Saudi Arabia bans all trade with Qatar in June 2017

Context

On June 5, 2017, Saudi Arabia cut all trade and diplomatic ties with Qatar and heavily restricted travel, including by closing its land border with Qatar. Saudi Arabia was part of a coalition of states taking similar actions against Qatar, including Bahrain, the UAE, and Egypt; this core coalition was supported to an extent by the Maldives, Yemen, and (one of the authorities in) Libya. Qatar’s alleged support for terrorism/political opponents of Saudi Arabia and others, its relations with Iran, and its use of the Al Jazeera broadcaster to promote its own interests in the region were cited as reasons behind these sweeping measures. 

Each of the anti-Qatar coalition states imposed varying measures against Qatar, reflecting their unique circumstances. For Saudi Arabia, which informally led this coalition, these unique measures included:

• A block on Qatari-owned TV sports broadcaster beIN from being viewed in Saudi Arabia, and (alleged) informal tolerance of property rights violations of beIN in Saudi Arabia (Qatar launched WTO proceedings against this in 2018) 
• A blockade on the land border shared between Saudi Arabia and Qatar
• Special allowances for religious pilgrims from Qatar, who were still allowed access to Saudi Arabia’s religious sites and associated services.

Impact

Prior to these measures, 40% of Qatar’s food was imported through its land border with Saudi Arabia, and consequently, this measure reportedly led to short-term issues of panic buying and depleted shelves at many of Qatar’s supermarkets. However, this short-term impact was alleviated by alternative suppliers from Turkey and Iran. Airspace restrictions also led Qatar’s national carrier, Qatar Airways, to re-route flights. New sources of building materials were required for Qatar to continue building infrastructure to host the 2022 FIFA World Cup.

However, claims from a Qatar-based analyst suggested that, despite short-term pain, “[i]n key ways, the blockade bolstered Qatar’s economy” because it  “helped it become more self-sufficient and kick-started the country’s economic diversification efforts.” Notably, despite these measures, Qatar’s economy reportedly grew by 2.4% in 2018 and around 3.1% in 2019.

The Saudi Arabia embargo against Qatar combined formal and informal measures. Best observed with the formal announcement of severed diplomatic relations, and simultaneous use of governmental instruments, including Circular limiting the distribution of Qatari media content in Saudi Arabia. ‘Anti-sympathy measures’ were further reported via social media but found not to be based on a formal legal mechanism, preventing Qatari companies from obtaining legal representation in Saudi Arabia. These informal measures stemmed from political signalling,  rather than policy, embodied in a clearly promulgated legal text. These informal measures also provided Saudi Arabia with plausible deniability, effectively concealing the extent to which the strategically motivated economic disruptions are even occurring. Simultaneous use of Informal and Formal measures meant Saudi Arabia retained the flexibility to reverse disruptions, without accepting accountability or enduring diplomatic consequences.

Responses  

i) Qatar government and industry responses.

Responding to the imposition of these measures on July 5, 2017, Qatar’s foreign minister, Sheikh Mohammed bin Abdul Rahman Al Thani, accused the anti-Qatar coalition of “demanding that we (Qatar) have to surrender our sovereignty”, adding that Qatar would “never do” that. Sheikh Mohammed also stated that “Qatar continues to call for dialogue, despite the violation of international laws and regulations, despite the separation of 12,000 families, despite the siege that is a clear aggression and an insult to all international treaties, bodies and jurisdictions”. Additionally, in August 2017 requested WTO consultations with Saudi Arabia (and Bahrain and the UAE) over what it called “coercive attempts at economic isolation”. 

Qatar responded economically to these measures by ramping up its trade links with Turkey and Iran. It also expanded investment links with Southeast Asia.  

At the same time, Qatar sought to respond to food security vulnerabilities exposed through these measures (90% of Qatar’s pre-blockade food was imported), Qatar invested in domestic food production, which reportedly grew by around 400% from 2017-19. Notably, Qatar became self-sufficient in dairy by 2019 by growing a domestic dairy industry, having previously imported around 72% of its consumption. Qatar’s leading dairy firm, Baladna, sourced around 18,000 Holstein dairy cows from Europe to boost its production.

(ii) Saudi Arabian government and industry responses

On June 23, 2017, AP News published a list of demands from Saudi Arabia, the UAE, Bahrain, and Egypt that mediator Kuwait had presented to Qatar the previous day, June 22, on their behalf. If Qatar agreed to comply, then it was offered an end to the trade and diplomatic measures. These demands were that Qatar should (summarised):

1. Downgrade economic, diplomatic and military ties with Iran
2. End relations with ‘terrorist groups’ such as the Muslim Brotherhood and Hezbollah
3. Close the TV station Al-Jazeera and its affiliates
4. Close other news outlets funded by Qatar
5. End military cooperation with Turkey
6. End all funding for entities designated “terrorists” by the anti-Qatar coalition
7. Extradite terrorists and other wanted criminals from the anti-Qatar coalition to their countries of origin
8. End practice of granting citizenship to nationals wanted in anti-Qatar coalition states, and revoke the citizenships already granted for those wanted in anti-Qatar coalition states
9. End contacts with (and share intelligence on) political opposition figures in anti-Qatar coalition states
10. Pay reparations and compensation to anti-Qatar coalition states
11. Align Qatar with the anti-Qatar coalition in all matters militarily, politically, socially, and economically
12. Agree to these demands within 10 days of notification
13. Agree to regular audits to monitor compliance with these demands for up to 12 years

On July 5, 2017, the anti-Qatar coalition told press that Qatar had sent them a “negative response” to the demands. Subsequently, on July 18, 2017, the New York Times reported that “senior diplomats” from the anti-Qatar coalition had “indicated… that they were no longer insisting on 13 precise demands that the Qataris must satisfy, or on a specific deadline for them to comply.” At a press conference, Saudi Arabia’s UN Ambassador Abdullah bin Yahya Almouallimi said that “[o]ur aim is to reach a diplomatic solution” and that he was hoping that Qatar would “come around” to the anti-Qatar coalition’s point of view. Replacing the hardline list of 13 explicit demands was a smaller and less specific list of demands for agreement on six key principles, summarised by the New York Times as “combating terrorism and extremism, denying financing and safe havens to terrorist groups, stopping incitement to hatred and violence and refraining from interfering in the internal affairs of other countries.”

(ii) Other states’ government and industry responses

Kuwait’s early attempts to act as a mediator failed, as did those of US Secretary of State Rex Tillerson. Notably, US President Donald Trump commented on the initial blockade by appearing to side with the anti-Qatar coalition, saying that “[t]he nation of Qatar, unfortunately, has historically been a funder of terrorism at a very high level.” However, the US ultimately was viewed as playing a role in resolving the crisis.

WTO Dispute

Following its request for WTO consultations on 1 October 2018, Qatar sought the establishment of a panel, pursuant to Article 6 of the DSU. The request concerned Saudi Arabia’s failure to provide adequate protection of intellectual property (IP) rights, with particular reference to IP rights held by entities in Qatar.

The Panels report, circulated June 2020, examined measures taken by Saudi Arabia following the June 2017 severance of Diplomatic Relations. This included formal and informal measures taken.

The panel analysed the 19 June 2017 Circular, issued by the Saudi Ministry of Culture and Information, which prohibited the distribution of beIN media content. The Circular states that all television and media channels that are interested in operating in Saudi Arabia “[m]ust obtain all required licences, all beIN channels and Al-Jazeera channels are not licensed and [do] not have the legal right to operate in the Kingdom of
Saudi Arabia and its presence and provision of entertainment, and Sports programs and television
services. The Panel considers that the transmission of the Circular alluding
to the potential loss of “related intellectual property rights” to these foreign right holders was an
action aimed at influencing these private entities in their arrangements with beIN. Though Saudi Arabia asserts the document was never ‘officially issued’, in the Panel’s view, the “unofficial” status of this document, sent to these 39 right holders who hold valuable IP rights related to beIN’s broadcasts, in no way diminishes its impact. The Panel therefore affirmed the existence of the circular and accepted its impact on beIN’s ability to access civil enforcement procedures.

The panel further examined the ‘anti-sympathy measures’, which subjected lawyers based in Saudi Arabia to legal jeopardy if they express support for and/or provide assistance to Qatar and Qatari
nationals. This thereby prevented access to civil enforcement procedures against the infringement of intellectual property rights. The panel concluded that Saudi Arabia imposed general anti-sympathy measures banning expressions of support toward Qatar, at least on social media on 6 June 2017. Considering, the panel found Saudi Arabia’s measures had directly or indirectly resulted in preventing access to obtaining Saudi Legal counsel to enforce its IP rights.

Saudi Arabia invoked the national security exception in defence, under Article 73(b)(iii) of the TRIPS agreement, which was rejected by the panel. Saudi Arabia subsequently indicated a wish to appeal however, by the end of 2021, the parties agreed to suspend the appeal, noting the terms of the Al-Ula Declaration signed by them on 5 January 2021.

Status

In January 2021, an agreement was reached ending these measures and restoring relations between the anti-Qatar coalition and Qatar, at a summit in the Saudi Arabian city of al-Ula, during which Qatar’s emir and Saudi Arabia’s crown prince embraced in front of reporters. It is thought that Saudi Arabia was supportive of a resolution to the crisis due to a mutual inclination to demonstrate to the US’ Biden administration it favoured dialogue and peace.

The Al-Ula Declaration restored diplomatic relations between the parties.

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