New Leaders

Turkey

Economic News

22 Jul 2010
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With the death of Sheikh Zayed bin Sultan al-Nahyan in November last year, one of the world's richest and most strategically vital countries passed into the hands of a new leader. Sheikh Khalifa bin Zayed, the new ruler of Abu Dhabi and president of the United Arab Emirates, inherited a country that holds more than 9% of the world's proven oil reserves and a vast amount of the associated gas that goes with it.



Now though, the younger generation of leaders in charge appears to feel that Abu Dhabi has been punching below its weight in the region and on the international stage. Since he took power, Sheikh Khalifa has received an endless stream of visitors from the four corners of the world, a mark of the influence a wealthy ruler can wield. But if Abu Dhabi is to be taken seriously, both at home and abroad, many argue that it must be a city that is symbolic of its economic muscle. The image of a sleeping giant might be overdone in a country with just 500,000 nationals, but certainly there is great economic potential to be unlocked - and a government intent on unlocking it that also has enough money in the bank to make it happen swiftly.



Some 95% of the UAE's resources are owned by Abu Dhabi itself, principal emirate of the seven. The oil revenues that have poured into the coffers since 1962 have made the country rich. The government-owned Abu Dhabi Investment Authority (ADIA) is one of the world's largest investors. Although its assets are a closely guarded secret, some estimate they could be approaching $500bn.



Sheikh Zayed's rule was characterised by his skilful diplomacy, temperance, justice and generosity and it would be hard to exaggerate the depth of admiration and respect he commanded throughout the country and region. Yet even as the country mourns Sheikh Zayed's death, it is looking to the next wave of development and transformation under its new leadership.



The first priority, however, has been to convey a message of stability and continuity to the people and to the world. Too much has been made in the past of an apparent rivalry between Sheikh Khalifa, the eldest son of Sheikh Zayed, and his younger brother Sheikh Mohammed, who was appointed deputy crown prince by Sheikh Zayed in November 2003. Excitable speculation had even questioned a smooth succession. When politics is a family business, external observers are often left guessing, but whether or not there had been some kind of hiatus among senior family members in the late 1990s, it is clear today that the two men are working closely together as ruler and crown prince. The government of Abu Dhabi and the UAE will be stable in the years ahead.



Indeed, it could never have been otherwise. There is much the two can achieve working together, and everything to lose had they been unable to do so. Sheikh Khalifa, 13 years the senior, learnt government at the knee of his father and has looked after the day-to-day running of the state for many years. His powers of patronage and loyalty spread deep into the Arabian tribes. Sheikh Mohammed is more outward looking, having forged close ties with Western governments and businessmen, and much beloved by the army. In the West they might be called a "dream ticket".



As Sheikh Zayed's chosen successors, the two command great credibility and respect, exemplified by the speed with which the Supreme Council of Rulers accepted Sheikh Khalifa as UAE president within hours of his father's death. Again, the message here is stability and continuity, reassurance that after Sheikh Zayed, the country is in safe hands. The announcement of the new cabinet, a day before Sheikh Zayed's death, conveyed the same message.



The new leaders had had plenty of time to prepare for power and decide on their direction. The make up of the new cabinet is therefore instructive. The al-Nahyan family have taken on a greater number of seats. This may seem regressive, but is in fact a sign that the family takes government seriously. The creation of the Ministry of Presidential Affairs, held by another brother, Sheikh Mansour, is also a reassurance that another member of the family is also keeping an eye on the affairs of state.



Meanwhile, Sheikh Khalifa has chosen to fill many positions with younger technocrats and remove some of those members of the family that were not really performing.



One of the most notable promotions is Sheikha Lubna al-Qasimi, the UAE's first female minister. As minister of economy and planning, she has been seeking ways to open the economy to international markets. Next year, the country will fulfil its World Trade Organisation (WTO) commitments. Meanwhile, Sheikha Lubna has opened free trade talks with the United States, Australia and Singapore as the new government seeks to increase foreign participation in the economy. This week she announced the drafting of a new companies law, which many expect to allow 100% foreign ownership of companies in a country which until now has demanded local majority holdings in all business ventures. She is also expected to encourage greater economic co-operation and integration among the emirates themselves, as the government seeks to solidify the federal structure and ensure stability well into the future.



Sheikh Nahyan bin Mubarak al-Nahyan, long seen as one of the most able ministers, has been given the federal education portfolio. Education reform is high on the government's agenda, both to ensure that the next generation have the skills and training necessary to be tomorrow's business leaders and to ensure that the Bedouin traditions of tolerance, hospitality, peace and partnership are upheld in the face of the Islamic radicalism that blights much of the region.



In Abu Dhabi itself, there is a feeling that the emirate has fallen behind in recent years, and has not been utilising its full economic potential. This is perhaps a natural feature in the cycle of monarchy. Sheikh Zayed's legacy stands testimony to his visionary leadership, but the pace of change and development had slowed during the last years of the elderly ruler's reign. Now, with power fully in his hands, Sheikh Khalifa is looking to build on and improve what he has inherited, fully employing the vast resources at his disposal to increase Abu Dhabi's international and economic standing.



Sheikh Mohammed has for some time actively promoted privatisation, foreign investment and economic liberalisation through his various investment and private equity vehicles. As head of a slimmed down Abu Dhabi Executive Council, he is instigating a new wave of development, with Sheikh Khalifa's full support.



To begin with, the government is keen to expand Abu Dhabi's industrial and private sector. With both energy and labour in cheap and abundant supply, the emirate has great advantages for downstream industry and manufacturing. With its ideal strategic location between eastern and western markets, it is also perfectly placed as a trading and distribution hub, a fact realised to great effect in the past decade by Dubai, but not exploited fully by Abu Dhabi.



Meanwhile Abu Dhabi's leaders have also been watching Dubai's success in promoting itself as an international city. With its vast oil wealth, Abu Dhabi does not need to sell itself with such urgency, but it will certainly be seeking to reassert itself as the UAE's capital in the eyes of the world. The new national airline, Etihad, has been given the money to buy a fleet of 40 aircraft in one swoop, with a remit to increase visitor numbers to Abu Dhabi exponentially in the next five years. This will require a massive surge in real estate development projects; new hotels and luxury resorts, housing developments and a new airport. A new tourism authority headed by senior members of the Executive Council has been set up to co-ordinate the government's agenda.



With an agenda for growth and competition with the emirate next door, these are exciting times for Abu Dhabi.

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