The #GCCCrisis: Conflict Resolution or Trade Consolidation?

 

First, it was the turn of the German Foreign Minister. Then came the US Secretary of State, only to be followed by the French Minister for Europe and Foreign Affairs. A fortnight later, the Turkish president flew into Kuwait, followed by the High Representative of the European Union for Foreign Affairs and Security Policy

24 July   |   2017   |   Subject  Middle East & North Africa (MENA)

Now, I would readily suggest that they all wished to help Kuwait in its mediation efforts to end a crisis that is unnecessary, overblown and creating new storms in old teacups in a Gulf region that has enough of those anyway. After all, such crises impact Europe and beyond too. So good luck to them all - collectively or individually - if they can prevent further escalation and instil some pragmatism into the leaders’ mind-sets so the siege of Qatar ends in a win-win way that pleases all - or none.

However, much as those visitors from the West are concerned about the "siege of Qatar", the real driver of this crisis - whether by the protagonists themselves or the outside world - is global trade and globalised interests that are have grown rapidly over many decades. We are aware of the airbases, small and big, but do we also know for instance that the Gulf region has recently become one of Germany's most important trade partners. Its federal government in Berlin is understandably concerned about the political consequences upon German companies active in the Gulf region. Germany, after all, exports US$30 billion of goods to the Gulf countries and hosts national investments in its major companies estimated at US$25 billion.

This is one key prism wherefrom we should examine the West’s keen interest in this #GCCCrisis and the concern over the embargo against Qatar. Germany, to take a leading example once more, is an energy-dependent country, and according to Deutsche Welle, the UAE annually imports German goods worth more than US$14 billion, while the value of Saudi imports from Germany to about US$10 billion annually.

Over the past decade, Qatar has become an important market for German goods thanks to its giant projects, especially the World Cup 2022 project. In addition, Qatar invests more than US$$25 billion in German companies and banks, including strategic ones such as Volkswagen, Siemens and Deutsche Bank. Thousands of German companies operate in the Gulf, and the German arms industry sells €1billion of arms to the countries of the region.

Perhaps those figures would explain why Sigmar Gabriel visited to Saudi Arabia, the UAE, Qatar and Kuwait so promptly after the quartet came up with their unrealistic - dare I add overbearing - 13 conditions. The land, sea and air blockade imposed by the quartet has so far caused Qatar to lose millions of dollars a day due to high transport and insurance costs for the region. These are not limited to Qatar, but also to other countries that are transit hubs for goods and people to the Qatari market and other neighbouring markets.

This current embargo by 3 GCC members against another (minus Kuwait and Oman) also affects German goods and services destined for Qatar via the UAE, Saudi Arabia, Bahrain and Egypt. German companies are forced after the blockade to ship goods through other routes, which means doubling transport and insurance costs. It also affects other countries in Europe, not least France which has an airbase in the UAE and whose new president can ill afford any new economic downturns.

The quartet had threatened to withdraw deposits from Qatari institutions and companies and stop dealing with the Qatari Riyal. The UAE ambassador to Moscow, Omar Ghbash, told the Guardian newspaper in London recently that the crisis could peak further toward imposition of conditions on foreign trading partners and that the embargo countries may be forced to choose between the boycotting countries and Qatar. And although Western companies will resist such sanctions because they are disputatious under International law and may have to file complaints and seek compensation from provincial states under domestic laws, talking about them or trying to apply them would confuse foreign companies with major business interests in the region.

It is telling that there is a large degree of interest in the #GCCCrisis whilst hardly anyone bothers with a war in Yemen that has shattered not only a country but is now a serious festering threat of cholera. Nor are we looking at those new regional incubators of extremism in Iraq and elsewhere. So given that immediate interests prevail and the rest doesn’t matter much anymore in our new world of impermeable and populist consciences, it behoves well upon the GCC countries to climb down from their trees and deal with this crisis as one between tribal members of the same house. It is in their interest, and that of the West, to put an end to media invectives and to settle this unnecessary spat.

Conflict resolution or trade consolidation? I would correct my title: it is unmistakably both!

© Dr Harry Hagopian   |   2017   |   24 July