Moody’s: Qatar crisis a negative for all countries involved
DUBAI, United Arab Emirates (AP) — Rating agency Moody’s said in a report released Wednesday that the three-month-old diplomatic dispute between Qatar and other Arab states has created uncertainty across the Gulf region and could negatively affect the credit outlook of all the countries involved.
The report by Moody’s Investors Service said persistent tensions between Qatar and its neighbors will have the biggest impact on Qatar and the island-nation of Bahrain, which has been roiled by low-level unrest since 2011.
The rating agency estimates Qatar has injected close to $40 billion, or close to 12 percent of its financial reserves, to support the economy in the first two months of the standoff. It said that $30 billion flowed out of Qatar’s banking system in those months of June and July, with further declines expected.
Moody’s said Bahrain’s climbing debt and the impact of the past five years of turmoil there have made it the most exposed if tensions persist. The likelihood of the dispute dragging out for months to come prompted Moody’s to downgrade Qatar’s sovereign rating from stable to negative in early July.
The dispute erupted in early June when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed all diplomatic and transport links with Qatar, accusing it of fomenting unrest in the region and backing extremist groups.
Qatar denies the allegations and says the moves are politically motivated. Much of the tensions stem from Qatar’s support of opposition Islamist groups, which the quartet view a political threat.
The small Gulf country has dug its heels in, and looked to Saudi rival Iran, Turkey and Oman for new trade routes. Moody’s says Kuwait and Oman, which have remained neutral in the dispute, could benefit marginally from the new trade routes to Qatar.