QATAR: Qatar Won't Bow To Gulf Countries Demands, Inspite Of The Economy Feeling The Blockade Pinch

A boycott imposed by four Arab nations that accuse Qatar of supporting terrorism is squeezing the tourism sector and Doha's hotels which would normally be full in the Eid al-Fitr holiday have seen steep falls in their occupancy rates.

Major hotels found average occupancy was around 57 percent at the start of the Eid festival on Sunday which marks the end of the Ramadan fasting month when friends and families eat and pray together and take holidays.

We’re usually packed with Saudis and Bahrainis but not this year, a staff member at a five-star hotel said.

Hamad International Airport, one of the Middle East's busiest, would handle 76 percent as many flights in early July compared with the same period last year, a loss of about 27,000 passengers a day.

The airport does not talk about data on the impact of sanctions.

Visitors from the rest of the Gulf Cooperation Council usually account for almost half of all visitors to Qatar. So a decision by Saudi Arabia, the UAE, Bahrain and Egypt to cut diplomatic and transport ties on June 5 hit traffic hard.

Doha in early July, assuming the restrictions remain, will have less capacity than a year ago - a confronting figure for a region where every month sets year-on-year records, analysts on Aviation say.

There is no breakthrough in sight for the crisis in which the four Arab nations issued an ultimatum to Doha to close Al Jazeera television, curb ties with Iran, shut a Turkish base and pay reparations.

A defiant Doha has denied accusations of supporting terrorism and says the demands are unrealistic.

Hundreds of weekly flights to and from Qatar have already been cancelled because of the dispute. Hamad airport will lose fees paid by airlines and passengers, as well as terminal revenue from duty free shops and restaurants.

Air blocades by the four Arab states represented around 25 percent of flights by state-owned Qatar Airways, one of the region's big three carriers.

Elsewhere in the tourist sector, hotels, restaurants and other facilities have had to find new sources of services and goods, in some cases, at higher cost, due to the boycott.

A substantial drop in visitor arrivals is likely to force hotel and real estate developers to re-evaluate their strategies and priorities, potentially causing delays to some of the ongoing tourism projects.

Qatar’s World Cup organising committee said sanctions had not affected preparations for the tournament and alternative sources for construction materials had been secured.

Qatar has said 46,000 rooms will be available to host fans by the time of the World Cup. In March, it had 119 hotels with 23,347 rooms, according to the tourism authority.

Developing business and leisure tourism is part of Qatar's drive to develop its economy away from reliance on oil and gas revenue.

Doha aims to raise the tourism sector's contribution to GDP to 5.2 percent by 2030 from around 4.1 percent now, while raising the number of people employed by nearly 70 percent to 127,900.

Qatar's foreign minister has called the Saudi-led blockade of his country a clear aggression and an insult and urged its opponents to act with reason and through dialogue to solve problems in the Middle East.

Mohammed bin Abdulrahman al-Thani told an audience in London that attempts to silence Qatar's independence would only exacerbate the serious problems experienced in the region and accused Saudi Arabia and its regional allies of demanding that we must surrender our sovereignty as the price for ending the siege.

His speech at the Chatham House think tank comes as the foreign ministers of Saudi Arabia, Egypt, the United Arab Emirates and Bahrain met in Cairo to consider its response to Qatar's refusal to give in to 13 demands, including ending alleged support for terrorists and shutting down media organisations.

Qatar's foreign minister said that Saudi Arabia and the United Arab Emirates were the main drivers of a campaign to isolate it, but added that Qatar was unlikely to be thrown out of the Gulf-Cooperation Council (GCC) regional group.

We believe that this entire campaign is merely driven by Saudi Arabia and the United Arab Emirates and these are the countries that we need to engage to find out what are the real problems and what are the real grievances, he said.

Bin Abdulrahman also used the London event to call for dialogue and to openly welcome any serious effort to solve the crisis with its Arab neighbours through dialogue not blockade.

He said: Qatar continues to call for dialogue. We welcome any serious efforts to resolve our differences with our neighbours, he said, adding: We don't accept intervention in our own affairs.

But he said Qatar would not take the first step, and declined to disclose the details of a response that Qatar has given to the Arab states' demands. They should not expect from me a first step, I should expect from them a first step for engagement, he said.

Earlier on Wednesday, the Saudi foreign ministry said it had received Qatar's response to their demands - which include Doha ending support for the Muslim Brotherhood and closing broadcaster Al Jazeera - and would respond at the right time.

Saudi Arabia and its allies have not said what steps they could take next, but there are fears of a wider embargo that would hurt the Qatari economy, with ratings agency Moody's announcing it was changing Qatar's outlook to negative over the crisis.

A group of Arab states led by Saudi Arabia has severed air, sea and ground links with Qatar, cutting off vital routes for imports including food.

Qatar Fgn Minister tells Chatham House audience '12000 families affected by Arab blockade/siege' on Qatar. pic.twitter.com/QhYVNlNAeP

They also ordered Qatari citizens to leave their territories and took various steps against Qatari firms and financial institutions.

The Qatari foreign minister told the London event that the underlying cause of the conflict was Qatar's different views on wider issues in the Middle East amid concerns over extremism. Why is Qatar's independence a threat to blockading countries? Because we have different views,he said.

The foreign minister said the crux of the issue was differences in approach from the Saudi bloc and Qatar. He said: Here is the crux: we have seen how young people left without hope turn to violence. We have watched as the world blames Islam. As the emir has said, the cause is not Islam. It is hopelessness. There are serious problems in the Middle East. Silencing Qatar will not stop them.

The crisis has raised concerns of growing instability in the region, home to some of the world's largest energy exporters and key Western allies who host US and UK military bases.

Energy-rich Qatar has been defiant throughout the crisis, insisting it can weather action taken against it.

However, the Qatari minister suggested he saw little hope of a rapid reconciliation and that his country was preparing for a more protracted rift.

What we've done in the last few weeks is develop different alternative ways to ensure the supply chain for the country not to be cut off.

He looked ahead to the football world cup that Qatar does not host until 2022

Even if the blockade is lifted, we have to rely on ourselves and ensure we deliver a World Cup that is attractive to the world, he said.

Responding to the accusation that it was now too close to regional rival Iran, he said Doha had to live alongside Tehran since the two states shared a gas field.

In a question and answer session at the Chatham House event the Qatari foreign minister denied Saudi and UAE claims that the country had paid ransom money to a Shia group to free kidnapped hunters in Iraq.

Bin Abdulrahman said the payment was made to the Iraqi government, and not Iran-backed militants.

Qatar's sovereign wealth fund has transferred over $30 billion worth of its domestic equity holdings to the finance ministry and may sell other assets as part of a restructuring drive, people familiar with the matter said.

Stakes in 18 companies were transferred earlier this year, before Qatar's diplomatic rift with other Gulf states.

The stakes include major holdings in some of the country's top firms such as Qatar National Bank, telecommunications operator Ooredoo and Qatar Electricity & Water Co.

The Qatar Investment Authority, one of the world's largest sovereign funds, moved the holdings as part of efforts by the entire government to become more efficient and generate higher returns, the sources said.

The assets were transferred so that the Ministry of Finance could oversee these holdings in a more active manner, one of the sources said.

He added, Under the rule of Sheikh Tamim, Qatar is moving into an era of greater government scrutiny and oversight of funds. The finance ministry has a hands-on approach to public investments.

A second source said an internal restructuring of the QIA had started earlier this year, aiming to ensure the fund focused on its strengths, particularly international investing.

The QIA declined to comment.

The QIA, which rarely discusses its operations publicly, is believed to have over $300 billion of assets around the world.

The holdings transferred to the finance ministry include stakes across the country's banking industry: Islamic lender Masraf al Rayan, Ahli Bank, Qatar Islamic Bank, Qatar International Islamic Bank, Doha Bank, Commercial Bank of Qatar and Al Khalij Commercial Bank.

They also include industrial, trading and transport firms: Qatar National Cement, Al Meera Consumer Goods , Qatar Gas Transport, Gulf International Services, Mannai Corp, Mayaza Qatar Real Estate, Qatar Industrial Manufacturing Co and Qatar Oman Investment Co.

The sources did not specify exactly how holdings in these companies would be managed more actively.

They bring to the finance ministry annual dividend revenue estimated at over 3 billion riyals ($824 million) this year.

It has not been decided yet how the revenue from the company dividends will be used.

They could form an additional revenue stream for the government, or the finance ministry holdings could be prepared for privatisations or strategic sales, the first source said.

The restructuring of the QIA was decided months before Saudi Arabia, the United Arab Emirates and Bahrain cut diplomatic and transport ties with Doha this month, accusing it of backing terrorism, a charge which Qatar strongly denies.

The changes at the QIA are part of a country-wide consolidation drive which includes planned mergers of state-owned liquefied natural gas producers Qatargas and RasGas, and Qatar Petrochemical Co with Qatar Vinyl Co.

The second source said assets which the QIA might sell included Hassad Food, the country's top investor in the international food and agri-business sectors.

It was established in 2008 as a wholly owned subsidiary of the QIA. No decision has been made, the source stressed.