As a former special envoy to the Gulf and chief strategic adviser to British Prime Minister Boris Johnson, Lord Edward Udny-Lister is perhaps the man best placed to describe the dramatic build-up of the relationship between the UAE and the UK.
Since last week, those ties have at their heart the new Partnership for the Future, which commits billions of pounds to Britain’s technology, infrastructure and energy transition as well as joint pledges on climate action.
For Mr Johnson, who hosted Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, the agreements marked a personal culmination of a long friendship.
“Boris loves that part of the world,” says Lord Udny-Lister, the co-chairman of the UAE-UK Business Council as he gives an insider perspective on the developing relationship.
He said Mr Johnson had several times referred to the UK as "the eighth emirate" because so many Emirati families enjoy their summer there.
“But there is an element of seriousness to that. Emiratis are comfortable here. They have friends here. Many of them have personal investments here as well as family and education (ties) and there are a lot of Brits in the UAE — there is this synergy.”
One pillar of the partnership is the Sovereign Investment Partnership (SIP) with £10 billion ($13.53bn) invested by Mubadala Investment Company, a commitment that will see a significant capital injection into Britain over the next five years. It builds on the existing £800 million commitment to the life sciences sector made in March.
What is particularly unique about the SIP deal, says Lord Udny-Lister, was the UK’s own commitment to invest £200m into the joint fund.
“The significance is that the British government, for the first time ever, put money into a joint fund with an overseas entity,” he says.
“This was unique; it showed a commitment which has never been there before. It’s a first and, of course, it's a very significant sum of money from the UAE.”
Lord Udny-Lister says the Business Council, which revamped its offering 12 months ago with two new co-chairs and a mission to represent the interests of both the UAE and the UK, was pivotal in building the cosier relationship between the two countries.
The Business Council is important, he says, because it was deliberately relaunched a year ago with senior figures as the co-chairs to “actually drive the relationship forward”.
“And that's what we've been doing,” he tells The National, in an interview at the private members club Alfreds, located in a grade-two listed Georgian building in London’s Mayfair.
“All of this has created a different atmosphere.”
Understanding the significance of that different atmosphere is easy for Lord Udny-Lister who has a long relationship with the Emirates. First visiting the UAE about 40 years ago, he has seen how the country has transformed from a small trading hub into a key location on the global map bridging the West and East.
Now as the head of the Business Council, representing the interests of the UK, he sits alongside Ahmed Ali Al Sayegh, chairman of Abu Dhabi Global Markets and Minister of State, who presides over the UAE interests.
The milestone deal reached earlier this month, which involved the expansion of the SIP, was no surprise to Lord Udny-Lister, but the scale of the framework was.
“It went further than I thought it was going to go,” he says. “I did not think they would get so many deals over the line in time — it was brilliant.”
The expansion of the SIP earlier this month was equally significant because as well as the £10bn commitment, in the run-up to Cop26, it included pledges on both sides to take strong, decisive climate action with investment into green industries supporting decarbonisation.
This included a trilateral collaboration between Abu Dhabi National Oil Company (Adnoc), Masdar and BP to focus on co-investments and co-development in areas such as low-carbon hydrogen hubs, carbon capture, usage and storage hubs, and methane emission detection technology.
Other significant investments included a £500m investment in digital infrastructure builder CityFibre, for the introduction of high-speed broadband to eight million homes in urban and rural areas of the UK, creating about 10,000 jobs in the process.
Meanwhile, UK Export Finance unveiled a £31m clean growth loan to complete the construction of UAE environmental management company Bee’ah’s headquarters in Sharjah — a building designed by the late British architect Dame Zaha Hadid that is entirely powered by renewable energy.
“What’s different about this latest deal,” says Lord Udny-Lister, is that unlike typical MOUs (memorandums of understanding) “which everybody signs to a fanfare, but which may or may not happen”, this time real capital was involved.
“This wasn't an MOU, this was hard cash going over. It was very, very tangible, so this is all very, very unique, and it shows such a strengthening of the relationship,” he says.
So if the UK has committed to a new style of partnership with the UAE, is that a template for the type of agreements post-Brexit Britain will forge with other economies around the world?
“I think the [UK's] model for the UAE is one well worth copying if they can? It's a model for the future. And I think it's probably a model for the UAE as well,” he says.
The deal with the Emirates is also a sign of the UK’s more far-reaching ambitions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) - a trade agreement between 11 Pacific Rim nations including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico and New Zealand.
“I think it's very significant that the integrated review when it was published six months ago showed a very clear tilt of British foreign policy towards the Asia-Pacific area,” Lord Udny-Lister says.
“It’s that massive tilt going through the Middle East and out the other side. And it's where Britain's future now lies.”
While the CPTPP is not directly related to the UAE, the pact with the Emirates and the wider aim to secure a free-trade agreement with the GCC Customs Union demonstrates a clear shift in direction to the East, Lord Udny-Lister says.
While negotiations for the GCC FTA started in March, the UAE deal is considered to be a stepping stone towards that, although Lord Udny-Lister would not disclose when he thought that might happen.
“Any FTA has to be with the GCC because that's about tariffs. I'm sure that will [result in] a reduction in tariffs but that's going to take a lot of negotiation because you are dealing with so many countries,” he says.
In the meantime, working arrangements with countries such as the UAE, “recognise the things that really matter”, he says, “and then of course, retrospectively, they can be folded into the FTA in due course".
Those “other things” are not about the export of goods but focus on elements such as expertise, qualifications and professional services.
“The days of sending boxes around the world are coming to an end. Everyone wants to manufacture locally and the UAE is concerned about jobs and making themselves a hub,” Lord Udny-Lister says.
While much of the SIP is seeing investment directed towards the UK, Lord Udny Lister says “nothing is being signed, which isn’t going to deliver a 'financial return' for the UAE, such as investing in new industries that can lead to jobs and manufacturing capacity in the Emirates".
“These have got to be investable propositions because at the end of the day, this is the sovereign fund of the UAE so it's got to be real investments with real income,” he says.
Ultimately though, the real boon for the UAE is that much of the investment into the UK will translate into knowledge, which can then be imported and applied to manufacturing hubs in the Emirates.
“That’s where the win-win is. We’re moving into a world of knowledge transfer of professional services,” he says.
With the Business Council set to celebrate its 10th anniversary in October, marking the occasion at its annual plenary at the Expo 2020 Dubai site, Lord Udny-Lister has an equally busy time ahead.
The plenary will involve 80 members from the UAE and the UK gathering at the Mohammed bin Rashid Aerospace Hub at its Dubai South headquarters next to the Expo 2020 Dubai site.
This will give the co-chairs a chance to listen to the conclusions of their working groups, which focus on areas of mutual interest such as education, life sciences and green energy, as well as hearing member concerns.
With the world just emerging from the pandemic, the fact that members can meet in person rather than communicating on Zoom will be key, Lord Udny Lister says.
“I'm very fortunate to get on fabulously with my co-chair. He’s so committed to this, so hopefully the two of us can push all of those companies further to increase their investments in each other,” he says.
“It’s almost like starting again, in a way, because we had to do everything through endless Zoom meetings.
“We did very well but at the end of the day, you do deals by meeting other people in person.”
The feedback generated from the plenary session will then be delivered by the co-chairs to the Joint Ministerial Committee — an annual ministerial meeting between the UK and UAE — which meets a week later.
So what’s next?
While the capital commitments pledged in the SIP now need to be turned “into real projects” Lord Udny-Lister says this will give the Business Council opportunities to help both sides achieve that.
“As soon as we know somebody is doing an investment, here or in the UAE, we go knocking on their door,” he says.
“What’s really important is that we are a Business Council that has an accountability to our members and the two governments, which is pretty unique. We’re being seen as part of the system.”
