Qatari remittance

A grave diplomatic crisis brews in the Middle East. And it’s not without implications on the economy. Reports are already flurrying in that Qatar’s airport looks deserted, and that citizens and residents of Qatar are stockpiling food items after the Saudi Arabia-led regional blockade of the fossil fuel-dependent state. As a result, the country is facing a food shortage, since nearly 40 percent of its food comes via the now-closed Saudi border. Will these developments have implications on remittance inflows from Qatar to Pakistan?

The short answer to that question is ‘no;’ at least not for now. And even if it does in the long run, the impact, if any, is going to be marginal. The reason it will not impact remittance flow to Pakistan is the simple fact that most Pakistanis in Qatar are from the blue-collar segment. And as such, there is no threat to that in the immediate term since Qatar’s FIFA 2022 World Cup is still on track.

Preparations for that tournament entail multibillion-dollar spending on nine stadiums and other huge infrastructure including hotels and other areas of the service industry. Till the time of writing this note, FIFA had not given any kind of threat; their response was very diplomatic – that we are always in close contact with the host countries.

Meanwhile, it appears that the United States, which has a strong presence in Qatar by way of a military base currently being used to counter ISIS threats, is trying to resolve the crisis in the region. CNN reported yesterday that “in a phone call with the Qatari Emir, President Trump extended an olive branch, offering to help the parties resolve their differences by inviting them to a White House meeting if necessary.”

In other developments, the US investigators have come out saying that they believe it was the Russian hackers who breached Qatar’s state news agency and planted a fake news report which contributed to the brewing diplomatic crisis in the region. In other words, Uncle Sam is trying to clear up the mess, given its partnership with Qatar.

While those developments appease short-term concerns over remittance inflows to Pakistan from Qatar, channel checks with the remittance industry here at home also confirm that inflows from the Gulf state haven’t been hit so far. If anything, the inflows from Qatar have increased in the last few days, with inflows rising about 10 percent over the average ticket size of $350-400 from this channel. That increase can be related to the seasonal Eid-related spike in inflows.

Either way, industry sources maintain that blue-collar workers are usually very sticky and do not leave the job in these regional countries just because there are fears of slowdown in the region. Because of lack of opportunities in that segment, they usually stick around until they are asked to leave. And that situation, given that FIFA 2022 is still on track, is not expected to dawn on Qatar at this point in time.

In the long term, there could be some implications that the Middle East rebalancing started by President Obama is now seeing signs of reversal under Trump. Qatar faces risks of long-term isolation, especially if Trump continues to supply American arms to Saudi Arabia and the alliance under its leadership, managed by Pakistan’s retired khaki leaders. Some deals to that effect worth billions of dollars have already been signed.

But even in that case, Pakistan’s reliance on remittance inflows is peanuts – two percent of the total in the last few years. Just for some perspective, inflow from Qatar was about $304 million in ten months ending April 2017; in contrast, just the drop in inflows from Saudi Arabia was about $320 million in the same period. Ergo, the long-term impact, if any, is going to be marginal.