United Arab Emirates Defence and Security Report Q3 2011

Regardless of the looming clouds on the horizon stemming from the political crisis in the Middle East and North Africa (MENA), the outlook for the United Arab Emirates (UAE) has gradually brightened since the start of 2011. As one of only a handful of countries that have not seen large-scale public demonstrations as a result of the regional upheaval, perceptions surrounding underlying economic and political stability in the UAE have been given a considerable boost in recent months. In addition to its higher living standards compared to other countries across the region, a demographic profile heavily skewed towards expatriate labour underpins our view that the risks of public demonstrations or protest activity similar to that seen elsewhere in MENA is unlikely in the near term.
With respect to instability in the MENA region, it is significant that in March 2011, the UAE deployed 12 fighter jets to Decimomannu, Italy. While not a member of NATO, the UAE sent the planes to enforce an UN Security Council Sanctioned no-fly zone on Libya. According to a report by AFP, in late April one of the F-16s crashed upon landing in Italy, with the pilot ejecting safely.
In external troop movements, April 2011 saw the South Korean Joint Chiefs of Staff (JCS) chairman General Han Min-koo visit 130 South Korean troops stationed in the UAE. The Korea Herald reports that it was the first official visit of a JCS chief to the UAE. The unit, deployed in January 2011, is helping to train local special warfare troops and follows a request made by the UAE in August 2010.
On the procurement front we note that according to the Military Balance, in late 2010, the country requested 30 Block III Apaches and 30 AH-64D Block II lot 10 Apaches, remanufactured to Block III configuration, from the United States. The publication also notes that four of the six C-17 aircraft the UAE recently procured from Boeing are due for delivery in 2011.
Our analysis of the country’s macroeconomic conditions intimate that significant challenges await over the coming quarters, most notably Dubai's lingering debt repayment schedule. Despite these longer-term issues, we are becoming increasingly confident about the economy's growth potential this year. We have revised up our forecast for real GDP growth in 2011 to 3.3% from 3.0%

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Executive Summary . 5
SWOT Analysis 6
United Arab Emirates Security SWOT 6
United Arab Emirates Defence Industry SWOT . 7
United Arab Emirates Political SWOT .. 8
United Arab Emirates Economic SWOT 9
United Arab Emirates Business Environment SWOT 10
Global Political Outlook .. 11
Japan After The Quake 12
Global Hotspots: Libya, Iran, Afghanistan, Korea 12
Wild Cards To Watch 17
Middle East Security Overview 19
Political Risk Analysis - The Strategic Outlook For The 2010s 19
The Middle East In A Global Context .. 19
Challenges And Threats To Stability And Security. 19
Regional Power Dynamics . 28
Nuclear Proliferation 30
External Powers.. 31
Scenarios For The Middle East 32
Security Risk Analysis . 35
BMI’s Security Ratings 35
Table: Middle East And Africa Defence And Security Ratings . 35
Table: Middle East And North Africa State Vulnerability To Terrorism Index . 36
UAE Security Risks 36
City Terrorism Rating .. 37
Table: BMI’s Middle East And North Africa City Terrorism Index 38
Political Overview 40
Domestic Politics 40
Long-Term Political Outlook 41
Domestic Security Overview . 47
Internal Security Situation . 47
Emirate Rivalry 48
Insurgency And Terrorism . 48
Latest Developments . 49
External Security Situation 50
Global Engagement .. 51
Latest Developments . 51
Armed Forces And Government Spending . 53
Armed Forces .. 53
Army . 53
Navy .. 54
Air Force 55
International Deployments . 55
Weapons Of Mass Destruction . 56
Market Overview .. 57
Arms Trade Overview .. 58
Industry Trends And Developments .. 58
Procurement Trends And Developments . 59
Latest Developments . 61
Industry Forecast Scenario 62
Armed Forces .. 62
Table: The UAE’s Armed Forces, 2002-2008 (‘000 personnel, unless otherwise stated) 62
Table: UAE’s Available Manpower For Military Services, 2008-2015 (aged 16-49, unless otherwise stated) . 62
Defence Expenditure . 62
Table: The UAE’s Government Defence Expenditure, 2008-2015 .. 63
Table: UAE Defence Expenditure Scenario – Changing % Of GDP, 2008-2015 (US$mn) 64
Defence Trade .. 64
Table: The UAE’s Defence Exports, 2008-2015 (US$mn) . 65
Table: The UAE's Defence Imports, 2008-2015 (US$mn) .. 66
Table: The UAE's Defence Trade Balance, 2008-2015 (US$mn) . 66
Key Risks To BMI’s Forecast Scenario 67
Macroeconomic Outlook . 67
Table: United Arab Emirates - Economic Activity, 2008-2015 . 69
Company Profile .. 70
Abu Dhabi Ship Building Company (ADSB) . 70
Country Snapshot: UAE Demographic Data .. 72
Section 1: Population 72
Table: Demographic Indicators, 2005-2030 . 72
Table: Rural/Urban Breakdown, 2005-2030 73
Section 2: Education And Healthcare .. 73
Table: Education, 2002-2005 .. 73
Table: Vital Statistics, 2005-2030 .. 73
Section 3: Labour Market And Spending Power . 74
Table: Employment Indicators, 2000-2004 74
Table: Consumer Expenditure, 2000-2012 (US$) .. 74
Methodology .. 75
How We Generate Our Industry Forecasts 75
Defence Industry . 75
City Terrorism Rating .. 76
Table: Methodology .. 78
Sources 78
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