- Sean Gallup / Getty
LONDON – The diplomatic crisis in the Gulf has shown no sign of easing, after the United Arab Emirates told its banks to stop dealing with major Qatari lenders.
Shares in the banks fell on Sunday, with Islamic lender Masraf Al Rayan down 4%.
Qatari lenders receive a lot of funding from other Gulf states, about 60 billion riyals ($16.5 billion) according to a Reuters report, which could dry up if the crisis continues or worsens.
The UAE central bank told its own banks to stop dealing with 59 individuals with links to Qatar and carry out enhanced due diligence on their activities with six Qatar lenders.
The crisis hit Qatar when the country’s neighbours, including Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, cut diplomatic and trade ties and accused it of supporting terrorist groups such as the Islamic State and Al-Qaeda. Qatar has denied the allegations.
Meanwhile, Reuters also reported that the crisis hit the supply of dollars available in Qatar, making it harder for the population of expatriates to send money home. “We have no dollars because there is no shipment or transportation from the United Arab Emirates. There is no stock,” a dealer at the Qatar-UAE Exchange House told Reuters. “The shipment is blocked from the UAE.”
The diplomatic spat has also highlighted the vulnerability of the UK’s gas supply, the Financial Times reported. The UK is becoming more dependent on gas, which powers around 42% of electricity generation, but dwindling supplies in the North Sea have led Britain to focus more on imports.
Qatar is a major exporter of gas, supplying just under a third of the UK’s imports, but the Gulf crisis could cause transport disruptions, the FT said.