ON MAY 14th the United States and United Arab Emirates (UAE) announced a deal that should, at least in theory, put an end to their long-simmering dispute over what airlines in America allege are unfair subsidies provided by the Gulf state to its two major airlines. News of the agreement had emerged three days earlier, prompting both sides to claim victory. American representatives claimed that the UAE had admitted that it had unfairly subsidised its flag carriers and had agreed not to add further so-called fifth-freedom flights, which are routes to the United States that do not originate in the UAE. (Breitbart News ran a triumphant story under the headline “Trump’s America First Agenda Wins Trade Dispute With United Arab Emirates.”) Meanwhile, the UAE ambassador to the United States argued essentially the opposite, stating that he was “very pleased” that Emirati airlines could continue to add fifth-freedom flights.
So who is right? Mostly, the UAE side. When you look at the real substance of the agreement, it is clear that the American airlines did not get anything they wanted. The main thing they sought was to put an end to those fifth-freedom flights, which cut into their business when Emirates and Etihad, the flag carriers of the states of Dubai and Abu Dhabi in the UAE, fly from their home bases to the United States via places such as Europe. The American carriers got some language they could point to in order to declare victory: the Emiratis stated in the deal that they have no plans to add new fifth-freedom routes. But the American claim of victory rings hollow, because there is nothing to prevent Emirates and Etihad from making such plans in the future.
The Americans also claimed a win because the UAE airlines promised to publish yearly reports on their finances that are up to international standards. The American airlines hope this will force them to fess up to the unfair government subsidies that the Americans think keep their Emirati rivals afloat.
Category: Business and finance, Gulliver