US, Qatar Attain Settlement On Subsidy Spat With Airways

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WASHINGTON — America and Qatar on Tuesday inked a deal to resolve a years-old quarrel over alleged airline subsidies, as Qatar’s authorities works to defuse tensions with the Trump administration.

A proper announcement got here Tuesday, as Secretary of State Rex Tillerson and Defence Secretary Jim Mattis hosted the inaugural spherical of the U.S.-Qatar strategic dialogue. Agreements, on safety and counter-terrorism co-operation and combatting human trafficking, have been additionally signed.

“Qatar is a robust associate and long-time good friend of the US,” Tillerson stated, welcoming the agreements. Tuesday’s assembly follows harsh criticism of Qatar from President Donald Trump. He denounced the nation final yr for allegedly funding terrorism amid a row between the nation and different members of the Gulf Cooperation Council, who’ve imposed a land, sea and air blockade on it.

Tillerson and Mattis stated the U.S. stays deeply involved in regards to the scenario because it nears its eight-month mark, together with hostile “rhetoric and propaganda” being employed. They known as on all events to the dispute to resume efforts to finish it.

Qatar is residence to a serious U.S. army base that’s key to the combat towards the Islamic State in Iraq and Syria and Mattis stated that “a united GCC bolsters our effectiveness on many fronts.”

The aviation settlement will see state-owned Qatar Airways agree voluntarily to open up its accounting books. U.S. airways say the corporate receives billions of in authorities funds that depart them at a aggressive drawback. Qatar additionally made a unfastened dedication that the flag provider gained’t launch flights to the US from Europe or different non-Qatari cities, creating but extra competitors for the U.S. airways.

Either side of the dispute can declare the settlement as a victory — for very completely different causes.

The U.S. airline business can declare the elevated transparency will create a robust disincentive to unfair subsidies, as Qatar will not be capable of masks such funds via artistic accounting. The three main U.S. carriers — Delta Air Strains, American Airways and United Airways — have spent enormous sums over the past three years urgent the Obama administration and Trump administration for robust motion. They’re keen to point out a win.

But for Qatar, the settlement averts the extra severe step U.S. airways wished: re-opening the so-called open-skies treaties that might result in much less beneficial circumstances for Persian Gulf airways. And, it implies that Qatar can even present it’s co-operating intently and productively with U.S. regulators.

That would assist the tiny gas-rich kingdom draw a distinction with the United Arab Emirates, whose two airways are additionally accused of improper subsidies however have but to succeed in an settlement with Washington.

“Everyone will get to assert victory on this,” stated Helane Becker, an airline analyst for Cowen and Co.

Certainly, even earlier than the announcement, American, the world’s greatest airline by passenger site visitors, praised the deal as a approach to “thoughtfully tackle” Qatari subsidies. And United CEO Oscar Munoz applauded the settlement whereas thanking Trump’s administration for “successfully representing the pursuits of the American aviation business.”

Although on the identical facet of the airline dispute, Qatar and the UAE oppose one another in a bitter, unrelated standoff. Final yr, the UAE, Saudi Arabia and different Gulf nations blockaded Qatar after accusing it of supporting extremism and fomenting dissent all through the area. Qatar hopes to vary that narrative by enhancing counterterrorism co-operation and permitting better U.S. visibility into its funds and banking practices.

In an eight-paragraph doc laying out “understandings” between Qatar and the U.S., the Gulf nation commited inside one yr to releasing audited monetary statements for Qatar Airways “in accordance with internationally-recognized accounting requirements.” Inside two years, Qatar Airways is to reveal any transactions with different state-owned entities, corresponding to caterers or different corporations that assist airline operations, closing what the U.S. airways have claimed is a backdoor utilized by Gulf nations to cover illicit subsidies.

A side-letter to the settlement said that Qatar’s civilian aviation authority is unaware of any plans by Qatar Airways to start out so-called “Fifth Freedoms” flights — routes from third international locations to the US. Below the situation U.S. airways worry, Qatar Airways may supply flights from its Doha hub to, say, Paris or London, cease to select up extra passengers, then fly on to New York.

The side-letter solely says there aren’t any present plans to function such service. That’s in need of a binding assure. There’s additionally no dedication Qatar Airways gained’t increase its providing of Qatar-U.S. flights.

“This seems to be the administration primarily throwing a meatless bone to the three U.S. carriers to place an finish to their rants towards the Gulf carriers,” stated John Byerly, who was the chief open skies negotiator within the Obama administration and has additionally consulted for Emirates Airline and UPS.

The 2 UAE airways — Dubai-based Emirates and Abu Dhabi-based Etihad Airways — aren’t a celebration to the U.S.-Qatar settlement. Emirates Airline at present affords “Fifth Freedom” flights through which passengers can fly from New York-area airports to Milan, Italy or Athens with out ever setting foot within the UAE.

All three Gulf airways have lengthy denied receiving unfair authorities subsidies. There was no speedy response from both Emirates or Etihad.


AP Diplomatic Author Matthew Lee, AP Airways Author David Koenig in Dallas and AP author Jon Gambrell in Dubai, United Arab Emirates, contributed to this report.


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