The purpose of this study is to explain the circumstances that persuaded the majority of the emirates of the Gulf to enter into an agreement establishing the federal state of the United Arab Emirates and the conditions under which it was established and flourished. It was no coincidence that the will for unity was contemporary with the sudden wealth that had a tremendous impact on the social and economic conditions of the area. The extreme poverty, the struggle for survival and unending fights over means of subsistence, added to the tribal structure of society, had always been divisive factors. Under British rule those divisions had been not only maintained but even encouraged. The discovery of oil persuaded the British that in order to maintain their control of the area they must initiate some changes in their policies designed to meet the challenge of the fast moving economic conditions. But the position of the British was beginning to weaken because of the scramble for oil by the United States. The regional powers, Iran, Saudi Arabia and, to a lesser extent, Kuwait, did not stand aside but took measures and applied pressures to protect their own conflicting interests. Meanwhile, the deterioration of the British economy forced the Labour Government in 1968 to take the most unexpected decision to withdraw from the Gulf by 1971 within the framework of the policy of withdrawal from ‘East of Suez’. The rulers of. the emirates were most surprised by this seemingly sudden decision, but when the British began to encourage them to enter together into negotiations for unity their surprise was only surpassed by their perplexity.