Best known as a financial centre and an oil and gas exporter, in recent years the United Arab Emirates has moved to take on a bigger role internationally. In particular, as a leading player in both the Qatar blockade and in the coalition forces fighting in Yemen, it is emerging as a regional power. Back at home, the UAE continues to plough ahead with efforts to diversify its traditionally oil-dependent economy, investing heavily in tourism and trade.

Diversifying the Economy

The UAE is best known for its oil: it has the world’s seventh-largest oil reserves (after Venezuela, Saudi Arabia, Canada, Iran, Iraq and Kuwait), with the vast majority concentrated in the emirate of Abu Dhabi. Reserves are predicted to last for another century at current levels of extraction, but – as the dramatic drop in oil prices in 2015 showed – the country has realised that it cannot afford to be complacent about preserving its wealth.

In common with Gulf neighbours, therefore, the UAE is looking at alternative sources of energy and ways of diversifying its economy. Dubai has been especially successful in this, largely thanks to the vision and ambition of its ruler, Sheikh Mohammed Bin Rashid Al Maktoum. Dubai's reserves of oil and gas were never that large to begin with, but the resources were used wisely to finance a modern and efficient infrastructure for trade, manufacturing and tourism. Today, Dubai is a business and tourism hub, and revenues for oil and gas account for less than 2% of Dubai's GDP.

Abu Dhabi has realised the power of this strategy and is catching up on non-oil enterprises. The Saadiyat Island cultural district development and the building of the new central business district on Maryah Island are two of the major ongoing projects that Abu Dhabi is investing in as part of a strategy to help it weather future storms.

A Bigger Player on the World Stage?

Since the Arab Spring in 2011, the UAE's military operations and expenditure have expanded significantly to make it one of the Middle East's rising military powers.

Since the government of President Hadi in Yemen was ousted by the Houthi rebel group in 2015, the UAE has taken a leading role in the coalition military campaign to unseat the Houthis from the capital Sanaa and restore President Hadi's rule across the country. The UAE has, however, also backed south Yemen secessionist groups in Aden and established a military base on the Yemeni island of Socotra, drawing accusations that the UAE is more focused on expanding its influence in Yemen for the long term than restoring the Hadi government to power. The campaign has also taken its toll on the UAE's military forces. In 2015, the UAE suffered its highest-ever combat casualties when 45 soldiers were killed in a missile strike.

As well as rapidly expanding military pursuits, the UAE is one of the major players in the Qatar blockade – ongoing since June 2017 – which began when quotes supporting Iran appeared to have been posted by the Qatar News Agency. The UAE (and its blockade partners) accused Qatar of sponsoring terrorism as well as allying itself with Iran. Qatar, in turn, claimed the posts were the work of hackers, and blamed the UAE, which denies responsibility for the incident. Within the first month of the crisis, all ties with Qatar were severed, all Qataris were expelled from UAE territory, and transport links halted. Public expressions of sympathy towards Qatar were made illegal, and access to Doha's Al Jazeera news network was blocked.

Aside from regional disputes, the UAE is making a bid to become an international player in space research, exploration and technology, creating the UAE National Space Programme in 2014. It plans to send an unmanned probe (named the Hope Spacecraft) to Mars in 2020, which would make it the first Arab nation to launch such a mission. The mission's scientific aims are to provide the first comprehensive study of Martian atmosphere while the longer-term goal is to establish space technology as one of the UAE's key industries.