BEIRUT • One of the triggers behind Arab states' dramatic decision to cut ties with Qatar apparently has to do with up to US$1 billion (S$1.38 billion) that the emirate paid to release members of its royal family who were kidnapped in Iraq, the Financial Times reported.
Quoting people involved in the hostage deal, the report said the money was used to pay off an Al-Qaeda affiliate fighting in Syria and Iranian security officials to secure the release of 26 members of a Qatari falconry party in southern Iraq and about 50 militants captured in Syria.
The deal, concluded in April, heightened concerns among Qatar's neighbours about its role in a region plagued by conflict and bitter rivalries. And on Monday, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain cut off diplomatic ties and transport links to Qatar, alleging the country fuels extremism and terrorism.
"The ransom payments are the straw that broke the camel's back," said one Gulf observer.
Doha denies it backs terrorist groups and dismissed the blockade by its neighbours as "founded on allegations that have no basis in fact".
Qatar, a United States ally that hosts an American military base, has long drawn the ire of its neighbours, who consider the small but wealthy emirate an irritating regional maverick.
It touts itself as a neutral player that can act as an intermediary in regional conflicts but critics, notably Saudi Arabia and the UAE, allege that it also uses such interventions to play both sides and fund radical Islamist groups.
And they say the hostage deal was further evidence of that role.
Around US$700 million was paid both to Iranian figures and the regional Shi'ite militias they support, according to regional government officials who spoke to FT.
They added that US$200 million to US$300 million went to Islamist groups in Syria, most of that to the Al-Qaeda-linked Tahrir al-Sham.
Those who spoke to the FT said the deal highlighted how Qatar has allegedly used hostage payments to bankroll extremists in Syria. But to its Gulf neighbours, the biggest issue is likely to be the fact that Doha could have paid off their main regional rival, Iran, which they accuse of fuelling conflicts in the Arab world.
The Qataris were kidnapped in December 2015 by an Iranian- backed Iraqi Shi'ite militia, known as Kata'eb Hizbollah.
Two regional diplomats said they believed one of the Iraqi group's motives for the kidnapping was to give Lebanese militant group Hizbollah and Iran leverage to negotiate the release of Shi'ite fighters kidnapped by Tahrir al-Sham in Syria.
The hostage transaction was also linked to a separate agreement to facilitate the evacuation of four towns in Syria, said Syrian rebels and diplomats.
One Western diplomat said the arrangement provided Qatar the "cover" to finance the hostage deal. "Iran and Qatar had long been looking for a cover to do this deal, and they finally found it," he said.