London (MEMO) – The UK Government has agreed to a $2 billion loan for a Saudi Arabian oil company at a time when global financial markets including London and New York are competing for the 2018 planned floatation of the Saudi oil giant Aramco.

A spokesman for the Treasury confirmed a Financial Times report published today that the government was planning the loan guarantee for the Saudi oil company.

UK Prime Minister Theresa May in Saudi Arabia
Image: Flickr – CC – Number 10

The loan guarantee comes on the back of a tweet by US President Donald Trump who said he would “appreciate” it if the Kingdom chose the New York Stock Exchange rather than the other range of options it is considering.

Trump had never spoken about the biggest public offering in history, which is said to be worth over $100 billion, until last weekend, when he explained that it would be “important to the United States”.

Critics have said the British government’s decision is an affront to free market. The government “guaranteeing a loan to Aramco would be a further lurch in descent to mercantilism,” said Nicholas MacPherson, who was the most senior non-elected official at Britain’s finance ministry until 2016.

Related: UK Labour Party Bars Saudi Arabia From Its Conference Over War Crimes

This isn’t the first time the UK has tried to woo the Saudis over the Aramco flotation. With Brexit on the horizon, Prime Minster May visited Riyadh in the summer with one eye on the lucrative deal.

In October UK financial institutions also “watered down” rules to accommodate the Saudi Aramco flotation, which critics say was designed to fend off competitors.

This post was originally written for and published by Middle East Monitor.


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