THE BLOG
11/09/2018 11:14 BST | Updated 11/09/2018 11:14 BST

Why Post-Brexit Britain Should Not Count On Kuwait To Fill The Trade Gap

Violations of basic legal rights, racism, sexism - do we really want to do business like this?

POOL New / Reuters

The United Kingdom’s desperation to forge significant trade deals outside the Eurozone gathers apace and urgency with the real prospect of a no-deal Brexit looming on the horizon.

Theresa May’s much-maligned African adventure in the summer has been derided as a rollover of existing trade deals and comes as concern grows over the UK missing out on recent EU agreements with Canada and Japan – far bigger trading partners.

Kuwait should, on the face of it, provide a perfect post-Brexit trading partner for the UK. The Gulf state is the eighth-richest country in the world, based on GDP per capita, according to the International Monetary Fund’s April 2018 figures.

And data from the Office for National Statistics shows that exports from the UK to Kuwait have risen steadily over the past two decades - from around £0.5bn in 1999 to £1.6bn in 2016. That puts Kuwait at No49 on the UK’s league table of outward trade.

Clearly there is room for improvement in this figure and there is already an upward trend in place. Slam dunk? Er, not quite. The FT clearly thinks so with a lavishly-funded Special Report entitled Investing in Kuwait.

Let us look a little closer at the reality. First the geopolitics and then a focused look at an, as yet, obscure case that should sound a warning bell for UK mercantile ambitions in the Gulf state.

Liam Fox, the UK’s International Trade Secretary, argues that the country cannot negotiate free trade agreements with other nations because it is hampered by European Union rules and regulations which impose common tariffs across the bloc.

Much-travelled Fox visited oil-rich Kuwait earlier this year on a trawl, maybe crawl would be more appropriate, of Gulf States like a desperate door-to-door salesman eager to make his quarterly numbers.

Fox was heavily criticised at the time by Liberal Democrat leader Tim Farron.

“Another day, another desperate visit by Liam Fox to secure a trade deal with a country that has a questionable record on human rights,” Farron said.

“If only he were so keen to ensure Britain was able to continue trading in the world’s largest market, the single market. Then he wouldn’t need to put trade above human rights.”

Human Rights Watch, the nonprofit, nongovernmental human rights organisation, sums up Kuwait thus:

Kuwait aggressively cracks down on free speech, using provisions in the constitution, the national security law, and other legislation to stifle political dissent. Despite recent reforms, migrant workers do not have adequate legal protections, and remain vulnerable to abuse, forced labor, and deportation for minor infractions.

Not exactly the familiar, liberal sort of trading partner we have become accustomed to in our dealings with Europe over the past 40 years. Is this the road we are taking?

A leading Russian businesswoman, managing a fund which includes UK investors, thought she could do business in Kuwait. Now Marsha Lazareva languishes in the country’s overcrowded Sulaibiya prison sentenced to ten years’ hard labour for fraud and fined the outlandish sum of $73m – a conviction that she has vowed to fight to her dying breath.

Hers is a cautionary tale for a country like the UK desperate to forge stronger trading alliances with new partners in exotic locations.

Lazareva was head of a multi-national private equity group called KGL Investment. On May 6 she was found guilty in Kuwait City of illegally taking Kuwait Port Authority monies. Her lawyers were given one week to examine 18,000 pages of allegations prior to the trial.

Here is what the 44-year-old mother of a four-year-old said to Forbes journalist Andrew Cave.

“In spite of numerous requests by my lawyers, the judge denied me full access to all accusatory documents and also denied my calling of all my witnesses,” she said.

“When I was accused in April 2017, I immediately returned to Kuwait from a business trip to Europe to clear my good name and reputation.

“All my human and civil rights were completely violated during the court hearings. The judge made many racist comments toward me during the case and singled me out as a woman.”

Violations of basic legal rights, racism, sexism - do we really want to do business like this?

Neil Micklethwaite, London-based partner of Brown Rudnick, is one of the country’s toughest legal operators but even he was moved to say: “This is one of the most extraordinary miscarriages of justice I have come across in 30 years.”

Another individual who tried to do business in Kuwait is now desperately trying to attain political asylum in the UK after falling foul of the whims of the elites.

Let’s call him Ali. It’s not his real name, of course, because of his fear for reprisals against family members still resident in Kuwait.

He said: “We were building a good business but we attracted the attention of rivals who pressured the ruling class to cut us down.

“Now we clear our name of one fabricated fraud charge only for another to spring up in its place. It’s a tried and tested tactic for them.”

The UK can do better than do business with Kuwait.