The end of the Gulf Co-operation Council?

The crisis pitting Saudi Arabia and the UAE against Qatar is the most serious turbulence to afflict the Gulf Co-operation Council (GCC) bloc since what is now called ‘the First Gulf War’, when non-member Iraq briefly invaded and occupied member state Kuwait.

The major difference between today’s crisis and those dramas, of course, is that there is no military dimension now, and no military escalation is to be expected. But the political fallout is massive.

For one thing, it spells a possible end to the GCC, which groups Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman into a bloc that can be compared with a nascent EU. The GCC has served as a politically and economically stabilising factor in the Arab Mideast Gulf since its inception in 1981, although it was seen by some as giving the largest and most powerful member of the alliance — Saudi Arabia — a vehicle to corral its smaller Arab neighbours. Oman, from early on, bucked attempts at such control, and quietly goes its own way on many issues, while Kuwait has managed to plot a separate course for itself, chiefly by trying to mediate regional crises, enabling it to distance itself from Saudi Arabia’s position.

And Kuwait is following a similar path this time round, trying to mediate an end to the political cold war between Saudi Arabia, the UAE and Egypt on the one hand, and Qatar on the other, but its efforts seem to be yielding no results, and the crisis is escalating. The latest twist is a UAE warning that any public expressions of sympathy for Qatar, including in online activity, will be considered as criminal acts punishable by a lengthy jail term and hefty fine. Jordan has downgraded relations with Qatar and, for what it’s worth, far distant Mauritania has joined the boycott.

At the heart of the standoff are demands by Saudi Arabia and the UAE that Qatar ceases its alleged support and financing for groups that Riyadh and Abu Dhabi consider as terrorist. They also accuse it of colluding with Iran to destabilise the region. Doha denies both accusations, and says that it simply wants good neighbourly relations with Iran, and seeks to resolve disputes through dialogue.

There have been political tensions among GCC members over the years – mostly to do with their shared borders, and associated hydrocarbons — or simply with control. The UAE originally claimed a share of Saudi Arabia’s giant 1mn b/d Shaybah field, which is close to the border between the two countries, but Saudi Arabia went ahead and developed the field, bringing it on stream in 1999 without discussing joint reservoir management arrangements with the UAE. Abu Dhabi just had to accept it.

Another more recent example is the dispute between Saudi Arabia and Kuwait over a patch of land in the Neutral Zone sandwiched between the two countries and shared by them. That dispute has led to a shut-in of over 500,000 b/d of shared onshore and offshore output for around two years, although Saudi Arabia has cited environmental reasons for the halt to production. The disagreement rumbles on, almost unheard, and the two countries have swept it under the carpet for now.

Compared with such past and present squabbles, the Saudi-UAE stance on Qatar is in a different league. For the first time ever, the GCC’s two most powerful states have placed a fellow member under almost total blockade, throwing existing free trade and travel and any prospects of a customs and monetary union out of the window. Even if reconciliation is eventually achieved, the damage to trust and credibility is likely to be too deep and permanent to repair.

Unless Kuwaiti mediation succeeds soon — which looks unlikely — the crisis will drag on, with serious economic consequences for Qatar.

It is unlikely that the standoff will have any impact on Qatar’s role within Opec and on its oil and gas output, other than to increase freight costs for exports. Indeed, Doha has told the Kuwaitis that it remains loyal to its Opec cut pledge. And there are indications that the ban on vessels with even a whiff of Qatar about them is being tailored to allow co-loading of crudes.

But the impact that a lasting blockade will have on Qatar’s economy will intensify as the standoff drags on. About 40pc of Qatar’s food supply arrives by truck from Saudi Arabia across Qatar’s only land border. The closure of that border means Qatar, which is a desert country that imports all its food, will have to fully depend on air and sea freight for food supplies. This will inevitably lead to inflation, which Qatari citizens will feel, possibly breeding popular discontent that may pressure the leadership to change its political course to meet Saudi-UAE demands. That could well be the thinking behind the strategy to economically blockade Qatar. Ultimately, such economic hardship could cause a change of leadership.

The closure of the land border between Saudi Arabia and Qatar will also exacerbate the materials shortage — particularly of concrete and steel — that hangs over Qatar’s construction industry as it races to build the infrastructure that will enable it to host the 2022 FIFA World Cup. Delays and higher costs are inevitable.

The timing of the co-ordinated Saudi-UAE-Egyptian action against Qatar is likely to be the outcome of US president Donald Trump’s visit to the region late last month. Saudi Arabia may have felt emboldened to relaunch and intensify efforts that it undertook in 2014 to force Qatar to fall in line with its political lead, in the belief that Trump would be supportive of its efforts. A tweet by Trump showing approval of the campaign against Qatar appears to strengthen that theory. But the US maintains its largest air base in the region at Udeid in Qatar, which hosts some 8,000 US personnel. Qatar invited the US to base its regional airforce presence there after Riyadh asked Washington to move it out of Saudi Arabia because it was creating an extremist Islamist backlash. So, Qatar as well as Saudi Arabia is an important regional US ally, and Washington is going to have to try to mediate a resolution of the standoff. Indeed, by today, Trump was rowing back and calling for Gulf Arab unity.

When the standoff will end and how is unclear. But the strident pronouncements of Riyadh and Abu Dhabi indicate that it could drag on, and the Mideast Gulf could be a very different place by the time it is resolved.

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