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

Hostage Crisis Could Divide Japan Over Plans to Boost Military

Japanese Chief Cabinet Secretary Yoshihide Suga said Monday the government is working closely with the Jordanian government to secure the release of remaining Japanese hostage Kenji Goto More

Video Brussels Shaken as New Greek Leader Challenges Europe’s Austerity Drive

Country's youngest ever PM Alexis Tsipras, 40, sworn in Monday and says he will restore dignity to Greece by ending spending cuts More

Multimedia National Geographic Photo Camps Empower Youth

Annual mentoring program's mission is to give young people a voice to tell their own stories through photography More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Obama Urges Closer Economic Ties During Historic India Visiti
X
Aru Pande
January 26, 2015 9:33 PM
U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video Obama Urges Closer Economic Ties During Historic India Visit

U.S. President Barack Obama says the United States and India must do better to capitalize on untapped potential in their economic relationship - by removing some of the roadblocks to greater trade and investment. As VOA correspondent Aru Pande reports from New Delhi, Obama spoke after participating in India’s Republic Day celebration.
Video

Video US, EU Threaten New Russia Sanctions Over Ukraine

U.S. President Barack Obama has blamed Russia for an attack by Ukrainian separatists that left dozens dead in the port of Mariupol and cast further doubt on the viability of last year’s cease-fire with the Kyiv government. VOA’s Michael Bowman reports from Washington.
Video

Video White House Grapples With Yemen Counterterrorism Strategy

Reports say the U.S. has carried out a drone strike on suspected militants in Yemen, the first after President Barack Obama offered reassurances the U.S. is continuing its counterterrorism operations in the country. The future of those operations has been in question following the collapse last week of Yemen’s government. VOA White House correspondent Luis Ramirez reports.
Video

Video Kerry Warns Against Violence in Nigeria Election

US Secretary of State John Kerry visited Nigeria Sunday in a show of the level of concern within the U.S. and the international community over next month’s presidential election. Chris Stein reports.
Video

Video Zoo Animals Show Their Artistic Sides

The pursuit of happiness is so important, America's founding fathers put it in the Declaration of Independence. Any zookeeper will tell you animals need enrichment, just like humans do. So painting, and even music, are part of the Smithsonian National Zoo's program to keep the animals happy. VOA’s June Soh met some animal artists at the zoo in Washington. Faith Lapidus narrates.
Video

Video Worldwide Photo Workshops Empower Youth

Last September, 20 young adults from South Sudan took part in a National Geographic Photo Camp. They are among hundreds of students from around the world who have learned how to use a camera to tell the stories of the people in their communities through the powerful medium of photography. Three camp participants talked about their experiences recently on a visit to Washington. VOA’s Julie Taboh reports.
Video

Video Saudi, Yemen Developments Are Sudden Complications for Obama

The death of Saudi Arabia's King Abdullah and the collapse of Yemen’s government have cast further uncertainty on U.S. efforts to fight militants in the Middle East and also contain Iran’s influence in the region. VOA White House correspondent Luis Ramirez reports on the new complications facing the Obama administration and its Middle East policy.
Video

Video Progress, Some Areas of Disagreement in Cuba Talks

U.S. and Cuban officials are reporting progress from initial talks in Havana on re-establishing diplomatic ties. U.S. Assistant Secretary of State (for Western Hemisphere Affairs) Roberta Jacobson said while there was agreement on a broad range of issues, there also are some “profound disagreements” between Washington and Havana. VOA State Department correspondent Pam Dockins has the story.
Video

Video US, Japan Offer Lessons as Eurozone Launches Huge Stimulus

The Euro currency has fallen sharply after the European Central Bank announced a bigger-than-expected $67 billion-a-month quantitative easing program Thursday - commonly seen as a form of printing new money. Henry Ridgwell reports for VOA from London on whether the move might rescue the eurozone economy -- and what lessons have been learned from similar programs around the world.
Video

Video Nigerian Elections Pose Concern of Potential Conflict in 'Middle Belt'

Nigeria’s north-central state of Kaduna has long been the site of fighting between Muslims and Christians as well as between people of different ethnic groups. As the February elections approach, community and religious leaders are making plans they hope will keep the streets calm after results are announced. Chris Stein reports from the state capital, Kaduna.
Video

Video As Viewership Drops, Obama Puts His Message on YouTube

Ratings reports show President Obama’s State of the Union address this week drew the lowest number of viewers for this annual speech in 15 years. White House officials anticipated this, and the president has decided to take a non-traditional approach to getting his message out. VOA White House correspondent Luis Ramirez reports.
Video

Video S. Korean Businesses Want to End Trade Restrictions With North

Business leaders in South Korea are calling for President Park Geun-hye to ease trade restrictions with North Korea that were put in place in 2010 after the sinking of a South Korean warship.Pro-business groups argue that expanding trade and investment is not only good for business, it is also good for long-term regional peace and security. VOA’s Brian Padden reports.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid

World Currencies

EUR
USD
0.8893
JPY
USD
118.31
GBP
USD
0.6660
CAD
USD
1.2459
INR
USD
61.427

Rates may not be current.