The United Arab Emirates (UAE), created in 1971, is the Arab world's only working federation. Six of its seven emirates cluster around the northeastern corner of the country, while Abu Dhabi has a larger hinterland of semiarid desert relieved by occasional oases. The cities, watered by extensive irrigation systems, have lavish greenery. Prosperity once relied on pearls, but the UAE is now a sizable gas and oil exporter, and has a growing services sector.

UAE nationals are largely city dwellers, with Abu Dhabi and Dubai the dominant centers. They are greatly outnumbered by expatriates who arrived in the 1970s during the oil boom, and the Western expatriate community is permitted a virtually unrestricted lifestyle. Most UAE nationals are conservative Sunni Muslims of Bedouin descent, although there is a Shi'a community in Dubai with links to Iran. Islamic fundamentalism is a growing force among the young.

Poverty is rare in the UAE, where the government remains the biggest employer. Women in theory enjoy equal rights with men. A Presidential Marriage Fund discourages UAE men from taking foreign wives.

Strengths

Oil and gas reserves are fourth-biggest in OPEC. Soaring oil prices in 2000. Development of service industries and manufacturing sector. Since 2000, regional tax-free base for e-commerce.

Weaknesses

Lack of skilled manpower. Most raw materials and foodstuffs have to be imported. Water resources scarce.

The UAE's seven emirates – Abu Dhabi, Dubai, Sharjah, Ras al Khaimah, Ajman, Umm al Qaiwain, and Fujairah – are dominated by their ruling families. The main personalities are the ruler of Abu Dhabi, Shaikh Zayed, who holds the UAE presidency, and the four al-Maktoum brothers who control Dubai. The eldest, Shaikh Maktoum al-Maktoum, is ruler of Dubai and vice president and prime minister of the UAE.

President Zayed has relaunched the advisory Federal National Council in response to criticism of the lack of democracy. The growth of Islamic fundamentalism is also a concern. The freedoms granted to Westerners have aroused some anger but, for economic reasons, they are unlikely to be withdrawn.

The UAE is well known as an advocate of moderation within the Arab world. It maintains close links with most OECD states, especially the UK and the USA. In 1992, conflict flared when Iran seized control of three islands in the Strait of Hormuz. Attempts are being made to settle the dispute through diplomacy.

Training of UAE forces is limited, and personnel are mainly drawn from other Arab states and the Indian subcontinent. US air bases in the UAE supply refueling craft and were used in the 1991 Gulf War, subsequent air patrols over southern Iraq, and during the 2001 air strikes in Afghanistan. The countries of the GCC signed their first defense pact in 2000.

The UAE is a major exporter of crude oil and natural gas. Oil production accounts for a great part of export revenue. Mina Jabal Ali in Dubai is the world's largest man-made port and has attracted companies from more than 50 countries. Saadiyat Island off Abu Dhabi is being developed as a financial resort.

Despite the harsh desert climate, there is a rich variety of plants and animals. Shaikh Zayed champions conservation parks to avert the threat from hunting.

The roads are good. Five of the seven emirates have international airports, of which the busiest is Dubai International.

A high-quality system of primary health care is in place for all UAE citizens, with hospitals able to carry out most operations.

UAE citizens enjoy completely free education. Zayed University was set up in three emirates in 1998.

Street crime and muggings are rare. However, Dubai has a reputation as a transit point for the smuggling of narcotics and caviar.

UAE nationals enjoy one of the highest per capita income in the Arab world. There is no income tax, and oil revenues subsidize public services. Government policies encourage entrepreneurs.

Until the mid-1980s, tourism was minimal. Led by Dubai, the UAE has now launched initiatives to attract Western visitors during the winter for sunshine, heritage, water sports, desert safaris, and duty-free shopping.

The UAE was influenced by the Portuguese and the Ottomans, but British control became dominant in the 19th century.

• 1971 The UK withdraws as protecting power and the UAE federation is formed.
• 1991 UAE offers bases to Western forces after Kuwait is invaded.