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Abu Dhabi
American Journal of Economics and Sociology, The, Dec, 2000 by Robert V. Andelson
ROBERT V. ANDELSON [*]
PRIOR TO THE commencement of oil production in 1962, Abu Dhabi was one of seven impecunious desert sheikhdoms known collectively as Trucial Oman or the Trucial States, the others being
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Dubai, Sharjah, Ajman, Umm al-Qaiwain, Ras al-Khaimah, and Fujairah. Aside from Dubai City, a trading center which was then by far the largest town, they subsisted primarily on date production, fishing, pearling, and, for some centuries, piracy. (At one time, they were frequently referred to as "the Pirate Coast.") Their population was sparse, consisting, as late as 1965, of no more than about 86,000 altogether. [1] (Since then, they have experienced a collective increase greater than 27 fold.) In the 19th century, the sheikhdoms came under the influence of Britain, which assumed responsibility for their defense and foreign affairs, including the regulation of their relations with one another. By the time Britain withdrew in 1971, the sheikhdoms (now styled "emirates") had formed a federation, the United Arab Emirates (UAE). (Bahrain and Qatar participated in the preliminary negotiations and agreements but ultimately decided to "go it alone"; Ras al-Khaimah remained outside the Federation until several months after it was officially proclaimed.) Each emirate is more or less autonomous, with the highest federal authority consisting of the emirs in council, and the highest federal positions divided, by agreement among the emirs, between the princely houses of Abu Dhabi and Dubai. Sheikh Zayed ibn Sultan an-Nahayan, emir of Abu Dhabi, who was the leading force in the formation of the UAE, has been its president since its inception.
The emirates cover an area of some 32,000 square miles along the lower Arabian (Persian) Gulf, with a shorter coastline on the Gulf of Oman, adjoining Qatar to the northwest and Oman to the southeast, and bordering Saudi Arabia inland on the west. Abu Dhabi, the most westerly emirate, occupies something in excess of two-thirds of the total. Despite its relatively larger area, Abu Dhabi, with the least rainfall and few oases, was poorer than some of the other sheikhdoms, although they were all extremely poor--especially after the market for natural pearls dried up in the 1930s. This situation was dramatically reversed with the development of its oil deposits, which account for approximately 85 percent of total oil production in the emirates. [2]
In 1961, the year before oil was first exported, Abu Dhabi City (the provisional capital of the UAE since its formation, and likely to remain the capital) had a population of 1,500--almost entirely Abu Dhabi citizens. Today, the population is close to 800,000--but it is made up overwhelmingly of foreigners. In fact, UAE nationals currently comprise fewer than 20 percent of the inhabitants of Abu Dhabi Emirate, and many of them are citizens of other emirates belonging to the Federation. (Throughout this study, the term "citizen" is used to denote status within the discrete emirates, "national" to denote status in the UAE at large, and "expatriate" to denote foreigners in the UAE.)
I
The Single-Tax Limited in Abu Dhabi
IN 1977, OTHER than a trivial percentage derived mainly from investment dividends and UAE stamps and customs duty, public revenue in Abu Dhabi came entirely from the government's 60 percent share of the profits from crude oil and gas production, and from corporate income taxes and royalties that went to foreign interests. [3] More recent discrete figures for the emirate are difficult where not impossible to come by, but one may safely assume that any changes are to the government's advantage. Doubtless, investment dividends have increased as a percentage; however, inasmuch as the invested funds consist of oil and gas revenue, this does not change the picture in any way germane to the present analysis. Since foreign companies invest virtually all the oil production capital, the share of profits received by Abu Dhabi must be virtually all rent. What relatively little capital (mainly infrastructure) is provided by Abu Dhabi is paid for out of oil rent.
In what is by some standards an absolute monarchy, where such a high percentage of wealth is channeled through the government, it is not easy to draw a clear-cut line between public and private expenditure. For purposes of this discussion, let us classify as "public expenditure" spending for goods and services provided by the state to the general population of the emirate, to all qualified UAE nationals in the emirate, to all citizens of the emirate, to holders of public office by virtue of functional relatedness to their duties, and to foreign aid. Under the category of "private," let us place spending not subsumed under these headings, even when allocated by the state. Although some public functions are still carried on at the emirate and municipal levels, more and more are being administered by the Federation government, which is largely subsidized by Abu Dhabi. For all practical purposes, public revenue in Abu Dhabi may be said to consist of oil money collected by the emirate government, regardless of wh at jurisdiction may administer its spending.
