Behind the skyscrapers lies a fragile federal bargain shifting toward Abu Dhabi and tested by the Emirates’ ties to Washington and Israel.
The Cradle
What emerged was a calculated bargain among hereditary rulers who understood both their fragility and their ambition, as British power receded from the Persian Gulf and Washington’s shadow stretched steadily across the region.
That bargain still holds. But it has never been equal.
Seven Emirates, one destiny?
The UAE is routinely portrayed as a unified, stable, forward-looking state – a Gulf success story that leveraged oil wealth, global trade, and strategic alignment with the US to project power well beyond its size.
In recent years, it has added normalization with Israel and deepening security integration with Washington to that formula. Yet what is rarely acknowledged is that the UAE is not a monolithic state in the classical sense. It is a federation of seven hereditary emirates, each with distinct economic models, political cultures, and varying levels of wealth and influence.
The question, then, is not whether the UAE is stable today. It is whether the structural imbalances built into its formation can endure the mounting internal and external pressures of the coming years.
A federation built on asymmetry
The UAE was not created by a single ruling family consolidating power. It was born of negotiation. In December 1971, six emirates formed the federation. Ras al-Khaimah joined in February 1972, bringing the total to seven. From the outset, the union brought together territories that were unequal in resources, demography, and geopolitical weight.
Before British protection agreements carved out the Trucial Coast, large swaths of today’s UAE lay within Oman’s sphere of influence, where tribal confederations and maritime rulers operated under shifting Omani suzerainty. The federation is thus a recent political settlement, not the continuation of a historical state.
Abu Dhabi controls the commanding heights of the federation, overseeing roughly 96 percent of oil and gas production capacity – giving it not only the largest share of hydrocarbon reserves, but also decisive control over how and when that wealth enters global markets.
Dubai charted a different course. With limited oil, it built its identity on economic openness – ports, aviation, re-export, finance – turning geography into leverage. It compensated for resource scarcity through hyper-connectivity and risk-taking.
According to the Central Bank of the UAE, Dubai received 9.9 million international visitors who spent at least one night in the first half of 2025, and Dubai Airport handled about 46 million passengers during the same period.
The northern emirates followed other paths. Ras al-Khaimah relied more heavily on manufacturing, quarrying, and mid-scale trade. Sharjah positioned itself around education, culture, and a more socially conservative public identity, even as it sought to expand industrial capacity and job creation.
Fujairah capitalized on geography, sitting on the Gulf of Oman and serving as a critical energy and shipping outlet beyond the Strait of Hormuz. Ajman and Umm al-Quwain, smaller and more financially constrained, depended more directly on federal redistribution and shared sovereign infrastructure.
These differences remain embedded in the federation’s architecture.
The federal design itself acknowledges hierarchy. The Federal Supreme Council, composed of the seven rulers, holds ultimate authority over major national matters. Yet substantive decisions require the agreement of Abu Dhabi and Dubai.
In practice, this grants both emirates veto power on key federal issues. Rather than being merely two of seven; they are the twin pillars of the state. While that structure has ensured stability, it has also entrenched asymmetry.
Abu Dhabi’s consolidation
The ruler of Abu Dhabi chairs the Supreme Council for Financial and Economic Affairs (SCFEA), established by law in December 2020. This body sets policy on financial, investment, economic, petroleum, and natural resource affairs, oversees relevant entities, and appoints members of strategic investment bodies.
For the other emirates, this council formalized what had already become reality, that decisive national economic authority increasingly emanates from Abu Dhabi.
On 30 January 2026, Abu Dhabi’s new sovereign wealth entity, Limad Holding, acquired Abu Dhabi Holding, consolidating hundreds of billions of dollars in state assets – airlines, utilities, and ports – under the direct leadership of the Crown Prince Sheikh Khaled bin Mohammed bin Zayed. A Reuters report described the move as placing vast strategic assets under a tighter circle of control worth “hundreds of billions of dollars.”
Such consolidation reduces institutional fragmentation at the top. It also narrows the circle of decision-makers. In a federation built on negotiated balance, that has consequences. Fewer actors at the apex can mean greater efficiency. It can also raise the stakes of elite disputes during crises, particularly if other emirates feel sidelined.
The unease is rarely voiced publicly. It surfaces instead in subtle signals – commentary in Gulf media since 2019, warning of potential fragmentation; muted frustration among elites; and social media expressions that occasionally break through before being erased.
The episode involving Haitham bin Saqr bin Sultan Al-Qasimi, deputy head of the Ruler’s Office in Kalba, who briefly posted a tweet attacking President Mohammed bin Zayed (MbZ) before deleting it, offered a glimpse into tensions that rarely see daylight.
Dubai, Ras al-Khaimah, Sharjah: Pressure points
If fragmentation were ever to materialize, it would not resemble street protests or separatist parties. Political parties are banned, public dissent is tightly controlled, and internal mobility is regulated. The UAE is not structured for open contestation.
Instead, pressure appears in less visible domains such as elite cohesion, socio-economic bargains, and exposure to external financial shocks.
Glitzy Dubai illustrates the first line of vulnerability. Its model depends on credibility as a predictable, dynamic global hub. The Dubai International Financial Centre (DIFC) emphasizes its independent legal and regulatory framework to attract global capital. Yet that openness makes Dubai sensitive to shifts in the global regulatory climate.
Corporate tax, introduced for the 2023 fiscal year, and a local supplementary minimum tax taking effect on 1 January 2025 have forced Dubai’s long-standing model of easy entry and differentiated zones to adapt to a more uniform federal tax environment.
At the same time, repeated western warnings about the use of UAE-based networks for sanctions evasion and financial opacity have heightened reputational risk. Dubai carries a disproportionate share of financial exposure. A sudden contraction in capital flows or a reputational shock tied to sanctions enforcement could reverberate quickly through its economy.
Dubai has drawn closer to the federal core. The appointment of the crown prince of Dubai as minister of defense in July 2024 tethered Dubai’s leadership directly to a central sovereign function. It was a strategic alignment move – one that reduces the likelihood of overt divergence.
Ras al-Khaimah presents a different test. The emirate has pursued differentiated growth projects, most notably the Wynn Al Marjan Island integrated resort. In September 2023, the UAE Commercial Gaming Regulatory Authority (GCGRA) was established as a federal body to develop a framework for commercial gaming and national lotteries.
On 5 October 2024, Wynn Resorts received the UAE’s first commercial gambling license for Ras al-Khaimah. This marks a major policy shift in a federation that had long prohibited gambling.
The test is twofold. Federal regulation means centralized oversight, largely from Abu Dhabi. Yet social and cultural norms vary across emirates. If gaming becomes a significant revenue source and tourism magnet, Ras al-Khaimah’s bargaining power within the federation will increase. It may draw tourist flows that would otherwise head to Dubai or Abu Dhabi, sharpening internal economic competition.
Sharjah, meanwhile, balances a conservative cultural identity with industrial and energy expansion. In November 2025, Sharjah’s Petroleum Council announced a new natural gas discovery at the Al-Hadiba field, reinforcing the emirate’s long-term push to strengthen its domestic energy position.
Yet Sharjah also carries a heavier debt burden relative to its size. In its May 2024 sovereign rating assessment, S&P Global Ratings underscored the emirate’s comparatively elevated debt burden, with gross government debt standing at roughly 52 percent of GDP in 2023.
Each of these emirates operates under the same flag. Each also pursues a distinct model of legitimacy and growth.
Security state and elite cohesion
The second axis of potential strain lies in how dissent is managed. In the UAE, opposition is treated primarily as a security issue. Over the past year, high-profile cases linked to what authorities describe as terrorism-related offenses have resurfaced.
Human rights groups have reported on the so-called UAE84 case, a mass trial involving 84 individuals. On 4 March 2025, Human Rights Watch (HRW) stated that the State Security Division of the Federal Supreme Court rejected appeals and upheld convictions. Authorities accused the defendants of establishing or running a secret entity designated as terrorist under the Anti-Terrorism Law.
Such cases reinforce elite discipline. They also send a message about the boundaries of permissible discourse. In a federation dependent on negotiated power-sharing among ruling families, cohesion at the top matters more than public contestation below.
However, the absence of visible opposition does not automatically translate into the absence of tension. It means tension, if it exists, circulates within elite networks rather than in the streets.
External entanglements and internal cost
The UAE has deepened its integration with Washington’s security architecture and normalized relations with Israel, embedding itself further in US-led regional frameworks. These alignments deliver technological, military, and financial advantages. They also carry political and reputational costs across West Asia.
As the federation expands its involvement in Israeli-linked projects, it risks widening the gap between external strategy and internal social currents. For smaller or more conservative emirates, the calculus may not be identical to that of Abu Dhabi’s strategic planners.
The UAE remains far from collapse. Division is unlikely in the near term. But the federation’s durability rests on continuous management of asymmetry – economic, political, and cultural. As Abu Dhabi centralizes authority and external commitments deepen, the margin for error narrows.
The UAE is one country in law. In practice, it is seven emirates negotiating power under one flag. Whether that negotiation remains balanced will determine the federation’s future.
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