Rupture in Arab ties: Impact on Qatar economy

A man buys water at a shop in the Qatari capital of Doha, June 5, 2017. (Photo by AFP)

Saudi Arabia has shepherded some of its regional allies in severing diplomatic ties with Qatar and blocking routes leading to the Persian Gulf littoral country. That has forced the Qatari government and populace to start taking precautions.

The cutting of ties by Saudi Arabia came on Monday and was copied by the United Arab Emirates (UAE), Bahrain, Egypt, Libya, the Maldives, the Indian Ocean island of Mauritius, and Yemen’s former government.

Qatar’s international banking was impacted on Tuesday, when some Sri Lankan banks stopped buying the Qatari riyal. They said their counterpart banks in Singapore had advised them not to accept the currency after the Saudi severance of ties. Some sources have put the damage ensuing so far from the isolation at around $11.5 billion.

Here is a look at how the rupture in the ties has or may come to affect the Qatari people and government in other ways.

Food

The volume of trade in foodstuff between Qatar on the one side and Saudi Arabia and the UAE on the other was valued at $310 million before the break-off. That included $178 million, which the latter two would export to the former in the form of vegetables.

Later on Monday, however, footage emerged showing people swarming shops to horde foodstuff as the country started to feel the pinch.

Iran has, in the meantime, announced readiness to make up for the short supply in the form of immediate exports to Qatar.

Qatar Airways

The world’s flagship airline has so far lost as many as 828 weekly flights to and from those imposing the embargoes. These include 370 flights leaving for or arriving from the UAE, and 324 to or from Saudi Arabia. The Qatar Airways’ flights would have also frequented Cairo and Alexandria in Egypt 54 times a week.

A picture taken on June 5, 2017 shows a man walking past the Qatar Airways branch in the Saudi capital, Riyadh, after it suspended all flights to Saudi Arabia following a severing of relations between major Persian Gulf states and gas-rich Qatar. (By AFP)

The Emirates airline now looks poised to take over from the carrier in terms of earnings, quality, and service.

As of Tuesday, the Iranian airspace was expected to host the flights run by Qatar Airways, which would have to detour the sanctioning countries, Iran’s Fars News Agency reported.

It said Iran’s Civil Aviation Organization would be issuing the permit at the request of airlines and pertinent countries, and added that it was holding meetings to study how to proceed to authorize Qatar Airways to use Iranian skies.

Oil and fuel

Qatar used to take in most of its fuel from Bahrain. The severance shot up both oil and fuel prices as it forced down Qatari stocks.

The crude hit a low on Tuesday, but fuel rates stayed high as the commodity threatens to run scarce.

One thing Doha would not have to worry about, though, is gas, given the fact that it shares the world’s largest gas reserves with Iran.

The job market

The Qatari job market, which enlists hundreds of thousands of Egyptians, might have to do without them as well as people of the many other nationalities, who either hail from the sanctioning countries or would have stopped over in them on their way to Qatar.

Also on Tuesday, the Philippine government expressed concern over the break-off, saying it might have “ripple effects” on the Filipinos working overseas.

The World Cup

Qatar’s efforts to prepare for the hosting of World Cup 2020 as it has been nominated to do so also stands to suffer from the isolation as it has complicated the flow of manpower and construction materials into the country.