Qatar's economic strengthening and expanding relations with Russia, China and Turkey have made the blockade imposed by its Gulf neighbours less effective.

It is a reality: Qatar has won its battle against the United Arab Emirates and Saudi Arabia after more than three years of diplomatic rupture in which both countries, along with other Arab neighbours, isolated the Qatari peninsula commercially and territorially. Economic and geopolitical reasons explain why the imposed blockade has finally faded without Qatar giving in to its autonomous diplomatic line.

Qatar's Emir Tamim Al Thani at lecture Munich Security 2018 [Kuhlmann/MSC].

article / Sebastián Bruzzone

In June 2017, Egypt, Jordan, Saudi Arabia, Bahrain, the United Arab Emirates, Libya, Yemen and the Maldives accused the Al Thani family of supporting Islamic terrorism and the Muslim Brotherhood and initiated a total blockade on trade to and from Qatar until Doha met thirteen conditions. On 5 January 2021, however, Saudi Arabia's Crown Prince Mohammed bin Salman welcomed Qatar's Emir Tamim bin Hamad Al Thani with an unexpected embrace in the Saudi city of Al-Ula, sealing the end of yet another dark chapter in the modern history of the Persian Gulf. But how many of the thirteen demands has Qatar met to reconcile with its neighbours? None.

As if nothing had happened. Tamim Al Thani arrived in Saudi Arabia to participate in the 41st Summit of the committee Gulf Cooperation Council (GCC) where member states pledged to make efforts to promote solidarity, stability and multilateralism in the face of the challenges in the region, which is confronted by Iran's nuclear and ballistic missile programme, as well as its plans for sabotage and destruction. In addition, the GCC as a whole welcomed the mediating role of Kuwait, then US President Donald J. Trump and his son-in-law, Jared Kushner.

The Gulf Arab leaders' meeting has been a thaw in the political desert after a storm of mutual accusations and instability in what was called the "Qatar diplomatic crisis"; this rapprochement, as an immediate effect, clears the way for the normal preparation of the football World Cup scheduled to take place in Qatar next year. The return of regional and diplomatic understanding is always positive in emergency situations such as an economic crisis, a global pandemic or a common Shia enemy arming missiles on the other side of the sea. In any case, the Al Thani's Qatar may be crowned as the winner of the economic pulse against the Emirati Al Nahyan and the Saudi Al Saud unable to suffocate the tiny peninsula.

The factors

The relevant question brings us back to the initial degree scroll before these lines: how has Qatar managed to withstand the pressure without buckling at all in the face of the thirteen conditions demanded in 2017? Several factors contribute to explaining this.

First, the capital injection by the QIA (Qatar Investment Authority). At the beginning of the blockade, the banking system suffered a capital flight of more than 30 billion dollars and foreign investment fell sharply. The Qatari sovereign wealth fund responded by pumping in $38.5 billion to provide liquidity to banks and revive Economics. The sudden trade blockade by the UAE and Saudi Arabia led to a financial panic that prompted foreign investors, and even Qatari residents, to transfer their assets out of the country and liquidate their positions in fear of a market collapse.

Second, rapprochement with Turkey. In 2018, Qatar came to Turkey's rescue by pledging to invest $15 billion in Turkish assets across subject and, in 2020, to execute a currency swap agreement to raise the value of the Turkish lira. In reciprocity, Turkey increased commodity exports to Qatar by 29 per cent and increased its military presence in the Qatari peninsula against a possible invasion or attack by its neighbours, building a second Turkish military base near Doha. In addition, as an internal reinforcement measure, the Qatari government has invested more than $30 billion in military equipment, artillery, submarines and aircraft from American companies.

Third, rapprochement with Iran. Qatar shares with the Persian country the South Pars North Dome gas field, considered the largest in the world, and positioned itself as a mediator between the Trump administration and the Ayatollah government. Since 2017, Iran has supplied 100,000 tonnes of food daily to Doha in the face of a potential food crisis caused by the blockade of the only land border with Saudi Arabia through which 40 per cent of the food enters.

Fourth, rapprochement with Russia and China. The Qatari sovereign wealth fund acquired a 19% stake in Rosneft, opening the door to partnership between the Russian oil company and Qatar Petroleum and to more joint ventures between the two nations. In the same vein, Qatar Airways increased its stake in China Southern Airlines to 5%.

Fifth, its reinforcement as the world's leading exporter of LNG (Liquefied Natural Gas). It is important to know that Qatar's main economic engine is gas, not oil. That is why, in 2020, the Qatari government launched its expansion plan by approving a $50 billion investment to expand its liquefaction and LNG carrier capacity, and a $29 billion investment to build more offshore offshore platforms at North Dome. The Qatari government has forecast that its LNG production will grow by 40% by 2027, from 77 million tonnes to 110 million tonnes per year.

We should bear in mind that LNG transport is much safer, cleaner, greener and cheaper than oil transport. Moreover, Royal Dutch Shell predicted in its report "Annual LNG Outlook Report 2019" that global LNG demand would double by 2040. If this forecast is confirmed, Qatar would be on the threshold of impressive economic growth in the coming decades. It is therefore in its best interest to keep its public coffers solvent and maintain a stable political climate in the Middle East region at status . As if that were not enough, last November 2020, Tamim Al Thani announced that future state budgets will be configured on the basis of a fictitious price of $40 per barrel, a much smaller value than the WTI Oil Barrel or Brent Oil Barrel, which is around $60-70. In other words, the Qatari government will index its public expense to the volatility of hydrocarbon prices. In other words, Qatar is seeking to anticipate a possible collapse in the price of crude oil by promoting an efficient public expense policy.

And sixth, the maintenance of the Qatar Investment Authority's investment portfolio , valued at $300 billion. The assets of the Qatari sovereign wealth fund constitute a life insurance policy for the country, which can order its liquidation in situations of extreme need.

Qatar has a very important role to play in the future of the Persian Gulf. The Al Thani dynasty has demonstrated its capacity for political and economic management and, above all, its great foresight for the future vis-à-vis the other countries of the Gulf Cooperation committee . The small peninsular "pearl" has struck a blow against Saudi Arabia's Crown Prince Mohammed bin Salman and Abu Dhabi's Crown Prince Mohammed bin Zayed, who did not even show up in Al-Ula. This geopolitical move, plus the Biden administration's decision to maintain a hardline policy towards Iran, seems to guarantee the international isolation of the Ayatollah regime from the Persian country.