The official media said on Wednesday the UAE federal council, made up of the leaders of the seven emirates of the oil-rich OPEC member, unanimously elected as president Shaikh Khalifa, who is Shaikh Zayid's eldest son.
Shaikh Khalifa, 56, has been increasingly running the UAE. He heads Abu Dhabi's Supreme Petroleum Council, which drafts oil policy, and is deputy supreme commander of the armed forces. The pro-Western moderniser also heads the UAE's economic body.
Shaikh Zayid, who ruled the UAE since its founding in 1971, died on Tuesday after a long illness.
He was laid to rest on Wednesday as fellow leaders assembled and paid tribute to the man who is credited with turning the UAE from a desert country into an economic success.
Shaikh Zayid was genuinely loved by his people for using oil money to turn the desert federation green after playing a key part in its creation on 2 December 1971 following Britain's pullout from the Gulf.
That was five years after he had been proclaimed ruler of Abu Dhabi, which became the wealthiest emirate of the federation and accounts for some 90% of the UAE's oil production, currently about 2.5 million barrels a day.
Shaikh Zayid used oil income to
transform a desert federation
Thousands of Emiratis and foreigners lined the streets, straining to catch a glimpse of the funeral procession held amid tight security with helicopters criss-crossing overhead at low altitude.
Police dispersed in the streets to control the crowd.
The day had started with almost deserted streets in the UAE capital as verses from the Quran were read through mosque loudspeakers.
Official media said several churches were also to hold special services later this week.
Crowds ran behind the convoy which later carried the body of Shaikh Zayid, who died after 33 years at the helm of the federation, to a mosque bearing his name at the entrance of the UAE capital. He was buried there.
"It was a big loss for the people of the UAE. Shaikh Zayid knew how to lead. He had a gift from God"
Arab and Muslim leaders turned up in force to pay their last respects to Shaikh Zayid.
Pakistan President Pervez Musharraf and Afghanistan's Hamid Karzai were among Muslim leaders on hand at the funeral. Jordan's King Abd Allah II, Syrian President Bashar al-Asad, Algerian President Abd al-Aziz Butaflika, Yemeni President Ali Abd Allah Salih, Bahrain's King Hamad and Oman's Sultan Qabuus were also present.
Saudi Arabia was represented by its crown prince and de facto ruler, Abd Allah bin Abd al-Aziz. Both Iraqi President Ghazi al-Yawar and Prime Minister Iyad Allawi also came.
The dignitaries, including Lebanese President Emile Lahud, were to offer condolences to Shaikh Khalifa starting on Wednesday evening.
Bashar al-Asad came to pay his
last respects to Shaikh Zayid
A number of envoys were expected to arrive later in the day, including German Foreign Minister Joschka Fischer.
Iran, which has a territorial dispute with the UAE, sent First Vice-President Mohammad Reza Arif.
Britain's Prince Charles and Prince Andrew also arrived to offer condolences.
Although Shaikh Zayid had been ill for some time, his death has cast a sombre mood on the federation.
Government departments and private establishments were closed as the country began an official 40-day period of mourning during which flags will fly at half-mast. The public sector will close down for eight days and the private sector for three.
"I couldn't describe my feelings. He has been the father and leader of the people. ... In the past 30 years, miracles were performed in building
Abu Dhabi native
Deputy President Shaikh Maktum bin Rashid al-Maktum, who is also ruler of Dubai, had briefly taken the reins for the transition.
The Supreme Federal Council, grouping the rulers of Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Ras al-Khaimah and Um al-Quayayn, had a month to elect a successor for a five-year mandate. As ruler of the UAE's largest and wealthiest member, Sheikh Khalifa had been expected to get the top post.
Emirati citizens crowd around the
presidential cortege in Abu Dhabi
Speaking of Shaikh Zayid, 31-year-old Abu Dhabi native Abu Hajar said, "I couldn't describe my feelings. He has been the father and leader of the people. ... In the past 30 years, miracles were performed in building this country."
"It is impossible to express how important Shaikh Zayid was to us. He was a father and a guardian who protected the rights of both locals and expatriates," said Muslim preacher Shaikh Sabri. "He was the best of all the Arab and Muslim rulers."
"Farewell our father, our Shaikh and sage of the Arab world," said al-Khaleej newspaper in its banner headline.
The UAE founder, who received a kidney transplant in 2000, used oil income to transform seven mostly poor and feuding shaikhdoms into modern cities.
Model of generosity
Shaikh Zayid enjoyed genuine
affection of the Emirati people
The country of four million people has one of the world's highest per capita incomes and expatriates make up over 85% of the population.
Shaikh Zayid's generosity, moderation and diplomacy won him a prominent place in the Arab and Muslim world.
US Secretary of State Colin Powell said: "Shaikh Zayid was a model of generosity, wisdom and leadership. The whole world knew him as a man of development, justice and civilisation."
Mansur al-Mahirby, a UAE resident, said, "In a region where rulers are often resented for their autocracy, Shaikh Zayid seemed to enjoy genuine affection. It was a big loss for the people of the UAE. He knew how to lead. He had a gift from God."
Many were confident about the future.
"He fixed the basis so that his policies could be continued in the future, so we are not worried", said Mattar al-Niyaby.