The paper discusses the dynamics of current relations between the United Arab Emirates (UAE) and the United Kingdom (UK) and prospects following Britain’s exit from the European Union (“Brexit”). It debates their bilateral relations and policy interests in these links. The article looks at the vital role their political, economic, and security interests play in their relationship. It poses the question of whether the form and shape of relations between both countries will remain critical post-Brexit and the reasons for pursuing this policy track. It provides an overview of investment links as the UK is considered one of the primary destinations for UAE foreign investments through its sovereign wealth funds or private investors. It also examines defense cooperation between the two countries with the UAE being an important customer for the UK’s defense industry. The paper provides an insight into the opportunities and challenges Brexit could create for the UAE and the UK in the fields of economics, security, and defense. It explores the role of the European Union in the bilateral relations post-Brexit. The article highlights the importance of both countries on the world stage in the context of the UK government’s strategy to prioritize its relations with the UAE and the Gulf region.
On 23 June 2016, the British vote to leave the European Union (EU)—“Brexit”—led to confusion and resonated around the global economy and financial markets. Brexit poses many questions surrounding the new form and shape of Britain’s relations with the outside world. It created ambiguity and uncertainty in relation to the United Kingdom’s (UK) interaction with different parts of the world. At the time of the exit vote, the flow of investment and trade was affected by the volatile market and a fall in the value of sterling. Brexit will have huge implications for the UK’s economic, legal, and political fronts, with thousands of regulations and laws, which were tied to European legislation needing to be reviewed. At the international level, Brexit is viewed by others as weakening to Europe. There are concerns in some quarters that the UK’s exit will lead to its retreat from world affairs. This viewpoint considers that being part of the EU offers Britain a pivotal stage for it to exercise its power; hence, Brexit would compromise Britain’s worldwide status.
The United Arab Emirates (UAE), a member of the Gulf Cooperation Council (GCC), is one of the critical states in a region vital to world prosperity and stability. UAE–UK relations are critical bilateral links in world affairs, since both countries possess important geopolitical features. The UAE’s competitive economy, its membership of the Organization of the Petroleum Exporting Countries (OPEC), and its increasing political, cultural, and security influence in the region make it an important player on the world stage. It has successfully become a major actor in the global trade structure. This is the outcome of its drive to reconstruct its economy through the global enhancement of its trade links in non-hydrocarbon products. It also embraces an appealing economic development model and business-friendly regulations. Dubai has become a global hub for business, trade, finance, and tourism and has adopted the knowledge economy as a central pillar of its future growth strategy.
The UK’s standing as a permanent member of the United Nations Security Council, the world’s fifth largest economy, and its nuclear power status makes it a key state with respect to global foreign and security matters, even after Brexit. These features make relations between the two countries vital in global affairs. The UK government’s ideal option after Brexit is to increase its engagement in all fields with different parts of the world. In this context, the UAE will be an important actor for the UK in its efforts to offset the economic and political impact of Brexit. This is the line advocated by the current UK government to boost economic, political, and military linkages in the region. In the last twenty years, the UAE and Gulf States, with their investment funds and wealthy individuals, have become one of the biggest investors in the UK’s economy. In 2016, UK trade with the Gulf States amounted to more than £30 billion (UK Government 2016a).
The UK has extensive defense and security cooperation with the UAE and other GCC countries. In 2016, it initiated a naval base in Bahrain, while arranging new military facilities in Oman that will support maritime and land-based activities (UK Government 2016a).
Brexit poses many questions in relation to the future shape of bilateral relations in areas of economics, security, and defense. The negotiation between the EU and the UK over the Brexit terms will be lengthy and problematic in various areas. Therefore, countries such as the UAE need to fine tune their external economic and defense policies accordingly. Both countries and other players such as the EU will explore the opportunities and challenges that emerge from the ongoing Brexit process. In the economic sphere, most investors in the Gulf assumed a cautious approach in the aftermath of Brexit. The UK will be more motivated to reach favorable bilateral trade deals with the UAE and other GCC countries and take advantage of the EU’s inability to strike a free trade agreement (FTA) with the GCC. The outcome of the ongoing Gulf dispute could change the future dynamics of the UK’s and the EU’s links with the GCC as an entity. Brexit also might have a major impact on the political and security relations that are central to UAE–UK bilateral relations.
This article provides an insight into the bilateral UK–UAE relations in the context of Brexit. It first discusses Brexit’s dynamics, followed by the current UAE–UK relations. It then discusses the opportunities and challenges in the bilateral relations. The author conducted a qualitative analysis by analyzing the different political and economic literature and perceptions related to UAE–UK relations in the context of Brexit, as well as the current EU–GCC relations. This article argues that Brexit will maintain strong bilateral links and present enhanced opportunities to deepen further UK relations with the UAE in different fields. Nonetheless, many challenges are inherent in the opportunities. One difficulty in studying UAE–UK relations is the lack of solid relevant data, since most information comes in the context of GCC–UK relations. Most data used in this article are from government sources, academic, or international media sources. The oral evidence given by academics, experts, officials in the various select committees of the British parliament, such as the Foreign Affairs Select Committee, Foreign Policy Committee, or Human Rights Committee, provide valuable sources in the analysis. These hearings offer a deeper insight into Brexit’s impact on the world stage. There are dispersed analyses in the literature by academics or in newspapers on certain aspects of Brexit and its effect on the Gulf States.
CURRENT STATUS OF UK–UAE RELATIONS
Since the independence of the UAE in 1971, the UAE and UK had strategic ties in various areas.1 Their links at present include a wide array of close-cooperation agreements on political, defense, security, counter-terrorism, energy security, trade and investments, and regional and international issues. The high-level engagement of both royal families and senior figures in both governments reflect the deep ties between both countries. Recent mutual visits include the visit of Prince Charles to the UAE in November 2016, and His Highness Sheikh Mohamed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE’s Armed Forces, to the UK in February 2017.2 The UK is represented by two embassies in the UAE—Dubai and Abu Dhabi—and is the only country in the world to have such a dual diplomatic presence in the same country. This is likely because the dual embassies were both fully functioning outposts before the UAE’s union (Al Qassemi 2010).
Their relations are intertwined with issues related to human rights and the UAE’s engagement in regional conflicts such as the war in Yemen and Syria. Although the UK government, to a large extent, is bound by commitments of its membership with the EU, it consistently sought to accommodate the UAE’s perspectives on various issues. On occasion, however, some of the policy lines on these matters did cause some unease in their close ties. The case of the Muslim Brotherhood, considered as a terrorist organization by the UAE, and its activities in the UK led to tension in bilateral relations.3 The UK shared the UAE’s concerns with regard to the Iranian threat to the stability of the region. The UK was part of the international powers (P5+1) nuclear deal that prevented Iran from acquiring a nuclear weapon. It also played a key part in the dispute over the three border islands of the Tunbs and Abu Musa between Iran and the UAE (Mobley 2003). Consecutive UK governments backed the rights of the UAE over the disputed Islands.
Trade and investment is a major area of engagement. There are five thousand British businesses active in the UAE and more than ten thousand British nationals live and work in the UAE’s financial, legal, and other professional services (Arab Today 2016). The Dubai World Expo in 2020, which will host around five million visitors, is another important venue to benefit from British expertise, which was proven in the 2012 London Olympics Games. Many British educational institutions have established a presence in the UAE, including the London Business School, Middlesex University, Heriott-Watt University, and Cass Business School; while there are a large number of Emirati students in the UK.
There are nearly 170 flights each week between the two countries, and over one million British tourists visit the UAE every year; while the UK has a growing number of Emirati visitors. Other facets of these educational and cultural relations incorporate initiatives such as Al-Maktoum Institute at the University of Aberdeen, the establishment of a Center for Middle East Studies at the London School of Economics. A spokesperson for the British Embassy in the UAE stated, “British citizens have helped drive UAE prosperity and have been involved in iconic projects like the Burj Khalifa and Abu Dhabi Formula One. UK oil companies, BP and Shell, have worked with Abu Dhabi for more than 70 years. Emirati investment in the UK is also rich and diverse. Through projects like the London Array, the world’s largest offshore wind farm, and the Emirates Skyline, a fantastic new cable car across the River Thames in London, the UAE is contributing positively to UK society” (Badwin 2013).
The UAE remains a major investor in the UK’s economy. In 2015, Emirates Airline ordered Rolls-Royce engines for fifty Airbus A380 passenger jet airliners for US$9.2 billion; and Masdar bought thirty-five percent of the UK’s Dudgeon offshore wind power projects for £525 billion (Randall 2017). Some of the UAE’s investments in the UK includes a fifteen percent stake in London Gatwick Airport (£125 billion); ExCel London (£400 billion); forty-two Marriot hotels (£640 billion); ten percent of Thames Water (£1.5 billion); Manchester Life (£1 billion); Manchester City Football Club (£483 billion spent on players); the New Scotland Yard building (£360 billion); and the Dubai Ports World Dh5.4 billion investment in the London Gateway project. British energy companies such as BP and Shell have played a central role in the development of UAE’s massive energy sector. These companies collaborated with the Abu Dhabi National Oil Company (ADNOC) and Abu Dhabi for Onshore Oil Operation (ADCO) (Ramesh 2015b).
The scale of UAE–UK trade relations is immense as bilateral trade figures reached £12 billion (AED63 billion) in 2015. According to Sulaiman Al Mazroui, UAE ambassador to the UK, this volume of trade relations makes the UAE the fourth largest market for the UK outside the EU (WAM (United Arab Emirates News Agency) 2016). The two countries set a target to double trade relations by 2020 to US$25 billion. Sultan Al Mansouri, UAE Economy Minister, indicated that a vital part in the drive for UK–UAE trade relations was instigated by the UAE’s policy direction towards innovation and diversity of its economy, the largest in the Arab world after Saudi Arabia (Randall 2017). The Emirates’ focus on sectors related to the knowledge economy such as healthcare, clean energy, and Islamic finance within the framework of its national strategy to move away from an oil economy enhanced the dynamics of bilateral relations.
With respect to defense and security, there is a long history of partnership between the two countries. They continue to cooperate on issues including tackling terrorism and countering extremism, in particular dealing with the threat posed by the Islamic State of Iraq and the Levant (ISIL). According to the UAE’s embassy in the UK, “Britain and the UAE signed a Defense Cooperation Accord in 1996 which sets out arrangements for security cooperation and represents Britain’s largest defense commitment outside NATO” (Embassy of the UAE in the UK 2017). In 2009, the UK and the UAE’s armed forces signed an agreement that included provisions for UK forces to use airbases in the UAE, comprising some sustainment flights to Afghanistan. The UAE military operations in Yemen are supported by the UK government, and both countries share the same perspectives towards the conflict in Syria.
The UAE remains an important customer of the UK’s defense industry, and purchase deals are vital to bilateral relations. The UK government delivers training together with its sales of military hardware that strengthen the capabilities of the UAE’s defense forces. With the Middle East being a priority defense market for the UK government, the UAE is one of the key clients for UK arms in the region. In 2015–16, the UK agreed arms deals worth £388 million with the UAE (Doward 2016). Al-Minhad airbase in Dubai serves as a logistical hub for the war in Afghanistan, and British troops are stationed there (Wikileaks 2012). In its effort to stave off the threat of Islamic State (ISIS), the UK government also considered setting up a military base with an infantry battalion in al-Minhad. A member of the defense source said, “You could see an infantry battalion based in al-Minhad being able to train alongside the Emirates” (Perry 2014).
BREXIT DYNAMICS IN THE GCC CONTEXT
One of the main premises stipulated by supporters of Brexit regarding the benefits of leaving the EU is its dysfunctional bureaucracy. They argue that Brexit would stimulate dynamism in the UK’s economy if efforts were made to “reduce regulation, improve competitiveness, and forge trade deals with fast-growing emerging economies” (Mance and Parker 2016). Hence, the UK government continues to advocate the concept of global Britain after the Brexit vote. This concept is aimed at promoting not only the British economy but also its foreign, culture, and defense policies in the international sphere. The new British economic and political setting will eventually propel any government to active global engagement.4
The EU is bound by the principles of the customs union, which encompass a common external trade policy to prevent its member states from signing individual comprehensive trade deals with other countries. EU–Gulf relations have encountered many challenges over time since the EU perceives, to a large extent, economic cooperation and Gulf security as a third strategic priority after Eastern and Central Europe, and the Mediterranean states (Hollis 1997). One of the main reasons for not striking a free-trade agreement (FTA) between the EU and the GCC is the complications related to conditions on political reform. However, both the EU and the Gulf have a responsibility in the impediments that challenge the development of their relations. While the GCC countries are fragmented in their interest, the EU member states continue to advance their own individual foreign policy, hence providing a leeway in their bilateral relations with the Gulf States. Over time, EU member states such as France, Germany, and the UK endeavored to foster preferential relations with GCC states (Baabood and Edwards 2017, 548–50). Friction between aspects of economic cooperation and issues of human rights and democracy led the GCC unilaterally to halt FTA negotiations in December 2008 (Eissa 2014).
Some economists indicated that possible Brexit pitfalls include “economic decline due to higher trade and investment barriers for British companies with business developed across the EU . . . a decrease in the volume of investments due to higher uncertainty” (Paun 2016, 310–11). However, after Brexit the UK would be able to run its own trade policy, which would lead to initiating a drive to build bilateral trade treaties or FTAs with actors outside the EU. In her speech for the upcoming Brexit negotiations, Theresa May, UK Prime Minister, affirmed: “We want to get out into the wider world, to trade and do business all around the globe. Countries including China, Brazil, and the Gulf States have already expressed their interest in striking trade deals with us” (UK Government 2017a). Such agreements will not be possible before deciding the modalities of the UK’s post-Brexit relations with the EU.
Following Brexit, the British pound sterling dropped to its lowest rate in thirty-one years against the US dollar. According to a study by Credit Suisse on global wealth funds, since Brexit, Britain is US$1.5 trillion poorer in US dollar terms due to the fall of the pound (Reuters 2016). It crashed by around sixteen percent against the dollar, meaning UK wealth is sharply lower expressed in dollars. This huge drop in sterling changed calculations for companies and investors around the world, while producing favorable deals for others. Despite the lack of clarity on Brexit, some international businesses continued to increase their investments in the UK.5 Many international firms and investors delayed key decisions on their investments, adopting a “wait and see” position in anticipation of economic stability and predictability after Brexit.
The UAE government and private investors continue to pursue trade and investment opportunities in the UK after Brexit; however, there remain many concerns regarding the regulatory and legal framework after Brexit. Officials within the UK government continued its efforts to affirm to the GCC countries its commitment to get the best out of Brexit. The UK Secretary of State for International Trade, Dr Liam Fox, stated, “I know that the UK’s recent decision to leave the EU has led some to question the economic prospects for the UK and its potential for trade. I want to bring a clear message to the Gulf, ‘the UK is open for business and we now have a huge opportunity to position ourselves at the centre of an increasingly interconnected world’” (Fox 2016). Another aspect of Brexit is the question related to whether London will maintain its status as a solid destination for investment. Many believe it will continue to be a vital hub for businesses worldwide, with the presence of several rival cities such as Hong Kong, Singapore, or Dubai.
There was unease in some quarters in the Middle East about Brexit representing an opportunity for their regional and international rivals in the security and defense fronts, since it would weaken and divide the EU over various regional issues. These sentiments question the continuity of the key role played by the UK in the international political scene when outside the EU. Powerful states such as Iran or Russia perceive Brexit as diminishing the UK’s position because it would be alone compared with the EU as an entity. This context could undermine the UK’s capacity to take an active part in global challenges and lead to ineffective action when dealing with immediate threats facing the region. Blunt (2016, 4) wrote: “In the immediate aftermath of the Brexit result, our friends in the region saw for themselves the unguarded glee of mid-ranking officials in both Iran and Russia … a senior aide to Iranian president Hassan Rouhani tweeted that ‘Stars in the flag of unity are falling in Europe; Britain’s exit from the EU is a historic opportunity for Iran.’” This line of argument considers that the EU without the UK would lead to inhibitions in its engagement in international conflicts.
Since the referendum for Brexit, senior officials in the UK government continued to affirm its commitment to its global allies. In December 2016, May stated at the Gulf–UK summit that following Brexit: “We should seize the opportunity to get out into the world and to shape an even bigger global role for my country. Yes, to build new alliances, but more importantly, to go even further in working with old friends, like our allies here in the Gulf, who have stood alongside us for centuries” (UK Government 2016a).
In this framework, the UK government launched a new international defense strategy aimed at underpinning its global role after Brexit. One press release stated: “For the first time a defense engagement was made a core defense task in the Strategic Defence and Security Review 2015. As a result, Britain is now stepping up its global commitment and leadership in international organizations, including NATO and the UN, as well as with bilateral partners” (UK Government 2017b). One of the main features in the strategy is the focus on the increasingly important Gulf region, and as stated by Boris Johnson, then Foreign Secretary, “Britain is back East of Suez” (UK Government 2016b). Part of this increase in the UK’s defense engagement in the Gulf is the reopening of a naval support facility in Bahrain, creating a permanent army presence in Oman, and establishing new defense staff centers in Dubai and Singapore (Vasagar 2016).
UAE–UK RELATIONS: OPPORTUNITIES AND CHALLENGES
Brexit presents prospects for further development in UK–UAE foreign and security relations. Once freed of EU common policies, the future direction of the UK’s foreign and defense policies can take a different direction. The UAE’s ambassador to the UK stated: “Obviously, Brexit is a major source of concern for some given the uncertainty associated with it, and while we believe that there will inevitably be positives and negatives as a consequence, we will always be looking to build on the positive side” (Embassy of the UAE in the UK 2017).With Brexit, the UK will have full autonomy in shaping its policies towards the UAE and the Gulf. This could lead both countries to a new impetus in their economic and defense interests.
On the world stage, the UK has a disadvantage compared with twenty-seven EU states that share agreements on issues related to EU common foreign and security policy. The EU as a block assumes more sway than the UK on its own. This dimension is critical for regional or international interests of the UAE, such as Iran, Yemen, or the Islamist threat. However, mutual decision-making within the twenty-seven EU states is protracted and laborious with any member having the authority to veto any policy or decision that is not in its interest. The UAE will benefit from the UK–EU collaboration following Brexit in fostering and creating a collective policy line on issues that are vital to UAE foreign policy such as Syria, Iran, or even Russia.
The EU–UK shared policy standpoint on these issues after Brexit will provide stronger international influence on regional issues, rather than the UK by itself. In this context, Brexit presents an opportunity for UAE–UK relations, to reshuffle the order of priorities set by the EU for its member states to which Britain was obliged to adhere. For example, the EU neglected relations with the Gulf region, whereas it is a high priority for the UK. The independence of the UK’s foreign and security and defense policies provides a leeway in its engagement with critical countries such as the UAE. Brexit will enable the UK to avoid the considerable amount of time and energy involved in the EU decision-making mechanism.
Since Brexit is in its early stages, the future development of EU–UK relations and the possible effects it could have on the UAE will present many opportunities and challenges. The EU played an important role in negotiating the nuclear deal with Iran, while the UAE and EU have robust strategic cooperation on diplomacy and security. Therefore, UK–EU relations post-Brexit are critical for the UAE, as it needs to fathom the effect of Brexit on the foreign and economic policies of both the EU and the UK. It will be in the interest of the UAE not to have stronger ties with the UK after Brexit at the expense of the EU, as they all share fundamental foreign and economic interests. Although it is still too early to state, the UK will maintain its large influence on issues related to foreign and defense policies within the EU. As stated by the London School of Economics (LSE), “The EU lives in the shadow of NATO. This will remain central to the UK’s defence and security policy and to Common Security and Defence Policy, which relies on NATO in terms of planning and capabilities” (LSE European Institute, LSE Commission on the Future of Britain in Europe 2016).
The ongoing Gulf dispute has reflected the shortcomings of British influence in the region. The UK government tried to engage with the warring parties to solve the differences, but to no avail. The clearly cautious British engagement in this diplomatic crisis aimed to avoid irritating both the UAE and Saudi Arabia, on the one hand, and Qatar, on the other. While the UK has vital interests on both sides, the ongoing dispute, nonetheless, offers some insight into the different EU states’ approaches to the crisis. The UK’s policy towards the UAE in the context of the current crisis is based on its economic interests.
The UK’s permanent seat in the UN Security Council and its importance as a nuclear power would continue to act as a major influence in international affairs. The UK’s status in global politics will sustain the UAE’s interest in maintaining strong diplomatic, security, and economic links with its government. Iran, as a critical security concern of the UAE, which is small in size and in population, will continue, despite its recent nuclear deal with international powers.Therefore, the UAE perceives relations with the UK as a central pillar in its foreign policy fear against Iran’s hegemonic ambitions in the region. The UAE has serious concerns about Iran’s efforts for internal subversion, its build-up of military capabilities, ideology and rhetoric, support for terrorism, and the dispute over the three Gulf islands (Rugh 1996). Through its strategic relations with the UK post-Brexit, the UAE will be able to contain Iran’s ambitions and respond to a wide range of geopolitical threats and dangers.
The UAE’s military expenditure in 2016 amounted to US$23.5 billion, and its spending is expected to reach US$31.8 billion by 2021. The UK is one of the countries the UAE relies on for its arms imports and it plays a key part in UAE military and police training programs. The UAE is developing its own indigenous UAE defense industry, which has an economic, security, and defense dimension to it. According to Louth et al. (2013, 5), “The development of its defense and security capabilities is seen by the leadership as a key enabler of its strategic economic vision of diversification from dependency on traditional, high-value Gulf industries to a high-tech, high-margin exporting economy of goods and services.” For the UK in the post-Brexit environment, the UAE presents an important market that could boost its defense industry, while lending its own expertise to the UAE’s national drive to create its own defense industry.
Prioritizing the Gulf region in the new UK international defense strategy would present the UAE with further development opportunities for its existing strategic defense and security links with Britain. The UAE places great value on its continuing partnership with the UK in defense and security issues, particularly the UAE’s increasing military engagement in the region at present, which includes military bases in Eritrea, Somalia, East Libya, and Yemen. These UAE’s military bases in the Horn of Africa, which are part of a long-term strategy for the emirates in the region, provide valuable assistance to its military operations in Yemen. In this context, the UAE is also a partner to NATO, which includes the UK as an important member in this block of twenty-eight countries that includes the United States and Germany.
One of the strategies to strengthen the UK’s foreign policy after Brexit is to enhance further UK relations with United States in security and defense policies. The UK will endeavor to enhance its relationship with the United States further in its security and defense policy to counterbalance the adverse political and economic effect of Brexit. However, another policy perspective in the UK was presented in the House of Lords report on the UK’s Middle East policy that calls for not relying heavily on the current US administration. The refocus of the US security position towards redressing the balance in the Far East will pose a risk to UAE security. That being the case, the UAE has developed a strategy “to diversify its allies, partners, suppliers and protectors. It is with this in mind that the UAE’s foreign policy has moved towards embracing more closely old European friends—namely the UK and France—in complex and binding agreements that complement, even if they do not replace, those with their current American friends” (Kelly and Stansfield 2013, 1217). Both the UK and the US strategy perspectives call for the UAE to strengthen its security and defense ties with the UK post-Brexit.
In the areas of investment and trade, since it became independent, the UAE and private investors have continued to invest heavily in various sectors of the British economy, despite the negative shifts that have occurred in the British economy over time. Many policy-makers in the UAE and the Gulf region perceive the historical and solid relations with the UK as providing an opportunity to enhance trade between their economies further, even after Brexit. This trend consolidates the perception that UK political and economic relations with the UAE and the Gulf are deeper and more wide ranging than with European and Asian contenders. In the context of Brexit, according to Bahlaiwa (2016), “The result would be the UK leapfrogging the EU and gaining an advantage over competitors such as Germany, France and Italy who have much to lose.” This assessment is largely shared by many in the Gulf States, including the UAE. However, Brexit will force the EU and the UK to compete for the UAE and the GCC markets and investments. The recent visits by the German leader Angela Merkel and Theresa May to the Gulf region, and their optimistic vision for their future relations with the Gulf States, reflect the race to build strategic links.
After Brexit, the UK would become independent of the EU common trade policy and could pursue its own trade agreement worldwide. The UK and the UAE could use this opportunity to strike an FTA. According to Gulf officials, it was reported in March 2017 that the GCC states were pushing for an early agreement on free trade with the UK to secure preferential arrangements after Brexit, and they could have a draft agreement ready within months (Finn 2017). These Brexit dynamics are propelling the EU to press for similar stronger economic relations with the GCC. German leader Merkel stated that the EU presented a new offer for an FTA, but there has, so far, not been any reply from the GCC.
However, the House of Lords’ report indicated that “the Government’s expectations of the economic dividends of a Gulf–UK agreement in trade and services and the ease of negotiating such an agreement are over-optimistic. It is primarily a continuation of an existing UK trade and investment policy and Brexit does not necessarily offer the UK any added advantage” (House of Lords, Select Committee on International Relations 2016). This perspective stipulates that there is no added benefit to Britain’s FTA with the GCC states, as an extensive economic connection already exists between the UK and the GCC. In the meantime, there were many challenges to Britain negotiating a trade agreement with the GCC, including human rights issues, absence of transparency in public procurement, and the GCC’s failure to work as a united bloc. The future EU–UK economic relationship will be a determinant factor in shaping the UAE–UK economic links on issues such as the FTA. Therefore, the UAE will have a keen interest in following closely the future development of EU–UK relations and the impact they might have on bilateral relations.
The UAE’s post-oil economic diversification strategy that seeks to accelerate the development of the non-hydrocarbon-based sectors is another key facet of enhancing the bilateral relations. The Abu Dhabi Economic Vision 2030, initiated in 2009, is a long-term strategy aimed at decreasing dependence on the oil sector as the basis of the UAE’s GDP, and increasing the input of non-hydrocarbon sectors in the economy. The UAE’s vision for its future emphasizes these knowledge-based activities and will need know-how and technology, which require more investment in education and research and development (R&D) (Allam and Alfaki 2013). The UAE has allocated huge financial resources into this drive to move away from its reliance on the oil sector. It intends to invest US$163 billion (£134 billion) in projects related to renewable and clean energy sectors (BBC News 2017). This investment strategy is possible since the UAE has amassed massive financial reserves through its sovereign wealth funds with the Abu Dhabi Investment Authority, which was ranked second in the top ten funds worldwide and worth US$847.6 billion. Britain can contribute in these sectors after Brexit as Jane Kinninmont, Deputy Head, Middle East and North Africa, at Chatham House, indicated: “There will be some good opportunities, particularly in the service sector areas where the UK has specific expertise in healthcare, education, infrastructure, construction and so forth” (House of Lords, Select Committee on International Relations 2016). The UAE’s ambassador to the UK, Sulaiman Al Mazroui, emphasized this aspect by stating: “We believe that there will be a lot of opportunities should Britain leave the European Union, particularly in areas like medicine, education etc.” (Wilson 2016). Britain’s strength and interest in stronger relations following Brexit lies not only in exporting its products but also largely in its service sector capacity.
Since Brexit was announced, the UAE continues to invest in different sectors of the British economy, which is reassuring for the future of the UK’s economy.The UK Secretary of State for International Trade stated: “Since the referendum, capital investment from the Gulf into the UK has shown no sign of weakening. We have seen big deals this year, with National Grid getting £1.4 billion from Qatar, Scotia Gas getting £621 million from the UAE” (House of Lords, Select Committee on International Relations 2016). Many investors moved ahead with their investments, despite the loss in the value of the pound and stocks undercut the value of their assets. One of the attractions for global investors in the UK is the City of London’s particular features that underpin its vitality as a major global financial services center. London’s location and the presence of a qualified pool of international professionals and talents gives that city an advantage for businesses and investors. Other characteristics include a legacy of internationalism, a tradition of economic opening and stability, and a broad and liquid market (Bahgat 2012). Some observers view Brexit as a threat to the status of London with most of its business depending on Europe, and that the Brexit negotiations will determine its future prospects. However, the UAE, and the Gulf States in general, view London through a positive lens in terms of investment prospects and sectors, such as Islamic banking.6
Human rights continue to cause some friction between the two countries since many civil society organizations constantly urge the UK government to raise issues with the UAE government related to the suppression of free speech and treatment of workers. Bilateral relations have suffered in the past as a result of this issue as the UK pursues trade interests and advocates the alleviation of human rights. It is a complicated issue with many factors involved, including culture. Some in the UK’s political establishment and activists criticize the UK’s pursuit of commercial interests over the promotion of human rights, the latter being a pillar of UK national interests. A recent report by the Joint Committee on Human Rights in the House of Commons emphasized that human rights must form a key component of any future trade after Brexit. The report stated: “We encourage the Government to use the opportunity of Brexit to set higher human rights standards in future trade agreements, to include workable provisions on enforcement, and to undertake human rights impact assessments before agreeing trade agreements” (Cowburn 2017).
One of the issues between the UAE and the UK is that of the Muslim Brotherhood’s activities based in London. The UAE consider this Islamist group a terrorist organization, as do some other Gulf countries. In 2012, the UK government initiated an independent review, led by Sir John Jenkins, Britain’s former ambassador to Saudi Arabia, about the activities of the Muslim Brotherhood after the UAE and Saudi Arabia had exerted pressure on the UK government in commercial-related issues (Ramesh 2015a). However, a recent parliamentary report criticized the findings of the Jenkins report of December 2015 and concluded that there were concerns about the activities of the Muslim Brotherhood. The report by the parliamentary Foreign Affairs Select Committee was constructive about the Muslim Brotherhood and concluded that it was a “firewall” against violent extremism and should be engaged with, either when in power or in opposition (House of Commons, Foreign Affairs Select Committee 2016b). Human rights will continue to pose a challenge in the post-Brexit era; however, realpolitik will always take priority in the construction of bilateral relations.
Britain’s standing in world affairs will be weakened with its exit from the EU. This is one viewpoint regarding Brexit; however, others view it as providing many opportunities for UK relations with the world. It is inevitable that Brexit will have a significant impact on the UK’s relations with the outside world; it being the fifth largest economy with the significant influence it has on international political and security issues. The Prime Minister affirmed to the GCC leaders that Gulf security was Britain’s security and the prosperity of the Gulf was Britain’s prosperity. The UK government declared a policy of global engagement after Brexit, and was looking for new opportunities. In that regard, the UAE is an imperative economic powerhouse and significant regional political player. It considers the UK a vital component of its security, while the UAE continues to be critical of Britain’s economic and security interests.
Brexit provides prospects for further development in bilateral economic, political, and security relations with the UAE. It gives the UAE leverage in its interaction with both the EU and the UK on vital issues. Therefore, the UAE will exploit Brexit to advance its foreign policy objectives. Although the EU, UK, and UAE share common views on regional issues such as Yemen, Syria, Iraq, and Iran, there are some differences in policy postures. The UAE will have two different venues to present its policy argument, and this aspect might lead to strengthening UK–UAE relations. However, Brexit poses a challenge for the UAE with regional powers, such as Iran, who conveyed an enthusiastic reaction for Brexit; Iran could exploit the fragmentation of the EU to advance its regional agenda.
The deep historical links between the UAE and the UK will be a determinant factor in shaping and forming bilateral relations. In this context, the UAE will maintain its foreign policy principle aimed at building closer strategic links with the UK as part of the Western block.7 Brexit will not change the substance of the bilateral relations between Britain and the UAE, but the new context presents opportunities and challenges for both countries. The UAE and the UK government will make efforts to remold their bilateral ties to address the effect of Brexit on their relations. Strong relations between Britain and the UAE will remain critical to both countries in the long term.
The treaty between the UK and Arab tribes, and a number of sheikhs, including Abu Dhabi, Sharijah, Ajman, and Umm al-Quwain in 1820, known as the “General Maritime Treaty,” laid the future foundation of a solid relationship between the two countries. For a detailed account, see Allday (n.d.).
High-level visits were undertaken by the Queen and Duke of Edinburgh to the UAE in 2010, and by a visit by His Highness Sheikh Khalifa bin Zayed Al Nahyan to the UK in 2013.
This fact caused the Parliament Foreign Affairs Select Committee to recommend that the government should commit a substantial increase in the funding and capacity of the Foreign and Commonwealth Office in the event of Brexit. For full details, see House of Commons, Foreign Affairs Select Committee (2016a).
The Japanese car maker Nissan, which provides one of the biggest foreign employment opportunities in Britain, stated that it would construct a new car plant in Sunderland. GlaxoSmithKline, the multinational pharmaceutical company, will pour US$355 million into its UK business. The French company EDF agreed a US$23.3 billion nuclear power plant—Hinkley Point C—which delivers seven percent of Britain’s electricity needs. Qatar Airways has raised, after the announcement of Brexit, its share in the parent company of British Airways, citing “an attractive opportunity.”
The Islamic Finance industry is growing at seventeen percent per year and is estimated to be worth around US$2 trillion. The UK has more than twenty banks offering Islamic services.
These ties have been strengthened by a series of bilateral agreements with the United States, the UK, and France (which has recently opened a military base in the UAE).