Qatar, A Breach in the Blockade

When Saudi Arabia launched a diplomatic crusade against Qatar last June, it was widely speculated that the crisis would reach a swift resolution, as was the case with a similar situation three years prior. However, 2014 saw a quieter conflict in which the diplomatic impasse was relieved after a series of clandestine agreements were struck. The current Qatari-Saudi standoff has been far more aggressive, with a list of 13 demands still nailed to Qatar’s door.

Seemingly Qatar has made the decision of selecting isolation over subservience to their fellow Gulf Cooperation Council (GCC) members. Officials have, unsurprisingly, rejected these ultimatums as “unrealistic” and “implausible”. Concordantly, foreign observers have warned that such demands are incongruous with international lawQatar’s defiance knew no bounds when they restored relations with the GCC’s common adversary – Iran – in wake of the crisis. Iran has taken Qatar under its wing, providing support to counteract the effects of the blockade; the two nations, in addition to Turkey, have successfully formulated a formidable power bloc against the GCC.

Since the conclusion of the ‘Made in China’ expo in Doha last year, Qatar has been in negotiations with Chinese companies to introduce “cutting-edge” Chinese technology into the Qatari market. Qatar is effectively fortifying its relations with China and the Far East, looking to pave the way for a new Silk Road.

2018 is also being celebrated as the “Year of Culture” between Russia and Qatar, an event which will augment the tourism industry and consolidate economic relations bilaterally, as well as provide numerous opportunities for intercountry cooperation on economic, energy and military issues. On 26 March, Emir Sheikh Tamim visited the Kremlin and met with President Vladimir Putin; the two discussed regional issues, including the civil wars in Syria and Yemen, and the Israeli-Palestinian conflict. Another main talking point was the potential for Russian investment in Qatar.

Turkey are also looking for a piece of the Qatari market, and have plans to inject an additional $3.7 billion annually into trade with the emirate. Qatar will largely benefit from Turkish connections to Europe, and there is the potential to act as a trade hub connecting the Far Eastern and European markets. Qatar is successfully forcing itself into the Iran-Turkey-Russia-China partnership, hoping to break away from Western influence for good and solidify itself as a powerful regional player.

Despite Saudi attempts to jeopardise the Qatari economy, figures released by the statistics ministry suggest that the country has since made a hasty recovery and is now boasting one of the highest economic growth rates in the region. “Despite the unfair siege enforced on Qatar, the country continued to implement its strategies aimed at promoting economic growth and enhancing the outward trade, as well as opening new channels of co-operation at all fields with friendly countries,” affirmed Saleh bin Hamad Al Sharqi, director general of Qatar Chamber.

As one of the world’s largest exporters of liquified natural gas (LNG), Qatar has used the surging demand for the ‘fuel of the future’ as a knife for carving out new trade routes. When the UAE enforced an embargo on Qatari cargo, Oman seized the opportunity to take over as the regional hub for maritime trade. In the second quarter, Qatar’s GDP grew a mere 0.2% as a result of the crisis, however, this soon accelerated to a staggering 5.5% in the following quarter. Contrasting this with Saudi Arabia’s GDP declinations of 0.4% and 1% in the same quarters, one might question who the true victim of the blockade is.

Saudi Arabia’s diminishing sphere of influence is simply ineffective against Qatar’s main import and export partners. Unless the Saudis can persuade Oman and the entire Far East to severe relations with Qatar, they will remain the only sufferers in what could be dubbed a tactless diplomatic move. The UAE has also been accused of attempting to manipulate Qatar’s currency, the Riyal, through fraudulent foreign exchange transactions. These accusations grew out of an investigation launched by the Qatari Central Bank last December. Recently the US Treasury has now been called upon to probe US subsidiaries of the First Abu Dhabi Bank (FAB). As expected, the FAB have denied such claims.

The failure of this financial war can be largely credited to the robust precautionary actions of Qatar, and strong support for the Riyal. With central bank reserves and sovereign wealth funds totalling over $300 billion, it is highly unlikely that one of Qatar’s neighbours will be carry out a successful assault on such a stable currency. Since 2001, the Qatari Riyal has been pegged at 3.64 Riyal to the dollar, and until the US decides to destabilise Qatari economic affairs, traders will not see a case for devaluation.

Last June, I posed the question whether a third Gulf War was on the horizon given the US’ overreacting influence in the conflict. After almost a year without resolve, the US has withdrawn from its ‘divide and rule’ directive and is now favouring a swift resolution. On 20 March, President Trump met with Crown Prince Mohammed bin Salman (MbS), Saudi Arabia’s de facto ruler. According to a senior White House official, Trump has pressured MbS to reconcile with Qatar and end their destructive disputeEvidently, the US is distancing itself from threat of the Iran-Turkey-Russia-China quartet – an alliance which truly rivals the unrestrained power of the West. Any escalation of current regional conflicts would redirect Saudi dollars away from US coffers, a scenario which does not suit American interests.

General Mattis has been coordinating with the Saudis to strike a conclusion for the war in Yemen. What makes this interesting is that, for such a feat to be achieved, the US must also be in continual, undisclosed dialogues with the Iranians. The nature of these discussions would further implicate the US in their desire to dismantle their once useful Arabian ally.

Qatar has been overwhelmingly successful in managing its affairs throughout the crisis; its currency and economy have stabilised, new partnerships have been struck with global leaders, and the seemingly small Emirate has projected itself as a potential regional superpower. Overall, it would be incorrect to refer to this situation as a crisis as it is merely pressuring Qatar to transition to self-sufficiency at a faster pace, a scenario which was inevitable. All eyes will be on this diplomatic drama, and its conclusion, similar to that of the Thirty Years’ War in Europe, will shape the region for decades to come.

 

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