Look, here’s the thing: on June 23, Saudi Arabia, Bahrain, the United Arab Emirates and Egypt made some demands.
13 of them, actually.
And Qatar had 10 days to comply with those demands. Or else.
The demands were, you’ll recall, laughable. In short: there was no way Doha was going to meet them and indeed, if you read the list (which includes cutting ties with Iran and shuttering al-Jazeera), it’s by no means clear that Qatar could have complied with them in the space of 10 days even if the sheikdom had wanted to.
And so, Qatar has decided the best response is probably to tell Saudi Arabia and the Riaydh-led coalition to go fuck themselves.
“There is no fear from our direction. We are ready to face the consequences,” Qatar’s Foreign Minister Mohammed Al Thani said this weekend. “There is an international law that should be respected and not violated.”
Of course the Saudis and their allies (of which Qatar used to be one), think that maybe financing extremism is itself a violation of international law. Qatar agrees. Only Qatar thinks maybe if the Saudis and the UAE are so goddamn concerned about Sunni extremists, they should stop funding those groups themselves (recall Doha’s hilarious response to a WSJ Op-Ed by the UAE’s ambassador to the US).
“As for the countries that accuse Qatar of financing terrorism, they have the same problems as Qatar, more so, they are on top of the list in that area,” Al Thani said in Rome on Saturday. “There are financial institutes in these countries involved in financing terrorist organization and financing terrorist operations in western countries.”
Right. And at the risk of overgeneralizing, the ideology espoused by the likes of al-Qaeda and ISIS is institutionalized in the Saudi monarchy.
Anyway, this whole fiasco (which reached a boiling point after comments Qatar says were falsely attributed to emir Sheikh Tamim bin Hamad Al Thani showed up on a state website and which was apparently exacerbated by a $700 million ransom payment made to Iran) has caused quite a bit of financial turmoil in Doha where the QE Index fell 8.8% in June, the worst monthly performance since January 2016.
The riyal peg has come under pressure with the currency trading well weaker than the lower band of the range since the blockade began and on Friday, reports suggested Lloyds Bank, Bank of Scotland and Halifax had stopped trading the currency because “the third-party supplier that fulfills their foreign exchange service has stopped trading in riyals.”
For its part, Qatar’s central bank said that was bullshit.
“Qatari riyal’s exchange rate is absolutely stable against the U.S. dollar, and its exchangeability inside and outside Qatar is guaranteed at any time at the official price,” the bank said, in a statement. Here’s what “stable” looks like, apparently:
Well on Sunday, after it became abundantly clear that Qatar has no intention of meeting the Saudi demands, Qatari stocks fell the most since the blockade began, diving 2.3% after falling as much as 4% intraday:
Perhaps Nabil Al Rantisi, the managing director of Abu Dhabi-based Mena Corp. Financial Services, put it best when he told Bloomberg TV the following this morning:
In normal circumstances, it would be a great chance to buy on the dip. But with all the uncertainty happening with the Qatar situation at the moment, I think investors will stay skeptical.