Blockade Blowback: Qatar Eyes Closer Economic Ties With Iran

EghtesadOnline: Qatar’s new ban on Arab products signals that the yearlong Saudi-led blockade aimed at keeping Doha in Riyadh’s economic and political orbit has likely backfired.

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03 June 2018

Qatar’s Ministry of Economy and Commerce announced on Saturday that it would prohibit the sale of all products made in Saudi Arabia, the UAE, Bahrain and Egypt—nearly a year after the four Arab states severed diplomatic ties with Doha and imposed sanctions and airspace restrictions, according to Financial Tribune.

Despite the original embargo, it was still possible for Qataris to purchase Saudi and Egyptian goods that had been rerouted through Kuwait and Oman. The ministry said the new, stringent provisions were motivated by “protectionism” and a need for “consumer safety”.

“The import ban suggests that Qatar now feels confident enough–both politically and economically–to strike back,” Jack Rasmus, professor of political economy at Saint Mary’s College of California, told RT.

“Qatar probably feels that the US military bases [it hosts] are important enough that it can take reciprocal action,” Rasmus said, adding that Washington must tread carefully if it hopes to persuade Qatar to embrace its hardline stance on Iran.

“Qatar might go its own way, find alternative markets ... And that would be a kind of difficulty for the Trump administration if Qatar develops its relationship with Iran and Iranian markets, which it wants to do. It would signal a decline or loss of US influence and the united front among its allies there against Iran.”

According to Rasmus, the Saudi-led blockade, which aimed in part to discourage Doha from developing bilateral relations with Iran, has not produced the desired results for Riyadh.

“The blockade had an initial effect on the Qataris, but they have quickly adjusted to that. They’ve established relationships with other economies, and in the long run [the blockade] won’t have much effect on their economy. They have a lot of exports and energy products, and a lot of people will want to buy them,” Rasmus said.

Doha signed a transportation agreement with Turkey and Iran in November 2017, which facilitated trilateral trade and increased exports to Qatar in the wake of the blockade.

In March, the International Monetary Fund said that the effect of the blockade on economic activity in Qatar had been “transitory”, as new trade routes were quickly established and growth remained positive.

The Saudi-led quartet imposed the economic blockade last June, after accusing Qatar of sponsoring “terrorism” and destabilizing the region. Riyadh and its Arab partners later issued an ultimatum, threatening to maintain the economic pressure until Qatar agreed to shut down its state broadcaster Al Jazeera, expel Turkish troops from its territory, scale back ties with Iran, and end relations with Egypt’s Muslim Brotherhood movement. Doha swiftly rejected the list of demands.

A year later, Qatar may now be seeking new leverage to negotiate with its Arab rivals, or perhaps is even charting a new, independent course in defiance of Riyadh, Rasmus suggested.

“The Saudis are trying to reestablish control of the whole peninsula, the way they once had. They’re getting nervous that they are losing control over the peninsula, maybe, in several different ways. And the Saudis, of course, see themselves as eventually having a conflict probably with Iran. And they want to make sure that the whole region is still under their hegemony. Which, of course, increasingly, it isn’t.”

137% Rise in Iran-Qatar Trade

Commerce between Iran and Qatar has been significantly increasing following the Saudi-led blockade.

The value of trade between Iran and Qatar hit $275 million in the last fiscal year (March 2017-18), marking a 137% increase compared with the year before.

Iran’s exports to the Persian Gulf state reached $248 million to register a 140% growth.

Earlier this month, Qatar’s ruler thanked Iran’s President Hassan Rouhani for his country’s support during an almost yearlong Arab crisis, which has seen the emirate cut adrift by neighboring former allies, AFP reported.

In a telephone conversation on May 17, Sheikh Tamim bin Hamad Al-Thani and the Iranian president also discussed ways of “boosting” relations between the two countries, according to a statement from Qatar News Agency.

The emir “expressed his gratitude to the Iranian president for Iran’s stance towards the siege imposed on Qatar and its contribution to alleviate its economic impacts, particularly by opening its airspace and territorial waters”, said QNA.

A delegation of high-ranking officials from Qatar Ports Management Company paid a visit to Iran’s southern ports last month. Mohammad Al-Khanji, the director of Qatar Ports Management Company, told a press conference in Bushehr during the visit that Qatar plans to invest in the development of Iran’s southern ports to help expand economic cooperation and increase bilateral trade.

“Qatar has long-term plans to increase trade ties with Iran and invest in its southern ports, which have an economic advantage for both countries … We firmly seek expansion of bilateral relations and nothing can change our strategic decision for expanding ties with Iran,” he said.

Currently, two southern ports of Bushehr and Bandar Lengeh account for the largest portion of goods sent from Iran to Qatar. However, Qatari officials seek stronger ties with all the Iranian southern ports, of which Negin Island Port in Bushehr offers best prospects for Qatari investors.

The dredging project of the container berth of Negin Island to allow the docking of 50,000-ton vessels has recently begun with an initial investment of 210 billion rials ($5 million).

Iran has offered to help Qatar with facilities during the 2022 football World Cup, which will be hosted by the emirate.

It has offered its island of Kish to be used as a training camp during the tournament.

The two sides signed a memorandum of understanding with Qatar Postal Services Company earlier this month to help boost e-commerce ties between the two countries last week in Doha.

Tipax and Q-Post also agreed to share their resources for the establishment of a courier network between Iran and Qatar to help boost trade.