Al-Ahsa (Saudi Arabia) (AFP) - Jackhammers and cranes gather dust at half-built Qatari-funded hotel sites in a Saudi city hit hard by an abrupt diplomatic rupture, but signs of thawing cross-border ties are reviving economic hopes.
Saudi Crown Prince Mohammed bin Salman has downplayed the dispute with Qatar -- which led to a Riyadh-led embargo on the neighbouring emirate and shuttered their land border in mid-2017 -- as a trivial matter with limited impact on the kingdom.
But it is anything but trivial for Al-Ahsa, a desert oasis near the border where Qatari shoppers once kept the local economy humming, crossing over to buy relatively cheaper provisions -- from herbs and eggs to milk and camel meat.
The deep-pocketed residents of gas-rich Qatar -- one of the wealthiest countries per capita -- also pumped millions of riyals into local hotels, date plantations and other real estate.
But the Qatari money dried up when the embargo shut them out, unleashing economic pain and dividing extended families on both sides, an unintended consequence of a policy meant to hurt Doha's government.
The Saudi-led bloc accuses Qatar of backing radical Islamists including Muslim Brotherhood and seeking closer ties with Riyadh's arch nemesis Iran -- charges Doha denies.
"The blockade had a negative impact on towns near the border and complicated investments at a time when Saudi Arabia's economy is struggling with large deficits," said Samuel Ramani, a doctoral researcher at Oxford University.
Official statistics are hard to come by but the tell-tale signs of the economic impact are everywhere in Al-Ahsa, home to more than a million people.
Its malls and traditional souks are emptier, multiple gas stations leading up to the border have shuttered, and even salesmen of bisht, traditional gold-trimmed robes, complain of depressed sales.
Shells of three Qatari-funded luxury hotels lie abandoned after construction was halted abruptly in 2017, a long-term investment some believe was intended to accommodate any surplus guests of Qatar's 2022 football World Cup.
The manager of another Al-Ahsa hotel pointed at his vacant parking lot, once full of cars with Qatari plates. The hotel's occupancy rate tanked after the embargo, and it has barely managed to cover its electricity bill, he told AFP.
But the fact that the majority of Qatari investors have not liquidated their investments in Al-Ahsa despite the embargo gives some hope it will be business as usual if relations are restored.
- Hopeful signs -
The feud is not irreconcilable, residents say, describing it as a spat between squabbling cousins. And amid signs of a thaw, many are betting on the return of Qatari high-rollers.
"The rift is between governments, not the people," said an Al-Ahsa businessman who asked not to be named.
"We are not different countries, we are one big family."
Arab diplomats say both sides are closer than ever to bringing the dispute to an end.
Raising hopes is recent "sports diplomacy", which saw football teams from Saudi Arabia, the United Arab Emirates and Bahrain travel to Qatar for the Gulf Cup despite earlier indications that they would boycott the tournament.
State-funded media networks on all sides recently appear to have toned down the shrill rhetoric against each other.
Qatar's foreign minister, who travelled to Saudi Arabia last month for talks, has spoken of "some progress" in negotiations.
But the real bellwether will be the level of Qatari representation at the Gulf Cooperation Council summit in Riyadh on Tuesday. The Saudi king has personally invited Qatar's emir, but it remains unclear whether he will attend.
Two sources familiar with the negotiations, including an Arab diplomat, told AFP that hardliners in Abu Dhabi -- Riyadh's principal ally -- are opposed to a restoration of ties.
This has raised the prospect of a "bifurcated peace", implying Qatar could possibly normalise ties with only some blockading nations including Saudi Arabia, with whom it shares its only land border.
- 'Punishment' -
Saudi Arabia appears to be adopting a de-escalatory approach after a series of what observers describe as foreign policy "missteps" that have spooked investors.
A cool reception by global investors to state energy giant Aramco's stock sale has highlighted the downside of its aggressive stance, they say.
Ramani said the rapprochement appears to be shaping up "without major concessions from Doha", after the blockade boosted its self-reliance.
Once heavily dependent on food imports, it has developed new trade routes, flown in thousands of dairy cows and developed poultry farms to beat the embargo.
"Qatar is like a newborn baby kicked out of a house as punishment," the Arab diplomat -- who is from outside the Gulf -- told AFP.
"You thought it would come back crying to you, but it has stood on its feet and does not need you anymore."