Doha — Qatar has launched direct shipping services to ports in Oman, a move that bypasses a Gulf "blockade" on a country largely dependent on food imports.
Qatar’s port authority announced the launch of two new services from Hamad Port to Oman’s Sohar and Salalah ports, circumventing the the need for cargo to stop in the neighbouring United Arab Emirates (UAE).
The UAE has, for decades, served as a central stopping point in cargo shipments. Qatar’s Hamad Port is 420 nautical miles from Sohar Port and 1,131 nautical miles from Salalah.
Saudi Arabia, the UAE and Bahrain are among several countries which announced the suspension of all ties to Qatar last week over what they say is the state’s support for extremist groups and its political proximity to Shiite Iran. Qatar denies the allegations.
The emirate is the world’s largest producer and exporter of liquefied natural gas, but the wealthy emirate also relies heavily on imports for food staples and raw materials. Analysts estimate that at least 40% of all of Qatar’s food supplies is transported across its land border with Saudi Arabia.
Last week, Riyadh closed the Qatari peninsula’s only land border, threatening the import of both fresh food and raw materials needed to complete a $200bn infrastructure project for the controversial 2022 football Fifa World Cup.
On Sunday, Saudi Arabia’s arch-rival, Iran, announced it had sent five planes carrying produce to Qatar. Three ships carrying 350 tonnes of food are also set to leave Iran for the emirate. Turkey is also tipped to play a major role in supplying Qatar with food.
Kuwait, which is now leading mediation efforts, and Oman are the only Gulf Co-operation Council members that did not take measures against Qatar in the worst diplomatic crisis to hit the region in years.
Finance minister Ali Shareef al-Emadi says Qatar has enough financial firepower to defend its currency and economy. Al-Emadi sought to play down the impact of the crisis on the country, saying the plunge in Qatari assets last week was a "normal" reaction to the cutting of diplomatic and transport links with Qatar. "We’re business as usual and we’re open for business," he told CNBC in an interview broadcast on Monday.
The unprecedented measures have prompted investors and economists to ponder how long Qatar, the world’s biggest exporter of liquefied natural gas, can weather the pressure without having to devalue its currency or sell any of its global assets.
Qatar’s sovereign wealth fund, one of the world’s largest, controls stakes in companies such as Glencore and Barclays. "Our reserves and investment funds are more than 250% of GDP," Al-Emadi, who sits on the board of the sovereign wealth fund, said. "I don’t think there is any reason that people need to be concerned about what’s happening, or any speculation on the Qatari riyal."
The crisis caused Qatar’s most liquid bonds to tumble last week as its sovereign rating was cut and bets against its currency surged.
Al-Emadi said Qatar’s government didn’t need to buy back its bonds. "We are extremely comfortable with our positions, our investments and liquidity in our systems," he said. "We are going to make sure we are even more diversified than we were before."
Ratings companies have been less sanguine about the feud’s effect on the economy of the world’s largest exporter of liquefied natural gas. Moody’s Investors Service sees the potential to push up Qatar’s borrowing costs. Qatar’s sovereign credit strength will be hurt primarily on higher funding costs, while a pick-up in foreign investment outflows would drain foreign-exchange reserves, it said.
S&P Global Ratings lowered Qatar’s long-term rating by one level to AA-last week and put it on negative watch, on concern that the country’s finances will be affected.
At the same time, it said on Sunday that Qatari banks are strong enough to survive the pull-out of all Gulf money and a quarter of their other foreign holdings. In a worst-case scenario, only two unidentified lenders would have to dip into their investment securities portfolio, S&P concluded.
Al-Emadi predicted the countries isolating Qatar will share in the economic pain they inflict on it. "A lot of people think we’re the only ones to lose in this," the minister said. "If we’re going to lose a dollar, they will lose a dollar also."
AFP and Bloomberg