All eyes are on the ongoing visit by Saudi Crown Prince Mohammed bin Salman to the UK this week. It might be a short visit with a lot of symbolism and photo opportunity events but beneath it lies issues of more substance and importance to both sides.
Despite some criticism from politicians on the left and anti-war campaigners to the visit, the overall message is clear – both Saudi Arabia and the UK will stand to benefit from a closer relationship with each other rather than drifting apart.
The signing of a new and comprehensive UK-Saudi “Strategic Partnership Council” — an initiative to encourage Saudi Arabia’s economic reforms and foster cooperation on issues such as education and culture, as well as defence and security.
It has laid the cornerstone for a long term mutual beneficial relationship Britain and sets out an ambition to build 65 billion pounds ($90.29 billion) of trade and investment ties in coming years.
This will also go beyond current trade relations with British non-oil exports to Saudi Arabia totalling 6.2 billion pounds in 2016 and imports from Saudi Arabia totalling 2.6 billion pounds. As the British government officials have pointed out, this has in turn supported “tens of thousands” of UK jobs.
The new investment and procurement opportunities envisioned is a definitely a two-way street that benefit both sides and will be spread across a range of sectors including education, training and skills, financial and investment services, culture and entertainment, healthcare services and life sciences, technology and renewable energy and the defence industry.
All these areas are underpinning the new Saudi Vision 2030 modernization and economic diversification program of Saudi Arabia and British expertise in these areas will help the Kingdom given the already strong relationship both countries have especially in education and science.
The Memorandums of Understanding for 14 trade deals are due to be signed during the visit will be a boost to the UK as it tries to find viable long term trading partners post a Brexit exit with growing economies like Saudi Arabia, China and India and is a welcome relief to Prime Minister May as the Brexit talks are getting bogged down in sniping from both the UK and EU officials.
“This is a significant boost for UK prosperity and a clear demonstration of the strong international confidence in our economy as we prepare to leave the European Union,” a Downing Street spokesperson said in the statement.
Then there is the expected Aramco IPO listing this year with major financial centres like London and New York vying for a slice of the international offering but it is not yet expected that a decision on where to list is made during this visit.
Defense remains a vital partnership between the two countries as Britain is Saudi Arabia’s second-biggest supplier of defense equipment and London-based based BAE Systems has been waiting for a follow-on order for the Eurofighter Typhoon fighter jet after the initial Al-Yamamah sale of 72 of the warplanes in 2006.
A deal would boost UK industry as Britain tightens its own defense spending. In this area the UK is also taking a lead in supporting the Crown Prince’s mandate for localization of as many of the imported defense equipment in Saudi Arabia to create jobs and add to local supply chain content.
The lessons of the earlier failures of the initial al-Yamamah offset program has been learned by both sides. Another area of UK expertise that Saudi Arabia values is UK cyber expertise to help them tackle the threat from Iran as cyber threat to both the public and the private sector has increased over the past few years from hostile actors.
One of the most important aspects of the Crown Princes’ visit is to set the message that Saudi Arabia is a reliable partner and that the Kingdom is indeed open for business and is looking for international support for his internal economic reforms while at the same time trying to offer reassurance to nervous international investors given the quick pace of internal reforms and anti-corruption campaigns to ensure a level playing field for all parties.
For those who have criticized Saudi Arabia as a country that moves at a snail’s pace, the pace of change has literally taken everyone by surprise and make the same people now say slow down. The Crown Prince has, however, made it clear – join us or be left behind.
Dr. Mohamed Ramady is an energy economist and geo political expert on the GCC and former Professor at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia and co author of ‘OPEC in a Post Shale world – where to next?’. His latest book is on ‘Saudi Aramco 2030: Post IPO challenges’.
Author: Dr. Mohamed A. Ramady