Qatar, the world’s richest country by per capita purchasing power, is cut off from basic goods and services. Surrounding nations have closed their borders. Trade routes have been disabled. That means billions of dollars of losses are stacking up as food, transportation and business restrictions come to bear.
Qatar’s wealth, however, equals resilience. And those who may actually suffer more over the log term are, ironically, its neighbors—the very governments trying to choke Qatar into submission.
A coalition of Gulf states, led by Saudi Arabia, has cut relations and imposed draconian measures as penalty for Qatar’s alleged terrorism financing. The tiny country, whose population numbers just 2.3 million, only has one land border—and that is with Saudi Arabia, where most of its food comes from. Other countries in the region have also limited airspace and maritime routes.
Qatar has an estimated $335 billion in its sovereign wealth fund. It earns billions per month from petroleum revenues. Much of that is liquified natural gas exports to countries outside the coalition that is lined up politically against it. The United States, which has a strategic military base in Qatar, is trying to negotiate blockade relief.
While Qatar trades briskly with its Persian Gulf neighbors in the Gulf Cooperation Council, Saudi Arabia and other GCC countries (the United Arab Emirates, Bahrain, Oman, Kuwait and Yemen) only account for between five percent to 10 percent of trading on the Qatari stock market. Moreover, borrowing costs for the whole region could rise if tensions persist.
“Asset managers will not differentiate between Qatar and the rest of the GCC, and international managers will take their hands off any credit from the GCC. If Qatar is seen as a terror financing or compliance issue, then asset managers will be cautious," a report published by Al Jazeera explains.
Indeed, travel hubs from Doha to Dubai are already seeing widespread fallout.
Qatar citizens’ purchasing power adds up to $141,543 each per year on average. Compare that to Saudi citizens, who earn on average one-third of that, or Yemenis, who earn on average less then two percent of that.
Qatar has enough money to stand a lot of economic pain. It’s neighbors, not so much.
