How Qatar is finding ways around the blockade

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When its neighbors severed diplomatic ties and cut land, sea and air links, panic rippled through the tiny Gulf state. There was a rush to buy food, people lined up at banks, and stock prices slumped.

Now, three weeks into what Qatar calls a “blockade,” it is finding ways around the sanctions imposed by the United Arab Emirates, Saudi Arabia, Bahrain and Egypt, who have accused their fellow Arab state of funding terrorism and destabilizing the Middle East.

Qatar denies those claims, and appears to be prepared for a long dispute. The UAE warned this week that the pressure on its neighbor could last “years.”

How is Qatar coping?

Oil and Gas Unaffected. Qatar is the world’s largest supplier of liquified natural gas, much of which comes from a giant offshore field that it shares with Iran. Its biggest crude and gas customers include Japan, South Korea, India and Singapore. The UAE is also a big customer, sourcing 30% of its energy needs from Qatar, and a pipeline connecting the two countries is still pumping.

New food suppliers. Despite its wealth, the desert state relies heavily on imported food, a third of which used to come from Saudi Arabia and the UAE. Early fears of shortages quickly subsided, in part because the government was able to find alternative suppliers.

Migrant workers keep coming. Only about 12% of Qatar’s population of 2.2 million are Qatari citizens and the state relies on foreign nationals to keep its economy ticking over. They work in every industry from healthcare and media, to education and energy. The Philippines government was quick to ban its workers from going to Qatar when the Gulf dispute began, saying it was concerned about the welfare of its 140,000 citizens living in Doha. It has since lifted the ban “in view of the normalization of conditions within the state of Qatar and with the guarantee of the safety for Filipinos there given by the Gulf state,” the Philippines’ government said in a statement.

Flying high but longer. The state’s national carrier was hard hit by the ban. It suddenly found 18 destinations out of bounds, forcing it to ground about 50 flights a day. Qatar Airways, which this week won the Skytrax “Airline of the Year” award, is unbowed. CEO Akbar Al Baker said last week his airline is scheduling more flights to other destinations to make up for the lost business and will continue with plans to add 24 new destinations in the next 12 months.

Sovereign wealth. The State’s sovereign fund provides “ample cover to Qatar’s exposure [to the Gulf states], even taking into account concerns regarding the liquidity and usability of a significant portion of these assets,” noted Farouk Soussa, Citibank’s chief economist for the Middle East.

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