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.
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

Video Is West Doing Enough to Tackle Islamic State?

There is growing uncertainty over whether West’s response to ISIS is adequate More

China Crackdown on Dual Citizens Causes Concern

New policy encourages reporting people who obtain citizenship in another country, but retain Chinese citizenship; move spurs sharp debate More

Video Coalition to Fight Islamic State Could Reward Assad

Losing ground to Islamic State fighters, Syria's government says it is ready to cooperate with international community More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Is West Doing Enough to Tackle Islamic State?i
X
Henry Ridgwell
August 29, 2014 12:26 AM
U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Pachyderms Play Polo to Raise Money for Elephants

Polo, the ancient team competition typically played on horseback, is known as the “sport of kings.” However, the royal version for one annual event in Thailand swaps the horse for the kingdom’s national symbol - the elephant. VOA Correspondent Steve Herman in Samut Prakan reports that the King’s Cup Elephant Polo tournament is all for a good cause.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.
Video

Video America's Most Popular Artworks Displayed in Public Places

Public places in cities across America were turned into open-air art galleries in August. Pictures of the nation’s most popular artworks were displayed on billboards, bus shelters, subway platforms and more. The idea behind “Art Everywhere,” a collaborative campaign by five major museums is to allow more people to enjoy art and learn about the country’s culture and history. Faiza Elmasry has more.
Video

Video Chinese Doctors Use 3-D Spinal Implant

A Chinese boy suffering from a debilitating bone disease has become the first patient with a part of his spine created in a three-dimensional printer. Doctors say he will soon regain normal mobility. VOA’s George Putic reports.
Video

Video Uneasy Calm Settles Over Israel, Gaza Strip

Israel and the Gaza Strip have been calm since a cease-fire set in Tuesday evening, ending seven weeks of hostilities. Hamas, which controls Gaza, declared victory. Israelis were more wart. VOA’s Scott Bobb reports from Jerusalem.
Video

Video India’s Leprosy Battle Stymied by Continuing Stigma

Medical advancements in the treatment of leprosy have greatly diminished its impact around the world, largely eliminating the disease from most countries. India made great strides in combating leprosy, but still accounts for a majority of the world’s new cases each year, and the number of newly infected Indians is rising - more than 130,000 recorded last year. Doctors there say the problem has more to do with society than science. Shaikh Azizur Rahman reports from Kolkata.
Video

Video Scientists Unlock Mystery of Bird Flocks

How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.