France and the UAE have signed a deal allowing France to set up a permanent military base. The US is the only western power with bases in the region.
Mr Sarkozy has been strengthening ties with Arab Gulf states
The deal allows for the stationing of up to 500 permanent military personnel in the UAE's largest emirate Abu Dhabi.
The two countries also signed a deal to develop peaceful nuclear energy during a visit by President Nicolas Sarkozy.
The agreement on nuclear energy is the latest in a series of similar deals between France and Arab countries.
The Emirates' WAM news agency said that an agreement would "boost relations between the two friendly countries through military cooperation".
The agreement was inked by UAE Foreign Minister Sheikh Abdullah bin Zayed al-Nahayan and French Defence Minister Herve Morin, WAM said.
Further details about the agreement were not immediately available.
Correspondents say the base will give France new ability to project its forces into a strategic oil-producing region.
The Gulf lives with chronic tension between the six Sunni Arab-led states on the Arabian peninsula, all strong US allies, on the one hand and America's arch-foe Iran, which is Shia Muslim.
The US has a string of military bases in Gulf countries, including several major army, naval and air force installations with thousands of personnel.