising crude oil prices - are expected to exceed US$35 billion, or nearly 10 percent of the overall income of the 11 members of Opec, and almost 80 percent of the UAE's gross domestic product. The UAE's foreign-exchange reserves are touching US$300 billion. Abu Dhabi, which produces 2.2 million barrels of oil and some 3.7 billion cubic feet of natural gas a day, can expect its wealth to keep growing over the next two centuries. Moreover, proven recoverable oil reserves are currently put at 98.2 billion barrels or 9.5 percent of the global crude oil proven reserves. The proven recoverable reserves of natural gas are estimated currently at 5.8 billion cubic meters or 4 percent of the world total.

Thus, the UAE possesses the third largest natural gas reserves in the region and the fourth largest in the world. At the current rate of utilization - and excluding any new discoveries - these reserves will last for more than 150 years.

With that much money at stake, speculation is mounting about who might succeed Sheikh Zayed, who, in 1971, welded seven emirates - Abu Dhabi, Dubai, Sharjah, Fujairah, Umn al-Qaiwain, Ajman and Ras al-Khaimah - into the federation known as the UAE. Families who don't always get along, much less like one another, head the various sheikhdoms. And of these sheikhdoms, the have-nots - those who don't have oil and rely almost exclusively, and hence resentfully, on Abu Dhabi's largesse - are Ajman, Ras al-Khaimah, Umm Al-Qaiwain, and Fujairah. Little wonder that the sheikhs, who form the country's Supreme Council, have "elected" Sheikh Zayed as president for six successive five-year terms since 1971.

The question of succession in the UAE comes at a time of considerable regional anxiety over monarchical succession in another Arab country - Saudi Arabia, a neighbour of the UAE. Sheikh Zayed and Saudi King Fahd haven't always enjoyed the most cordial of relationships. King Fahd is now confined to a wheelchair, and the actual chief operating officer of the oil-rich kingdom is his half brother, Crown Prince Abdullah. Islamic terrorists have targeted Saudi Arabia, and many Western analysts wonder how long the Saudi monarchy will last.

No such questions are raised about the UAE, however. That's partly because Sheikh Zayed's rule has been generally benign, there's far less corruption of the sort that has afflicted Saudi Arabia, and because he has formed cordial alliances with religious organisations that could potentially support opposition to the Al-Nahyan family.

Sheikh Zayed's formal successor is supposed to be eldest of his 44 children (correct), Sheikh Khalifa bin Zayed Al-Nahyan, the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces. But the widespread perception in the Gulf is that the Crown Prince may be a weak president: he is more than 60 years old, is reputed to lead a colourful personal life that offends some of the more conservative segments of Abu Dhabi society, and has already suffered a stroke. The Crown prince, however, is said to have a strong following of four major tribes in the west, south and east of the country.

But Middle East scholars such as Professor Bernard Lewis of Princeton University contend that traditional Islamic monarchies do not operate under the rule of primogeniture; the issue of succession is informally decided either by nomination or by election before the death of a ruler. It could well be that Sheikh Zayed may have already resolved that Sheikh Khalifa should be left to his pleasures and pastimes, and that the UAE - which has barely four million people but which aspires to be a regional hub for trade, technology and finance - needs a younger, more dynamic leader.

He would not have to look very far for such a figure. That would almost certainly be Sheikh Muhammad Al-Nahyan, the third son of President Zayed. He was named Deputy Crown Prince of Abu Dhabi on 20 November last year. Sheikh Muhammad is well under 50, devoted to physical fitness, a graduate of Sandhurst Military Academy in Britain, holds the rank of Lieutenant General, and is the Commander-in-Chief of the UAE Armed Forces. He's known to be supportive of the United States' efforts to stabilize Iraq, and prides himself on his familiarity with navigating and negotiating weapons acquisitions with the US, now the prime supplier of arms to the UAE.

Sheikh Muhammad is also an advocate of prudent spending. That may mean the subventions to some of the have-not sheikhdoms - whose rulers are said to be profligate - could be trimmed. It could also mean putting the brakes on the relentless real-estate development and expenditures on theme parks, hotels and resorts through which the UAE hopes to entice more tourists from around the world. Sheikh Muhammad is reported to be concerned about the country's budgetary deficit, which reached US$8.55 billion in 2003 due to a sharp increase in spending. The Abu Dhabi-based Arab Monetary Fund put the deficit at 11.2 per cent of the gross domestic product last year.

Any time that a country's budgetary deficit - the difference between its expenditures and its income - rises above three or four percent, economists get worried. Countries typically finance deficits by borrowing overseas - through issuing treasury bonds, for example - but UAE officials say that their country's huge foreign-exchange reserves have insulated the UAE from having to borrow abroad. The UAE's recent cash windfall through record oil revenues will help it tackle the budget deficit without much effort. It will also help bring down the country's external debt of US$18.5 billion.

Still, if there were any slowing down of UAE's economic plans, the Sheikh would surely incur the wrath of a cousin, another Muhammad - Sheikh Muhammad Bin Rashid Al-Maktoum, the Crown Prince of Dubai and the UAE's Minister of Defence. The Dubai sheikh is the main force behind the near-maniacal drive to usurp Bahrain and Singapore as offshore financial centres, and also to develop real-estate properties attractive to wealthy investors from overseas as well as celebrities. He's building what will be the world's tallest building, its biggest theme park, and its most stunning artificial residential islands in the shape of a map of the world.

When the World Bank and the International Monetary Fund held their annual meetings in Dubai last year, pictures of Sheikh Muhammad Bin Rashid Al-Maktoum festooned lampposts all across Dubai, prompting one prominent American banker - who was unaware that no political activity of any sort is permitted in the UAE - to inquire whether the Crown Prince was running for some sort of office.

In the final analysis, it's Abu Dhabi that has the real money because of its oil and natural gas - and real money, as opposed to the monopoly money generated by Sheikh Muhammad Bin Rashid Al-Maktoum, will always prevail when it comes to the politics of governing in the Middle East. Dubai has virtually no oil left, and no natural gas. In one way or another, the Crown Prince will always have to curry favour with Sheikh Zayed's successor.

The succession, as analysts in Dubai see it, will have to be undertaken smoothly. Because Sheikh Muhammad Bin Rashid Al-Maktoum is soliciting large-scale investments from the Japanese and Chinese - who can be notoriously conservative investors - for his ambitious economic development plans, he would have to be perceived as being agreeable to a quick and peaceful transition.

But that doesn't mean that the Crown Prince of Dubai would necessarily abandon aspirations to lead the entire country. He's only 54 years old, and also a graduate of Sandhurst. He recently married the younger sister of King Abdullah of Jordan. He says that he sees himself as a global citizen far more than as a regional tribal chieftain.

And consider this: Under an unusual arrangement made many years ago, when the next president of the federation takes office, the capital of the UAE will shift from Abu Dhabi to Dubai. And Dubai is Sheikh Muhammad Bin Rashid Al-Maktoum's home ground.

Pranay Gupte,
Senior Writer and Global-Affairs Columnist

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