The United Arab Emirates (UAE) is arguably the most politically stable country in the Arab world. It is currently edging towards reforms, largely at the behest of the US' limited agenda to introduce popular participation in the Gulf States, but these will be symbolic and will not cause any fundamental shifts in the power dynamics. The UAE has few explicit security threats. However, its inauspicious geo-strategic location dictates a permanent state of insecurity. Minor territorial disputes with Iran continue to put a low-level security pressure on the Emirates, while instability in nearby Iraq and political uncertainties in the wider region provide reason for caution. The security threats to the UAE in terms of insurgency and terrorism are thus far not significant. The UAE's 10-year modernisation programme has created a military with the potential to challenge Iran and Saudi Arabia for regional dominance. The confluence of strategic imperative and immediate wealth contributed to the UAE's establishment as a procurer, not a producer, of arms. The UAE lacks an established local defence industry and its forces are almost entirely reliant upon foreign procurement, training and expertise. The Offsets Group Programme mandates that foreign contractors establish joint ventures with local firms, providing the opportunities for technology transfers and the establishment of local maintenance and manufacturing facilities. A number of indigenous firms are however making limited progress in strengthening their position within the industry. Strong support for advanced military procurements and upgrades drive the industry for the medium term. Coming to the end of a 10-year US$15bn defence modernisation programme, the UAE is the most rapidly developing military power in the Gulf region. The UAE engages in a brisk arms trade with a variety of international suppliers. Regional security imperatives mean that the UAE is consistently looking to maintain its credible deterrent force by importing the latest technologies. To dilute the potential political effect of heavy reliance of foreign arms producers, the UAE consciously aims to diversify its suppliers among the four main global suppliers of arms: the US, France, the UK and Russia. The UAE does not export arms to any significant degree. It seems the Emirates have little to worry about for the time being - a stable political system, a strong economy, limited security threats, and a military with technology that can, in some aspects, rival the best in the world. [ABSTRACT FROM PUBLISHER]