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Qatar economic outlook downgraded hours before crunch Gulf meeting

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Moodys forecasts prolonged period of uncertainty as Arab nations prepare to meet in Cairo over Qatars response to demands

Ratings agency Moodys has downgraded Qatars economic outlook as political uncertainty swirled ahead of a crunch meeting between Arab nations on Wednesday in Cairo.

A quartet of Arab nations said early on Wednesday it had received Qatars response to its demands for ending a diplomatic crisis gripping the Persian Gulf. Bahrain, Egypt, Saudi Arabia and the United Arab Emirates said only that they would respond in a timely manner.

Ratings agency Moodys changed Qatars outlook to negative, saying this was largely due to the ongoing diplomatic dispute engulfing the tiny, energy-rich nation. Early on Wednesday it said the likelihood of a prolonged period of uncertainty extending into 2018 has increased and a quick resolution of the dispute is unlikely over the next few months. The turmoil carries the risk that Qatars sovereign credit fundamentals could be negatively affected, it added.

So far, Qatars exports of natural gas have yet to be affected, the agency said. Those exports make the small countrys citizens have the biggest per capita incomes in the world.

The quarter cut ties to the FIFA 2022 World Cup host early last month over its alleged support for extremist groups and ties with Iran. Qatar denies supporting extremists and has defended its warm relations with Iran; the two countries share a massive undersea natural gas field.

The nations issued a 13-point list of demands on 22 June, giving Qatar 10 days to comply. They later extended the deadline by another 48 hours at the request of Kuwait, which has acted as a mediator to resolve the crisis. That deadline expired early Wednesday.

Later on Wednesday, foreign ministers from the four Arab countries will meet in Cairo to discuss their next move. Late Tuesday, Egypts state-run Mena news agency reported intelligence agency chiefs from those countries had met in Cairo, likely discussing the crisis.

What Qatar said in response to the demands remains unclear. It already had called the demands, which include shutting down its al-Jazeera satellite news network, expelling Turkish military forces based in the country and paying restitution, as an affront to its sovereignty.

The crisis has become a global concern because neither side appears to be backing down. Qatar, the worlds biggest exporter of liquefied natural gas, hosts some 10,000 American troops at its sprawling al-Udeid air base. US secretary of state Rex Tillerson has been trying to ease tensions, while President Donald Trumps comments on Qatar funding extremist groups back the Saudi-led countries position.

The nations could impose financial sanctions or force Qatar out of the Gulf Cooperation Council (GCC), a regional body known as the GCC that serves as a counterbalance to Iran.

Some Arab media outlets have suggested a military confrontation or a change of leadership in Qatar could be in the offing, but officials have said those options are not on the table.

On Tuesday, German foreign minister, Sigmar Gabriel, visited officials in both the United Arab Emirates and Qatar. He said Germany supported the UAEs efforts at confronting those who funded extremists.

We now have this opportunity to reach good results for the benefit of the whole region. The matter is not related only to the sovereignty of Qatar, Gabriel said. We have to come back to common work at the GCC and for the Europeans this is a very important matter. For us, the GCC is the guarantor of stability and security in the region.

Emirati foreign minister Abdullah bin Zayed Al Nahyan kept up the pressure on Qatar in his own remarks to journalists. To defeat terrorism, we must confront extremism, we must confront hate speech, we must confront the harbouring and sheltering of extremists and terrorists, and funding them, he said. Unfortunately, we in this region see that our sister nation of Qatar has allowed and harboured and encouraged all of this.

Enough is enough, he added.

Qatars foreign minister meanwhile criticised the four Arab nations for trying to isolate Qatar under the banner of fighting terrorism.

When measures are clothed in this context, it is because they think they will be met with international sympathy because they are anti-terrorism measures, Sheikh Mohammed bin Abdulrahman Al Thani said.

Though Qatar Airways routes over its neighbours have been cut, along with the countrys sole land border with Saudi Arabia, the country has been able to source food from other countries. Its economy, fuelled by its natural gas exports, continues to hum along though there has been pressure on its stock market and currency.

Read more: https://www.theguardian.com/world/2017/jul/05/qatar-economic-outlook-downgraded-hours-before-crunch-gulf-meeting

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