Bank of Credit, Tunb islands, Sughra, new federation, forgery charges
At its birth on December 2, 1971, the UAE faced challenges that caused many to predict that the new federation would fail. There were border disputes with Saudi Arabia and Oman, rivalries among the emirates were strong, and Iran seized the island of Abu Musa, Tunb al Kubra (Greater Tunb), and Tunb as Sughra (Lesser Tunb) in the Persian Gulf, all of which had been claimed by the UAE. Threats to regional stability since then have included the 1979 Iranian Islamic Revolution, the Iran-Iraq War (1980-1988), and Iraq’s invasion of Kuwait in 1990. The UAE has survived these dangers and prospered largely because its president, Sheikh Zayed, has used the oil wealth of his emirate, Abu Dhabi, to the benefit of all Emiris as well as to promote the UAE’s security in the international arena. Under Zayed the UAE has been a force for moderation in the Middle East and cooperated closely with the United States and its allies to defeat Iraqi aggression in the 1991 Persian Gulf War.
In 1993, with the other Persian Gulf Arab states, the UAE supported the Israeli-Palestinian peace accord. That same year, a dispute between the UAE and Iran over administration of the island of Abu Musa continued without significant progress. The conflict had flared up in April 1992 when Iran refused to allow several hundred expatriates to return to the island, which is jointly administered by the two nations under a 1971 agreement. Iran continues to occupy Abu Musa and the Tunb islands.
In domestic affairs, the UAE became involved in a major financial scandal in 1991, when international regulators closed down worldwide operations of the Bank of Credit and Commerce International (BCCI) on fraud and forgery charges. Sheikh Zayed was a founding shareholder of BCCI, and Abu Dhabi businesses and investors lost approximately $2 billion. In December 1993 the government of Abu Dhabi filed a civil suit against BCCI and 13 of its top officials. In July 1994 the former chief executive of the bank pleaded guilty in U.S. federal court to charges of fraud, conspiracy, and racketeering.
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