The UK government has courted investments from the Gulf to help boost its economy, especially after Brexit. But will it come at a cost?
The UK has seen investments pour in from Middle Eastern Gulf states to the tune of £140 billion ($193 billion) in recent years, raising the question of what kind of influence such levels of financial exposure could have on London.
The figures were compiled by UK Declassified, an investigative journalism organisation.
Among the investments include prime property in London and stakes in household British companies and media outlets.
Most of the spending is traced to the Gulf’s vast sovereign wealth funds, where much of their oil and gas revenues are accumulated and which hold some $2 trillion in assets. Since the pandemic, many have gone on a “Covid-19 spending spree” to snap up distressed assets.
London has long been a second home for many Gulf investors, with some even referring to as the “eighth emirate” of the UAE.
Following Brexit, Gulf states have been pushing the UK to launch negotiations on free trade deals. The UK-GCC joint trade and investment review which began in November is expected to wrap up this summer.
The UK’s trade with six Gulf countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE – is estimated to be worth around £45 billion ($62 billion) a year, making them the UK’s fourth largest trading partner after the US, EU, and China.
Just last month, the Emirati state-backed Mubadala fund inked a multibillion-pound partnership with the UK to invest in British health and clean technologies, agreeing to pump £800 million ($1.1 billion) into Britain’s life sciences sector over five years alongside £200 million ($275 million) from the UK government. The investment could eventually exceed £5 billion ($6.9 billion).
It was the first major deal for the Office for Investment, which British premier Boris Johnson launched last November in an effort to attract foreign capital.
Post-Brexit, the British government has strongly encouraged investments from the Gulf to help sustain its economy.
However, critics warn that such financial exposure means London is less likely to criticise its Gulf partners.
“By giving Gulf countries the opportunity to invest in Britain despite their record on human rights, Britain becomes more dependent on these countries and less able to voice a critical opinion on their autocratic rule,” Madawi al Rasheed, a Saudi analyst at LSE, told Declassified.
“Britain does not only sell arms to these countries but also shields them from criticism in international organisations. We all remember how Britain used its position in the UN and supported Saudi Arabia’s application to have a seat at the UN Human Rights Council,” she added.
Any concern for human rights appears to have taken a backseat to commercial interests instead.
Over the last five years, the UK has sold over £75 million ($103 million) worth of spyware, wiretaps, and telecom interception equipment to spy on dissidents, to over 17 countries including Saudi Arabia, the UAE and Bahrain.
Not to mention Whitehall also authorised £1.88 billion ($2.6 billion) worth of arms sales in 2020 to the Saudi-led coalition in war-torn Yemen.
Underlying it all, there is a historical element to Britain’s approach to the region. London has long sought to maintain close ties with Gulf monarchies it once controlled through the trucial states under the British Empire so as to preserve its geopolitical influence – even if it means overlooking their problematic human rights record.
Here is a summary of some of the major Gulf investments in the UK:
Saudi Arabia: £60 billion
Most of the Kingdom’s investments have been funnelled through its Public Investment Fund, which is chaired by Crown Prince Mohammed bin Salman, the Kingdom’s de facto ruler.
Last year, it bought a £598 million ($824 million) stake in oil giant British Petroleum (BP), as well as British Telecom (BT) as part of its “bargain hunting spree”. Saudi investors also have holdings in Anglo-Dutch oil giant Shell.
Saudi businessman Mohamed Abuljadayel, who has ties to a state bank in the Kingdom, owns a third of media outlets The Independent and Evening Standard.
There are also joint ventures with HSBC and Jaguar Land Rover, while Kingdom Holding Company holds a majority stake in the Savoy Hotel in central London. Apps like Twitter, Uber and Snapchat are partially Saudi-funded too.
Millions in donations are targeted at leading universities like Oxford, Cambridge, and the London School of Economics (LSE).
Qatar: £40 billion
The Qataris have dished out a fair amount in the UK property market. Among the most notable investments include Harrods, the Shard building in central London, Canary Wharf and a stake in the London Stock Exchange.
Abdulhadi Mana Al Hajri, the brother-in-law of Qatari emir Sheikh Hamad al Thani, purchased London’s Ritz hotel in 2020 for £700 million ($965 million).
The sheikdom’s sovereign wealth fund – the Qatar Investment Authority – owns 22 percent of Sainsbury and nearly 6 percent in Barclays bank. It also has a 20 percent stake in Heathrow Airport Holdings.
UAE: £25 billion
Private investment from the UAE is believed to have acquired assets worth over £13 billion ($18 billion), while £12 billion ($16.5 billion) is estimated to have been made by Emirati banks in the UK.
The President of the UAE and emir of Abu Dhabi, Sheikh Khalifa, is believed to have a portfolio of £5.5 billion ($7.6 billion), primarily consisting of real estate in London. Sheikh Mohammed al Maktoum, emir of Dubai, owns property worth over £100 million ($138 million), including much of the English horse racing town, Newmarket. He is also the largest owner of racehorses in Britain.
Dubai-based logistics company DP World, has invested over £2 billion ($2.76 billion), including in the port of Southampton and P&O Ferries.
Kuwait: £17 billion
The world’s fourth-biggest oil exporter, Kuwait has managed to procure stakes in companies including BP, HSBC, and Vodafone.
The Kuwait Investment Authority, one of the world’s largest sovereign wealth funds, has an estimated $342 billion in assets. Its international arm, the Kuwait Investment Office, is based in London, with its advisory committee including former UK chancellor and foreign secretary Phillip Hammond and former foreign minister David Howell.
Bahrain: £2.5 billion
In February, Bahrain’s king Hamad, who happens to be a personal friend of the Queen, bought the country estate Glympton Park for £120 million ($165 million) from Saudi Arabia’s Prince Bandar.
The country’s sovereign wealth fund owns a majority stake in British car manufacturer McLaren, estimated to be worth £1.5 billion ($2 billion) out of the company’s value of £2.4 billion ($3.3 billion).
Bahrain-based investment fund GFH Financial Group has a majority stake in Roebuck Asset Management worth more than £1.4 billion ($1.93 billion).