December 12, 2016
With the go-ahead from the House of Commons and Article 50 invocation in sight, Theresa May is in full Brexit-hawking mode. In her second major trip abroad to advertise the post-EU UK, Britain’s Prime Minister embarked on a high-profile visit to Bahrain this week to address Gulf leaders and discuss security cooperation but also, critically, trade.
As May put it, the hope was that her visit would herald “the start of a new chapter in relations between the United Kingdom and the Gulf – a true strategic partnership that enables us to together seize the opportunities ahead and ensure the security and prosperity of our people.” While defence and security ties were certainly a key item on the agenda, the question of “prosperity” (read: trade) is now front and centre in ties with Britain’s Gulf allies. In the run-up to their victory in June, the Brexiteers promised repeatedly that markets outside Europe would be clamouring to trade with the UK once it shook off the shackles of Europe. Going into this trip, the reality had thus far been rather different.
May’s first attempt, a visit aimed at warming up India, was quickly overshadowed by tensions over visa restrictions on students wanting to stay on in Britain after completing university courses. India’s commerce minister put it bluntly when he noted that “we are not being treated as old friends any longer.” The visa controversy took the conundrum of immigration and free movement and threw it right back in May’s face: while the former Home Secretary was never a Brexit backer, she does have a long and hard-line record on immigration policy that will forever handicap her in countries (like India) that want their citizens to have access to Britain in exchange for free trade.
Luckily for her, this second go-round found a much more receptive audience. The members of the Gulf Cooperation Council (GCC), Saudi Arabia chief among them, have been very straightforward in seeking a free trade agreement with the UK. Ever since former Prime Minister David Cameron came to power in 2010, the UK has been ramping up relations with these countries at the same time the EU allowed lengthy trade negotiations with the GCC to lapse into suspended animation. Talks have been on hold in the wake of disagreements over export duties and human rights.
Another factor working in May’s favour is that, unlike in India, promoting two-way investment between the UK and the Gulf has the potential to be very lucrative very quickly. The same leaders May pitched Brexit to this week are rapidly trying to change their economic structures following the wake-up call of plummeting oil prices. Saudi Arabia in particular is plunging many millions in the tech sector both at home and abroad, in addition to pursuing aggressive privatisations and divestments in order to whittle down bloated public sectors. Those countries see the UK as a partner whose expertise and influence in the financial sector can help them navigate the changes, and May made it clear she was happy to oblige in “helping Gulf countries to achieve their long-term vision of reform.”
In return, of course, the Prime Minister wants the wealthy emirs and their compatriots to see Britain as a worthwhile destination for their considerable wealth. In that respect, she is largely preaching to the choir. Investors from Qatar, Saudi Arabia, Kuwait, and the UAE already own a sizeable chunk of the London property market and are apparently so enamoured with Brand Britain that they setting their sights on the Premier League as an investment opportunity.
Unlike Abu Dhabi’s purchase of Manchester City or Qatar’s buying of Paris Saint-Germain, however, even these football investments would be tied back to the ongoing reform efforts back home. Saudi Arabia’s privatisation push extends to its mostly state-owned professional football teams, and in a parallel of the broader hunt for Western expertise, potential buyers see these British clubs as a way to get the domestic league up and running.
Although the trip took place this week, Downing Street was careful to lay the groundwork for May’s visit so that it would be seen in the most positive light possible. As the British royal family also happens to enjoy a reservoir of goodwill among the monarchy-minded populace, the British government dispatched Prince Charles to precede the PM’s visit with his own tour of the Gulf in November. Prince Charles opened a new British naval base in the country’s Mina Salman port in a tangible display of British re-engagement in a region where it once enjoyed unparalleled influence.
As Iran continues to discomfit its neighbours to the south, that renewed British presence is more than welcome. As Bahrain’s ambassador wrote in the Telegraph: “With the region continuing to face difficult times, the British return to East of Suez is a reassuring sign that our countries remain steadfast friends and allies, with strong diplomatic, military and trade relations.” Security issues and Iran, of course, formed the other pillar of May’s message this week.
In many ways, the GCC is the low-hanging fruit of Britain’s post-Brexit trading prospects. There are other future partners with deep historical ties, including Australia and Donald Trump’s America, but India has proven the Commonwealth economies have outgrown sentimental attachments and will re-engage with Britain to the extent deeper ties serve their own interests. The Gulf, which already has a very clear idea of what it wants from London, need much less persuasion as to benefits of working with a post-EU UK. It is a win-win for both, but the greatest win will be for Theresa May herself, who desperately needs a good news cycle to help shore up her government’s position.