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Economy

Qatar row with Gulf states hits Japan businesses

Blockade stirs fears of a materials shortage for 2020 World Cup venues

DUBAI -- The transport disruptions caused by the fallout between Qatar and its Persian Gulf neighbors is beginning to impact Japanese companies that do business in the region.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt have severed diplomatic ties and cut transport links with Qatar, claiming it is supporting terrorist groups. 

Japanese cargo vessels sailing to the region typically carry goods bound for both Qatar and Dubai, offloading cargo in Dubai before continuing on to Qatar. But because of the virtual sanctions imposed by the UAE, shippers now must transport cargo bound for Qatar on a separate ship -- regardless of how small the load is -- pushing up shipping costs.

One company taking a hit is Japanese gas trader Iwatani, which had shipped helium produced in Qatar to Asia via Saudi Arabia and the UAE.

The UAE government is discouraging private banks from doing business with Qatari institutions, which could delay financial transactions in the region.

Most damaging to Qatar thus far is Saudi Arabia's decision to close its border with the country. The move has shut off the tiny nation's only overland trade routes, through which about 14% of its trade flows. Only Qataris departing their country on government orders are allowed to pass Saudi border checkpoints.

The land blockade has raised concerns that Qatar may not be able to import enough construction materials to build facilities for the 2020 soccer World Cup tournament it will host. Though transporting the materials via ship is an option, it is far more expensive. However, the Qatari government said the country has enough steel and cement to proceed with the construction work.

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