Christian Manrique’s new post

Christian Manrique points out how Qatar’s diplomatic crisis within the Persian Gulf, with the measures taken by Saudi Arabia and its allies, has produced an important effect in the country. According to this situation, on the short run, blocking borders by land, sea and air will increase gas and oil export costs and pricing. It will also imply a new redistribution scheme on the Persian Gulf logistic chain. These issues are just the tip of the iceberg and other elements must be taken into account for deeper understanding.

As Christian Manrique outlines, Qatar is the major LNG (Liquefied Natural Gas) exporter, sharing with Iran the biggest gas field of the world (by the name of North Field in Qatar and South Parsen in Iran).

Although its production and exports are much lower than the ones from Saudi Arabia and the UAE, its ships are being rejected on the UAE deep water hub harbour facilities of Jebel Ali and Fujairah. There, the cargo awaits with other goods until its shipped. In addition to this, Qatar has just bought shares of Rosneft, the Russian oil company.

On the other hand, it seems quite improbable seeing Egypt blocking the Suez Canal to Qatari gas and oil traffic. This measure would be deeply criticised within the international sphere by its main partner economies such as Japan, South Korea, India and China, on one side, and EU (United Kingdom, Spain and Poland) in a minor degree, on the other. These countries maintain strong energy links with Saudi Arabia and the UAE.

As Christian Manrique sees it, Qatar depends upon imports by land and sea to satisfy its 2,7 million population’s basic needs. It is important to take into consideration that 40% of food gets in the country through the Saudi Arabian border.

Limited effects

Although this embargo it’s going to have a deep impact on Qatar’s economy, limited effects are expected. Qatar sails through Iranian waters to overcome the Strait of Hormuz and operates through Sohar and Salalah Omani harbours to consolidate its shipments. Besides, it receives foods from Turkey and Iran, that previously came from Saudi Arabia. Attending to Qatar’s crossed relations with world first economies that have some sort of energy link, the embargo effects might seem quite restrained.

To Christian Manrique, if there is no escalation with the measures taken and Qatar maintains its gas supply to Egypt and the UAE, restrained effects are expected. Had this been gone in a different direction, LNG fares could rise high throughout Mediterranean Countries, as well as, oil fares within the Persian Gulf.

Any change might possibly touch domestic, as well as international investment in Europe and the USA carried by the Qatar Investment Authority, because energy policies are linked to investment policies.

Qatar Airways flies more frequently over Iran and Turkey after being forced to take diversions due to restrictions in Saudi Arabia, UAE and Egypt’s airspace.

Iran and Qatar

Strategic reality imposes over any other element when it comes to the biggest gas field in the world due to geographical proximity and shared borders with Iran, which has led them to maintain a friendly political relation. Even Qatar accepted, in order to maintain a symmetrical exploitation with Iran conditioned by sanctions, to reduce its drilling quota.

Turkey and Qatar

Turkey and Qatar had already signed a military protocol in 2015 and Turkey had opened a military base in Qatar, the first one in the region. Nowadays it hosts 100 Turkish soldiers, although it could reach easily its number up to 5.000.

Governments from both countries share similar ideologic points of view regarding Hamas, which is not classified by them as a “terrorist organization”. At the same time, both countries had condemned the military coup in Egypt that toppled Mohammed Morsi in 2013, and both have showed their support to Islamic groups trying to remove Bashar al-Assad from power in Syria. Both have the same attitude towards Iran, recognizing its main role within the region and therefore maintaining a good relationship, against Saudi Arabia’s Teheran’s demonization.

Qatar has invested strongly in Turkey, becoming its seventh recipient. Turkish enterprises are willing to obtain construction contracts in Qatar for 2022 World Cup.

Conclusions

As Christian Manrique outlines, the crisis that has risen from Saudi Arabia and its allies to isolate Qatar is based on supporting extremist groups accusations, who might become a threat in the Middle East. On the other hand, Qatar’s relations with Iran count more and more due to geostrategic rivalry, the ideological conflict and the struggle for hegemony. This situation arises amid Saudi Arabia’s incipient economic crisis.

The measures taken by the group led by Saudi Arabia and Egypt against Qatar have increased its export costs and a new logistic redistribution scheme has emerged within the Persian Gulf.

In the middle run, this effect will constrain as long as an escalation of the already deployed measures doesn’t take place, maintaining open the Strait of Hormuz and the Suez Canal, also assuring that gas supply from Qatar reaches Saudi Arabia and Egypt. Of course, also taking for granted that Qatar won’t reduce its national and international investments.

Uncertain coup d’état

If events take a complete different path, gas and oil prices could increase and the possibility of a coup d’état or a military confrontation might become a reality. Although this might appear quite difficult due to crossed links and interests between Persian Gulf countries and first global powers. Support must also be taken into account from Turkey and Iran. Therefore, a diplomatic agreement to re-establish relations might seem the best option.

So far, Saudi Arabia decision in August to reopen its border with Qatar to allow pilgrimage to Mecca might have looked like a first step to avoid conflict. Iran has benefited from this measure as well.