MIRACLE OR MIRAGE: IS DEVELOPMENT SUSTAINABLE IN THE UNITED ARAB EMIRATES? Timothy N. Walters,* Alma Kadragic,* and Lynne M. Walters* The United Arab Emirates has combined government policy and the brute force of petrodollars to alter its economic landscape. Guided by the single-minded vision of the nation’s leaders, the UAE has been transformed from seven small, impoverished desert principalities to a modern state with a high standard of living, an advanced educational system, and a cutting-edge infrastructure. This paper looks at the vision behind this economy, the symbols that it has created, the business model employed, and the social structure on which it is built and considers whether the UAE has a chance for sustainable development. INTRODUCTION As the 2002 Arab Human Development Report suggested, the Arabian Peninsula is full of contradictions. On this peninsula, it is the best of times; it is the worst of times; it is the age of wisdom, it is the age of foolishness; it is the spring of hope, it is the winter of despair. It is also a time in which the news coming from the region is written in superlatives. Yet buried beneath the hyperbole is the grim reality—many of these countries face a daunting and uncertain future. Those who do not plan ahead, modernize their economies, reduce subsidies to their citizens, and get their ecological house in order will find the not-so-distant future especially bleak. 1 Some nations, such as Saudi Arabia, are victims of misspent windfalls and bad public policy. Other nations, such as the United Arab Emirates, appear to have made progress. During the lifetimes of the benevolent, but aging, leaders, the UAE has been transformed from seven small impoverished desert principalities to a modern state. To his credit, much of this is due to the simple, clear national priorities set by late President His Highness Shaykh Zayed bin Sultan al-Nahyan, who led the country from its formation in 1971 until his death in November 2004. Under his tutelage, the UAE developed a diversified economy with one of the world’s highest mean standards of living. Many of its petrodollars have been used to build infrastructure and to broaden the country’s economy. From the early days, he had a clear sense of what should be done. “The first fundamental change, and the most important,” Shaykh Zayed has been quoted as remembering was: …the availability of drinking water. The bringing of water was …important. After [water came] everything started changing. Housing became available when there was none before, then infrastructure and Middle East Review of International Affairs, Vol. 10, No. 3 (September 2006) 77