June 7, 2017

GCC Crisis

June 2017 witnessed an unprecedented escalation of tensions among the Gulf Cooperation Council states, culminating with Saudi Arabia, the United Arab Emirates, and Bahrain severing ties with Qatar. AGSIW offers insights into the ongoing tensions and identifies the implications for Qatar and its GCC neighbors.


Self-Imposed Barriers to Economic Integration in the GCC

By Karen E. Young

Qatar has lodged a complaint with the World Trade Organization against the United Arab Emirates, Saudi Arabia, and Bahrain for blocking its air traffic and increasing the costs of basic food and medicine imports. Though intra-Gulf state economic relations continue to suffer as a result of the current crisis, there are long-standing barriers to trade and investment flows that deserve consideration. Since the inception of the Gulf Cooperation Council, there have been deep tensions on ceding sovereignty and facilitating the free movement of people, finance, and ideas. While trade flows between the GCC states have been increasing in recent years, some of the most important added value of integration has been in the facilitation of investment flows, the free movement of GCC citizens, and large shared infrastructure investment, such as the Dolphin pipeline between Qatar, the UAE, and Oman.
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Qatar Must Adapt SEZs to New Regional Geopolitical Realities

By Robert Mogielnicki

The Saudi, Bahraini, and Emirati efforts to isolate Qatar logistically as part of the most recent Gulf Cooperation Council crisis will require a restructuring of the country’s plans for special economic zones (SEZs) – commonly known as free zones (FZs) in the rest of the GCC states. The traditional goals of SEZ development include attracting foreign and domestic investment, generating employment, stimulating strategic exports, and developing local human capital. Qatar is mired in the planning and construction stages of three SEZs located near the Hamad International Airport, Hamad Port, and land border with Saudi Arabia. Yet the requirements for successful SEZ implementation have risen substantially, as these SEZs must help reduce commercial bottlenecks, facilitate new trade, and attract a steady flow of investment in the future.
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Enter Erdogan: Turkey’s Economic Stake in the GCC Dispute

By Karen E. Young

On the heels of the G-20 summit in Hamburg, Turkish President Recep Tayyip Erdogan announced plans to visit Kuwait, Saudi Arabia, and Qatar. As the Gulf Cooperation Council diplomatic crisis continues, Erdogan’s presence likely will do little to calm regional tensions. U.S. Secretary of State Rex Tillerson’s own visit resulted in a U.S.-Qatar agreement to combat terrorism financing, but no breakthrough agreement on the Saudi-Emirati led embargo on Qatar.
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Qatar’s Dispute with Neighbors Reverberates in Yemen

By Adam Baron

On the surface, Yemen’s reaction to the Gulf crisis, in which Saudi Arabia, the United Arab Emirates, and Bahrain, along with Egypt, have broken diplomatic ties with Qatar, was rather straightforward: On June 5, Yemen’s internationally recognized government cut ties with Qatar, accusing the country of backing the Houthis and Yemen-based extremist groups. The Qatari armed forces were expelled from the Saudi-led coalition battling the Houthis and their allies to restore Yemen’s government. In reality, however, the situation is far more complicated, and the crisis has made Yemen’s already convoluted conflict all the more complex. Certainly, it has highlighted some of the contradictions facing the anti-Qatar quartet and has exacerbated the existential crisis faced by Yemen’s Muslim Brotherhood-aligned Islah Party, historically one of the country’s most powerful political factions.
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Existing Agreements and U.S. Leadership Emerge as Keys to Resolving Qatar Standoff

By Hussein Ibish

As the crisis regarding Qatar’s relations with four other key Arab countries – Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt – enters its second month, the recent meeting of Arab foreign ministers in Cairo appears to offer a new framework to resolve the standoff. The representatives of the four countries imposing severe restrictions on diplomatic, trade, travel, and communication ties with Qatar met in Cairo to consider their next steps. Qatar had rejected a list of 13 demands the countries had presented, however the foreign ministers did not take any practical steps to escalate the confrontation. To the contrary, they refined their expectations in six newly articulated “principles” that could facilitate mediation by Kuwait, the United States, and others, and centered their demands firmly on the implementation of agreements from 2013 and 2014 already accepted by Qatar.
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Diplomatic Rift May Weaken Qatar’s Negotiating Power in Asian LNG Markets

By Diane Munro

Three weeks after the Gulf Cooperation Council’s worst crisis erupted, the diplomatic and economic boycott imposed on Qatar – the world’s largest exporter of liquefied natural gas (LNG) – has created only marginal logistical disruptions for international LNG markets and has had no impact on oil supplies. Qatar, one of the smallest producers in OPEC at around 600,000 barrels per day, represents just 2 percent of the group’s current production of 32.1 million barrels per day.
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Securing the Qatari State

By David B. Roberts

The small Gulf state of Qatar secures itself in two ways. First, its security is based on close relations with the United States stemming from the provision of the near-irreplaceable Al Udeid Air Base for U.S. military use. Second, diversifying this dependency, Qatar has buried itself into the energy supplies of a range of the world’s more powerful states with its provision of liquefied natural gas (LNG). Add to this a small, stable, and well-provided for set of citizens, and the Qatari state is well-secured.
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Washington’s Competing Priorities in the Qatar Crisis

By Hussein Ibish

On June 20, a U.S. State Department spokesperson announced what seemed to be a crucial shift in the U.S. approach to the confrontation between a group of Washington’s core Arab allies – Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt – and another major partner, Qatar. Noting that “it’s been more than two weeks since the embargo started, we are mystified that the Gulf states have not released to the public, nor to the Qataris, the details about the claims that they are making toward Qatar.” Now, she pointedly added, “we are left with one simple question: Were the actions really about their concerns regarding Qatar’s alleged support for terrorism, or were they about the long simmering grievances between and among the GCC [Gulf Cooperation Council] countries?”
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Qatar Crisis Heightens Obstacles to the Economic Reform Agenda

By Karen E. Young

The isolation of Qatar is but one example of how the politics of the Gulf Arab states are getting in the way of economic diversification and transformation. While there are professed visions of change away from state-led growth, in which new private sector dynamism and the expansion of Gulf equity markets would employ citizens and wean states from oil and gas revenue, the realities of politics on the ground in the last two weeks demonstrate there are more powerful forces at play.
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GCC Crisis: Implications

 

As tensions across the Gulf Arab states escalate, measures taken against Qatar are impacting trade, business, and food security. Here are some implications of the ongoing diplomatic fallout with Qatar.
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Unfulfilled 2014 Riyadh Agreement Defines Current GCC Rift

By Hussein Ibish

Historical context is essential to understanding the escalating rift among the Gulf Cooperation Council states. Saudi Arabia, the United Arab Emirates, and Bahrain broke diplomatic relations with Qatar in 2014. Back then the dispute was resolved within weeks. This time, these three countries, now backed by Egypt, Yemen, and others, have not only broken relations with Doha, they have cut all trade and travel ties, instructed their citizens to return home, and ordered Qatari diplomats to leave within 48 hours and private citizens within 14 days, among other extraordinary gestures. The crisis this time is much deeper, in that it involves broader sanctions, and far wider, in that it draws in more countries. The dispute now rests on what Saudi Arabia and the UAE say are unfulfilled promises from 2014, and additional demands regarding Iran.
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Saudi Leadership and Qatar Media

By Kristin Smith Diwan

This week has seen a precipitous escalation in what is now the sharpest crisis in the history of the Gulf Cooperation Council since the Iraqi invasion of Kuwait. Three members of the GCC – Saudi Arabia, the United Arab Emirates, and Bahrain, joined by Egypt and others – cut off ties to Qatar in a bold, high-stakes move to alter its behavior. Their actions amount to a coordinated attempt to exert maximum pressure on the peninsula state’s leadership, restricting not only diplomatic relations, but the flow of goods and people.
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Isolating Qatar Reveals Economic Vulnerabilities of the GCC

By Karen E. Young

The Saudi, Bahraini and Emirati efforts to isolate Qatar diplomatically and logistically from its Gulf Cooperation Council partners highlights structural weaknesses in many of the Gulf states, not just Qatar. There are a number of shared weaknesses within Gulf economies, mostly because of their dependency on revenue from oil and gas exports, but also because they do not produce their own food, they are extremely sensitive to reliability of electricity generation for both power and water desalination, their geography leaves them very sensitive to threats to air and sea port access, and their labor markets are dependent on foreigners. This island mentality and structural dependency can be exploited, but it can also be a source of unity, as was the intention of the formation of the Gulf Cooperation Council.
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