Britain should revisit its relationship with Saudi Arabia

Arms, and oil, are significant—but our financial gains come at a geopolitical cost

June 19, 2017
Theresa May with King Salman bin Abdulaziz al Saud of Saudi Arabia. Photo: PA
Theresa May with King Salman bin Abdulaziz al Saud of Saudi Arabia. Photo: PA

One of the signs that something unusual was happening in the run-up to the general election came when the terrorist attacks in Manchester and London failed to boost Theresa May’s fortunes in the polls. Instead, Jeremy Corbyn was able to push back forcefully against criticism of his national security credentials, in part by highlighting a suppressed Home Office report thought to implicate Saudi Arabia in the funding of extremism. That the UK-Saudi relationship came up as a negative in such a high-profile context will have alarmed officials in London and Riyadh. The question now is whether this key strategic alliance is becoming a liability to the British government.

Saudi Arabia’s primary value to London is related to the recycling of “petrodollars” (oil export revenues) to the UK in various ways. Lucrative arms sales help to sustain a domestic weapons industry that is central to Britain’s capacity to remain a global military power. With sales to the rest of the world in long-term decline, the Gulf has become a crucial market with Saudi Arabia now accounting for a third of British arms exports over the last decade.

In addition, Saudi capital inflows are a major source of financing for Britain’s chronic current account deficit, and the combined Gulf market is more significant for British exporters than China, as well as being a rare net contributor to Britain’s balance of trade.

These strategic and economic factors explain why the Conservatives have moved to strengthen Britain’s ties with the Gulf monarchies, first under David Cameron and then, after the Brexit vote, under Theresa May.

A diplomatic crisis

The question is whether this is strategically wise or, more importantly, morally defensible. Returning to the issue of security, the problem is not only that the Saudis have poured money into promoting an extreme, puritanical form of Islam, indirectly feeding terrorism at an ideological level. It is also that wider Saudi foreign policy is contributing to the socio-political conditions in the Middle East in which jihadi groups flourish.

The current diplomatic crisis in the Gulf is a symptom of this. Qatar has been ostracised by the UAE and Saudi Arabia for maintaining cordial relations with Riyadh’s geopolitical arch rival Iran, and for supporting groups within the broad Muslim Brotherhood family, also regarded as a threat to the Saudi and Emirati regimes. To impress its western allies, Riyadh frames all this as a struggle against “terrorism.”

But when the Saudis sponsored a violent coup in Egypt against the Muslim Brotherhood government in 2013, it was local jihadis who fed off the resulting disaffection, and if Hamas is weakened in Gaza by a loss of Qatari support it is the more extreme, not more moderate, groups who stand to gain.

Escalating conflicts

Direct and indirect Saudi interventions in civil wars in Syria and Yemen, both part of the struggle with Tehran for regional influence, have escalated those conflicts and contributed to the chaos in which jihadi groups flourish.  All of this clearly undermines Britain’s security, but far worse is the effect on the peoples of the region. The Saudi-led coalition intervening in Yemen has carried out “widespread and systematic” bombing of civilian targets according to UN investigators, killing thousands while imposing a blockade that has helped push the country to the brink of famine and total state collapse. Britain has provided technical and logistical support to the Saudi campaign throughout, including a sharp increase in arms supplies.

A not-so-slick future

It is an indictment of British political discourse that more time was spent in the general election campaign talking about Jeremy Corbyn’s imaginary support for terrorists than discussing the Conservative government’s very real, material support for Saudi state terrorism in Yemen.

Nevertheless, London’s ties to Riyadh are fast becoming a major embarassment, not least on the crucial question of national security, and a future government might start to question whether the close relationship is worth the cost.

British engineering skills could be put to more efficient use in developing, say, renewable energy technology than in an arms industry dependent on state support and with uncertain prospects. And perhaps after the loss of empire, and the more recent record of military failure, the strategic rationale for maintaining that industry has passed.

Meanwhile, the 2008 financial crash exposed the urgent need to rebalance the economy in favour of exports and away from financial services, which if successfully effected would close the current account deficit and obviate the need for petrodollar capital inflows.

One should also bear in mind that, if meaningful steps are taken at a global level to combat climate change, much of the Gulf’s oil will stay in the ground and the oil wealth will dry up in any case, rendering the Saudis and Emiratis a bad long term bet for the UK.

All of these policy changes, it is worth noting in closing, would be broadly consistent with Labour’s 2017 manifesto. The party is already committed to cut off arms sales to Saudi Arabia in the context of the conflict in Yemen, and if it does come to power under Corbyn’s leadership a wider pivot away from Riyadh could become a real possibility.