Qatar directed shopkeepers to clear their stores of contraband goods from Saudi Arabia and other neighboring countries, the latest salvo in the economic battle among former Middle East allies that shows no signs of easing.
The directive on Saturday came as the June 5 anniversary approaches of Saudi Arabia, Egypt, Bahrain and the United Arab Emirates severing diplomatic and business ties with Qatar, accusing the tiny but wealthy emirate of promoting extremism in the region and cozying up to Iran. Denying the charges, Qatar says Riyadh and Abu Dhabi are trying to interfere with its sovereignty.
Qatari officials said the directive wasn’t an escalation of the diplomatic rift. They said it was aimed at consumer safety because Saudi Arabia, the United Arab Emirates, Bahrain and Egypt had already banned sending exports to Qatar. Therefore, any products from those countries remaining on store shelves had been illegally trafficked into Qatar through third parties, evading customs inspections, Qatari officials said.
As a result, Qatar’s ministry of Economy and Commerce issued a directive on Saturday to find new suppliers for those products, including frozen chicken breasts and shampoos, still originating from the four countries.
The move provided a reminder of how little progress has been made in bridging the divide between Qatar and its neighbors.
The U.S. has pushed Saudi Arabia and the U.A.E. to patch things up with Qatar and present a united front against what the Trump administrations sees as the region’s biggest threat, Iran. The U.S. operates one of its largest military bases outside the U.S. in Qatar.
But Anwar Gargash, the U.A.E’s minister of state for foreign affairs, tweeted days ago that Qatar hadn’t dealt “wisely” with a list of demands from the four countries that it changed its behavior in the region.
The political impasse has upended transport and trade routes in the region.The boycott initially hurt Qatar’s economy with imports dropping 40% and billions of dollars flowing out of the domestic banking system, forcing Qatar to seek deeper ties with trade partners such as Turkey and Oman to cushion the blockade’s economic blows.
Qatar’s deep-pocketed sovereign-wealth fund injected about $40 billion into the domestic economy, staving off a financial crisis. Today, growth rates have largely normalized with the impact of the blockade largely under control, according to the International Monetary Fund.
The Gulf rift has spilled over into regional and even international financial markets. Both Qatar and Saudi Arabia in April tapped international bond markets. The debt sales were arranged by an entirely different send of international banks who, depending on whether they had Qatari shareholders or focused heavily on Saudi expansion, picked one side or the other.
Write to Nicolas Parasie at nicolas.parasie@wsj.com