By Denise Marray/Gulf Times Correspondent/London
Ahead of his upcoming visit to Qatar, Kuwait, Saudi Arabia, the UAE and Oman, the Lord Mayor of the City of London, Alderman Alan Yarrow, invited members of the Gulf media in London to share details of his itinerary and outline the main business aims.
“I want to go and reconfirm and reconsolidate what is already a very strong relationship with the Gulf countries.
“I am going out there basically to market the services which the City of London and the financial services sector of the UK can offer the Gulf countries. That is everything from legal services to insurance, to trading in shares, to financing capital markets and also to Islamic finance, because we have some of the strongest Islamic finance operations in London. We are the largest international financial centre in the world and we have to be up with curve of development of new products, and we think that the Islamic financing market is potentially a very exciting one and we want to make sure that we are involved.
“We want to be there — it’s very early stages — we have got people thinking about it and insurance companies willing to underwrite on the basis. It’s not a complex issue — the risks are the same. It’s not just the sukuk market, it’s the takaful market as well. We have got the product but where is the demand going to be? I will be asking that question.”
He emphasised the mutually beneficial aspects of UK-Gulf relations with a particular focus on how investment, not just in major infrastructure projects such as HS2, the new high speed railway, but also in top level UK research was advantageous to both parties.
“We have some of the world’s best universities; we have three (Oxford, Cambridge and Imperial College) in the top ten universities globally. We have some of the best and highest quality research coming out of our universities, and we have phenomenal innovative research projects coming to maturity which need funding.
“We haven’t got sufficient funds in this country to fund those issues: so it’s not just big infrastructural issues, it’s also looking at very specific, very refining technology which also should be attractive to a set of countries who are desperately trying to diversify out of hydrocarbons. So it’s offering some of the best research in the world at their disposal where they can get an equity interest.
“A past example would have been graphene — financed quite largely by the Malaysians. We are looking to world sovereign funds and world individuals to help finance these things. We have got a very innovative country and all we are short of is cash. But, unfortunately and sadly, the Gulf at the moment is going to be short of cash too, so we are going to have to be considerate of that issue.”
Speaking about the impact of the drop in oil prices, he said: “The reality is that most of the Gulf countries have been very conservative in building up reserves and they can shortly take quite a lot of the hit that is happening at the moment. It’s a very interesting time to be going to the Gulf; whenever I have been there before, nearly always the conversation has been about, ‘Can you help us with entrepreneurism?’ or ‘Can you help us with building up our SME sector?’. I am afraid that entrepreneurism is a function of austerity; it is not a function of plenty. To actually get people interested in building up entrepreneurism you need to have pressure. And I suspect this is quite an interesting time for the Gulf to confirm the fact that diversification has to happen.”
He added: “The oil price crash is going to put huge pressures on some countries. I suspect Iran is one of them, along with Russia and Venezuela. You have got a situation where there is enormous economic pressure being forced on certain countries. We don’t know what the outplay of that is going to be, but you can’t have an asset fall by that large a percentage without somebody suffering some damage.”
In response to a question by Gulf Times about the continuing opportunities for UK companies to win contracts connected to the Qatar 2022 World Cup infrastructure, he said: “I think there is every reason for UK companies to see continuing opportunities for contracts related to the World Cup. There is every reason to be interested in it; it’s a very exciting project. You can speculate about what has been going on, but that is not my job. My job is to sell services from the UK into the Gulf and to get overseas money invested in this country.
“We have a very close association with Qatar; I have got no reason to believe, despite the hysteria in the press, that those deep-seated long term relationships have changed. It’s awkward, it’s obviously embarrassing for both parties, but the reality is that we have got a far longer relationship with Qatar than some articles which appear in the papers.”
Speaking of the wider Gulf region in relation to the UK, he said that while there is not very much exposure in direct construction there is a considerable involvement in design and management. Defence is also a key sector while there is also respect in the Gulf for the UK legal system, advocacy and capital markets.
In response to a question asked by a member of the press about the state of preparedness of the City of London in the event of the lifting of sanctions against Iran, Yarrow responded.
“What I would say, is that if I was a financial service organisation or a bank which had frozen Iranian assets in my asset base I would be quite simply saying that I would already have a plan A, B and C worked out. The reality is it’s quite a long way away. I don’t think we are that close yet to sanctions being lifted.
“The reality is we are quite quick to move but also much more cautious than some others. We don’t want to be seen to be breaking sanctions in anticipation of sanctions coming off. We think sanctions should be held because they are there for a reason. You will find some countries go early and we might be a bit behind — but that’s because we respect the sanctions system and we will probably lose some business as a consequence of that. But, if sanctions come off from Iran, I promise you we will be out there along with a number of our companies trying to get new business.”
Asked about the likely prospects for developing a shale gas industry in the UK in the light of the current energy climate, he said: “If you change the demand and price curve, inevitably it’s going to put things off — it can’t accelerate anyway. Shale gas hasn’t been decided upon but has been very much at the forefront of peoples’ minds. We have got these ridiculous windmills around the place which are incredibly expensive and subsidised by government grants.”
Asked for his views on the terrorist attacks in Paris he said that is particularly concerning that this tragedy comes at a time when nationalist movements seem to be forming not just in Europe but around the world.
“Right across the world nationalism is appearing everywhere. That in itself walks hand in hand with protectionism. Protectionism is something we stand very strongly against. Protectionism means damage to world trade. We have got 65 million mouths to feed in this country — we need to be involved with world trade – we cannot generate enough on our own sitting on our little island off Europe. We have to be out there pounding the pavement, and that’s the reality of the situation.”
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