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City: the geopolitical quagmire

Concern is growing in business and political consequences of the scandal at Manchester City.  The Financial Times devotes a whole page it today under the headline 'Man City cheating scandal risks growing geopolitical quagmire.'

It is important to keep a sense of proportion as the FT does.  The leading sports business paper is not presenting a worst case scenario, simply pointing out some of the risks.

Relations between the UK and the UAE are important both economically and politically, but have been subject to recurrent tensions.  They are best described as 'volatile'.

The row over the acquisition of the Telegraph caused particular turbulence with some in the UAE taking the view that opposition to the deal (which eventually failed) was driven by racism.

As the FT notes, 'Abu Dhabi has a history of using commercial contracts to exert pressure on the UK.'  Britain has often needed UAE funds.  In the global financial crisis the UAE provided a £3.5 billion emergency cash injection into Barclays.   The money came from Sheikh Mansour who had acquired Manchester City earlier in 2008.

It should be emphasised that for now investment is continuing.  A proposed £900m capital injection into brioadband provider CityFibre by its shareholders, including Abu Dhabi's Mubadala, is proceeding.  For now, the City issue is being compartmentalised.

UAE president Sheikh Mohamed bin Zayed al Nahyan (the brother of Sheikh Mansou) is due to make a marquee visit to London later this year to sign a renewed investment partnership.   Depending on the severity of the punishments handed down to City, 'Whitehall is left to fret over whether the grand signing will take place at all.'

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