Since over a year now, Qatar has been cut off diplomatically and economically by Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt. The blockade was announced after Emir Sheikh Tamim bin Hamad Al-Thani’s remarks on Qatar News Agency (QNA) in May 2017. The prolonged blockade is having a significant impact on Qatar and other GCC economies.

This paper argues that the blockade has had a tremendous impact on Qatar’s economy, in particular, the financial markets and banking sector. Using quarterly and monthly financial data of eight commercial banks in Qatar before and after the blockade, the paper examines how the structure of deposits and loans in the Qatar’s banking sector has changed during the ongoing crisis.

The results of this study reveal that immediately after the blockade began, due from banks abroad and non-resident deposits at Qatar’s banks declined. Subsequently, the Qatar Central Bank sold holdings of foreign securities and injected funds to shore up the domestic banking sector. In addition, due to the financial support by the Central Bank and Investment Authority, the performance of the commercial banks in Qatar has been on a recovery trend since the second half of 2017, and there have been outstanding differences between banks performance with credit risk exposures to Arab Quartet markets and other banks. Finally, this study finds that financial dependence on the government sector can act as a buffer against external shocks.

Azerbaijan, a land locked country in South Caucasia, gained independence in 1991 after the break-up of the USSR. It is surrounded by Russia, Iran, Armenia, Georgia, and Turkey and is compelled to depend on a balancing act in its diplomacy to protect its sovereignty and survive. In April 2018, it reiterated its intention to host the 2019 Summit of the Non-Aligned Movement (NAM) in Baku and take on the position of chairmanship of NAM for a 3-year term. It is to be noted that Azerbaijan took this decision at a time of heightened tensions in the region when the US unilaterally withdrew from the Joint Comprehensive Plan of Action, popularly known as the Iran nuclear deal. Azerbaijan has a border with northwestern Iran and has had a complicated relationship with it based on historical, ethnic, and religious ties. At the same time, Azerbaijan is the major supplier of oil to Israel, which is increasingly antagonistic to Iran. For the last decade, Israel and Iran have tried to gain Azerbaijan’s favor by offering arms or adjusting their diplomatic stance to take into account the geopolitical importance of Azerbaijan. Iran switched from its tacit support to Armenia on the Nagorno Karabakh conflict to a more sympathetic understanding of Azerbaijan’s position.

The Nagorno Karabakh issue has been the focal point of security and sovereignty for Azerbaijan, which claims that Nagorno Karabakh and its neighboring areas have been occupied illegally by Armenia. Since the latter half of 2018, Israel has raised the level of military cooperation with Azerbaijan by supplying more advanced arms, such as drones, while Iran strengthened its military links with Azerbaijan by enhancing its military contacts and cooperation. For Azerbaijan, the simultaneous deepening of military cooperation with the two influential and mutually antagonistic regional powers—Israel and Iran—is not inconsistent because it seeks to upgrade its own military capacity.

The NAM has not been given serious attention in the world politics since the end of the cold war. At the same time, the objective reality that the number of member states has increased cannot be denied. The purpose and definition of the NAM is still vague and allows member states to arrive at different versions of its objectives. The mediating capacity of the NAM to solve conflicts among the member states is, at best, marginal. However, the NAM is a forum where the participants—most of whom experienced colonial rule—can express strong or mild dissatisfaction with the present world regime, dominated by the West. In this sense, the role of NAM could be still flexible and effective under certain conditions in the fluid world political system. Azerbaijan utilizes the NAM to achieve a balance in its diplomatic relations in the present turbulent situation and strengthen its political position on the Nagorno Karabakh issue.