28 August 2011 Last updated at 14:56 ET

United Arab Emirates profile

The United Arab Emirates (UAE) is a federation of seven states formed in 1971 by the then Trucial States after independence from Britain.

Since then, it has grown from a quiet backwater to one of the Middle East's most important economic centres.

Although each state - Abu Dhabi, Dubai, Ajman, Fujairah, Ras al Khaimah, Sharjah and Umm al Qaiwain - maintains a large degree of independence, the UAE is governed by a Supreme Council of Rulers made up of the seven emirs, who appoint the prime minister and the cabinet.

Before oil was discovered in the 1950s the UAE's economy was dependent on fishing and a declining pearling industry. But since 1962, when Abu Dhabi became the first of the emirates to begin exporting oil, the country's society and economy have been transformed.

The late Sheikh Zayed, ruler of Abu Dhabi and president of the UAE at its inception, was quick to seize on the potential of the oil industry. He oversaw the development of all the emirates and directed oil revenues into healthcare, education and the national infrastructure.

The oil industry has attracted a large influx of foreign workers who, together with expatriates, now make up more than three quarters of the population.

But the UAE's authorities also tried to reduce its dependency on oil exports by diversifying the economy, creating booming business, tourism and construction sectors.

While Abu Dhabi remained relatively conservative in its approach, Dubai, which has far smaller oil reserves, was bolder in its diversification policy.

Particularly during the credit boom that built up after 2000, Dubai sought to turn itself into the financial gateway and cosmopolitan hub of the Middle East.

It also began attracting vast amounts foreign investment for ever more ambitious construction projects, most famously the Burj Khalifa skyscraper - as of 2009, the tallest man-made structure ever built - and futuristic land reclamation projects, such as the palm-shaped artificial Palm Islands.

But the worldwide freeze in credit markets looked set to hit Dubai harder than oil-rich Abu Dhabi, prompting speculation that the balance of power in the UAE could shift back to its traditional political centre.

The UAE is one of the most liberal countries in the Gulf, with other cultures and beliefs generally tolerated, especially in Dubai.

However, politically it remains authoritarian. It was the only country in the region not to have elected bodies until 2006 December, when it convened a half-elected federal assembly, which, however, was restricted to a consultative role.