- Doha stock market tumbles
- Food trucks lining up at border
Saudi Gazette report
Riyadh — Qatar is reeling from economic and diplomatic impact after eight nations cut ties with the tiny Gulf nation on Monday over its relations with Iran and support of terror groups, isolating it by cutting off its land, sea and air routes.
Saudi Arabia, Bahrain, Egypt, and the United Arab Emirates began withdrawing their diplomatic staff from Qatar as regional airlines quickly announced they had suspend service to its capital, Doha.
Yemen, Libya, Maldives and Mauritius also cut diplomatic ties with Qatar.
According to reports, trucks carrying food for Qatar were lining up across the border in Saudi Arabia.
Every day hundreds of lorries cross the border, and food is one of the main supplies. About 40% of Qatar’s food is believed to come via this route, said BBC.
Saudi Arabia and the UAE provided $309 million of Qatar’s $1.05 billion of food imports in 2015. Much of them, especially dairy products, came over the Saudi land border; Doha will have to make other arrangements for them.
Doha News, a local news website in Qatar, reported some citizens and residents already had begun swarming grocery stores.
It said some stores had begun seeing their shelves empty over fears that the crisis could see groceries run out of products.
Construction costs
The closure of that border could, as with food — push up prices and lead to delays.
Key materials, including concrete and steel come in by ship but also by land from Saudi Arabia.
Construction costs in Qatar could also rise, fuelling inflation across the economy, because aluminium and other building materials can no longer be imported by land.
Stocks
The Qatari stock index sank 7.6 percent in the first hour of trading. Some of the market’s top blue chips were hit hardest, with Vodafone Qatar, the most heavily traded stock, sliding its 10 percent daily limit.
Qatar National Bank, the country’s largest bank, dropped 5.7 percent.
Qatar’s government has been borrowing at home and abroad to help finance some $200 billion of infrastructure spending as it prepares to host the World Cup soccer tournament in 2022.
A drop in Qatari bond prices on Monday suggested the borrowing will become more expensive — possibly slowing some projects.
Egypt banks halt dealings
Some Egyptian banks halted dealings with Qatari banks, four Cairo-based bankers said, responding to Cairo’s announcement that it had cut ties with Qatar.
The four bankers said the halting of transactions with Qatari banks came on internal orders from management at their banks, and excludes the opening of letters of credit required for imports.
Some banks have stopped accepting Qatari currency while others are halting some treasury transactions, the bankers said.
Egyptian billionaire Naguib Sawiris has called on Egyptian businessmen to withdraw their investments from Qatar and halt business dealings with the Gulf state, his spokesperson told Reuters on Monday.
2022 FIFA World Cup
FIFA, international soccer’s governing body, said it remained in regular contact with Qatar, which will host the 2022 FIFA World Cup.
Major Saudi football team Al-Ahli has canceled a sponsorship deal with Qatar Airways.
Organization of the 23rd edition of GCC Cup is expected to be taken away from Qatar. There were reports that Gulf Cup 2017 could be hosted by Iraq if the FIFA lifted ban from the country.
The diplomatic crisis could invigorate a campaign by critics of Qatar to strip Doha of the 2022 World Cup, experts said Monday.
“This is a massive escalation in pressure on Qatar,” said Kristian Ulrichsen, a Gulf analyst with the Baker Institute at Rice University in Houston. “I think it will really have an impact if it lasts any time.”
Since being chosen by FIFA in 2010 as the host, Qatar has maintained that it is a politically secure nation despite its location in a volatile region. Doha has also emphasized that the tournament serves the entire Gulf, and not just the tiny gas-rich emirate.
But current events may challenge those notions, Ulrichsen said. “One of its pitches (to secure the World Cup) was that Qatar is one of the most stable countries in the Middle East,” he told AFP.
With that potentially called into question — and the fact that there are other countries which could host the event at little notice — organizers may be getting anxious, Ulrichsen said. “Qatar will know that there are alternatives, so they will be looking over their shoulder,” he said.
In a brief statement sent to AFP, football’s governing body FIFA said it was “in regular contact” with Qatar 2022 organizers and had “no further comments for the time being”.
