To ensure its energy security and influence in the Gulf region, the United Kingdom will likely deepen its relations with GCC nations in a post-Brexit world.


First published in February 2020.


On January 31, the United Kingdom ceased to be a member of the European Union and regained its status as an “independent” trading partner. Over the course of 2019, the country ramped up its efforts to sign up trading partners and was able to establish 20 bilateral “continuity” agreements covering 50 countries or territories. While many regions in the world are covered, a notable exception are nations belonging to the Gulf Cooperation Council (GCC), which regroups Saudi Arabia, UAE, Bahrain, Kuwait, Oman and Qatar.

The UK has historically been a major partner and ally to the GCC countries in the economic, diplomatic and defence spheres. What will be the impact of the Brexit on the UK-GCC relations? Will Britain’s new status affect its foreign policy and its defence and security cooperation with GCC countries? Will trade and mutual investments suffer from Brexit?

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Meeting between US, UK and Saudi Arabian officials in the Royal Terminal 1 at King Abdulaziz International Airport in Jeddah, 25 August 2016. / U.S. Department of State

A long history of treaties

British military and diplomatic cooperation with the region stretches back 200 years. A series of treaties were signed between Great Britain and the sheikhs and leaders ruling current-day GCC countries resulting in mutual benefits for all signatory parties. The most famous are the 1798 treaty with Oman, the 1820 maritime treaty with the UAE and later Bahrain, the 1915 Darin British-Saudi treaty and the 1916 Anglo-Qatari treaty.

Due to the frequent conflicts between Gulf countries, their rulers mainly sought diplomatic, naval and military interventions by the British crown. At the time the relations could best be described as a tandem of protector (ruler) and protégé (protectorate). However, Britain’s role was far more important, as it helped carve out the current geographical borders and granted independence to those nations.

Boosting Britain’s presence

In a post-Brexit world, Britain will seek to increase its regional influence based on three interrelated drivers: the protection of its national interests, providing security guarantees to its GCC partners and a greater diplomatic involvement to solve regional conflicts.

The UK’s influence has always been strong within the GCC ruling elite, in particular because many are graduates of Britain’s military academies. King Hamad of Bahrain, Mohamed Bin Zayed of the UAE, Sheikh Tamim of Qatar and Sultan Qaboos of Oman are all graduates of Sandhurst’s Officer Program. With Britain providing them with security guarantees, they in turn make sure to look after British business and commercial interests in the Gulf region. Given the importance for the UK of protecting its own energy security – the country imports one-third of its gas from Qatar alone – British firms are deeply involved in the region’s energy business.

London’s diplomacy is also needed in a broad range of issues in the permanently turbulent region, including Iran’s nuclear deal, Arab-Iranian tensions, the Yemeni conflict and Qatar’s conflict with its neighbours. To strengthen its military presence, the UK has been establishing regional military bases – Bahrein in 2018 and Oman in 2019.

By committing its military resources to help assure the security of GCC countries, the UK has managed to keep its position as a leading arms provider. In 2018, British defence exports rose to a record 14 billion pounds, with sales to Saudi Arabia, the UAE, Qatar and Middle Eastern nations accounting for nearly 80%.

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Trade and mutual investment

The potential cost to the UK’s economic performance and influence from leaving the European Union has made Britain’s relations with Gulf countries more important. The UK’s trade volume with the GCC in 2016 was US$44.5 billion, a jump from the $19.1 billion in 2010. Britain has been conducting a diplomatic campaign stressing the importance of the GCC to the UK external trade. London already approached GCC nations for a free trade deal, but an agreement has yet to be reached. According to the UAE economy minister, such an agreement could take years to be concluded.

However, there are no signs that commercial relations should suffer, and investment plans such as Saudi Arabia’s Vision 2030, Qatar’s National Vision 2030 and Kuwait’s Vision 2035 could provide an excellent platform for British know-how. In 2018 the UK and Saudi Arabia reached a deal valued at 65 billion pounds of trade and investment. Other recent signs are similarly positive:

◦ The UAE: The largest trade partner of the UK within the GCC, trade between the two totalled 17.5 billion British pounds in 2017. By 2020, the UK government wants it to reach 25 billion pounds.

◦ Qatar: A bilateral trade came to 5.3 billion pounds in 2018, and around 4,500 UK businesses exported goods to Qatar, with around 500 importing. Qatar provides a third of Britain’s gas needs. Doha has already invested around 3 billion pounds in infrastructure projects and real estate between 2017 and 2018 as part of a larger pledge (5 billion pounds over 36 months)

◦ Kuwait: The trade exchange reached US$4 billion in 2018 increasing by up to 20% in two years. The Kuwait investment authority office in London announced that they will continue their works after Brexit, as the direct impact on their investments is not notable. After the 2016 referendum, the authority diversified its investments (to other economies) while its investments in Britain amount to only 30%, equivalent to US$180 billion.

◦ Oman: Trade between the UK and Oman rose 90% to around 2.8 billion pounds in 2018, compared to 2016.

◦ Bahrein: Bilateral trade reached about 1.1 billion pounds (2018-March 2019), up 9% from the previous year.

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Reciprocal dependence

Both the UK and GCC need each other. The UK seeks to replace the trade losses it is expecting after Brexit by expanding in other markets, and the GCC countries want to be assured of the UK’s continued military and diplomatic support. Their security and diplomatic cooperation are also essential in preserving both sides’ interests in the whole of the Middle East.

Despite the lack of bilateral agreements between the UK and Gulf nations, Brexit’s impact on their relations should be minimal. Indeed, in some spheres it could provide an opportunity for strengthening already-close cooperation. London realises that competition for GCC influence and markets with the United States, China, Russia and its former partners in the EU will be tough. However, its long history and expertise in the Middle East will no doubt help it to play an essential role in the region.🔷


This article was written with Ahmad Ismail, a Paris-based research consultant specialising in political-economic analysis and geopolitics.

The Conversation



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[This piece was originally published in The Conversation and re-published in PMP Magazine on 5 February 2020, with the author’s consent. | The author writes in a personal capacity.]

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(Cover: Flickr/U.S. Department of State. - US Secretary Tillerson and British Foreign Secretary Boris Johnson attending the Quad Dinner Hosted by the UK Ambassador in Paris. | 23 Jan 2018. / Licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.)



     

THE AUTHOR

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Professor of Finance, European Business School, INSEEC U. Economic and Financial Analyst. His areas of research include company performance, bank efficiency, Energy strategy, ICT and privatization.

Paris, France. Articles in PMP Magazine Website