The 2017 Gulf Crisis and Changes in Qatar’s Economic Landscape

Abstract

This chapter analyzes the major transformations that Qatar’s economy went through during the 2017 Gulf crisis. This chapter argues that the Gulf crisis has proved to be a “blessing in disguise.” Qatar confronted unprecedented economic challenges immediately after the blockade, which forced it to take three broad policy initiatives: domestic production, trade diversification and crisis management strategy. This broad policy shift spawns immediate benefits for the country in managing the crisis effectively as well as in making the country resilient to international shocks, whether it is the COVID-19 pandemic or Ukraine war.

Since the discovery of oil, the Gulf Cooperation Council (GCC) states have become the economic hub of West Asia. Oil revenues have transformed the  socio-political, and economic structures of the Gulf region (Al-Sayegh, 1999; Crystal, 1990). The GCC states are now characterized by cutting-edge infrastructure and vast investments in social sectors. Their ascension to development has tied their economies together, making them interdependent and tightly knitted (Sturm et al., 2008).

Partly due to their similar socio-economic developmental trajectory and political arrangements (Davidson, 2019), the Arabian Peninsula has been seen historically as a homogenous region (Al-Hamad, 1997). However, the recent political and diplomatic rift that befell the region challenged the perceptions of its unity. On June 5, 2017, GCC member states Saudi Arabia, UAE, and Bahrain (alongside Egypt) imposed a land, sea, and air embargo on Qatar. In addition to severing all diplomatic ties with their smaller geographically besieged neighbor, the four embargoing countries, commonly referred to as the ‘Quartet,’ abruptly halted trade, financial, and commercial dealings, banned all forms of transport and deported Qatari residents while recalling their citizens from Qatar.

At first glance, the crisis appeared to be a culmination of Qatar’s political tug-of-war with Saudi Arabia for regional dominance and with the UAE for a greater “market share” (Krieg, 2019). Some observers argued that the crisis was grounded in the personal rivalries among the ruling families arising from the clash of visions for the region’s future (Davidson, 2019; Ramesh, 2017).² A few days following the rift, the Quartet put forward a list of thirteen demands Qatar had to fulfill to normalize its relationship with them (AlJazeera, 2017). These demands revealed that the driver of the 2017 political fiasco was Qatar’s insistence on forging an independent foreign policy which its neighbors, primarily Saudi Arabia and UAE, perceived to go against their political interests.

Experts predicted that the embargo would have disastrous consequences for the economy of Qatar and the Gulf region at large.³ While the crisis adversely impacted other GCC states, it was Qatar’s economy that was hit the hardest (Bouoiyour & Selmi, 2019). With the majority of imports coming from or through Saudi Arabia and the UAE (Collins, 2018), the cut-off in the supplies of essential daily products meant that the country faced an imminent political and logistical crisis. The disruption in the supply chain crippled the flow of goods and services, impacting almost all economic activities. The Qatar Stock Exchange index took a nose-dive, losing up to 10 percent of its market value in the first few days, while imports fell by nearly 40 percent (Kerr, 2017). The ensuing frenzy provoked anxiety and confusion among investors and business firms.

Despite the dire situation, Qatar’s economy displayed resilience and growth after the initial crisis period, defying the embargoing countries’ expectations (Kucsera, 2021; Ulrichsen, 2020). The government’s pragmatic approach dampened the shock on the economy. The country launched several national initiatives, including those encouraging self-reliance, increased domestic industrialization, and easing restrictions on foreign investment. Acting ultimately as a “blessing in disguise,” the crisis provided the necessary momentum for the government to push forward economic reforms and legislation (Gharatkar et al., 2021).⁴

This chapter takes a snapshot moment of Qatar’s resilience during the 2017 Gulf Crisis and discusses how the embargo catalyzed changes in Qatar’s economy. It traces Qatar’s approach toward economic policies and its developmental trajectories in the wake of the 2017 Gulf crisis. Although the embargo impacted the political and social spheres as well, this chapter will primarily focus on the changes in the economic sphere. The chapter consists of four main sections. The first section examines the development in the food sector, Qatar’s most vulnerable economic front. The second section deals with the aviation sector which was severly hit by the embargo. The third section focuses on evolving changes in Qatar’s trade relations, and the fourth and final section, followed by the conclusion, provides a brief study of the country’s efforts to boost domestic production and enhannce its capacity to conduct trade through sea routes.

1 Food Security

By natural default, Qatar is a food-import-dependent economy. Marked by its desert and hot climatic conditions, Qatar’s arid terrain is not conducive to agriculture. Its location in one of the world’s most water-stressed regions offers a limited option for food production,  forcing the country to rely on imports for almost 90 percent of its total food consumption (Ismail, 2015). Such trade-based reliance makes Qatar’s food security vulnerable to any disruption in trade, be it political, natural, or economic, as seen during the 2017 embargo. The crisis sharpened food insecurity when the neighboring states cut off all trade to Qatar and prevented ships destined to the peninsula from docking at their ports. For this reason, securing food was one of the foremost priorities of the government.

Nonetheless, food security has been on the Qatari government’s agenda long before the embargo. Similar to other food import-dependent economies, Qatar also felt the urgency to secure its food supplies during the 2008 food price crises. In 2011, the Syrian civil war further hampered the supply of fresh vegetables and fruits to the Gulf region (Fathallah, 2019). In addition to this, the country’s geostrategic location also makes its trade supplies vulnerable to disruption. Around two-thirds of the country’s imports are transported through the narrow Bab al-Mandab and the Strait of Hormuz, which have always  been centers of political conflicts (Amery, 2019).  Hence, Qatar has sought to shrug off its complete reliance on food imports in the past. In the aftermath of the 2008 financial crisis, the country made its first attempt at enhancing food security through the Qatar National Food Security Program (QNFSP). The program aimed to boost domestic production upto 40 percent by 2030. However, the project remained dormant until the 2017 crisis (Almohamadi, 2017).

The Gulf crisis forced the Qatari government to reconsider its food security policies. In 2018, the government launched a new action plan, Qatar National Food Security Strategy (2018–2023), which was focused on four pillars: diversifying international and trade logistics, boosting local production, securing strategic reserves, and protecting domestic markets (QNFS, 2020). As evident by the strategy, the government appears to accept that the country will always have a food trade deficit, but the major lesson learned from the embargo was to promote diversification of import sources by geographically diversifying trade partners and limiting exposure to external factors affecting trade, such as political rifts or natural disasters. In addition to  trade diversification, the  government recognized the importance of increasing self-sufficiency in perishable commodities and securing adequate but sensible reserves to act as buffers against temporary import or production disruptions. The strategy while acting as an insurance policy against long-term shocks, also encouraged streamlining the domestic market model (from farms to retail stores). It ensured transparency in the price-setting process and assisted farmers in improving their productivity and quality. An example of this is Mahaseel, a government-established company that helps market farmers’ products, giving them time to focus on production rather than packaging, labeling, and retail marketing.

With investments in food projects, Qatar moved into an unchartered territory with no substantial experience of domestic food production. However, the reports suggest that the country’s new initiatives were aimed in the right direction (Mazzoni, 2022; Peninsula, 2021). There was a rapid increase in agricultural activity across the country and local food production witnessed a significant boost (Peninsula, 2019). Founded just a month before the rift, the aptly labeled farm Baladna (i.e., our nation) became the main domestic supplier of dairy products (Sayegh, 2017). It was widely recognized as a symbol of national resilience and one of the first steps towards achieving self-dependency in the food sector. With little experience in large-scale dairy production, the country was able to meet its domestic demand for dairy products within a short period. Qatar’s self-sufficiency in dairy products increased from 27% in 2016 to 68% in 2018.⁵ By 2020, domestic production exceeded domestic demand (self-sufficiency reached 106%), and Baladna considered exporting its dairy products to other countries as well (Pathak, 2020). Similar noteworthy achievements were made in poultry and fish production (Table 27.1). The successful trial of local food production boosted the nation’s morale.

Table 27.1 Qatar’s self-sufficiency, 2016, 2018, 2020

Before the rift, Qatar had invested in agricultural land overseas in Australia, Sudan, and Tanzania to secure an uninterrupted food supply in the future. It also invested in agricultural projects in Cambodia, Pakistan, the Philippines, and Vietnam (Ismail, 2015; Wellesley, 2019). In 2008, Qatar Investment Authority (QIA) established an agricultural investment arm, Hassad Food, to manage country’s domestic and foreign investments in the food sector. In addition to intensifying foreign investments in the agricultural sectors following the rift, the government also increased its investment in the domestic market to support local producers and develop their marketing capabilities (Wellesley, 2019).

Qatar also received support from other states in the Middle East region. Prior to embargo, Saudi Arabia and the United Arab Emirates were among Qatar’s top ten import partners, supplying almost 30% of total food products. In 2016, Saudi Arabia exported 14% of total food imports of the country, while the UAE exported 13%.⁷ With the severing of trade relations with its primary trade partners, the besieged peninsula was forced to find alternative food sources and direct trade routes. Its neighbors, primarily, Iran, Turkey, Oman, Kuwait and India extended their supports. By sending hundreds of planes and ships carrying essential food supplies, these and other states played a crucial role in ensuring that the Qatari population did not face acute food shortages.

Iran,  arguably, saw the 2017 Gulf crisis as an invaluable opportunity to fulfill the gap created by Saudi Arabia. Even though Qatar’s relationship with Iran was one of the prime concerns of embargoing countries,  Qatar and Iran boosted their economic ties during the blockade (Sudetic & Cafiero, 2021). According to a report published by Fars News Agency, Iran sent a significant stock of fruits and vegetables to ease the pressure on Qatar’s food sector.⁸ The spokesman of Iran Air, Shahrokh Noushabadi, said that some 90 tons of food items such as fruit and vegetables were sent to Doha by five planes.⁹ He added that the country would continue to deliver  food supplies as long as there was a demand for it. Moreover, three ships loaded with 350 tons of food were set to leave an Iranian port for Qatar.¹⁰

The blockading countries also resented Qatar’s relations with Turkey. One of the thirteen demands issued by the Quartet was that Qatar should cut its military ties with Turkey (AlJazeera, 2017). Despite the damand, the relationship between these two countries grew stronger during the blockade. Immediately after the embargo, Turkey sent food stocks to Qatar to ensure the supplies were not disrupted (Simmons, 2017). Four months after the blockade, Qatar’s imports from Turkey increased by 90 percent.¹¹ In an interview, Nihat Zeybekci, the then minister of economy, said that Turkey had sent more than 100 cargo planes with food supplies.¹²

Kuwait and Oman, the GCC’s remaining member states, did not participate in the embargo imposed on Qatar. Both had since significantly improved their trade and economi cties and supported the besieged country at various fronts. Meanwhile, Qatar’s Mediterranean ally Greece also offered to help amid the crisis. The country was planning to share its expertise on agricultural technologies to enhance Qatar’s capacity for domestic food production (Alagos, 2018). In his interview with Gulf Times, the Chairman of the Greece-Qatar Business Council, Panagiotis G Mihalos stated: “in line with the Qatar government’s efforts towards food security and achieving self-sufficiency, I hope we can play a role in all of this” (Alagos, 2018).

Due to its pragmatic economic and foreign policies, Qatar was able to secure its food supply in the subsequent period after the embargo. It also began exporting some food items to other countries, largely as a show of strength. In a 2019 interview with Al Arab newspaper, Dr. Mohammed bin Saif Al Kuwari, Assistant Undersecretary at the Ministry of Municipality and Environment, asserted that Qatar had achieved an unprecedented level of independence from importing food items and that the government is expecting growth in food exports of dairy products, vegetables, and poultry.¹³

The Qatari government’s investments and increased spending on the food industry played a crucial role in supporting the country’s food sector. Governmental support ranged from subsidized utilities for new farm owners to business development funds for new food processors.¹⁴ The Ministry of Municipality and Environment initiated several projects collaborating with various national companies to enhance agriculture, dairy, and fish production. As a result, Qatar’s local production doubled in 2019 compared to 2014. Furthermore, the country  aimed to cut its agricultural import up to 70 percent by 2023 (Karanisa, et al., 2021).

The challanges that Qatar encountered during the embargo resulted in the preparation of sudden crises such as COVID-19 pandemic as well as Russian-Ukrainian conflict. During a public webinar on May 20, 2020, prior to the Gulf reconciliation, the Qatari Minister of Municipality and Environment, Abdulla bin Abdulaziz Al Subaie, shared that Qatar’s experience from the embargo helped it mitigate the food shortages that occurred due to the global pandemic. He stated: “On food security, we have learned the hard way due to the blockade. We developed many strategies to deal with a crisis… When the global COVID-19 crisis began, the State of Qatar was one of the countries least affected” (Shoeb, 2020). Shortly following the Russian invasion of Ukraine, concerns of energy and food supplies rose again all over the globe. With respect to Qatar, Dr. Masoud Al Marri, Director of The Food Security Department at Ministry of Municipality, stated that “wheat stock in Qatar could serve the country up to 6 months.”¹⁵ Due to these preparations, Qatar ranked 24th in Global Food Security Index and first in the Middle East region in 2021.¹⁶

2 Aviation Sector

After the discovery of oil, the aviation sector in the Gulf region has grown manifolds. Its strategic location, abundance of natural resources, low operating cost, and high disposable income have facilitated the smooth development of the aviation industry (Petcu, 2021). So far, the GCC states have invested almost US$313 billion in their aviation sectors (Capital, 2015). The region hosts some of the world’s busiest airports and largest airlines such as Qatar Airways, Emirates and Etihad (Economist, 2020; Ulrichsen K. C., 2015). These three airlines account for almost 75 percent of total air traffic in the region (Petcu, 2021). Between 2007 and 2013, the Gulf aviation sector saw an increase of 27 percent in tourist arrivals, and reports suggest that the numbers will rise up to 92 percent by the end of 2024 (Tessler & El Beyrouty, 2015).

Qatar’s national carrier, Qatar Airways, saw a rapid development between 2000–2008 (Hansman & Ishutkina, 2009), reporting an annual growth of 20 percent until 2016 (Law, 2017). By 2019, the airline had acquired 250 aircraft and was contemplating to further expand its fleet size (Qatar Airways Group, 2019). With an order of more than 100 new aircraft worth US$18 billion in 2016, Qatar Airways sought to challenge the hegemony of UAE’s Etihad and Emirate Airlines (Law, 2017). Additionally, the airline employed more than 46,000 staff by 2019 (Qatar Airways Group, 2019). In tandem with the investment in its national carrier, the Qatari government heavily invested in the infrastructure of its new national airport, Hamad International Airport, valued at US$16 billion—making it the highest value investment in a single project in the Gulf region (Petcu, 2021).

With a resident population of less than three million, Qatar relies heavily on incoming and transiting travelers for its aviation sector. Through massive investments in the expansion of its national airline and airport, the country has embarked on a project to facilitate the smooth flow of goods and people. Furthermore, the aviation sector plays a central role in projecting the country as a favorable tourist destination, and it is an indispensable asset in achieving the country’s “Vision 2030”.¹⁷ Any disruption to the sector is likely to hamper Qatar’s national development.

Such was the case in 2017 when several GCC members imposed a ban on Qatar Airways from flying into or over their territories and airspaces. The ban sent a shock wave across Qatar Airways operations, making the aviation sector the most impacted industry during the embargo (Capital, 2015). Consequently, hundreds of Qatar Airways’ flights that previously cruised through the airspace of neighboring Gulf countries, now had to either stop flying or change their previous routes (BBC, 2017). Flights to Saudi Arabia, Bahrain, UAE, and Egypt were grounded. The airline used to operate around 20 flights daily to Dubai alone. The ban led to the dropping of 18 regional routes (France24, 2018). Moreover, Qatar Airways offices in the embargoing countries were banned from operating, with hundreds of employees left out of job overnight (Law, 2017).

The airspace restrictions put immense pressure on the airline as it had to find alternate flight routes. For the most part, Qatar Airways’ flights had to take longer routes through the Iranian airspace, which led to significant delays in flight durations and increased fuel expenses. Another consequence of the airspace restrictions was that Qatar’s air-bound imports decreased considerably in 2017, shrinking by 40 percent from 2016 to 2017 (Law, 2017). As a result, Qatar Airways’ revenues saw a decrease of up to 19 percent, with a 20 percent downfall in the number of travelers flying with the airline (Deutsche Presse-Agentur, 2019). Due to this, the airline significantly lost its revenues during the first year of the Gulf crisis. Dubbed as the “most challenging year in its 20-year history,” in 2017, Qatar Airways announced a financial loss of almost $69 m.¹⁸ In the following fiscal year, 2018–2019, the loss was estimated to be up to US$500 million (Group, 2019).

Despite facing the tremendous challenges to keep its operation running, the airline expanded its services to new destinations. Significant among these were its services to several countries in the African continent,  such as Morocco, Somalia, Botswana, and Angola. By expanding its operation to lesser-known destinations in Africa, Qatar Airways cemented its position in these niche locations and proved its capacity to bounce back. Moreover, defying the embargo’s impact, Qatar Airways acquired a 49 percent stake in Meridiana, an Italian Airline company (Law, 2017). In 2019, the airlines bought a five percent share of China Southern Airlines and obtained a 25 percent stake in Vnukovo International Airport in Moscow as well (Qatar Airways Group, 2019). Besides that, Qatar Airways Cargo placed an order for five Boeing 777 Freighters in 2018 to meet increased transport demand.¹⁹

To increase the airline’s revenue, the governmet developed a strategy to attract foriegn tourists  by implementing a visa-free travel scheme eligible to more than 80 nationalities (Qatar Airways, 2017a, 2017b). Qatar also launched public relations campaigns aimed at nation branding to further enhance the country’s image (Kamel, 2017).  The use of social media was instrumental during the crisis to reshape the narrative and counter negative perceptions. Qatar Airways published a video message titled “No borders, only horizons” to denounce the unjustified embargo (Kamel, 2017). The video was viewed more than 54 million times on social media sites (Qatar Airways, 2017a, 2017b).

Furthermore, a Qatari artist designed a black and white sketch of Qatar’s Emir, Sheikh Tamim bin Hamad Al Thani, which was painted on a Qatar Airways Cargo, Boeing 747–8 Freighter (Prabhakaran, 2017). The sketch became an iconic symbol that encapsulated Qatar’s resistance against the abrupt embargo. Qatari citizens and residents alike used the sketch as stickers on their vehicles and on buildings’ exteriors to showcase their solidarity with the nation.

3 Emerging Trade Partners

In the aftermath of 2017 crisis, Qatar needed to proactively engage in the Middle East region to ensure its economic and  political  interests were not jeopardized. The country strategically increased its engagements with Iran and Turkey. In addition to supplying food and other essential goods, Iran provided Qatar with a crucial air passage to connect its airline to the rest of the world (Kabbani, 2021), while Turkey was a source of both material and political support. After the embargo, Qatar boosted its military and economic ties with Turkey (Altunışık, 2021). In 2018, the trade volume between the two countries stood at US$1.4 billion, an increase of 57 percent in comparison with 2017.²⁰ Furthermore, Qatari investments in Turkey increased considerably, surpassing US$22 billion (MEMO, 2020). On the military front, the country acquired a 49.9 percent stake in Turkish tank maintenance company BMC (Altunışık, 2021).

The embargo also provided Qatar an opportunity to strengthen its relationship with Malaysia and Indonesia, the Muslim-majority countries in the Asia–Pacific region. Previously, Qatar and Malaysia had enjoyed a steady trade partnership. Hossain and Mohamad Shukri  (2021) noted that, “the state of the Malaysia–Qatar bilateral relationship is good and has withstood the changing nature of the international and regional orders in the Middle East and Southeast Asia.” In comparison with 2016, Qatar’s trade volume with Malaysia increased by 18.6 percent in 2017, an amount equal to US$672.4 million (Hossain & Mohamad Shukri, 2021). After the embargo, the Malaysian and Qatari governments signed four memorandums of understanding (MoU) (Cafiero, 2017). In the aftermath of the 2017 political crisis, Qatar also forged a favorable relationship with Indonesia. Ridwan Hassan, the Indonesian Ambassador to Qatar, asserted that the trade engagement between the two countries grew during the crisis (Agonia, 2021). In 2017, Qatar Chamber Chairman, Sheikh Khalifa bin Jassim Al Thani, mentioned that Qatar was “very keen” on strengthening its cooperation with Indonesia in all fields (Qatar Chamber, 2017). Qatar’s Emir also traveled to Indonesia and signed memorandums in health, education, and aviation sectors (Agonia, 2021).

Moving beyond its traditional trade partners in the Arab world, Qatar boosted its trade relations with other Asian partners such as South Korea and Azerbaijan. In 2018, the trade volume between South Korea and Qatar stood at almost $12.5 bn.²¹ Both countries vowed to increase their economic engagements through investments in private sectors. In January 2019, trade representatives from both the countries met and discussed ways to strengthen their bilateral relationship. During a meeting with his Qatari counterpart, the South Korean Trade Minister, Kim Hyun-Chong, praised Qatar’s pragmatic approaches during the crisis and reiterated his government’s support to Qatar (The Peninsula, 2019). Additionally, he suggested that Qatar use this crisis to expand its trade outreach.²²

Meanwhile, Azerbaijan’s sovereign wealth fund (the State Oil Fund of the Republic of Azerbaijan) significantly increased its engagement with Qatar. The fund’s executive director stated: “once we find investment opportunities in Qatar, we will invest” (Mohamed, 2019). Azerbaijan’s leaders signaled further support for Qatar when Aslan Aslanov, the Chairman of the Board of Azerbaijan State News Agency (AZERTAC) and President of the Organization of Asia–Pacific News Agencies (OANA), stated that “we have a good relationship with Qatar News Agency, and we have signed a memorandum of cooperation to exchange information between the agencies” (Mohamed, 2019).

Qatar also galvanized further international support in its favor. Major powers such as the United States, Russia, France, and the United Kingdom signaled their support for a peaceful de-escalation of the brewing political crisis.²³ The United Nations, similarly, requested the embargo nations to “de-escalate the tensions and engage in direct dialogue” and cautioned them from taking any “unilateral steps.”²⁴ Qatar’s global outreach helped the country build new relationships with other states and paved the way for increased investment and trade partnerships with major international companies while boosting global confidence in its economy. Contrary to its aim, the embargo bolstered Qatar’s ties with countries around the globe. It provided Qatar with further incentive to continue charting its independent foreign policy. Along with solidifying relationships with its traditional partners, Qatar’s foreign policy during the embargo successfully brought many other countries to its list of strategic partners.

4 National Seaports and Domestic Production

As Qatar’s economy dominantly relies on imports, the trade embargo initially affected the country’s overall economic performance. Qatar reported an import deficit of almost $1.6 billion during the first year of embargo (Law, 2017). In 2017, the volume of imports decreased by nearly 40 percent (Petcu, 2021). This decline in imports highlighted the economy’s vulnerability to political events. As Egyptian columnist Mustafa Amin  noted: “the current blockade, not imposed against a background of war, yet obtaining between countries of the same religion, culture, and language, is unambiguously intended to harm Qatar’s economy, besides demonizing it regionally and globally” (Ali, 2021). In a bid to overcome the disruption to its economy’s supply chains, the government galvanized the private sector to lead the effort towards finding alternatives (Kabbani, 2021). Qatari policymakers had no choice but to encourage costly yet necessary local production, diversify trade partners even if at a cost to the government, relax custom regulations, and reconfigure trade routes to meet the local population’s demand for goods (Oxford Business Group, 2019).

One of the major developments during the crisis was the inauguration of Hamad Port a few months after the embargo. The port connects the Gulf nation directly to its traditional partners such as Pakistan, India, Oman, and Turkey.²⁵ Although the rift limited shipping options and made them less competitive for local importers in the short to medium term (Tan & Jaganathan, 2017), Qatari commercial ports benefited from the embargo. Qatar’s maritime connectivity improved significantly between 2016 and 2018, according to the United Nations Conference on Trade and Development’s (UNCTAD) Liner Shipping Connectivity Index (LSCI)—a measure of a country’s port connectivity and access to international markets (UNCTAD, 2019). In 2016, Qatar’s index was at 9.15, among the lowest globally and the lowest in the GCC; the index rose to 33.7 in 2018, making Qatar one of the few countries whose index has made such a remarkable leap in mere two years (see Table 27.2 for comparison with other GCC port indices). During the rift, Qatari authorities increased domestic port capacities and established new direct and connecting trading routes, linking Doha to major trading hubs. As a result, by the end of 2018, Qatar began transporting 39% of its imports via air cargo and 61% via sea cargo (see Fig. 27.1). Qatari importers had learned to live without the use of neighboring ports. 

Table 27.2 GCC liner shipping connectivity index

Fig. 27.1

(Note A peninsula nearly encircled by water, Qatar’s only land border is the one it shares with Saudi Arabia. Before the embargo and shutting of the land border, nearly a quarter of Qatar’s imports were transported through this land border. Similarly, Qatar’s market size was too small for direct shipments to be delivered to it directly. Like other smaller Gulf states, Qatar relied on UAE ports to redistribute nearly half of its imports. By 2018, Qatar shifted reliance on its domestic sea- and airports to transport goods in and out of the country. Source Data from the State of Qatar’s Planning and Statistics Authority [2018]²⁷)

Qatar’s Imports by Port of Entry, 2016–2018

To reduce its reliance on imports, the government also encouraged domestic production.  In 2017, Qatar’s Ministry of Commerce and Industry (MoCI) launched the initiative, “National Product,” to support domestically produced goods.²⁸ Under the theme “Together to Support National Products,” the initiative aimed to promote local industries and businesses (Peninsula, 2017).²⁹ All malls and retail shops in Qatar were advised to place goods with the “National Product” logo on display (Marhaba, 2019). MoCI also passed a decree banning all the products originating from the embargoing countries (Reuters, 2018). According to Qatar’s Government Communications Office (GCO), the decree was intended to “protect the safety of consumers,”³⁰ given that products from the embargoing countries no longer passed through the necessary channels “to undergo proper import inspections and customs procedures.”³¹ The project boosted the confidence of local business enterprises which saw the embargo as an opportunity to expand their presence in their national market (Gulf Times, 2017). Previously, local products were in direct competition with often heavily subsidized imported products from the neighboring Gulf countries. Now, in the absence of fierce competition, Qatari new businesses had grown rapidly during the Gulf crisis.

Qatar’s economic initiatives during the embargo left a significant international mark. Various international economic organizations praised the country’s economic resilience. The International Monetary Fund (IMF) reported that the embargo had not significantly impacted the economy; rather, it had served as an opportunity for the small Gulf nation to realize its economic potential.³² IMF reported that the country was readily able to thwart the negative consequences of the economic embargo and turn the tide in its favor. A report published by Qatar’s Ministry of Finance suggested that the country had made a significant recovery after the embargo, reaching a surplus of 2.8 percent in 2018 compared to a deficit of 1.6 percent in 2017.³³ For its effort in improving the economy, World Economic Forum (WEF) termed Qatar the second-best competitive economy in the Arab world (Myers, 2018).

In a show of support, Qatar’s Emir praised the country’s collective effort and resilience in a public speech given in November 2019.³⁴ The leader of the besieged but economically-resilient nation suggested that the country needed to push further to sustain the rapidly growing private sectors, promising to review the burdensome bureaucratic process that “hampers progression and development.”³⁵

5 Summary

As expected, the calculated nature of the Gulf crisis carried significant economic consequences, but beating the odds, Qatar’s economy displayed resilience and adaptability. The economic impacts of the crisis were alone expected to bring the peninsula to its knees, but the slew of reforms, mostly driven by government initiatives, helped the country turn the tide in its favor. While causing significant losses to certain sectors, the crisis, arguably, provided an impetus to much-needed reforms in the Qatari economy.

During the embargo, one of the most notable accomplishments was the significant development in Qatar’s food sector. The halting of trade with some neighboring countries posed a threat to food security since Qatar relied on imports to fulfill 90 percent of its domestic food demands. To turn scarcity into abundance and decrease its dependence on food imports, the government enacted a new food security agenda, helping the economy achieve self-sufficiency in fish, poultry and dairy products. Consequently, the crisis shaped Qatar’s food security policies for years to come. The embargo also transformed the country’s aviation sector. Despite being  heavily impacted by the 2017 Gulf crisis, Qatar airways managed to thwart the challenges posed by the embargo. It emerged as a key symbol of the country’s defiance. Notwithstanding significant revenue loss, the airline expanded its commercial interests worldwide. Its decision to acquire stakes in major international airlines showed its willingness to open new windows of opportunities.

 Experiencing the Gulf rift better prepared Qatar for the COVID-19 global pandemic. Its experience with diversifying trade routes, partners, and import sources, gave the peninsula leverage over its neighbors during the early months of global disruptions to food and trade supply. Qatar had a strategic food reserve to utilize during the pandemic’s disruption to the global food trade, not to mention local production and a range of geographically diverse trade partners to lean on, developed primarily during the embargo. However, the question remains whether Qatar’s diversification and self-reliance policies will withstand future challenges. To date, it appears that the government is serious about preserving the infant industries it nourished during the rift. Given these hard-learned economic lessons, it is unlikely that Qatar will return to pre-rift levels of dependence on its neighbors. To sum it up, it is not far-fetched to argue that the embargo proved to be a “blessing in disguise.”

Notes

• 2. H. E. Yussuf al Otaiba, UAE Ambassador to the United States discusses UAE’s disagreement with Qatar over the future of the Middle East on Charlie Rose show. (2017). Qatar and the Middle East, broadcasted June 26 2017. https://charlierose.com/videos/30799.

• 3. In 2017, the IMF projected that the Gulf crisis would weaken the region’s medium-term growth. IMF (2017), Regional Economic Outlook: Middle East and Central Asia, October 2017, p. 20, https://www.imf.org/~/media/Files/Publications/REO/MCD-CCA/2017/October/MENAP/mcd-printer-without.ashx?la=en (accessed February 10, 2022).

• 4. “Qatar makes giant strides in food security initiative,” (2019), https://www.gulf-times.com/story/624920/100-self-sufficiency-achieved-in-poultry-meat-dair.

• 5. https://www.mme.gov.qa/pdocs/cview?siteID=2&docID=19772&year=2020 & https://www.psa.gov.qa/en/statistics1/Pages/default.aspx.

• 6. https://www.psa.gov.qa/en/statistics1/Pages/default.aspx & https://www.mme.gov.qa/pdocs/cview?siteID=2&docID=19772&year=2020.

• 7. https://www.psa.gov.qa/en/statistics1/Pages/default.aspx.

• 8. Pakistan Today (2017, June 22). Iran sends 1,100 tonnes of food to Qatar daily: Report.

• 9. Iran Air tweeted a photo of Boeing 747 loaded with food supplies at Shiraz Airport.

• 10. NDTV. (2017, June 11). Iran Sends 5 Planes of Vegetables to Qatar Amid Concerns of Shortages. Retrieved August 7, 2019, retrieved from, https://www.ndtv.com/world-news/iran-has-sent-5-planes-filled-with-food-supplies-to-qatar-iran-air-1710652.

• 11. How Turkey stood by Qatar amid the Gulf crisis, retrieved from https://www.aljazeera.com/news/2017/11/14/how-turkey-stood-by-qatar-amid-the-gulf-crisis.

• 12. Turkey sent 197 cargo planes to Qatar since the dispute began, retrieved from https://www.chinadailyhk.com/articles/190/153/196/1555663737198.html.

• 13. The Peninsula (2018, December 23). Qatar will start exporting food items from 2019: Official.

• 14. Retrieved from https://www.mme.gov.qa/pdocs/cview?siteID=2&docID=19772&year=2020 & https://www.mdpi.com/2073-4441/12/4/1051/htm.

• 15. The wheat stock in Qatar is enough for 6 months, retrieved from, https://www.wgoqatar.com/182919

• 16. Qatar ranks first in Arab world in Global Food Security Index for 2021, retrieved from https://www.qatar-tribune.com/news-details/id/228405/qatar-ranks-first-in-arab-world-in-global-food-security-index-for-2021.

• 17. Read: Qatar National Vision 2030, retrieved from, https://www.gco.gov.qa/wp-content/uploads/2016/09/GCO-QNV-English.pdf.

• 18. Gulf Times (2018, October 24). How airspace is distributed in the Gulf.

• 19. Kevin (2018, May 14). Qatar Airways and the Blockade. Flight Report.

• 20. Turkey-Qatar Economic and Trade Relations, retrieved from https://www.mfa.gov.tr/turkey_s-commercial-and-economic-relations-with-qatar.en.mfa.

• 21. Qatar South Korea trade. retrieved from https://oec.world/en/profile/bilateral-country/qat/partner/kor.

• 22. Gulf Times (2019, January 14). Qatar, South Korea explore joint investments across sectors to boost trade ties. Gulf Times.

• 23. US and Russia call for dialogue over Qatar-GCC dispute. Retrieved August 9, 2019, from Aljazeera.com, retrieved fromhttps://www.aljazeera.com/news/2017/06/russia-call-dialogue-qatar-gcc-dispute-170611132858154.html.

• 24. Ibid.

• 25. Hamad Port, retrieved from https://aecom.com/qa/projects/hamad-port/.

• 26. UNCTAD. (2021). Liner Shipping Connectivity Index (LSCI). United Nations Conference on Trade and Development, retrieved from, https://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=92.

• 27. Planning & Statistics Authority. (2019). Foreign Trade Statistics for Year 2019. State of Qatar’s Planning & Statistics Authority, retrieved from, https://www.psa.gov.qa/en/statistics1/ft/Pages/advancedsearch.aspx.

• 28. National Product Initiative, retrieved from, https://www.moci.gov.qa/en/mec_news/ministry-of-economy-and-commerce-unveils-the-national-product-initiative-under-the-theme-together-to-support-national-products/.

• 29. Marhaba, June 3 2017, retrieved from https://www.marhaba.qa/made-in-qatar/.

• 30. Statement by the GCO on Protecting the Safety of Consumers and to Combat Improper Trafficking of Goods, retrieved from https://www.gco.gov.qa/en/2018/05/26/statement-by-the-gco-on-protecting-the-safety-of-consumers-and-to-combat-improper-trafficking-of-goods/.

• 31. Ibid.

• 32. Al Jazeera English (2018, March 7). Businesses in Qatar booming since Gulf crisis began.

• 33. Al Jazeera English (2018, May 18). Qatar-Gulf crisis: All latest updates.

• 34. Al Jazeera English (2019, November 5). Emir says Qatar has overcome obstacles of the Gulf blockade. Al Jazeera English.

• 35. Ibid.