A Breakthrough Decision and the GCC Rebound; Al Ula Solidarity Agreement

A Breakthrough Decision and the GCC Rebound; Al Ula Solidarity Agreement

Gulf leaders pose for an official photograph (Image Credit: https://www.france24.com/)

In June 2017, the quartet of Saudi Arabia, the United Arab Emirates (UAE), Bahrain, and Egypt operated a diplomatic, trade, and travel boycott of Qatar. The four countries recalled their ambassadors to Qatar and sanctions were imposed. The economic and political boycott had a significant impact on international trade in the Middle East and beyond. Qatar was dependent on imports by land and sea for the basic supplies and about 45% of its food came in through the land border with Saudi Arabia. In the first month of the crisis, Qatar’s stock market lost about $15 billion in market value.


Over the past three years, both Riyadh and Doha experienced major revenue impacts due to the decline in energy prices and the ongoing coronavirus pandemic. The embargo is estimated to have cost both parties billions of dollars by slowing trade, investment and economic growth further pulled down by the oil price collapse. The GCC had also been badly paralyzed, as the bloc had lost a great deal of influence among other countries in the region because of failing to work as a single body.

The boycott had a considerable impact on the Qatari economy. More than 60 percent of Qatar’s trade was transited through the UAE ports and Saudi border crossing. The blockading had led the Qatari government to use its financial reserves to pay for the higher transport costs of imports and to support the domestic industry which had got impacted by this. However, the country’s economic growth rate remained positive though declined from the 2016 period.

With Kuwait mediating the dispute, after 3 years of tension, differences are set aside and as a first step, Saudi Arabia is opening its airspace and land border to Qatar. Diplomatic relations are being restored between Qatar and the four other Arab states, with Saudi Arabia seeking to unify Arab ranks ahead of the incoming new US government.

The Al Ula solidarity agreement aimed at normalization of relations between Qatar and the Gulf countries was signed at the Saudi Arabian city of Al Ula on 5th January 2021. According to the crown prince of Saudi Arabia Mohammed bin Salman, the AlUla Declaration strengthens the bonds of friendship and brotherhood among the countries and peoples in order to serve their aspirations. It also concreted the vision and priority of Saudi Arabia to have a unified and strong GCC.

Normalization of border trade is expected to give the much-needed push for reviving the COVID hit economy. The move was lauded by both economists and political analysts and the markets in the region responded positively. Post the agreement, the focus would be strengthening all areas in the Gulf cooperation. The united GCC bloc will also be discussing ways to overcome the effects of COVID-19 and proposals to revive the economies. The efforts taken by the countries towards reconciliation have finally found success and GCC would be unitedly facing the challenges of the region.

It is overwhelming to think about the positive and far-reaching impact the recent political decisions would bring in to the region – including Israel–United Arab Emirates normalization agreement, officially the Abraham Accords Peace Agreement: Treaty of Peace, Diplomatic Relations and Full Normalization Between the United Arab Emirates and the State of Israel and now the Al Ula solidarity agreement. Saudi’s strategic move is expected to be replicated by UAE, and Bahrain bringing hope for an economic revival for the region and bring back the good old days of economic prosperity.

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