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Sat 6 Aug 2011 10:15 AM

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UN agency questions UAE's wealth disparities

Economic disparities between emirates are slowing development, says UN Development Programme

UN agency questions UAE's wealth disparities
UN agency questions UAE's wealth disparities
Dubai skyline (Bloomberg Images)
UN agency questions UAE's wealth disparities
UN agency questions UAE's wealth disparities

Economic disparities between the seven-member UAE are slowing the development of the Gulf state, the UN Development Programme (UNDP) has said.

In an interview, Elissar Sarrouh, UNDP resident representative, said those gaps showed the need to rethink parts of the economic strategy that turned the country from a sleepy desert backwater in the 1960s into an oil powerhouse with the world's eighth highest per capita income at $47,000.

"The economic development model of the UAE is not unified and this calls for rethinking of the federal development paradigm," she said.

"One of the focus areas of UNDP in the UAE is bridging the regional disparities gap and focus on sustainable human development and poverty reduction in the northern emirates."

The UAE, the world's third-largest oil exporter, which is hoping to be upgraded to emerging market status from frontier by the index provider MSCI , has escaped the popular protests that have rocked nearby Bahrain, Oman and Yemen.

But the concentration of its wealth in oil-rich Abu Dhabi and trade and business hub Dubai has led to uneven development in other emirates, raising concerns that tensions could be fuelled if the gap between rich and poor widens.

The UAE has pledged to spend $1.6 billion in the northern emirates - Ras Al Khaimah, Sharjah, Ajman, Fujairah and Umm al-Quwain, which have long relied on richer Dubai and Abu Dhabi. The federation has also introduced bread and rice subsidies and hiked military pensions.

The UNDP had hoped to get $15 million from the UAE government and $1 million from other parties to support its 2007-2011 development programme for the emirates, which focused on environment, social and economic development, empowerment of women, and HIV/Aids.

But Sarrouh said the UNDP has so far received only half of that amount.

"We hope that the rest of the funds will be allocated to UNDP in order to develop new programs and initiatives under the current programme priorities," she said.

For the programme to address disparities between the northern emirates and the rest of the federation, the planned government contribution was marginal, she said, considering the development needs and priorities in these emirates.

The agency said the Gulf state was on track to achieve UN targets for addressing extreme poverty in the world by 2015.

In 2010, the UAE ranked highest among Arab states and number 32 in the world in terms of human development.

The UAE's primary education enrolment rate stands at 98 percent and the literacy rate among 15-24-year olds is 99 percent.

Child mortality in the country is 10.6 per 1,000 births and the HIV/AIDS prevalence rate is below 0.2 percent.

"The UAE is definitely not lagging behind in terms of development... It has become a major economic and investment force," Sarrouh said.

"There is a keenness from the leadership to focus on creating new job opportunities and ensuring employment for young Emiratis who have graduated from universities," she said.

Analysts polled by Reuters in June expect the UAE economy to expand by 3.7 percent this year.