Rapprochement in the Gulf crisis may finally be in sight, but the blockade has changed Qatar’s economy in many ways.
A Bloomberg News report this week shed new light on Luxembourg-based Banque Havilland’s 2017 proposal to allegedly destabilise Qatar’s economy on behalf of one of its largest clients, Mohammed bin Zayed, the crown prince of Abu Dhabi and de facto ruler of the United Arab Emirates.
In June 2017, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed a diplomatic, trade and travel boycott on Qatar.
At the heart of it is the health of Qatar’s currency and economy, which Doha alleges came under attack by banks bent on pressuring it to capitulate to the demands of the blockading nations.
But more than three years into the blockade, Qatar’s economy has become more self-sufficient and proven resilient, adapting in a way that may now be helping the country weather the global coronavirus crisis as well.
Rapprochement in the Gulf crisis may also be in sight.
Speaking at a press conference on Wednesday, Qatar’s foreign minister, Sheikh Mohammed bin Abdulrahman Al Thani, said there were no obstacles to resolving the Gulf crisis at the political level, just days after confirming that “movement” was being made on a resolution.
While the prospects of a solution look bright in the new year, the economic effects of the blockade remain an important issue.
Qatar has learned to weather the storm economically over the past three years of the blockade.
Before the restrictions, Qatar imported 90 percent of its food. Over the past three years, it has adapted, opening domestic dairy and meat farms and increasing trade with Turkey and Iran.
Like nations around the world, Qatar is now grappling with the economic fallout from the coronavirus pandemic and slumping energy prices, and it faces its largest budget deficit since the start of the blockade.
But the resilience and nimbleness Qatar brought to dealing with the Gulf crisis may pay off in handling the economic implications brought by the pandemic, too.
“Financial buffers remain ample” in Qatar, according to a report from the International Monetary Fund released earlier this month, and the country is expected to grow its GDP by 2.5 percent in 2021, the second-highest rate among Gulf Cooperation Council countries.
The Gulf saga has deep roots. Qatar was accused of supporting “terrorism,” being too close to Iran and interfering in the internal affairs of other countries.
The blockade was meant to hurt Qatar’s economy and force its government to accept the four nations’ demands, which included shuttering the Al Jazeera Media Network, downgrading diplomatic ties with Iran and ceasing military cooperation with Turkey, as well as severing ties with what the bloc deemed to be “terrorist groups”.
The pressure campaign had a financial aspect as well.
Following the rupture of relations, Qatar alleges three banks – UAE’s First Abu Dhabi Bank, Saudi Arabia’s Samba Bank and Banque Havilland – sought to sow economic instability by undermining confidence in Qatar’s currency and bonds, according to a lawsuit Qatar filed in London and New York in 2019.
In a statement announcing the lawsuit, the government claimed the banks had tried to weaken the Qatari riyal by “submitting fraudulent quotes to foreign exchange platforms based in New York, to manipulate New York-based indices, and disrupt financial markets in New York, where significant Qatari assets are held and many investors in Qatar are located”.
Qatar spent billions shoring up its currency peg and economy, and “while the financial market manipulation failed in its efforts to undermine confidence in the Qatari riyal and Qatar, it nonetheless caused economic losses”, the government said.
As evidence of its claims of financial market manipulation, Qatar points to a 2017 plan created by a former Banque Havilland analyst for an alleged assault on Qatar’s economy, distilled into a presentation with a mission that reads “control the yield curve, decide the future”.
The presentation was sent to the UAE’s ambassador to the United States, Yousef al-Otaiba, by a former British intelligence agent who worked as a consultant for Banque Havilland and an adviser to Abu Dhabi Crown Prince Mohammed bin Zayed (MBZ), Bloomberg News reported this week.
Screenshots of the presentation were publicly revealed after al-Otaiba’s emails were hacked, and The Intercept was the first to report on them in November 2017. The presentation file had been saved as “Rowland Banque Havilland” on al-Otaiba’s computer and is now part of Qatar’s lawsuit against the bank.
“Maintaining the [currency] peg requires extensive use of central bank foreign exchange reserves,” another of the presentation’s mission statements read. That was exactly what happened.
Qatar’s government said it spent billions to defend its currency peg and protect its financial system before the Banque Havilland presentation was made public. In court in April, Qatar’s lawyers put it simply: The bank’s executives had been “caught with their pants down” when the plan came to light, Bloomberg News reported.
Banque Havilland has maintained in court filings that the presentation was created in August 2017, two months after the blockade of Qatar began, as “risk-management strategy to protect UAE holdings of Qatari bonds”, Bloomberg News reporters wrote, and not a blueprint to wage an economic war.
“Banque Havilland firmly denies any allegations of wrongdoing or improper conduct made by the State of Qatar,” a spokesman for the bank told Bloomberg News. “The bank was not part of any conspiracy against Qatar and rejects all of Qatar’s claims.”
The publication of the Bloomberg News report dealing MBZ’s relationship with Banque Havilland – and its unorthodox work on its behalf – garnered much attention.