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Qatar endures economic blockade with aplomb

Anchal Vohra Doha
January 2, 2019

Eighteen months after a Saudi-led blockade was imposed, Qatar isn't just moving on but planning to move ahead. The desert country shows it has the gumption — and the money — to brook frosty relations with its neighbors.

Doha skyline with a huge image of Sheikh Tamim bin Hamad Al Thani on one of the buildings
Image: picture-alliance/MAXPPP/Kyodo

"What crisis?" That is the response whomever you speak to in Qatar about the Saudi-led blockade imposed a year and a half ago. 

Take Nasir Ali, a Qatari policeman who was picking up locally grown cucumbers in a Doha supermarket. He asked me to follow him to shelves packed with milk bottles and cheese bars produced in an air-conditioned farm 60 kilometers (37 miles) from the city. 

"So what if the Saudis and the Emiratis don't let us fly in stuff from their airspace. We will make our own. Look at these," he said, his eyes beaming with pride at the success of the desert country in producing perishable food products. "We have no dearth," he said.

Read more: What is the Qatar crisis?

Soon after the quartet of Saudi Arabia, the United Arab Emirates, Egypt and Bahrain banned trade and travel, aimed at stopping the imports that the country relied on, Qatar sped up its dairy and livestock production, prioritizing the country's food security program. Forced to reroute the imports, it unloaded them within a few months at the newly built $7.4 billion (€6.5 billion) Hamad port. 

A map showing Bahrain

The shortage, induced mainly by panic shopping, lasted just a few days. Now, Argentine beef, German caviar and Iranian vegetables — among other global goodies — are stocked to the brim. 

"We do not want Saudi products and have asked the shops to remove whatever is remaining," said Nasir Ali. 

The embargo was meant to teach a lesson to Qatar's emir for supporting the political Islamists of the Muslim Brotherhood, seen as a threat by the blockade-imposing quartet. They demanded Qatar stop helping the group and shut down its international news broadcaster Al Jazeera, which it accused of fanning the flames of the Arab Spring.

Qatar didn't capitulate and refused to give in to any of the demands. It has proved to be much more resilient than its neighbors envisaged.

Deep pockets to rely on

Powering this resilience is a feeling of being pushed around by Saudi Arabia for far too long, but mostly it is sustained by the state's overflowing coffers. Qatar dipped into its sovereign wealth fund of over $340 billion when the blockade came into place.

The confidence that it will not only survive but carry on building the $200 billion infrastructure projects for the 2022 FIFA World Cup also emanated from Qatar's natural gas reserves, the third-largest in the world. The wealth they have generated has catapulted the nation known until the 1970s for pearl-diving into one with the highest per capita income.

Read more: Is Qatar failing to deliver on its World Cup promises?

The blockade has had adverse effects, from a fall in real estate prices to losses suffered by Qatar Airways and a drop in the number of tourists from Persian Gulf countries. But 18 months into the row, Qatar seems to have bounced back. 

Angela Merkel talks with the emir of Qatar
Emir Sheikh Tamim bin Hamad Al Thani took over the throne from his father in 2013Image: dpa

In November the International Monetary Fund said Qatar has continued to grow. A month later global ratings agency S&P revised Qatar's outlook from negative to stable. 

Business opportunities

Ibrahim al-Emadi is a member of the second-richest family in Qatar and the cousin of the country's finance minister. He pulled out a dusty blue vase engraved with Arabic calligraphy and claimed it to be centuries old. "Antiques," he said, are his side business. Emadi runs a range of other businesses, dealing in hospital equipment, cybersecurity and real estate. 

"We are doing great. Nothing better could have happened to us," he said of the blockade. "I am no more a distributor: I am the agency for our imports." 

Emadi said that by cutting out the Saudi and Emirati middlemen, his businesses have earned 40 percent more profit. 

He didn't show his balance sheet but insisted: "We have complete backing of our government. They say, 'You want to do business, here, we help you with money and everything, go do it.'" 

Construction workers on the site of the Ras Abu Abud Stadium
Qatar is investing hundreds of billions of dollars in infrastructure for the 2022 World CupImage: picture-alliance/dpa/S. Babu

As Qatar asked its businessmen to take the initiative, the state cut out a hefty task for itself and strengthened its defense capabilities.

It has decided to spend tens of billions of dollars on advanced weapon systems and announced purchases of 36 American F-15s, 12 French Rafale fighters and 24 Eurofighter Typhoon combat jets. Qatar will also commence construction of a new naval base this year and plans to double its naval forces by 2025.

Bolstering defense

Filling up the stores and coughing up billions to buy weapons is one thing, building the defense forces another. Qatar has all of 300,000 Qatari citizens, a severe limitation if it wishes to enlarge its armed forces. Thus far, Doha has banked largely on soldiers recruited from other countries, such as Sudan and Pakistan. 

In an attempt to make up for the numbers, Qatar has stretched the national service program from three to 12 months and allowed women to enlist on a volunteer basis. 

"For the first time, our women will join the army," said Emadi. 

A natural gas refinery in Qatar
Qatar is rich in natural gas, rather than oil, in contrast to its neighborsImage: picture-alliance/Construction Photography/T. Motion

Qatar's real defense comes from the presence of the al-Udeid Air Base on its soil. It is the largest US military facility in the region. The Qataris had real cause for concern when President Donald Trump backed Saudi Arabia and took an anti-Qatar stand in the beginning of the blockade. Qatar got busy lobbying for its cause in Washington and as a sweetener offered to expand the air base to provide space for the families of 10,000 American soldiers based there.

No signs of blockade lifting

The tensions have not escalated since June 2017, but the distance between the neighbors has grown. 

In November Qatar announced it was quitting OPEC. While it said the reason was because it is the smallest contributor to the cartel and would rather focus on gas production, it was seen as a rebuke of an organization believed to be under the control of the Saudis.

Read more: Qatar's OPEC exit rooted in Gulf diplomatic unrest

In a further snub, the emir did not attend the Gulf Cooperation Council (GCC) Summit in Riyadh, sending a junior minister instead. Local news reports suggested that Qatar did not see the Saudis to be serious about discussing peace at the summit and hence did not find merit in appeasing them by the emir's presence. 

Noha Aboueldahab, a fellow at the Brookings Doha Center, said that the blockade has changed the relationship between the Gulf nations, perhaps forever. 

"Unless there is a fundamental change in the regimes or leaderships of any of those countries," she said. "It will be a long time before we see a genuine rapprochement between Qatar and the blockading states."  

Qatar finds vindication in the plummeting reputation of Saudi Crown Prince Mohammed bin Salman. He has been criticized for the rising death toll in the war in Yemen, the incarceration of women's rights activists at home and the killing of dissident journalist Jamal Khashoggi

At the supermarket, Nasir Ali said, "They accused us of backing terrorists. What about Khashoggi?" Flailing his arms for emphasis, he added, "Who killed Khashoggi? Saud kill their own people. We love our emir."