Qatar loses face, stares at a bleak future if it continues to support extremism
Qatar's economy has been reduced to a shadow of its former self.
On June 5 last year, Saudi Arabia, UAE, Bahrain and Egypt collectively took a decision to boycott Qatar - economically and politically. The trade and travel embargo continues till date, and Qatar is to blame for the continued stalemate. Notably, it was neither an easy decision nor one taken out of the blue. The four Arab states were forced to take the tough but painful decision after years of diplomacy failed to convince Qatar to stop supporting extremists covertly.
Qatar's economy has been reduced to a shadow of its former self. In the last one year, the economic growth in the tiny peninsula has slipped. Import costs have risen, and residents have been affected by rising prices primarily of food and transport. Foreign financing and private sector deposits too have fallen, by $40 billion.
The government is learnt to have repatriated billions from its overseas portfolio to keep the domestic financial systems up and running. It has dipped into the country's sovereign wealth fund to divert cash for the economy, and has been pumping $200 billion in the infrastructure sector to keep projects running. The aviation sector has taken a beating and lost sheen. The Qatar Investment Authority has been using its assets to meet extra costs of the country's national carrier.
Yet, the schism with the Gulf countries has not narrowed and there are no signs of reconciliation. Qatar has, in fact, advanced its relationship with Iran, and has been trying to reshape its supply lines and trade relations. It has paid no serious thought to resolve differences with the bloc. Together the GCC is a force to be reckoned with.
The bloc is strategically located and has resources at its disposal that can make it an economic presence felt in the region. However, Qatar's reluctance to amend its ways is symptomatic of the fundamental problems that all its relationship with the Gulf countries. It continues to support rebels, Muslim Brotherhood and uses its media platform for covert agenda. The Saudi-led bloc is ready to restore relations, and has spelt out its expectations. The Camp David Summit in September could offer a way forward, but only if Al Thani family, which rules Qatar, sees reason, and takes action against extremist groups.