Amid the political and security crises of recent years in the Middle East and the on-again off-again U.S. policy of democracy promotion, the oil-rich United Arab Emirates (UAE) have experienced rapid social and economic development in the absence of genuine democratic reform. Dubai provides the most striking case of a government carefully—and successfully—structured to serve this development.

The general terms of Dubai's development trajectory are well documented.  Lacking significant energy reserves compared to Abu Dhabi, Dubai's leaders diversified their economy, becoming a regional center for finance and business services. Government continues to be the driving force behind development in Dubai, despite efforts to establish a more traditional private sector removed from government financing. The “free zone” strategy, offering full foreign ownership of businesses in a tax-free environment, continues to attract multinationals to establish regional offices here, with the arrival of Halliburton providing the latest evidence. Government operates these free zones as businesses, with management teams accountable to growth targets and the bottom line. Each free zone operates according to laws and regulations tailored to the businesses operating there. These laws often contradict federal ones, but thus far have not produced much public protest from Abu Dhabi, the most politically powerful of the emirates.

The largest development projects here, mostly in the real estate sector, also fall under a government umbrella. Dubai has consolidated most of its local and foreign projects in two holding companies, Dubai World and Dubai Holding (containing approximately one hundred five and twenty-six different companies respectively). These holding companies will continue to finance and execute large-scale development projects on the horizon, such as Dubailand and the offshore Jumeirah Palm and World. Emaar, a publicly-traded real estate firm building the Burj Dubai (planned to be the world's tallest tower), at one time contributed the largest share volume to the limited Dubai stock market.  But Emaar recently announced a land-for-shares deal with Dubai Holding, increasing the government control as a majority shareholder.

The latest Dubai census figures released in March 2007 show a population around 1.4 million, of which fewer than 20 percent are Emirati citizens. A recent Gulf News editorial by a UAE University professor observed that by 2025, native Emirati citizens will constitute less than 1 percent of UAE residents if the current rate of foreign immigration persists. As Dubai and the UAE evolve towards this unprecedented model of a state with almost no citizens, governance is becoming an increasingly delicate balancing act between Dubai's native and expatriate constituencies.

Recent policy measures illustrate Dubai's sensitivity about the relationship between its population and development. For locals, there is increased government enforcement of the Emiratisation (encouraging Emiratis to become educated and to replace skilled expatriate workers) in Dubai institutions. The latest Dubai Strategic Plan, released in February 2007 by Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, emphasizes social development through education and employment as a priority. The recent “Careers UAE Exhibition” received extensive press coverage, bringing over one hundred businesses to college campuses in order to connect Emirati students with prospective employers.

While Emiratisation is a long-term investment in human capital, government policy continues to cater to the expatriate labor force driving development at present. Recently, freehold real estate became available for purchase by foreigners. This move relieved growing discontent among expatriates who had been closed out of Dubai's booming real estate market. In mid-March, the Labor Ministry announced that a minimum wage will be established for the construction sector and also eased the paperwork associated with getting work permits, instituting a 24-hour online system for companies compliant with labor laws. But the ministry also devotes effort to enforcing hiring quotas for Emiratis.

In the midst of all this economic and business development, Emiratis have paid far less attention to the question of political reform than have many Arabs in other countries. Even the one cautious step taken toward political reform—the UAE's first-ever elections to the Federal National Council (FNC), an advisory body lacking legislative powers, in December 2006—were primarily a political expression of Emiratisation.

In the unique economic and demographic situation of the UAE, there is no reason for the United States to press assertively for political reform. But the United States can enhance the evolution of this customized Dubai model by advocating worker's rights, press freedom, and government transparency. Progress in these areas will further Dubai's economic growth in the short term and possibly ignite a more participatory political system in the longer term. Recent events—including a rare protest by laborers near the rising Burj Dubai, a forum on UAE press freedom organized by Emirati students, and the increasing size and influence of the local blogosphere—suggest there is an opening to begin addressing these sensitive areas.

Jeremy Tamanini is a Fulbright scholar in the United Arab Emirates.