cellcard cellcard

Qatar’s financial markets stabilise

Reuters Share:
Political differences between Qatar and neighbouring Saudi Arabia, the United Arab Emirates and Bahrain, as well as Egypt, have affected Qatar Airways’ routes. Reuters

DOHA (Reuters) – Qatar’s financial markets stabilised on Monday after a week of losses as the government showed it could keep the economy running in the face of sanctions by its neighbours.
 
The finance minister of the world’s richest country per capita played down the economic toll of the confrontation, and said the government was “extremely comfortable” with its financial position, with the resources to endure the pressure.
 
Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar a week ago, accusing it of fomenting regional unrest, supporting terrorism and getting too close to Iran, all of which Doha denies.
 
The biggest diplomatic rift in years among the rich states of the Gulf has disrupted Qatar’s imports of food and other materials and caused some foreign banks to scale back business.
 
On Monday, it was becoming clear that Qatar could keep the economic damage from becoming critical. Some of its food factories were working extra shifts to process imports from nations outside the Gulf, such as Brazil. Shipping lines have re-routed container traffic via Oman instead of the UAE.
 
Such measures may involve delays and raise costs for Qatar; on Monday Fitch put Qatar’s AA credit rating on Rating Watch Negative, saying a sustained crisis could hurt its credit outlook. But they are unlikely to prevent the economy from functioning in any fundamental way, economists say.
 
The diplomatic confrontation has become a major test for the United States, which is closely allied to the countries on both sides. Qatar hosts the Middle East headquarters for US air forces; Bahrain hosts the main base for the US navy.
 
As the world’s leading exporter of liquefied natural gas, Qatar’s wealth has allowed it to crown its small Gulf peninsula with skyscrapers. It has also given the government the means to take an outsized role in regional affairs, sponsoring factions in revolts and civil wars and brokering peace deals across the Middle East. Several neighbours have been furious for years.
 
Qatari Foreign Minister Sheikh Abdulrahman al-Thani told a news conference in France that Qatar “still had no clue” why the nations cut ties. He denied that Qatar supported groups like the Muslim Brotherhood that its neighbours oppose, or had warm ties with their enemy Iran.
 
So far, the measures do not seem to have caused a serious shortages of supplies in shops. Some people have even joked about being “blockaded” inside the world’s richest country: a Twitter page called “Doha under siege” pokes fun at the prospect of readying “escape yachts”, stocking up on caviar and trading Rolex watches for espresso.
 
But an economic downturn could have more dire consequences for the vast majority of Qatar’s 2.7 million residents, who are not citizens but foreign workers.
 
Migrant labourers make up 90 percent of Qatar’s population, mostly unskilled and dependent on construction projects such as building stadiums for the 2022 soccer World Cup.
 
Jason Tuvey, a Middle East economist at London-based Capital Economics, said that as long as the other Gulf countries did not interfere with Qatar’s gas exports, the tiny state should be able to carry on without a serious recession.

Previous Article

Qatar closes helium plants

Next Article

Chinese firm plans hotels boost