UK triggers Brexit, starts eyeing up Middle East

As the UK triggered its divorce from the European Union on Wednesday, Prime Minister Theresa May’s government is already working to secure new trade partnerships and deals in the Middle East.

International trade minister Liam Fox has said that the UK is already in informal talks with 12 countries around the world, many of which are in the Middle East. Free trade agreements, lucrative arms deals, human rights concerns: let’s look at what the government has done so far in the region post-Brexit vote.

Gulf Cooperation Council

Qatar, the UAE, Saudi Arabia, Kuwait, Bahrain and Oman could be among the first countries to sign a free trade agreement with post-Brexit UK.

Acting under the Gulf Cooperation Council’s banner, the six states are working on a “signature-ready” deal that could be signed immediately after Brexit, according to an unnamed Qatari official interviewed by Reuters. In exchange, the GCC countries are asking for fewer restrictions on travel visas to the UK.

The UK cannot sign any trade partnership until the divorce from the European Union is complete, but Foreign Secretary Boris Johnson said nothing prevents Britain from “pencilling” deals “on the back of an envelope”.

In a meeting in December with Britain's Chancellor of the Exchequer Philip Hammond, Qatari finance minister Ali Sherif al-Emadi discussed a partial draft of a free trade deal, a Qatari official told Reuters, declining to be named under briefing rules.

The UK has reportedly identified the GCC countries as a top priority for future free trade agreements, with Johnson last year joking that the country planned to sell "sand to the Saudis" and underpants to "just about everyone".

• READ: Boris Johnson touts underpants sales to Arab world

Trade between Britain and the GCC amounts to $37.22bn annually, while Qatar pledged an investment of $6.23bn over three to five years the day before Brexit was triggered. Qatar is also the largest landowner in London and it holds a property portfolio that is three times the size of that of the Queen, data from research firm Datscha seen by Property Week shows.

For its part, the UK government pledged $5.6bn to help UK businesses exporting to Qatar through UK Export Finance, the UK export credit agency.

After Brexit, the British government has also used the same credit tool to help secure a “lucrative green construction contract” in the UAE.

"Free trade makes us all richer. It creates jobs. It increases investment. It improves productivity. It transforms living standards and creates opportunities for all of our citizens," May told the GCC during a visit to Bahrain in December 2016.

“We will make it a priority, when the UK leaves the European Union, to build the closest possible commercial and economic relationship,” a GCC-UK joint statement released after the meeting read.

The UK seems to be taking advantage as the EU’s own talks with Gulf nations have stalled. Negotiations between Brussels and the GCC broke down over concerns over Saudi petrochemicals pricing and tariffs, as well as some EU countries’ concerns over human rights abuses in the Gulf.

Liberal Democrats leader Tim Farron has criticised the Conservative government, saying it is desperate to secure deals and so is engaging countries with questionable human rights records.

Secretary of State for International Trade Liam Fox has paid visits to Qatar, Kuwait, Oman, United Arab Emirates and Bahrain. Human Rights Watch has condemned Kuwait’s and Bahrain’s continuous crackdown on freedom of speech and violation of their own citizens’ privacy.

“Just this week Liam Fox gave two speeches to the Qatar-UK Trade and Investment Conference, in neither one was there a single mention of human rights or workers’ rights," Barry Gardiner MP, Labour's shadow secretary for international trade, told MEE on Wednesday.

"This government is prioritising quick trade deals but has made no mention of how they plan to protect and promote human rights or workers’ rights through trade policy."

Fox is expected to also visit Saudi Arabia, but the trip has so far been postponed, possibly because of criticism surrounding the British sale of weapons used in Yemen.

Johnson urged Fox in November to keep shipping weapons to the Saudis even after the bombing of a funeral in Yemen that killed more than 140 people last October. Under UK export rules, licences should not be approved if there is a clear risk the weapons could be used for serious violations of international humanitarian law.

Correspondence obtained by the Campaign Against Arms Trade showed that Fox put the export of weapons on hold following the incident, but was persuaded to resume the sale after Johnson’s letter.

Johnson wrote the missive in November, shortly before sparking outrage with his comments on Saudi Arabia acting as a puppeteer in “proxy wars” in the region. 

Saudi Arabia is Britain’s biggest arms buyer, having bought more than $4.1 billion in arms in the two years since the Yemeni conflict started. The UAE also figures among the top customers since the Brexit referendum vote in June last year.

Turkey

Britain and Turkey signed a $125 million defence deal in January to help develop fighter jets for the Turkish air force. The UK has already sold almost $62 million worth of military equipment to Turkey after the failed coup attempt in July last year.

• READ: UK's May does fighter jet deal with Turkey

More than 40,000 people have reportedly been arrested in Turkey since the failed coup and over 125,000 have been suspended or dismissed from their jobs.

PM May said the defence deal was showing that “Britain is a great, global trading nation” and that the UK would enhance trade relations with Turkey.

A post-Brexit free trade agreement between the UK and Turkey is being discussed and the two countries have launched a trade working group to explore in which ways they can improve their relations. Turkey might, however, push for free movement of people or for an easing on travel visas to the UK in exchange for a trade deal.

The defence deal was signed between BAE Systems and Turkish Aerospace Industries and is meant to be the first step for deeper military co-operation between the two countries.

The UK has sold $410m worth of arms to Turkey since 2015 and the country is on the Department of Trade’s “priority list” for weapons exports.

On the other side, Turkish President Erdogan announced that Turkey aims to increase trade with the UK to $20bn a year from $15.6bn.

May addressed concerns over human rights abuses in Turkey and the ongoing crackdown on political opponents in her bilateral meeting with President Erdogan.

However, the Foreign Affairs Committee has criticised the government, warning that Britain risks looking as if it is putting trade and military interests over human rights concerns in pursuing a closer relationship with Ankara.

"Our impression has been of two countries that share interests more than they share values, and the UK risks being perceived as de-prioritising its concern for human rights in its drive to establish a 'strategic' relationship with Turkey," the report by the foreign affairs committee said on Saturday. 

Instead, the committee recommended that London use its increasing trading influence on Turkey to push for better recognition of human rights, instead of rushing to secure deals overlooking human rights concerns.

The foreign affairs committee said: “The inadequate funding provided to the FCO has led to a worrying weakening of its independent analytical capacity, and may jeopardise the UK’s ability to seize on the opportunities presented by Brexit.”

Israel

On the same day that May officially triggered Brexit, British cabinet ministers chaired the first meeting of the new UK-Israel trade working group. Tasked with drafting a free trade agreement that will be signed once the divorce from the European Union is finalised, the working group will meet three times a year. It was created in February following a visit by Israeli Prime Minister Benjamin Netanyahu.

“We see high importance in keeping and enhancing our trade relations when the UK ceases to be a member of the European Union,” said Israeli Minister of Trade and Industry Eli Cohen, ahead of the meeting. 

The UK is Israel’s second largest trade partner after the United States and the two countries enjoy a long relationship, especially in the defence and security sector.

Rolls Royce recently signed the biggest UK-Israel trade deal in history, landing a substantially lucrative contract to service and maintain its Trent 1000 engines for Israeli flag carrier airline El Al. 

For its part, Israel’s Elbit System has secured a hefty contract to provide the British Ministry of Defense with training aircraft and simulators.

Egypt

Foreign Secretary Boris Johnson visited Cairo at the end of February and discussed how to improve trade relations and investments with President Abdel-Fattah al-Sisi according to AFP.

UK companies investments in Egypt reached a total of £29.8 billion in 2016 according to the Foreign Office. During the visit, the two signed an agreement for a $186m loan that Egypt needed in order to secure a vital bailout programme from IMF.

Johnson’s visit was anticipated by the UK prime minister's trade envoy, Jeffrey Donaldson, and an economic delegation to discuss potential trade opportunities.

Egypt remains a key economic partner for the UK, especially after BP signed a $12bn deal for gas exploration in Egypt's Northern Delta, but it is not a candidate to sign a free trade agreement with the UK as Cairo's government is still trying to recover from a deep economic crisis and currency fluctuation.