Middle East (IRC Report)

Viscount Waverley Excerpts

Tuesday 4th July 2017 Lords Chamber

[Viscount Waverley (CB)]

My Lords, I declare that I am associated with a major Middle Eastern entity, although naturally the views I express are mine alone.

I offer congratulations to the noble Lord, Lord Howell, and his team on their many thought-provoking assessments. As the title of the main report indicates, the region under consideration is primarily the Middle East, although extending to north Africa and the Levant. Defining a region can be elusive. I would always classify the Levant as being in the Middle East and wonder why there is not more consideration of Israel’s contribution within the Middle East. I remember well a conversation with Crown Prince Hassan in Amman when we discussed the role of Israel in the Arab world, as applicable then as now. Regional tensions might be reduced if Israel focused more on the Arab world rather than Europe or the United States and, conversely, if the Arab world was more accepting of Israel, although I accept that positive moves are afoot. The common thread of extremism and terrorism, cyber or otherwise, has to be tackled.

North Africa, included in the report under the banner of MENA, has a different dynamic from that of the Middle East. MENA, as it impacts north Africa—expedient geography to the Foreign Office, Brussels and the OECD, with their development initiatives on governance and competitiveness—is of course very much of the world of Islam, but with differing politics and trade issues. It is a pity, but in the circumstances understandable, that the committee was unable to visit Riyadh and Tehran—two Middle East linchpins. It is preferable always to test the broader world view from within rather than solely as perceived from London. Both offer a world of opportunity for the United Kingdom. All commentators inform me that the UK is lagging behind in connecting with Iran. The signing of a $5 billion contract with Total is testament to that. I see the inability of the Iranian embassy to open a bank account in London as a detriment. I ask the Minister: are there any developments in that regard and what is holding back the ability to do so?

Iran’s significant historical and current influence, the unresolved Israel-Palestinian situation and the recent Gulf rifts with Qatar exacerbate old and new regional tensions. Multiple crises define the MENA region. One also should not be blind to Afghanistan; the effects of the refugee exodus reaching directly into Europe, Italy in particular; and the bilateral tussle between Morocco and Algeria over Sahara. Matters are compounded on the one hand by an apparent withdrawal by the United States, while still defending its national interest combating ISIS and al-Qaeda, and on the other hand by Russia and its interests becoming increasingly centre-stage, with support for Syria and nuclear activities in Iran. Co-operation generally between these state actors needs to be established. Events have the potential to get out of hand.

The Middle East requires vital stabilisation. Trust and confidence-building measures are urgently required. Yet throughout the Arab world, with all its turmoil, Arabs, barring extremists, are intrinsically a peaceful people; to raise one’s voice is considered very much a non-Arab trait. Undeniable contributors to a more settled region would be a greater role for women in society and state affairs; a strengthened civil society; and, I suggest with respect to regional elders, a move to a younger leadership pattern, currently in the offing in Saudi Arabia, together with the acceptance of social media as a practical reality. Of course I recognise that these issues are anathema to many but they are none the less unavoidable for tomorrow’s leaders. There is much to reflect upon.

The report’s emphasis is more on political and security issues than trade. Given the importance of trade to a post-Brexit United Kingdom, perhaps I might offer one or two pointers. The unintended consequences of low oil prices and political instability are giving great cause for concern to UK trade with the Middle East. Trade figures show that the low oil prices are affecting spending plans, with countries now urgently seeking new models for financing future plans. The UK leads in this area and it is where we can help. On the positive side, wealthier GCC countries have adequate financial buffers to insulate them from the current volatility in the price of oil and other global factors, where non-oil sector growth is supported by high government expenditures on infrastructure, including public transportation, housing, healthcare and aviation. A real effort is taking place to diversify economies away from oil and gas. A good example of this is the Abu Dhabi Economic Vision 2030 and Kuwait’s recently announced five-year plan, while in Egypt, where a more challenging market exists, the economic and political outlook should improve with enhanced security conditions, reduced fuel subsidies, tax-system reform and the Suez Canal expansion project.

However, trade finance for international trade remains a major challenge for economic recovery and development. For my part, I am engaged with two emerging initiatives. A new committee for Middle East trade—COMET—will work in an advisory role highlighting opportunities and challenges for members and government. COMET will provide a new approach in the UK by working with government and the private sector stimulating interest for British exporters where no UK advisory body exists. It is felt that the immediate future for UK trade should focus on British partnerships in medium-sized ventures, particularly those that support employment coupled to training, while keeping a watching brief on the high-value projects, most of which are long term. Key areas for growth range from legal and Sharia-compliant financial services to energy infrastructure, defence and security, educational and vocational training and healthcare. The key question is how the UK can best co-ordinate and mobilise its resources during these challenging times to ensure that British companies maintain their interest and do not turn away from these markets.

In addition, a meeting, lunch and gala dinner on 10 October under the banner of the global CEO club will take place in London. The royal families of various countries, together with industry leaders from throughout the region, are to attend. I have been asked to encourage the Prime Minister to address a strong guest list, and I wonder whether the Minister would consider this through his good offices. The purpose of the event is to introduce leaders in the region to partner with United Kingdom interests. There is much to play for.