The UAE economy remains robust despite numerous issues that offer potential to derail growth. Driven by the country's proven oil reserves, the economy remains largely isolated from the military conflicts and turbulent political situations that surround it in the region. The federation is dominated by the two main emirates of Abu Dhabi and Dubai which contribute nearly 80% of national GDP. While Dubai's commercial hub had previously dominated on the international stage, the recent financial crisis has meant that political power is shifting in favour of Abu Dhabi on the back of its oil industry. Control of military and police forces is separated between the seven emirates, resulting in some tensions. However, overall decision making is in the hands of a select few rulers, which limits democratic influence. Considering the small size of its population, the military capabilities of the federation are impressive. The federation has little national manufacturing and as a result nearly all equipment is imported. The UAE maintains strong links with all the major arms manufacturing countries - France, Russia, UK, US - by splitting procurement equally between suppliers. The UAE has an exceptionally high ratio of foreign non-citizens - only 1mn of the estimated 6mn population are Emiratis. The largest population are from India, outnumbering native Emaratis at 1.75mn. The fact that many are poorly paid and work in difficult conditions has led to some demonstrations in recent years. There remains a serious risk that violence may potentially break out if more is not done to control or ease frictions. The country's geographical location places it close to several serious security risk zones: however, at present, there is no immediate threat to the UAE. The wars in Iraq and Afghanistan, and resurgent fundamentalism in Iran, all present the potential to grow into larger issues. This is particularly true of the situation in Iran, as the two countries are engaged in an ongoing dispute over strategic islands in the Gulf. Political stability in the country relies heavily on strong oil prices to bolster the current regime and prevent discontent with the current lack of democracy, transparency, or civil rights. As a result, risk ratings could be seriously affected by any large downturn in the price of oil. In the worst case scenario, however, the country is unlikely to see sudden or violent action. Any changes are likely to be gradual and evolutionary rather than disruptive. [ABSTRACT FROM AUTHOR]