WASHINGTON: Britain hasn’t even divorced the European Union yet, and already a new suitor has come calling: the United States.
During a visit this week to the United Kingdom, Vice President Mike Pence brought word from his boss, President Donald Trump: The United States is eager to reach a new trade pact — one that won’t be possible until Britain completes Brexit and moves out of the 28-country EU trading bloc.
“Our message is clear: The minute the UK is out, America is in,” Vice President Mike Pence said in a visit with British Prime Minister Boris Johnson at 10 Downing Street on Thursday.
Not so fast.
Building a new US-UK trading relationship atop the wreckage of Brexit won’t be easy.
British officials are already vowing to resist an agreement that is lopsided in favor of the more powerful United States, creating potential for disputes over matters such as chlorinated chicken and the divisive Scottish dish haggis.
“I know that you guys are pretty tough negotiators,” Johnson told Pence. “So, we’re going to work very hard to make sure that that free trade deal is one that works for all sides.”
As a member of the EU, Britain outsourced its trade policy to the bloc’s bureaucrats in Brussels. Before it can pursue an independent course and reach a brand-new trade pact with Washington, London will have to negotiate a divorce with the EU— or crash out of the bloc without a deal and risk damaging its own economy.
“Until that gets resolved, this is all speculation,” said Christine McDaniel, senior research fellow at George Mason University’s Mercatus Center.
And the terms of the UK-EU split will complicate any deal with the Americans, which will have to be approved by Congress.
No obstacle looms larger than the fate of the border between the independent Republic of Ireland and Northern Ireland, which is part of the United Kingdom.
Currently, people and goods can freely cross the Irish border without encountering immigration or customs checkpoints because both the UK and Ireland belong to the EU, which allows free trade and travel among its members.
The question is: What happens to the Irish border if Britain leaves the EU? If the border stays open, a US-UK trade deal won’t work. That is because an open border would allow goods from the remaining 27 EU countries to slip into Britain via the Republic of Ireland. Those goods could then be exported to the United States under the favorable terms of what is supposed to be an exclusive deal between the UK and the US
But creating a hard border between the two Irelands would risk conjuring up old animosities and undermining the historic Good Friday accord of 1998 that brought peace to an island long torn by violence.
What’s more, House Speaker Nancy Pelosi has repeatedly said there is “no chance” the US Congress will approve a trade pact with Britain if Brexit closes the Irish border.
Still, there are reasons for optimism if the Brexit issues can be resolved. Trump has a friendlier relationship with Johnson than he does with many other leaders. So it’s possible that US-UK trade talks can proceed more smoothly and quickly than American negotiations with, say, China.
Some issues are likely to prove thorny. Britain’s farmers have been shielded from export competition under the EU’s protectionist agricultural policies. The US intends to demand more access to Britain’s agriculture market post-Brexit, according to a list of negotiating objectives the Office of the US Trade Representative published in February. Accepting more competition from American farmers could prove a tough sell in Britain.
And there are other sensitive issues. In June, Trump caused a stir when he said that “everything” — including Britain’s National Health Service — would “be on the table” in US-UK trade talks. The British are fiercely protective of the state-run health system, which delivers free medical care to everyone. Although Trump later walked back the idea, Johnson reiterated this week that “the National Health Service is not on the table.”
Johnson also suggested that America needs to lift its ban on Scottish haggis — a savory pudding cooked in the stomach of a calf or lamb — and made a joking reference to British fears that the US would insist on more lax food safety standards, resulting in an influx of chlorinated chicken from the United States.
“And we’re not too keen on that chlorinated chicken either,” he quipped, taking a poke at his political opponents: “We have a gigantic chlorinated chicken of our own here on the opposition bench.”
“Boris Johnson has to walk a very fine line,” said Amanda Sloat, senior fellow at the Brookings Institution. “On one hand he needs Donald Trump to be able to show that the UK still has close friends and allies ... On the other hand, Donald Trump is extremely unpopular in the UK And Boris Johnson has to make sure that he’s not looking like Trump’s poodle.”
Trade between Britain and its one-time colonial possession is already brisk, moreover, which suggests that the potential for big economic gains in either country might be slim.
Last year, the United Kingdom was America’s fourth-biggest export market. And the United States, which runs chronic trade deficits with most of its major trading partners, reported a trade surplus — $18.6 billion worth — with Britain in 2018.
Even so, a US-UK deal would represent a powerful show of support for Britain after a messy divorce with the EU. “Clearly the British government is using this as a signal that they can do without Europe,” said Robert Lawrence, professor of trade and investment at Harvard University’s Kennedy School.
Trump’s top economic adviser, Larry Kudlow, said the administration wants to get to work on an agreement, but acknowledges it has to get the green light from the United Kingdom first. In the meantime, the US will focus on other agreements in the works, especially the US-Mexico-Canada Agreement that is meant to replace a 25-year-old North American trade pact.
“It’s not a tomorrow question. I mean the most important trade deal is USMCA. That is our top legislative priority,” Kudlow said.
US-UK trade deal won’t be so easy post-Brexit
US-UK trade deal won’t be so easy post-Brexit
- Building a new US-UK trading relationship atop the wreckage of Brexit won’t be easy
- British officials are already vowing to resist an agreement that is lopsided in favor of the more powerful United States
SABIC, Almarai, SEC able to absorb fuel price hike: S&P Global
RIYADH: Major Saudi companies, including chemical company SABIC, dairy firm Almarai, and Saudi Electric Co., are well-positioned to handle the impact of higher fuel and feedstock prices introduced on Jan. 1, according to a new report.
Released by capital market economy firm S&P Global, the analysis reveals that those corporates will be able to absorb the marginal increase in production costs by further improving operational efficiencies as well as potentially via pass-through mechanisms.
This came after Saudi Aramco increased diesel prices in the Kingdom to SR1.66 ($0.44) per liter, effective Jan. 1, marking a 44.3 percent rise compared to the start of 2024. The company has kept gasoline prices unchanged, with Gasoline 91 priced at SR2.18 per liter and Gasoline 93 at SR2.33 per liter.
Despite the hike, diesel prices in Saudi Arabia remain lower than those in many neighboring Arab countries. In the UAE and Qatar, a liter of diesel is priced at $0.73 and $0.56, respectively, while in Bahrain and Kuwait, it costs $0.42 and $0.39 per liter.
“For SABIC and Almarai, the increase in feedstock prices will not affect profitability significantly. In the case of utility company, SEC, additional support will likely come from the government if needed,” the report said.
The capital market economy firm projects that SABIC will continue to outperform global peers on profitability.
“We don’t expect the rise in feedstock and fuel prices to materially affect profitability, since the company estimates it will increase its cost of sales by only 0.2 percent,” the report said.
It further highlighted that SABIC is considered a government-related entity with a high possibility of receiving support when needed.
The report also underlines that Almarai anticipates an additional SR200 million in costs for 2025, driven by higher fuel prices and the indirect effects of increased expenses across other areas of its supply chain.
“We believe Almarai will continue focusing on business efficiency, cost optimization, and other initiatives to mitigate these impacts,” the release stressed.
With regards to SEC, S&P said that an unrestricted and uncapped balancing account provides a mechanism for government support, including related to the higher fuel costs.
“We believe any increased fuel cost will be covered by this balancing account,” the report said.
The study further highlights that the marginal increase “could significantly affect wider Saudi corporations’ profit margins and competitiveness.”
The S&P data also suggests that additional costs will be reflected in companies’ financials from the first quarter of 2025.
“Saudi Arabia is continuing its significant and rapid transformation under the country’s Vision 2030 program. We expect an acceleration of investments to diversify the Saudi economy away from its reliance on the upstream hydrocarbon sector,” the report said.
“The sheer scale of projects — estimated at more than $1 trillion in total — suggests large funding requirements. Higher feedstock and fuel prices would help reduce subsidy costs for the government, with those savings potentially redeployed to Vision 2030 projects,” it added.
Lenovo to produce ‘Saudi Made’ PCs by 2026 following $2bn Alat deal closure
RIYADH: Chinese tech giant Lenovo is set to manufacture millions of computer devices in Saudi Arabia by 2026, following the completion of a $2 billion investment deal with Alat, a subsidiary of the Public Investment Fund.
First announced in May, the partnership has now received shareholder and regulatory approvals, paving the way for Lenovo to establish a regional headquarters and a manufacturing facility in the Kingdom.
The deal marks a significant step in aligning Lenovo’s growth ambitions with Saudi Arabia’s Vision 2030 goals of economic diversification, innovation, and job creation, the company said in a press release.
The factory will manufacture millions of PCs and servers every year using local research and development teams for fully end-to-end “Saudi Made” products and is expected to begin production by 2026, it added.
“Through this powerful strategic collaboration and investment, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in KSA and the wider MEA region,” Yang said.
He added: “We are excited to have Alat as our long-term strategic partner and are confident that our world-class supply chain, technology, and manufacturing capabilities will benefit KSA as it drives its Vision 2030 goals of economic diversification, industrial development, innovation, and job creation.”
Amit Midha, CEO of Alat, underscored the significance of the partnership for both Lenovo and the Kingdom.
“We are incredibly proud to become a strategic investor in Lenovo and partner with them on their continued journey as a leading global technology company,” said Midha.
“With the establishment of a regional headquarters in Riyadh and a world-class manufacturing hub, powered by clean energy, in the Kingdom of Saudi Arabia, we expect the Lenovo team to further their potential across the MEA region,” he added.
The partnership is expected to generate thousands of jobs, strengthen the region’s technological infrastructure, and attract further investment into the Middle East and Africa, according to the press release.
In May, Lenovo raised $1.15 billion through the issuance of warrants to support its future growth plans. The initiative, which was fully subscribed by investors, signals confidence in Lenovo’s strategic approach and its plans for global expansion.
The investment deal was advised by Citi and Cleary Gottlieb Steen & Hamilton for Lenovo, while Morgan Stanley and Latham & Watkins represented Alat.
Lebanon’s bonds climb as parliament elects first president since 2022
LONDON: Lebanon’s government bonds extended a three-month long rally on Thursday as its parliament voted in a new head of state for the crisis-ravaged country for the first time since 2022.
Lebanese lawmakers elected army chief Joseph Aoun as president. It came after the failure of 12 previous attempts to pick a president and the move boosts hopes that Lebanon might finally be able to start addressing its dire economic woes.
Lebanon’s battered bonds have almost trebled in value since September when the regional conflict with Israel weakened Lebanese armed group Hezbollah, long viewed as an obstacle to overcoming the country’s political paralysis.
Most of Lebanon’s international bonds, which have been in default since 2020, rallied after Aoun’s victory was announced to stand between 0.8 and 0.9 cents higher on the day and at nearly 16 cents on the dollar.
They have also risen almost every day since late December, although they remain some of the lowest priced government bonds in the world, reflecting the scale of Lebanon’s difficulties.
With its economy still reeling from a devastating financial collapse in 2019, Lebanon is in dire need of international support to rebuild from the war, which the World Bank estimates to have cost the country $8.5 billion.
Closing Bell: Saudi main index closes in green at 12,097
RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 9.01 points, or 0.07 percent, to close at 12,097.75.
The total trading turnover of the benchmark index was SR7.48 billion ($1.99 billion), as 96 stocks advanced, while 133 retreated.
The MSCI Tadawul Index decreased by 3.28 points, or 0.22 percent, to close at 1,510.14.
The Kingdom’s parallel market, Nomu, surged, gaining 251.24 points, or 0.82 percent, to close at 31,027.39. This comes as 56 of the listed stocks advanced, while 32 declined.
The best-performing stock was Nice One Beauty Digital Marketing Co. for the second day in a row, with its share price increasing by 7.69 percent to SR49.
Other top performers included Fawaz Abdulaziz Alhokair Co., which saw its share price rise by 6.5 percent to SR14.74, and Abdullah Saad Mohammed Abo Moati for Bookstores Co., which saw a 4.42 percent increase to SR35.45.
Arabian Pipes Co. and Dr. Sulaiman Al Habib Medical Services Group also saw positive change with their share prices moving up by 4.10 percent and 3.89 percent to SR12.70 and SR298.80, respectively.
The worst performer of the day was Salama Cooperative Insurance Co., whose share price fell by 5.88 percent to SR19.52.
Almoosa Health Co. and Al Hassan Ghazi Ibrahim Shaker Co. also saw declines, with their shares dropping by 5.13 percent and 3.91 percent to SR133.20 and SR28.25, respectively.
On the announcements front, Riyad Bank declared its intention to fully redeem its $1.5 billion fixed-rate reset tier 2 sukuk, issued in February 2020, on Feb. 25, 2025.
According to a Tadawul statement, the sukuk originally maturing in 2030, will be redeemed at face value in accordance with the terms and conditions. The redemption, approved by the regulators, will include any accrued but unpaid periodic distributions.
On the redemption date, Riyad Sukuk Limited will deposit the full amount into the accounts of sukuk holders, marking the completion of the issuance. This redemption will conclude the sukuk’s life, with no remaining value post-redemption.
Riyad Bank ended today’s trading session edging up by 0.91 percent to SR27.85.
Rotana eyes growth in smaller Saudi cities amid hospitality expansion
RIYADH: Rotana Hotels is turning its attention to smaller cities in Saudi Arabia as part of its ambitious growth strategy to strengthen its presence in the Kingdom.
Speaking on the sidelines of the third Saudi Tourism Forum, the firm’s Chief Operating Officer Eddy Tannous told Arab News the company is engaging with tourism authorities, development funds, and private investors to explore opportunities in emerging destinations such as Al-Baha and Asir.
Rotana has previously announced its plans to develop nine new properties in Saudi Arabia, five of which are scheduled to open in 2025. This follows the launch of three hotels in 2024, including Nova M, the first Edge by Rotana property, as well as Dar Rayhaan by Rotana in Alkhobar and Al Manakha Rotana in Madinah.
Tannous said: “We have development on properties that will probably open in the next, I want to say, two to five years. Probably six to eight properties in those tertiary cities where it’s becoming a destination that people want to go to as well.”
With Saudi Arabia ranking third globally for international tourist arrival growth in 2024, with a 25 percent increase compared to the previous year, the Kingdom’s hospitality sector is seeing rapid growth.
The company’s goal is to triple its current key count in the Kingdom to 6,000 within the next three years, bolstered by strong demand for hospitality services.
Rotana’s upcoming developments, including Yasmina Rayhaan by Rotana in Riyadh, aim to meet this increasing demand.
“We are a regional brand. We are a brand that grew up in this region, so Saudi Arabia has always been a focus for us. But I think with the announcement of Vision 2030, it became more of a catalyst for us to continue focusing on Saudi Arabia,” Tannous said.
He added: “Saudi Arabia is the region or is the country in this Middle East region that’s growing the fastest and that’s growing with the biggest magnitude from a hospitality standpoint. Our main focus in Saudi Arabia is to focus both on the government sector projects and individual investors.”
Rotana’s expansion strategy is also geared toward major international events, including Saudi Arabia’s hosting of the FIFA World Cup in 2034. This event is expected to attract millions of visitors, creating significant opportunities for the hospitality sector.
Commenting on the company’s plans, Rotana CEO Philip Barnes said in a press release: “We see tremendous potential for expansion in Saudi Arabia. Our ambitious pipeline for KSA underscores our commitment to the hospitality and tourism sectors, both in the Kingdom and regionally, as demand for business and leisure travel soars to new heights in anticipation of major events such as the FIFA World Cup 2034.”
Beyond Saudi Arabia, Rotana is expanding across the Middle East, Africa, Eastern Europe, and Turkiye, where it currently operates 81 properties. The company has a pipeline of 36 new properties in 22 cities, including its projects in Saudi Arabia.
Rotana is also strengthening its presence in key markets such as the UAE, Turkiye, and Africa, where demand for leisure and business travel is on the rise.
“As a company today, we run 86 properties in the world. Some of our source markets to Dubai and Abu Dhabi, which are two of our biggest markets, include the UK, Germany, and Russia,” Tannous said.
Rotana is also preparing for significant updates to its loyalty program, which are expected to be announced later this year — although details remain under wraps.
“It’s not something I can talk about today, but we will hopefully in 2025,” Tannous said. “The most exciting thing for me right now is what we’re doing on our loyalty program because that will open the door for bank partnerships, credit card partnerships, airline partnerships.”
Rotana’s expansion in Saudi Arabia and beyond reflects its commitment to meeting the growing demand for hospitality services while positioning itself as a leader in both regional and international markets.
