Qatari Diplomatic Crisis: A Boon or a Bane for the Qatari Economy
On June 5, 2017, Saudi Arabia, Bahrain, Egypt, the United Arab Emirates, and Yemen officially suspended their diplomatic relations with Qatar due to accusations of Doha supporting terrorism. On the very same day, Saudi Arabia encouraged its “brotherly countries” to take action, which resulted in 9 other countries in the region either cutting or severing their diplomatic ties with Qatar. In addition to the political isolation, the four Arab countries implemented a land, sea and air embargo on the country.
Michael Stephens (2019) who is a Middle East research fellow at London's Royal United Services Institute said that “The Qataris had a two-fold battle to fight. One was to convince world opinion that they weren't these horrid terrorist-supporting Bin Laden types. And the other was to show that the economy was robust, that it was a good place to invest, and that the Qataris were creating conditions that will make it easier for foreign direct investment to thrive."
The four Arab countries initially demanded that the country shut down the broadcaster Al-Jazeera, terminate economic cooperation with Iran, expire contact with groups such as but not limited to the Muslim Brotherhood and issue monthly external compliance checks. Qatar had been asked to comply with these demands within 10 days and though the country has been strongly denying the charges, Doha refused to collaborate. Thus, the embargoes have been in place for 19 months now.
In the past, the four Arab countries provided 60 percent of Qatar's total imports, including a significant portion of the nation’s food supplies (Matt Smith, 2019). Therefore, one of the first actions the government has taken is to facilitate alternative food supply routes through Turkey and Iran. It also enhanced domestic production, such as having imported tens of thousands of cows with the purpose of increasing its dairy supplies. However, as Qatar is one of the world’s largest exporters of liquefied natural gas, its recent division of resources in various areas of domestic production has raised concerns about economic inefficiency.
On the other hand, Sheikh Ahmed Bin Jassim Bin Mohammed Al Thani, Foreign Minister of Qatar, reported to Bloomberg that Qatari exports have risen 19 percent since the embargoes began, and the country’s global trade has risen by 16 percent (2018). “If we lost around a 110-million market, we opened a 400-million market” in countries including Turkey, Azerbaijan, Armenia, Pakistan, Iran and central Asia, he said. In addition, the International Monetary Fund predicts that the country’s gross domestic product, that grew 2.2 percent in 2016 and 1.6 percent in 2017, has grown 2.6 percent in 2018, and will further accelerate to 2.7 percent in 2019.
After the blockage, Qatar had to diversify its economy and build international partnerships in order to eliminate its economic vulnerability to the political crisis it has been facing. Though the embargoes still remain in place, Qatar has proved more resilient than ever anticipated.