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Qatar quandary

June 19, 2017

Pakistan appears unlikely to face any immediate and sizable economic impact because of the diplomatic blockade of Qatar by Saudi-led Arab nations.

At least, the relevant government agencies give an impression as if the situation was a non-issue notwithstanding a diplomatic effort by Prime Minister Nawaz Sharif and Chief of Army Staff Qamar Javed Bajwa to defuse the Middle East crisis.

There has also been no effort on part of the government agencies or the private sector to ascertain if the Middle East tussle can open any business or trade opportunity for Pakistan — like Turkey and Iran appeared to be doing — as Qatar looks around to meet food requirements arising out of the Saudi blockade of its airspace and trade routes.

There has been no effort to ascertain if the Middle East tussle can open any business or trade opportunity for Pakistan

This was apparent from a response from the federal ministries. Foreign Office Spokesman Nafees Zakaria was unable to say if the Qatar situation could in any way affect Islamabad or if there was any concern for possible loss of trade and jobs in Qatar, at present, or in case of escalation of tension in the Middle East.

Minister for Commerce Khurram Dastgir and Secretary Commerce Muhammad Younas Dagha were not forthcoming on the subject when contacted. Community Welfare Attache at Pakistan’s mission in Doha also did not respond to telephone calls and messages.

But that’s not the kind of proactive approach government ministries are known to take, otherwise the historic opportunity of securing jobs for the upcoming 2022 FIFA World Cup in Doha would have delivered great dividends in the shape of manpower export.

A senior official of the Ministry of Overseas Pakistanis and Human Resource said that about 115,000 Pakistanis were currently working in Doha but there was no apparent reason for concern.

“There is no war or war-like situation there. Therefore, there is also no emergency situation for us”, he said explaining that in such circumstances, it is the local embassy (of Pakistan) that should generate an internal report on the basis of which the ministry of foreign affairs sets a process in motion for coordination among relevant agencies, countries and diplomatic missions.

“No such alert has emerged from the Doha mission. No abnormal return of any Pakistani has been seen and the impact on remittances could not be felt in a matter of days”, he said.

Pakistan’s has a sizeable diaspora of around 115,000 overseas Pakistani currently working in Qatar, sending home $17-18 million in remittances. They contributed a total of $342m in eleven months (July-May) of the current fiscal year, accounting for less than 2pc of the total $17.5 billion remittances from overseas Pakistanis.

These dropped slightly from $345m of the same period last year in line with declining remittances from elsewhere.

Pakistan’s exports to Qatar have maintained a steady decline over the year from $79m in 2012 to $63m last year, accounting for less than 0.5pc of the country’s total exports. This is a fraction of more than $25bn Qatar spends a year on imports from the world.

With commencement of Liquefied Natural Gas supplies, imports from Qatar are on the rise. From $180m in 2014, the imports increased to $320m last year and are expected to go well beyond $450m this year including about $230m worth of LNG.

At present, Pakistan imports about 600m cubic feet per day of LNG, most of it from Qatar. This accounts for almost one-fifth of Pakistan’s natural gas consumption that may increase going forward given Islamabad’s quest to ramp up LNG imports to 2,000MMCFD by 2022.

It was in this perspective that petroleum minister Shahid Khaqan Abbasi said a diplomatic crisis in the Middle East would not affect Pakistan’s LNG imports from Qatar. He said Pakistan is currently importing 600m cubic feet per day of LNG from Qatar under a binding commercial contract.

He explained that only two things could affect LNG imports. First, a force majeure event that is beyond the control of the two parties and international sanctions, particularly on gas sales. “There are no such apprehensions on both counts”, he said.

There is no war in the region that can hamper LNG supplies nor UN sponsored international sanctions that discourage business deals. Abbasi said Pakistan was importing 2.7m tonnes LNG from Doha whereas neighbouring India was importing 9m tonnes and Korea, Japan and China were importing 60m tonnes LNG from Qatar.

Saad Sherida Al-Kaabi, Qatar Petroleum’s (QP)President and CEO, said LNG customers should rest assured that QP would continue uninterrupted supplies as the world’s most reliable LNG supplier.

“QP and its subsidiaries have immediately mobilised all available resources and activated its business continuity plans to mitigate the impact of any action that could hamper its efforts to ensure safe and reliable energy supplies to all its customers across the globe”, it said.

Not impressed, the National Assembly passed a resolution seeking efforts to defuse tensions in the Arabian Peninsula and be watchful of an impending fall out.

Opposition parties feared that remittance from Qatar could be affected because of recently imposed sanctions on the country by Saudi-led Arab states that could hamper bilateral Pak-Qatar projects related to oil and gas.

“The government has to keep in view a fall out from Qatar’s sanctions and should take care of Pakistanis living in Qatar,” a parliamentarian said.

Published in Dawn, The Business and Finance Weekly, June 19th, 2017