British prime minister Theresa May will not be the only one who sees her latest visit to the Middle East as a welcome break from the seemingly endless obsession of Britain's ruling elite with the Brexit negotiations. There will be many Arab leaders, too, who see the British leader's return to the region as a positive re-engagement with a part of the world that is going through one of the most turbulent and challenging periods in its modern history.
For the majority of the Gulf states, as well as other similarly moderate Arab states like Jordan and Egypt, Britain has long been regarded as an important and valued ally. But the recent political turbulence in Britain, together with the demands of the Brexit negotiations, have made many Arab leaders question whether the country still has a role to play in resolving regional issues.
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During David Cameron's tenure there were, it is true, some modest steps taken to strengthen regional ties, with Whitehall officials speaking of a "return east of Suez" policy that sought to re-establish some of the influence it lost in the region following its withdrawal in the early 1970s. One of the few tangible manifestations of this new approach was the building of the Royal Navy's new base in Bahrain.
The British military has also been involved in the successful US-led coalition effort to defeat ISIL. But lingering doubts remain about the seriousness of Britain's diplomatic investment in the Middle East, a concern among Arab leaders that intensified following parliament's decision to veto Mr Cameron's attempts to launch military action in 2013 against the Bashar Al Assad regime over its use of chemical weapons against rebel forces in Syria.
More recently leaders of the quartet of Arab states (Saudi Arabia, the UAE, Bahrain and Egypt) have been unhappy with the British government's ambivalent attitude to the diplomatic stand-off with Qatar, with British officials being accused of turning a blind eye to Doha's support for Islamist extremists and groups like the Muslim Brotherhood.
Mrs May’s visit to the region, therefore, provides an opportunity for Britain to reassert its commitment to the region and demonstrate that it is serious about maintaining its relationships with moderate, pro-western Arab governments, many of which date back decades.
The most obvious purpose of the British prime minister's latest diplomatic venture to the region is to boost British trade ties in the wake of Brexit. It is for this reason that she will declare her support for the economic reforms taking place in Jordan and Saudi Arabia.
The most obvious new opportunities afforded to British business are likely to be those coming from Saudi Arabia's ambitious Vision 2030 programme, whereby the country's dynamic Crown Prince Mohammed bin Salman intends to undertake a radical transformation of the Saudi economy. Using the funds generated by the upcoming sale of Aramco shares, the crown prince aims to diversify the country's economy away from its traditional dependence on oil revenues, as well as push an ambitious social reform agenda.
But while the British government is understandably fixated on developing new trade ties with the region, it must also understand that such new agreements are unlikely to be forthcoming unless Britain is also prepared to engage fully on challenging regional security issues as well.
Top of the list is how to deal with ISIL following its defeat in Raqqa and Mosul and the political destabilisation caused by Iran’s Revolutionary Guards’ continued meddling in the affairs of pro-western Arab states.
As Mrs May will have learnt from her brief stopover in Iraq, where she met British troops and visited Iraqi prime minister Haider Al Abadi, the recapture of Mosul and ISIL’s crushing military defeats in other parts of the Arab world do not mean the threat posed by Islamist-inspired terrorism is at an end.
On the contrary, as last weekend's devastating attack on a Sufi mosque in Egypt's northern Sinai region has shown, the group will simply change tactics and concentrate more on carrying out terror attacks than trying to maintain its self-proclaimed caliphate.
And on this score, ISIL will pose just as much of a threat to western countries like Britain, as ISIL terrorists look for new targets to attack, as to the Middle East. It is therefore essential that Britain and its allies in the region continue to work closely together on bilateral issues such as intelligence-sharing.
The other issue where Britain needs to show its support for moderate Arab states is on the vexed matter of Iran's attempts to destabilise the region. During the prime minister's meeting with King Salman and Prince Mohammed in Saudi Arabia on Wednesday, Mrs May was under pressure to raise the issue of Yemen, where the Saudi-led coalition blockaded air, land and sea access for several weeks to stop a flow of arms to Houthi rebels from Iran. Aid agencies said the blockade had worsened the humanitarian crisis in which an estimated seven million Yemenis are said to be at risk of malnutrition.
But it is also important that Britain holds Iran to account for the disaster in Yemen as, had it not been for Tehran's support for the Houthi rebels, the conflict could well have been avoided in the first place.
For it is the Iranian regime, and not moderate Arab states, that is responsible for much of the discord currently affecting the region. And if Mrs May can show she grasps this fundamental point, then there is no reason why Britain cannot enjoy better and more profitable relations with its traditional allies in the region.
Con Coughlin is the Daily Telegraph’s defence and foreign affairs editor
Brief scoreline:
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
