Top 5 Facts about the Qatar-Gulf Crisis
Fact 1: Despite the drop in oil revenues, Qatar's economy has grown.
Despite the drop in oil revenues, Qatar achieved a growth rate of 2.1 per cent in 2017, almost unchanged from the previous year, and is forecast to rise to 2.6 per cent this year, according to the IMF.
“Growth performance remains resilient. The direct economic and financial impact of the diplomatic rift between Qatar and some countries in the region has been manageable,” the International Monetary Fund said in a report on Wednesday (May 30).
Gas-rich Qatar tapped into its massive wealth to absorb the early shocks to its financial system, and secure alternative food supplies, maritime routes and ports, reports said.
“The latest data from Qatar reiterate that the worst of the hit to the economy from its diplomatic crisis with Saudi Arabia and its allies has now passed,” said Capital Economics in a report in May.
Doha injected tens of billions of dollars to offset a drop in banking deposits at the start of the crisis and succeeded in bringing the banking sector back to normal operations.
“Qatar’s economy has suffered on several fronts as new logistics links proved to be more expensive in the short term,” Andreas Krieg, a professor at King’s College London, told AFP.
“However, Qatar has been able to transform this crisis into an opportunity.”
Economic diversification has made a huge leap, such as the opening of Hamad Port to bypass Jebel Ali in Dubai. The multi-billion-dollar mega projects connected to the 2022 football World Cup have continued unabated, said Krieg.
In addition, Doha’s gas and crude oil exports have not been disrupted, providing a revenue lifeline.
Despite the rift, Qatari gas continues to flow into the UAE through the Dolphin pipeline.
Since the blockade began, Qatar – home of Al-Udeid, the largest US base in the region – has agreed a raft of military purchases worth tens of billions of dollars with the United States and Europe.
“Qatar made a large drawdown of its reserves and investment assets when the blockade began,” said Middle East commentator Neil Partrick.
Although it sustained losses in tourism revenue, it has enjoyed “economic success” assisted by Iran, Turkey and Oman, Partrick said.
The blockade’s negative impacts on Qatar were in real estate, tourism and Qatar Airways, which is expected to announce large losses because of longer routes.
According to Capital Economics, in the first six months of the blockade, visitors to Qatar dropped by 20 per cent, flights into Doha by 25 per cent, and Qatar Airways flights by 20 per cent.
It estimated loss in tourism revenue during the same period at US$600 million (S$803 million), and real estate prices fell by 10 per cent.
Mandagolathur Raghu, head of research at the Kuwait Financial Centre, said his company estimates Qatar Airways has lost around US$3 billion in revenues.
The blockading nations also suffered from the diplomatic crisis, though to a lesser degree.
“I think that the economic impact of the blockade on the entire region should not be underestimated. The loss due to the disruption of free trade is in the tens of billions of dollars for all countries,” Krieg said.
Dubai in particular has suffered billions of dollars in losses due to Qatari companies no longer being able to work there, he said.
Lost Qatari investments in the UAE real estate sector are worth hundreds of millions, while both Saudi Arabia and the UAE have taken a blow worth billions after cutting food exports to Qatar.
Capital markets suffered as a whole and GCC economic programmes will be delayed further.
“Projects that require GCC-wide coordination could be shelved or timelines indefinitely postponed,” Raghu told AFP.
Fact 2: Qatar has taken the United Arab Emirates (UAE) to the UN International Court of Justice over human rights violations
Doha has filed a motion against the Emirates for triggering a series of measures that discriminate against Qataris and the country’s residents.
The measures include expelling Qataris from the UAE, prohibiting them from entering or passing through the Emirates, and closing UAE airspace and ports to Qatar.
“As set forth in detail in Qatar’s application to the International Court, the UAE led these actions, which have had a devastating effect on the human rights of Qataris and residents of Qatar,” the government in Doha said today.
According to Al Jazeera, Qatar believes that that the UAE’s measures violate the International Convention of the Elimination of All Forms of Racial Dissemination (CERD).
In December last year, the National Human Rights Committee based in Qatar published a report detailing the restriction on the freedom of movement, expression and the forceful separation of families as a result of the siege.
Qatar is seeking compensation for those impacted, although no information has been provided as to the value.
Fact 3: The US is expanding a major base in Qatar
Qatar and the US signed a military cooperation agreement after Operation Desert Storm in 1991. The Al Udeid Air Base was built in 1996, and the US military moved its operations there in 2003, shortly after the invasion of Iraq.
The base currently houses around 10,000 US military personnel, and has been essential for air operations in Afghanistan, Iraq, and Syria.
The base is now the home of the US Air Force Central Command, and has proven essential for American air operations in the region.
“Qatar is strategically placed. Afghanistan, Iraq, Syria — these are all hotspots in the region. I am not exaggerating when I say 80% of aerial refueling in the region is from Udeid,” al-Attiyah said. “We’re the ones that keep your birds flying.”
Military personnel from the UK and other allies are also stationed at Al Udeid.
On August 2, Qatari Defence Minister Khalid bin Mohammad al-Attiyah visited Washington to meet with the US Department of Defense to discuss the upcoming expansion of a major US base in Qatar, and the strategic military partnership between both countries.
On July 24, al-Attiyah laid the foundation stone for the expansion project of Al Udeid base where roughly 11,000 US military personnel are stationed.
The ceremony was also attended by US Army Brigadier-General Jason Armagost, commander of the 379th Air Expeditionary Wing at Al Udeid.
The planned expansion will include construction of additional housing facilities and service buildings.
Fact 4: Qatar Airways will make a loss due to the blockades
- On June 9, Qatar Airways CEO Akbar al-Baker said Qatar Airways has been impacted by the blockade, “it increased our flying time, and put pressure on [our] operational cost, but it did not stop the will and our determination to keep on our part of growth.”
- Losses: On Wednesday, April 25, Qatar Airways CEO Akbar al-Baker told reporters that the airline has made a “substantial” loss in its financial year because of the regional dispute.
- Acquisitions: On April 10, Qatar Airways bought a minority stake in JetSuite, a US private aviation company, potentially expanding the semi-private model across the US.
- On February 20, Italian airline Meridiana changed its name to Air Italy with the backing of its new shareholder, Qatar Airways. The airline aims to become Italy’s flagship carrier, as UAE-backed Alitalia filed for bankruptcy.
- The blockading countries have targeted Qatar Airways by forbidding it from using their airspace, but it has found alternative routes and expanded its travel network with new international partnerships.
Fact 5: Russia will supply Qatar its S-400 Surface-to-air defence systems despite Saudi's Opposition
In January, Qatar’s ambassador to Russia said talks for the acquisition of Russia’s S-400 Surface-to-air- defence system were “at an advanced stage”.
This came after the signing of an agreement on military and technical cooperation between the two countries in October 2017 to further cooperation in the defence field during a visit by Russian Defence Minister Sergei Shoigu to the Gulf state.
Saudi asked France, US, UK to prevent Qatar buying missile system but a senior Russian politician has said Moscow still plans to supply an advanced aerial defence system to Qatar despite Saudi Arabia’s reported opposition.
A senior Russian politician has said Moscow still plans to supply an advanced aerial defence system to Qatar despite Saudi Arabia‘s reported opposition.
In comments made to local media, Aleksei Kondratyev, a member of the Russian upper house and the deputy chairman of the committee on Defence and Security, said Russia will pursue its own objectives in determining sales of its S-400 surface-to-air missiles.
“Russia seeks its own interest, supplying S-400 to Qatar and earning money for the state budget. Saudi Arabia’s position has nothing to do with it, Russia’s plans will not change,” Kondratyev was quoted as saying by Sputnik on Saturday.
“It is clear that Riyadh plays a dominant role in the region, but Qatar gets an advantage by enhancing its armed forces due to the acquisition of Russian S-400 systems. Therefore, Saudi Arabia’s tension is understandable.”