Iran Sees Economic Opportunities in Qatar Amid Arab Rift

As Iranian officials are calling for dialogue to resolve a recent spat between Qatar on the one hand and Saudi Arabia and its regional allies on the other, Iranian businesses expect a boom, albeit short-lived, in the food and aviation sector as a result of the blockade imposed on the Persian Gulf peninsular monarchy by Riyadh, Abu Dhabi, Manama and Cairo.

The severance of ties as of Monday came after Riyadh accused Doha of backing “terrorists”. Qatar has denied the allegations.

As a consequence, Saudi Arabia and its regional allies cut all land, sea and air links to the gas-rich Qatar, which relies on its Persian Gulf neighbors for a majority of its consumer product supplies.

Trucks carrying food to Qatar were reportedly lining up across the border on Monday, as its residents began swarming grocery stores. Qatari media reported that some stores had begun seeing their shelves empty over fears that the crisis could see groceries run out of products.

“Qatar imports $4-5 billion worth of food annually from Saudi Arabia and the UAE. It is considered a rich country. This is while Iran has great potential regarding supply of food and other products needed in Qatar,” says Mohammad Lahouti, the head of Iran Export Confederation.

“Qatar is adjacent to Iran. We can ship commodities to the country via sea from our three main ports of Bandar Abbas, Bandar Lengeh and Bushehr in less than 12 hours,” he was quoted as saying by Mehr News Agency on Tuesday.

Masoud Polmeh, chairman of the Shipping Association of Iran, says the body is ready to establish shipping services to Qatar from the southern Iranian ports, Bushehr in particular.

“We can say with confidence that we are able to supply 100% of the food demand in Qatar,” he told Iran Chamber of Commerce, Industries, Mines and Agriculture’s news portal on Tuesday.

Iran’s trade relations with Qatar are not impressive at present. The latest annual trade data released by the Trade Promotion Organization of Iran show Iran exported $146.6 million worth of goods, including carpet, cement, steel pipes, beams and industrial oil to Qatar in the Iranian year ending March 2016.  

The Arab state, in turn, exported commodities worth $3.1 million, including vehicles, steel products and pharmaceuticals to Iran during the period.

Like many Arab governments, Qatar has a history of viewing Iran as an arch-rival in the region. In 2016, when angry protesters reacted to the execution without due process of a prominent Shia cleric in Saudi Arabia by attacking the Saudi Embassy in Tehran, Doha recalled its ambassador to Iran.

But in the past few months, Qatari Emir Sheikh Tamim bin Hamad Al-Thani has distanced his country from Riyadh by warming up to Tehran.

In a conversation with Iranian President Hassan Rouhani last week, the Qatari emir congratulated Rouhani over his reelection, saying he wanted bilateral ties to be stronger than before.

“We seek special and unique relations with Iran,” he stressed.

Notably, Qatar and Iran share the world’s largest gas field, South Pars, in the Persian Gulf.

  Air Transport Opportunities

Qatar’s rift with the Arab states has also created opportunities for Iran in the air sector, as one of the world’s largest carriers Qatar Airways faces flight restrictions after the tension.

The diplomatic rift has wreaked havoc with airlines in the region, with major long-haul carriers such as Dubai’s Emirates suspending flights, leaving many passengers stranded at airports in the Persian Gulf, Aljazeera reported.

This is while Iran expects a rise in the use of its airspace by the Doha-based Qatar Airways, which operates a long range of international flights to and from North Africa, Europe and Americas.

Ebrahim Moradi, a board member at Iran Airports Company, said the company estimates daily addition of 100-150 Qatar Airways flights over Iran’s airspace.

“This, of course, depends on the policy of Qatar’s aviation authorities,” he was quoted as saying by ILNA.

The airline might decide to cancel North African flights, or share codes with airlines such as British Airways, which is allowed to pass Bahrain’s airspace, as taking the Iran path might add one to one and a half hours to flight durations.

The Qatari carrier already uses Iran’s airspace for European and Atlantic destinations.

Meanwhile, Dubai’s Emirates and Abu Dhabi’s Etihad Airways have suspended all flights to and from Doha, starting Tuesday morning.

FlyDubai, a Dubai-based budget carrier, said it is cancelling its flights to Qatar beginning on Tuesday. Air Arabia, a Sharjah-based carrier, and Saudi Arabian Airlines (Saudia), have also cancelled all flights to Qatar.

“Qatar Airways will of course be severely impacted on key regional routes, especially to cities like Dubai. But then so to with other [P]GCC/Arab carriers that also fly into Doha,” Saj Ahmad, chief analyst at Dubai-based Strategic Aero Research, told Financial Tribune.

“The fallout of this spat is far from clear. This has the potency to be a protracted affair. While Qatar Airways can look to its more profitable long haul operations to offset the costs of losing or standing down regional flights, the cost of parking airplanes, crew and other services will not be cheap.”

Ahmad doubts the new developments will put Qatar closer to Iran as the Arab nation might want to prove to its neighbors that it is independent of Iran and instead will work to allay fears of a Qatar-Iran alliance.

“Some travelers may opt to fly to Qatar via Iran, depending on their departure point and the costs incurred. So there’s definitely an opportunity for Iran to step in,” Ahmad said. “The question now is whether this stalemate between [P]GCC neighboring countries is short- or long-term. At this point, it is all very opaque.”