Abu Dhabi and Dubai have been rivals for decades, one building world-class museums as fast as the other has been throwing up skyscrapers.
But the healthy competition that's helped transform them into two of the Middle East's most vibrant and bustling cities has soured as they grow increasingly divided over their relations with two other rivals — Iran and the United States.
At first, the differences were cultural. Dubai's sprawling beaches, American-style theme parks and over-the-top shopping malls clash with the more prim sophistication of Abu Dhabi, which is building a symphony orchestra and branches of the Guggenheim and Louvre museums.
But now Dubai's soaring commercial growth, liberal Western outlook — and massive trade with Iran — are becoming a liability for U.S.-friendly Abu Dhabi.
With half the population and glitz of Dubai, Abu Dhabi is the richest emirate and capital of the seven that make up the United Arab Emirates. As the world's fourth largest exporter of oil, Abu Dhabi is also the main provider for the rest of the semi-independent states, including Dubai.
That gives Abu Dhabi the political capital to assert its authority and rein in Dubai's at times murky commercial dealings with Iran.
The UAE and other Sunni-ruled Arab states are suspicious of Shiite Iran, just a boat ride across the Gulf from Dubai. They share the West's concern over Iran's nuclear program and fear Tehran's growing ability to empower Shiites across the region, especially in Iraq.
Iran and the UAE have diplomatic ties and both benefit from their booming commerce. Thousands of Iranian business are based in Dubai, which also hosts the Arab world's largest Iranian expat community.
With U.S. sanctions against Iran already in place and Washington threatening new penalties for Tehran's failure to curb uranium enrichment, Dubai is finding it more difficult to defend its lucrative commercial dealingswith Iran's ruling elite.
The UAE has been a loyal ally in America's war on terror. The U.S. has been allowed to operate in an airbase in the outskirts of Abu Dhabi and its warships regularly dock in Dubai's ports.
But Iranian investment in Dubai — about US$14 billion each year — buoys a robust development plan largely financed with foreign cash. The trade is also huge boost to Tehran's confidence that it can survive Western-imposed sanctions.
"Iran is not suffering from sanctions if it can still bring things through Dubai," said Jean-François Seznec, a Gulf specialist at Georgetown University.
Last year, the Bush administration asked Abu Dhabi to crack down on companies suspected of smuggling equipment to Iran to build explosive devices killing American soldiers in Iraq and Afghanistan. The White House also expressed concerns about shipments to Iranian front companies operating in Dubai.
Within days, the UAE president announced a law that allows authorities to "ban or restrict imports, exports or passthrough shipments for reasons of health, safety, environmental concerns, national security or foreign affairs."
Authorities announced the closure of some companies, but it isn't clear how thoroughly the law has been enforced. Analysts say Dubai has largely ignored America's pressure to curb trade with Iran.
By continuing with business as usual, "Dubai has been jeopardizing Abu Dhabi's relationship with Washington," said Christopher Davidson, a UAE specialist and a lecturer at the U.K.'s Durham University.
Plus, Dubai's permissive ways to accommodate Western residents and tourists — by circumventing alcohol restrictions and other rules in the conservative Muslim country — have made the city-state a "liability for the federation, with its behavior," Davidson said.
So Abu Dhabi has stepped up its pressure, starting with delicate issues Dubai has trouble defending — nudity and excessive booze. Last month, Dubai obliged when Abu Dhabi questioned its neighbor's Islamic credentials.
Police detained almost 80 people over in a crackdown on public drinking, topless sunbathing and nudity on public beaches. Undercover policemen also rounded up 17 foreign men authorities accused of being gay.
Dubai's acting police chief vowed to detain all those suspected of acts "deemed offensive, immoral or disrespectful."
But limiting Iranian business in Dubai is a tougher task, with few rewards for Abu Dhabi, analysts say.
"Neither of them wants to be too close to the U.S. nor too distant from Iran," said Abdulkhaleq Abdullah, political science professor at Emirates University.
The balancing act associated with trying to accommodate the U.S. and Iran has enabled Dubai and Abu Dhabi to "play good cop, bad cop," Seznec said.
But he said it was also possible Abu Dhabi doesn't truly want Dubai to stop being "the main transport hub for Iran."
The UAE capital looks after the interests of other Gulf states, who fear a U.S. recession and high inflation because their currencies are pegged to the dollar, Seznec said.
"And a bankrupt Iran is simply not in the Gulf's interest," he said.
6 months ago