Introduction:
The Trucial States of the Persian Gulf coast granted the UK control of their defense and foreign affairs in 19th century treaties. In 1971, six of these states - Abu Zaby, 'Ajman, Al Fujayrah, Ash Shariqah, Dubayy, and Umm al Qaywayn - merged to form the United Arab Emirates (UAE). They were joined in 1972 by Ra's al Khaymah. The UAE's per capita GDP is on par with those of leading West European nations. Its generosity with oil revenues and its moderate foreign policy stance have allowed the UAE to play a vital role in the affairs of the region.

Location: Middle East, bordering the Gulf of Oman and the Persian Gulf, between Oman and Saudi Arabia

Population: 2,602,713 (July 2006 est.)

Languages: Arabic (official), Persian, English, Hindi, Urdu

Country name: conventional long form: United Arab Emirates
conventional short form: none
local long form: Al Imarat al Arabiyah al Muttahidah
local short form: none
former: Trucial Oman, Trucial States
abbreviation: UAE

Capital: name: Abu Dhabi
geographic coordinates: 24 28 N, 54 22 E
time difference: UTC+4 (9 hours ahead of Washington, DC during Standard Time)

Economy - overview:
The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Its wealth is based on oil and gas output (about 30% of GDP), and the fortunes of the economy fluctuate with the prices of those commodities. Since the discovery of oil in the UAE more than 30 years ago, the UAE has undergone a profound transformation from an impoverished region of small desert principalities to a modern state with a high standard of living. The government has increased spending on job creation and infrastructure expansion and is opening up its utilities to greater private sector involvement. In April 2004, the UAE signed a Trade and Investment Framework Agreement (TIFA) with Washington and in November 2004 agreed to undertake negotiations toward a Free Trade Agreement (FTA) with the US. Higher oil revenue, strong liquidity, and cheap credit in 2005-06 led to a surge in asset prices (shares and real estate) and consumer inflation. Rising prices are increasing the operating costs for businesses in the UAE and degrading the UAE's allure to foreign investors. Dependence on a large expatriate workforce and oil are significant long-term challenges to the UAE's economy.