"We're Back To Square One" - Saudi Bloc Reinstates Demands As Qatar Economy Collapses

Tyler Durden's picture

Authored by Tsvetana Paraskova via OilPrice.com,

The four countries leading the boycott against Qatar are going back to their list of 13 demands for Doha to meet before talks can start, essentially reverting the Arab Gulf spat back to square one.    

At the same time, economic data for June shows that Qatar’s imports plummeted due to the blockade imposed by most of its neighbors, and foreign deposits at Qatari banks dropped to their lowest in nearly two years. 

However, Qatar has a huge sovereign wealth fund, and boasts considerable foreign exchange reserves. Although Qatar’s non-oil economy is expected to see some pressure due to the fact that it has to use alternative trade routes, the world’s largest LNG exporter has not seen its LNG trade disrupted yet, which is precisely why analysts do not see the blockade as potentially crippling Qatar’s economy. Rather, they see it as merely straining economic growth.

Saudi Arabia, Bahrain, Egypt, and the United Arab Emirates (UAE) – the four countries leading the boycott on Qatar – issued on June 22 a list of 13 demands to Qatar, which included severing ties with Saudi archrival Iran, and shutting down the Al-Jazeera TV network. 

Two weeks ago, diplomats from the four countries signaled that they no longer wanted Qatar to comply with the 13 demands, instead proposing six broad principles that they want Qatar to sign onto. The principles included denying safe havens and financing to terrorists, combating terrorism and extremism, stopping incitement of hatred and violence, and refraining from interfering in the internal politics of other countries, the New York Times reported.

This past Sunday, however, the four countries said that apart from the six principles, they insisted on Qatar meeting those 13 demands, reverting to their original conditions, which analysts had thought were too steep for Qatar to meet.

“We are back to square one,” Abdullah Al-Shayji, a political science professor at Kuwait University, told Bloomberg, commenting on the latest twist in the Qatar crisis.

 

“We have not progressed an inch because we were under the impression that the 13 demands were not only null and void but channeled into six principles. It seems that they are not budging and are escalating,” Al-Shayji said.

The blockade imposed by the four states is forcing Qatar to seek alternative—and more expensive—routes for trade, and its imports dropped in June by 40 percent compared to June last year, Bloomberg data show.

Qatar is flying in cows from Germany to address milk demand, and is arranging new shipping routes through ports in neutral Oman. 

But Qatar’s continuing oil and gas exports, as well as significant forex reserves, are the reason why analysts are not as pessimistic as they would have been if LNG trade were disrupted or cash reserves low. The latest Reuters poll on the Gulf economies lowered expectations for Qatar’s economic growth this year to 2.3 percent from the previous 3.5-percent-growth forecast. Still, analysts expected Qatar to outperform most of its neighbors, including Saudi Arabia whose median GDP growth estimate was reduced to just 0.1 percent this year, from 0.5 percent expected earlier.

The Qatar Central Bank has US$40 billion in cash reserves plus gold, while the Qatar Investment Authority has US$300 billion in reserves that it could liquidate, the Governor of Qatar Central Bank, Sheikh Abdulla Bin Saud Al-Thani, told CNBC in an interview in early July, one month into the blockade. “We have enough cash to preserve any - any kind of shock,” the governor said.

Qatar’s LNG flows are stable, Steve Hill, Executive Vice-President for Gas and Energy Marketing and Trading at one of the largest LNG traders, Shell, said on July 10.

On July 4, Moody’s changed the outlook on Qatar’s rating to negative from stable, on expectations that the dispute would not end quickly. But the rating agency affirmed the long-term issuer and senior unsecured debt ratings of Qatar, citing “sizable net asset position of the government and exceptionally high levels of wealth.”

“Moody's also acknowledges the fact that as long as hydrocarbon exports are not disrupted, the ongoing dispute will not affect the overwhelming majority of foreign exchange receipts in the current account balance and the bulk of government revenues,” the rating agency noted.

An end to the dispute is currently nowhere in sight. Just a day after the four states reverted to their 13 demands, Qatar said that it had filed a complaint with the World Trade Organization (WTO) to challenge the boycott.

Qatar requested consultations with Saudi Arabia, Bahrain, and the UAE, triggering a 60-day period for the three countries to either settle the trade complaint or face litigation at the WTO, Reuters reported, citing the director of Qatar’s WTO office Ali Alwaleed al-Thani.

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poland spring's picture

I wonder why Iran isn't seizing this golden opportunity as far as trade goes...Or maybe they are and MSM not reporting it?

Looney's picture

How can we help resolving the crisis between Saudi Arabia and Qatar?

<<<    Nuke them both

<<<    Give them a couple of nukes each, so they can nuke each other

Looney   ;-)

SethPoor's picture

I take "C", both of the above; Alex.

MK13's picture

Ultimately the way to modernize Islam is to have shiites and sunnis kill few hundred million each, aka German experience in 100 year war. Nothing brings desire for peace like unlimited, generational barbarism and violence.

In the meantime, close borders to anyone trying to leave. Force locals to solve gdsue own issues.

a Smudge by any other name's picture

Unlimited generational barbarism and violence. Wow. Have you filed for patent and trademark protection on that yet?

sinbad2's picture

That wouldn't be very smart, the US is doing this, because the US makes a huge amount of money out of its pet Arabs, nuking them, would be like a bullet to the liver for the US economy.

Brazen Heist's picture

Iran, China, Russia play the long game, that's why you don't hear about it. It's usually not the kind of news that gets on the front pages.

The other suckers play ultimatums and other horseshit that backfires and goes on MSM front pages.

Buck Johnson's picture

Trust me they are, Iran can supply them with cows and such much easier than Germany since they are closer.  They aren't reporting that because the US doesn't want this to escalate any further because those other countries would try to start something with Iran.

 

earleflorida's picture

please elaborate moar...

confused about language regarding iran?

 

francis scott falseflag's picture

I'm shocked, shocked to learn that the MSM may not be reporting something....

 

like the Awan Brothers, for example.  

Anybody read much about them in the NYT or WaPo?

 

 

 

 


sinbad2's picture

Iran seems to have done a deal with Qatar. The Qatari gas field is mostly under Iran, so a joint pipeline to Europe makes good economic sense.

The US of course is not pleased, at that's why it is currently destabilizing Qatar.

NickyGall's picture

Here is an article that looks at what military equipment has recently been sold to Qatar by the United States :

 

http://viableopposition.blogspot.ca/2017/06/qatar-and-washington-bedfell...

 

The link between Qatar and terrorism, if it exists, is being fed by the American military complex.

Canadian Dirtlump's picture

I would suggest anyone who questions a link between terrorists, and any gulf state nation, any western nation, or a small nation on the mediterranean has been living on the planet zontar.

 

doctor10's picture

None of the Arabians or the Gulf royal families "wants" terrorism. Thats nuts to say that. there is NO political advantage for them to do so.

That having been said-they sit on such a huge and critical supply of the world's resources, there literally is no end or limit to the monkeyshines that are brought to bear on their stewardship of those resources.

Be very wary of playing into the hands of those that would sow war here. This is no more a "struggle" between Arabian princes as it is of much larger forces that would do to the Gulf monarchs what was done to the European monarchs a century ago

Canadian Dirtlump's picture

I'm not playing into anyone's hands. If it weren't for the Gulf state cash register and ideology, and the Western military supply "terrorism" in it's current form would not exist. Sorry about the inconvenient truth.

 

Anyone who ignores the billions spent by Saudi Arabia on Learning centres and mosques all over the world spreading their poison and serving as terror recruiting locations, for example, is welcome to live in their own fantasy.

Conscious Reviver's picture

I think you got the dv's above due to lack of /sarc detection.

sinbad2's picture

"there is NO political advantage for them to do so."

The political advantage is America protects them if the commit terror acts for America.

The current crisis, has only happened since Qatar stopped funding ISIS, Washington is not amused, and has arranged for the Saudis to threaten Qatar.

Calculus99's picture

Too true. 

Which is why I always say a smart American politician (oxymoron?) when asked what he/she wants for Christmas says 'a terrorist' as there are so many great ways they can be used to gain more power and more money (plus votes, vote for me and I'll save you all from the risks). 

Folks, if you haven't realised yet - WE ALL BEING PLAYED whether we know it/like it or not...

sinbad2's picture

"The link between Qatar and terrorism, if it exists, is being fed by the American military complex."

Well the link does exist, and they are following instructions from Washington.

FORD_FIESTA's picture

Really?   Who gives a shit.     All the chest beating is useless.  Saudi should level the country and take it over......shit or get off the pot.

Canadian Dirtlump's picture

Of all the countries on the planet which need to be leveled, Saudi Arabia is number 2, Qatar is not ahead of it. As the Incoherent king sits droolin in a palace somewhere, and the young demonic / insane heir apparent ( a coup in itself ) does his best to drive the kingdom into the ground, we may not need to see it leveled.

 

Qatar is just the equivalent of a criminal faction of a syndicate who got caught coloring outside the lines.

silverer's picture

The last thing Qatar should do as the Saudi tanks roll in is inject PCB's into the oil wells. Up yours, Saudinbergs.

Anteater's picture

"You're gonna have the best healthcare. The best!

And it will  be so cheap, and so easy.

Now watch this drive!" DJT/JCK

Anteater's picture

As soon as the al-Saud Wahhabi-ISIS terrorist headchopper's

$112B check clears at MIC Central on the Trump:Kushner SA

Arms-for-Hotels 'Scheme', then Donald Sr can instruct Jared

to send another 20,000 American sons and daughters to the

Great Sandbox to 'stabilize the humanitarian situation', isn't

that the term the Luciferian Satanists at CIA:State Central use?

Donald Jr can be Jared's attache, and hold his purse for him,

the one made from a human scrotum Jared bought on eBay,

as part of his other '666' Collection of Nazi War Memorabilia.

"You're gonna need a lotta body bags from all the winning!" DJT/JCK

Stormtrooper's picture

I take it that you don't plan to volunteer for the mission.

Squidward_Tentacles's picture

Qatar derives its wealth from LPG, not oil.

a Smudge by any other name's picture

The first thing Saudi tanks do upon rolling is.....sink. Quatar is an island nation. But don't tell the Sauds that. Lest they all go buy snorkels.

sinbad2's picture

Qatar is not an island, perhaps you are thinking of Bahrain?

Conscious Reviver's picture

Silverer - no worries. Saudi tanks are useless. Watch any Houthi video for confirmation. Plus, the Turks are on the ground, defending Qatar.

Silver Savior's picture

Not that long ago Qatar was a very rich country. 

JamesinNM's picture

Hang tough Qatar. Join BRICS. Let Russia build military bases in Qatar.

 

Savyindallas's picture

Better yet-let Iran build a base there. 

sinbad2's picture

Better yet, maybe Turkey and Iran could invade Saudi Arabia, and divide it up with Qatar.

The only countries that would miss Saudi Arabia, is the US and UK.

hoytmonger's picture

Trump took responsibility for this.

He made a deal with the Saudis when he visited. The US would take out Iran if the Saudis would stop Qatar from selling LNG to China, so the US could have an energy hegemony.

Brazen Heist's picture

Russia sanctions and the Qatar blockade were meant to discredit the 2 biggest gas markets in the world so Uncle Scam can shove his fat ass into the market and enjoy them "free" markets.

Fortunately, bullying the competition will backfire into the Neocon's faces. It's expediting new alliances and partnerships, incentivizing a move away from the stinking, rogue empire.

francis scott falseflag's picture

Who is going to stop Russia from selling piped natural gas to China?

How long will it take Gazprom to go into the LNG business?  

Then ship it from Vladivostok down the coast to the eastern of China?

hoytmonger's picture

Who says they aren't already?

Maybe China has more demand than Russia has supply.

Maybe Qatar LNG is cheaper.

francis scott falseflag's picture

 

"more demand than Russia has supply'

PEAK GAS                            (oh, I beg your pardon, I have peak gas)

 

If China has more demand than Russia has supply, you're not suggesting 

America has more ready-to-go LNG than Gazprom, and ships to deliver it?

 

LNG is like tip and tax on a restaurant bill.  Russian piped gas is tip and tax free. 

sinbad2's picture

You are right, the new Russian gas pipeline to China, that will deliver 38 billion cubic meters a year to China, starting next year, is only 10% of Chinese needs.

No sane country would rely on only one source, for something as important as oil/gas.

That's why I think the US push to force the EU to buy only American gas will fail.

sinbad2's picture

Gazprom is in the LNG business, they sell LNG to 14  countries. 

The LNG mostly comes from Sakhalin, but they are building a plant at Vladivostok.

OliverAnd's picture

Erdogan will save Qatar... LOL!!! 

francis scott falseflag's picture

Don't forget Iran, Russia and China.  

sinbad2's picture

He might just do that.

When the US rescued Kuwait, it was for money, why can't Turkey also play gun for hire?

Conscious Reviver's picture

Turkey's  new role in OBOR is the sheriff .

jmack's picture

yea, as long as oil cant hold $50, this "conflict" will continue

 

hooligan2009's picture

hmmm.. the US treasury has a list of instiutions and individuals against which it levels sanctions.

the qatar investment authority has the odd 335 billion dollars of assets - the cows won't milk much out of that.

https://en.wikipedia.org/wiki/Qatar_Investment_Authority

maybe the qatari elite can take up residence on the upper east side of manhattan that its prime miister bought for 285 million a few years ago with its petty cash.

or maybe it can resettle its 250,000 residents in washington dc

https://www.washingtonpost.com/local/qatar-is-suddenly-investing-heavily...

maybe part of the washington deal was the backhander passed to clinton

https://www.rt.com/usa/365442-clinton-foundation-qatar-emails/

the Clinton Foundation has confirmed allegations that it received a $1 million ‘gift’ from Qatar without telling the State Department,

However, Clinton kept the $1 million check from Qatar a secret. While Foundation officials declined to confirm its existence last month, with just days to go before the election, the daily WikiLeaks revelations, and the FBI’s relaunched investigation into Hillary Clinton’s private email server gaining momentum, its spokesman, Brian Cookstra, finally admitted to receiving the money, though he insisted that the sum did not qualify as a “material increase” in Qatari support of the foundation.

 

sinbad2's picture

Qatar will never get its money back from the US, no country ever gets their money back from America, they might allow them to have some made in USA weapons, but no money.

hanekhw's picture

I'm confused. I always thought the most important policies for any Muslim majority country was to keep the goats 'happy', the women covered, the camels racing and their AK-47s shiny and oiled so they can kill something. Anything.

Zero_Hope's picture

Qatar is to be absorbed into the Saudi led Sunni Caliphate.

On with Globalism. On with the New World Order.

You're going to love tyranny.

sinbad2's picture

You mean on with the American empire.