The Pandemic Further Consolidates Abu Dhabi’s Supremacy within the UAE

The advent of the COVID-19 pandemic seems to be igniting a new kind of competition between the UAE’s two foremost power centers—Abu Dhabi and Dubai. At the moment, the race is guided towards the ambition of becoming the premier logistical hub globally for the distribution of Covid-19 vaccines. In this race, the capital city Abu Dhabi is evidently in the lead, with the launch of the “Hope Consortium” initiative, a public-private partnership that has already facilitated the transport of 20 million doses since it was established last Fall. The chairman of the Department of Health in Abu Dhabi had hailed the initiative as a “continuation of all players collaboration of a UAE-based public-private partnership that spans the globe.” However, one striking observation is that the initiative does not include a single Dubai-based entity. This fact, alongside other recent moves from the Emirati government overwhelmingly confirms that long gone are the days when Abu Dhabi was content just being in the shadows of Dubai’s commercial success, the latter being the first to actually put the UAE on the map.

The Hope Consortium consists of five entities. At the forefront is Abu Dhabi’s Department of Health, the Abu Dhabi Ports Company (ADPC), Rafed—a healthcare procurement scheme launched in September by the ADQ, also known as the Abu Dhabi Developmental Holding Company—Etihad Cargo, and lastly Skycell, a Swiss pharmaceutical wholesaler. The entire development is also interesting in the sense that, much prior to the UAE’s independence in 1971, Dubai had already established itself as the region’s nerve center for logistical support. It was over 50 years ago that the first container port of the region, Port Rashid, was commissioned by then-Emir of Dubai Sheikh Rashid bin Saeed Al Maktoum. The Jebel Ali Port, constructed 40 years ago, remains the largest man-made harbor and the ninth busiest port in the world. However, on its part, the DPW (Dubai Ports World) – founded in 2005 and which manages 48 ports worldwide – had announced in January a partnership with UNICEF to distribute vaccines to lower and middle income group countries.

The Battle Playing out in the Skies

As a local newspaper raves about Abu Dhabi Ports having the Middle East’s largest capacity for cold chain and ultra-cold storage, Dubai International Airport boasts of a single refrigerated storage space of 15,000 square meters; it has been working with Pfizer since late last year to address the logistical challenge of shipping their vaccine, which requires storage at a temperature of -70 degrees Celsius for optimal efficacy. Till date, Dubai’s flagship carrier, Emirates Airline, has been reported to have delivered millions of doses of Covid-19 vaccines to Latin America, South Africa, and Egypt.

It has been a calamitous year for the airline industry globally; however, before the start of the pandemic, Etihad, the Abu Dhabi based UAE’s national carrier and also a member of Hope consortium, had already recorded a loss of $4.8 billion over a period of three years. As for Emirates, it recorded a revenue decline of about 74% for the first six months of FY 2020-21, starting in April. At the peak of the pandemic, rumors abounded of a possible merger between Etihad and Emirates, although these rumors were then refuted by the respective CEO and President of both the carriers.

Dubai’s Decade Long Recession

The power struggle between Abu Dhabi and Dubai has mostly been seen as a matter of the past. As a result of the 2008 financial crash, the UAE’s central bank – in which Abu Dhabi is a major stakeholder – had issued two timely bailouts to Dubai amounting to $20 billion. The current outstanding debt of Dubai is at a staggering 77% of the its GDP. Despite the trauma of the 2008 crash, the city had sprung back to life in a matter of a year with a string of positive attention-grabbing headlines like the unveiling of the longest unmanned metro system in the last quarter of 2009, the completion of the world’s tallest building, Burj Khalifa, in 2010, and the winning of the hosting bid for EXPO 2020 in 2013. In hindsight, the crash of 2008 looks as though it was just a prelude to a much worse crisis that was to befall the city, which in effect brought to the fore the true magnitude of the loss it inherited in terms of its financial and political autonomy since 2008. The collapse of oil prices in 2014 and the rising geopolitical tensions vis-a-vis Yemen, Qatar and Iran have ended up making Dubai’s stock market the worst performer in the Middle East.

Is This the New Normal?

It needs to be stressed that as Abu Dhabi and Dubai always pursued diverse growth trajectories, there was not much of a direct competition in any sector or undercutting financially of either emirate by the other. However, this status quo is being increasingly challenged by the onset of the COVID-19 crisis. As mentioned earlier, the announcement of a locally produced COVID-19 vaccine – Hayat Vax – further bolsters UAE’s attempt at vaccine diplomacy. The vaccine is being produced in partnership with China’s Sinopharm, and again sees Abu Dhabi leveraging its homegrown entities at most levels of production. At the forefront this time is G42, an AI and cloud computing company headquartered in Abu Dhabi. KIZAD, the industrial zone of the Abu Dhabi Ports, will see a new vaccine plant built for the very purpose. The only non-Abu Dhabi based entity as part of this joint Sino-UAE venture is the pharmaceutical company, Julphar, owned by the royalty of Ras Al Khaimah, a city in the Northern Emirates.

In May 2020, the Vice President of the UAE and the Emir of Dubai, Sheikh Mohammed Bin Rashid Al Maktoum, called the nation to make the fastest recovery from the pandemic. He also proposed the officials to form an ‘Emirates team’ to get onto the task, and went as far as even penning down a poem for the crown prince of Abu Dhabi and the de-facto ruler of the UAE, MBZ, in appreciation of his leadership during this crisis. While Abu Dhabi continues to reap the benefits of its deliberate overtime strategy of directing its hydrocarbon wealth into heavy industries and renewables, the average denizen of Dubai is just left to getting used to the city’s continued diminishing status over the past decade, which is arguably a fate that has befallen all former financial capitals of the Middle East, such as Beirut or Manama, due to ever shifting geopolitics of the region.