The ball is in Qatar’s court now – What will it do?
As of today, it’s been a year and a half since Saudi, the UAE, Bahrain and non-GCC member Egypt cut ties with Qatar, under accusations of terrorism.
It’s safe to say that these 18 months weren’t easy for the small GCC nation, and the numbers have proven it.
Now, things could possibly change, as Saudi has extended an olive branch of sorts, despite a recent shocking move by Qatar.
Saudi wants to rebuild bridges?
Saudi King Salman has invited Qatar’s Emir Sheikh Tamim bin Hamad Al Thani to attend the upcoming GCC summit set to take place in Riyadh on December 9, according to the official Qatar News Agency (QNA).
The invitation was delivered by the Bahraini secretary general of the GCC, Abdullatif bin Rashid Al Zayani, during a reception by Qatar’s Minister of State for Foreign Affairs Sultan bin Saad Al Muraikhi.
At the moment, Qatar has not given an official response whether Sheikh Tamim would oblige King Salman’s invitation.
At last year’s GCC summit, and directly 6 months after the heated feud, Saudi Arabia, the UAE and Bahrain sent ministers or deputy prime ministers, rather than heads of state. Kuwait had been acting as a mediator between the feuding sides.
Today, tempers seems to have calmed, and Saudi, one of the countries that had instigated this boycott, could be looking to reach an understanding – their accusations of Qatar still unwavering, however.
Saudi is extending more than invitations, however.
In late October, Crown Prince Mohammad Bin Salman (MBS) praised Qatar’s economy during the Future Investment Initiative (FII) conference in Riyadh, in a plot-twist of a statement media outlets such as Bloomberg described as a “surprising shift.”
“Qatar, despite the differences we have, has a great economy and they will be doing a lot in the next five years,” MBS had said.
We could very well be seeing the early seeds of a diplomacy and understanding. The US has also been pushing for a truce between the feuding parties.
The question is, however, will Qatar respond in kind?
Qatar pulls out of OPEC
It is worthy of note that King Salman’s invitation to Qatar’s Sheikh Tamim was extended a day after Qatar had declared it would be leaving OPEC by January 2019, after 57 years of membership.
While Qatar maintained this decision was not motivated by political incentives, many say this is a move to target Saudi and its allies, Zawya explains.
This is especially glaring given the fact that Qatar’s oil production represents just 2% of OPEC’s total oil production, which further underlines the likeliness of this being a political move.
“Qatar is the cartel’s 11th largest oil producer, producing only 600,000 barrels of oil per day,” OilPrice.com said. “In context, Saudi Arabia just reached a historic record of pumping 11 million bpd. Moreover, it’s been gas that has made Qatar, per capita, one of the richest countries in the world, not its oil exports.”
The oil price aggregator site noted: “Natural gas is the cornerstone of Qatar’s economy and accounts for more than 70% of total government revenue, more than 60% of gross domestic product, and roughly 85% of export earnings.”
Saad Al-Kaabi, the country’s energy minister, told a news conference on Monday that the move to leave OPEC was related to its liquefied natural gas (LNG) ambitions, which should be taken at face value, OilPrice.com highlighted.
Qatar will need to heed Saudi’s reconciliatory actions
While Saudi’s goals are not entirely clear at the moment, Qatar will need to accept the Kingdom’s diplomatic gestures, as the embargo has caused devastation to its economy.
“Regardless of the Qatari media’s promotion of Doha’s ability to confront the Gulf and Arab boycott, now in its second year, economic indicators by international organisations, and even some Qatari entities such as Qatar Airways, show it is the other way round,” Gulf News said.
According to Capital Economics, in the first six months of the blockade, visitors to Qatar dropped by 20%, flights into Doha by 25%, and Qatar Airways flights by 20%, AFP noted.
It estimated loss in tourism revenue during the same period at $600 million, and real estate prices fell by 10%, AFP continued.
As of April, Qatar Airways revealed it had lost access to 18 cities in Saudi Arabia, UAE, Egypt and Bahrain due to the blockade.
According to an extensive report by Gulf News: “The economy is practically depleted and key financial and banking indicators are falling to worrisome levels. To begin with, Standard & Poor’s, the influential credit rating agency, has maintained a negative outlook on Qatar’s economic future due to the continued use of its huge external financial assets to ease the impact of the boycott.”
According to the IMF, deposits held by non-resident customers declined significantly by 24% since the beginning of the boycott, which have deprived Qatari banks of nearly 40% of foreign-owned funds. The level of foreign exchange reserves held by the central bank also declined, by 17% in the same period.
Qatar needs to reconsider its stance, and heed Saudi’s plea. If this embargo continues, the country will be in for a very difficult time. Leaving OPEC will be seen by many as a political move, and is not likely to improve things anytime soon.