Qatar- Will renewed cooperation bring a boost?

For the last three years, thanks to the blockade of Qatar by the UAE, Saudi Arabia and Bahrain, the 50-minute flight from Dubai to Doha has been replaced with a day-long odyssey via Kuwait or Muscat. Land, sea and airspace borders were all locked-down between these neighbours, as the Gulf Cooperation Council eschewed it's title due to serious geo-political differences. Following a breakthrough last week led by the US, Qatar finally re-took its seat at the GCC conference in Saudi Arabia. Images of the Saudi Crown Prince, Mohammed bin Salman, welcoming the Emir of Qatar in the spectacular setting of Al Ula have raised expectations of a new chapter of cooperation. Already all travel ties have been reinstated between the countries as relations are normalised. So will this be a lasting solution and can we expect to see a consequential economic boost across the GCC?


Some commentators remain relatively muted about the upside potential of the agreement, pointing out that the fundamental causes of the schism are still unresolved and the positions of the principle players relatively unchanged. As Barbara Slavin, Director at the Atlantic Council, said, "I doubt we will see a sudden increase in cooperation among the Gulf Cooperation Council (GCC) states, which have failed to even make their militaries compatible over the past forty years and which have divergent interests and relationships with external powers". A relatively widely held opinion is that the agreement is a gesture to the incoming Biden administration who are expected to take a harder line on Saudi Arabia. "Despite the purported rapprochement between Gulf parties, it is worth noting that this is seemingly influenced by a desire to pre-empt pressure from an incoming Biden administration, more than a genuine commitment to conflict resolution" is how Emad Baddedin of the Atlantic Council sees it. Others, such as Amjad Ashmad, a senior fellow at empowerMe are more optimistic about its effects, saying, "one cannot ignore the significant economic benefits that this agreement could bring to all the players involved. Dialing down conflicts is a crucial building block to attracting investment to drive much needed economic diversification across the Gulf, especially for Saudi Arabia. In light of the economic decline and mounting debt of GCC countries, this agreement could not have come at a better time".


With the jury seemingly still out on a durable understanding, it seems that in the short term there will still be some winners from the visible steps that are being taken. Clear beneficiaries will be those from the UAE, Saudi and Bahrain looking to do business in Doha. Many UAE-based companies either closed or significantly reduced their presence in Doha during the blockade to protect their interests and due to challenges of travel. Round-trips in a day are suddenly possible again and Qatari money and investment acceptable in the UAE. Hospitality focused businesses in Doha and the key hubs of the three protagonists can expect to see an uptick in activity driven by the lifting of the restrictions as can travel agencies and sports and entertainment businesses. One clear winner is likely to emerge quickly.


Dubai, already recently boosted by the influx of Israeli tourists following the historic deal with Israel (over 70,000 in December alone), was hugely popular with Qatari nationals before the blockade. Always pragmatic when it comes to business versus politics, the emirate will surely be working on campaigns to bring their neighbours back to play and spend as quickly as possible. It will be interesting to see whether Saudi Arabia can bring itself to promote inbound tourism from Doha as it is doing across the other GCC states. On the Qatari side, the negative impact of the blockade on Qatar Airlines was already very significant before the blow that Covid brought to aviation. Doha's status as a regional hub was all but wiped out, whilst the airline's inability to fly across Saudi, Bahraini and UAE airspace made many of its longer routes uncompetitive due to the increased flying time. With all those barriers now removed, Qatar's flag carrier should be expected to bounce back in a big way. The country has also been investing heavily in upgrading its in-bound tourism marketing and products since the middle of 2020 and should see a much improved ROI.


Although still almost two years away, the next FIFA World Cup, scheduled for late 2022, is also potentially a major winner from recent developments that can deliver p

ositive impacts across the GCC. Under the blockade, Qatar's ability to attract and accommodate large volumes of fans was severely limited, both by travel corridors and in-country infrastructure. Now with its flight network fully open and the option for fans to stay in neighbouring countries and travel in for matches, the viability of the tournament is back on and will likely be a very welcome boost for the countries with well developed tourism offerings.


Obviously all this will depend on an enduring agreement and all sides honouring their commitments. It does seem however from an economic standpoint that the entire GCC can only stand to benefit from a stable and open environment. We at Gulf Prospects are hopeful that the Gulf's prospects are looking up!



15 views0 comments

© Gulf Prospects Group 2020

Gulf Prospects Group
PO Box 929119
Dubai, UAE
info@gulfprospects.com