Capital’s Emirates

At first glance, the United Arab Emirates, an oil-rich monarchy with a long history of loyalty to American empire, appears to be adapting to the multipolar order. Since 2022 it has recused itself from Washington’s economic war on Russia. Abu Dhabi, the emirate responsible for the federation’s foreign and energy policy (and the one sitting on most of its oil reserves), has blocked the exclusion of Russia from OPEC+ monthly quotas. Dubai, the region’s major freight centre, exports Russian-bound drones and semiconductors, while allowing Russian-originating bullion and diamonds to pass through its Gold & Commodities Exchange. The city’s property market and docks have been made available for Russians who need a place to hide their wealth.

The UAE also provides invaluable services to another American foe: Iran. Ports in Fujairah facilitate the crude shipments which allowed Tehran’s oil exports to jump by 50% in 2023. Abu Dhabi orchestrates sizeable re-export flows, while Dubai provides shadow banking and import arrangements. Official statistics show the UAE conducting around $25 billion worth of trade per annum with Iran, earning it second place on the latter’s bilateral ledger, without factoring in an estimated $10 billion worth of illicit exchanges.

And then there is China, now the largest buyer of goods made in or transiting through the UAE. Roughly two-thirds of all Chinese exports to the Middle East, Africa and Europe pass through Emirati ports. To streamline exchange, significant currency swap agreements have been established between the central banks, and Chinese commercial banks have become ensconced in Dubai’s International Financial Centre, where they hold a quarter of all assets. The Bani Fatima – the moniker given to the UAE President and ruler of Abu Dhabi, Muhammad bin Zayed Al Nahyan, and his five maternal brothers – selected Huawei to build the country’s 5G infrastructure in 2019, to the NSA’s chagrin. In another apparent rebuke to Washington, Tahnoun bin Zayed Al Nahyan, the UAE’s spy chief, made a $220 billion investment through his family’s firm into ByteDance, the parent company of TikTok.

In some ways, the UAE’s bid for geopolitical autonomy is real – its refusal to choose between rival superpowers a privilege born of unique financial resources as well as lobbying and political acumen. (The country also received various dispensations from Washington by signing the Abraham Accords in 2020.) But the Emirates’ motivations are more complex than mere sovereigntism. On closer examination, many of their recent actions can be understood as respecting, rather than renouncing, obligations to empire. Despite partnerships with nonconforming states, the country remains committed to US-led neoliberal globalization: a faithful servant of what Ellen Meiksins Wood called the ‘empire of capital’.

The UAE’s relations with Russia are a case in point. Though they seem to contradict American interests, in reality they facilitate the US strategy of keeping global commodities markets functioning as if the war in Ukraine were not happening. Mindful of supply shortages and their effect on inflation, Washington has made its energy sanctions easy enough to circumvent – using the UAE as a conduit for Russian crude, which has even flowed into New York’s Upper Bay without too much handwringing. The EU, for its part, has enacted legislation to sanctify the arrangement, exempting refined products from the G7’s regulations. Admittedly, the US Treasury Department decided last winter to sanction four shipping companies domiciled in the UAE for transporting Russian crude sold above the G7 price limit of $60 a barrel. But this was clearly a tokenistic gesture – intended to show that the White House was doing something about violations, which have been constant since the price limit was introduced. The penalties were too small to have any real effect.

Modest gas sales in yuan aside, Emirati commitments to the dollar and to the dominance of American finance also remain steadfast. Pricing virtually all sales of oil and oil-derived products in greenbacks, and keeping most of its windfall profits abroad, the UAE pumped $45 billion into eurodollar and US banking markets in 2022 alone. The following year, Emirati institutions increased US treasury holdings by about 40%, further easing liquidity conditions and helping to pay Washington’s fiscal and current account deficits. Since Covid, the UAE’s enlisting of American banks as primary underwriters for their bond issues has furnished those banks with an ample source of fresh revenue and cash flow. The country’s largest sovereign wealth funds – the Abu Dhabi Investment Authority (ADIA), Mubadala and the Abu Dhabi Developing Holding Company (ADQ) – have meanwhile been recycling massive sums of petrodollars into US shadow banks.

ADIA and Mubadala have also been propping up what is now arguably the key institutional pillar of American finance: asset management. ADIA entrusts 45% of its capital to Blackrock et al., while Mubadala retains a non-negligible equity stake in the same outfit. As part of the Biden Administration’s ‘Partnership for Accelerating Clean Energy’, the Al Nahyan family’s asset management firm has pledged $30 billion worth of green investment, to be co-managed with Blackrock. In arranging long-term leases of forest land in Liberia, Kenya, Tanzania, Zambia and Zimbabwe, the UAE has played a key role in emerging carbon credit markets – helping to bolster Washington’s absurd ‘derisking’ climate rescue strategy.

Of similar benefit to US empire is the maritime trade network that the UAE has pieced together through the dealings of DP World and the AD Ports Group – state-owned firms run by Dubai and Abu Dhabi respectively. Their role is to direct increasing shares of global trade through Emirati-owned mega ports, facilitate security arrangements with partner/client countries, and acquire spaces from which the UAE can launch military operations, as when the Emirates attacked Yemen from a DP World port in Eritrea. The Emirati companies build and manage ‘free zones’ around their ports, which operate beyond national labour laws and smooth out logistical frictions arising from the intersection of Chinese, Indian and American commercial activities. Markets along the Horn of Africa, once loosely embedded in the circuitry of the global economy, are now being fully integrated thanks to these zones. By this means, the UAE provides other states – the US chief among them – with spaces to absorb their export capital and advance their geostrategic interests. In return, it extracts rents on a large share of the world’s trade. Its control over key logistical sites is now set to extend to the Indian and Pacific Oceans via recent port takeovers in Pakistan, India and Indonesia.

Global capital is likewise served by the state-owned – or, more precisely, royal-owned – structure of the UAE’s economy. The system’s idiosyncrasies can, from time to time, transgress the principles of free competition or corporate governance. First Abu Dhabi Bank, chaired by Sheikh Tahnoun and majority-owned by Mubadala and the royal family, has granted his royal highness and other board members more than $3 billion in loans. Tahnoun, who chairs public and private institutions with total assets worth more than $1.5 trillion, has used his command of public resources and regulatory powers to propel his International Holding Company, a private Al Nahyan family-owned entity, from total obscurity to a market capitalization larger than Goldman Sachs in the space of a few years. Yet, such excesses aside, the Al Nahyans, along with Dubai’s ruling Al Maktoum family, have been widely praised for their economic management and openness to foreign investment. They typically act as the first risk-bearers within the MENA region, opening up opportunities for traders in London and New York to grab an easy scalp. In relieving Egypt’s balance-of-payment strains through a $35 billion investment in February, ADQ allowed Western bond traders to safely return to the country and collect enormous interest payments on its sovereign debt. The UAE’s state capitalism can thus serve as a vehicle for investors to navigate the rise of new actors within the structures of contemporary globalization.

Assessed in full, then, the UAE’s devotion to the empire of capital is pure, even though its relationship with Washington shows some signs of surface fracture. The Emiratis know that American dominance is sustained not only by military might, but by the free movement of capital, the management of labour and trade hierarchies, the exorbitant privilege of the dollar and the availability of offshore hideaways. The UAE upholds these principles in all its commercial engagements, including those involving Russia, China and Iran. In contrast, parts of the American political establishment are willing to compromise them by pursuing self-destructive trade wars and weaponizing the global financial system. The apparent divergence between the UAE and US is less the result of an imperial custodian going rogue than of an emperor no longer able to discern, let alone honour, his best interests.

Since the Arab Spring, the UAE no longer views the US as a reliable protector: a scepticism that was fuelled by Biden’s lackadaisical response to the Houthis’ attacks on UAE territory and the Iranian seizures of oil tankers. Even so, by maintaining close relations with particular fractions of US capital – the financial sector in particular – Emirati elites hope to preserve their position in the imperial matrix: one that allows them to augment their wealth, consolidate their power and obstruct the possibility of social change.

None of this is to imply that the UAE is without internal contradictions. Since 2011 especially, it has adopted a muscular military interventionism which has often hindered rather than helped capital accumulation. The Emirati-Saudi misadventure in Yemen was one such instance, which expedited Ansar Allah’s maturation into a force capable of redirecting maritime traffic around the Cape of Good Hope. The UAE’s support for Zintan militias – and, later, Khalifa Haftar in Libya – was another, which fomented political instability and disrupted oil production, while the transnational campaign against the Muslim Brotherhood was, at best, a waste of resources. Nevertheless, Abu Dhabi’s violence, even when it has resulted in short-term losses, has never been wholly useless to capital. While martial crackdowns across the Middle East and North Africa may have foreclosed investment opportunities temporarily, they have also narrowed the horizons of popular movements. By forcing those aspiring for social, political and economic transformation into more defensive postures, they have helped protect the region’s class relations and power distribution. 

As Washington continues to restructure its empire in the years ahead, the UAE will exploit this transition by playing all sides to its material and strategic advantage, while also working to preserve global capital’s boundless hegemony. It is possible that this will lead to fractures between the US and its deputy, which could create openings for a politics of democratization and redistribution. Yet, given the coordinates of the present conjuncture, it is more likely to have the opposite effect: strengthening the dominance of a rapacious neoliberal monarchy, which can court America’s adversaries without weakening the power of its patron. 

Read on: Mike Davis, ‘Fear and Money in Dubai’, NLR 41.