International Trade


On June 4, Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt severed diplomatic ties with Qatar, closing borders, airspace and ports to Qatari goods and businesses and shuttering the local stations of Qatar’s state-owned media group Al Jazeera. The causes and effects of this sudden and coordinated diplomatic crisis can be seen through multiple lenses.

Qatar has earned a reputation over the past two decades for playing all sides of Middle Eastern conflicts. A member of the Gulf Cooperation Council (GCC), Qatar has maintained warm relations with the GCC’s bitter enemy, Iran. Home to the largest U.S. air base in the region and nearly 11,000 American soldiers, Qatar has allegedly helped fund terrorist organizations throughout the region.

Qatar’s funding of terrorist groups throughout the Middle East, particularly Hamas, stands as the first cause of the diplomatic mess. Donald Trump’s visit to the GCC in May signaled to the Arab world the United States was serious about combating terrorism. In the President’s own tweet, shortly after the episode began, Trump said, “During my recent trip to the Middle East, I stated that there can no longer be funding of Radical Ideology. Leaders pointed to Qatar – look!” Apparently, the President’s prioritization of counter-terrorism gave the green light to Arab countries to take a hard line against what they see as Qatar’s perfidious double-dealing.

However, the situation is more complicated than that.

The causes of many Middle Eastern conflicts can be traced back to the geopolitical tension between Saudi Arabia (and its allies) and Iran. The civil wars in Yemen and Syria contain elements of a proxy conflict between Saudi Arabia and Iran, with both nations pouring funding into client governments and extremist groups. Qatar, a tiny nation of roughly 200,000, is caught between the two regional powers. Though it is a member of the Gulf Cooperation Council with Saudi Arabia and others, Qatar maintains a positive working relationship with Iran, mostly because of a shared natural gas field in the Persian Gulf that drives the Qatari economy. Even as tensions have ratcheted up between Saudi Arabia and Iran, Qatar has maintained diplomatic backchannels with the Iranian regime. Through these backchannels, Qatar paid a multi-million dollar ransom in April to an Iranian-backed militia in Iraq that had captured members of the Qatari royal family on a hunting trip, infuriating Arab allies. Qatar’s cozy relationship with Iran pushed its relationships with Saudi Arabia, the United Arab Emirates and Bahrain to the breaking point.

Of course, Qatar has a long history of spats and feuds with the other Gulf countries, especially during the Arab Spring. In a bid to increase its regional power, Qatar provided funding to Islamist groups (especially the Muslim Brotherhood) throughout the Middle East after protests in Tunisia sparked uprisings. Qatar’s state news network also provided sympathetic coverage to protesters and Islamist opposition leaders, while pillorying oppressive regimes. This undermined more conservative autocracies like that of former Egyptian President Hosni Mubarak, drawing the ire of Saudi Arabia and the UAE. In 2014, Saudi Arabia and several other Gulf states broke off diplomatic relations with Qatar for nine months, out of anger at Qatari funding of the Muslim Brotherhood, although borders, ports and airspace remained open. That clash ended with Qatar expelling some members of the Muslim Brotherhood and promising to reduce its support for the Islamist group.

Family squabbling plays a role in this conflict as well. Since independence in 1971, Qatar has been ruled by the Al-Thani family. A conservative monarchy like the Al-Saud family that governs Saudi Arabia, the Al-Thanis were little more than vassals of Saudi Arabia – until Hamad bin Khalifa Al Thani seized power from his father in a bloodless coup in 1995. Saudi Arabia, concerned that the new Emir would assert his independence from the Saudis, launched a failed counter-coup to restore the father in 1996. Hamad bin Khalifa Al Thani liberalized Qatar, launching the news station Al Jazeera, introducing women’s suffrage and shifting foreign policy away from Saudi Arabian interests. Under the new Al-Thani, Qatar would operate as a neutral arbiter between rival powers in the Middle East, and would rely on Islamist movements and militia groups to multiply its power. Despite having a tiny population, Qatar would come to be seen as a regional power broker – much to the chagrin of the Saudis. Though Qatar’s influence has grown significantly since the coup, its much larger Saudi neighbor dominates the region. However, since 2003, Qatar has had an ace in the hole when dealing with the Saudis: Al Udeid Air Base.

The largest American military base in the Middle East, with over 10,000 American soldiers, Al-Udeid Air Base is home to U.S. Central Command and the Combined Air Operations Center. Most American bombing campaigns against ISIS in Iraq or the Taliban in Afghanistan originate from Al-Udeid. By providing Americans with a military base and maintaining a close partnership with the United States, Qatar has been able to maintain its territorial integrity despite hostility from many of its Arab neighbors. The presence of American troops on Qatari soil serves as a deterrent to potential adversaries, especially GCC countries. Because of their close relationship with America, the United States maintains troops in Kuwait and the UAE, stations the U.S. Fifth Fleet in Bahrain and just completed a $110 billion arms sale to Saudi Arabia. The American presence in the Persian Gulf helps bind the GCC together and keeps GCC member states from turning on each other. Until now, that is.

The current diplomatic quarrel has been described by some as a blockade. Qatar’s only land border is with Saudi Arabia, through which it imports most of its food. Since the border closing, the richest per capita country in the world must rely on food aid from Turkey and Iran, which have rushed to its aid since the beginning of the crisis. Qatar can hold out for a long time, with 250 percent of its GDP in cash reserves and investments, and with support from regional allies. Qatar, the world’s largest exporter of Liquefied Natural Gas (LNG), can still ship its LNG to Asian consumers via Oman, which has remained neutral. Al Jazeera continues to run news stories, though not in countries like Saudi Arabia which shut down the local Al Jazeera office. Qatari military forces have been removed from the Saudi-led coalition in Yemen, and in the UAE, a social media post sympathetic towards Qatar can buy an Emirati 15 years in prison. Turkey has authorized sending troops to its military base in Qatar as a show of support, further escalating the situation. By severing diplomatic relations, Saudi Arabia, the UAE, Bahrain and Egypt have further polarized the Middle East. Qatar’s isolation by its erstwhile allies will force it to resolve the contradictions in its maverick foreign policy – to pick a side.

This could have the side effect of pushing Qatar closer to Iran, and perhaps even pushing Iran and Turkey into closer cooperation in defense of their mutual partner, Qatar. Russia has weighed in saying Qatar’s isolation could threaten a Syrian peace deal and has called for cooperation. The Middle East has a number of problems already, including wars in Iraq, Syria, Libya, Yemen and Afghanistan. Dividing the Middle East into two opposing camps with Saudi Arabia, the UAE, Egypt, Bahrain and others in one camp, and Qatar, Iran and Turkey in the other makes an already fraught and complicated situation even more dangerous.

Why should Americans care about the machinations of a band of monarchs and emirs against a tiny state of 200,000 people thousands of miles away? In a word: gas. As the world’s largest supplier of Liquefied Natural Gas (LNG), Qatar is far more important than its land or population size suggest. Though its trade routes have not been severely disrupted yet, mostly because of the neutrality of Oman, the potential for serious disruption grows as the blockade continues. Though not impossible, it seems unlikely the current quarrel will develop into outright conflict between the great powers of the Middle East. However, greater geopolitical tensions surrounding such a gas-rich country in a region replete with oil resources will increase costs for consumers around the world, as risk factors into the price of oil and gas.

The American response thus far has been muddled. Shortly after the Saudis, Bahrain, Egypt and the UAE broke diplomatic ties with Qatar, President Trump tweeted in support of the move. However, Secretary of State Rex Tillerson called for easing the blockade, because it was hindering U.S. military operations in the region. Secretary of Defense James Mattis said American operations at Al-Udeid Air Base were unaffected; he also said any funding of any terrorist group is “inimical to all our interests”, although Qatar is moving in the right direction when it comes to ending terrorism funding. In Congress, a bill blocking a recent $110 billion arms sale to Saudi Arabia was narrowly defeated, allowing the arms sale to go through. On June 14, however, Qatar made a surprise $12 billion purchase of American F-35 fighter jets. Semi-officially, the United States has joined the neutral country of Kuwait in pushing for a settlement between Qatar and the Saudis, despite the President’s seeming embrace of the Saudi position – though President Trump himself also called the Emir of Qatar to offer mediation services, which were declined (the Emir did not think it appropriate to leave Qatar while it was under blockade). As the blockade drags on, even if operations at Al-Udeid remain unaffected, the U.S.-led campaign against ISIS could be at risk because of fraying relations amongst our Gulf Cooperation Council allies.

Though the Saudis and Emiratis are in a position of strength relative to Qatar, Qatar can hold out for quite some time, especially with aid from Iran and Turkey. The longer the crisis lasts, the greater the chances it escalates to open conflict. One can only walk a tightrope for so long. The United States needs to enact a clear strategy to protect its national interests, chief among them the campaign against ISIS, deterrence of Iran and keeping American troops in military bases overseas safe – and it should do so sooner rather than later.

In Depth: International Trade

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