The RAF’s Red Arrows over Doha in 2013. They return this weekend as part of the UK’s campaign to maintain its trade relationship with both sides of the GCC split
The Royal Air Force (RAF) Red Arrows will fly over Doha for the first time in four years on Saturday as part of a tour of Jordan and GCC member states.
Leaders of the British business community and guests from government and commerce in Qatar will gather at the Doha Sheraton to watch the show.
It will have special significance.
Britain’s navigation of the shoals of Middle East politics is being tested this autumn by President Trump’s aggressive rhetoric about Iran and the split within the GCC about Qatar that started in June.
The UK’s annual exports of goods and services to the GCC are now running at about £30bn a year. That’s more than Britain sells to China and twice what it exports to India. More than 150,000 Britons live and work in the Gulf. That’s more than come from the US or any other EU nation.
These achievements are the product of decades of careful diplomacy supported by a connection that with Arabia that extends back to the 18th century.
Britain is a strong supporter of the Joint Comprehensive Programme of Action (JCPOA) agreed with Iran at the start of 2016 that has led to a relaxation of nuclear sanctions. The UK is actively encouraging UK companies to trade with Iran and is open to Iranian investment in the UK.
This approach contrasts with the view from the White House.
President Trump told the UN general assembly on 19 September that the JCPOA “was one of the worst and most one-sided transactions the United States has ever entered into. Frankly, that deal is an embarrassment to the United States, and I don’t think you’ve heard the last of it.”
UK Prime Minister Teresa May spoke to the general assembly later on the same day, but made no reference to Iran or to Trump’s words. But the view in Whitehall is that the JCPOA is the best possible way to contain Iran’s nuclear ambitions and encourage Tehran to behave better.
It’s not certain that the US will withdraw from the JCPOA. But if it does, London expects to be pressed by Washington to do the same. Unless there’s a dramatic change of view in Whitehall, Britain will just say no.
The embargo imposed by Bahrain, Saudi Arabia and the UAE on trade and transport links with Qatar is testing British Middle East policy in a different way.
The UAE is Britain’s largest regional trading partner and Saudi Arabia’s the largest non-OECD buyer of UK defence equipment. Around 100,000 Britons live in the UAE. The UK also has longstanding trade relations with Qatar, which has become in the past decade a major investor in London real estate.
Britain wants to stay on good terms with all six GCC states and for the moment the embargo is not a major issue. No British companies have pulled out of any Gulf market because of the GCC split. Companies serving Qatar from the UAE have been told this is no longer acceptable. People travelling from Bahrain, Saudi Arabia and the UAE to Qatar are having to fly through Oman or Kuwait. This turns a journey that normally took little more than two hours into one that lasts up to eight.
This is irritating but not an insuperable impediment. Some British firms plan to open a presence in Doha.
The robustness of Britain’s Gulf links was reflected in the announcement on 18 September that Qatar had placed an initial order for 24 Eurofighter Typhoon combat jets with BAE Systems. The following day, in a previously unannounced visit, UK Defence Secretary Michael Fallon met Saudi Arabia’s Defence Minister, Crown Prince Mohammed Bin Salman and signed a defence and security agreement.
Britain has not been asked to choose sides. Yet.
Meanwhile, UK companies are focussing on juicy potential orders on both sides of the divide. In Qatar, this includes Qatar Airways’ plan to buy Airbus Industrie A350-1000 jets. They will be powered by engines made by Rolls Royce, one of the UK’s leading manufacturing firms. The first is due to be delivered later this year.
Serco, the UK service firm, hopes to pick up a major order with the Doha Metro. In Saudi Arabia, Britain is targeting orders expected to flow from the $15bn Jeddah metro programme and other major infrastructure projects. There is enthusiasm in the City of London about Saudi Aramco’s planned IPO, which is due to be launched in 2018. The London Stock Exchange (LSE) is in the running to be one of the international listing centres for what might be the biggest IPO in history.
Saudi Arabia’s public-private partnership (PPP) programme, the largest ever attempted in the Middle East, is getting attention in the UK. It’s part of the kingdom’s Vision2030 plan.
The UK’s been asked by the Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, to identify possible investment opportunities. The PIF will mange the proceeds of the Saudi Aramco IPO.
In the UAE, activity is building ahead of Expo 2020, which opens in Dubai in three years. Abu Dhabi’s oil and gas sector continues to generate orders for UK companies, though business has been hit by the fall in the oil price and the restructuring of the emirate’s oil and gas sector.
For British business, regional politics are trumping the debate about the terms of Britain’s departure from the EU, scheduled for March 2019, as the top talking point. Business people say GCC government officials and business people were surprised by the result of the UK’s EU referendum last year but believe it will create opportunities for new deals at the government-to-government level.
This will be one of the issues on the agenda of the GCC trade commissioner due to be appointed by the Department for International Trade (DiT) by 1 April next year. This is part of a radical restructuring of the UK government’s international and investment promotion agencies that followed the UK general election in June. The DiT was created to take over the work of the UKTI and has absorbed UK Export Finance, the UK’s export credit agency. It is headed by Secretary of State Liam Fox, a strong supporter of the decision to leave the EU as is UK Foreign Secretary Boris Johnson.
Trade commissioners are to be appointed to cover eight other parts of the world. They will take over the management of trade and investment officers employed by the Foreign & Commonwealth Office (FCO). Observers say the appointments reflect an increased emphasis on the role of the DiT at the expense of the FCO.
The Gulf trade commissioner’s main concern, however, will be the stagnation of British exports to Saudi Arabia this year and the challenge of encouraging trade with Iran at a time when the White House’s approach to Iran is difficult to predict.
He or she will also be hoping that the GCC split, which looks like it could last for years, won’t undermine one of the UK’s most successful trade and investment partnerships.