Why was the Qatar cut-off so extreme and sudden?

by on June 7, 2017 at 12:17 am in Current Affairs, Games, Political Science, Uncategorized | Permalink

I am considering hypotheses here, to see how game theory might apply, so don’t think of this is an actual description of the situation.

As an economist, what struck me was the quick and extreme cut-off of Qatar by the Saudis and six other supporting parties.  In the simplest versions of principal-agent theory, we think of most incentives as being applied continuously and varied in small doses: was Qatar’s behavior the day before the Qatar embargo/boycott really so different than the day of and after?  So why did it happen this way?  I can think of a few possibilities:

1. The boycott is like suddenly firing misbehaving workers.  For morale reasons, you don’t want to keep them around on lesser terms, because they will be destructive.  This hypothesis implies that the cut-off of Qatar is a permanent one.

2. Demonstrations of power require large, discrete events.  If the Saudis had simply tweaked the incentives facing Qatar, the Qatar citizenry might not have distinguished the effects of that tweak from random noise.  This hypothesis suggests that once the Saudis have made their point, and received Qatari concessions, the cut-off will be lifted or at least modified.

Note that along this game path, Qatar may not wish to “fold” immediately, as that could make them an ongoing puppet of the Saudis, all too easily manipulated.  And indeed Qatar still has significant open markets for its natural gas.

3. Donald Trump’s meeting with the Saudis gave them an unexpected green light, either explicitly or implicitly, and thus the sudden receipt of this new information motivated their sudden switch in behavior.

#3 still may be consistent with either #1 or #2.

4. The Saudis actually are playing a game with Iran, not so much with Qatar.  What appears to be a big, sudden snap to the Qataris is actually just a smallish, mid-sized tweak in the incentives being applied to Iran.  Qatar, because it is so small, feels a high degree of collateral damage.

5. The punishment space is multi-dimensional.  Once “duration of punishment” is viewed as a variable, even a big punishment applied for a short period of time can be viewed as a marginal tweak.  In this sense there is no paradox.

6. The Saudis view the Qataris as the ones who made a “discrete break” from the previous equilibrium, by paying a $1 billion ransom to Iranian and al Qaeda-linked forces, to induce the release of some kidnapped royal family members.  Discrete breaks are inefficient, but perhaps you have to respond to one discrete break with another, precisely because they are inefficient.

7. Ian Bremmer mentioned on Twitter that 90% of the Qatari food supply is imported, 40% of it from Saudi, and now that is at risk.  There are some countries for which a partial degree of agricultural subsidies and protectionism may make sense, for national security reasons.  In any case, the degree of allowed smuggling reintroduces the notion of a smoother punishment space.

In a rational actor model (ha), this cut-off would be lifted in about a week from now.

1 Richard Harrington June 7, 2017 at 12:37 am

And given the changes in the petroleum markets the Gulf States may not need to cooperate as much as they have in the past. This may be the first step in the breakup of OPEC.

2 Mark Thorson June 7, 2017 at 1:39 am

Maybe an OPEC break-up in the long term (>5 y), but what’s going to happen in the near term? A coup or an invasion, but more likely a coup because invasions are chancy and have poor optics. One or more Gulf states probably have contact with the leaders of the replacement government, they’ll have military and police forces standing by outside of Qatar if needed to support the new government, and some of the tricky stuff with taking out the old government would be performed by highly skilled commandos supplied very covertly by a friendly global superpower. By this time tomorrow, it’s done. Where can I place a bet on this?

3 carlospln June 7, 2017 at 2:18 am

I’ll bet you a year’s pay, Mark.

“Maybe an OPEC break-up in the long term (>5 y), but what’s going to happen in the near term? A coup or an invasion, but more likely a coup because invasions are chancy and have poor optics”

Yes, ‘poor optics’ indeed. What’s going to happen to the fifteen year old forward base of US Centcom, US Air Force Central Command & the 379th Air Expeditionary Wing of the USAF?

“Al Udeid and other facilities in Qatar serve as logistics, command, and basing hubs for the U.S. Central Command (CENTCOM) area of operations, including Iraq and Afghanistan” [SNIP]. That’s somewhere between 5-10,000 US servicemen, at an air facility that operates continuously 24/7.

One suspects Trump is once again out over his skis. General McMaster to yet again have a quiet word with him.

Please provide your private email, so that I can lodge my bank account details with you.

I”ll even let you settle in Bitcoin.

4 carlospln June 7, 2017 at 7:43 pm
5 prior_test2 June 7, 2017 at 2:22 am

Hard to know whether the Qataris are prepared for that game, but it fair to assume that anybody tried to pull that off with the Saudis, places like Ras Tanura and Ju Aymah terminals or Abqaiq are going boom in the first couple of minutes. Oil infrastructure is extremely fragile – LNG like in Qatar even more so.

6 Borjigid June 7, 2017 at 8:34 am

Coups are nothing new in Qatar. Is the current emir’s father still in alive & in exile?

7 jdgalt June 7, 2017 at 12:37 am

Both Turkey and Qatar have been funding Hamas, whose charter says they want to exterminate all Jews. How about WE dump them both as allies, even if it means leaving NATO? This should have happened within a month after Erdogan was elected, if not before.

8 Ricardo June 7, 2017 at 5:09 am

Turkey borders ISIS territory in Syria — we need their help to stop the flow of weapons, supplies and people going into ISIS territory. We (or Europe, at least) also need their help in dealing with refugees.

9 Cpt Obvious June 7, 2017 at 7:01 am

Who do think trained and armed ISIS to the teeth? My grandmother? Or the US govern + allies like Saudi Arabia, Qatar? I think the answer is obvious, there is no way such a movement arises out of nowhere…

10 Ricardo June 7, 2017 at 9:00 am

ISIS is made up of former Iraqi army officers and Islamists who took advantage of the chaos in Iraq in the mid-2000s and then expanded to Syria when civil war broke out there. The best evidence is that, like the mafia, their funding comes from a mix of extortion rackets and direct control of certain businesses.

At any rate, the original suggestion was that the U.S. should sever ties with Turkey and Qatar. If you add Saudi to this list, then you should be out protesting Trump’s arms deal with them.

11 Gerber Baby June 7, 2017 at 12:38 am

How about the Israel lobby? They lobbied Trump to lobby Saudia to crack down on the Hamas-funders in Qatar.

12 Anonymous June 7, 2017 at 10:56 am

Please. Stop looking for order in the new global disorder.

This is what the absence of US leadership looks like. Score settling takes a higher place than geopolitics.

In other news Turkey move to reinforce Qatar, South Korea protests US protection (!).

13 Anonymous June 7, 2017 at 10:58 am

Oh, I should mention that Trumpians fall in line with the Trump response to each setback:

“I meant to do that!”

14 TMC June 7, 2017 at 12:14 pm

” new global disorder.” New? 8 yrs old isn’t new anymore.

15 Chuck June 7, 2017 at 1:27 pm

“Please. Stop looking for order in the new global disorder.”

Nothing to see here goy.

16 Anonymous June 7, 2017 at 3:13 pm
17 Tom T. June 7, 2017 at 12:49 am

We paid a $1.7 billion ransom to Iran last year, and the Saudis didn’t cut us off.

18 vak June 7, 2017 at 12:56 am

Do you have any links?

19 Richard Harrington June 7, 2017 at 12:57 am
20 Artimus June 7, 2017 at 1:45 am

Actually that wasn’t a ransom. It was the return of frozen Iranian assets. Still, I would have preferred we didn’t give Iran that money.

21 Artimus June 7, 2017 at 1:56 am

BTW I don’t agree with giving Iran any of that money.

22 Believe it! June 7, 2017 at 2:03 am

Why?

23 Artimus June 7, 2017 at 2:11 am

Because although I generally think highly of Iranians in the Gulf I don’t think much of nor trust the current maamgement of Iran. Perhaps I am biased due to the fact that I live 2 and a half minutes from Iran by missile.

24 GoneWithTheWind June 7, 2017 at 10:27 am

” I generally think highly of Iranians in the Gulf”.

Not sure exactly what you mean. Iran had many individual freedoms in the past but 37 years ago that changed dramatically. I have worked with and known Iranians (more than 37 years ago) and they were good, happy intelligent people. I can’t imagine them willingly going along with the politics of Iran today. But the fact remains that when Iran does finally make that big mistake and let slip the dogs of war all of the Iranian people will pay a terrible price. Just as there were good Germans in the 30’s who were unable or unwilling to reverse their political fate and they paid the same terrible price that the Nazis did. So if you are saying that Iranians are basically good people and if they could throw off their political/religious leaders they could once more be a decent responsible country I would agree. If however you are saying that they are good people and thus nothing bad will happen as a result of their political/religious leaders that would be naive. I expect Iran to let their alligator mouth overload their hummingbird ass most probably by attacking Israel and they will get nuked back to the 6th century. Unless those good people in Iran throw out their leaders this will be their fate. Just a matter of time…

25 Thiago Ribeiro June 7, 2017 at 10:34 am

“Not sure exactly what you mean. Iran had many individual freedoms in the past but 37 years ago that changed dramatically. I have worked with and known Iranians (more than 37 years ago) and they were good, happy intelligent people. I can’t imagine them willingly going along with the politics of Iran today. ”
I am sure they are more SAVAK types.

26 Artimus June 7, 2017 at 10:54 am

@GWTW. What I mean is that I think highly of Iranians in the Gulf. There is a big diaspora in Dubai and I like the people, their culture and their food. I haven’t meant many Iranians living in Iran, especially rural small village Iranians so I have no idea how similar or different they may be. I am hardly under any illusions that nothing bad can happen especially as I alluded to before, Dubai is only 2 and a half minutes by missile from Iran. That clarifies ones perspective a bit.

27 Mr. Econotarian June 7, 2017 at 11:51 am

The problem is that Iran’s score on the 2017 Index of Economic Freedom score is 50.5:

“Iran’s intrusive state and institutional shortcomings continue to hold back more broadly based economic development. Deriving most of its revenue from the oil sector, the state owns and directly operates numerous enterprises and indirectly controls many companies affiliated with the security forces. The rule of law remains vulnerable to political interference and oppression.

The private sector is largely marginalized by the restrictive regulatory environment and government inefficiency and mismanagement. Modest efforts to enhance the business climate have occasionally been undone to maintain the status quo. The repressive climate stifles innovation.”

So there are plenty of poor Iranians trapped behind economic regulations who are easily manipulated by the government’s claims of religious piety.

I maintain that the Shi’ite vs. Sunni vs. Jewish problems in the Middle East are actually mostly due to lack of economic freedom and resulting high private sector unemployment and lack of economic growth.

28 Kasper Jensen June 7, 2017 at 1:04 am

“Iranian AND al Qaeda-linked” doesnt make much sense. al Qaeda wants to blow up Teheran too.

29 Artimus June 7, 2017 at 2:13 am
30 So Much For Subtlety June 7, 2017 at 3:53 am

The Middle East is marked by its extreme shifts in alliances. Regardless of what people claim.

So in Syria America is siding with al-Qaeda, the Communist PKK and in effect ISIS against the Syrian government which is allied with Turkey and Israel as well as Russia and Iran.

You have to be nimble to keep up.

31 Borjigid June 7, 2017 at 8:37 am

Everybody hates everybody in that region, and none of them are good at coordinating. Its no surprise that some of the alliances don’t make sense.

32 Mr. Econotarian June 7, 2017 at 11:58 am

Iran has occasionally tolerated some “Al Qaeda” operations inside Iran, and probably sponsored other “Al Qaeda” operations in some places, if indirectly.

For example, In March 2015, U.S. federal judge Rudolph Contreras found both Iran and Sudan complicit in the 2000 bombing of the USS Cole by al Qaeda, stating that “Iran was directly involved in establishing Al-Qaeda’s Yemen network and supported training and logistics for Al-Qaeda in the Gulf region” through Hezbollah.

But it is true that Tehran is not on good relations directly with core Al Qaeda.

33 The Cuckmeister-General June 7, 2017 at 1:10 am

You should have started this post with “time for some game theory” you Hillary supporter.

34 Mark Thorson June 7, 2017 at 1:22 am

In situations when your information is woefully incomplete and viewed through a deeply colored lens, wait to see what Executive Intelligence Review says — they will put the whole mosaic together even when they’re missing most of the pieces!

35 Artimus June 7, 2017 at 4:49 am

This is the same magazine that said Queen Elizabeth was the head of an international drug cartel and that the Oklahoma City bombing was a British plot to take over the U.S..

36 Thiago Ribeiro June 7, 2017 at 6:09 am

“This is the same magazine that said Queen Elizabeth was the head of an international drug cartel and that the Oklahoma City bombing was a British plot to take over the U.S.”
Such things would not have been unprecedent.
https://en.m.wikipedia.org/wiki/Opium_Wars
https://en.m.wikipedia.org/wiki/King_David_Hotel_bombing

37 Artimus June 7, 2017 at 6:35 am

Okayyy, I’ll get you some tinfoil so you can build that hat….

38 Thiago Ribeiro June 7, 2017 at 7:29 am

The point is, we know governments engage in covert action.

39 prior_test2 June 7, 2017 at 1:32 am

2. Finally a bit of recognition that the U.S. (not to mention ExxonMobil or the rest of the world) has no plans to boycott Qatar any time soon, for the only reasons that actually matter when dealing with the GCC.

If 2 is consistent with 3, it is extremely likely that a former ExxonMobil executive who Trump has access to was (unsurprisingly, given how Trump seems to operate) likely not consulted ahead of time.

40 ChrisA June 7, 2017 at 1:40 am

Earthquakes happen all at once, not gradually overtime. This is due to their being fairly high activation energy, the potentially energy has to build up over time to a high level before it can overwhelm the frictional forces. What then sets of the earthquake can be a fairly trivial amount of extra energy, I think this is a good model for middle eastern decision making (coming from that part of the world myself). There is a huge friction factor of debate before making any decision, people there are very reluctant to commit to any action mostly because they fear being blamed for any consequences. But eventually the energy to do something builds up to the point where it can’t be held back any more. Perhaps Trumps visit was the final straw that released that energy, but it would happen anyway.

41 ChrisA June 7, 2017 at 1:41 am

*their = there

42 Artimus June 7, 2017 at 1:54 am

Tyler you missed one reason. The soccer season just ended this last weekend with the final of the Champions League. The UAE and Saudi get all their sports from BeIn Sports whichs runs through Qatar. All the channels have been blocked since yesterday(I live in Dubai). With soccer being very popular here, people would have been very irate missing out on the finals. (I am being kind of serious, nothing over here surprises me).

43 Borjigid June 7, 2017 at 8:42 am

Huh, that is weirdly persuasive.

44 Toby June 7, 2017 at 2:30 am

There is the possibility that Qatar asked the Saudi’s to cut them off, albeit temporarily, in order to make Qatari royals a less attractive prize for terrorists. There will either not be a next time or the next time Qatar can use this in the negotiations that it is too costly for them to pay this much ransom. The terrorists will know this because it is highly visible.

45 Andre June 7, 2017 at 3:20 am

it’s all Al Jazeera, that’s been Egypt and Saudi Arabia’s beef for years. They feel like they got the nod from the Don and now they can move and get Qatar to smother the network. Qatar thinks their safe hosting American troops and navy vessels but who knows if Trump is even aware of that.

Can you imagine if the Saudi’s drop a few bombs and damage any US personnel or equipment?

46 prior_test2 June 7, 2017 at 3:55 am

They’d say ‘oops’ or blame American citizens for provoking a response, and we would ignore the whole. Much like Erdogan’s security detail beating American citizens in the streets of DC is so easily ignored by the Make America Great Again crowd. Really, who cares if some foreigners beat American citizens in America’s capital city – at least the U.S. is no longer as weak as it used to be, when no one’s security detail was beating up American citizens.

47 Bob from Ohio June 7, 2017 at 11:25 am

“it’s all Al Jazeera, that’s been Egypt and Saudi Arabia’s beef for years.”

Eliminating Al Queda’s propaganda arm would be a boon to all humanity.

48 Matt Young June 7, 2017 at 3:38 am

Sudden panic at the natural gas shock. Coal got beaten by natural gas, trucks and cars run on it, and the USA has lots of it. Advances in hybrid autos using natural gas offer significant market share and digital controls make switching of fuel the easier. Real shock, happening now.

49 TMC June 7, 2017 at 12:30 pm

“Advances in hybrid autos using natural gas”

Don’t hear much about this, but I hope it’s happening.

50 Thiago Ribeiro June 7, 2017 at 5:55 am

I knew it was Qatar, even when it was Saudi Arabia, I knew it was Qatar.

51 rayward June 7, 2017 at 6:21 am

“Since Mr. Trump has surrounded himself with a coterie of advisers obsessed with the twin threats of Iranian influence and “radical Islamic terror,” it makes sense that the Saudis decided this was the moment to act.” https://www.nytimes.com/2017/06/06/opinion/qatar-saudi-arabia-iran-trump.html? The Obama doctrine was to engage Iran in diplomacy, while Trump’s coterie of advisers wish to engage Iran in a war. Trump has chosen sides in the age-old sectarian conflict in Islam: he has chosen the Sunnis, this even though it was Sunnis from Saudi Arabia who attacked America on 9/11, Sunni insurgents funded by Saudis who killed and maimed thousands of American soldiers in Iraq, and Sunni extremists funded by Saudis who have been committing unspeakable acts of terror in Syria and Iraq including by ISIS a Sunni organization. Cowen asked the wrong question: it isn’t why the Saudis chose to act, it’s why Trump chose to side with the Saudis. Simple: Trump is both an ignoramus and a self-dealer, and the Saudis offer him far more opportunities for Trump to enrich himself even if it comes at a steep price for America.

52 Moo cow June 7, 2017 at 11:46 am

+1.

Who is funding the radical madrassas in Indonesia and Malaysia? Hint: not Iran.

53 GW June 7, 2017 at 6:32 am

If the Qatari state press office was, in fact, hacked, then look to the Russian interests in damaging Qatar. In addition to being a major competitor on the natural gas market, any weakening of the Qatari cash holdings makes this an attack on the Qatar Investment Authority with its major investments in Germany, France and the UK. Major divestments by Qatar in those countries would have major effects on share prices, particularly for companies like VW. And this on top of dividing US allies in the Gulf and, in particular, alienating the ally on whose soil sits the US’s most important base in the region. Once again, Trump is doing exactly what benefits Putin’s Russia most.

54 Cpt Obvious June 7, 2017 at 7:06 am

If you want to believe mainstream media, then apparently “russian hackers” control everything going on in the world looool. And btw CIA, FBI no hackers, completely forgot to hire them, yup rings true to me.

55 rayward June 7, 2017 at 7:35 am

Now this terrorist attack today in Iran by either ISIS or by Saudis: https://www.nytimes.com/2017/06/07/world/middleeast/iran-parliament-attack-khomeini-mausoleum.html? Has Trump been the spark for all-out war between Saudi Arabia and Iran?

56 TMC June 7, 2017 at 12:33 pm

Can they both lose? Interesting war. US funds SA and Obama funded the Iranian war machine.

57 Chuck June 7, 2017 at 1:42 pm

When two goys kill each other a chosen gets his horns.

58 The Centrist June 7, 2017 at 3:11 pm

You do realize, do you not, that things can happen in the world without Trump being the spark, cause or reason?

He’s not my guy, but at least I understand that he cannot be the all knowing malevolent schemer and at the same time the complete idiot who is in over his head. Make up your incoherent mind!

59 chuck martel June 7, 2017 at 8:45 am

Since the US media has neither the time nor the inclination to present a realistic picture of the middle east, we’re led to believe that the paramount issue is, as always, the Sunni/Shiite rift. This fails to recognize the fact that the societies of the area are divided more by tribal loyalties than religious ones. Saudi Arabia is led by the Al Saud tribe. The Al Thani rule Qatar. Inter-tribal jockeying for power and influence isn’t dependent on religion or institutional matters but instead on personalities, even more obviously than in the west. Some respected individual in the Arab world has managed to convince others that giving Qatar a spanking is to everyone’s advantage.

60 August Hurtel June 7, 2017 at 9:53 am

Qatar is the goat.
This is scapegoating.
The rest of them are trying to appease Trump.
They use simplistic, superstitious methods that look quite silly to us.
It might work; Trump bombed Syria, so he might take this at face value as well.

61 charlie June 7, 2017 at 10:18 am

#6.

This isn’t quick. Last week they put out a statement that the the al-thanis are just pretenders.

Looks quick if you are not looking.

62 collin June 7, 2017 at 10:18 am

This all makes sense but it appears Saudi Arabia wants to lead some kind of NATO like organization against Iran. And Donald Trump just signals this activity is backed by the US. (If we are fighting terrorism then why are we so-Saudia Arabia here.) Judging by list of demands, Saudia Arabia is screaming Trumpian Fake News on Al-Jazeera.

Unfortunately, the 10 Saudi demands and actions of Turkey ready to send troops to Qatar is the modern Middle East version of 1914 Europe in which all nations made a long list of game theory errors that started in WW1. (There are few more steps but we should be worried.)

63 Bob from Ohio June 7, 2017 at 11:27 am

“Unfortunately, the 10 Saudi demands and actions of Turkey ready to send troops to Qatar is the modern Middle East version of 1914 Europe in which all nations made a long list of game theory errors that started in WW1. (There are few more steps but we should be worried.)”

Good. Its long past time to settle the region.

64 Anonymous June 7, 2017 at 11:42 am

Spoken like a guy on a sofa in Ohio.

Is empathy heritable?

https://twitter.com/SteveStuWill/status/872257972059070464

65 Bob from Ohio June 7, 2017 at 12:06 pm

I am sitting on a chair.

You don’t seem to have any empathy for the current victims of all the chaos.

Sometimes its best to finish all family business at once.

66 Anonymous June 7, 2017 at 12:09 pm

“The war to end war” – look it up.

67 Thiago Ribeiro June 7, 2017 at 12:29 pm

Two countries I would drop A-Bombs with no remorse if I could: Japan and Saudi Arabia.

68 ricardo June 7, 2017 at 1:38 pm

“Two countries I would drop A-Bombs with no remorse if I could: Japan and Saudi Arabia.”

Japan? Is that because their national football team stole a couple of Brazilians?

69 Cooper June 7, 2017 at 1:41 pm

The Middle East has artificial borders that don’t reflect ethnic, geographic, religious or economic realities. A reorganization is inevitable. We’ve been prolonging the pain for decades.

Syria was a totally artificial nation, it’s breaking apart. Iraq is a totally artificial nation, it’s breaking apart. Kurdish independence can’t be held off forever. The Gulf states are hoarding oil wealth while the Arab periphery starves, that’s not sustainable. Israel’s position in the West Bank cannot be maintained at the status quo through the rest of the century.

The oil wells will either run dry or become stranded assets eventually, water resources are being depleted, populations are growing extremely rapidly, economic growth outside the energy/public sector is weak.

All in all, another major war in the Middle East or a series of civil wars is a foregone conclusion. The only question is how much longer we can head it off.

The world of 2117 might look something like this: https://smokeandstir.files.wordpress.com/2013/10/the-project-for-the-new-middle-east.jpg

70 Anonymous June 7, 2017 at 2:00 pm

I guess I am too American to think fragmentation along racial, ethnic, or religious lines is progress.

One man(*) one vote.

* – women and minorities added in due course.

71 Thiago Ribeiro June 7, 2017 at 3:39 pm

“Japan? Is that because their national football team stole a couple of Brazilians?”
No, it is because it is a fascist country that plundered and raped Asia and attacked Brazil. Rhey haven’t change and they will not change. They are aggressors, it is the nature of their society.

72 Managing History June 7, 2017 at 10:29 am
73 Slugger June 7, 2017 at 10:32 am

I have no idea what is going on in the Qatar situation and have given up on any hope of understanding that whole region. However, I was interested by Professor Cowan’s statement about game theory advocating an incremental response to a situation. I recall a graduated process of responding in Vietnam; it was called “escalation.” It was led by Robert MacNamara and produced a spectacularly bad result. In poker, players often go “all in” to force a favorable outcome. What am I failing to understand?

Comments on this entry are closed.

Previous post:

Next post: