In an effort to deepen Qatar’s isolation, the latest in a series of unprecedented measures by the Saudi-led alliance that risk squeezing the country’s economy and finances, the United Arab Emirates banned all international flights serving Doha from flying through its airspace.
The civil aviation authority said Thursday in an emailed statement that until further notice, U.A.E.’s airspace will be closed to any planes flying to or from the Qatari capital. U.A.E. travel restrictions outlined Wednesday on Qatari passport-holders and citizens of other nations who have Qatari residence permits was expanded by the move which also expands on an earlier ban on direct flights between the two countries.
Unless Qatar changes policies supporting extremist groups — charges that Doha denies, the alliance made up of his country, Saudi Arabia and Bahrain was ready to impose more sanctions, said a senior U.A.E. official on Wednesday. According to people familiar with the matter, exposures of banks to any Qatari clients have been asked not to be increased by Saudi Arabia’s central bank. The sources also said that they should not process any payments denominated in Qatari riyals, the regulator also told banks licensed in the country.
Moody’s Investor Service said in a report that additional punitive measures “could include restrictions on capital flows, which would be negative for Qatari banks’ liquidity and funding”. “In a scenario of a rapid loss of confidence from international investors and depositors from other GCC countries, the government might have to step in to support domestic banks.”
On concern the dispute will weaken its finances, S&P Global Ratings this week put Qatar’s long-term rating on negative watch and lowered it by one level to AA-, the fourth-highest investment grade. Citing uncertainty over its economic growth model, Moody’s had taken a similar action before the crisis broke out.
Qatar needed to pledge to overhaul its foreign policy for any mediation to succeed, Anwar Gargash, the U.A.E. minister of state for foreign affairs, told the media in Dubai. Kuwaiti ruler Sheikh Sabah Al-Ahmed Al-Sabah, who’s been shuttling Gulf capitals for talks is leading the efforts to defuse the crisis. He met Qatar’s emir, Sheikh Tamim bin Hamad Al Thani, in Doha on Wednesday.
Sheikh Tamim was called and offered to host talks between the U.S. allies by U.S. President Donald Trump, who initially came out in support of the Saudi-led action.
Qatar is the world’s largest producer and exporter of liquefied natural gas. Stakes in global companies from Volkswagen to Glencore and Barclays, are owned by its $335 billion sovereign wealth fund. But Qatar’s influence goes beyond money. The forward headquarters of CENTCOM, the U.S. military’s central command in the region, is also based in the country.
“The President reiterated that a united Gulf Cooperation Council and a strong United States-Gulf Cooperation Council partnership are critical to defeating terrorism and promoting regional stability,” the White House said in a statement.
Planes serving the country are now limited to routes to its north, via Iran and Kuwait wBottom of Form
ith all adjacent Arabian Peninsula nations now either shutting their airspace to Qatar or demanding advance clearance. Flights to Doha that would usually use shortcuts over Saudi Arabia and the U.A.E. are flights particularly from Africa, India and Southeast Asia and these are being disrupted.
(Adapted from Bloomberg)