The Modes of Emergence of Federal Systems and Their Institutional Consequences: A Comparative Study of the United Arab Emirates and Iraq
Subject Areas : Research in Theoritical Politics
Saeed Attar
1
,
Arash Mandanizadeh
2
1 - Associate Professor, Department of Political Science, Faculty of Law, Political Science and History, Yazd University, Yazd, Iran.
2 - M.A Graduate, Department of Political Science, Faculty of Law, Political Science, and History, Yazd University, Yazd, Iran.
Keywords: Rational Choice, United Arab Emirates, Federalism, Iraq, Institutionalism.,
Abstract :
The Modes of Emergence of Federal Systems and Their Institutional Consequences: A Comparative Study of the United Arab Emirates and Iraq
Saeed Attar*
Arash Mandanizadeh**
Why do some federal systems achieve stability and efficiency while others remain unstable? Adopting the theoretical framework of Rational Choice Institutionalism, this paper argues that the “mode of emergence” of federalism is the key independent variable in explaining this divergence. Through a comparative study between the UAE (convergent/coming-together federalism) and Iraq (holding-together federalism), the paper demonstrates how the logic of elite calculations in each model leads to different outcomes. In the UAE, federalism was the product of a positive-sum game in which ruling elites, in order to maximize security and economic interests, voluntarily ceded part of their sovereignty and created stable institutions. In contrast, federalism in Iraq was the result of a zero-sum game intended to prevent state collapse, in which conflicting ethno-sectarian elite calculations led to a fragile compromise and inefficient institutions. Consequently, institutional stability depends more on the alignment of rational elite incentives at the moment of founding than on reliance on formal institutional design.
Keywords: Rational Choice, United Arab Emirates, Federalism, Iraq, Institutionalism.
Introduction and Problem Statement
Throughout history, societies with ethnic, religious, and linguistic diversity have faced the dual challenge of “maintaining order and stability” on the one hand, and “establishing efficient systems of territorial governance” on the other. In this context, proponents of federal political systems argue that this model can resolve the problems of pluralistic societies and provide institutional efficiency by dividing sovereignty between the central government and autonomous units. However, historical experience shows that federalism is not always a definitive panacea; in some countries, it has led to political stability, sustainable economic development, and peaceful coexistence, while in others, it has resulted in intensified ethnic conflicts, chronic instability, and the paralysis of sovereignty.
This research seeks to resolve this puzzle of divergence in institutional outcomes. The central question is: Why do some federal systems succeed while others fail? To answer this, two contrasting examples in the Middle East have been selected: the United Arab Emirates as a model of political stability and remarkable economic growth (established in 1971), and post-2003 Iraq, which, despite choosing federalism to manage ethno-sectarian diversity, is mired in chronic instability and violent conflict.
Research Hypothesis
The fundamental hypothesis of this paper is that the “mode of emergence” of federalism is the key independent variable in determining the fate of political institutions. The authors argue that the UAE’s federal system is an example of “convergent” (coming-together) federalism, formed based on voluntary elite bargaining to achieve mutual benefits (a positive-sum game), which has led to “self-enforcing” and stable institutions. Conversely, Iraq’s federal system represents “holding-together” federalism; a model born from a forced compromise and an unavoidable fear of central state collapse (a zero-sum game) that has created fragile and unstable institutions.
Theoretical and Practical Significance
This research is significant in three aspects:
- Theoretical richness: Moving beyond purely descriptive
analyses, it applies the systematic approach of “Rational Choice Institutionalism” to analyze the state-building process.
- Regional understanding: Comparing two key cases in the Middle East contributes to a deeper understanding of the dynamics of state-building in this turbulent region.
- Policy implications and lessons learned: This research emphasizes the vital importance of the “founding moment.” It serves as a clear warning to countries like Iran that the imposition of formal federalism, without the alignment of elite interests, will merely create a new platform for the continuation of conflict.
Background and Literature Review
Existing literature on federalism includes classical theories and empirical findings. Theoretically, William Riker believes federalism is the product of rational elite bargaining to aggregate military or economic power against threats (consistent with the convergent model). On the other hand, Alfred Stepan introduces the “holding-together” model, in which power is devolved from the center to the periphery to prevent the country’s disintegration.
Empirical findings in domestic Iranian literature also show that previous researchers (such as Saei and Moradi, Sardarnia, and Bodaghi) have mainly sought the reasons for Iraq’s failure in constitutional ambiguities, historical identity crises, clientelist political culture, foreign interventions, and administrative corruption. However, none of these studies have focused on the logic of elite calculations as the most important factor in institutional stability a gap this paper seeks to fill using a precise comparative approach.
Theoretical Framework: Rational Choice Institutionalism
This micro-founded analytical approach considers macro political phenomena to be the product of the strategic behavior of individual actors (elites). In this framework, political actors are rational beings who, based on cost-benefit analysis, seek to maximize their utilities (including power, security, or wealth). Institutions act here as the “rules of the game” that structure interactions and reduce transaction costs.
An institution remains stable when it becomes a “self-enforcing equilibrium” a state where adherence to the rules is more beneficial for all key actors than violating them. Otherwise, institutions lead to suboptimal outcomes and remain fragile.
Application to federal bargaining:
- Convergent model (Positive-sum game): Independent units bargain with each other to achieve benefits by aggregating resources that they would be unable to obtain alone. The benefit of union exceeds the cost of relinquishing autonomy, forming a stable “Nash equilibrium.”
- Holding-together model (Zero/Negative-sum game): The state devolves power to prevent disintegration. Regional elites accept this structure only as a “second-best” option (better than suppression, worse than full independence). Here, the goal is to maximize relative power at the expense of others, leading to a fragile compromise.
Methodology
The present research utilizes a qualitative “comparative study” method, relying on the logic of a “most different systems design.” The UAE and Iraq are different in terms of demographic context (a homogeneous tribal society versus deep ethno-sectarian diversity) but share a commonality in possessing a federal legal structure and a rentier political economy. This method allows the confounding variable of “social context” to be controlled, demonstrating that the difference in institutional outcomes is precisely due to the “mode of emergence” and the “logic of elite bargaining.”
Case Study 1: The United Arab Emirates (Convergent Federalism)
The UAE is a classic example of federalism in which actors, facing an environmental shock, chose the path of unification.
- Historical context and rational incentives: Until 1971, the region was a British protectorate. The sudden British withdrawal created a massive “security vacuum.” The ruling elites, particularly Sheikh Zayed (ruler of Abu Dhabi) and Sheikh Rashid (ruler of Dubai), faced potential threats from powerful neighbors. Their rational calculation showed that a defense union was necessary. On the other hand, the discovery of oil in Abu Dhabi provided a powerful economic incentive. Sheikh Zayed raised the opportunity cost of not joining the union through generous assistance.
- Institutional design and cooperative equilibrium: Negotiations were conducted solely between the rulers with full consent. The 1971 provisional constitution was the product of a rational compromise that reflected the actual balance of power; Abu Dhabi assumed the presidency of the federation due to its greater wealth, and Dubai the vice-presidency. The Federal Supreme Council was designed so that major decisions required the affirmative vote of these two emirates. This intelligent division of labor turned institutions into a “self-enforcing equilibrium.”
- Empirical implications: World Bank and IMF data show that the UAE consistently ranks in the top deciles in indices of rule of law, control of corruption, and political stability. Oil rent here has been put to the service of development. GDP per capita (PPP) has reached staggering figures (over $88,000 in 2023), and the country alone has attracted tens of billions of dollars in foreign capital. Very low unemployment and economic diversification are other fruits of this stable institutional stability.
Case Study 2: Iraq (Holding-Together Federalism)
The story of Iraq post-2003 invasion is a completely different narrative of a forced compromise in the heart of anarchy.
- Historical context and conflict of elite interests: The fall of the Ba’athist regime created a competitive and violent situation among Kurds, Shiites, and Sunnis, each of whom had conflicting calculations:
- Kurds: Sought to legitimize a distinct identity and maintain their practical autonomy. Their goal was to weaken the center and control natural resources.
- Shiites: As the demographic majority who had been oppressed for decades, they initially wanted decentralization, but upon taking hold of the center, they inclined toward full control of state resources.
- Sunnis: Viewed federalism as a conspiracy to break up Iraq and permanently sideline them, and strongly opposed it.
- Fragile bargaining and ambiguous institutional design: The 2005 constitution was drafted under pressure from US forces and in the absence of cohesive Sunni organization, mainly based on the agreement between Kurds and Shiites. Instead of resolving conflicts, this text was full of deliberate ambiguities; issues such as the status of Kirkuk and the distribution of oil revenues remained unresolved. The result of this process was the establishment of the Muhasasa (ethno-sectarian quota) system, which divided positions and resources among elites like spoils of war.
- Empirical implications: Iraq was caught in a fragile balance based on deterrence (rather than cooperation). The constitution was repeatedly violated, governments were paralyzed for long periods, and institutionalized corruption disrupted public service delivery. In comparison to the UAE, Iraq’s economic growth has been accompanied by contraction, and oil dependency is extremely high. Foreign investment in the country has shown a negative trend (capital flight), and the unemployment rate, especially among youth, is critical. In regulatory quality and control of corruption indices, Iraq has consistently ranked among the lowest globally.
Comparative Analysis and Research Findings
A systematic comparison of these two cases demonstrates the fundamental contrast between the “logic of consent” versus the “logic of coercion.”
In the UAE, federalism was a rational social contract, the output of which, due to the alignment of incentives and the recovery of mutual interests, became solid institutions, remarkable development, and freedom from sectarian tensions. But in Iraq, federalism was a “temporary ceasefire” without the consent of a large demographic group (Sunnis). In this imposed structure, each group strives to maximize its own ethnic interests, which has led to a “tragedy of the commons” in the political structure; where the pursuit of individual/group interests has completely destroyed the public good and national stability.
Furthermore, objective and economic indicators clearly confirm this difference. While the UAE has one of the highest human development indices, the lowest unemployment rate, and the most stable space for investment in the region, Iraq, despite having massive oil revenues, struggles with the problem of capital flight, inflation, and the lowest levels of rule of law and regulatory quality. These data prove that wealth alone does not guarantee success; rather, the “initial institutional equilibrium” determines the country’s economic fate.
Conclusion
By utilizing the theoretical framework of rational choice, this paper proved that the success or failure of federal systems is dependent on the logic of elite bargaining at the founding moment, rather than the legal design of institutions on paper. Stable institutions are created when they are the result of a win-win game and an endogenous agreement of elites to maximize collective interests.
Integrating the rational choice approach with historical institutionalism shows that the rationality of actors does not occur in a vacuum, but is reinforced by historical conditions. Practically, the findings of this research are a serious warning for countries in the region, including multi-ethnic societies; imposing federalism in situations where elites are looking to gain relative power in a zero-sum game not only does not solve any problems but turns new institutions into battlegrounds for more violent conflicts and steers the country toward collapse.
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* Corresponding Author: Associate Professor, Department of Political Science, Faculty of Law, Political Science and History, Yazd University, Yazd, Iran. s.attar@yazd.ac.ir
https://orcid.org/0000-0002-6313-6189
** M.A Graduate, Department of Political Science, Faculty of Law, Political Science, and History, Yazd University, Yazd, Iran.
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