In Historic Move, Qatar Restores Diplomatic Relations With Iran

Tyler Durden's picture

Qatar has remained defiant throughout its unprecedented summer diplomatic crisis with Saudi Arabia and other Gulf Cooperation Council (GCC) states which have brought immense pressure to bear on the tiny gas and oil rich monarchy through a complete economic and diplomatic blockade imposed by its neighbors. However, on Thursday it unveiled a stunning geopolitical realignment when it announced the restoration of diplomatic relations with Iran in a move that is arguably its greatest act of defiance yet. The Qatari foreign ministry announced early Thursday that "the state of Qatar expressed its aspiration to strengthen bilateral relations with the Islamic Republic of Iran in all fields" and reportedly informed Iran by phone of plans to return the Qatari ambassador to Tehran for the first time since it broke relations in 2016.

The move is significant because the chief accusation leveled against Qatar by its former GCC allies, especially Saudi Arabia, is of growing too close to Iran while sponsoring and funding terrorism. For the Sunni gulf states "funding terrorism" is more often a euphemism meaning links to Iran and Shia movements in the gulf. Ironically, there is ample evidence demonstrating that both sides of the current gulf schism have in truth funded terror groups like al-Qaeda and ISIS, especially in Syria. But Qatar's announcement sends an audacious and daring message essentially signalling that the country remains unbowed by Saudi pressure, and that the severe economic sanctions designed to bring Qatar to its knees may result in a geopolitical backfiring and new regional order as Iran stands to benefit.

Image source: Iran's Payvand News Service

On June 5 Saudi Arabia, UAE, Bahrain, and Egypt cut ties with Qatar in a dramatic move that resulted in a near total blockade of the small country which encompassed air, land, and sea. Even commercial airline flight paths were diverted mid-air at the time, causing multiple major regional carriers to cancel future flights to Doha's Hamad International Airport. Aggressive economic sanctions followed, including food blockages - most of which had previously been supplied by land via Saudi Arabia. While energy-rich Qatar has the highest per capita income in the world, its residents have faced a summer of empty supermarkets and long lines to get basic staples. Reports of extreme and creative ways Qataris have attempted to get around the blockade include an ongoing plan to fly thousands of dairy cows on Qatar Airways jets into the country.

Qatari companies were expelled from Saudi Arabia, as well as individuals from diplomats (who were give 48 hours to leave) to farmers. While stock prices immediately slumped and imports plunged (by 37.9 percent in June compared with May), the government's making up the difference in rising costs through subsidies has made life bearable - and Qatar actually appears to be resilient and weathering the storm. The nation's oil and gas sector, which accounts for more than half of the country's GDP, is what is carrying the country through. Analysts have consistently characterized Qatar's oil and gas as vulnerable yet largely "unaffected" throughout the crisis - this partly because exports to Japan, China, India, and South Korea account for nearly three quarters of its total exports and have remained untouched by the boycott. The UAE, though firmly on the Saudi side of the spat, relies on sourcing 30% of its energy needs from Qatar to keep the lights on, and a major gas pipeline connecting the two countries has kept pumping all summer.

Fresh financial data out today confirms that Qatar is set to at least in the near term persist through the crisis while avoiding collapse, with some sectors remaining surprisingly strong. No doubt its leaders are keenly aware of this and emboldened in their shots fired across the Saudi bow as they restore diplomatic relations with Iran. Qatar's former adversary across the Persian Gulf has throughout the summer shipped food supplies into the blockaded country, as well as allowed Qatari flights increased use of Iranian airspace in largely symbolic acts aimed at poking the Saudis. But it's Qatar's shared massive natural gas field with Iran - with the South Pars Field owned by Tehran and the North Field owned by Doha - that has been the biggest stabilizing lifeline of the crisis. Though Thursday's figures show that:

Qatar is still far from restoring its imports to normal. Imports recovered by only 6.3 percent month-on-month to 6.24 billion riyals ($1.71 billion) in July; they were 35.0 percent below their level in July 2016.

Much of the disruption appears to be to big-ticket items. Imports of aircraft parts were down 40.5 percent from a year ago at 292 million riyals in July. The diplomatic crisis has deprived Qatar Airways of two of its biggest markets, Saudi Arabia and the UAE.

But as analysts have consistently predicted:

Thursday's trade figures suggested the sanctions are not affecting Qatar's natural gas exports - July exports of petroleum gases and other gaseous hydrocarbons rose 7.8 percent from a year ago - and are no longer slowing other exports much.

As a result, Qatar's trade surplus expanded 78.1 percent from a year earlier to 11.91 billion riyals in July, although it edged down 4.8 percent from the previous month.

And though prices on basic staples continue to rise (for example food and drink prices rose 4.2 percent in July from June), even this may stabilize:

Analysts think the sanctions damage should ease in coming months as new shipping routes develop. Qatar Navigation launched a direct Qatar-Turkey service this week after starting a container service to Kuwait last week; construction of a food processing and storage facility at Qatar's Hamad Port received $440 million of bank financing this week.

The so-called "13 demands" presented by the quartet of Arab countries sanctioning Qatar on June 23 have unsurprisingly remained unfulfilled while today's announcement further signals Qatar's willingness to forge alternate permanent ties away from the GCC alliance which has defined much of short history as a young nation-state. The announced willingness to form fresh ties with Iran comes just days after Saudi Arabia began somewhat bizarrely and aggressively promoting an exiled Qatari royal family member and prominent businessman, Sheikh Abdullah Bin Ali Al-Thani, whose family was forced out in 1972. The Saudis would like nothing more than be in a position to hand pick their choice for the Qatari throne and reduce Qatar to a vassal state. 

From the Saudi and GCC perspective, the list of pre-conditions for lifting the embargo remain in effect, and include (according to India's English news site The Wire):

  • Close down Al Jazeera television network and all its affiliates, plus other Qatar-funded news outlets
  • Close a military base operated by Turkey
  • Expel all citizens of Saudi Arabia, Egypt, UAE and Bahrain currently in Qatar
  • Hand over all individuals wanted by those four countries for terrorism
  • Stop funding any extremist entities that are designated as terrorist groups by the US
  • Provide detailed information about opposition figures Qatar has funded
  • Shut down diplomatic posts in Iran
  • Expel members of Iran’s elite Revolutionary Guard
  • Conduct trade and commerce with Iran only in conformity with US sanctions

And yet surprisingly it appears Qatar is increasingly in the geopolitical driver's seat, having called the bluff of the more powerful GCC states led by Saudi Arabia and backed by Saudi allies like the US and even Israel. For now it appears tiny Qatar is defying the odds, and its potential to successfully navigate the current economic and diplomatic full frontal assault has huge repercussions for the entire region. As accurately predicted by a comprehensive report by Middle East scholar Mouin Rabbani produced earlier this summer: 

The big winners so far are Iran, Syria, and their Lebanese ally Hizballah, who cannot but be delighted by the audible cracks in the alliance ranged against Damascus and Tehran and that may well spell the end of the GCC. Iran and Hizballah will additionally hope that Hamas has finally learned the lesson that no ally of the United States can be a true friend of the Palestinians. Turkey has also, yet again, demonstrated that in today’s Middle East it has a role to play in every crisis and that others ignore Ankara’s interests– whether in the Gulf, Syria, or Iraq–at their peril. On the flip side, there are growing noises within Riyadh and Abu Dhabi that the campaign should expand to include Turkey–which has recently been claiming that the UAE is implicated in the 2016 coup attempt against Erdogan.

Will we all look back on this moment when future historians trace the end of the GCC? Did the Saudis finally overreach in their anti-Iran fanaticism to become the authors of their own demise? The surprising emergent Iran-Qatar alliance is sure to at least be the start of a new regional order where the Saudis can no longer dictate terms no matter how many Western powers stand at their side.

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Enceladus's picture

Thank G^d the Charlottesville and Nork thing was played out. 

Manthong's picture

 

Does that mean Israel can now bomb Qatar, too?

 

Enceladus's picture

Let's see what CNN says before we commit 

Volkodav's picture

     your mispell vomit...

Honey-Badger's picture

Cheesepopes left their cheese out in the Syrian desert too long, now it's stinky and nobody wants it.

moimeme's picture

The US pushed S.A. against Iran because IsraHell told it to. America has an IsraHell-centered foreign policy.

http://biblicisminstitute.wordpress.com/2014/08/05/israel-the-scourge-of...

Volkodav's picture

     Most Hebrew were far distant and not subject to Romans as your claim

     Four Assyrian invasions took Israel Tribes and much of Judah away captive centuries before

 

stizazz's picture

Unfortunately, some people will believe what they want to believe - the hell with real history.

Volkodav's picture

     no   is spam

DWD-MOVIE's picture

I’m making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do… http://disq.us/url?url=http%3A%2F%2Fwww.jobproplan.com%3A68UoF1LgzM-Yo3S...

webmatex's picture

I'm making over $7k a month working part time for George Soros. I kept hearing other people tell me how much money they can make at protests and demonstrations so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

https://www.youtube.com/watch?v=UajhKqHMG8Y

Dame Ednas Possum's picture

You spammers can all go to hell. 

You know nobody on ZH follows your links so why don't you do yourselves and the rest of us a favour and just fuck off. 

 

Koba the Dread's picture

And in a few more days the troops to Afghanistan thing will be played out.

Talk is cheap.

BitchesBetterRecognize's picture

So....

 

It Appears to me that Tehran & Moscow are now calling the shots in the ME...? 

peopledontwanttruth's picture

I agree and they're going to be calling the shots at more parts of the world than just the ME, everyone everywhere sees this for what I is.

HowdyDoody's picture

I wonder how the ARAMCO IPO is playing out. Selling burnt out wells seems to work in the US shale market so it may pan out OK. /sarc

Enceladus's picture

It's Star of David chess. It's a lot like Chinese checkers but more dangerous 

peopledontwanttruth's picture

You mean Star of Rephan? The 6 pointed one.
Thought so

Volkodav's picture

      Sambo < Samozashchita Bez Oruzhiya >Self Defense Without Weapons

 

blue51's picture

Great system . Putin is a fan .

Bay Area Guy's picture

So does this mean we don't have to worry about the Qatari pipeline any more?  And we can leave the people in Syria alone?  Or does it simply mean we gonna bomb the shit out of Qatar now and cause their entire population to flee to Western Europe?

So little time.....so many countries to fuck over.

xrxs's picture

That was a rhetorical question, right?

Mustafa Kemal's picture

That means the Saudi/US/Israel team is losing friends with natural resources fast

Moreover, Saudi gas is in mostly shia country....

xrxs's picture

I'm keeping my eyes on Eastern Province.

SmittyinLA's picture

Israel is allied with Saudi Arabia and Iran, whoever wins it will be Israel's ally and bitch.

"Death to Israel" and "death to America" is an Israeli funding raising song like "cars for kids".

peopledontwanttruth's picture

No I think it means that SA and when it comes to their "friends in the ME", that they might want to get themselves the book 10 little Indians.

HowdyDoody's picture

The irony is that is exactly what Israel has suckered the US into trying to do in its behalf.

https://www.youtube.com/watch?v=9RC1Mepk_Sw

Doesn't Judo encourage the use of the opponent's own momentum against him? Anyway, its a fine example. Maybe the US should learn something.

 

 

peopledontwanttruth's picture

Yes it was but the longer times go on the less people can and are willing to play the fool. I do see where DNA is playing a bigger role in the decisions being made in today's world. People are stubbornly prewired to stick to family

AncientAviator's picture

Oooooooohhhhhh - 2016. How historic! It seems like only one year ago.

gregga777's picture

KSA (Kingdom of Saudi Arabia) appears to be taking Blowback lessons from US Blowback Lunatic Merchants, formerly known as US CIA (Criminally Insane Agency).

ReadyforLiftoff's picture

So, the Clintons saw this coming? The Clinton foundation needs to be investigated. The Clinton Foundation has sent money to Qatar, which now is now in bed with an Iran/ Russian ally. If there was Russian collusion to meddle in our elections, then it could well be the Clintons that are funding such operations. You know these Dems. They always point fingers at others and accuse them with exactly what they themselves are guilty of. Investigate!

c2nnib2l's picture

now they only have to allign themselves with North Korea and addapt Kim Strategy 

Kim is playing Trump well so far :& 

Gorgeous's picture

Might as well act like neighbors.  They share the same bed (Pars gas field).

 

Albertarocks's picture

Saudi Arabia just took one hell of a glove across the face.

Yen Cross's picture

  Of course they did. Qatar and Iran have those Yuuge gas fields.  Now Sodomania has real problems. 

 

Joiningupthedots's picture

PREDICTION:

Qatar to piggy back its North Dome field onto Irans South Pars field and I can get back to work after sitting on my arse at home for the last 12 months of American engineered and Saudi delivered low ol prices.

I helped install bits of the North Dome over the years and will see out my retirement building the subsea infrastructure to link to Iran now.

I guess money talks and both bullshit and religion walks in the end.

Happy days! HeHeHe

Mustafa Kemal's picture

"Qatar to piggy back its North Dome field onto Irans South Pars field"

Yes, think about it. If you get along with your North Pars neighbor they can ship your gas and you can share in the profits.

The Qatar pipeline just took a detour through Iran and Syria

peopledontwanttruth's picture

We will see but I don't think Iran would do that to Russia They're bigger and stronger together

Joiningupthedots's picture

Iran needs Russia too much at the strategic level.

peopledontwanttruth's picture

They need and trust each other'. Wondering if there's any family ties there going back millennia

katagorikal's picture

The Anglo-Russian Entente (1907) gave Russia a sphere of influence over the northern half of Iran.

Francis Marx's picture

Kind of funny that the Saudis domineering acts wouldn't  produce Qatar  to make moves like this.. too funny.

Mustafa Kemal's picture

It seems like some just arent going to be bullied anymore

sinbad2's picture

And another brick falls from the walls of Babylon.

zebra77a's picture

Saudi Arabia invaded Yemen because they have a LOT of oil and gas something nobody has talked about - not because of its terrorist armies.. What we could be sitting on here is a war as Saudi Arabia is quietly invading nation states to maintain oil and gas production it no longer has..

Which may explain why UAE had to order 2 million barrels of crude condensate from New York!

In otherwords this two year maximum pumping oil dumping operation has depleted Saudi reserves and they do not want it to get out because if it does it will collapse their hegemonic share interesfs in world oil...