Qatar: Political tensions in GCC to persist for a few years - S&P
Source: Middle East Insurance Review | Sep 2017
Political tensions within the GCC will persist over the next few years, said S&P which believes that the boycott of Qatar has illustrated deeper fissures within the group than were previously evident. The ratings agency also believes that the impact of the current boycott of Qatar may not be confined to within Qatari borders.
In a Credit FAQ titled “Potential Implications of Qatar Boycott for Gulf Cooperation Council Sovereigns”, S&P responded to questions about the implications of the Qatar boycott. The countries boycotting Qatar includes Saudi Arabia, the UAE, Bahrain, Egypt, Libya and Yemen.
For the most part, the agency has viewed the GCC as a stable political alliance in the Arab region. Numerous regional economic initiatives, suggestive of a cohesive vision, have been launched, such as financial support packages for Oman and Bahrain, and the planned introduction of VAT across the region in 2018. These initiatives indicated a desire to ensure the political and financial stability of the GCC and its individual member states, said S&P.
While the agency does not think this desire has changed significantly, current tensions has weakened the cohesiveness of the GCC and complicated policy predictability.
The boycott creates the potential for financial flows to be disrupted, and for the reversal of prior investment decisions and financing lines, including those to financial institutions, the agency said. However, in the absence of further escalation in the boycott against Qatar, S&P does not expect these risks to materialise to a significant extent. M