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By : Frank Kane

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Of the many subjects of interest discussed between Theresa May, the British prime minister, and leaders of Saudi Arabia during her visit to the Kingdom, you can guarantee that her choice of headwear (none) was not on the list.

The more infantile sections of the British media — which on the subject of UK-Saudi relations often accounts for a significant chunk of it — focused on her hair, congratulating her for “taking a stand.” On what, they did not really specify, though their coverage was laced with strained references to women’s causes and gender equality.

In fact, May’s visit itself was a symbol of the advancement of women in the Kingdom and the Arabian Gulf. Before her departure from London, and well before she was pictured hatless, she was talking about her hope to be a “role model” for Saudi women.

That was commendable but only serves to reinforce the fact that Saudi women are already playing a much greater role in business and society. Just a few weeks ago, women were appointed to senior positions in three big financial institutions, including the top job at the Tadawul stock exchange.

Even May, from such a supposedly liberated society as the UK, could not point to such examples of women in top positions within London’s crusty old male-dominated world of finance. On this topic, she is talking to the already converted.

More than just ‘guns for oil’

May’s visit to the Kingdom is the next phase of the “new chapter” she opened in relations with the Arabian Gulf when she addressed a meeting of the Gulf Cooperation Council (GCC) in Bahrain last year. It also owes a lot to Britain’s need to forge new global trading alliances in the wake of Brexit, which was officially triggered last week when May started the convoluted two-year process that will eventually lead to the UK’s withdrawal from the world’s biggest trading bloc.

Most economists agree that it is a tough call to make up all that potentially lost business, but she has to start somewhere and Saudi Arabia, as Britain’s biggest trading partner in the Middle East, is as good a place as any.

Trade relations between Britain and the Kingdom are far more complex than the simplistic “guns for oil” formula the UK media bleats about. Certainly, crude oil is a big export from Saudi Arabia, and a lot of defense equipment goes the other way.

From trade to the Saudi Aramco IPO, there was more on the agenda during the British PM’s visit than some sections of the UK media made out.

Frank Kane

But a big proportion of the £7.34 billion ($9.15 billion) of exports from Britain in 2015 was made up of far less controversial items, like transport equipment, power-generating machinery, medicines and pharmaceuticals, and foodstuffs, as well as financial services.

Likewise, while oil is the biggest single export item from the Kingdom, there is a wealth of investment from Saudi Arabia into the UK’s real estate, commercial and residential, as well as other financial investment.

Market talk

Both sides have obviously identified other areas for future cooperation. One of the few private-sector officials accompanying May was Xavier Rolet, chief executive of the London Stock Exchange (LSE).

That inevitably got tongues wagging that the LSE was pitching to get a part of the forthcoming initial public offering (IPO) of Saudi Aramco, which will be the biggest offering in market history whatever its eventual valuation.

Of course, London would like that, but it faces strong competition from New York, Tokyo, Singapore and (lately) Toronto as a foreign venue for the IPO, apart from the Tadawul (which May also visited hatless).

In many ways, London — still the leading world financial center, with a history of welcoming global company listings on its board — is a natural home for part of the Aramco listing.

But the UK delegation’s visit to Saudi Arabia also comes at a time of change for the LSE, after a merger with Deutsche Boerse of Germany was aborted, partly because of post-Brexit tensions. Like the UK itself, the LSE is looking for a new role in the world when Britain departs the EU, as well as a strategy to enhance its status as a global financial center.

I would be surprised if the talks between LSE and Saudi officials do not extend further than a simple pitch for Aramco. The exchange has a long and successful tradition of encouraging investment from the Gulf region, with Dubai a substantial shareholder for a number of years, right through the financial crisis, while Qatar is still big on the LSE share register.

As the Kingdom gears up its own privatization strategy as part of the National Transformation Program (NTP) 2020 and Vision 2030, it might be wise to consider a relationship between Riyadh and London, the place where privatization was invented in the 1980s.

It would have been intriguing to be a fly on the wall at the reported meeting between May, Rolet and Khalid Al-Falih, the Saudi energy minister and chairman of Aramco. I doubt they talked about hats.

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Frank Kane is an award-winning business journalist based in Dubai. He can be reached on Twitter @frankkanedubai

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Disclaimer: Views expressed by writers in the Column section are their own and do not reflect RiyadhVision’s point-of-view.

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