Oman represents a different model among GCC countries with its unique political, economic and social structure. The country differs from its fellow neighbours in terms of political orientation, economic development as well as social and cultural life. While the country particularly avoids taking sides in regional conflicts and other foreign policy issues, it plays a mediating role especially in the disputes between Iran and regional and global actors. Unlike other Gulf countries such as the UAE, Qatar, and Bahrain, the Omani government keeps the ratio of foreigners to its own population at a certain level in order to allow its citizens to benefit more from the already limited resources in the country. An interesting fact with the expatriates who reside in Oman is the fact that they are far better integrated into Omani society than expats in other Gulf countries who experience some form of segregation. This is mainly due to Oman’s centuries-old culture of hosting people from different countries and being a trade hub between continents.

Oman also differs from other Gulf countries such as Qatar and the UAE in terms of its economic capabilities as well as structure. Despite Oman’s economy being heavily dependent on oil exports, the country’s reserves are limited. Because of the lack of enough natural resources, the Omani regime has tried to increase the welfare level of the country by using the existing reserves as effectively as possible, and allocating returns towards economic development and infrastructure. These limited reserves caused Oman to lag behind other Gulf countries with regards to economic development. As a result, Oman has made little progress in terms of becoming an international trade hub, despite the strategic location of the country. Additionally, Oman’s GDP per capita also remained the lowest among the GCC countries. Although it has lagged behind other Gulf countries economically, Oman has been undertaking a new initiative to bring a sustainable development model for the country and to make a rapid progress towards a post-petroleum economy.

On 27-28 January 2019, the Omani government announced its Vision 2040 program where it detailed a new strategic road map that would allow the country to transform its economic structure. There is no doubt that the most important motivation that pushed Sultan Qaboos’ leadership to define a new strategy is the disappearing natural resources in the country. It is estimated that the oil and natural gas reserves of Oman will end before 2040. If new discoveries cannot be made, the country will supply its energy needs through imports and will have to replace their exports with goods other than oil. This depressing trend is pushing the Omani leadership to find alternative ways to restructure the country’s economy.

The fact that the Omani economy is heavily dependent on energy products is a serious challenge for restructuring its economy in the post-oil era. In current numbers, the Omani economy is 70% based on exports from the energy sector. The disappearance of this high volume of exports and the increasing imports in order to meet the energy needs will mean a serious burden for the country’s economy. In addition to this trend, the Omani economy is also struggling with high unemployment, which increases the pessimistic future for the country’s economic Outlook.

By implementing the Vision 2040, Oman’s main priority is to diversify its economic activities and establish an economic environment where dependence on hydrocarbon products is kept at a very limited level. Aiming to adopt an economic development model in this direction, Oman aims to stand out in fields such as production, industry, tourism, trade, mining and port management. The country also aims to replace hydrocarbon based energy resources with renewable energy options.

Within the scope of the policy of diversifying the economic activities, one of the areas Oman attaches special importance to is the transforming the country into global trade hub. By increasing the capacities of its ports in southern regions Oman aims to attract regional and international investors. In this context, significant efforts are being made to expand the ports in the cities of Duqm and Salalah along the Indian Ocean in the hope that these ports can also serve as alternative to Jabal Ali Port in Dubai.  

Attracting foreign investments to Oman is another important target of the Vision 2040 strategy. The Omani administration organizes a number of events where international investors are being informed about potential projects in the country. The Omani government also made significant legal changes that would help investors easily tackle investment procedures. Within the context of these developments, there has been a significant increase in foreign direct investments in Oman in 2019. A recent example of such investment came from China. Under the newly signed privatization agreement on December 17, 2019, Oman’s state-owned Electricity Transmission Company, known as Nama, sold a 49% stake to the Chinese state-owned State Grid Corporation of China for $1 billion.

While struggling with these concerns regarding the future of the economy, Oman is also dealing with problems in foreign policy. Although Muscat remains neutral on many regional issues, Omani leadership is concerned that the new political dynamics of the region may also affect the country. For instance, the aggressive foreign policies of Saudi Arabia and the United Arab Emirates are not welcomed by the Omani leadership, as the country prefers to remain neutral in foreign policy. The continuation of this approach would bring some level of tension between these two countries and Oman. The civil war in Yemen also put Oman in a difficult position in pursuing a neutral foreign policy. This is mainly due to the fact that both Riyadh and Abu Dhabi consider Oman to be a passage for Iranian arms to Houthis in Yemen who are fighting against Saudi and Emirati backed forces. Although the Muscat administration rejects these claims, the continuation of the conflict in Yemen remains a cause of tension between Oman and its northern neighbours. Given this grim picture, Oman has to be careful not only in managing its economic direction, but also political relations with neighbouring actors that have strong natural resources reserves.

As Sultan Qaboos has been recently admitted to a hospital in Belgium due to health problems, the uncertainty over Oman’s leadership is also a source of concern for the country. As the uncertainty continues, Oman has focused on economic development while insisting on continuing a neutral foreign policy. With its inclusive social fabric, cultural pluralism, economic structure and neutral foreign policy position, Oman represents a unique case among the GCC countries. These aspects would allow the Omani leadership to become successful in its attempt to transform the country, particularly economically.

On June 13, 2019, two tankers in the Oman Sea carrying crude oil were the target of attacks. Located between the United Arab Emirates and Iran, the two tankers were just about to leave the Persian Gulf. It is not yet known who is responsible for the attack. However, this is not the first one and it seems like it will not be the last.

Following the Trump Administration’s decision not to extend the waivers of the Iran sanctions, Tehran once again threatened the U.S. to close the Strait of Hormuz, which is of great strategic and economic importance with oil and recently LNG tankers. These tankers carry almost one third of the global oil shipment passing through it. “If Iran cannot export oil from the Gulf, no one else can either,” President Rouhani said. Energy exports constitute around 50 percent of Iran’s revenue and almost 20 percent of its GDP.

On November 5, 2018, the U.S. granted waivers to the top buyers of Iranian crude, when the second-round of sanctions imposed on Iran affected the most revenue-generating sector. Between November 5, 2018, and May 2, 2019, China, India, Turkey, South Korea, Japan, Taiwan, Italy, and Greece were allowed to import crude from Iran up to a limited amount. 5 of the 8 countries sustained their imports, mostly China, India, and Turkey, while helping Iran to generate revenue. However, this did not help the Tehran government save its economy, as the country began to experience difficulties in trading other goods as well. High inflation accompanied by rising unemployment, the extremely fragile banking sector and stagnant economic growth caused Tehran to become more aggressive.

The attack on two tankers in the Oman Sea carrying crude oil was not the first and won’t be the last. 

As part of a “maximum-pressure policy” against Iran, on May 2, 2019, the U.S. declared that waivers granted to the eight countries will not be renewed. China, India, and Turkey criticized the decision at first and intended to pursue their imports. However, the private entities importing crude oil in these countries could not take the risk to face secondary sanctions from the U.S. and terminated importing crude from Iran. Tehran tried hard to sustain its oil trade as Zarif visited India, Japan and China in an attempt to persuade these countries to continue their oil trade. However, according to the available data, these efforts have seemed to fail.

The expiration of the waivers was followed by a series of events that threatened the global oil trade and brought the world’s attention to the Gulf. First, on May 12, 4 oil tankers – whose banners were not announced – were sabotaged. Although no serious damage occurred, it caused concerns. Then on May 13, tankers, of which one belonged to Saudi Arabia and was carrying Saudi oil, were sabotaged and the tankers were seriously damaged but no oil spill occurred. Though there is no clear evidence as to who was responsible for these two attacks, the U.S. and its allies in the region blamed Iran, which had already been threatening to close the Strait of Hormuz. On May 14, a drone attack was carried out against Saudi oil production facilities and a pipeline. This time however, Iran was directly targeted and it was asserted that the attacks were carried out by Iran-backed Houthis in Yemen.

The latest attack on two tankers took place in the Oman Sea after the U.S.’ latest sanction decision against Iran’s largest and most profitable petrochemical holding group, Persian Petrochemical Industries Company, for providing financial support to the Islamic Revolutionary Guard Corps. The IRGC was designed as a foreign terrorist organization by the U.S. State Department. However, the attack has more importance in terms of timing and targeted vessels. The attack took place during Japanese Prime Minister Abe’s visit to Iran and one of the tankers belonged to Japan. Shortly afterwards, U.S. Secretary of State Mike Pompeo held a press conference, announcing that according to U.S. military intelligence services, Iran had carried out the attack. Israel, Saudi Arabia, the United Arab Emirates and the UK supported these claims. Many other countries have expressed their concern about oil supply security.

Iran denied the accusations immediately after the attacks and government officials announced that a team had been assigned to rescue about 40 crew members in the tankers. Nevertheless, the U.S. claimed that explosives of Iranian origin were used in the attack and that the mentioned team was working to conceal the evidence revealing Iran, not for rescuing purposes. In this case, one can count a couple of conspiracy theories. First, U.S. claims are correct and Iran carried out these attacks to menace the Trump Administration from conducting a maximum pressure policy. Second, Tehran did not commend the attacks but some extremists in the IRCG carried them out. Third, the U.S. ordered the attacks in order to break negotiating activities between Iran and Japan. Last but not least, a third party organized these attacks to place Iran as a target in order to further worsen relations between the U.S and Iran and to further isolate Tehran.

There are four conspiracy theories that can be negated about the tanker attacks in the Oman Sea. First, it was Iran. Second, it was the Islamic Revolutionary Guard Corps. Third, it was the U.S. And finally, that they were conducted by a third party to benefit from the insecure environment. 

Many questions can be asked about the first scenario. It is quite contradictory for Iran to attack a Japanese tanker when Prime Minister Abe was in Iran and was acting as a mediator – especially at a time when Tehran is in need of all kinds of cooperation. Why would Iran want to humiliate Abe with such an act?

In regards to the second theory, many experts, especially in the last few years, have argued that the IRCG has considerably increased its military and technological capacity and that it is highly probable for the IRCG to have carried out these attacks in order to defend Iran and its interests.

There are a number of impulsions in the third scenario. It is an accepted fact that there are contradictory ideas within the Trump Administration; the president is not in favor of military confrontation with Iran, whereas individuals like John Bolton and Mike Pompeo are keen to bring Iran to its knees with maximum pressure – even using military intervention if necessary. While President Trump has put aside his harsh language against Iran in the period before the attack and said that he was open to negotiations, Pompeo and Bolton have insisted on maximum pressure, illustrating the clashes among the administration in terms of what to do with Iran. Moreover, some pro-Israeli also support Bolton and Pompeo’s idea of military intervention in order to limit Iran in the region and to increase Israeli influence. This would be possible if the world believes Iran is an absolute aggressor and poses a threat, and needs to be controlled by any means.

In the fourth scenario, any third party producing oil could have organized the attack in order to benefit from increased oil prices. It is known that the world is experiencing interesting times when there are sanctions against oil producers, supply disruptions as a result of different geopolitical affairs, increased summertime demand and also a glut of oil supply at the same time, which lowers prices and is hurting oil producers.

These scenarios and possibilities can be further duplicated. However, there is an indisputable fact: The U.S. is already at an economic war with Iran, which is damaging both the liberal world order and the lives of millions of innocent Iranian people.

The international arena is experiencing a turbulent period in which the effects of political, economic, and commercial decisions taken by President Donald Trump are clearly being felt. During his election campaign, Trump influenced the agenda with his statements on the actions he will take on issues closely related to the global political and economic system. Using the motto “America First,” the U.S. President made it clear to the whole world that his ultimate goal is to protect the interests of the American nation. Thus, he first decided to withdraw from the Paris Climate Agreement, which he believed was in contradiction with the country’s interests. Then, again arguing to protect the interests of the American people, he began to implement trade sanctions on many actors such as China, Russia, the EU, and Turkey. However, these sanctions not only affected the targeted states but also hit global trade.

Lastly, on May 2018, Trump unilaterally withdrew the United States from the Joint Comprehensive Plan of Action (JCPOA), which is also known as the Iran nuclear deal, although the other signatories of the deal, P5+1 countries, strictly opposed the decision. He charged the Tehran regime with supporting terrorist actions and organizations widening the chaos in the Middle East, producing ballistic missiles, and continuing its nuclear program despite the JCPOA. The withdrawal of the country followed Trump’s announcement on the re-implementation of the sanctions that had been suspended after the nuclear deal. In order to increase the pressure of sanctions and to further isolate Iran, Trump also threatened other states and corporations: “Anyone doing business with Iran will NOT be doing business with the United States!”

Trump’s “America First” motto and his withdrawal from the JCPOA has not only affected targeted states, but has also hit global trade.

The new round of U.S. sanctions

The first round of the two-phase sanctions began to be imposed on August 6, and from that time on, Iran has been unilaterally blocked to have or access the U.S. dollar and precious metals like gold and silver, and so on. The automotive and aviation industries are also being isolated from the international system. The second round targeting Iran’s petroleum, the largest income source of the government revenues, and shipping industries and port operators to diminish the country’s petroleum and petrochemical products exports to zero began to be re-imposed on November 5. On the same day Washington granted temporary waivers to 8 states – China, India, South Korea, Japan, Taiwan, Italy, Greece and Turkey. The U.S. administration claims that it is trying to cut off Iranian oil exports since the Tehran regime uses the revenues obtained from the petroleum industry to fund terrorist organizations and conduct terrorism in different parts of the world.

Leading by the remaining P5+1 countries, China, France, Russia, the United Kingdom and Germany, the EU and Turkey have expressed their opposition to Trump’s decision many times and intend to maintain their trade relations with Iran. Especially the position of China and India is crucial for Iran as these two countries are its largest crude oil importers. They all have searched for new types of payment systems to avoid U.S. interruption while doing business with Iran. The EU has begun to implement “blocking statute” to enable EU companies to continue their commercial relations with Iran and compensate the damages that may arise from the sanctions. Later on, the EU, China and Russia also agreed on founding a special purpose vehicle that could channel new payment mechanisms alternative to using U.S. dollars. The two biggest buyers of Iranian crude, China and India, reached a deal with the Tehran regime on using their national currencies. Turkey has been evaluating whether to use Turkish Lira and/or establishing a barter system that could facilitate exporting its goods and services to Iran in response to its crude oil imports.

The two biggest buyers of Iranian crude, China and Iran, have reached a deal with the Tehran regime on using their national currencies during business. Now, Turkey is evaluating whether to do the same.

What are the effects of sanctions on Turkey-Iran energy relations?

Turkey, as a growing economy, imports approximately 90 percent of its oil and 95% gas and Iran has been one of its primary suppliers. In 2017, the country imported about 45 percent of crude oil and 17 percent of natural gas it consumed from Iran. In other words, Iran was the largest crude oil and the second largest natural gas supplier of Turkey.

As the new round of sanctions does not cover Iran’s natural gas sector, contrary to the previous ones, it’s expected that Turkey’s natural gas supply from Iran will not be affected and the country will not be subjected to U.S. sanctions. However, the amount of Iranian crude oil in total crude oil imports of Turkey has begun to decline as Trump decided to re-impose the Iran sanctions on May 2018. Turkey’s biggest crude oil importer TUPRAS began to gradually reduce the amount of oil supplied from Iran in order to balance the internal market. According to Turkey’s Energy Market Regulatory Authority (EPDK), in April 2018, the amount of Iranian crude oil was 67 percent of the total crude oil imports, which decreased to 51% in May. A sharp drop was experienced in June as it fell to 15 percent. However, the amount increased in July and August, reaching respectively to 38 and 31 percent.

At that point, it should be highlighted that Turkey did not stop importing crude oil from Iran even during the internationalized sanctions throughout 2010-2015. This signals that Turkey will continue to import Iranian oil during the unilaterally imposed U.S. sanctions. In addition, Iran’s 38 percent share in total crude oil imports of January 2018 is also remarkable. This could be interpreted as a sign that import amounts may vary from time to time. Moreover, Iran has been one of the two countries where Turkey imports most of its crude oil since 2011. Accordingly, TUPRAS, supporting President Erdogan’s statements, has announced that Turkey will continue to import crude oil from Iran.

Following the Trump administration’s sanctions on Iran, growing economies that are highly dependent on imported energy resources are in need of tight cooperation more than ever.

What’s next for the waivers?

As the exception granted by the Trump administration will last for only 180 days, the 8 waivers, including Turkey, now need to plan how to manage their relations with Washington and Tehran. Japan and South Korea are expected to cut their Iranian crude imports completely while China, India and Turkey seem decisive to pursue their imports. However, as the shares of Greece, Italy and Taiwan are rather low and, contrary to other waivers, they did not make a clear statement on unilaterally imposed sanctions, their future positions are unclear. Besides, since the waiver is limited to 1.1 million barrels of Iranian oil per day, the waivers also need to collaborate on how to allocate this amount.

It is expected that during the 180-day exception period, China, India and Turkey will investigate alternative ways and conduct intensive diplomatic efforts engaging at political and financial levels to maintain their oil trade with Iran. It would also be beneficial for both the three-waivers and Russia and the EU to create a counter-block to convince the Trump administration to reconsider its unilaterally imposed sanctions. Growing economies that are highly dependent on imported energy resources are in need of tight cooperation more than ever.

After the seizure of Mosul in June 2014 by the terrorist organization Deash, the Iraqi Petroleum Ministry announced that a new pipeline will be constructed to the border of Turkey, since the pipelines carrying Kirkuk oil to the port of Ceyhan in the southern Adana province became irreparable.

With the construction of the pipeline, the Iraqi central government aims to strengthen its control over the oil wells in Kirkuk, on which it seized control after the military operation on October 16, and to bypass the Iraqi Kurdish Regional Government on oil exports.

The pipeline that will transport Kirkuk oil to the port of Ceyhan will pass from Saladin province to Kirkuk and Mosul and from Dohuk’s Faysh Khabur district to Turkey from which the pipeline section in Iraq’s territories will be 350 kilometers (217 miles) long.

The new pipeline section, with a daily export capacity of 1 million barrels, will replace the old pipeline that suffered severe damage in terror attacks after Daesh took control of Mosul in June 2014.

In a statement on October 17, the Iraqi Oil Minister Jabar Ali al-Luaibi declared that his government aims to increase the export capacity of Kirkuk oil fields from 450 thousand barrels to 1 million barrels per day with the help of international oil companies’ investments.

In Kirkuk there are 5 oil fields in Havana, Bai Hasan, Babagurgur, Hebaziya and Cenbure. There are more than one oil well in each of these fields.

Havana and Bai Hasan, which were under the control of the KRG for about 3 years, were able to export 300,000 barrels per day by October 16th.

The Kirkuk-based North Oil Company of the central government could export approximately 150 thousand barrels of oil per day on average from the remaining three Kirkuk oil fields, the oil ministry said.

Iraq is the second largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia, and holds the world’s fifth largest proven crude oil reserves after Venezuela, Saudi Arabia, Canada, and Iran, according to the U.S. Energy Information Administration (EIA).

*Written by Suna Nur Sarihan. 

Following the Kurdish independence referendum which took place on September 25, where residents in KRG-controlled areas were asked whether they wanted to separate from Baghdad, tensions have escalated between Erbil and the central Iraqi administration.

While the results of the referendum have been announced as 93 percent in favor, the Iraqi administration have repeatedly underlined that they do not recognize the result as it is an infringement on the Iraqi Constitution.

In addition to the central Iraqi administration, Turkey, Iran and the US have openly opposed the referendum, calling for the territorial integrity of Iraq.

In most recent developments, Prime Minister al-Abadi emphasized that “The central government is solely authorized to provide security in disputed areas [of Iraq].”

While according to Iraq’s 2005 Constitution, Kurdish Peshmerga forces are answerable to the central government in Baghdad, on the ground they take their orders from the Kurdistan Regional Government.

In regards to this, Al-Abadi said “I urge Peshmerga forces deployed in these areas to refrain from fighting federal government forces.”

Gold and oil: economic limits on the KRG

Increasing political and economic sanctions on the KRG following the independence vote, on Tuesday Iraqi authorities banned the import of gold and other precious metals through airports in the northern region.

Iraq Planning Ministry spokesman Abdul Zohra al-Hendawi stated that “The ministry’s economic committee has decided that, from now on, only Iraq’s Baghdad and Najaf airports will be used for the import of gold and other precious metals.”

He added that the decision was made in order to prevent the “illegal import” of gold into the country.

In addition, Turkey’s government is considering the decision they will take on whether to continue the KRG’s oil transfer through Turkey.

Speaking at the 8^th Turkey Energy Summit, Energy Ministry Undersecretary Fatih Donmez stated that while no decision has yet been made, the issue is currently on the agenda and is being examined.

He asserted that “We will decide on our stance based on instructions from the [Turkish] government. As of today, there is no decision yet, although this does not mean that there will not be one.”

Oil is a main asset of the KRG, and the regional government has enjoyed close ties with Ankara by using a pipeline stretching from northern Iraq to the Turkish Mediterranean port of Ceyhan in order to export oil.

However, following the independence referendum relations between Turkey and the KRG have deteriorated.

The globalisation of finance has produced a structural and ideological transformation in the financial system since the beginning of the 1970s. The globalization of the financial system in turn has accelerated the process of globalisation in other sectors, ever since states first made the decision to enter into the financial markets.  Such involvement has enabled some countries to assume prominent positions in the global financial system. This is clearly noticeable in the case of the Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE).

These countries have achieved economic prosperity due to the accumulation of wealth generated from oil and gas revenues. However, the Gulf has struggled with regional troubles for the last few weeks. Although a regional diplomatic crisis has plagued the Gulf in the past, the recent crisis has gone beyond a diplomatic one with the imposition of tangible sanctions on Qatar. Although Qatar is a small country in terms of its population and land area, it is an example of the “small States, big politics” trend experts describe in literature about the region. Under these circumstances, the impact of the Qatar crisis on current politics and economics will be not only regional but also global, as can be understood from the official reaction by world leaders.

According to the IMF, Qatar had the highest GDP per capita in the world –  $128,000 GDP per capita (at purchasing power parity) in 2016. Beside this, Qatar, which holds the world’s 9th largest Sovereign Wealth Fund (SWF) worth some $350 billion, has invested in real estate, banking, automotive and technology sectors. This already means Qatar has a significant role in the global financial system. Furthermore, Qatar is one of the biggest financial supporters of professional sports – its SWF owns the French Paris Saint Germain football team, and sponsors the Barcelona Football Team through Qatar Airways. Qatar will host the 2022 World Cup, and is buying beIN Sport, one of the biggest sport channels in the world.

The Qatar crisis has had a negative impact on many markets, and Qatar’s stock market experienced a severe fall. The Qatar stock exchange underwent its largest price drop in 18 months, nearly 8 percent, after the diplomatic rift on Monday. According to Wednesday market data, Although the Qatar Stock Exchange became the world’s worst performer with 8,965.01 point since January, 2016, Qatar Stock Exchange reached the high of 9,237.86 point since Monday, when was started the sanctions against Qatar. Some companies, moreover, were uptrend on Wednesday and Thursday by contrast with Monday, when all companies were down. In addition to Qatar Stock Exchange, the investments of Qatar through SWF, which are, mainly, invested in abroad such as European and Asian countries, could be affected by Gulf crisis in the long term.

http://thenewturkey.org/what-is-behind-the-crisis-in-the-gulf/

In addition to the stock market, the crisis will lead to trade problems in the region, and will have an impact on Qatar’s import-dependent food sector. Food imports from Saudi Arabia account for about 90% of Qatar’s daily food consumption. According to 2016 data, Qatar’s trade volume was around $11 billion with the other GCC countries. However, Qatar’s trade volume with Saudi Arabia, the United Arab Emirates, and Bahrain, which cut diplomatic ties with Qatar, were around 85% of the total GCC trade volume of Qatar in 2016. This data shows that Qatar will be faced with a daily food scarcity in the short term, and a lack of food products in long-run if they don’t find alternative daily food suppliers from friendly countries.

Another impact of the crisis on Qatar’s economy is the changing air route of Qatar Airways, which will decrease customers because of the longer distance and cost-plus pricing the airline will have to follow. Lastly, the businessman who are visiting Dubai and Abu Dhabi, which are financial and business hubs for the region, will not prefer to visit Doha after their UAE visits due to travel difficulties to Qatar from the UAE. After mentioning the potential worst scenario of the Gulf crisis on Qatar’s economy, it is important to emphasise that this crisis will not affect the country’s gas production and its transportation to customers abroad, mainly Asian countries. Qatar may also have a shortage of cash to pay for imports, and the fact that its border with Saudi Arabia is sealed will further exacerbate this problem, but one solution is to find a trade partner the country can import from, in exchange for providing energy and raw materials for construction.

President Recep Tayyip Erdoğan has clarified that Turkey stands with Qatar, and is focused on mediating between the sides to calm the tension. Turkey’s parliament also approved draft bill allowing troop deployment to a new military base in Qatar on Wednesday. After these political and military steps, it is important to evaluate the impact of the crisis on the economic relationship between Qatar and Turkey, which has historically not been as promising as the political relationship.

In 2016, Turkey’s export to Qatar were around $440 million, mainly comprised of ships, yachts, appliances, furniture, and electronic products. In the same year, Qatar’s exports to Turkey were worth around $271 million, and were chiefly aluminium products, plastics, fertilisers, fossil fuels, and mineral oils.  Turkey has an advantage over Qatar because its products cover a wider range, and Turkey has an overall trade surplus. From this perspective, Turkey has positioned itself as a major supplier to Qatar in the new conjuncture. Turkey, thus, will find an opportunity to increase its exports in the near future. Furthermore, new products, which have not been sold to Qatar before, might be brought into line for export. The increase in Turkey’s exports to Qatar, therefore, would relax Qatar’s shortage of food supplies in the long-run. This trade partnership will initially bring extra cost for Qatar, mainly due to higher transportation overhead, but in the long term, if a viable system of trade is found and new channels opened, Qatar will meet its needs.