A region full of uncertainty just added another worry to its plate. During the first week of June, a number of Arabic countries announced that they would cut ties with Qatar immediately, following accusations of funding terrorists.
The news came shortly after a foreign visit by U.S. President Donald Trump, who had urged nations in the Middle East to join together in the fight against terrorism. The direct relation of the visit to this action is unclear. At the same time, the potential impact of this development on the region’s labor market is undeniable.
What Happened?
On June 4, Saudi Arabia, the United Arab Emirates, Egypt and Bahrain all announced that they would cut ties with Qatar because it was destabilizing the region with its support for Islamist groups. According to The Guardian,
The countries said they would halt all land, air and sea traffic with Qatar, eject its diplomats and order Qatari citizens to leave the Gulf states within 14 days. Shoppers in the Qatari capital, Doha, meanwhile packed supermarkets amid fears the country, which relies on imports from its neighbors, would face food shortages after Saudi Arabia closed its sole land border.
Immediately, airlines from these countries stopped flying to Qatar’s major locations. Diplomats were withdrawn, despite the nation’s statement that the claims are unfounded.
Potential Impact on the Region’s Labor Market
It’s difficult to overstate the influence of Qatar in the region. The richest nation in the world per capita is also one of the smallest countries in the Middle East, meaning that it plays a major part in building regional economies through imports. What happens with these imports could change the short-term and long-term outlook of regional labor markets.
Traditionally, Qatar has boasted a thriving economy that attracts especially international applicants from around the world. An unemployment rate of just 0.2 percent shows just how healthy the country’s economy had been before this development. Of course, the future is more uncertain.
Qatar, for instance, draws more than 40 percent of its food from imports that originate from Saudi Arabia. The initial news sent a shock wave through the country, which resulted in empty shelves as residents seemingly prepared themselves for an incoming food shortage.
Not surprisingly, the decision to cut ties with the nation was felt in stock markets around the world, as well. Especially energy prices fell almost immediately, thanks to concerns over oil and natural exports. They have stabilized since, but only time will tell where the compass points in the near future.
A decrease in profits through exports could manifest itself negatively on the labor market in Qatar. Its source of wealth stems largely from these national resources. A decrease in export, or even a weakening of ties with its strongest Western ally in the United States (who is also committed to Saudi Arabia), could have significant negative consequences.
Cutting ties with the small but wealthy nation, of course, could also impact the labor market in the countries around Qatar. A drop in imports will inevitably lead to fewer profits, and fewer opportunities for employment. Countries like Saudi Arabia and Egypt both have unemployment rates around 12 percent, significantly higher than Qatar.
It’s too early to tell exactly how this story will develop. Given the strong ties that the United States has with both Qatar and Saudi Arabia, a diplomatic solution could be found that ends up making a minimal impact on the labor markets in all involved countries.
But for the time being, caution is necessary. At the very least, this news could make international applicants a bit more hesitant to start or continue their career in the region. Whether that makes a long-term impact on the labor market will be worthy of close monitoring.
This article was originally published on our website at www.the-network.com/spotlight.
