Kuwait’s Emir Moves to Mediate the Saudi-Qatar Crisis

By Fiona Macdonald and Glen Carey

GCC MembersKuwait’s ruler is stepping up his efforts to resolve one of the worst crises among Gulf Arab monarchies, a day after Saudi Arabia and its allies isolated Qatar by cutting off air and sea transport and closing the small nation’s only land border.

Sheikh Sabah Al-Ahmed Al-Sabah will travel to Saudi Arabia on Tuesday to mediate an end to the feud, according to a Gulf government official with knowledge of the matter, who spoke on condition of anonymity. Sheikh Sabah also spoke with Qatar’s ruler and urged him to avoid any escalation, Kuwaiti state-run media reported.

The crisis pits U.S. allies against each other, disrupting trade, flights and business activity in one of the world’s most strategically important regions. The Saudi-led action has prompted some analysts to openly speculate about the possibility of regime change in Qatar, the No. 1 exporter of liquefied natural gas, whose sovereign wealth fund owns stakes in global companies from Barclays Plc to Credit Suisse Group.

Emir of Qatar

The moves are aimed at “forcing a complete change in Qatari policy or creating an environment for leadership change in Doha,” Ayham Kamel and Hani Sabra, analysts at New York-based risk analyst Eurasia Group, said in an emailed note. “Saudi Arabia and its allies will not accept any solution short of capitulation.”

Saudi Arabia and three regional allies — the United Arab Emirates, Egypt and Bahrain — accused their fellow Gulf Cooperation Council member of supporting a range of violent groups, from proxies of Shiite Muslim Iran to the Sunni militants of al-Qaeda and Islamic State. They suspended flights and sea travel to Qatar, ordering Qatari diplomats and citizens out.

Thousands of trucks carrying food across Saudi Arabia’s land border with Qatar were stopped on Monday, the Riyadh-based Al Eqtisadiah newspaper reported.

The moves are aimed at “forcing a complete change in Qatari policy or creating an environment for leadership change in Doha,” Ayham Kamel and Hani Sabra, analysts at New York-based risk analyst Eurasia Group, said in an emailed note. “Saudi Arabia and its allies will not accept any solution short of capitulation.”

Saudi Arabia’s central bank instructed “all banks working in the kingdom” to stop buying Qatari currency and to sell it as quickly as possible, Al Eqtisadiah newspaper reported, citing the authority. The bank and its counterparts in the U.A.E. and Bahrain also asked some lenders to detail their exposure to Qatari clients, according to people familiar with the matter.

“A long-lasting rift would have significant negative economic ramifications for the country, and the maintenance of Gulf ties has become increasingly important for the Qatari government amid elevated regional instability,” Andrine Skjelland, MENA country risk analyst at Fitch Group’s BMI Research, said in a report. “Doha will make considerable efforts to avoid a substantial prolongation or further escalation of the situation.”

Moody’s Investor Service cut Qatar’s credit rating last month by one level to Aa3, the fourth-highest investment grade, citing uncertainty over its economic growth model. Qatar’s economy is forecast to grow 3.3 percent this year, according to data compiled by Bloomberg.

Stocks Hammered

The escalation in tensions hit Qatari stocks on Monday, with the benchmark QE Index falling the most since 2009. The country’s main stock gauge dropped 1.6 percent on Tuesday.

Qatar dismissed the charges as baseless, and said the Saudis are seeking to dominate the region. Qatari Emir Sheikh Tamim bin Hamad Al Thani delayed a speech to the nation on Monday to allow Kuwaiti efforts a chance to succeed, Foreign Minister Mohammed Al Thani told Al Jazeera television.

“Qatar will not take measures to escalate, because Qatar thinks that such disagreements between GCC states or between brotherly and friendly states must be resolved through dialogue,” he said. The Qatari ruler “considers Sheikh Sabah as his father, and he honored his wish to postpone any step or speech to the people until there is a clearer picture of this crisis,” he said.

The rift threatens the unity of the GCC at time when the U.S. and Saudi Arabia want to contain Iranian influence in the region. The bloc was founded in 1981 and also includes Oman and Kuwait, which have maintained commercial and diplomatic ties with Qatar.

Past Disagreements

The dispute among some of the world’s richest countries broke out shortly after President Donald Trump’s visit to Saudi Arabia last month. The president wants to “de-escalate” the crisis and is committed to holding talks with all parties, White House spokeswoman Sarah Sanders told reporters Monday.

This isn’t the first time Qatar has been singled out by Saudi Arabia, Bahrain and the U.A.E. for its regional policies. They pulled their envoys from Doha in 2014, accusing the state of undermining regional security. Qatar’s backing for the Muslim Brotherhood, especially in Egypt, drew fire from other Gulf nations.

“It is not clear what is required of Qatar for these sanctions to be lifted, and it is therefore difficult to estimate how long they will remain in place,” analysts Farouk Soussa and Luis Costa at Citigroup Inc. wrote in a report. “In 2014, it took eight months to resolve the row.”

This time “the severity and extent of the sanctions” may argue for a quicker resolution as “Qatar will be particularly incentivized to resolve any differences with its neighbors as soon as possible,” the Citigroup economists wrote. Given that the position of Saudi Arabia, the U.A.E. and Bahrain has hardened since 2014, “Qatar would need to do a lot more to satisfy them,” they said.

Source: https://www.bloomberg.com

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