News analysis

Qatar unbowed but feeling effects of Saudi-led pressure

Standing firm is costly - trade has plunged and it reportedly injected $51b into economy

Jonathan Eyal The Emir of Qatar, who has just concluded a trip to South-east Asia, including a state visit to Singapore, has every reason to walk tall on the international stage.

Sheikh Tamim bin Hamad Al Thani rules one of the Arab world's smallest and most vulnerable states, a country with only 2.2 million residents, out of whom not more than a tenth are actual nationals. But he makes up for this with resilience: After months of surviving intense political and economic pressure from its immediate neighbours, Qatar remains unbowed.

Still, the confrontation between Qatar and its Arab neighbours, which could drag on for years to come, is inflicting a heavy toll on the Qatari economy. And the absence of any mechanism for dialogue is worrying in a region which is already highly volatile.

Saudi Arabia, the region's pre-eminent power, has long resented Qatar's determination to conduct its own independent foreign policy, its warmer relations with Iran - regarded by the Saudis as their biggest rival - and its funding of the Al Jazeera TV network, which often presented Saudi Arabia in a poor light.

Saudi Arabia, Bahrain, the United Arab Emirates and Egypt suddenly severed diplomatic and trade links with Qatar on June 5. The significance of this timing was never explained, but all four accused the Emir's government of supporting "extremism and terrorism". The cut-off in trade links was expected to hit Qatar hard, since the country's vital logical supply routes as well as 90 per cent of its food depend on overland access through Saudi territory.

The expectation was it would only be a matter of weeks before Qatar caved in to a series of tough demands, which include the closure of Al Jazeera's broadcasts and the immediate severance of ties with Iran.

But precisely the opposite has happened. Qatar airlifts food - including live animals and dairy products - from Turkey, Iran and India; the closure of Saudi airspace to civilian flights by national carrier Qatar Airways paradoxically meant a greater capacity for airlifting necessities opened up.

A painting of Sheikh Tamim in a swimming pool at Qatar University.
A painting of Sheikh Tamim in a swimming pool at Qatar University. PHOTO: AGENCE FRANCE-PRESSE

More significantly, Qatari society stood up in defiance. The face of Emir Tamim became the symbol of national defiance, affixed to every building or traded item.

Nevertheless, Qatari officials are now grudgingly admitting that standing up to their neighbours doesn't come cheap. The country's trade plummeted by 40 per cent in the first month after the Saudi-led embargo started, and international rating agency Moody's claimed last month that Qatar had to inject US$38.5 billion (S$51.2 billion) into its economy since the crisis erupted.

Mr Ali Shareef Al-Emadi, Qatar's Finance Minister, also revealed this week that a further US$20 billion worth of funds belonging to the Qatar Investment Authority, the country's sovereign wealth fund, is being repatriated to create a "buffer" and provide further liquidity in the banking system.

"We have enough liquid assets," Mr Al-Emadi told investors with some justification, since Qatar's wealth fund has around US$300 billion under management.

Still, the suspicion is that Saudi Arabia and its allies are settling down for a long financial confrontation with Qatar, with the aim of derailing its preparations to host the 2022 Fifa World Cup, a high-prestige project which, among other things, depends on overland imports of construction materials.

And the confrontation is getting worse. Having confined themselves to just punitive financial measures, the Saudi-led front now appears to be encouraging domestic opposition to Emir Tamim, in the shape of a distant member of his ruling family, now touted as a potential future ruler.

Such moves have prompted Qatar's Foreign Minister to accuse the Saudis of encouraging tribal divisions which could drag the Gulf "back to the dark ages".

Emir Tamim's overseas visits are a good way for the Qataris to indicate that they have no intention of being cowed. But what the Qataris really hope for is mediation from the United States, the only power able to halt this spiralling confrontation.

And at least for now, Washington is paralysed by divisions between President Donald Trump, who tends to support the Saudi position, and Secretary of State Rex Tillerson, who tried to mediate, only to see his entire mission undermined by one of Mr Trump's famously dismissive tweets.

A version of this article appeared in the print edition of The Straits Times on October 21, 2017, with the headline 'Qatar unbowed but feeling effects of Saudi-led pressure'. Print Edition | Subscribe