Qatar’s Plucky Plan to Outlast the Saudi Embargo

[frigidmagi]

bloomberg

For a moment, it looked like Saudi Arabia might be easing up on its estranged neighbor Qatar. On Aug. 17, King Salman bin Abdul-Aziz Al Saud Salman, the Saudi monarch, lifted restrictions on Qataris who want to take part in the annual hajj pilgrimage beginning on Aug. 30. The king even offered to fly Qataris to Mecca on Saudi airplanes as his guests. It was the Saudis’ warmest action toward Qatar since June, when the kingdom and three of its Arab allies imposed an embargo against the tiny emirate to punish it for allegedly supporting Islamic insurgents.

The hajj gesture, however, was part of a double-move against Qatar’s ruling family that’s only made the bad blood worse. The Saudis credited the “mediation” to an elderly descendant of Qatar’s founder, a royal cousin plucked from obscurity for surprise audiences with King Salman and his powerful son, Crown Prince Mohammed bin Salman. A photo distributed by the Saudi Press Agency showed the beaming Saudi king holding hands with Sheikh Abdullah Bin Ali Al Thani, whose brother was overthrown as Qatar’s first ruler in 1972 by the grandfather of Qatar’s current emir. “That will be viewed as intensely provocative in Doha,” Qatar’s capital, says Kristian Ulrichsen of Rice University’s Baker Institute for Public Policy. “They’re clearly trying to present this guy as an alternative to Qatar’s ruling elite.”

Qatar’s 37-year-old emir, Sheikh Tamim Bin Hamad Al Thani, has survived his frenemies’ initial siege and is riding a surge in domestic nationalism as Qataris dig in for a long standoff. Panic buying in grocery stores, driven by whispered fears of a coup or invasion, made headlines early on. Neither materialized, giving Sheikh Tamim time to cement friendships in the West with big-ticket purchases of U.S. military jets, Italian naval ships, and the contract of Brazilian superstar Neymar, the world’s most expensive soccer player, which was acquired on Aug. 2 by the Qatari-owned club Paris Saint-Germain. Qatar even flirted with buying a stake in American Airlines Inc.

Top diplomats from Europe and the U.S. have paraded through Doha to reassure Sheikh Tamim, who controls the world’s third-largest reserves of natural gas. Turkey and Iran have stepped in to replenish Qatari warehouses with construction supplies and restock store shelves with parsley, milk, and other popular goods, foiling the embargo imposed by Saudi Arabia and its partners, Bahrain, Egypt, and the United Arab Emirates. In early July, Qatar signed a new counterterrorism pact with the U.S., belying the Saudi bloc’s accusations of extremism and undermining President Trump’s initial support for the blockaders.

Qatar’s banks are looking east for fresh financing, according to people familiar with the matter. As Persian Gulf lenders have pulled out, the country’s foreign deposits have dropped. To fill that gap, the emirate has told its banks to target investors in Asia. Qatar Islamic Bank, the country’s second-biggest bank, recently raised financing in yen and Australian dollars through private placements, one of the people says. The bank wouldn’t comment.
“The problem we’re facing is counterrevolution”

Regional isolation is nothing new for Qatar, and Sheikh Tamim, the world’s third-youngest head of state, is taking no chances. He assumed the throne in 2013 when his father, Sheikh Hamad bin Khalifa Al Thani, at 61, abdicated in the first voluntary transfer of power in Qatar’s history. Sheikh Hamad had survived a 1996 coup attempt by some Saudis. That was followed by repeated diplomatic clashes, including over Al Jazeera, the TV news channel he founded that’s roiled the Middle East with reporting from Tangier to Tel Aviv to Tehran. Shutting it down is one of the Saudi demands for lifting the embargo.

Qatar’s relations with Saudi Arabia, the U.A.E., and Egypt cratered after the Arab Spring, when the Saudi bloc accused Qatar of destabilizing the region through its support of the Muslim Brotherhood. Sheikh Tamim has blamed the Saudi bloc for exaggerating terrorism concerns to justify their own repression. “The problem we’re facing is counterrevolution,” he told an interviewer at Georgetown University two years ago in one of his few public comments about the failure of the Arab Spring. “We believe that the entire world, including our region, suffers from problems such as poverty, tyranny, and occupation. This suffering, which is one of the most important root causes of terrorism, also needs to be addressed.”
Qatar’s troubles are essentially tribal in origin. Roughly the size of Connecticut, the Qatari peninsula was unified in the late 19th century by Sheikh Tamim’s forebear, Jassim bin Mohammed Al Thani, as a national home for nomads and exiles. In a poem, he rhapsodized that Qatar was the “Kaaba of the dispossessed,” a sanctuary for wanderers just as Mecca’s grand mosque, with its famous black cube, or Kaaba, was a refuge for Muslim pilgrims. Unmoved, the rulers of Bahrain and Abu Dhabi accused Jassim of harboring Bedouin outlaws. They fought a series of pitched battles, culminating in what’s known as Qatar’s War of Independence in 1867-68, when Jassim’s men sacked Bahrain, destroyed 60 ships, and killed more than 1,000 people.

Substitute offshore oil and gas for Qatar’s ancient pearl-diving industry, and U.S. fighter jets for British muskets, and little has changed. In 1974, three years after Qatar gained its independence from Britain, Saudi Arabia and the U.A.E. secretly redrew their boundary lines south of Qatar in a deal that erased Qatar’s border with the U.A.E. and gave Saudi Arabia rights to a 14 billion-barrel oil field along the Saudi-U.A.E. border.

Qatar did, however, retain its rights to the massive North Field gas deposit, the largest in the world, which it shares with Iran. That’s insulated Qatar from the drop in oil prices that’s weakened its oil-exporting Arab neighbors. Saudi Arabia’s economy is expected to grow just 0.5 percent next year, and the U.A.E.’s is predicted to expand 2 percent. Economists polled by Bloomberg News say Qatar has absorbed the embargo’s economic shock; they expect its gross domestic product growth to return to previously forecast rates of about 3.2 percent in 2018—the highest in the six-nation Gulf Cooperation Council.

Sheikh Tamim is hoping to use the blockade to Qatar’s long-term advantage by increasing its self-reliance. “We need diligence, creativity, independent thinking, constructive initiatives, and interest in academic achievement in all disciplines,” he told the nation in a speech last month. “Our goals are realistic and practical, based on the continued determination that Qataris have shown during this crisis, lest it be a passing wave of enthusiasm instead of a basis for further awareness in building the homeland.” —With Zainab Fattah and Archana Narayanan