When the quartet of Arab nations imposed an embargo on Qatar a month ago, accusing the gas-rich Gulf state of backing terrorism, they quickly closed air, sea and land borders to their neighbour.
For Mohammed Saleh, who runs a business that distributes building materials across the region, the crisis left an important Qatar-bound cargo stranded at Dubai’s Jebel Ali port. He had to take out a loan to pay his supplier, losing £30,000 in the process.
“One minute we are doing business with Qatar, the next we are told we are doing business with terrorist financiers,” he said. “It’s all so confusing.”
From construction companies to financial consultancies, the private sector has been left reeling by the move from the quartet of Saudi Arabia, the United Arab Emirates, Bahrain and Egypt to abandon quiet diplomacy in favour of harsh measures that seek to bend Doha to their will.
The UAE this week had to deny a report that it orchestrated a cyber attack on Qatar’s state media in May that resulted in false statements being attributed to the gas-rich nation’s emir.
With no end in sight to a dispute that has pitted US allies against one another, the embargo has jeopardised the Gulf’s hard-won position as a haven of business stability within the restive Middle East.
Most Gulf nationals now cannot travel to or from Qatar, breaking up families, business ties and dealing a blow to cross-border investments. Business people who are already struggling with the regional slowdown caused by the lower oil price say the embargo is also causing uncertainty and confusion and pushing up costs.
“Qatar used to be lucrative business but now it all costs more,” says one contractor. “While we can get paid in [Qatari] riyals for now, will that be true in the future?”
Doha officials say they will do all they can to maintain imports to prevent the crisis from hitting ordinary Qataris and to sustain its $500m-a-week pipeline of infrastructure projects as it prepares to host the Fifa World Cup in 2022.
Qatar is one of the world’s richest nations, in per capita terms, due to its vast gas reserves and small population of just 2.7m people. But with its sole land border to Saudi Arabia blocked, the country has been forced to spend significant sums of money to airlift and ship in vegetables and fruit from Iran and Turkish dairy products.
“No one will be left out of pocket,” says a senior Qatari official, when asked about the financial impact of the embargo on suppliers. But he refused to pledge compensation for businesses ensnared by the moratorium.
When the embargo was announced in early June, some Doha residents embarked on panic buying sprees at supermarkets, while others drained the city’s foreign exchange bureaux of US dollars.
Meanwhile business people such as Mr Saleh are feeling the pinch. His small materials business, whose revenues are split between Qatar and Dubai, faces higher travel and logistics costs with the end to direct air and maritime routes.
The regional transshipment hub of Jebel Ali has barred Qatar-bound vessels until further notice. UAE authorities have also notified freight-forwarders not to handle any cargo destined for Qatar, including shipments via a third country.
Contractors are shifting supply chains from the UAE to Oman, which has remained neutral in the dispute. Mr Saleh, for example, managed to get his blocked shipment to Qatar by rerouting it via the Omani port of Salalah — an additional 10 days en route.
Qatari businessmen say they are also having to seek alternative sources for building materials such as aggregate — blown out of the rocks of the Hajar Mountains — from Ras al-Khaimah in the UAE over the border to Oman.
Companies can still move materials from the UAE to Qatar, albeit with extra precautions, says one lawyer working in the region. “You have to break delivery — you can’t issue a bill of landing in Doha from Dubai routed via Salalah,” he says. “But it can be done with separate contracts of carriage.”
As companies set about finding strategies to work around the embargo, UAE officials have threatened further restrictions against businesses that carry on doing business with Qatar.
“It is entirely rational for us to choose our partners on the basis of where they establish ties,” said Omar Ghobash, the UAE’s ambassador to Russia. “There is nothing definite yet, but it is logical for us to shun those who are getting into bed with the Qataris.”
Multinationals operating out of the regional business hub of Dubai are already having to decide whether their Qatar business is lucrative enough to risk censure in Saudi Arabia, the UAE and Egypt — the three largest Arab economies in the Middle East.
“The crisis has encouraged companies to think about restructuring to keep UAE and Qatar operations separate,” says one diplomat.
Others are pre-empting any call to sever ties with Qatar by turning down new business there. Some are shifting responsibility for servicing Qatari clients from Dubai to offices in Europe.
This is not an option for Mr Saleh, who for now will keep looking for ways around the embargo. “Oh we can read between the lines,” he says. “All our business partners say just do not tell anyone we are doing business in Qatar.”