Diplomatic row triggers economic stress in Gulf

World
Europe

Two months have passed since a Saudi-led coalition cut diplomatic ties with Qatar. And the crisis is taking a toll on the gulf nation's economy.

Qatar is beginning to feel the pinch, with credit ratings agency Moody's on Wednesday downgrading its outlook for Doha from stable to negative. Moody's also lowered the gulf nation's GDP growth rate in 2017 to 2.4 percent. That's down from the average 13.3 percent from 2006 to 2014.

VCG Photo

Experts warned that if the dispute continues, the economic crisis would spill over to other parts of the Middle East, thanks in part to the integrility of Gulf Council Countries' (GCC) banking systems, and a dollar shortage when the crisis happened which affected the area’s economic outlook.

Doha has had to make some changes in its trade system to avoid more economic pain, from a reconfiguration of the food supply chain and construction material network to an adjustment of international trade resources.

The latest measure is a free "visa on arrival" policy to citizens of more than 80 countries, aimed at easing the blow to Qatar's tourism sector.

"All these moves are designed to create confidence in Qatar’s economy and Qatari society," said Adel Abdel Ghafar, research fellow from the Brookings Doha Center.

VCG Photo

Under the new policy announced by Qatar Airways and relevant authorities, citizens of 33 mostly European countries can enter without a visa for 90 days in single or multiple trips during a 180-day period.

Americans, Britons, Canadians and citizens of 44 other countries can enter visa-free for an initial 30 days on single or multiple trips, and can extend that for a further 30 days.

In a related development, the UAE and Bahrain on Wednesday sought to clarify a statement made the day before by the International Civil Aviation Organization, which said both countries had agreed to open up some of their airspace, including new "temporary or contingency" routes, for Qatar Airways.

The two said in the statement that they had not agreed to open up their airspace in full to Qatari flights, but to only allow Qatari aircraft to use their airspace located above international waters.

The diplomatic row in the Middle East started in early June, the biggest to hit the mid-east in years. A host of Gulf nations, including Saudi Arabia, United Arab Emirates (UAE), Bahrain and Egypt severed diplomatic relations and cut land, sea and air travel to Qatar.

6165km