Counting the Cost of the Qatar-(P)GCC Crisis

On June 5, several (Persian) Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates and Bahrain severed diplomatic ties and cut off sea and air links with Qatar, accusing it of supporting “extremism”.

Qatar may have been isolated economically by its Persian Gulf Arab neighbors, but its financial markets have stabilized after an initial week of losses, Aljazeera reported.

The government says it has the resources to cope with the regional sanctions. And Qatar’s finance minister is warning that if Qatar loses money, the countries behind the embargo will lose money too.

Credit rating agency Standard and Poor’s says Qatari banks are strong enough to hold on, even if all the Persian Gulf money—and more—is pulled out. And it’s not just Qatari banks, the UAE’s main lenders could also lose out from a slowdown in business coming in from Qatar.

Qatar says gas exports, its top export earner, are on track, though importers are expected to push for better deals. And these gas exports matter for the UAE, too. The undersea Dolphin Energy pipeline, which supplies the UAE and Oman with about 56 million cubic meters of Qatari natural gas daily, is still operating despite the diplomatic tension.

Qatar’s economy minister, Ahmed bin Jassim al Thani, told Al Jazeera that the government is already proving it can keep the country running.

“Qatar’s economy is strong and resilient,” says al Thani. According to economic indicators, “Qatar’s economy is the 18th-most competitive in the world—the second in microeconomic efficiency,” he says. “Looking at the diversification of the economy, 61% come from non-oil and gas. Our trade with the world is $330 billion and it is a diversified economy that’s supported by the Qatar Vision 2030.”

Asked about the blockade, he says, “we have a clear plan and know exactly how to deal with it. More than this, we built a strategic reserve for food or other materials for our projects. That’s why we were ready to deal with such a situation—immediately within hours,” says al Thani.

Qatar Airways has been forced to scrap dozens of daily flights to Saudi Arabia, UAE, Bahrain and Egypt. It has to take circuitous routes to avoid large parts of the Arabian Peninsula it’s barred from flying over. But Qatar Airways CEO Akbar al-Baker says the airline sees opportunities in expanding to other untapped markets.