Qatar weathers the storm

Eight months after Saudi Arabia, the UAE, Bahrain and Egypt moved to politically and economically isolate Qatar, there are few signs in the country’s capital, Doha, that their blockade is achieving its objectives.

Outlined in 13 demands, those objectives included forcing Qatar to break links with Iran, close a Turkish military base, shut down TV channel Al Jazeera and end support for groups such as the Muslim Brotherhood.

Yet nowadays, there is much evidence to suggest that the blockade has served only to rally Qataris behind their ruler, Emir Sheikh Tamim bin Hamad Al Thani, while also strengthening the country’s links with Iran and Turkey.

The crisis may, however, have delivered some permanent damage to the Gulf Cooperation Council (GCC), a regional alliance long dominated by Saudi Arabia, to which both the blockaders and Qatar belong.

At the same time, as a key ally of both Qatar and the blockading states, the crisis has placed the US in a difficult position. Later this month, President Trump, who initially backed the blockade, will seek to bring an end to the impasse by meeting the Saudi, Emirati and Qatari leaders in Washington.

“I think the blockading states now realize that what they were trying to get out of this isn’t going to happen,” says Jason Tuvey, Middle East Economist at London-based Capital Economics. “Now, though, the importance of saving face can’t be underestimated.”

First moves

Immediately after the blockade began, back in June 2017, the Qatari economy took a major hit.

Saudi Arabia closed Qatar’s only land frontier, while the Saudi and UAE authorities also closed their ports to Qatari shipping. Air access was also restricted, forcing flights to travel by lengthier routes, while the Saudi central bank ceased trading with Qatari banks in Qatari currency. Ratings agencies downgraded the country, while Qatari citizens in the blockading nations were forced to leave, with diplomatic links severed.

In July and August that year, Qatar’s imports slumped around 40%, year-on-year. Investors began moving their money out of the country, and the cost of some imported food and medicine went up ten-fold, according to Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani.

Meanwhile, with Qatar a major work destination for many expatriate South Asian and Filipino nationals, the crisis also hit the Asia-Pacific, with many layoffs reported. At one point, more than two million of the 2.6 million population were expats.

Qatar is, however, one of the world’s richest countries. Blessed with huge reserves of natural gas, its rulers were able to quickly inject some $38.5 billion into the economy during those crucial first months, according to ratings agency Moody’s.

New supply chains were rapidly established, substituting goods from Turkey and Iran for those from Saudi Arabia and the Emirates.

Qatar was also fortunate that Port Hamad, a major new harbor, was completed in September. This was key, as previously, some very large vessels had been unable to dock at Doha and often had to call in at the UAE port of Jebel Ali, before sending goods bound for Qatar in smaller ships. Post-September, giant international cargo vessels could instead head straight for Doha and avoid the blockade.

“Since those first two months, the Qatari economy has weathered the crisis quite well,” Tuvey said. “Even the banking sector, which was one of the most vulnerable areas, with large external liabilities and deposit outflows, is now beginning to see a trickle back in.”

The blockade has also given a boost to efforts at more self-sufficiency within the state. A key example of this is the dairy sector, which had been dominated by imports from Saudi Arabia. Now though, Qatar has imported thousands of cows and set up its own dairy farms. One of these, Baladna, aims to have 10,000-head by April, to take care of 100% of Qatar’s milk needs.

Impact for many was personal, social

Some businesses have suffered, however. “You do hear that firms which had been doing a lot of business in Saudi Arabia or the UAE have been hurting, as they don’t have access to their markets anymore,” says Mehran Kamrava, director of the Center for International and Regional Studies at Georgetown University-Qatar. “Until they find alternative places to do business, this definitely has an effect on them.”

Yet for many, the economic effects of the blockade seem hardly noticeable.

“To be honest, we don’t feel any economic impact,” says Mohammed K. Al-Rwaili, head of program coordination at Hamad bin Khalifa University in Doha. “The currency is stable, pegged to the US dollar, the stock market is now also stable and a lot of infrastructure projects are going ahead and roads are opening… We don’t see Saudi milk anymore, but there’s plenty from Turkey and Europe instead.”

For many Qataris, the impact is more personal and social.

“I have family in Saudi Arabia,” Al-Rwaili continues. “Since the blockade, I can’t visit them. As a Muslim, too, it affects me that I can’t visit Mecca, in Saudi Arabia, and perform one of my religious duties.”

Political popularity

Meanwhile, the blockade has led to a groundswell of support for the Emir. Pictures of the 37-year old Sheikh Tamim, who came to power in 2013, are everywhere around Doha, with many Qataris praising him for standing up to Saudi and Emirati pressure. For many, he has become a personification of national sovereignty.

“The Emir has unprecedented popularity,” says Kamrava, and while several members of his Al Thani clan living outside Qatar have come out in support of the Arab Quartet, “they are really rather marginal figures, whom no one takes seriously.”

At the same time, Qatar’s links with Turkey strengthened, as Ankara rapidly stepped up to support Doha when the crisis began, fast-tracking the despatch of troops to a military base in Qatar. Iran also became an alternative source of supplies, while Doha restored full diplomatic ties with the Islamic Republic soon after the blockade began.

In addition, fellow GCC members Kuwait and Oman have not followed Saudi, Emirati and Bahrani commands to join the blockade and have instead kept relations with Qatar as before. This places a major question mark over the future of the GCC, which was founded in 1981.

“I don’t think we’ll see it break up,” says Kamrava, “as no one wants to be the party responsible for that. But we may find the GCC becoming even less meaningful, less an organization for coordination and collaboration between the Arab Gulf states.”

In the long term, the crisis is likely to damage an important and scarce commodity in the region – trust.

“What happened to my country is not an easy thing,” says Al-Rwaili. “One day you believe these countries are your neighbors, friends, and then… We need to have a dialogue with these countries, and it’s better if we are together with our neighbors… but in the long term, we will not forget this.”

With the Saudi, Emirati and Qatari leaders meeting President Trump this month, the hope is that the US, an ally to all three, may help solve the current impasse. Yet, “even if there is a resolution,” Tuvey said, “Qatar wants to make sure it can’t ever be put under the same strain again.”