The administration is rolling out the red carpet for Qatari Emir Sheikh Tamim bin Hamad al-Thani during his visit to Washington. Among the items on the agenda, dinner at the Treasury Department on Monday, organized by Secretary Steve Mnuchin, which President Trump attended. Trump has a meeting with the Emir on Tuesday.
There’s much to discuss. The Emir almost certainly wants to discuss the U.S. position on the continuing Gulf Crisis that’s paralyzed relations between his small country, the UAE, Egypt, and the Saudis, and the impact it’s having on efforts to bring peace to the region.
For President Trump, the list is much longer. In addition to discussing the crisis and the problems created by Iran’s renewed aggressions — Iran being a full partner with Qatar in one of the world’s largest known natural gas fields — there are a few items one hopes he’ll raise that are important to the U.S. economy.
On the top of that list is the need for Qatar to live by the spirit of the Open Skies agreement governing international air travel, something that’s been a problem since President Trump’s first year in office.
The operations of Qatar Airways (along with Etihad Airways and Emirates Airline) are generously subsidized by their respective governments, thanks to the income generated from their abundant energy resources. Their airlines, referred to collectively as the ME3, have experienced huge capacity growth but not the profits that should follow.
According to data compiled by Thomas J. Duesterberg of the Hudson Institute as of 2015, Qatar and the UAE had provided more than $52 billion in subsidies and in-kind discounts to the M3 carriers. His analysis also shows the three airlines have increased capacity 10-fold since 2001 and have placed orders for hundreds more Airbus and Boeing aircraft. Unlike U.S. carriers, these airlines don’t have to show a profit to stay in business.
The Open Skies agreement the U.S. has with Qatar, the UAE and 124 other countries says that: “Each Party shall allow a fair and equal opportunity for the designated airlines to compete …” That’s supposed to level the landing field and prevent the government-subsidized carriers from driving the privately-owned ones out of business in price wars.
In 2018 — while refusing to agree they were violating the Open Skies pact, Qatar and the UAE agreed to more transparency, fewer subsidies, and that they would not launch so-called “fifth freedom flights” to the U.S. This commitment was memorialized in a side letter as part of the government-to-government agreements between each country and the United States.
Since that agreement was made, however, Qatar has found a loophole big enough to fly several wide-body aircraft through. It bought, or rather Qatar Airways bought a 49% stake in Meridiana, a struggling Italian carrier. Now rebranded as Air Italy, and with an infusion of cash and equipment from Qatar Airways, it’s begun direct service to the U.S.
The E.U., which also ought to partner with the U.S. on calling the Qataris out for cheating, has thus far been unwilling to describe Qatar Airways as anything but a minority investor in Air Italy. For that, they’ve gotten the promise more aircraft will be purchased from Airbus, the European conglomerate that competes with all-American Boeing. A sweet deal to be sure, but of the kind President Trump has already proven he can see through.
On its face, the operation of Air Italy in this manner — with executives from Qatar Airways and flight crews and uniforms and airplanes — certainly violates the spirit of the Open Skies agreement. An investor with unlimited resources and no need to turn a profit will disrupt the global aviation market adversely, as far as U.S. private carriers are concerned, they’re allowed unfettered access to the American and European markets.
As the current president often reminds us, past administrations were all too willing to sign bad trade deals and bad national security deals, to placate others. His predecessors since Ronald Reagan did little when agreements were broken so as not to offend trading partners or risk trade wars. That was a failed strategy that has rightfully been discarded. Any agreement that goes unenforced is not worth the parchment it’s printed on.
If he chooses to make an issue of it, he’ll have support in Congress from Republicans and Democrats. House Transportation and Infrastructure Committee Chairman Peter DeFazio and Republican Sen. Ted Cruz of Texas have both questioned Qatar’s investment in Air Italy.
President Trump should challenge the Emir to make sure the right thing gets done. and get it resolved. He’s made it a central tenet of his trade policy to get out of bad deals and to negotiate good ones. He told the American voters he’d fight for American national security, American Jobs and American trade. To keep that promise he must bring this issue to the table.
Horace Cooper is a writer and legal commentator based in Washington. D.C.
Originally Published on Issues & Insights.
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