Late night calls fail to ease Arabian Cold War

The long-simmering tensions between Qatar and its GCC neighbours, which burst into a regional crisis in June 2017, continue to place regional businesses in a precarious position. While it may appear the crisis has reached a stalemate, subtle shifts throughout the summer months indicate a détente may be far from being reached.

 The quartet of Arab nations – namely the United Arab Emirates, Saudi Arabia, Bahrain, and Egypt – leading the blockade against Qatar have said that ‘peace talks’ called for by the international community, including the US and the UK, can only proceed once the countries’ list of demands regarding Qatar’s support for extremist groups is fulfilled. The fear is that the Arabian Peninsula, which is key for the global economy, has entered a period of cold war.

Origins of the crisis

For over a decade, Qatar has been out of step with its GCC partners. It has been criticised for its alleged support of extremist Islamist movements that have threatened the security and stability of nations across the region.

Back in 2014, making some of the same complaints that resurfaced in this year’s crisis, Saudi Arabia, the UAE and Bahrain withdrew their ambassadors from Qatar. They objected to Qatar’s support for the Muslim Brotherhood and other regional dissidents and wanted to end critical and incendiary coverage by Qatar’s Al Jazeera broadcaster.

The conflict in Syria forced the two sides further apart. In a move which brought Riyadh and Abu Dhabi closer together, Qatar aligned itself with Turkey. While all these parties supported efforts to topple the regime of President Bashar al-Assad, they had divergent approaches and supported different rebel groups.

In June 2017, an article in the Financial Times reported that Qatar had paid a ransom of $1bn to militant groups fighting in Syria two months earlier, to release members of its royal family who were kidnapped while hunting in Iraq. The allegation was that $700m were paid to Iranian-backed Shia militias and $300m were paid to Islamic groups in Syria with links to al-Qaeda. The payment was the final straw for the GCC countries, who interpreted it as Qatari willingness to deal with and support terrorist groups.

As a result, in June 2017, Saudi Arabia, Egypt, the United Arab Emirates and Bahrain, took the extraordinary step of cutting all transport, trade, and diplomatic ties to Qatar.

International concern

The reaction from the global community was of shock as they scrambled to implement a set of peace talks. The concern was that the region, already destabilised with the war in Syria and northern Iraq, was moving towards further conflict.

Confused intervention from Trump

At first, US President Donald Trump offered “to help the parties resolve their differences, including a meeting at the White House if necessary.” However, US intervention became confused when on the 10th of June, hours after Secretary of State Rex Tillerson urged Saudi Arabia and its allies to end the blockade; Trump accused Qatar of having “historically been a funder of terrorism at a very high-level.”

The Turkish president, Recep (pronounced “Reh-djeb”) Tayyip Erdogan, while claiming to be neutral on the dispute, fast-tracked the deployment of troops to Qatar in accordance with a pact signed previously between the two nations. Iran offered Qatar the use of three of its ports to import supplies.

European intervention fails

The British Prime Minister, Theresa May, and Foreign Minister Boris Johnson, both offered for talks to be held in London. In a similar move the German foreign minister, representing the EU, offered to broker talks in Europe. Despite these calls for a truce and mediation, not all sides were willing to engage.

While the Qatari Foreign Minister, Sheikh Mohammed bin Abdulrahman al-Thani, went on the record saying Qatar was willing to hold talks to avoid an escalation of tensions, there were various disclosures from officials in KSA and UAE revealing Qatar’s collaborations with extremist groups like Al-Qaeda in Syria, as well as against its own neighbours. Adel al-Jubeir, the Saudi Arabian Foreign Minister, said Gulf states could settle the dispute themselves. “We have not asked for mediation; we believe this issue can be dealt with among the states of the Gulf Cooperation Council.”

Long summer of tension

By the end of June, attempts of mediation and talks appeared exhausted while the commercial and personal impacts were taking shape. As the crisis entered July 2017, Gulf nationals were no longer able to travel to and from Qatar. The blockade broke up families and business ties, and dealt a huge blow to cross-border investments.

The regional economy, already hit with lower oil prices, has had to adjust to the embargo which has caused uncertainty and confusion by pushing up costs, and reducing inward regional investment. The UAE dismissed a report in the Washington Post claiming the country orchestrated a hacking of Qatar’s official media

Escalation of media war

The broadcast and social media war escalated with Sky News Arabia running a documentary that claimed to reveal Doha’s links to the terrorist attacks of September 11th, 2001 on the US. On social media, rumours spread that Saudi Arabia would punish anyone wearing an FC Barcelona shirt because Qatar Airways sponsored the Spanish football team. Another rumour was that an unofficial blacklist of some of London’s top hotels including Claridge’s, the Connaught and the Berkeley, with links to Qatar, was being shared on social media. The message was to boycott these establishments.

Banking and Trade

In August, Qatar lodged an official complaint with the World Trade Organization (WTO) accusing the four Arab states of imposing an illegal siege. Media reported that Abu Dhabi was unofficially boycotting Western banks with significant Qatari shareholdings. The message sent to bankers such as Credit Suisse, Deutsche Bank and Barclays was that they were unlikely to win significant mandates in the UAE if they continued to hold large shareholdings in the Qatari sovereign wealth fund or continued to do business in Qatar.

On the 30th of August, the International Monetary Fund cut its growth forecast for Qatar. It expected non-hydrocarbon growth would fall from 5.6 per cent in 2016 to 4.6 per cent this year. The fund had been forecasting growth of 5.7 per cent in 2017.

Shifts in the geopolitical order

In August, the Qatari Foreign Ministry restored diplomatic ties with Iran and sent its ambassador back to Tehran. In the same month, Saudi Arabia announced that it planned to reopen the northern Arar border crossing with Iraq which had closed in 1990. This announcement followed soon after a meeting in Jeddah between Muqtada al-Sadr, the powerful Iraqi Shia cleric, and Crown Prince Mohammed bin Salman of Saudi Arabia.

These actions indicate a realignment of the traditional axis of power within the Gulf region. The opening of the northern Saudi border along with the al-Sadr meeting are interpreted as Riyadh seeking to bolster its influence in Iraq and counter the role of Iran, its regional rival. The move by Qatar puts it firmly on the wrong side of the Saudi-led campaign in Yemen against Iran-allied Houthi rebels.

Latest developments

Over the past weekend, news broke that Crown Prince Mohammed bin Salman and Sheikh Tamim bin Hamad al-Thani spoke over the phone, following a joint press conference at the White House by the Emir of Kuwait, Sheikh Sabah al-Ahmad al-Jaber al-Sabah, and President Donal Trump that Qatar was ready to return to the negotiating table.

While there was a moment of optimism over prospects that the crisis was on its way to being resolved, conflicting news reports from Qatar about the motivations for the call prompted Saudi Arabia to quickly announce the suspension of all talks with Qatar “until a clear statement explaining its position is made public and that its public statements are in conformity with its obligations.”

Wider tensions complicate the situation

Since the beginning of September 2017, the region has witnessed a rapid change in the accepted alliances and orders. Over a short period, tensions have increased. These geopolitical shifts feed into the wider middle-east tensions in Syria, Iraq and Yemen, and make the situation more complicated.

The effect of the embargo has been to drive a wedge into the US-backed Sunni alliance against Da’esh terrorists and to reinforce Russian and Iranian collaboration in the region.

Qatar has been able to withstand the immediate effects of the blockade by re-sourcing supplies from Iran and Turkey. The longer it holds out, the greater the confusion of the consequences and the outcome.