The United Arab Emirates is a country in Western Asia located at the eastern end of the Arabian Peninsula. It borders Oman and Saudi Arabia, and has maritime borders in the Persian Gulf with Qatar and Iran. It is a federal elective constitutional monarchy formed from a federation of seven emirates, consisting of Abu Dhabi (which serves as the capital), Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. Their boundaries have numerous enclaves within each other. Each emirate is governed by a ruler, who together form the Federal Supreme Council, and one of whom serves as President of the United Arab Emirates. In 2013, the UAE's population was 9.2 million, of which 1.4 million were Emirati citizens and 7.8 million were expatriates. The estimated population of the UAE in 2020 was 9.89 million.
Islam is the official religion and Arabic is the official language. The UAE's oil reserves are the sixth-largest in the world while its natural gas reserves are the world's seventh-largest. Zayed bin Sultan Al Nahyan, ruler of Abu Dhabi and the first President of the UAE, oversaw the development of the Emirates and steered oil revenues into healthcare, education, and infrastructure. The UAE's economy is the most diversified of all the members of the Gulf Cooperation Council, while its most populous city of Dubai is a global city and international aviation and maritime trade hub. The country has become less reliant on oil and gas, and is economically focusing on tourism and business. The UAE government does not levy income tax, although there is a system of corporate tax in place and value-added tax at 5% was established in 2018.The sovereign state of the UAE rising international profile has led to it being recognised as a regional and a middle power. The UAE is a member of the United Nations, the Arab League, the Organisation of Islamic Cooperation, OPEC, the Non-Aligned Movement, and the Gulf Cooperation Council.
Human occupation has been traced back to the emergence of anatomically modern humans from Africa some 124,000 BCE through finds at the Faya-2 site in Mleiha, Sharjah. Burial sites dating back to the Neolithic Age and the Bronze Age include the oldest known such inland site at Jebel Buhais. Known as Magan to the Sumerians, the area was home to a prosperous Bronze Age trading culture during the Umm Al Nar period which traded between the Indus Valley, Bahrain and Mesopotamia as well as Iran, Bactria and the Levant. The ensuing Wadi Suq period and three Iron Ages saw the emergence of nomadism as well as the development of water management and irrigation systems supporting human settlement in both the coast and interior. The Islamic age of the UAE dates back to the expulsion of the Sasanians and the subsequent Battle of Dibba. The UAE' history of trade led to the emergence of Julfar, in the present-day emirate of Ras Al Khaimah, as a regional trading and maritime hub in the area. The maritime dominance of the Persian Gulf by Emirati traders led to conflicts with European powers, including the Portuguese Empire and the British Empire.
Following decades of maritime conflict, the coastal emirates became known as the Trucial States with the signing of the General Maritime Treaty with the British in 1820 (ratified in 1853 and again in 1892), which established the Trucial States as a British protectorate. This arrangement ended with independence and the establishment of the United Arab Emirates on 2 December 1971 following the British withdrawal from its treaty obligations. Six emirates joined the UAE in 1971; the seventh, Ras Al Khaimah, joined the federation on 10 February 1972.
The United Arab Emirates is situated in Middle East, bordering the Gulf of Oman and the Persian Gulf, between Oman and Saudi Arabia; it is in a strategic location slightly south of the Strait of Hormuz, a vital transit point for world crude oil.
The UAE lies between 22°30' and 26°10' north latitude and between 51° and 56°25′ east longitude. It shares a 530-kilometre (330 mi) border with Saudi Arabia on the west, south, and southeast, and a 450-kilometre (280 mi) border with Oman on the southeast and northeast. The land border with Qatar in the Khawr al Udayd area is about nineteen kilometres (12 miles) in the northwest; however, it is a source of ongoing dispute. Following Britain's military departure from the UAE in 1971, and its establishment as a new state, the UAE laid claim to islands resulting in disputes with Iran that remain unresolved. The UAE also disputes claim on other islands against the neighboring state of Qatar. The largest emirate, Abu Dhabi, accounts for 87% of the UAE's total area (67,340 square kilometres (26,000 sq mi)). The smallest emirate, Ajman, encompasses only 259 square kilometres (100 sq mi).
The UAE coast stretches for nearly 650 km (404 mi) along the southern shore of the Persian Gulf, briefly interrupted by an isolated outcrop of the Sultanate of Oman. Six of the emirates are on situated along the Persian Gulf, and the seventh, Fujairah is on the eastern coast of the peninsula with direct access to the Gulf of Oman. Most of the coast consists of salt pans that extend 8–10 km inland. The largest natural harbor is at Dubai, although other ports have been dredged at Abu Dhabi, Sharjah, and elsewhere. Numerous islands are found in the Persian Gulf, and the ownership of some of them has been the subject of international disputes with both Iran and Qatar. The smaller islands, as well as many coral reefs and shifting sandbars, are a menace to navigation. Strong tides and occasional windstorms further complicate ship movements near the shore. The UAE also has a stretch of the Al Bāţinah coast of the Gulf of Oman, although the Musandam Peninsula, the very tip of Arabia by the Strait of Hormuz, is an exclave of Oman separated by the UAE.
South and west of Abu Dhabi, vast, rolling sand dunes merge into the Rub al-Khali (Empty Quarter) of Saudi Arabia. The desert area of Abu Dhabi includes two important oases with adequate underground water for permanent settlements and cultivation. The extensive Liwa Oasis is in the south near the undefined border with Saudi Arabia. About 100 km (62 mi) to the northeast of Liwa is the Al-Buraimi oasis, which extends on both sides of the Abu Dhabi-Oman border. Lake Zakher in Al Ain is a human-made lake near the border with Oman that was created from treated waste water.
Prior to withdrawing from the area in 1971, Britain delineated the internal borders among the seven emirates in order to preempt territorial disputes that might hamper formation of the federation. In general, the rulers of the emirates accepted the British interventions, but in the case of boundary disputes between Abu Dhabi and Dubai, and also between Dubai and Sharjah, conflicting claims were not resolved until after the UAE became independent. The most complicated borders were in the Al-Hajar al-Gharbi Mountains, where five of the emirates contested jurisdiction over more than a dozen enclaves.
The climate of the UAE is subtropical-arid with hot summers and warm winters. The climate is categorized as desert climate. The hottest months are July and August, when average maximum temperatures reach above 45 °C (113 °F) on the coastal plain. In the Al Hajar Mountains, temperatures are considerably lower, a result of increased elevation. Average minimum temperatures in January and February are between 10 and 14 °C (50 and 57 °F). During the late summer months, a humid southeastern wind known as Sharqi (i.e. "Easterner") makes the coastal region especially unpleasant. The average annual rainfall in the coastal area is less than 120 mm (4.7 in), but in some mountainous areas annual rainfall often reaches 350 mm (13.8 in). Rain in the coastal region falls in short, torrential bursts during the summer months, sometimes resulting in floods in ordinarily dry wadi beds. The region is prone to occasional, violent dust storms, which can severely reduce visibility.
On 28 December 2004, there was snow recorded in the UAE for the first time, in the Jebel Jais mountain cluster in Ras al-Khaimah. A few years later, there were more sightings of snow and hail. The Jebel Jais mountain cluster has experienced snow only twice since records began. 
The UAE has extensive diplomatic and commercial relations with other countries. It plays a significant role in OPEC and the UN, and is one of the founding members of the Gulf Cooperation Council (GCC). One of the main anchorers of the UAE's foreign policy has been building cooperation-based relations with all countries of the world. Substantial development assistance has increased the UAE's stature among recipient states. Most of this foreign aid (in excess of $15 billion) has been to Arab and Muslim countries.
The UAE is a member of the United Nations and several of its specialized agencies (ICAO, ILO, UPU, WHO, WIPO), as well as the World Bank, IMF, Arab League, Organisation of Islamic Cooperation (OIC), OPEC, Organization of Arab Petroleum Exporting Countries, and the Non-Aligned Movement. Also, it is an observer in the Organisation Internationale de la Francophonie.
The UAE maintains close relations with Egypt and is Egypt's largest investor from the Arab world. Pakistan was the first country to formally recognize the UAE upon its formation and continues to be one of its major economic and trading partners. China and UAE are also strong international allies, with significant cooperation across economic, political and cultural lines. The largest expatriate presence in the UAE is Indian. Following the British withdrawal from the UAE in 1971 and the establishment of the UAE as a state, the UAE disputed rights to three islands in the Persian Gulf against Iran, namely Abu Musa, Greater Tunb, and Lesser Tunb. The UAE tried to bring the matter to the International Court of Justice, but Iran dismissed the notion. The dispute has not significantly impacted relations because of the large Iranian community presence and strong economic ties. The UAE also has a long and a close relationship with the UK and Germany, and many European nationals reside in the UAE. Former British Prime Minister Tony Blair serves as a funded adviser to the Mubadala Development Company, a wholly owned investment vehicle of the government of Abu Dhabi.
The United Arab Emirates and the United States enjoy very close strategic ties. The UAE has been described as the United States' best counter-terrorism ally in the Gulf by Richard A. Clarke, the US national security advisor and counter-terrorism expert. The US maintains three military bases in the UAE. The UAE is also the only country in the Middle East which has a US border preclearance that is staffed and operated by US Customs and Border Protection officers, allowing travelers to reach the US as domestic travelers. In 2013, The UAE spent more than any other country in the world to influence U.S. policy and shape domestic debate. In its dispute with the United States, Iran has repeatedly threatened to close the Strait of Hormuz, a vital oil-trade route. Therefore, in July 2012, the UAE began operating a key overland oil pipeline, the Habshan–Fujairah oil pipeline, which bypasses the Strait of Hormuz in order to mitigate any consequences of an Iranian shut-off.
It was reported in 2019 that UAE's National Electronic Security Authority (NESA) has enlisted the help of American and Israeli experts in its targeting of political leaders, activists and the governments of Qatar, Turkey and Iran. According to Reuters their surveillance activities have also targeted American citizens.
The UAE was one of only three countries to recognise the Taliban as Afghanistan's legitimate government (Pakistan and Saudi Arabia were the other two countries). At the encouragement of the United States, the UAE attempted to host a Taliban embassy under three conditions, which include: denouncing Al Qaeda leader Osama bin Laden, recognizing the Afghan constitution, and renouncing violence and laying down their weapons. The Taliban refused all three conditions, and the UAE withdrew its offer. The UAE rescinded diplomatic relations with the Taliban after 11 September attacks in 2001 (alongside Pakistan).
The UAE has been actively involved in Saudi-led intervention in Yemen and has supported Yemen's internationally recognized government as well as the separatist Southern Transitional Council in Yemen against the Houthi takeover in Yemen. The Saudi-led coalition has been repeatedly accused of conducting indiscriminate and unlawful airstrikes on civilian targets.
The UAE and Saudi Arabia became close allies when Salman bin Abdulaziz Al Saud became King of Saudi Arabia in 2015 and Mohammed bin Salman as Crown Prince in 2017. In June 2017, the UAE alongside multiple Middle Eastern and African countries cut diplomatic ties with Qatar due to allegations of Qatar being a state sponsor of terrorism, resulting in the Qatar diplomatic crisis. The UAE backed Saudi Arabia in its 2018 dispute with Canada. The UAE also backed Saudi Arabia's statement about the death of Saudi journalist Jamal Khashoggi.
Pope Francis was the first pope to visit the Arabian Peninsula on a trip to Abu Dhabi in 2019 and held papal mass to more than 120,000 attendees in the Zayed Sports City Stadium.
As a result of the successful foreign policy of the UAE, the Emirati passport became the largest individual climber in Henley & Partners Passport Index in 2018 over the past decade, increasing its global rank by 28 places. According to the Henley Passport Index, as of 28 March 2019, Emirati citizens had visa-free or visa on arrival access to 165 countries and territories, ranking the Emirati passport 21st in the world in terms of travel freedom.
In August 2020, the UAE and Israel reached a historic Israel–United Arab Emirates peace agreement to lead towards full normalization of relations between the two countries. The agreement formally became part of the Abraham Accords involving the UAE and Israel and was signed on 15 September 2020. The agreement came as a result of Emirati efforts to halt Israel's planned annexation of parts of the West Bank.
The UAE has developed from a juxtaposition of Bedouin tribes to one of the world's most wealthy states in only about 50 years. Economic growth has been impressive and steady throughout the history of this young confederation of emirates with brief periods of recessions only, e.g. in the global financial and economic crisis years 2008–09, and a couple of more mixed years starting in 2015 and persisting until 2019. Between 2000 and 2018, average real Gross Domestic Product (GDP) growth was at close to 4%. It is the second largest economy in the GCC (after Saudi Arabia), with a nominal gross domestic product (GDP) of US$414.2 billion, and a real GDP of 392.8 billion constant 2010 USD in 2018. Since its independence in 1971, the UAE's economy has grown by nearly 231 times to 1.45 trillion AED in 2013. The non-oil trade has grown to 1.2 trillion AED, a growth by around 28 times from 1981 to 2012. Backed by the world's seventh-largest oil deposits, and thanks to considerate investments combined with decided economic liberalism and firm Government control, the UAE has seen their real GDP more than triple in the last four decades. Nowadays the UAE is one of the world's richest countries, with GDP per capita almost 80% higher than OECD average.
As impressive as economic growth has been in the UAE, the total population has increased from just around 550,000 in 1975 to close to 10 million in 2018. This growth is mainly due to the influx of foreign workers into the country, making the national population a minority. The UAE features a unique labour market system, in which residence in the UAE is conditional on stringent visa rules. This system is a major advantage in terms of macroeconomic stability, as labour supply adjusts quickly to demand throughout economic business cycles. This allows the Government to keep unemployment in the country on a very low level of less than 3%, and it also gives the Government more leeway in terms of macroeconomic policies – where other governments often need to make trade-offs between fighting unemployment and fighting inflation.
Between 2014 and 2018, the accommodation and food, education, information and communication, arts and recreation, and real estate sectors overperformed in terms of growth, whereas the construction, logistics, professional services, public, and oil and gas sectors underperformed.
The UAE offers businesses a strong enabling environment: stable political and macroeconomic conditions, a future-oriented Government, good general infrastructure and ICT infrastructure. Moreover, the country has made continuous and convincing improvements to its regulatory environment and is generally a top country for doing business. UAE is ranked as the 26th best nation in the world for doing business by the Doing Business 2017 Report published by the World Bank Group. The UAE are in the top ranks of several global indices, such as the Doing Business, the World Economic Forum's (WEF) Global Competitiveness Index (GCI), the World Happiness Report (WHR) and the Global Innovation Index (GII). The Economist Intelligence Unit (EIU), for example, assigns the UAE rank two regionally in terms of business environment and 22 worldwide. From the 2018 Arab Youth Survey the UAE emerges as top Arab country in areas such as living, safety and security, economic opportunities, and starting a business, and as an example for other states to emulate.
The weaker points remain the level of education across the UAE population, limitations in the financial and labour markets, barriers to trade and some regulations that hinder business dynamism. The major challenge for the country, though, remains translating investments and strong enabling conditions into knowledge, innovation and creative outputs.
UAE law does not allow trade unions to exist. The right to collective bargaining and the right to strike are not recognised, and the Ministry of Labour has the power to force workers to go back to work. Migrant workers who participate in a strike can have their work permits cancelled and be deported. Consequently, there are very few anti-discrimination laws in relation to labour issues, with Emiratis – and other GCC Arabs – getting preference in public sector jobs despite lesser credentials than competitors and lower motivation. In fact, just over eighty percent of Emirati workers hold government posts, with many of the rest taking part in state-owned enterprises such as Emirates airlines and Dubai Properties.
The UAE's monetary policy is in the service of stability and predictability, as the Central Bank of the UAE (CBUAE) keeps a peg to the US Dollar (USD) and moves interest rates close to the Federal Funds Rate. This policy makes sense in the current situation of global and regional economic and geopolitical uncertainty. Also considering the fact that exports have become the main driver of the UAE's economic growth (the contribution of international trade to GDP grew from 31% in 2017 to 33.5% in 2018, outpacing overall GDP growth for the period), and the fact that the AED is currently undervalued, a departure from this policy – and particularly the peg – would negatively affect this important part of the UAE economy in the short term. In the mid- to long term, however, the peg will become less important, as the UAE transitions to a knowledge-based economy – and becomes yet more independent from the oil and gas sector (oil is currently still being traded not in AED, but in USD). On the contrary, it will become more and more important for the Government to have monetary policy at its free disposal to target inflation, shun too heavy reliance on taxes, and avoid situations where decisions on exchange rates and interest rates contradict fiscal policy measures – as has been the case in recent years, where monetary policy has limited fiscal policy effects on economic expansion.
According to Fitch Ratings, the decline in property sector follows risks of progressively worsening the quality of assets in possession with UAE banks, leading the economy to rougher times ahead. Even though as compared to retail and property, UAE banks fared well. The higher US interest rates followed since 2016 – which the UAE currency complies to – have boosted profitability. However, the likelihood of plunging interest rates and increasing provisioning costs on bad loans, point to difficult times ahead for the economy.
Since 2015, economic growth has been more mixed due to a number of factors impacting both demand and supply. In 2017 and 2018 growth has been positive but on a low level of 0.8 and 1.4%, respectively. To support the economy the Government is currently following an expansionary fiscal policy. However, the effects of this policy are partially offset by monetary policy, which has been contractionary. If not for the fiscal stimulus in 2018, the UAE economy would probably have contracted in that year. One of the factors responsible for slower growth has been a credit crunch, which is due to, among other factors, higher interest rates. Government debt has remained on a low level, despite high deficits in a few recent years. Risks related to government debt remain low. Inflation has been picking up in 2017 and 18. Contributing factors were the introduction of a value added tax (VAT) of 5% in 2018 as well as higher commodity prices. Despite the Government's expansionary fiscal policy and a growing economy in 2018 and at the beginning of 2019, prices have been dropping in late 2018 and 2019 owing to oversupply in some sectors of importance to consumer prices.
In July 2020, a UAE-based firm, Essentra FZE agreed to pay a fine of $665,112 to the US Department of Justice. The firm defrauded the US sanctions on North Korea by devising a criminal scheme to use a deceitful network of front companies and financial entities to manipulate US banks into processing prohibited US dollar transactions for benefiting North Korea.
The UAE has an attractive tax system for companies and wealthy individuals, making it a preferred destination for companies seeking to tax avoidance. The NGO Tax Justice Network places them in 2021 in the group of the ten largest tax havens.
The UAE leadership has driven forward economic diversification efforts already before the oil price crash in the 1980s, and the UAE is nowadays the most diversified economy in the Middle East and North Africa (MENA) region. Although the oil and gas sector does still play an important role in the UAE economy, these efforts have paid off in terms of great resilience during periods of oil price fluctuations and economic turbulence. In 2018, the oil and gas sector contributed 26% to overall GDP. The introduction of the VAT has provided the Government with an additional source of income – approximately 6% of the total revenue in 2018, or 27 billion United Arab Emirates Dirham (AED) – affording its fiscal policy more independence from oil- and gas-related revenue, which constitutes about 36% of the total Government revenue. While the Government may still adjust the exact arrangement of the VAT, it is not likely that any new taxes will be introduced in the foreseeable future. Additional taxes would destroy one of the UAE's main enticements for businesses to operate in the country and put a heavy burden on the economy.
Tourism acts as a growth sector for the entire UAE economy. Dubai is the top tourism destination in the Middle East. According to the annual MasterCard Global Destination Cities Index, Dubai is the fifth most popular tourism destination in the world. Dubai holds up to 66% share of the UAE's tourism economy, with Abu Dhabi having 16% and Sharjah 10%. Dubai welcomed 10 million tourists in 2013.
The UAE has the most advanced and developed infrastructure in the region. Since the 1980s, the UAE has been spending billions of dollars on infrastructure. These developments are particularly evident in the larger emirates of Abu Dhabi and Dubai. The northern emirates are rapidly following suit, providing major incentives for developers of residential and commercial property.
On 6 January 2020, Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum announced that the tourist visa to the United Arab Emirates, which was earlier valid for 30 – 90 days, was extended to five years.
