Baker Institute Brief: Anti-Qatar Embargo Grinds Toward Strategic Failure

Baker Institute Issue Brief: Anti-Qatar Embargo Grinds Toward Strategic Failure

Rice University’s Baker Institute for Public Policy published an issue brief on 22 January 2018 titled Anti-Qatar Embargo Grinds Toward Strategic Failure by Gabriel Collins, J.D., Baker Botts Fellow in Energy & Environmental Regulatory Affairs, Center for Energy Studies. Below are key findings from the issue brief:

The anti-Qatar blockade runs counter to historical precedent and has dangerous collateral consequences:

Centuries of history reveal a simple strategic truth: embargoes and blockades frequently fail to coerce states into making policy changes sought by the embargoing countries and often create unintended consequences

The evidence suggests that even an embargo lasting multiple years would likely still fail to coerce Qatar into making the concessions desired by the embargoing countries

The embargo and its slow-motion strategic failure have already unleashed consequences that will haunt the region for decades to come, and more effects will become clear as time rolls on.

The issue brief supports its claim that the blockade is a failure with concrete statistical and qualitative evidence:

This issue brief 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

First and foremost, global investors do not view the Saudi-led embargo as an existential threat.

Even without an increase in LNG exports, the “lost” trade volumes caused by the embargo do not just disappear. Rather, they are likely temporary disruptions that will be replaced over time as Qatar builds relationships with new trading partners.

Anti-Qatar campaigns in foreign capitals are backfiring:

Quartet lobbying efforts against Qatar are likely to fail. Chairman of the US Senate Committee on Foreign Relations Bob Corker is deeply critical of the quartet’s blockade of Qatar, noting that “when you live in glass houses, you shouldn’t throw stones,” and is unlikely to support Senate passage of House bills aimed at sanctioning Qatar.

Finally, as with the blockade itself, time is not on the quartet’s side on Capitol Hill either, since additional time provides more opportunities for members of Congress to properly comprehend Doha’s strategic importance to US interests across the broader Middle East.

The blockade is proving to be a fundamentally unsound use of state power:

The blockade against Qatar is on the wrong end of powerful diplomatic and strategic dynamics and is likely to weaken as time progresses. Escalating pressure against Qatar also does not seem a realistic option, since moving the embargo from its current footing into a bona fide blockade backed by military force would likely trigger a strong reaction from Washington.

Qatar enjoys the support of its ally the United States:

The September 28 meeting between US Secretary of Defense James Mattis and Emir of Qatar Sheikh Tamim bin Hamad Al-Thani at the Al Udeid Air Base highlights Qatar’s strategic importance to American interests and also carries important symbolic weight, given Mattis’ apparent influence with President Donald Trump.

Financial markets recognize Qatar’s fundamentally strong position, and traders are pricing a future that sees Doha successfully resisting the embargo:

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 LNG 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.

Qatar is net self-sufficient in steel production (including rebar critical for construction as it prepares for the 2022 World Cup).20 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 tonnes per year in general cargo.