Azernews.Az

By Kamila Aliyeva

The conflict in the Persian Gulf escalates further as the blockade of Qatar by its Arab neighbours remains in place, diplomatic isolation increases and neither side wants to back away from its position.

Saudi Arabia and its close allies have previously sent a list of harsh demands to Qatar for ending blockade which resulted in cutting off vital imports to this country.

However, Qatar rejected these demands expressed in such a manner (one of the points of the ultimatum was the 10-day deadline for its adoption) describing them as humiliating and unacceptable. The list was regarded as an illegal attempt to limit Qatar's sovereignty and control its foreign policy.

Sheikh Mohammed bin Abdulrahman Al Thani, Qatar's foreign minister, has already said that any negotiations will begin only after the blockade regime is softened, that is, without ultimatums and pressure, but as partners.

Meanwhile, Saudi Arabia, Bahrain and the UAE tried to strike at the financial system of Qatar so it could face a severe liquidity crisis.

They demanded Doha to return the funds, $16 billion, which were placed by state companies of these countries as term deposits in Qatari banks.

The sum is not so large, but considering the hard currency deficit in the banking system of the country, such requirement can drain the financial system and provoke a collapse of the national currency.

Against this background, investors have more fears that Qatar will not be able to survive the current crisis without currency devaluation.

The Qatari riyal stood at the level of 3.64 riyal for the U.S. dollar since 2001, but after other Arab countries reduced diplomatic relations with Doha, accusing it of terrorism, the rate descended making up 3.68 riyals per dollar. Although in absolute terms this fall is very small, it is still the most serious decline since 2005.

At the same time, Qatar stated that it can suspend all projects with the Council of Cooperation of the Arab States of the Persian Gulf (GCC), despite Doha’s previous claims about its intention not to take any counter-action measures against its Arab neighbours.

Qatar showed large interest in joint projects with Turkey in such sectors as construction, medicine and pharmaceuticals can attract Turkish investors.

It is also expected to create a free economic zone between Turkey and Qatar, Qatar media reported.

Saudi Arabia, the UAE, Bahrain, along with Egypt, cut diplomatic and transport ties with Qatar in early June, accusing the country of supporting "extremism" and their regional ally, Iran - charges that Qatar has repeatedly denied.

The blockade has disrupted imports of food and other materials into Qatar and caused many foreign banks to scale back their business with the country.

Arab countries demanded from Qatar to comply with 13 points in return for an end to a three-week-old diplomatic and trade boycott of the country.

They required Qatar to cut diplomatic relations with Iran, close the Turkish military base, eliminate Al-Jazeera TV channel, extradite all persons wanted in four countries on charges of terrorism and pay compensation.

The U.S., which urges a diplomatic solution to the crisis, has been pushing for a list of grievances that are "reasonable and actionable."

---

Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva

Follow us on Twitter @AzerNewsAz