News / Economy

British Defense, Oil Business in Gulf May Be Vulnerable to Syria

The British Petroleum logo is seen near a gas station in Dubai, United Arab Emirates, in this July 7, 2010, file photo.The British Petroleum logo is seen near a gas station in Dubai, United Arab Emirates, in this July 7, 2010, file photo.
x
The British Petroleum logo is seen near a gas station in Dubai, United Arab Emirates, in this July 7, 2010, file photo.
The British Petroleum logo is seen near a gas station in Dubai, United Arab Emirates, in this July 7, 2010, file photo.
TEXT SIZE - +
Reuters
— Britain's decision not to join a military strike on Syria may have more than a purely political impact: it could over time make it more difficult for British businessmen to win billions of dollars of contracts in the Gulf.

British companies are bidding for several big-ticket deals in the region, including oil concessions and contracts to supply dozens of fighter jets to the United Arab Emirates and Qatar.

Most of the wealthy Gulf oil exporters, particularly Qatar and Saudi Arabia, are supporting - morally, financially and in some cases militarily - the Syrian rebels in their civil war with the government of President Bashar al-Assad.

So Britain's refusal to get involved in military action could weaken its position in the Gulf as it tries to secure contracts which depend heavily on close political ties and shared strategic interests.

Companies from the United States and France, which are considering a strike against the Syrian government over its alleged use of chemical weapons, may benefit from any setbacks for British firms.

Jonathan Eyal, international director at the Royal United Services Institute in London, said parliament did not seem to have taken this into account in its surprise vote on August 29 against action in Syria.

While legislators were clearly aware of the risk to Britain's ‘special relationship’ with the United States of their vote, the country's footprint in the Middle East appeared either to have been taken for granted or undervalued, he said.

”There was no understanding that what was at stake was Britain's reputation as a major security actor in the Middle East as a whole. What is the point of buying equipment which, after all, is only marginally better than that which is available from the United States, from a country that is unlikely to realize its security commitments?,” asked Eyal.
 
Competition

Gulf governments have not commented publicly on the British parliament's vote, and British officials said they do not expect it to affect commercial ties.

”We have no reason to believe that the U.K. parliament's decision on Syria will impact our trade and investment relationship with Saudi Arabia,” the British embassy in Riyadh said in a statement.

”The U.K. will continue to play a full role in seeking to bring an end to the conflict and hold the Syrian regime to account for its actions... U.K. exports to Saudi Arabia grew 26 percent in the first five months of this year and we expect that growth to continue,” the statement said.

Privately, however, some British officials were jittery about a cooling of Britain's traditionally warm relationship with the Gulf even before the decision on Syria.

Anger among unelected Gulf rulers over the West's support for the 2011 Arab Spring uprisings, and British media reports seen as supportive of the Muslim Brotherhood, were blamed by some analysts for British oil giant BP's temporary exclusion last year from the bidding to run Abu Dhabi's biggest oilfields over the next few decades.

BP was allowed to bid again after British Prime Minister David Cameron flew to Abu Dhabi to promote his country's energy and weapons companies in November 2012.

But the United States and France have also been flexing their diplomatic muscles to win business in the Gulf; French President Francois Hollande visited Abu Dhabi in January this year. This suggests that for some contracts, the Syria issue could become a factor in decision-making.

Britain's BAE Systems is competing against France's Dassault Aviation to sell around 60 planes to the UAE. Qatar is weighing whether to replace its aging fleet with BAE Eurofighter Typhoons or Dassault Rafales.

BAE has been locked in talks with Saudi Arabia over the sale of 72 Eurofighters since it signed a preliminary deal in 2007; it also hopes to sell fighters to Bahrain. Other fighters competing for Gulf sales include U.S.-based Lockheed Martin's F-35 and the Gripen from Sweden's Saab.

A Western aerospace executive in the Gulf noted that many factors were involved in large deals such as the UAE's fighter purchase, including technology transfers and governments' desire to diversify their suppliers. But that did not mean Syria would be ignored, he said.

”The U.K.'s stand on Syria will play into the minds of the decision-makers in Gulf. You could make an argument that this will impact Eurofighter's chances,” he said, declining to be named because of the political sensitivity of the issue. BAE declined to comment.

Strategic withdrawal?

William Patey, a former British ambassador to Saudi Arabia and Iraq, and now an international affairs adviser at consulting firm Control Risks, said he did not expect any immediate impact on British contracts in the Gulf.

”That's not how it works...I can't see that the Saudis are suddenly going to say, ‘No, we are not going to do this deal on Typhoon because the Brits aren't attacking Syria,’” he said.

But Patey added that there could be long-term damage if the British parliament's vote on Syria eventually came to be seen as part of a strategic withdrawal by Britain from action in the region on behalf of its Gulf allies.

British ministers have denied that any such withdrawal is in the cards, but the parliamentary vote showed the matter is not entirely in their hands.

Edward Hunt, a consultant at IHS Jane's Aerospace and Defense in London, said extended Western military intervention in Syria could eventually start to help Britain's commercial competitors if British forces sat it out.

”Historically, equipment tends to sell better when it's been proven in combat situations - manufacturers always like to see their aircraft being used, successfully anyway, because that tends to increase sales overseas,” he said.

”If the equipment isn't used, then competitor equipment - obviously the French and the Americans sell the same sort of equipment as we do - may be favored in future procurements and competitions.”

BP and Royal Dutch Shell, Britain's two international energy champions, declined to comment on how political relations between London and the Gulf might affect their interests.

In April, Abu Dhabi National Oil Company (ADNOC) chose Shell ahead of French rival Total to develop the Bab sour gas field in a project that has been valued at around $10 billion.

The 30-year deal showcases Shell's technology for treating potentially deadly gases from Bab and may therefore put it in a strong position to renew its role in the UAE's largest onshore oil concession, despite growing competition from Asian buyers of the UAE's oil.

The extent to which the Syria issue could affect this will start to become clear after October, when bids are due from international oil companies seeking to operate the UAE's onshore fields beyond 2014.

You May Like

Analysts Warn of Regional Proxy Conflict in Afghanistan

Analysts warn if Kabul’s neighbors do not start to cooperate, competing desires for influence could deteriorate into a bloody proxy war in the country More

Saudi Intelligence Chief Resigns

Bandar bin Sultan came under criticism for supporting al Qaida, prompting King Abdallah to wrest Syria operations away from him in February, handing them to Interior Minister Prince Mohammed bin Nayef More

Poetry Magazine editor Don Share talks what makes a good poem with VOA's David Byrd

What makes a good poem? And is poetry as viable an art form as it once was? To find out, VOA's David Byrd spoke to Don Share, the editor of Poetry Magazine. More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid

World Currencies

EUR
USD
0.7287
JPY
USD
103.22
GBP
USD
0.6027
CAD
USD
1.0991
INR
USD
60.191

Rates may not be current.