RSM Egypt

How Brexit Will Affect the Arab World

Brexit is well and truly underway after the United Kingdom formally left the European Union on the 31st of January, 2020. While the UK and EU have agreed on the terms of the UK’s departure, talks are still ongoing regarding the nature of the two sides’ future relationship. During the remainder of the calendar year 2020, the two sides will continue ongoing discussions regarding this relationship, and the UK will continue to follow all of the EU’s rules and maintain their trading relationship to ensure a smooth process in this transitional period.

While the UK is no longer the British Empire, and Middle Eastern countries are no longer under Great Britain’s control as they once were, Brexit is naturally expected to affect the Arab World due to the sheer size of this phenomenon. As Global Risk Insights put it just days before the referendum, the Arab World is most likely to be affected in one of four ways:

A weaker, more inward looking Europe

As the massive support provided to the EU by the UK begins to dwindle, the EU is expected to pay more attention to internal affairs as financial and political issues connected with Brexit begin to rise. This will lead to “less involvement in the Middle East as it battles with its own problems and tries to save what is left of the union. Due to the erosion of its capacity to project soft power, the EU’s ability to promote its values of the rule of law and democracy (through dangling carrots like membership) will no longer be appealing to MENA states. Protecting human rights, the plight of refugees and minorities will haplessly fall victim to realpolitik (as has been demonstrated recently with the EU-Turkey deal).” (Global Risk Insights)

An increase in interventions in Middle Eastern affairs by the UK

As the UK withdraws from the EU and regains its unfettered global influence, we can expect to see a more pragmatic, self-centered approach from the UK in its political decisions. While the fight against terrorist groups such as the IS (Islamic State) has largely been subdued, “it is unlikely that the UK will simply put the Middle East peace process on the back burner, as GRI predicts, especially if the country wants to maintain its relevance and influence in the region. If anything, a post-Brexit future may actually be the most ideal time for Britain to assert itself in the MENA region, especially as the EU could be further weakened by Britain’s departure and its own internal problems.” (Fair Observer)

Increased Market Volatility in the MENA Region

With looming doubts over leadership in a post-Brexit UK, volatility in markets such as oil and foreign investments is bound to increase. “As of November 2018, foreign investment in the UK fell by 19% since the Brexit referendum. However, the impact in the Gulf will likely be less stark, at least in the short run. For some analysts, industries such as real estate will see a boom in business as “investors buying in dollar-pegged currencies such as the [UAE] dirham can pick up discounted deals.” (Fair Observer)

The Rise of Other Alliances and Regional Networks

As the UK becomes more self-serving and self-centered, and the EU also becomes a weakened, more inward looking organization, other global powers are expected to come to the fore. For example, the GCC (Gulf Cooperation Council) is expected to develop a stronger security and economic structure to address the MENA Region’s many concerns.

While Brexit is a phenomenon that mainly affects the EU and UK’s internal and external affairs, it is doubtless that countries in the Arab World, and the world in general, will be affected economically, politically, and even security-wise. As Brexit is a completely unique situation in modern history, it is predicted that its effects will continue to be felt by global economies for years to come; until a thorough restructuring and reworking of trade relationships, political standpoints, and security situations throughout the EU and UK is completed.




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