The UAE is a Muslim country which lies at the southeastern corner of the Arabian Peninsula bordering the Arabian Gulf, between Oman and Saudi Arabia. It has a land size of 82,880 sq km.

Once known as the Trucial States in the 19th century, the UAE is now considered a Middle East hub for business, media and a major tourist destination.

In particular, Dubai and Abu Dhabi, the two most prosperous states, are a model for rapid economic development and hugely popular with foreign investors from around the world because of their expanding leisure facilities and relaxed laws.

The city of Abu Dhabi, located in the emirate of the same name, is the federal capital and the largest city in the country.

Historical background

The UAE was formed from a group of tribally organised shaikhdoms along the southern coast of the Gulf.

The area was dominated by shaikhdoms who were embroiled in dynastic disputes for many centuries. The disputes were mainly over the domination of the harbours that used to generate huge profits.

Throughout its history, the area now known as the UAE was abuzz with transit ports where ships coming from the Indian subcontinent resupplied before continuing their way to the crucial port of Basra in Iraq. 

Commercial ships also used to unload their commodities in order to transport them inland to areas in Arabia.

As a centre of commercial sea traffic, attacks and counter-attacks by sea became commonplace and the area became known as the Pirate Coast as raiders based there harassed foreign shipping.

From the 17th to the 19th century, British and other European naval ships patrolled the coast to protect merchant ships. With better and more sophisticated weaponry, the Trucial States conceded control over their defence and foreign affairs to the British, who were already in control of neighbouring Oman and Qatar.

Before the discovery of oil in the 1950s, the UAE was largely undeveloped. Oil brought rapid growth and modernisation, and the country gained independence in 1971.

However, independence did not spare the UAE from regional disputes. Aside from internal rivalries, there were border disputes with Saudi Arabia and Oman. 

Iran seized the islands of Abu Musa, Tunb al-Kubra (Greater Tunb), and Tunb al-Sughra (Lesser Tunb) in the Gulf, all of which had been claimed by the UAE.

Rapid modernisation

Regional threats of war and revolution did not harm the country's quest for development under the leadership of Shaikh Zayid bin Sultan Al Nahyan, who used oil revenues to establish and strengthen the business and tourism sectors as well as promote the UAE's regional security.

Rapid modernisation, enormous strides in education, and the influx of a large foreign population have changed the face of society but have not altered its traditional political system.

There are no political parties. There has been some slow movement toward democratisation, however, with limited elections for a new assembly, but the rulers hold power on the basis of their dynastic position and their legitimacy in a system of tribal consensus.

Lately Shaikha Lubna al-Qasimi was appointed as minister of education to be the first female minister in the UAE.

With Dubai the leading destination in the Gulf for shopping and business, the UAE's per capita GDP is comparable to leading west European nations.

Its generosity with oil revenues, both in spending within the country and pan-Arab contributions, has allowed the UAE and its president Shaikh Zayid to play a vital role in the affairs of the region.

A cultural economy

Since 1973, the UAE has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living.

At present, with current levels of production, oil and gas reserves should last for more than 100 years. The government has increased spending on job creation and infrastructure and is opening up its utilities to greater private sector involvement.

The culture and society are a blend of traditional and modern elements.

Islam and the heritage of a traditional, tribal society form the basis of a stable and essentially conservative social structure.

There is, however, a decidedly tolerant and cosmopolitan atmosphere - most notable in the emirate of Dubai - that gives non-UAE nationals the opportunity to practice their own cultural and religious ways of life.

The UAE military relies heavily on troops from other Arab countries and Pakistan. The officer corps, however, is composed almost exclusively of UAE nationals.

Country statistics

Official name: United Arab Emirates
Capital: Abu Dhabi
Form of government: Federation of emirates
Gained independence: 2 December 1971

Currency: Dirham (AED) - 1 USD = (app) 3.67 AED
Natural resources: Oil, natural gas
Major industries: Oil, fishing, petrochemicals, construction materials, boat building, handicrafts, pearling
GDP: $71bn (2002 est)
GDP annual growth rate: 1.8% (2002 est)
Per capita GDP: $22,000 (2002 est)
Imports: $34bn (2002 est)
Exports: $46bn (2002 est)

Military budget: $1.6bn (2002 est)
Army size: 41,500 active troops

Population: 2,995,000 (2003 est)
Languages: Arabic (official), Persian, English, Hindi, Urdu
Religions: Islam 96% (official; Shia 16%)
Ethnic diversity: Arab and Iranian 42%, Indian 50%, other 8%
Literacy rate: 77.9% 
Important media: Al-Bayan newspaper, Gulf News English newspaper, Khaleej Times English newspaper, Emirates Dubai TV (pan-Arab broadcaster), Abu Dhabi TV (pan-Arab broadcaster), Abu Dhabi Radio, Free FM (English radio station), City FM (radio station; programmes in English and Urdu)

Sources: World Bank, countryreports.org, MSN Encarta, politinfo.com, The World Almanac