Food, football and aviation: the impact of the conflict, Qatar’s neighbors
Saudi Arabia, Egypt, Bahrain, United Arab Emirates, Libya and Yemen broke off diplomatic relations with Qatar. What this might mean for Qatar’s economy and for those who are doing business in this country?
The population of Qatar is just 2.7 million people, but the influence of this country on the northeastern coast of the Arabian Peninsula disproportionate to its modest size.
Qatar is known the world over for its national airline, Qatar Airways international TV channel “al Jazeera”, as well as through sport — the Emirate will host the world championship on football of 2022, as well as sponsoring FC Barcelona — the most famous football club in the world.
The logo of Qatar Airways on the shirt of players of “Barcelona”
In the capital of Qatar Doha in recent years we have built a lot of skyscrapers, which has offices of some multinational companies.
The rupture of relations with Saudi Arabia and its allies threatens Qatar negative consequences.
Etihad Airways flying from Abu Dhabi, and Dubai-based Emirates, Tuesday morning stop flights to Qatar. Each of them has four daily flights to Doha and back.
Also on this route will stop flying budget airline FlyDubai, and it can be followed by the Bahraini Gulf Air and Egyptair Egyptian.
Saudi Arabia, UAE, Bahrain and Egypt have decided to stop the flights with Qatar and close its airspace to Qatari planes.
For Qatar Airways is fraught with serious losses. First, she will have to cancel dozens of daily flights to Dubai, Abu Dhabi, Riyadh and Cairo.
Second, more importantly, the closure of vast areas of airspace in the region is forcing the airline to change the flight routes.
The duration of many flights will inevitably increase and it is a serious problem for the carrier: this increases fuel costs and can cause dissatisfaction of passengers.
Qatar Airways serves passengers do not travel so much directly to Qatar as an opportunity to fly from Europe to Asia or Australia with a convenient stopover in Doha.
“If a trip to Europe, which previously took six hours, will now continue for eight to nine hours because of the need to change routes, it will be much less attractive for passengers, and they will turn to other carriers,” says the Director of consulting company Cornerstone Global Ghanem nusseibeh.
Products will rise in price
A significant part of the territory of Qatar is desert. In desert country it is hard to produce food, and for Qatar, the situation is compounded by the fact that its only land border is with Saudi Arabia.
Every day cross this border, hundreds of trucks, and one of the main categories of cargo is food. Up to 40% of food goes to Qatar on this route.
Now Saudi Arabia has decided to close the border, and then to deliver food in Qatar will have to either by sea or by air.
“This will immediately lead to inflation and will directly affect the life of normal people in Qatar, says nusseibeh. — If everything is much more expensive, the Qatari people will start to put pressure on the ruling family, demanding either a change of leadership or change of course”.
Also, according to him, the poor Qataris weekly and even daily travel to Saudi Arabia to purchase the products out there that are cheaper. After the closure of the border it will be impossible.
Qatar is currently implementing a number of large-scale construction projects associated with world Cup 2022: in particular, it built a complex of medical institutions, metro and eight stadiums.
The main construction materials are imported by sea, but on land, too — the same Saudi Arabia.
The closure of the Saudi border, as well as food, will lead to delays and higher prices.
The Qatari construction sector experiences a deficit of construction materials. The overlap of the Saudi route would exacerbate the problem.
If closing air space and land borders last long, schedule of preparations for the 2022 world Cup to be rushed, afraid Christian Ulrichsen, an expert on Gulf countries from the American Institute of Baker.
The government of Saudi Arabia, the UAE and Bahrain also banned its citizens to travel to Qatar, living in this country and even transit. Those who are already in Qatar are required to leave the Emirate within 14 days.
The same term is given to Qataris in Saudi Arabia, UAE or Bahrain to leave the territory of these countries.
However, the more serious the consequences will be if the same measures will be taken by Egypt. According to a recent study in Qatar lives about 180 thousand Egyptians is not only builders, but also doctors, engineers and lawyers. The loss of such skilled labour will create problems for international companies with offices in Qatar.
Transactions in Qatar’s already broken. Many companies from the Gulf have a presence in Qatar, including in the sphere of retail trade. Their stores will probably close, at least temporarily, says nusseibeh.
And the largest Saudi football club “al-Ahly” has refused sponsorship of Qatar Airways.