KUWAIT • Foreign ministers from Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt convened yesterday to discuss the diplomatic crisis with Qatar, with little sign the eight-week standoff is nearing its end.
The meeting in Manama, Bahrain’s capital, is part of the coalition’s efforts to coordinate its response to Qatar’s “support for terrorism”, Bahrain’s Foreign Ministry said in a statement.
The Saudi-led bloc will study imposing more sanctions, including measures that would gradually harm the Qatari economy, the Saudi-owned Al-Hayat newspaper reported, citing unidentified officials. Egypt’s Foreign Ministry spokesman posted a photo of the meeting on Twitter.
The four countries severed their diplomatic and transport links with Qatar on June 5, accusing the government in Doha of backing extremist groups in the region. Qatar denied the charges and said the boycott is an attempt by Saudi Arabia to force smaller nations into submission.
Qatar’s isolation has forced it to open new, more expensive, trade routes to import food, building materials and equipment. Food prices in Qatar rose the most since 2015 in June, while the the crisis triggered a ratings downgrade for the nation’s sovereign debt by S&P Global Ratings.
Central bank data released last week showed that foreign deposits at Qatar’s banks fell the most in almost two years last month as customers withdrew funds, pressuring liquidity available locally for businesses and the government. Efforts to resolve the crisis have reached an impasse, a Gulf official with direct knowledge of the matter said last week, amid signs the four-nation bloc wanted to extract more concessions from the Gulf nation.
US Secretary of State Rex Tillerson visited the region this month, but failed to secure a breakthrough. “The dispute is at a standstill,” State Department spokeswoman Heather Nauert told reporters in Washington last Thursday.
The countries at the heart of the crisis are all US allies. Saudi Arabia has strong counter-terrorism ties with the US and is a top customer for American weapons.
Qatar hosts the regional headquarters for US Central Command, which includes an air base the Pentagon depends on to target the Islamic State.
Meanwhile, some international banks are serving Qatar from London and New York instead of Dubai’s financial centre as a regional dispute makes it harder to do business with clients in the gas-rich Gulf state, according to people familiar with the matter.
Lenders that handled clients such as the Qatar Investment Authority and wealthy family offices out of the Dubai International Financial Centre (DIFC) are shifting coverage to other global financial hubs to avoid damaging relations with the UAE and Saudi Arabia, said the people, asking not to be identified because the matter is private.
Dubai became the Gulf region’s main banking hub after opening the DIFC in 2004 to attract international banks, asset managers and insurers with promises of zero taxes for 50 years. Many bankers commute daily or weekly between the emirate and neighbouring Gulf states such as Qatar and Saudi Arabia to do business with local clients.
A number of Qatari clients are also saying they would prefer to work with bankers outside of the Gulf region rather than with bankers based in the DIFC, the people said.
Regional banking operations are also being impacted amid the crisis. Some lenders in the UAE, Saudi Arabia and Bahrain are said to have cut their exposure to Qatar amid concern of a widening of the blockade, while Qatari lenders are boosting interest rates on dollar deposits to shore up liquidity. — Bloomberg