The Middle East’s massive energy reserves have made it the center of many key geopolitical events throughout history. The presidency of Donald Trump has transformed the power dynamics in the region with the ‘outsourcing of Washington’s foreign policy’ as an important part of the current President’s plan. The U.S. has largely withdrawn from the Middle East in the last few years while encouraging its allies such as Saudi Arabia and Israel to pick up its role regarding the containment of Iran.
Riyadh, however, interpreted Washington’s acquiescence as a carte blanche to deal with unrelated issues which it deemed as problematic such as Qatar’s independent foreign policy. Saudi Arabia’s ambitious crown prince Muhammad bin Salman has been the cause of several miscalculations costing the country financially and damaging its reputation. The timing of these missteps couldn't have been worse for Saudi Arabia as Riyadh attempts to modernize the country's economy with hard-earned cash from the partial IPO of its oil giant Saudi Aramco. Low investor confidence is partly attributed to the region’s unstable political situation.
Not only has Qatar managed to withstand the intense Saudi-led siege against it since 2017 but its economy has emerged far stronger than before the siege with the International Monetary Fund (IMF) saying that Qatar’s economy grew in 2018 at 2.2% and 2.6% in 2019. Moreover, Qatar has been expanding its LNG production and export capacities from the current 77 million mt/year to 110 mt/y 2023 to consolidate its position as the world’s top producer and exporter of LNG.
Qatar has also been geopolitically and economically savvy in diversifying its foreign investments and even buying the opposition whenever opportunities presented themselves.
Despite pressure by the Saudi-led alliance, Qatar has managed to maintain its independent foreign policy and instead of yielding, it strengthened its military alliance with Turkey thus preventing any possible Saudi military action against it, improved political relations with Iran and established alternative sources to import essential products.
Rather than being the one suffering from the blockade, the political and financial costs seem to be becoming unsustainable for the bloc that it imposed it particularly Saudi Arabia which continues to be sucked deeper into the costly Yemeni quagmire.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London