The Political Economy of the Gulf Divide

Abstract

This chapter examines the crisis from a political economy perspective, with particular attention to the various macro-economic implications of the crisis, in addition to the role of Qatari LNG. At an economic level, Wright makes the case, Qatar has proved resilient despite its trade, currency, and macro-economic indicators all coming under pressure in the wake of the crisis. In terms of Qatar’s LNG exports, the global and diversified nature of Qatar’s energy strategy meant that the crisis has had no discernible effect on its current energy policy, but longer-term, there are clear implications stemming from this crisis that work against both Qatar and the blockading GCC states. While the blockade may not have had any immediate impact, one conclusion that can be reached is that it has served to close the door to any future use of gas to drive regional integration. This has longer-term negative implications for Qatar and the neighbouring blockading states, as the Gulf market was poised to be an important future market for Qatar given the transformational changes taking place in the global gas market and the rise of competing LNG powers which include the United States, Australia, and Russia. In essence, it has closed the door to any possibilities for a mutually beneficial regional gas-market, meaning Saudi Arabia, the UAE and Bahrain will need to source their gas needs from the global market.