Sanctions from GCC nations unlikely, but Qatar preparing nonetheless

Al Marai

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In the event that diplomatic relations between Qatar and Saudi Arabia deteriorate further, the tiny Gulf state has been working out contingency plans to prevent disruptions to residents’ everyday life, the Financial Times reports.

The preparation comes after Saudi, the UAE and Bahrain withdrew their ambassadors from Qatar earlier this month, citing internal security concerns and Doha’s support of “hostile media” as their main concerns.

Qatar has responded by saying the dispute actually appears to be over external matters, largely believed to be the country’s support of the Muslim Brotherhood, particularly in Egypt. That political group and former President Mohamed Mursi were overthrown in Cairo last year.

Since then, Saudi, the UAE and Kuwait have pledged billions of dollars to the new military-backed Egyptian government, which Qatar has criticized for cracking down on dissenters.

Escalation questions

Pressure on Doha to fall in line with Gulf policy does not appear to be working so far. Last week, its foreign minister said that the country’s independent foreign policy is “non-negotiable.”

So far, the tensions have remained political, but there are concerns that the three Gulf countries will further press Qatar by closing off its land border and airspace.

Qatar is a peninsula, surrounded on three sides by water, and shares its only land border with Saudi Arabia. It also imports more than 90 percent of its food.

In 2012, Qatar imported 66 percent of its dairy, 39 percent of its vegetables and 6 percent of its poultry from the Kingdom, according to Qatarvironment.org. Trade disruptions with Saudi could thus pose a significant problem.

However, according to FT, sanctions appears unlikely. The newspaper cites a Qatari official as saying:

“Saudi Arabia does not want to push the GCC towards disintegration. Closing borders is a bad sign for them as much as us.”

Still, preparations are underway to manage any potential disruptions on the ground, with government departments asking suppliers if they would be able to continue their services in the event of a “crisis.”

The newspaper also reports that Qatar is discussing how to handle potential trade disruptions from Dubai:

“Qatari officials have discussed the potential impact of Dubai’s tran-shipment hub, the largest in the region, being closed to its shipping…

(But) the UAE would also be wary of escalating matters, given its dependence on natural gas imported from Qatar for its power generation.”

Economic leverage

According to Bloomberg, Qatar’s natural gas wealth makes it hard for Saudi and other GCC countries to pressure Doha economically. It cites John Sfakianakis, chief investment strategist at MASIC in Saudi Arabia, as saying:

“Direct economic leverage is of little impact. Qatar could go it alone, as long as the world is in need of gas, and as long as they don’t get all their neighbors to be their enemies.”

The news service adds that last year, in a move unrelated to any regional disputes, Qatar hired consultants to draft food-supply contingency plans in case regional trade routes were disrupted. One scenario included the closing of the Saudi border.

With Qatar standing firm on its policy decisions and other Gulf countries expressing unhappiness at is maverick status, what happens next remains to be seen. Abdulkhaleq Abdullah, an Emirati academic and author of “The Gulf Regional System,” tells Bloomberg that the stakes for Doha are high:

“Qatar is asked to reverse 15 years of policy, of being anti-status quo, of having an alliance with the Brotherhood, of going it alone. To change all that means that the Qatar you and I know will no longer be there.”

Thoughts?