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Side-lined States: Qatar and economic blockade

The State of Qatar is a small littoral country located on the north-eastern coast of the Arabian Peninsula alongside the Persian Gulf. Globally, Qatar has the third-highest GDP per capita and has been classified by the United Nations as a nation with high-human development and is also regarded as a World Bank high-income economy. This is buttressed by the fact that Qatar has one of the world’s largest natural gas and oil reserves. Notwithstanding its economic heft, Qatar has remained a regional middle-power due to constraints of its limited geographical expanse. Qatar gained significant power in the Arab world in the 21st century because of its indigenous media group, Al Jazeera Media Network, which has a global outreach. It has also acquired notoriety of sorts for supporting various rebel groups during the Arab Spring. The political and economic developments that have ensued since form the focus of this paper. 

Qatar’s diplomatic crisis

On the 5th June 2017, the Ministry of Foreign Affairs in Bahrain, Saudi Arabia, the UAE and Egypt issued statements announcing the severing of diplomatic relations with Qatar and imposition of an economic embargo. While all these countries imposed a land, sea and air embargo against Qatar, Saudi Arabia went ahead and shut its land borders as well. The Saudi-led coalition cited Qatar’s alleged support for terrorism as the reason for severing diplomatic ties with the country and further criticized Qatar’s ties with Iran and Al Jazeera. The consequences of the blockade were instantly felt across the economy;  it disrupted business, education and transport links between Qatar and its neighbours, while also tearing apart families, whose members held different passports. The main trade routes were cut off, i.e. the land border with Saudi Arabia as well as the busy shipping lanes between Doha and the re-export trading centre of Dubai’s Jebel Ali, and national carrier Qatar Airways was prevented from overflying the airspace of the blockading countries.

Qatar’s response 

Qatar was quick in its response to deny the allegations being levelled by the Saudi-led coalition of the country’s involvement in backing terrorist organisations. It has from the very beginning been diplomatically on the front foot by expanding its international relationships, pleading its case to the International Court of Justice, and relaying its message of being the victim of a gross injustice through its influential news outlets. Trade links with Turkey and Iran were bolstered for the establishment of new supply routes. In places where trade routes could not be established, goods were transported by trans-shipment via neutral Oman.

On the economic front, Qatar opened its borders for business and investment to countries as far as Southeast Asia. It increased exports by as much as 19% and expanded previously state-owned projects to the private sector, aggressively encouraging foreign investment. Qatar also undertook expenditure on bolstering its security, by purchasing weapons systems (worth billions of dollars), constructing a new naval base, with an aim to double its naval force by 2025.

Qatar has also sought to diversify its economy through industrialization and economic reform. After the diplomatic crisis of 2017, Qatar took up the task of becoming a self-sufficient state. Abdulrahman Al Khayarin, CEO of Widam Foods stated that Qatar invested a great deal in attaining the goal of self-sufficiency in multiple sectors, especially agriculture and dairy products. He went on to say that the market had reacted positively to the regional blockade, increasing the output of the local goods, which were backed by high-quality international experts. Significantly, of its 2.6 million population, 2.3 million are expatriates. With reforms in the visa facilitation process, Qatar has emerged as the most open country in the Middle East according to the World Tourism Organisation. Despite the severed relations, Qatari gas continued to flow to the UAE and will continue to do so until 2032. Ports at Abu Dhabi and Dubai have both apparently eased restrictions on third-party shippers moving cargo to and from Qatar (although Qatari-flagged vessels are still banned). Preparation for the all-important hosting of the 2022 FIFA World Cup in Qatar continues unabated, a sure sign that it is not just Qatar that is confident in its future. 

The Qatari Government is using natural gas and oil exports to finance the construction of a diverse economy based on services and greater autonomy and security in food supplies. The modernization of the country, its infrastructure, labour, visa and investment laws will help in the creation of a new competitive business environment; making it reasonable to expect the Qatari economy to flourish and focus on higher technological industries, instead of solely relying on hydrocarbons. Significantly, Qatar has also opened its property market to foreign nationals to allow the inflow of foreign capital, as a means to diversify Qatar’s economy away from hydrocarbon dependency, ahead of the 2022 FIFA World Cup.

Looking ahead 

Qatar’s economic clout has so far helped it stave off both political and economic threats posed by the Saudi-led coalition. Seminal to its diplomatic isolation is the pursuit of independent foreign policy and assertion by Qatar since 1995, which is naturally viewed by Saudi Arabia as undermining its regional hegemony in the Arab world. The fight between Qatar and its big neighbour is often viewed through the prism of a proverbial David and Goliath contest. What does the prognosis look like? Analysts regard the emergence of the Doha-Teheran-Ankara axis as portending significant security implications for Qatar. Proximity with Iran may well push Qatar away from its military benefactor, i.e. the United States which has its largest military base in the Middle East in Qatar. Saudi Arabia’s Salwa Canal project alongside Qatar’s southern border, that poses a real danger of converting the emirate into an island, appears to be on hold since 2018; yet the threat remains real. As the FIFA World Cup in 2022 draws closer, it may well serve Qatar’s interests to steadily work towards a détente and not end up becoming an island, both literally and figuratively. On the other hand, the international community would do well to end Qatar’s diplomatic isolation to bring lasting peace and stability in the Gulf. 

Amisha Singh is a second-year student at Ashoka University, pursuing her bachelor’s in Politics, Philosophy and Economics.

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