A few weeks ago we shed a little bit of light on the current diplomatic crisis in Qatar. It has been essentially blockaded by its neighbouring countries on the grounds of supposedly promoting terrorism and destabilizing the Middle East. This has made it slightly more complicated for Qatar to import and export goods, but as we learned from Qatar’s finance minister, there was no need to worry too much. Or is there?
The countries opposing Qatar are Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain. They made a list of demands that aim at making Qatar work for better stability in the region. However, the blockaded state has refused to comply, stating that the demands may constitute a violation of international law, reports CNN. In retaliation, the four countries which cut ties with Qatar have showed a determination to step up their measures and increase pressure on Qatar, though the meaning of this is yet unclear.
Qatar’s powerful economy relies heavily on foreign investment and international business partnerships. To hurt Qatar, the four opposing countries may resort to meddling in these relations, trying to draw allies away from Qatar. However, despite a recent plunge of stocks in Qatar, generally all international companies have kept their activities going within Qatar, seemingly not bothered by the blockade. Countries like France are even improving their relations with Qatar as we speak; not to mention that Qatar has the support of the United States.
A different approach to pressuring Qatar might be to exclude it from the Gulf Cooperation Council, an important regional organization somewhat similar to the European Union in its allowance of free movement within member states and policy coordination. The expulsion of Qatar might not be possible, however, because Kuweit, one of the members whose agreement is required, has actually taken up the position of a mediator without picking sides in this conflict. They would likely not want to vote against Qatar. If it happens, however, it could have a strong negative impact on Qatar’s economy.
As we established before, Qatar has a massive GDP and even more in investment abroad, so its economy is quite powerful. However, they cannot keep this up forever – if the crisis continues, and if the opposing four countries take more serious measures against Qatar, even an economy as strong as this could give in.
If you are interested in stocks, especially in terms of fuels, or the stability of the Middle East in general, we urge you to follow the events surrounding Qatar’s crisis closely.
