Qatar: Economists' View of Qatar Cutoff Is A Little Scary

Experts on international relations typically approach foreign affairs using different tools than economists use.

The analysts with their knowledge rooted in a deep study of a particular country or region deploy complex, interdisciplinary models with many moving parts and less formalism.

Economic models of foreign policy are more likely to assume some kind of rational behavior, use more game theory and treat the capture of wealth as a significant political end.

Suffice to say, economic models have not taken over the study of international relations, but periodically it is worth checking in to see what they say.

And right now there is a big red light flashing: the trade and border shutdowns that Saudi Arabia and six other countries have directed at Qatar, a highly vulnerable nation that imports most of its food.

Those events could be the most significant of Donald Trump’s presidency so far.

Some reports indicate the Saudis are demanding Qatar cut off links with Iran, limit its ties to Hamas and the Muslim Brotherhood, and shutter the Al-Jazeera news network, among other conditions.

Whether or not that exact account is true, clearly the blockading coalition wants concessions and basically has committed some acts of war to demand them.

If Qatar gives in, this could begin an unraveling of yet more global alliances.

You don’t have to endorse Qatar’s financial support for terrorist groups (not uncommon in the region, by the way) to find that a very disturbing prospect.

In economic models of foreign policy, it is a puzzle why big, powerful countries do not take over small, resource-rich countries.

And indeed Qatar could be a victim, just as Kuwait was when Iraq invaded in 1990.

Qatar is about the size of Connecticut, yet because it shares a large natural gas field with Iran, it is one of the wealthiest nations in the world, at more than $129,000 in per capita income and with a $335 billion sovereign wealth fund.

Yet the population is below 3 million, with almost 90 percent of that being foreign guest workers.

One major reason Qatar has maintained its independence is protection from the U.S., dating from the Persian Gulf War, as shown by David R. Roberts in his new and very useful book "Qatar: Securing the Global Ambitions of a City-State." As part of the arrangement, the U.S. has a significant military base there.

That background raises the importance of the U.S. response to the pressure on Qatar.

One strand of thought in the Trump administration, as represented by Secretary of State Rex Tillerson, is that the Americans should work to restore some form of the way things used to be and pressure the Saudis and others to back off.

Yet President Trump himself took credit for the Saudi pressure, and later maintained his support for a "hard but necessary action" against Qatar.

If Trump gets his way, the Qataris will probably have to accede to some of the demands, or seek Iranian or perhaps Turkish intervention on their behalf.

Those scenarios are difficult to game out, but American security guarantees would fall precipitously in value, especially as they might apply to small, vulnerable countries.

Typically, if you put a major military base in a country, there is a general expectation you will not actively work to subvert the sovereignty of the host government. But right now the U.S. is violating that understanding.

Now imagine you are the leadership of Singapore, which faces political pressure from a much larger China and Indonesia.

Singapore also hosts a significant American military base. You will think twice about the benefits you once expected from this arrangement.

Kuwait and Bahrain, too, will be reconsidering their options. Other vulnerable countries with American military bases include South Korea, Kosovo, Greece and Djibouti. Yet other nations, such as Taiwan, do not host American military forces, but rely in part on the potential for American military assistance.

In sum, many more countries will feel less secure, and many of these countries will most likely court additional favor with their local or regional hegemons, which are typically less liberal influences than the U.S. In the Middle East and Gulf, for instance, Turkey and Iran stand to gain in influence.

theory. Once commitments to smaller, more vulnerable countries weaken, larger alliances get tested as well, as virtually everyone seeks to clarify or disambiguate their commitments. Given Trump’s periodic reluctance to affirm the U.S.’s Article 5 commitment to defending NATO, it isn’t hard to imagine a major and fairly sudden collapse of American credibility overseas.

Yet another scary element is that relatively few Western observers had identified Qatar as a major pending trouble spot, and so global vulnerability may be worse than we had thought.