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Qatar under siege: the economic consequences of the conflict in the Arab world

The Emirate of Qatar is one of the richest countries in the world, the wealth of which is based on the largest deposits of natural gas.

However, the world is a state primarily known for the television station «al Jazeera», the airline Qatar Airways, the world Cup 2022 and sponsorship contract with the football club «Barcelona».

In addition, the Emirate is the largest in the region of the base of the U.S. army, and senior officials at the Pentagon have made clear that the question of its closure can not be.

Entered the Arab countries of the Persian Gulf air and land blockade of Qatar primarily affect the population of the Emirate and Qatar Airways passengers. The airline had to cancel dozens of flights a day to airports in the UAE and Saudi Arabia and flights to other directions will last for an hour or two longer.

With regard to the population of Qatar does not provide themselves with food, to a large extent (about 40%) based on overland imports from Saudi Arabia. Many Qataris go for groceries in a neighboring Kingdom, where prices are significantly lower. Closing the border will lead to a sharp rise in prices and, if the conflict drags on, the deficit.

Closing the border means the almost complete cessation of construction because the materials for them (first and foremost – for stadiums and other facilities associated with the football world Cup) are also coming from Saudi Arabia. Threatened the construction of the subway, medical center and new seaport.

The citizens of countries to sever relations with Qatar, given 14 days to leave the territory of the Emirate. This decision will negatively affect the construction industry and in medicine (in Qatar has about 200 thousand Egyptian builders, engineers, doctors).

In a difficult situation, and other foreign workers working in Qatar, and enable their families. In the Emirate are citizens of India, Pakistan, the Philippines and other Asian countries.

The impact of the conflict on gas contracts at the moment difficult to assess, however, before the conflict, the international rating Agency Moody’s lowered the credit rating of the Emirate to the level of Aa3 due to declining revenues from gas on the background of falling prices on world markets. The main victims in this situation would be Egypt, which Qatar in 2016 was the main supplier of natural gas. Given the energy and financial problems of the country, the authorities in Cairo will need to quickly find a new gas supplier without increasing prices. Negatively on the situation in Egypt will impact the return of 200 thousand expelled from Qatar of foreign workers.

Qatar and Saudi Arabia are in OPEC, and until now, the Emirate has supported the policy of the Kingdom in the oil cartel. Although the share of Qatar have only 2% exported by the OPEC countries of oil, the conflict may lead to differences in the organization and gap agreements on the reduction of oil production.

Recall that on 5 June to break off diplomatic relations with Qatar, said Bahrain, Saudi Arabia, United Arab Emirates, Egypt, Yemen, Eastern Libya, the Maldives and Mauritius. Doha accused of terrorist financing, cooperation with Iran and attempts to interfere in the internal Affairs of Arab countries.

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Qatar under siege: the economic consequences of the conflict in the Arab world

06.06.2017

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