Dubai in the United Arab Emirates has become an epicenter for the business world over the past several years. Immense building projects, a playground for the rich & famous and, oh yeah, a place where you will no longer be able to use some critical features on your BlackBerry.

The United Arab Emirates (UAE) has announced that it will begin blocking sending emails, accessing the Internet and instant messages on BlackBerry handsets as of Oct. 11th of this year. Saudi Arabia quickly followed suit announcing that it will begin blocking BlackBerry Messenger as soon as the end of this month.

BlackBerry TourThe reasons behind this is that BlackBerry communications are encrypted, and go to servers outside of the country first, making it impossible for the local governments to monitor what is being said on the handsets. The claimed fear is that terrorists could theoretically use the phones to communicate, so it is considered to be a matter of national security for both nations to disable the specified functions of the devices.

There is no word yet if this will apply only to locals or if it will be extended to foreign visitors who bring the phones with them in roaming mode when they enter the nations.

The problem is that Dubai has become a leading economic center of the world, and it is estimated that 400,000 to 500,000 BlackBerry phones are in use in the country at this time.  It is also that encryption that worries the governments that has made the phones so popular with corporations.  While the iPhone has been picking up more corporate users as of late, the BlackBerry is still the leading brand for business in the world.

Abdulrahman Mazi, a board member of state-controlled Saudi Telecom, told the BBC that this decision is mainly about putting pressure on Research In Motion (RIM), the Canadian company that makes the phones, to release data to the UAE “when needed.”  According to The Washington Post, RIM has no comment on the situation at this time.

Director general Mohammed al-Ghanem of TRA, the UAE’s telecoms regulator said, “It’s a final decision but we are continuing discussions with them.”  He went on to say that the decision has nothing to do with censorship, but the fact that the phones violate local telecommunication laws that RIM has not complied with.

Various other sources are saying this is more about blackmail of RIM than anything else to hand over the source code for its encryption so the country can monitor communications.  Two years ago an update was sent out to BackBerry users in the UAE that was labeled as a system update was discovered to actually be spyware that the government sent out to try to circumvent the security measures.

Apparently India is also concerned about the high security of the handsets, but have yet to announce any restrictions on them.

What say you?  Should RIM continue to hold out and lose the market, or continue to resist?