Troubled Waters: GCC Internal Schisms In The Spotlight Again

Qatar’s shunning of Saudi Arabia’s foreign policy paradigm has again put it in a tricky situation with a host of Arab states cutting diplomatic ties. The biggest impact looks to be on travel restrictions which will damage its business environment. Will it acquiesce?

The tenuous relations binding the six Gulf Cooperation Council (GCC) members together have again frayed, with Saudi Arabia, the UAE and Bahrain cutting diplomatic ties with Qatar. Strict economic and logistical restrictions have been imposed which will put considerable pressure on the country’s population and leadership. But hydrocarbon exports which form the backbone of the Qatari economy are set to continue with limited disruption (see p4 & p6).

Saudi Arabia, the UAE and Bahrain along with Egypt, Yemen, Libya’s non-recognized eastern government in Baida, and the Maldives severed diplomatic relations with Qatar on 5 June. Other countries have subsequently joined the anti-Qatar coalition. The Saudis also closed the Saudi-Qatar land border, banned Qatar Airways from their airspace, and suspended their domestic airlines’ flights to Doha. Qatari vessels have been banned from their ports and Qatar has been ejected from the Saudi-led military operations in Yemen among other restrictions.

Qatar doesn’t rely on its neighbors for imports and what it does buy there can be sourced elsewhere. But air travel and visa restrictions will make life tough for businesses with operations in Qatar and other GCC states.

Its leaders won’t want to acquiesce to the demands from Saudi Arabia and the UAE, but will be willing to make some concessions. An ambitious foreign policy is not as crucial to Emir Tamim as it was to his father and he may be willing to sacrifice some links to Islamist groups in the region, but will this be sufficient to bring Qatar back into the fold?

GCC POWER STRUGGLE

Saudi Arabia and its allies state that the measures have been taken because of Qatar’s support of Islamist groups such as Palestinian group Hamas and Egypt’s Muslim Brotherhood, in addition to Iran.

Emirati officials have taken a firmer public stance against Qatar than Saudi Arabia. Emirati Minister of State for Foreign Affairs Anwar Gargash attributed the rupture to “an accumulation over many, many years of subversive Qatari politics and support for extremism and terrorist organizations.” Saudi Foreign Minister Adel al-Jubeir meanwhile said the measures were implemented with “great pain” and that we hope that our brother Qatar will now take the right steps in order to end this crisis.”

There is no doubt that Qatar has provided considerable support to Islamist groups. Hamas has a permanent presence there as does the Taliban, and Qatar has long hosted the Muslim Brotherhood. Doha was very clear in its support for the brotherhood-backed Mursi government in Egypt prior to its ousting in July 2013.

The accusations all have a basis in fact and Saudi Arabia and the UAE especially view the Muslim Brotherhood’s rival strain of political Islam as a threat. But equally, Riyadh has had similar accusations leveled at it from multiple fronts. Saudi Arabia appears motivated to try to clamp down on its smaller neighbor’s highly vocal independent foreign policies that refuse to adhere to Riyadh’s line.

This was also the case in 2014 when Saudi Arabia, UAE and Bahrain withdrew their ambassadors for nine months. But the more punitive restrictions on air traffic and shipping were not implemented on that occasion. The decision to go straight for these measures is an indication of how determined Saudi Arabia and the UAE are to secure significant concessions this time around.

Qatar Looks Outside Of GCC For Vast Majority Of Its Imports ($Bn)

...But Within The GCC, It Looks Overwhelmingly To Saudi Arabia And UAE

SOURCE: QATAR MINISTRY OF DEVELOPMENT PLANNING & STATISTICS, MEES.

POTENTIAL CONCESSIONS

What might these be? One act would be to curtail its support for Hamas and the Muslim Brotherhood and eject members currently in Qatar from the country. This is feasible given that Qatar’s Emir Tamim has adopted a less ambitious foreign policy than his father since taking over in 2013.

Another long running bone of contention is Qatar’s Al Jazeera TV station which has often been critical of Arab autocracies. Al Jazeera has been a crucial source of soft power for Qatar since its establishment in 1996. Saudi Arabia recalled its ambassador from Doha in 2002 after the station broadcast a debate in which the kingdom’s royal family were criticized, and didn’t restore diplomatic ties until 2007 (MEES, 7 October 2002). Qatar will again be under pressure to close the station, but this would be a major step that Doha will resist.

Meanwhile, despite suspicions in Riyadh and Abu Dhabi to the contrary, the reasons that Qatar has more cordial relations with Iran are pragmatic. Iran is a militarily powerful country with which Qatar shares its most important economic resource – the North Dome gas field – and as such Doha is loath to risk antagonizing it. Qatar is certainly not going to rely on Saudi protection given that they had a skirmish in 1992 over border demarcation in which three people died. Qatar also accuses Riyadh of instigating a failed counter-coup against the previous emir in 1996.

Concern over potential military aggression from either of its neighbors was also the rationale behind Qatar’s successful wooing of the US to open up the Al-Udeid military airbase outside Doha. This is a critical element within the US Middle Eastern military infrastructure. Planes continue to launch from the airbase in support of operations in Iraq, Syria, Afghanistan and elsewhere. Some 11,000 US military personnel are stationed at the base and Qatar reasons that this is sufficient to head off any aggression from its neighbors.

Both the UAE and Saudi Arabia have flagged up Qatar’s failure to comply with promises made in 2014. Mr Jubeir says that while Qatar promised to “take measures in relation to supporting some organizations” it has failed to do so. Mr Gargash meanwhile said in an interview with CNN that as a result “clearly there is a lack of trust, so a new mediation will be much more difficult.” Both will require not just pledges, but immediate action from Doha.

Qatari Foreign Minister Muhammad bin ‘Abd al-Rahman Al Thani has damned this “foreign intervention” in Qatari affairs and defended its hosting of controversial groups. He told AFP the “Taliban representation here is done in coordination with the Americans... for peace talks.”

WHY NOW?

Despite the return of Ambassadors in November 2014 amid Qatar’s eviction of some Brotherhood members, little changed and these tensions have been simmering under the surface until now.

A confluence of events in recent weeks appears to have brought everything to a head.

Firstly, 26 members of a Qatari royal falconry party kidnapped in Iraq in 2015 were released in April following Iranian-mediated negotiations. The Financial Times reports that Qatar coughed up $1bn to secure their release, of which some $700mn reportedly went to Iran and Iranian-backed Shia fighters in Iraq, with the remainder going to Sunni militants including some linked to Al-Qa’ ida.

Then US President Donald Trump made Saudi Arabia his first official overseas trip in late May and made it clear that he was throwing his lot in with the kingdom. Riyadh appears to have been emboldened by his visit – whether justifiably so or not. It was confident that Trump would at a minimum remain neutral in any dispute – despite him stating his intention to sell Qatar “lots of beautiful military equipment…for us that means jobs and it also means great security back here.”

Shortly after the US delegation left, Qatar’s state news agency QNA reported statements purportedly by the Emir which criticized Saudi policy on a number of issues. “There is no wisdom in harboring hostility towards Iran” he was quoted as saying, along with support for Hamas and Lebanon’s Iran-backed Hizbollah.

The report provoked outrage in Saudi Arabia and the UAE, Qatar claimed QNA had been hacked and that the quotes were fake, but the damage had been done. The two countries blocked Qatari websites including QNA and Al Jazeera and have now massively upped the ante.

QATAR IMPACT

The immediate impact on Qatar was severe, as panicked residents rushed to supermarkets to stock up on goods, leaving shelves bare. But in reality, only a small proportion of Qatar’s imports are sourced from within the GCC (see chart, p2 ), and Egypt is not a major supplier. Additional goods have been re-exported to Qatar from Saudi Arabia and the UAE, but in future these can be routed through Pakistan, India or elsewhere without too much hassle.

The restrictions on air travel however are far more serious. Many foreign businesses operating in the GCC have offices in multiple cities there. The simple direct flights between Doha and Dubai, Abu Dhabi, Bahrain and cities in Saudi Arabia are now an impossibility that will cause significant headaches for these firms. Similarly, many visitors to Doha from outside the region would fly via one of the other GCC states.

Qatar Airways is also affected as it can no longer fly over Emirati, Bahraini, Egyptian or Saudi airspace and is instead having to take circuitous routes which add to journey times and increase fuel consumption.

The upshot is that businesses operating in Qatar now face considerable additional inconvenience and costs. But the interconnectivity of the GCC means that so do those in Saudi Arabia, UAE and Bahrain. The reputation of all involved is suffering.

KUWAIT, OMAN STAY ON THE SIDELINES

Kuwait and Oman have not joined their fellow GCC members in acting against Qatar – nor did they in 2014 – and Kuwait has sought to mediate between the parties. It’s highly unlikely that they will be convinced to change this stance.

Much like Qatar, both countries also refuse to adopt Saudi Arabia’s hardline stance against Iran. Kuwait especially has strong trade links to Iran, and Oman facilitated the backchannel US-Iran talks which resulted in the country’s landmark 2015 nuclear deal. But their limited foreign policy ambitions has seen them avoid Riyadh’s ire.

Despite Trump’s vocal support for the Saudi-led action against Qatar – largely through the medium of Twitter – other elements of the US administration have adopted a more reserved approach. Secretary of State Rex Tillerson said on 6 June that “We are hopeful that the parties can resolve this through dialogue, and we encourage that, that they do sit together and find a way to resolve whatever the differences are that have led to this decision.”

EXXON DIPLOMACY?

Given that this takes a more moderated stance than president Trump’s it’s impossible to ascertain exactly how the US administration will act in the coming days. But if does seek to bring about a solution through dialogue, Mr Tillerson is arguably very well placed. Through his previous career as CEO of ExxonMobil he will have developed relationships at the highest echelons of Qatar’s government. ExxonMobil has the largest presence in Qatar’s oil and gas sector with a stake in most of its LNG trains (see table, p5 ).

TURKEY, IRAN OFFER ASSISTANCE

The current US administration may not be the stalwart ally that Qatar was hoping for, but Doha has received offers of assistance from other quarters.

Turkey has pursued similar objectives to Qatar since the “Arab Spring” began in 2011, with both supporting Islamist groups across the region. It has moved rapidly to back Qatar, passing legislation on 7 June to permit the deployment of troops to the emirate in a symbolic display of support. Turkey opened a military base in Qatar in 2014 although it only has small numbers stationed there.

The new legislation does not mean that more troops will actually be deployed, or even that Qatar supports the move, but it does demonstrate Ankara’s support for Qatar in the dispute. If Qatar opts to expel members of the Muslim Brotherhood and Hamas, there is a strong likelihood that Turkey would accept them.

Meanwhile, Iran’s Foreign Minister Mohammad Javad Zarif was quick to criticize the embargoing of Qatar. Writing on Twitter on 5 June he said “Neighbors are permanent; geography can’t be changed. Coercion is never the solution. Dialogue is imperative, especially during blessed Ramadan.”

Iran has offered the use of its ports for vessels carrying crude, has said it can send food shipments to Qatar and emphasized that Qatar Airways can use its airspace. There has therefore been speculation that Saudi Arabia’s attempts to punish Qatar for its ties to Iran could backfire and actually push Doha closer to Tehran. This seems unlikely and Qatar will be wary of accepting too much assistance from across the Gulf.

But this won’t stop Iran from making further such offers as it seeks to pry open cracks within the GCC and capitalize on the upheaval.