Baker Institute expert: The embargo of Qatar will likely fail

The decision by Bahrain, Egypt, Saudi Arabia and the United Arab Emirates (UAE) to embargo Qatar over its alleged support of terrorism was risky and without a clear endgame, according to a new issue brief by an expert in the Center for Energy Studies at Rice University’s Baker Institute for Public Policy.

Qatar is a peninsula that borders the Persian Gulf and Saudi Arabia, in a strategic location near major oil and gas deposits. Credit: 123RF.com/Rice University

The list of 13 demands presented in June 2017 by these anti-Qatar coalition countries suggests a supremely ambitious set of goals behind their embargo, including “red lines” that touch directly upon Qatari sovereignty and that leadership in the Qatari capital of Doha will almost certainly reject, said brief author Gabriel Collins, the Baker Botts Fellow in Energy and Environmental Regulatory Affairs. “The stage is thus set for a contest of endurance, one that with every passing month looks more likely to result in favor of Qatar,” he wrote.

The brief, “Anti-Qatar Embargo Grinds Toward Strategic Failure,” provides evidence of the anti-Qatar blockade’s trajectory from initial shock to emerging strategic failure using actual market data. It also discusses potential paths forward and the economic and security ramifications of those options.

“At this point, it is difficult to envision Qatar making unilateral concessions that could lead to the embargo being lifted,” Collins wrote. “The worst of the post-blockade capital flight is likely over, the country is rebuilding its trade links and food-supply chain to bypass imports previously obtained via Saudi Arabia and the UAE, and liquefied natural gas exports remain robust, underpinning Qatari cash flow. From this point, the embargo could remain in place for years and Qatar could very likely withstand the effects with decreasing impact each year as it increasingly emphasizes economic relationships outside the Gulf region.”

Collins noted that Qatar is net self-sufficient in steel production (including rebar critical for construction as it prepares for the 2022 World Cup). Likewise, the new Hamad Port — capable of storing enough cereal grains to satisfy multiple years of local consumption, able to handle more than 3.5 million 40-foot shipping containers per year and able to accept 1.7 million metric tons per year in general cargo — is already replacing import trade that formerly came by land from Saudi Arabia and by sea from the UAE, he said.

“As the embargo continues, diplomatic and political relationships between many Arab countries will likely suffer further damage, and Iran’s relative influence in the region will likely rise as a result,” Collins wrote. “The ultimate consequences of increased Iranian influence across the region remain debatable, but from the perspective of the countries embargoing Qatar, as well as that of the United States, this is clearly an unintended consequence.”

Collins conducts a range of globally focused commodity market, energy, water and environmental research. His current research focuses on oilfield water issues, groundwater valuation in Texas, evolutions in the global gasoline market, shifts in China’s domestic oil consumption structure, Texas water governance and the food-water-energy nexus.