Following the completion of Brexit in two years’ time there is the distinct possibility of another global city replacing London as one of the most influential financial centres in the world.
The Middle East continues to emerge as a crucial banking and financial services region, and one which, geographically at least, acts as an important hub connecting east and west.
The impending Brexit is a situation that financial centres in the Middle East will look to take advantage of, although they will be up against stiff competition from the likes of New York and Singapore, as well as European options like Frankfurt and Paris. Of course, London will not give up its position easily either, so it’s set to be an intriguing period ahead.
In light of the recently published Corruption Perceptions Index 2016 (CPI), I want to focus on the Middle East, more specifically, the Gulf States, and the potential damage the results of the CPI may have done to their chances of taking advantage of the Brexit opportunity.
The CPI shows that several countries have seen a “drastic” rise in their perceived level of corruption in the past year. Bottom of Form
Qatar, Kuwait, Bahrain and Saudi Arabia all took larger backward steps than any of the other 176 countries in the rankings.
Qatar saw the biggest fall sliding 10 points from 71 to 61 in the 2016 index, no doubt largely as a result of the FIFA scandals that have surrounded its awarding of the 2022 World Cup. Kuwait and Bahrain both fell eight points, to 41 and 43 respectively, and Saudi Arabia six points to 46.
To put this into context, the CPI results reflected signs of progress in some unlikely places, including North Korea, Afghanistan and Belarus, as well as China, Brazil and India.
A Transparency International survey of 11,000 people across the MENA region concluded that 61 per cent thought corruption was increasing and just 15 per cent thought it was diminishing. Clearly there’s a perception in the region of an increase in corruption, but where has this perception come from?
Well, the results could point to the deeper problems across much of the Arab world, with Somalia, Syria, Sudan, Yemen and Libya all among the seven most corrupt states in the world, according to the rankings. So, despite the significant political changes that have taken place in the region over recent years, it seems this has had little or no effect on corruption, in fact, quite the opposite.
One could argue that very little political change has taken place at all. In many of the Gulf States, the ruling families continue to hold power, both politically and economically, and public freedoms do not exist in the same way they do in jurisdictions where perceived corruption is lower.
Additionally, anti-corruption measures are typically reactive rather than proactive, and in some MENA jurisdictions bribes are not only accepted but expected.
So, what does this mean? Well, it may simply mean that MENA is always going to trail some way behind other jurisdictions in terms of its corruption perception levels, and this can only hold back the region from becoming a truly influential global financial centre.
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