The Economic Blockade of Qatar

Qatar is a small oil-rich nation in the Middle East. Although the nation is very small in size and has a population of about two million, it has amongst the highest per capita wealth in the world.

However, Qatar has traditionally relied heavily on its neighbors such as Saudi Arabia and the United Arab Emirates.

The problem happened when Saudi Arabia accused Qatar of intermingling with Iran which is Saudi’s arch rival.

Saudi also accused that Qatar had been covertly funding radical Islamist groups in Iran which work against Saudi interests.

Citing these two reasons as a pretext, Saudi convinced other important Muslim countries like United Arab Emirates, Bahrain, and Egypt to start an economic blockade against Qatar. Therefore all these nations immediately cut their diplomatic ties with Qatar. Also, all transport routes from these nations to Qatar were closed down.

The Saudi led coalition had started this economic blockade with the intent of breaking the back of the Qatari economy. However, it seems like they have been unsuccessful in doing so. In this article, we will have a look at the effect of the economic blockade and how Qatari economy has not only survived despite the odds but is instead thriving.

The Sudden Blockade

The news of the economic blockade came as a surprise to many Qataris in June 2017. There was a lot of ambiguity which created investor panic. Major investors simply wanted to move out of the country since a war seemed to be on the cards.

The quartet of Muslim countries, i.e., Saudi Arabia, Bahrain, UAE, and Egypt were considering military action in Qatar but were warned by the United States of such misadventure. The military base that America has in Qatar saved the day for the Qataris.

However, there was panic all around, and the market capitalization of the stock market had plunged to nearly half almost overnight. Real estate prices were also negatively affected. The food supply was also becoming an area of concern since supermarket shelves had started running dry. The country was quickly running out of its Forex reserves.

Within a couple of months, the reserves had halved from $31 billion to $15 billion. In short, the Qatari economy found itself in disarray in the days immediately following the blockade.

The aggressor quartet intended to attack the growing Qatari economy. Qatar had gone from being a $6 billion economy in 2000 to a $300 billion economy in 2015. It was rapidly developing economically, and this made the other countries insecure. This is why they wanted to use the blockade in order to keep the Qatari clout in check.

Why The Blockade Failed?

  • Qatar’s Strong Diplomacy: Qatar has used economic diplomacy as a tool. As soon as the siege was laid, Qatari officials started visiting prominent countries in the world in order to get them on to Qatar’s side. An economic blockade only really works if all the countries work in a coordinated manner.

    In Qatar’s case, its immediate neighbors have severed ties with the small nation. However, other prominent nations of the world continue to trade with Qatar. Hence, there is no real shortage of anything in the economy. Some goods are more expensive to obtain. However, the Qatari government has reduced their taxes on such goods in order to maintain the price levels.

    The Qatari government also had to give up many controversial practices in order to get international approval.

    For instance, modern day slavery was rampant in Qatar through the Kafala system. Qatar had to bow down to international pressure and reform the Kafala system. Since human rights were no longer being violated in Qatar, an increased number of nations started supporting it.

  • Continued Fulfillment of Commitments: When the siege was laid, Qatar was the biggest supplier of natural gas in the world. The idea behind this siege was to disrupt the supply lines which would then disrupt the economic prowess being made in Qatar. However, the nation has somehow managed to deliver against its commitments. This has reinforced the confidence that the international community had in Qatar.

    After observing Qatar’s commitments to keep its partners’ interests ahead of its own, more nations have started trading with Qatar.

  • Government Became An Importer: Qatar was heavily dependent upon its neighbors in order to obtain many essential goods such as food. There was a likelihood that the Saudi led blockade would send the nation into chaos as black-markets would take over the nation. To avoid this, the government has become an importer itself. The government has found out many diverse alternate supplies leaving no scope for the aggressors to further be able to damage the supply chain by including another country in their fold.
  • Support From China: One of the biggest reasons behind Qatar’s survival is support from China. America already has Saudi Arabia as a major ally in the Middle East. China was looking for an ally to cement its position. This crisis provided a perfect opportunity for China to swoop in to help Qatar.

    China is filling the small emirate up with cheap goods. Thanks to China, Qataris are now buying cheaper than ever before. Also, China has been buying up Qatar’s energy products in large quantities. Hence, China is both a source of high income and low expenditure for the Qataris.

    Also, China has been collaborating with Qatar to build world-class infrastructure in the nation. For instance, China is helping Qatar build its main football stadium which will host the 2022 football world cup.

To sum it up, Qatar has successfully defended itself against this economic blockade.

Despite attempts by adversaries, the Qatari economy is growing rapidly. In short, the blockade and Saudis intentions seemed to have failed miserably.

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