As strongly-worded ultimatums are re-issued, and compliance deadlines pass, the diplomatic crisis in the Gulf grinds on with no obvious end in sight.
The real world actions that Saudi Arabia, the UAE, Egypt and Bahrain have so far taken against Qatar mean the financial impacts have now moved beyond the hypothetical.
The Qatari currency, the riyal, remains nominally pegged to the US dollar, but has recently been trading at its weakest level against the greenback in almost three decades. A lack of liquidity in the spot market is partially responsible, and on a retail level that shortage is even playing out here on the British high street.
A number of foreign currency suppliers in the UK have apparently stopped trading in riyals, and the knock-on effect has been almost immediate. Barclays, Royal Bank of Scotland, the Post Office and Lloyds Banking Group have announced in the last few days that they are no longer exchanging the currency at their branches.
Qatari news agencies have quoted various far-flung readers from across the globe who are nervously reporting that they have struggled to exchange their hard-earned riyals on overseas trips.
Any negative impact on the free flow of remittances will naturally raise concerns among the hundreds of thousands of expats who make up the vast majority of the Qatari workforce – not to mention 90 per cent of its population.
Authorities in Doha are actively seeking to persuade investors and customers that there has been a “limited” and “manageable” effect on local banks, and that they will guarantee all riyal-related foreign exchange transactions.
In a small nation like Qatar, where life quite literally relies on imports, consumers will quickly feel the pinch from even the slightest slide in their currency. Obviously, with the world’s highest GDP per capita, Qatar is hardly likely to be grappling with food shortages any time soon.
But after S&P’s decision to downgrade Qatar’s rating and Fitch’s. announcement that the country was now on negative watch, authorities in Doha may see their cost of borrowing rise. (The millions of people facing malnutrition in nearby Yemen might wish they enjoyed the same level of financial clout as they struggle to survive a far harsher Saudi-led naval and air blockade.)
Qatari government revenues depend heavily on the country’s energy sector, and with global crude prices remaining at stubbornly low levels, official spending may start to eat into foreign currency reserves.
The uncertainty has also hit overseas investment, with regionally focused portfolio managers and business executives understandably spooked by the blockade and the relatively opaque geopolitics behind it.
Saudi, Bahraini and Emirati institutions also have billions invested in Qatari companies and financial firms, and even though the country’s banks have relatively limited credit exposure across the Gulf region, around a quarter of deposits are held by non-residents.
Any unilateral move that prompts the withdrawal of that capital could prove relatively damaging, and investors seemed poised to price in that possibility, with the bank-heavy local stock market, the QSI, falling more than three per cent over the weekend.
Resolving the rift between Qatar and its Arab neighbours will doubtless require an equal measure of public political posturing and behind-closed-doors negotiations.
But even with the diverse diplomatic cast of powerful supporting actors, ranging from US President Donald Trump to the Emir of Kuwait, there are few guarantees that political risk in the Gulf region will recede in the near future.