Khalid, ladies and gentlemen. Thank you for the kind invitation to give my annual address to the Bahrain British Business Forum.
A few days after the UK and Bahrain signed a landmark defence agreement, arguably the most important since Bahrain’s independence and which will mean the first permanent British base in the region since our withdrawal from East of Suez in 1971, this seems a particularly auspicious moment to give you my assessment of the current state of UK/Bahrain relations and how I see the year ahead.
But let’s go back a bit. The last 3 years have seen a remarkable transformation in UK/Bahrain relations. From a period in the first half of 2011 when relations were pretty difficult, to a situation now where the UK is Bahrain’s strategic partner of choice. Their words, not mine. You might say business as usual then, but many observers of the relationship with a far longer perspective than me suggest that our relations are in their best state for a decade or two.
In particular, we are ‘walking the walk’ on our strategic policy of constructive engagement with Bahrain by providing substantial technical support for the ambitious reform plans of His Majesty King Hamad and His Royal Highness the Crown Prince. But we are also advancing our strong defence and commercial interests. We can do all of these things. They are not mutually exclusive. For supporting political, economic and social reform in Bahrain, thus creating the conditions for the sustainable stability which we all wish to see, is in British interests. As the Foreign Secretary said to our Gulf allies and partners in his speech at the International Institute for Strategic Studies Manama Dialogue at the weekend: your stability is our stability; your security is our security; your prosperity is our prosperity.
Bahrain’s leadership openly talk of the importance of the strategic partnership with the UK. Both King Hamad and Crown Prince Salman did so in their discussions with the Foreign Secretary, Philip Hammond, and the Defence Secretary, Michael Fallon, this weekend, when we saw the most senior and the largest official delegation from the UK to visit Bahrain for many years. These visits and many others in both directions have significantly advanced bilateral cooperation, helping to build the trust and confidence necessary to ensure effective partnership and cooperation.
Given that this address is something akin to the Chairman’s address to shareholders at an AGM, let me remind you of the UK’s 3 strategic goals in Bahrain (covering the 4 year period from 2014 to 2018) and what progress we have made on those over the last year.
First, Bahrain is, with UK assistance and the UK as ‘partner of choice’, a reforming country with sustainable stability, good governance and a good human rights record.
Second, an even stronger bilateral defence relationship with an enhanced British military presence.
Third, the UK is viewed as Bahrain’s preferred European business partner, with British business winning a greater share of the Bahraini market and the UK being the preferred European location for Bahraini investment.
On the first of those, namely reform, some of you may be wondering how come the British government is giving reform support to a Gulf State. Surely they’re too rich. Surely they’re not interested. Didn’t we stop doing that sort of thing when Bahrain and the other Gulf States became independent over 40 years ago. Well, we are doing so because as a close friend and ally of Bahrain we wanted to offer support at a time when Bahrain badly needed it. But our Bahraini friends also wanted our assistance. The hard-hitting landmark report of the Bahrain Independent Commission of Inquiry into the unrest of early 2011 and what followed was accepted by King Hamad and his government. We welcomed that. But it was quite clear that many parts of the Bahraini system lacked the capacity and capability to implement the report’s recommendations. Recognising the need for the reforms recommended in the report to be implemented if Bahrain was to have the sustainable stability to which I referred a moment ago, we stepped up to the plate and said that we would help where we could. That was in November 2011.
Three years later and the UK is in a league of its own in providing judicial, human rights, prisons and security sector reform assistance to key ministries and institutions, including capacity building and training, with regular visits to and from the UK involving eg the National School of Government International, Her Majesty’s Inspectorate of Prisons, Northern Ireland Cooperation Overseas, the Crown Prosecution Service, the Charity Commission and the Northern Ireland Causeway Institute for Peacebuilding and Conflict Resolution, to mention but a few of the British organisations involved. We have been key to the establishment of the Police Ombudsman, the first in the region; and the restructuring of the National Institution for Human Rights, which issued a hard-hitting report just a couple of months ago. And in an acknowledgement that these new and reformed institutions do represent a significant step forward for Bahrain, the European Union just last night awarded its annual human rights prize in the Gulf to these two organisations.
But it is too early to judge the impact of the work we are doing. Reform of the sort I am talking about is not like cuppa soup. Add hot water and stir. In Northern Ireland, many similar changes have taken a decade or more to take root. And yet even a couple of years ago we saw some of the worst unrest since the troubles. And this is in a peaceful and supportive regional environment. Bahrain is in a very different place, a very different environment, as we all know. We acknowledge that changing attitudes, culture and behaviour takes time. Which is why the British government is committed to a long-term approach. Sustained, comprehensive reform will take time, and we urge the Government of Bahrain, as a close friend and ally, to build on the welcome steps they have taken and ensure that all the recommendations of the various reports which they have accepted are implemented in full soon, particularly in areas where progress has been slow.
The new government formed at the weekend following the successful parliamentary elections can act as a catalyst for a stepchange in the reform programme which the Crown Prince is driving forward. I welcome the new MPs who were elected and the new ministers who have been appointed and can assure them that the UK will give its full support to their reform efforts. Particular congratulations to Zayed Al Zayani, Khalid’s brother, who has been appointed Minister for Industry and Commerce, and with whom I will want to work closely to boost UK/Bahrain economic and trade relations. Let me also take this opportunity to wish Dr Hassan Fakhro well in his new role as an adviser to the King.
In short, ladies and gentlemen, the UK is, by far, the leading provider of reform support to Bahrain. Our delivery of key reform assistance has been effective (and is without parallel in the Gulf). Our goal is for Bahrain to become a model for reform in the region and for the British government’s actions to be seen as a pragmatic and effective way to support Gulf States deliver fundamental reform while maintaining stability and security.
But it is not just about the UK. We are also encouraging our international partners, such as the EU, to complement our support. And encouraging Bahrain to accept offers of assistance from others, such as the UN High Commissioner for Human Rights.
So, on this International Human Rights Day, let me repeat what Philip Hammond said at the weekend. Bahrain is by no means perfect. But it is a country that is making progress and its leadership has shown a willingness to engage with the human rights challenges it faces. There are steps in the right direction. But there is much more to do. We will work together to ensure further progress.
Overall then, on track but clearly work in progress.
So, to our second strategic objective: defence and security.
If I can say a few words about the background to the defence agreement we have just signed. We have of course had a naval presence in Bahrain for most of the last 80 years, since the establishment of HMS Juffair in 1935. This followed a few centuries of patrolling the Gulf (Nelson reputedly sailed here in the 1770s). But since we moved back into the naval base which we vacated in 1971, on Bahrain’s independence, our presence has been operational rather than strategic. We operate continuous naval patrols in the Gulf as part of a wider alliance effort. Four Royal Navy mine-hunter warships are permanently based here. Bahrain is now the busiest Royal Navy port outside UK waters with the only Royal Navy operational HQ outside the UK. Several hundred service personnel are in Bahrain at any given time. But rather than being back here for 40 years, we have been back one year 40 times.
And the facilities that we have used have been fairly poor, temporary facilities, reflecting that short-term approach. Or as Philip Hammond described to me 2 years ago, when he visited Mina Salman as Defence Secretary, a “portakabin existence”. What the new agreement means is that with very generous Bahraini support, for which we are most grateful, we will develop a permanent base, as part of our defence presence in the region, where our servicemen and women will come for longer periods of deployment and where we can service and maintain our ships here in the Gulf without having to send them back to the UK.
As Philip Hammond said at the weekend, the agreement means we will now be based again in the Gulf for the long term and is just one example of our growing partnership with Gulf partners to tackle shared strategic and regional threats.
But the new naval base is not the only sign of a more strategic approach. We started work this spring on the construction of a new Royal Navy Headquarters inside the US 5th Fleet Headquarters. This will open next year.
So, Bahrain remains a generous host, providing key support for our strategically significant missions, such as our mine hunters helping to keep open the Strait of Hormuz and our anti-piracy operations off Somalia. These provide security not just for Bahrain and the Gulf but also the wider region and ultimately for the international community.
It is therefore strange to hear some here express opposition to the move. I am not surprised to hear it from radicals and extremists who act as proxies for others in the region opposed to any cooperation, defence or otherwise, between Bahrain, or indeed the other Gulf States, and the international community. But I was surprised to hear Al Wefaq say, and I quote, the agreement is unacceptable and may contribute to rising regional tensions, music of course to the ears of more extreme voices. I can only assume that Al Wefaq are blissfully unaware that the US 5th Fleet, our considerably larger ally in the fight against ISIL, or Da’ash, is already based in Bahrain. Or that Al Wefaq are opposed to the 60 nation coalition against Da’ash, or the 30 nation Combined Maritime Force based in Bahrain.
Let me take this opportunity to again thank the British servicemen and women who serve their country in Bahrain and elsewhere in the Gulf. I pay tribute to their loyal and dedicated service far from home. And a measure of the increasing cooperation with Bahraini forces has been exercises in Bahrain in recent months involving the Parachute Regiment and the Royal Marines.
Overall then, on defence and security lots to celebrate this year. A landmark year. But hard work ahead as we seek to out flesh on the bones of the defence agreement.
Finally, our third strategic objective: business and prosperity. As this is, in Mastermind terms, your specialist subject let me restrict myself to looking back at what I see as some of the highlights of the last 12 months, as well as briefly examining the prospects for the year ahead.
We kicked off the year in some style with GREAT British Week, held under the generous patronage of His Majesty The King and attended by His Royal Highness the Duke of York. Its aim was to celebrate our long-standing friendship and all that is best about Britain, as well as launching preparations for the bicentenary of bilateral relations in 2016.
It was a glorious week when Bahrain was painted red, white and blue. The warmth of the friendship between our countries was clear throughout the 50 plus events, many supported by British companies and members of the BBBF. The peg for the Week was the Bahrain International Airshow, in itself a superb collaboration between Bahrain and the Farnborough International Airshow. The huge British presence at the Airshow, in particular the awesome RAF Typhoons and that elegant icon, the Spitfire, led some members of the Bahraini royal family to suggest that we rename the Airshow the Bahrain British Airshow.
There were too many memorable moments during GREAT British Week to mention, but the most surreal moment had to be an iconic London double-decker bus conveying the Duke of York and the Crown Prince and numerous other VIPs to Sakhir Palace for lunch with His Majesty. Standing room only and not an oyster card in sight!
The close relationship between our respective financial services sectors was underlined during the visit in February of the Lord Mayor of London, Fiona Woolf, whose fond memories of the way she was welcomed and treated when she worked in Bahrain in the 1980s will resonate with us all. Her visit deepened cooperation, particularly on Islamic Finance, where Bahrain is acknowledged as the leading player in the Middle East and second only to Malaysia globally.
This was underlined at the inaugural UK/Bahrain Islamic Finance Summit in London in April which saw the signing of an MOU which set out plans to boost bilateral co-operation through an education and skills programme and Islamic Finance-driven trade and investment. It strengthens the UK’s Islamic finance standing and underpins our position as Bahrain’s preferred partner on Islamic finance, which we built on at last week’s World Islamic Banking Conference here in Bahrain.
Over the last year the Embassy’s efforts to support British companies have shifted up a couple of gears, to take advantage of clear messages from the Bahraini authorities that they want to see a bigger and stronger British commercial presence in Bahrain. We have helped various companies to enter the market. A particular success was National Express’s £170m bus transportation contract, its first in the region. Through its NX Bahrain Bus Company subsidiary, National Express entered into a 50/50 joint venture with the local AMA Group to form Bahrain Public Transport Company, which will hold the concession for the public bus system.
Other UK-based companies have benefitted significantly from the Embassy’s support, including high-level lobbying, for example our work in support of Rolls Royce’s $100m 5 year deal with Gulf Air, struck at the Bahrain International Airshow.
And just this week we have welcomed the largest British trade mission to visit Bahrain in my time here, with nearly 20 universities, colleges and private training providers focussing on corporate and executive training, where the UK is globally renowned as a centre of excellence. A warm welcome to Amanda, who will be saying a few words later, and all her missioners. We wish you every success.
And finally, the latest trade figures show UK exports of goods are currently up 13% compared with 2013.
So, overall, a good year for British business in Bahrain. But we all want to do better. What are the prospects? The clear message from senior Bahrainis at the weekend was that they want to see more British business winning business. There are clearly some mega opportunities.
With support from its GCC neighbours, the Bahraini government’s ambitious infrastructure development programme is worth some US $22billion. This opens up new opportunities for British companies in oil and gas infrastructure work, aluminium (both the smelter expansion and downstream manufacturing), new housing, airport expansion and transport infrastructure.
One example of Bahraini interest in British expertise in relation to airport expansion was the visits to the UK (Heathrow, Gatwick and Manchester) by the Minister for Transportation and the Head of the Bahrain Airport Company to see what we have to offer.
The second causeway recently announced by Their Majesties King Abdullah and King Hamad to carry the proposed Gulf rail link, a project worth an estimated $5bn and a part of the whopping $86bn GCC rail network, presents a major opportunity for British expertise.
A big unknown at this stage is what the impact will be of the falling oil price, particularly given Bahrain’s relatively high fiscal break-even price of around $125 per barrel. My expectation is that Bahrain’s neighbours will continue to support the Bahraini economy given their fears of what a weaker economy might mean for stability. But with an estimated 86% of government revenues coming from oil and gas, the drop in the oil price must act as a wake-up call for Bahrain to intensify diversification of its economy.
In conclusion then, as I look back over the last year, I think I can honestly say that it has been a year of achievement for the UK in Bahrain. For that I would like to thank my team at the Embassy for all their hard work, support and achievement. Not bad for the smallest British Embassy in the Middle East. In particular I would like to thank Bridget for her continuous sterling support. And finally, my thanks to you the BBBF and to Khalid Al Zayani OBE for your staunch support. Thank you.