A year ago, four countries of the Gulf Cooperation Council (GCC), led by Saudi Arabia, followed by United Arab Emirates, Bahrain and Egypt, imposed a full land, air and sea blockade on Qatar.

The imposition of the blockade was majorly for diminishing Qatar’s political autonomy and economic independence, as the countries accused Doha of supporting terrorism.

One year later, the crisis does not seem to simmer down.

On Sunday (June 3), in a letter written to French President Emmanuel Macron, Saudi King Salman threatened to take military actions, if Qatar bought surface-to-air S-400 missiles from Russia.

Despite Riyadh having a dominant role in the Gulf region, Qatar will get an upper hand, if it acquires these missiles. Saudi Arabia also fears the deployment of these missiles by the outcast Qatar, said Aleksei Kondratyev, a member of the Russian upper house and the deputy chairman of the committee on Defence and Security.

The diplomatic talks between Moscow and Doha is of a complete selfish nature for the Kremlin, which wants to grow its state budget by selling anti-aircraft missiles to Qatar.

Qatar, An Economy Less Affected:

Qatar National Bank on May 16 reported the current account surplus widened to 6.4% of gross domestic product (GDP) in the fourth quarter on the back of higher oil prices.

Post the blockade, Qatar, one of the richest countries in the world per person, was forced to use its sovereign wealth fund to keep its economy from not sinking.

The effect on the economy from blockade has been limited for Doha, which raised $12 billion in bond issue earlier this year.

International investors have a good vibe about Qatar and don't hesitate on betting on its future. Financial transactions have shifted from Dubai to New York or London, which has put Qatar at a loss of business volumes.

Qatar is the largest exporter of Liquefied Natural Gas (LNG) and is busy signing new long-term supply deals. The trade links based on LNG exports has helped Qatar to maintain its relationship with a lot of countries, not leaving it isolated post the crisis.

Threats The Mighty Faces:

Saudi Arabia is the largest Gulf country, has the largest population, economy and army and much of the region’s crude oil. It explains why most of its neighbors are consistently preoccupied with the country’s threat.

Qatar, the size of the state of Connecticut, never saw itself as a threat to bigger Gulf countries. However, UAE and Saudi Arabia, were of opposite opinion, forcing Qatar to accept its subordinate status.

UAE and Saudi Arabia withdrew their ambassadors from Doha in 2014 for a brief period of time, to send a message to Qatar that its divergent policies would no longer be tolerated.

Saudi saw Qatar as an emerging global player in areas of energy, financial, investments and property markets and felt threatened on Doha becoming a significant foreign policy player, challenging Saudi Arabia’s position as the Gulf's dominant diplomatic and political player.

In the present day, the demands coming out of the two biggest Arab countries have not only targeted Qatar’s foreign policy, but also its history, legitimacy and sovereign rights.

The bigger Gulf countries even stopped Qatar Airways flights from using their airspace, blocking the land borders with Saudi Arabia and using ports for Qatar's ships.

'LNG': A Life Saviour:

source: tradingeconomics.com

The LNG exports have kept the country’s economy stable, as Qatar is one of the largest LNG exporter in the world with a total share of 60% of exports. It is also one of the largest supplier of LNG to India with exports at 27.3% higher from the same period year ago, at QAR 24 billion (Qatari Riyal) in April 2018.

Exports in Qatar averaged QAR 36,979.51 million from 2004 until 2018, reaching an all-time high of QAR 124,265 million in February of 2012 and a record low of QAR 10,709 million in December of 2016.

This is a major source of revenue, which has not been impacted profoundly. It will continue to be a large source of income, provided there is no confrontation with Iran.

First Published:Jun 4, 2018 2:07 PM IST