If you were to listen to some hard line Brexiteers, you could be forgiven for thinking that the British Empire was still in full force. After all, little else explains the notion that the UK will be able to strike up beneficial trade deals within months of leaving the EU, with such an entrenched and partisan outlook capable of ignoring bare facts and practical inconveniences.
Still, there’s no doubt that the British electorate’s decision to leave the EU has had a seminal impact, and one that resonates well beyond the shores of the UK and the boundaries of the single market. Make no mistake; other nations and regions will also feel the force of Brexit, with some profiting and others struggling to cope in the aftermath.
The impact will arguably be mixed in the Middle East and the MENA region, where complex politics and an increasingly diverse economy make the precise influence of Brexit hard to define. In this post, we’ll look at how the Middle East will be affected and what this means for the region:
How Brexit is Progressing and When will it Come into Play?
The spectre of Brexit continues to loom large over the world’s market and the global economy, with negotiations between the UK and the EU continuing in earnest. While the level of acrimony between the two partners appears to have quelled slightly in recent times, with British Prime Minister Theresa May struggling under pressure from her own party to deliver a so-called ‘hard Brexit’ and a clean break from the EU.
This represents the latest challenge for the UK government, who despite clearing a number of initial hurdles concerning the rights of EU nationals Northern Ireland continue to present a divided and uncertain front in the quest to secure Brexit.
Still, there is nothing to suggest that the UK will not exit the EU on March 29th 2019, as per the terms of Article 50. With this in mind, the only question that remains is whether the government will be able to secure a progressive trade deal with the EU, or sever their ties completely with the Union and exit without an agreement in place,
How will Brexit Impact on the Middle East?
Ultimately, the nature of the UK’s exit and any deal that is agreed with the EU will have a significant impact on how the Middle East is affected by Brexit. There are some universal considerations that may be worth considering, however, particularly from the perspective of prominent Gulf states and leading MENA nations.
MENA’s financial markets have certainly suffered during the Brexit negotiations, after initial gains were recorded when the UK referendum result was announced in 2016. In fact, sustained political uncertainty caused by the unprecedented nature of Brexit and a defined lack of leadership have caused the markets to decline again recently, with stocks and commodities such as oil particularly badly hit.
This has been partially offset by the introduction of cryptocurrency in Middle Eastern markets, of course, as trading Bitcoin and similar assets has enabled investors to profit by branching out into new markets. This, combined with the sustained diversification of Middle East economies, is helping the markets to cope with continued volatility and drive sustainable growth in the near-term.
As economies become less reliant on oil and successfully branch out into sectors such as tourism, media and financial services, it may even be argued that Brexit will offer an opportunity for further growth and development once the March 29th deadline has passed.
In the case of the UK, for example, nations such as Saudi Arabia and the UAE should be able to agree mutually beneficial trade deals directly with the UK, while perhaps leveraging a competitive advantage as Britain looks to secure quick agreements. As a result, key British products (or more pertinently, services) could make their way to the Middle East with greater ease, helping the region’s diversification plans and boosting economic growth.
On a similar note, it’s also important to note that a more inward-focused EU (and an increasingly self-interested UK) could see the world’s political landscape shift significantly, allowing new regional alliances to form. There’s certainly scope for global powers such as China to develop further, strategic alliances with nations in the Middle East, for example, while the balance of power could also shift outside of the single market in the near-term.