UK election: Why the Middle East should care
The result of the June 8 snap parliament election is expected to provide clarity on a host of policy issues for Britain – all linked to the country’s exit from the European Union.
While the main issues dictating the campaign and election revolves around Brexit negotiations, economic slowdown, immigration and security, one of the outcomes could be positive reconfiguration of the contours of Britain’s international engagement, including the Gulf and Middle East.
The top concern, of course, is how the Britain-EU divorce will play out.
About nine months after the Brexit referendum, Britain formally notified the other 27 EU members in March that it would leave the bloc in two years. Its fallout – the multi-billion-euro exit bill and the rights of Europeans residing in Britain and Britons living in Europe – takes centrestage.
Brexit becoming a challenge?
In the initial days of election campaign many pundits believed it is going to be a cakewalk for Prime Minister Theresa May. But things have changed. Labour Party’s Jeremy Corbyn’s ratings have suddenly gone up stoking assumptions that his party could win or even prospect a hung parliament.
“A market-friendly UK election outcome already appears priced; however the risks could be now skewed to a disappointment especially when you look at how Corbyn is moving up in the surveys,” notes the latest Weekly Money Market Report from National Bank of Kuwait.
“The price action that we have witnessed on the GBP lately seems to be telling markets that even if Theresa May would win the elections, without a strong majority, Brexit is not going to be easy process for the UK.
“Since Macron’s election, Europe looks much more cohesive against Theresa May. According to the former director for economic policy at the German Economics Ministry, the election of Emmanuel Macron has started to show an opening to the reform of Europe’s Economic and Monetary Union. According to him, France under Macron may again become a reliable partner for Germany. So the initial “Brexit” talks are likely to be very difficult and the European stance is hardening. Add on this the latest UK economic data disappointing, this cannot depict a rosy picture for the country for the remaining of 2017.”
Immigration will change the future
Both – Brexit and immigration – issues have a bearing on the state of the economy at present and in the future.
While the momentum of economic growth picked up marginally after the referendum, it is unclear how the economy will respond once the entire exit strategy unfolds. This, and its impact on employment opportunities, is keeping the voters, political parties and experts anxious.
Adding to the anxiety is the possibility of London losing its grip as Europe’s financial hub. With British banks unlikely to have the same leverage to operate in EU after Brexit, a banking meltdown and its consequences stares in the faces of Britons.
The steady decline in the value of the Pound Sterling in recent times and its potential to trigger inflation is a reason for unease among the common people. The fact that a weak currency is also likely to discourage foreign investments, thus causing a further slowdown of economic growth, throws up a distressing scenario.
Security issues loom large
A series of terror attacks across Europe, including the one outside British Parliament in March, had raised alarm bells. This will intensify and hog the election campaign limelight following the suspected suicide bombing at the Ariana Grande concert in Manchester on 22 May.
With at least 22 people dead, this is the worst terror incident on British soil since the 2005 London bombings. Irrespective of the identity of the perpetrators and their intent, terror attacks in Europe intensify the Islamophobia debate.
The possibility of Brexit weakening anti-terror cooperation between Britain and other EU members is a topic that may gain traction hereon.
Linking these poll factors to the Middle East, it is worth delving a little on how Britain is exploring alternatives to counter the fallout of Brexit. This is evident in Britain’s new Middle East strategy during the last year.
During her visit to Jordan in April, Prime Minister May reiterated that maintaining links with the region is important for the UK’s trade and security prospects.
This post-Brexit policy approach was clear even in her Lancaster House speech in January, when she confirmed that, among others, “the Gulf States have already expressed their interest in striking trade deals with us.”
The problem, however, is that the UK is not allowed to sign any new trade deals till it has quit the European Union, which is likely to be March 2019.
This has not deterred advance groundwork though.
Among the senior leaders who have visited the region since the Brexit referendum last June are Chancellor Philip Hammond, International Trade Secretary Liam Fox, former prime minister David Cameron and Prince Charles.
May herself was at the GCC Summit in Bahrain in December, where she not only talked about signing “an ambitious trade agreement” but also stressed that “Gulf security is our security”. The latter meant making “a more permanent and more enduring commitment to the long-term security of the Gulf” through a defence spending of nearly $4 billion in the region over the next 10 years.
Overall, while the Brexit-induced election throws up plenty of uncertainties at home, its impact on Britain-Middle East relations has a sense of positivity and certainty to it – across the economic, political and security domains.