8, long-term
growth could be threatened by the government's plans to reinstate
tax, trade, and customs privileges and to maintain restrictive grain
export quotas.

United Arab Emirates
The UAE has an open economy with a high per
capita income and a sizable annual trade surplus. Despite largely
successful efforts at economic diversification, nearly 40% of GDP is
still directly based on oil and gas output. Since the discovery of
oil in the UAE more than 30 years ago, the UAE has undergone a
profound transformation from an impoverished region of small desert
principalities to a modern state with a high standard of living. The
government has increased spending on job creation and infrastructure
expansion and is opening up utilities to greater private sector
involvement. In April 2004, the UAE signed a Trade and Investment
Framework Agreement with Washington and in November 2004 agreed to
undertake negotiations toward a Free Trade Agreement with the US.
The country's Free Trade Zones - offering 100% foreign ownership and
zero taxes - are helping to attract foreign investors. Higher oil
revenue, strong liquidity, housing shortages, and cheap credit in
2005-07 led to a surge in asset prices (shares and real estate) and
consumer inflation. Rising prices are increasing the operating costs
for businesses in the UAE and adversely impacting government
employees and others on fixed incomes. Dependence on oil and a large
expatriate workforce are significant long-term challenges. The UAE's
strategic plan for the next few years focuses on diversification and
creating more opportunities for nationals through improved education
and increased private sector employment.

United Kingdom
The UK, a leading trading power and financial center,
is one of the quintet of trillion dollar economies of Western
Europe. Over the past two decades, the government has greatly
reduced public ownership and contained the growth of social welfare
programs. Agriculture is intensive, highly mechanized, and efficient
by European standards, producing about 60% of food needs with less
than 2% of the labor force. The UK has large coal, natural gas, and
oil reserves; primary energy production accounts for 10% of GDP, one
of the highest shares of any industrial nation. Services,
particularly banking, insurance, and business services, account by
far for the largest proportion of GDP while in