Cairo sees Qatar’s ban on Egyptian imports as toothless

The Egyptian plan to diversify export markets and increase exports prioritised other Gulf countries, Asia and Africa and did not highly feature Qatar.
Sunday 03/06/2018
A woman shops in a supermarket in Doha.  (Reuters)
Support deficit. A woman shops in a supermarket in Doha. (Reuters)

CAIRO - A Qatari ban on Egyptian goods will not harm the country’s exports and will ultimately prove toothless, the Egyptian government said.

“Qatar has never been an important market for us,” said Ahmed Antar, a senior Egyptian Ministry of Trade and Industry official. “This is a very small market, which means that exports to it are nothing compared to our overall trade.”

Qatar announced a ban on products originating from Egypt, Saudi Arabia, the United Arab Emirates and Bahrain — the Arab Quartet — nearly a year after those countries severed diplomatic and trade ties with Doha over its alleged financing of terrorism and policies the quartet said harmed Arab security.

The quartet last June presented a list of demands for Qatar to meet, including cutting funding of extremist groups and changing its Iran policies. Doha has refused to act on the demands.

Political analysts said the timing of the ban on products from the Arab Quartet demonstrates Qatari defiance one year after the diplomatic and trade embargo was imposed on it. With a population of 2.7 million, including 315,000 Qatari nationals, however, Qatar is not a large export market for any of the four countries.

“Doha still wants to show that it has not been weakened by the boycott,” said Tarek Fahmi, a political science professor at Cairo University. “It wants to show that it too can inflict damage on the economies of the four countries.”

The move will cause no damage, the Egyptian Trade and Industry Ministry said. In 2017, Egyptian exports to Qatar totalled $79 million, a small fraction of overall Egyptian exports of $20.5 billion.

Egyptian goods do not enter Qatar directly, Antar said, but through a third party in one of the Gulf Cooperation Council (GCC) members. Antar said Egyptian goods were also sent to Qatar through private exporters who do not have anything to do with official policy.

Soon after Qatar issued its ban, officials at the Egyptian Trade and Industry Ministry reached an agreement with businesses that export to Qatar that the affected exports — mostly engineering products, vegetables and fruit — would be channelled to other markets.

Egyptian officials said their plan to diversify export markets and increase exports prioritised other Gulf countries, Asia and Africa and did not highly feature Qatar.

“We have a strategy to increase exports to Africa, in particular,” Antar said. “This is a promising market that contains a huge number of consumers.”

Egypt’s new export-oriented production policy received impetus 18 months ago with the flotation of the Egyptian pound. While the pound quickly lost half its value and prices increased dramatically locally, Egyptian products enjoyed a competitive edge in foreign markets.

“Products originating in Egypt are more competitive in foreign markets in terms of price,” said Mukhtar al-Sherif, an economics professor at Mansoura University. “A weaker pound makes exports cheap, compared to exports from other countries with strong national currencies.”

The Qatari ban, political analysts said, comes when Doha’s main backers — Turkey and Iran — are having their problems, which creates a support deficit for Doha.

Iran is struggling to rescue the nuclear deal it signed in 2015 with Western powers after US President Donald Trump withdrew from it, bringing the prospect of a return to economic sanctions. Turkey, which will have snap presidential and parliamentary elections on June 24, is facing a tough economic situation as the Turkish lira weakens.

US backing for a settlement to the standoff over Qatar was pushed back because of issues such as Iran’s nuclear activities and the potential settlement of the dispute with North Korea.

“All these developments make Doha feel lonely in the field against four countries that are unwavering in their determination to make it suspend its negative policies and financing of terrorism,” Fahmi said. “If this determination and the Qatari defiance reveal anything, it is that this crisis will not be settled any time soon.”