Qatar Isolation: The Economic Impact

Several days ago, five Arab nations severed their ties with Qatar all due to the belief that it has become a permissive environment for terrorism financing.

There had been reports that there are Qatari groups and individuals that have been financing and money laundering for different rebel groups. In spite the information given by external auditors regarding the rebel financiers, and the efforts of Qatar’s neighbors, particularly the members of the Gulf Cooperation Council (GCC) and even the US to coerce Qatar to run after these purported financiers, Qatar had allegedly been non-compliant to all their agreements.

Qatar’s Dilemma

Just some three days after the international announcement of Qatar’s Isolation, the country was already slipping from its grip on economic affluence. Being one of the wealthiest countries in the world, accountable for about a third of world wide liquefied gas supply, economic analysts argue that Qatar can sustain its bank, more so its economy.

Their main proposition, the other parts of the world it supplies with energy, being its main source of funds and its major product, extends outside the Arabic regions. But here’s the dilemma: Qatar is relatively small. This entails limited air space and geographical boundaries which means it shares ports with adjoining territories.

The problem now is even when they have tons of products to receive and they have also crates to export, Dubai’s Jebel Ali won’t let them pass. This was confirmed by Maersk, a global leading shipping company.

In just a week, several financial reports were one in saying that Qatar-related stocks have dropped as well as their exchange rate. Some fear shortage in food as probably transport to get to and from Qatar has been denied.

What we can see here is that their tourism industry has been greatly affected so far. Bookings cancelled, flights rerouted. The workforce could be thin in the long run as foreign workers are being summoned back to their country of origin. Qatar may have all the resources to stand alone, but when they are bordered by nations that forbid them entry even just a pass, how could they move about?

Neighbors’ Predicament

Of course, there is always a drawback for being isolated. However, Qatar had also been good when it comes to its diplomatic relations.

Being a wealthy country, Qatar is known to be generous in its financing programs. In fact, it would donate up to a Billion Qatari Riyal to neighbouring countries funding researches and other organizations. Its financial aid even extended up to the USA. It was also noted that Qatar donated $1M to Clinton Foundation and blessed Brooking Institution too.

Moreover, Qatar’s loss would greatly impact the supply of fuels especially liquefied gas. Qatar is the third largest supplier of energy. As such, if some countries would refrain from importing Qatari products, in an attempt to curb income therefore restricting terrorism financing, the demand for fuel from other suppliers would rise and would probably result in inflation.

It is also important to note that about 90% of Qatar’s workforce is foreign. Which means that they also help in the economic growth of other nations when these workers send remittances worldwide. Though Qatar vehemently denies the claim that they support terrorism, its isolation would upgrade this doubt to a certain degree and who knows how many more countries would want to cut relations with them?

Yes, Qatar can sustain itself but there are also foreign investors that are thinking of pulling out investments. Also, there have been international transactions for Qatar that had been put on hold following said isolation.

Thinking that several economic aspects such as transport and tourism would be challenging for Qatar, the question is, are the nations working in partnership with Qatar and are dependent on its wealth and funding ready to lose a portion of their funds?

Right now, we see Qatar sustaining what they have and they are about playing it well. Nonetheless, the uncertainty is this: are the Arab nations and others really ready to lose Qatar?

About Patricia Abrihan

Patricia has always been inspired by the witty yet innocent voice of Harper Lee’s To Kill a Mockingbird that she believes that writing is able to revolutionize ideas of society. She is a former college instructor from the Philippines and is currently a freelance writer and blogger managing her portfolio. She is open to collaboration and also loves reading and watching movies.

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