JUN Market Update 2017
Qatar’s Diplomatic Gulf
Saudi Arabia, Bahrain, the United Arab Emirates (UAE), and Egypt severed ties with Qatar on 5 June, which included the expulsion of Qatari citizens from all these countries but Egypt. The Saudi-led coalition has cited Qatar’s financial and political support for radical Islamic terrorism as a reason for ostracising the country. The coalition has also called for an end to construc- tive relations with Iran, with which Qatar is jointly developing the world’s largest gas field. Tensions have escalated following an attack on 7 June on Iran’s parliament, with the Islamic State claiming responsibility. Qatar’s small landmass belies its strategic role (Exhibit 1). It is home to the most important US military base in the Middle East, is a major regional air hub, and is the world’s largest producer of liquefied natural gas (LNG). We believe a diplomatic solu- tion to the current suspension in international relations is possible, as Qatar has come to the negotiating table in the past, most recently in 2014 when diplomatic relations were severed with Saudi Arabia, the UAE, and Bahrain. In this update, our analysts in Dubai evaluate the economic and trade aspects of this regional strife that they believe will be focal points for decision makers over the coming months.
Exhibit 1 Qatar Is Strategically Located