ABSTRACT
The federal government has effectively cut its current spending by reducing the number of its employees. It has made a start at reducing subsidies and the size of the welfare state by raising domestic petroleum prices and by directing foreign children into the private schooling system. Higher oil revenues would alleviate many of the present difficulties. As with its Gulf Cooperation Council partners and other Organization of Petroleum Exporting Countries oil exporters, the United Arab Emirates (UAE) has had some difficulty in adjusting to the sharp drop in demand for its oil that has occurred over the past several years. Income from oil exports accounts for between 85 percent and 95 percent of federal revenues. Defense spending is the largest single category in the federal UAE budget. The UAE maintains one of the largest armies as a percentage of population in the world.
