21st Century Wire
The saga of the Saudi-Qatar dispute continues. This week saw some important developments, which might provide pointers to what is likely to happen in the coming weeks and months, and possibly years.
As expected, the US stepped in to ensure that the Saudis, UAE, and Bahrain did not escalate their actions against Qatar. In particular, it was necessary to prevent any military adventure, which the Saudi Crown Prince, Mohammad bin Sultan (MbS), was perfectly capable of launching, going by his record in Yemen.
This had to be done urgently if the Americans wanted to continue their operations at the Al Udeid air base in Qatar, the forward headquarters of CENTCOM.
In the event, US Secretary of State Rex Tillerson undertook a visit to Qatar and Saudi Arabia, during which he signed an agreement with the Qatari foreign minister on June 11 to combat “terrorism financing.” He said he was trying, along with the Emir of Kuwait, to find a peaceful solution to the crisis.
He also said: “I think Qatar has been quite clear in its positions [regarding terrorism] and I think those have been very reasonable.”
He, however, said on July 13 that the final resolution of the dispute might take “quite a while.”
By signing the anti-terrorism agreement with Qatar and describing Qatar’s position as “very reasonable,” Tillerson sent a clear signal to the Saudis and their allies that the US will not allow an invasion of Qatar.
Tillerson had good reasons to do so. In addition to the Al Udeid air base mentioned above, there is another critical reason why the US cannot let the Saudis invade Doha.
Like most Gulf currencies, the Qatari Riyal is also pegged to the US dollar, and Qatari gas is priced in the same currency.
According to a report by Commerzbank AG, the longer the Saudi-Qatar dispute goes on, the higher the likelihood that Qatar will abandon the Riyal peg to the USD, which would be disastrous for the Dollar, which is already under some pressure.
The USD is often referred to as the “petrodollar,” because most of the global oil exports are priced in the US currency. This is, however, changing, with some countries pricing their oil or gas in the Chinese Yuan and the Euro. If Qatar, the largest exporter of LNG in the world, begins pricing its gas in Euros or some other currency, the underpinnings of the USD will erode, ending the hegemony of the petrodollar.
By openly supporting Qatar, which was the first stop on Tillerson’s Gulf tour, the US was protecting not only its military but also its economic and financial interests, notwithstanding the massive Saudi purchase of US arms, etc., which MbS and his friends [wrongly] interpreted as a license to intimidate Qatar.
As in the past, MbS overplayed his hand, eliciting a sharp rebuke from Qatar and its partners such as the US and some EU countries.
Earlier, in a bid to sabotage Tillerson’s visit to Doha, the Saudis accused Qatar on July 10 of failing to meet its commitments under the 2013 “Riyadh Agreement,” signed by Qatar and Kuwait.
Under that agreement, members of the Gulf Cooperation Council (GCC) pledged to combat funding of terrorism, and refrain from backing any “political currents that pose a threat to any member of the GCC.” They also agreed to expel any member of the Muslim Brotherhood who was not a citizen of a GCC state.
The Riyadh Agreement was supposed to be secret but was leaked, most probably by the Saudis or their allies, to CNN hours before Tillerson’s arrival in the region.
Not to be outdone, the Qataris leaked their own set of documents to an Egyptian newspaper which suggested that the Saudi and UAE Crown Princes had supported ISIS and Al Qaida. Thus, both sides indulged in the washing of some dirty linen in public, to the amusement of outsiders.
The report claimed that Saudi Arabia had exported Wahhabism and other extremist ideas to many European countries including Britain and Germany, and was thus responsible for the radicalization of many Muslims in these countries. It also stated that the Saudis had spent around USD 86 billion in the past 50 years on spreading Wahhabi extremism in Europe.
According to the report, in 2015 there were 110 mosques in the UK preaching Wahhabism and Salafism compared to 28 mosques in 2007. Saudi money was primarily funnelled through mosques, schools, and use of Saudi textbooks in the UK’s independent Islamic schools.
The Saudis, however, remained unfazed by the Report, confident that their oil exports to, and arms purchases from, the West will insulate them from any action by the US, UK, France, etc. This has been the case so far and is likely to be so in the foreseeable future.
They also said that the US-Qatar agreement signed by Tillerson “isn’t enough,” and that Saudi Arabia and its allies will continue their measures against Qatar until their demands were met.
It is important to understand that, fundamentally, the Saudi-Qatar quarrel is about overlordship in the Persian Gulf [the Saudis prefer to call it the “Arabian Gulf”].
For a very long time, the Saudis have seen themselves as the lords of the Gulf, mainly on account of their size, oil, and financial clout. In doing so, they have been supported by the Americans and their allies for their own reasons, such as being one of the biggest buyers of US, UK, and French arms, and the biggest producer of oil in the world.
The Saudis have gotten used to laying down red lines in the Gulf, which no GCC country may cross. Qatar committed the cardinal sin of crossing not only one, but many Saudi red lines, including those pertaining to relations with Iran, the Muslim Brotherhood, and Al Jazeera.
As Qatar became ultra rich in the last decade or so through exports of its LNG, it began harbouring ambitions of punching above its weight. And in the last few years, it actually started doing so.
Its Sovereign Wealth Fund is of the order of USD 335 billion. It has bought prime real estate in the US, UK, and other European countries, in addition to large chunk of shares in many Western multinationals. The West, therefore, cannot allow Qatar to sink, or be invaded.
The Saudis have not been happy with Qatar’s behaviour for quite some time now. They showed their displeasure in 2014 by engineering a crisis which took about eight months to resolve.
But Qatar, apparently, learnt nothing from it and continued to “misbehave,” by crossing Saudi red lines again and again. This included, among other things, opposing some Saudi-backed Jihadi groups in countries like Libya and Syria.
The Qataris also carved out a niche for themselves in regional trouble spots by rescuing some Western nationals, who were held hostage by terrorist and Jihadi groups.
Thus, Qatar used its links with the Taliban to secure the release of US soldier Bowe Bergdahl in May 2014. Three months later it rescued Peter Theo Curtis, a US journalist held by the Nusra Front. Qatar was able to do so because of its close links with such outfits as the Taliban, Hamas, Al Qaida and even Hezbollah.
The US and some other Western countries started viewing Qatar as a regional arbiter of conflicts. Qatar reportedly paid a huge ransom to secure the freedom of 26 members of a Qatari falcon hunting party in April 2017, who were taken hostage by some Iran-backed militias in Iraq. Qatar’s cordial relations with Iran must have come in handy in this operation.
Qatar also sponsored the “Four Towns Agreement” in Syria and negotiated with Iran and Hezbollah to free civilians trapped in areas under siege by Jihadi or government troops.
The Saudis obviously did not like Qatar’s growing regional and international profile, and the country’s increasingly independent foreign policy, which was often not in line with the boundaries laid down by them. They started seeing Qatar as an upstart, the new kid on the block, who had to be put in his place.
A sharp rap on Qatar’s knuckles was necessary, they believed.
The opportunity to do so, they thought, arose after Trump’s visit to Riyadh last month, during which arms deals worth hundreds of billions of USD were signed by the two sides.
Trump also made some statements which were [mistakenly] interpreted by MbS and the UAE Crown Prince Mohammad bin Zayed al Nahyan as a license to do whatever they liked in the Gulf.
MbS was also emboldened by his close personal relations with Trump’s son-in-law Jared Kushner, an Orthodox Jew, who has emerged as Trump’s point-man on the Middle East.
It has been reported recently that Kushner tried and failed to get a half billion dollar loan from a Qatari billionaire to bail out one of his real estate projects in New York which is in serious financial trouble. The Kushners bought a building located at 666 Fifth Avenue in 2007 for $1.8 billion.
Throughout 2015 and 2016 Kushner and his father Charles negotiated with former Qatari Prime Minister Sheikh Hamid bin Jassim al-Thani (HBJ) to refinance the above property, but the deal did not come through.
As a result, Kushner’s $500 million investment in the project has almost been wiped out.
It has been suggested that Kushner was, therefore, not very happy with Qatar, though it would be unfair to penalise a country for the [private] actions of one of its nationals. But it is entirely possible that Kushner would not have minded if the Saudis caused some trouble for the Qataris.
And someone rash like MbS could easily have [mis]interpreted Kushner’s displeasure with HBJ as a green signal to blockade that country, secure in the knowledge that the US would support him against the Qataris.
And he was not completely wrong. It may be noted that for a couple of days after the Saudi action against Qatar, no less than Trump himself kept tweeting his support for the Saudi action, even though his own Secretaries of State and Defence were making statements in support of Qatar!
It took them a few days to educate Trump about the importance of Qatar. The situation was ludicrous; some uncharitable commentators suggested that both Trump and Kushner probably did not know that the Al Udeid air base was located in Qatar!
Be that as it may, Trump finally came around to their point of view and took corrective action, which included sending Tillerson to the Gulf to defuse the crisis and prevent any further reckless behaviour by MbS.
Another important development in this context was the bilateral meeting between Trump and Putin on the margins of the G-20 Summit in Hamburg on July 7. The meeting, which was scheduled for 35 minutes, went on for two hours and fifteen minutes. A number of issues were discussed, including the situation in Syria.
Subsequently, Russian, US, and Jordanian experts agreed to sign an MOU to create a “de-escalation zone” in the Syrian areas of Quneitra, Deraa, and Suweida.
According to some reports, the ceasefire came into effect at 0900 hrs. GMT on July 9 and is holding so far. It also appears, from the statements made by Trump during his recent visit to Paris, that the goal of regime change in Syria has been given up by the West.
However, it would be unwise to take these statements at their face value, because neocons such as Hillary Clinton, John McCain, and their acolytes are still baying for Assad’s blood.
The proof of the pudding should be in the eating. “Wait and Watch” would be a more prudent approach to adopt in the matter.
Meanwhile, life is gradually returning to normal in Doha, after the political earthquake of June 5. In a recent report entitled “Tiny Qatar is living large despite month long Arab siege,” the Washington Post indicated that there was little sign of shortages and hardship in the country. Grocery stores had been restocked with food.
Alternative supply chains for import of fresh produce etc. are now operational, mainly from Iran and Turkey. On July 12, 165 Holstein dairy cows arrived in Doha by air from Germany, the first consignment of about 4000 cattle that Qatar wants to import. They will meet about 30% of the country’s dairy requirements. A new Qatari dairy brand will be introduced.
Qatar’s stock exchange has stabilised after dropping by around 10% immediately following the Saudi sanctions. The country’s Sovereign Wealth Fund of around $350 billion should help in exploiting financial and economic opportunities around the world and absorbing the shocks caused by the blockade.
Personal hardships, involving separation of family members, however, continue. These will take some time to resolve.
The above developments suggest that Qatar is preparing for the long haul, and new realignments are emerging in the region involving Iran, Turkey, and Russia.
It is likely that the Saudi-Qatar rift will continue for months, if not years, further fragmenting the Middle East. Outsiders will get opportunities to fish in troubled waters. Regional instability will grow.
But, in the long term, the Saudis and their allies perhaps stand to lose more than Qatar, in terms of lost business opportunities, tourism, and foreign direct investment.
And the Saudi hegemony over the GCC is likely to be eroded. Kuwait and Oman have not shunned Qatar, which, along with Iran and Turkey, could emerge as a second power centre in the Gulf.
The Saudi Crown Prince could not have imagined this outcome when he tried to isolate Iran and punish Qatar on June 5, 2017. Such are the vagaries of international politics. One wrong move and the law of unintended consequences kicks in.
Niraj Srivastava is a former Ambassador of India who has served in Saudi Arabia, Syria, Libya, and the United States, among other countries.