Berlin The United Arab Emirates are something like the creative exotic of the region. In the 50 years since it was founded, the small country on the Gulf has developed into an important regional power and financial center in the Middle East.
In the meantime, however, the country is coming under increasing pressure from the supremacy of Saudi Arabia, which is trying to copy the Emirati business model – tourism, entertainment industry, finance, logistics and attracting the most modern manufacturing industries to free trade zones. And because of the much larger market, the kingdom is putting in a lot of pressure.
But whenever the UAE comes under pressure, the country comes up with surprises. This is also how the most recent measure should be understood. The government has now decided to introduce a shorter working week from January 3rd. The Emirates will move their working week to Monday to Friday instead of Sunday to Thursday. And since the state is dominated by Muslims, Friday is work-free from 12 noon.
The UAE, which see themselves primarily with the Emirate of Dubai as a financial and logistics center in the Middle East, want, according to the government, to “better align themselves with the global markets” and “increase productivity and improve the work-life balance”. Monica Malik, chief economist at Abu Dhabi Commercial Bank, expects this to boost growth for important sectors such as tourism and for the competitiveness of the UAE.
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The new week is started in public service. But many banks and corporations have already joined the plan.
In 2020 the economy plummeted 11 percent
The Dubai Chamber of Commerce anticipates 3.4 percent economic growth for the coming year. The Expo 2020, the first world exhibition in the Arab world postponed by a year due to the pandemic, also contributes to this. It will run until the end of March and should attract a total of 20 million people to the glittering metropolis on the Gulf.
In 2020 the economy in the Emirates crashed violently due to the corona crisis.
(Photo: AP)
Dubai can use that: Because in 2020 the economy crashed by eleven percent. The more than 85 percent foreign population fell by 8.4 percent, and real estate prices hit a record low since the 2008 financial crash.
And now there is a risk of the Expo stopping after the turn of the year – because of the sharp rise in corona cases. In the main emirate of the UAE, Abu Dhabi, a PCR test has already become compulsory for all immigrants – including those from neighboring emirates. And the schools there have already switched to distance learning again.
In the end, things went really well again: the real estate market, which is important for Dubai and Abu Dhabi, had recovered.
With the Mars probe “Hope” there is a relevant space mission in the UAE. Major companies in the aerospace industry have now settled in the Gulf. And with Masdar, the UAE have founded a leading global developer and investor in the field of renewable energies.
The Indian petrochemical giant Reliance Industries stopped the sale of a company stake in Saudi Aramco, the world’s largest oil company from Saudi Arabia, the rival of the UAE. Instead, Reliance announced the construction of a two billion dollar petrochemical plant with Abu Dhabi’s oil company Adnoc.
“Expats” are attracted with special measures
Many founders, influencers and companies have already been lured to the Gulf with zero percent income taxes and very affordable company fees. But because of the Corona dip, a program with “golden” visas has now been launched for wealthy pensioners as well as for founders, freelancers, creative people and specialists. Long-term residence permit makes it easier for sought-after workers and entrepreneurs to move to the Gulf 100 percent of the company no longer own or need an Emirati majority shareholder.
In the 14-year expat survey, which the major bank HSBC uses to find the best locations for foreign specialists, the UAE ranks fourth after Switzerland, Australia and New Zealand.
The US Department of Commerce praises the UAE as a “strategic location with a gateway to the entire region”, sovereign wealth funds with an investment volume of 1.3 trillion dollars, large oil reserves as a financial buffer and as an “attractive long-term market”, albeit with short-term risks.
This not only includes the risk of a flare-up pandemic. Above all, this threatens the real estate market, which is only just recovering, around the highest building in the world at 828 meters, the Burj Khalifa. The central bank of the UAE has just prescribed a new and stricter risk management system for the banks involved in real estate projects.
50 years after it was founded: size and risks
Since the unification of seven emirates to form the UAE 50 years ago, the country has developed into a significant regional power both politically and militarily. The UAE now controls the most important ports in the Horn of Africa and the important trade sea routes on the Gulf of Aden to the Suez Canal.
But with the expansion of military size and economic power, criticism is also growing: while neighboring Qatar has significantly improved labor law and conditions in the UAE after displeasure with the conditions for guest workers at the buildings for the football World Cup next November and December still scandalous conditions. The conditions under which millions of taxi drivers, construction workers and cashiers work are reminiscent of slave labor.
Of the 9.8 million inhabitants, only a good ten percent have emirate citizenship. But for them too, the situation has worsened since the outbreak of the Arab Spring in 2011 if they are critical of the state leadership. The UAE are “one of the most authoritarian of all Gulf states,” says Hiba Zayadin of the human rights organization Human Rights Watch. There is hardly any freedom of expression. People who criticized the authorities would be arrested or even disappeared.
The European Parliament had even called for a boycott of the world exhibition Expo in Dubai because of the poor human rights situation.
More: Danger for German companies: Growing rivalry in the Gulf.