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The Backstory to the Qatari Standoff – the World’s Largest NGL Pool

Some say it’s a proxy battle between Saudi Arabia’s Sunnis and Iran’s Shia’s for control of the Middle East. Many Muslims believe it’s a generational conflict for the soul of Islam.

By Heather Douglas

Saudi Arabia and Iran are waging a struggle for dominance that has turned much of the Middle East into their battlefield. Rather than fighting directly, they wield and in that way, worsen the region’s direst problems: dictatorship, militia violence, and religious extremism. The history of their rivalry tracks — and helps to explain — the Middle East’s disintegration, particularly the Sunni-Shiite sectarianism both powers have found useful to cultivate. It is a story in which the United States has been a supporting but constant player, most recently by backing the Saudi war in Yemen, which kills hundreds of civilians. These dynamics, scholars warn, point toward a future of civil wars, divided societies and unstable governments.” Max Fisher, How the Iranian-Saudi Proxy Struggle Tore Apart the Middle East, The New York Times (Nov. 19, 2016).

Saudi Arabia, the Sunni heavyweight in the Middle East, recently led a consortium of other Sunni countries – United Arab Emirates, Bahrain, and Egypt – all allies of the United States, to isolate its neighbour Qatar (also Sunni and an American ally with a conservative monarchy). The accusation against Qatar? That country “embraces various terrorist and sectarian groups aimed at destabilizing the region.”

Seen from Riyadh, Abu Dhabi, Manama, and Cairo, Qatar is a source of instability; a tiny, but rich nation that “all too often opposes its neighbours’ efforts to isolate rival Iran,” says Caroline Alexander and Sam Dodge, writing for Bloomberg (June 7, 2017). “Whenever tensions flare, Qatari backing for the Muslim Brotherhood features prominently.”

On June 6, U.S. President Trump tweeted that he hoped Qatar’s isolation would hasten “the beginning of the end to the horror of terrorism.” An interesting observation given the American military stages its bombing campaign from Qatar’s Al Udeid Air Base, located about 32 km southwest of Doha (Qatari capital). The base is home to about 11,000 armed forces and support personnel who provide command and control for American (and Canadian et al) airstrikes and bombing missions against Iraq, Syria, Afghanistan, and 17 other nations.

Why are the Saudis, Emiratis, Bahrainis, and Egyptians angry at Qatar? And why declare a siege against the nation that is also Sunni, an American ally, and boasts a conservative monarchy? The answer lies in the region’s geology.

More NGLs than All Other Fields Combined

Qatar shares the world’s largest gas field with Iran, under the Persian Gulf and the Strait of Hormuz. According to the International Energy Agency (IEA), it holds an estimated 1,800 trillion cubic feet (tcf) of natural gas and approximately 50 billion barrels of liquids (propane, butane, and condensates). It holds more recoverable reserves than all other gas fields combined. The field covers 9,700 square kms with 3,700 in Iranian territorial waters, called the South Pars field, and 6,000 square kms in Qatari waters, named the North Dome field. Qatar is currently the world’s largest exporter of natural gas liquids (LNGs) and produces 77 million tonnes of gas annually.

These enormous reserves of gas and liquids have fueled Qatar’s rise to the top of the world’s wealthiest nations. According to the World Atlas, 2017 figures, Qatar ranks number one at $141,543 per person, based on GDP (gross domestic product) numbers.

Zeeshan Aleem, Middle Eastern expert, reports that because Qatar’s economy isn’t beholden to oil means that it isn’t beholden to Saudi Arabia. “Qatar generates four times more export revenue from natural gas than it does from oil, and doesn’t need to follow Saudi’s dictates the way it would if its survival were predicated on it.” In addition, he adds, the natural gas Qatar exports is liquefied, meaning it is compressed and shipped around the world, and “isn’t primarily distributed through pipelines that are vulnerable to being meddled with by angry neighbours.”

As the Gulf countries modernized their economics, Aleem says, their demand for natural gas grew too, and Qatar was able to capitalize on it. “Qatar sends natural gas to the UAE and Oman by pipeline, and it’s a crucial supply for energy for them. About 40 per cent of the electricity that is generated in the UAE depends on the gas supply from Qatar.”

According to Karen Young, senior resident scholar at the Arab Gulf States Institute, based in Washington, Qatar’s natural gas reserves transformed it from a tiny former British protectorate and mid-level oil producer into a global energy giant. “Qatar has been eager to exploit its unique wealth to forge a unique geopolitical identity, much to the chagrin of Saudi Arabia.”

While the geology links Qatar with Iran, its cordial relations with the Shia Islamic republic really provoked the Saudis. They accused the Qataris of providing support to Shia Iran (and the assorted terrorist groups Tehran sponsors), which is in a tussle for regional supremacy with Riyadh.

“The fact that Qatar shares resource fields with Iran is a crucial component of this,” Young notes. Iran, the Middle East’s preeminent Shia power, is typically at odds with the Sunni Muslim monarchies of the Gulf. But the fact that Iran and Qatar draw from the same pot of gold tempers that tension. Qatar has valued a friendly relationship of engagement with Iran, which is a much larger country than it, and could make outsize claims to the field they share. “Their relationship is investment partners, as they are not necessarily pals, but they have little to gain from antagonism with one another.”

Tim Lister, a journalist with the BBC and CNN, who has lived and worked in the Middle East for almost 25-years, says, “The Saudis and their allies see Qatar as promiscuous: it has flirted with Israel, embraced the radical Muslim Brotherhood, and offers shelter to the radical Palestinian group Hamas, welcomed al Qaeda and the Taliban, all while using the pan-Arab reach of the al Jazeera news network to convey its perspective.”

This confrontation has deepened with the Syrian civil war, Lister adds. It’s contributed to the rise of ISIS and the conspicuous role of Iran, supported by the Russians, in both Iraq and Syria. He believes “that Iran is trying to carve out a land belt between Persia and Lebanon, claiming parts of Iraq and Syria, as it moves westward.”

On June 23, 2017, Kuwait, acting as a mediator, presented Qatar with the following list demands (translated from Arabic and obtained from The Associated Press):

  1. “Qatar must announce the reduction of diplomatic links with Iran and shut down its missions there, expel Revolutionary Guard Corps, and limit commercial ties. It must cut military and intelligence cooperation.
  2. Immediately shut Turkey’s military base currently being established in Qatar and halt military cooperation with Turkey.
  3. Cut relations with all terrorist individuals, entities, and sectarian organizations, including the Muslim Brotherhood, ISIS, al Qaeda, Hezbollah, Hamas, and the Taliban.
  4. Cease funding any extremist and terrorist organizations (noted above).
  5. Hand over all designated terrorists, freeze their assets, and stop hosting them.
  6. Shut down al Jazeera and all affiliated channels.
  7. Stop interfering in Saudi, UAE, Bahrain, Jordan, and Egypt’s domestic and foreign affairs.
  8. Provide reparations to the consortium for any damage or opportunity costs incurred because of Qatari politics.
  9. Align Qatar back with its Gulf and Arab neighbours on all levels – military, political, social, and security
  10. Provide data showing which opposition groups Qatar supported and what help was provided.
  11. Close all media outlets backed by Qatar – directly or indirectly.
  12. All demands must be agreed to within 10 days – or they would be considered void.
  13. The agreements would involve clear goals and mechanisms, with monthly reports in the first year, every three months in the next year, and then annually for 10 years.”

The consortium suspended diplomatic ties with Qatar and also severed all air, land, and sea travel to and from the country.

Some investors, who have long speculated on the demise of the petrodollar, believe the blockade of Qatar maybe another signal heralding the passing of the U.S. greenback as the global currency. Since 2015, Qatar made deals worth $86 billion in yuan, with China. Then Russia made headlines in 2016 when it began accepting oil payments in yuan, while Iran stopped using U.S. dollars the same year.

On July 5, 2017 Qatar responded to the four Arab states. Mohammed bin Abdulrahman al-Thani, the country’s foreign minister, flew to Kuwait to hand deliver the reply to Kuwait’s emir. Trump also participated in the diplomacy, making telephone calls during that weekend to Saudi Arabia, Qatar, and United Arab Emirates. They have huddled in Cairo to analyze both the response and their new course of action.

Saudi Arabia and Iran are waging a struggle for dominance that has turned much of the Middle East into their battlefield,” says Fisher, (The New York Times, Nov. 19, 2016). “Rather than fighting directly, they wield and in that way, worsen the region’s direst problems: dictatorship, militia violence, and religious extremism.”

This is part of that generational conflict for the soul of Islam.

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