DOHA (Reuters Breakingviews) - An influential Saudi Arabian prince once called Qatar, a spit of sand sticking into the Persian Gulf like a thumb, nothing more than “300 people and a television channel.” Such disdain inspired Saudi Crown Prince Mohammed bin Salman to initiate a four-nation blockade of the country. But not a year and a half later, the young Saudi monarch has acknowledged what has become apparent to the world: Qatar is doing just fine.
It would be easy for this tiny-but-rich nation of 2.6 million people to gloat over the global public display of revulsion surrounding the killing of journalist Jamal Khashoggi by Saudi agents. Yet “Saudenfreude,” or satisfaction over condemnation of its neighbour’s alleged drawing-and-quartering of a prominent dissident in its Istanbul consulate, is in short supply in Doha.
That’s not because Qatar is especially humble. Emir Sheikh Tamim bin Hamad al-Thani’s visage is more ubiquitous in the capital than those of his counterparts in Abu Dhabi or Dubai. His silhouette adorns everything from skyscrapers to taxis. And Qatar has never been shy about flaunting its good fortune, embarking on flashy shopping sprees and acquiring trophy assets like Harrods and French soccer club, Paris Saint-Germain.
But taking an uncharacteristically quiet high road is now Qatar’s best bet for handling the Saudi crisis. And with good reason: a closed border with its neighbour to the south is better than chaos on the other side, especially if it leads to unrest over absolute monarchies in the region. Either through internal checks or U.S. and European sanctions, the best outcome for Qatar is a chastened crown prince - not a deposed one - who is more acutely aware of the limits of his power.
It doesn’t take long in Doha to see the embargo by Saudi, the United Arab Emirates, Bahrain and Egypt has been something of an economic blessing. After an initial shock, when some $30 billion of bank deposits from those countries were repatriated and shipments of foodstuffs, like milk dried up, Qatar quickly reoriented supply chains and funding sources in ways that may ultimately benefit it for years to come. Even MbS gets that, praising Qatar’s “great economy” in remarks at his Future Investment Initiative on Wednesday.
In what has become a symbol of Qatar’s resilience, the country used its considerable wealth - which includes some $44 billion of reserves and a $300 billion sovereign fund - to ship in 17,000 cows and an Irish farmer to become self-sufficient in dairy. Iranian and Turkish produce is prominent on the shelves of the downtown Doha Carrefour.
Raw materials like bitumen, once purchased through resellers in Dubai, now arrive directly, and at a lower cost, says one government official. The embargo accelerated the expansion of Hamad Port, a key infrastructural component of the Qatar National Vision 2030, the country’s plan to prepare for when energy demand slows. Since the embargo cut off key shipping routes in the region, Hamad has forged new ones with Malaysia, China, India and Greece.
Though Qataris don’t want to say it on the record, there is consistent pride in successfully weathering a Saudi-induced “stress test”. There is also near-universal relief that it occurred before the eyes of the world are focused on Qatar’s hosting of soccer’s World Cup in 2022, a first for an Arab nation. “The blockade has been a tragedy for many families who have been separated - and for cooperation in the Gulf,” says one senior official. “But we have to proceed as if the blockade is permanent – that it’s the new normal”.
The boycott began in June 2017, not long after U.S. President Donald Trump visited the region and met MbS and his father King Salman bin Abdulaziz, as well as Sheikh Tamim. It came as a complete surprise in Doha. Not even the national airline had any inkling it would be barred from flying to Dubai, Riyadh, Cairo and other key destinations, or that its planes would be forced to circumvent the airspace of the embargoing nations.
Yet even the airline is moving ahead. True, it lost $69 million in the year ended in March as 18 routes, and around 20 percent of its passengers, disappeared. Since then, it has added 24 new routes, and its chief says it may be facing a shortage of aircraft as it gears up for the World Cup.
For Qataris with relatives in the region – about 15,000 families and thousands more non-resident workers - the pain is acute. Qatar didn’t reciprocate. In fact, the country relaxed some visa restrictions after the blockade. But getting to Doha requires a stop in Kuwait or Oman even for those allowed to enter. The closure of the Saudi embassy also makes it virtually impossible for Muslims in Qatar to arrange visits to the holy sites of Mecca and Medina.
Notwithstanding these difficulties, Qatar’s economy is humming. Higher energy prices have been a boon for the gas business that powers more than a third of GDP. Qatar has proven reserves of around 173 billion barrels of oil equivalent, mostly in the offshore North Field, which the U.S. Energy Information Administration calls the largest single gas field in the world.
The World Bank expects the economy to bounce back 2.8 percent this year, and grow another 3 percent in 2019, amid higher energy prices and as spending on the World Cup continues. After the games are done, the expansion of LNG output to 110 million tons a year, from around 77 million today, should ensure massive government cash surpluses for years to come.
The combination of the World Cup and the boycott appears to have had another benefit that could elevate Qatar’s global standing. Last month, the emir issued a new law partially scrapping the exit permits that allowed employers to keep migrant workers – of which Qatar has some 1.9 million – from leaving the country. The move drew faint praise from workers’ rights groups. Amnesty International called it “an important first step towards meeting the authorities’ promise to fundamentally reform the exploitative sponsorship system”.
Add it all up, and Qatar appears to have made it through the blockade with flying colours, supermarket shelves stocked with goods, its people bursting with patriotism, while also making progress on the way it treats guest workers. No wonder MbS appears envious.
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