Qatar desperate for reconciliation amid deteriorating economy

Sarah Wahid

Qatar has renewed the call to end the boycott imposed on it by Arab countries in an attempt to end the continuous deterioration of its economic sectors and save what is left of the tiny emirate.

It stated that this boycott has affected the solidarity and regional cooperation, which has become more necessary amid the outbreak of the Coronavirus pandemic (COVID-19).

This came in a statement by Ambassador Sheikha Alya Ahmed bin Saif Al -Thani, Permanent Representative of the State of Qatar to the United Nations, in writing to the UN Security Council, which held a virtual meeting on Thursday, on “the situation in the Middle East.”

In June 2017, Saudi Arabia, the United Arab Emirates, Bahrain, Egypt, the Maldives, Mauritania, Senegal, Djibouti, the Comoros, Jordan, Libya, and Yemen severed diplomatic relations with Qatar and banned Qatari airplanes and ships from utilizing their airspace and sea routes along with Saudi Arabia blocking the only land crossing.

The Saudi-led coalition cited Qatar’s support for terrorism as the main reason for their actions, insisting that Qatar has violated a 2014 agreement with the members of the Gulf Cooperation Council (GCC).

Sheikha Alya stressed that “ending the illegal and unjust blockade of the State of Qatar has become more urgent, and ending the blockading countries’ blocking of their airspace for Qatar aircraft, which is a violation of international law and the provisions of the Chicago International Aviation Agreement.”

The ambassador also reiterated the readiness of the State of Qatar to settle the crisis peacefully through constructive, unconditional dialogue based on mutual respect that preserves the sovereignty of the States.

She also renewed the State of Qatar’s appreciation for the sincere efforts of by Kuwait to resolve the crisis, and alleged that the other party continued to refuse the dialogue.

In June 2018, Qatar Central Bank data revealed that Doha had sold bonds and bills worth 59.3 billion riyals ($16.2 billion) since the boycott, while Qatari banks lost $40 billion in foreign financing.

Qatar’s external debt increased to $54 billion dollars, which was mentioned by Qatar Central Bank data in December 2019, which confirmed that Qatar’s total external debt increased by the end of 2019 by about 25% on an annual basis.

CNBC Arabia had also reported that Qatar’s external debt increased by 25.3 percent to about $54 billion.

Moreover, Qatar sold $10 billion in bonds in tranches of 5, 10, and 30 years in April, the first Gulf state to raise cash in the debt markets against a backdrop of low oil prices and market uncertainty caused by the COVID-19 pandemic.

Qatar offered interest equivalent to 300 basis points (bps) over U.S. Treasuries for a $2-billion five-year tranche, 305 bps over the same benchmark for a $3-billion 10-year tranche and 4.4% for the 30-year paper, a document issued by one of the banks leading the deal showed.

Tarek Fahmy, a professor of political science at Cairo University, told The Reference in an interview that Qatar has faced a real crisis in its economic structure since the four Arab states boycotted it, which revealed the fragility of the Qatari economy.

Qatar is currently resorting to reconciliation because it is the last card it holds to save its economy, especially since global economists expected that the Qatari economy will have three to five years before it completely collapses, Fahmy added.