Nestling at the Southern end of the Persian Gulf is the modern nation of the United Arab Emirates (UAE). The UAE was formed in 1971 from the amalgamation of seven different independent sheikdoms which had previously been part of a British protectorate called the Trucial States. The largest of these seven are Abu Dhabi and Dubai. Today the UAE is an oil fueled development success with astonishing urban development in Abu Dhabi and Dubai, the latter currently boasting the world’s tallest building. You can see signs of the remarkable transformation in the city state in the last 50 years in this picture.
But this was not always the case, even after the oil came on stream. Abu Dhabi has been run since the 18th century by the Al-Nahyan family, the dominant family in a loose confederation of families known as the Bani Yas. In 1928, Shakhbut bin Sultan Al-Nahyan inherited the title of Sheikh. Serious oil prospecting had begun in the Persian Gulf in the 1920s, but Shakhbut resisted giving any concession until 1939. Even after the oil and oil money began to flow, he resisted spending much of it on his kingdom. In the early 1950s he banned all new construction, including roads and required that anyone who wanted to build anything had to ask for his personal permission, which he rarely gave. He didn’t believe in schools either. In the early 1950s, the historian Christopher Davidson reports in his book Abu Dhabi: Oil and Beyond, Shakhbut was approached by the new ruler of Sharjah for advice concerning whether or not the sons of an exiled man should be permitted to remain in a school in Sharjah, Davidson notes (p. 35):
Shakhbut bragged that such a complication would never arise in Abu Dhabi because there was not even a single school.
When finally a school was opened in 1958, the ruler refused to allow any foreign teachers and banned all of the teaching materials in use in Dubai and Sharjah. The school had to close. When it re-opened in 1961, the teachers could only teach subjects related to Abu Dhabi; international history and geography were banned. In the mid 1960s the British agent for the Trucial States remarked (quoted in Davidson, p. 45):
it could hardly seem stranger that this potentially oil-rich town now consists of just barasti huts, a broken down market … and a few buildings out up by the oil company.
It certainly would seem strange to a development economist. Why not allow roads? Schools? But readers of Why Nations Fail and this blog will recognize that in fact neither the outcome nor the motivation was strange. Sheikh Shakhbut, like many autocrats before him, was afraid that promoting development would cause political instability and undermine the grip of the Al-Nahyan family on power. As Davidson himself notes (p. 32), Shakhbut
feared that any rapid oil-financed development would have far reaching socio-cultural consequences for Abu Dhabi.