Text size

"This strategy embodies our ambitious vision to take our policy to new heights," Caliph bin Zayed Al Nahyan, ruler of the United Arab Emirates, declared grandly in 2007. But while aiming to lead the people to new horizons, the values on which the nation had been founded would be preserved, he said.

The caliph's words accompanied a PowerPoint presentation by Sheikh Mohammad bin Rashed al Maktoum, vice-president of the UAE and Emir of Dubai.

Maktoum hoped to broaden cooperation among the seven emirates comprising the UAE in education, economics, environment, infrastructure and law, empowering the federal government and blurring differences between the emirates.

This week, after Dubai World admitted to difficulty repaying about $59 billion in debt, Maktoum's strategy faces one of its stiffest tests: Will the federal government agree to guarantee the debts or pay part of them? Or will it leave Dubai to lose its assets?

The answer came on Sunday: Abu Dhabi clarified that it would help Dubai on a "case by case" basis.

In the UAE, Dubai is the world's amusement park and Abu Dhabi has always been the responsible adult. But who actually is going to help Dubai: the joint resources of the seven emirates or the private pockets of Abu Dhabi's ruling family? They are believed - real figures are not available - to be worth about $750 billion. They could buy Dubai World's entire debt in a second.

The Maktoum family left Abu Dhabi 176 years ago and conquered Dubai. This started a tribal border dispute between two parts of the large Bani Yas clan, one of which ruled in Abu Dhabi and the other in Dubai. To this day the Maktoum and Nahyan families remember history, which is one reason why the Nahyans of Abu Dhabi would "love" to help Dubai. They'd gain control of part of the emirate's glittering assets.

In 1971, nine years after the first shipment of oil left Abu Dhabi, Abu Dhabi's ruler Sheikh Ziad bin Sultan proposed to the ruler of Dubai unification between them, and suggested inviting the five other emirates to join the union. Four of the emirates, Sharja, Ajman, Fujaira and Umm al-Qaiwain joined immediately. Ras al-Khaima joined a year later.

Each emirate pursues independent domestic policy based on the values of local tribal leadership. Decisions in the UAE constitutionally rely on the Supreme Federal Council consisting of the rulers of all seven emirates. The council chooses the president of the UAE and the prime minister. But there is a historical agreement that the president will be from the Nahyan family and the prime minister from the Maktoum family. Abu Dhabi and Dubai have the right to veto important decisions concerning all the emirates.

The Supreme Federal Council shapes foreign policy and the joint budget, and names ministers to the federal government. Beneath it is an advisory council of 40 members, half of whom are appointed by the emirs. The other half are elected.

The advisory council cannot pass laws or veto laws proposed by the Supreme Federal Council. It can, however, criticize the laws and the ministers' functioning.

This formal structure depends on a system of personal relations among the rulers and the understanding that it is impossible to force decisions without agreement, even if the constitution allows decisions to pass by a majority. The emirs take care to demonstrate unity and cling to the slogan "We are all one state."

Most disagreements are between the ruling family of Abu Dhabi and the smaller emirates, whose part in the federal budget, as well as their contribution to it, is relatively small. Once the Emirate of Ras al-Khaima accused the ruler of Abu Dhabi of fomenting a coup. In March, Dubai suspected that the Nahyan family was planning to take control of companies in Dubai, in return for financial aid amounting to $10 billion granted to the emirate by the federal bank. The leadership went to great lengths to refute these claims, but the suspicion is surfacing following Abu Dhabi's aid to Dubai.

The two largest and wealthiest emirates also disagree on values. The leader of Abu Dhabi for nearly 40 years until his death in 2004 was not keen on the permissive Western character of the Emirate of Dubai. On several occasions he obliquely criticized his colleague's ostentation and extravagance. Dubai's ruler explained that his emirate couldn't compete with the wealth of Abu Dhabi, which has most of the oil in the UAE. It had to diversify its sources, he said.

Each emirate controls its own income and expenditure. They do not share resources. Hence, while Abu Dhabi relies on oil, Dubai became a kingdom of real estate and international commerce. Possibly following the meltdown in Dubai, Abu Dhabi's emir will assume more power. The UAE as a whole would benefit: It would be run more centrally and conservatively, restoring the trust of investors.

Parrying Abu Dhabi's aspirations, the ruler of Dubai shook up the management of Dubai World. He appointed family to the top management, to avert a hostile takeover. However, he may prove unable to stop change in the political structure of the UAE.