The Blockade Against Qatar: A Blessing in Disguise?

Abstract

On 5 June 2017, the United Arab Emirates, Bahrain, Saudi Arabia, and Egypt cut diplomatic ties with the State of Qatar and initiated a blockade against the country. In this study, we provide the first in-depth examination of the impact the blockade had on Qatar’s economy and review the policy responses that followed. In particular, we consider how the policies that have since emerged either complemented or deviated from past policies and practices and evaluate whether they have in fact brought long-term benefits to the country –– benefits that may have not been realized had the blockade not taken place. Our review finds that the blockade did not cause a shift in policy direction, but it did change the urgency and process by which policies were put together and pushed forward, as well as their effectiveness. Furthermore, we find that the timing of the blockade worked in Qatar’s favor in surprising ways. To the best of our knowledge, this is the first study to provide both a meticulous documentation of the policy responses that followed the blockade and an in-depth analysis of its impact.

Keywords:

• Qatar
• blockade
• Middle East
• political economy

Notes

1 De Young and Nakashima, “UAE Orchestrated Hacking of Qatari Government Sites, Sparking Regional Upheaval, According to U.S. Intelligence Officials”, Washington Post, 16 July 2017.

2 The expression was used by, among others, Yousuf Al-Jaida, CEO of the Qatar Financial Center Authority during an interview with CNBC published in October 2018; Ali Sherif Al-Emadi, Minister of Finance, at a Euromoney conference in Doha in December 2018; and Ali Al-Kuwari, Minister of Commerce and Industry, at a lecture delivered at Carnegie Mellon University in September 2019.

3 Stock markets in 2017 had reached record levels [see for instance the Reuters article: Carew, “Wall St. Hits Record Highs on Strong Technology, Health Stocks”, 19 June 2017]. According to Reuters: “Qatar’s sovereign wealth fund has transferred over $30 billion worth of its domestic equity holdings to the finance ministry and may sell other assets as part of a restructuring drive, people familiar with the matter told Reuters” [Finn, “Exclusive: Qatar Sovereign Fund Moves Stakes to Government, May Sell Assets - Sources”, Reuters, 21 June 2017].

4 Coates Ulrichsen, “The Economic Impact of the Blockade of Qatar”, in Al-Jaber and Neubauer (eds), The Gulf Crisis (2018), pp. 73–88; Coates Ulrichsen, Qatar and the Gulf Crisis: A Study of Resilience (2020); Oxford Business Group, “Qatar’s Economy Thrives Despite Blockade” (2019).

5 Wright, “The Political Economy of the Gulf Divide”, in Krieg (ed.), Divided Gulf (2019), pp. 145–159.

6 Baabood, “Qatar’s Resilience Strategy and Implications for State-Society Relations”, Istituto Affari Internazionali 17.36, 1 December 2017.

7 Selmi and Bouoiyour, “Arab Geopolitics in Turmoil: Implications of Qatar-Gulf Crisis for Business”, International Economics 161 (2020); Al-Maadid et al., “Political Tension and Stock Markets in the Arabian Peninsula”, International Journal of Finance & Economics 26 (2021), pp. 679–683; Al-Maadid et al., “The Impact of Business and Political News on the GCC Stock Markets”, Research in International Business and Finance 52 (2020); Charfeddine and Al Refai, “Political Tensions, Stock Market Dependence and Volatility Spillover: Evidence from the Recent Intra-GCC Crises”, The North American Journal of Economics and Finance 50 (2019).

8 The view that the economy slowed down but not due to the blockade is reflected in official statistics for Q2 GDP date. As per a Reuters’ analysis of the release of the Q2 2017 GDP numbers, “Qatar’s economic growth slowed in the second quarter to its lowest rate since the global financial crisis because of a sagging oil sector, while sanctions by other Arab states inflicted minor damage, official data showed on Sunday” [Torchia, “Qatar Growth Sinks as Oil Sector Stalls, Sanctions Cause Minor Damage”, Reuters, 1 October 2017].

9 Qatar Central Bank, Monthly Monetary Bulletin, Table 14, Column N (January 2018).

10 FitchRatings, “Qatari Bank Funding, Liquidity to Benefit as Saudi Blockade Ends”, 7 January 2021.

11 For more information on the humanitarian impact of the blockade on families in Qatar, see Doha International Family Institute, The Impact of the Blockade on Families in Qatar (2018).

12 We continue to collect data on policies and related initiatives and plan to set up a website that provides everyone –– from researchers and to journalists to policymakers –– with access to this information for their own use.

13 An exception is Al Meezan (www.almeezan.qa), Qatar’s official legal portal, where all legislations, treaties, rulings, and advisory opinions are in principle listed. However, as we explain in the Appendix, its usability for studying the policy response of the country is limited by three shortcomings: (i) no English translations post-2014 are provided, (ii) many of the measures announced through press releases in the newspapers are not found on the portal, and (iii) key policies and initiatives are buried along with thousands of other recordings. Furthermore, any initiative that is listed on almeezan.qa but not disseminated to the public through the press may not be as relevant and important. By looking at what is disseminated in the press we are able to filter out the nuisances from the important measures.

14 The Supreme Committee for Economic Affairs was established in 2001 to lead efforts toward transforming the economy and responding to current challenges. The structure, which was amended in 2014, includes the Emir, the deputy emir, the prime minister, the ministers of Foreign Affairs, Energy and Industry, Economy and Commerce, and Finance, the governor of the central bank, and two representatives from the Qatar Investment Authority. The Committee (also referred to as the Economic Development Board) meets every few months, and decisions made at the top are then delegated to the relevant ministries or committees for execution and implementation.

15 Companies registered under the Qatar Financial Center and the Qatar Science and Technology Park were exempted from the local partner requirement. Prior to the blockade, the majority ownership of local firms had to belong to a local individual or entity.

16 See: Al Bawaba, “Doha’s $7.5B New Port Project Set for Completion in 2020”, 6 April 2016.

17 Antoniades and Dehdary, “Social Media and Nation Branding: A Case Study of Qatar”, Georgetown University in Qatar/QNRF (2014).

18 In 2017, Qatar Airways was voted “World’s Best Airline” and “World’s Best Business Class” [Qatar Airways website, “An Award-Winning Year as Qatar Airways Sweeps International Awards Ceremonies”, Press Release, 11 December 2017]. See also Skytrax, “Qatar Airways Rating”.

19 BBC, “Qatar ‘Uses $38 bn to Support Economy’ During Gulf Crisis”, 14 September 2017.

20 The Emir of Qatar’s first foreign trip since the blockade started was a good indication of who his allies were. In September 2017 the Emir met with German Chancellor Angela Merkel, French President Emmanuel Macron, and Turkish Prime Minister Recep Tayib Erdogan [France 24, “Qatar Emir Meets Merkel, Macron on First Foreign Tour since Crisis”, 15 September 2017].

21 The Peninsula, “Qatar Airways to Offer High Speed Broadband on Flights, 12 New Destinations Announces”, 24 April 2017; also see Skytrax website, “Qatar Airways Rating”.

22 Gulf Times, “100% Self-Sufficiency Achieved in Poultry, Meat, Dairy, Output”, 14 March 2019.

Additional information

Notes on contributors

Alexis Antoniades

Alexis Antoniades is Associate Professor and Director of International Economics at Georgetown University in Qatar, Education City, PO Box 23689, Doha, Qatar, [email protected];

Rafia Al-Jassim

Rafia Al-Jassim, a BSFS alumna of Georgetown University in Qatar, is an Economic Analyst at QIPA, Tornado Tower, 13th Floor, Doha, Qatar, [email protected];

Khalique Gharatkar

Khalique Gharatkar is Associate Director at the Qatar Financial Center Authority, Doha, Qatar, [email protected].