A proposal to dig a canal along the length of the Saudi-Qatari border has emerged, in the latest surprising twist in the ongoing diplomatic and economic standoff between the two countries.

Some in Saudi Arabia appear to want to draw – or rather dig – a line in the sand, creating a permanent physical barrier between the two countries and essentially turning the Qatari peninsula into an island.

Aconsortium of nine local firms is involved in the proposed project, which has yet to receive official approval.

The commercial rationale is to develop tourism resorts along the new waterway, with plans for at least five hotels. Ports will also be constructed and a free trade zone set up.

However, it remains to be seen how much demand there will be for all this. The area is thinly populated and far away from any major industrial centres. And assuming the border with Qatar remains closed, one main target market for any commercial or tourism activity will be shut off. It would also make little sense for shipping traffic from further north or south to divert into the narrow channel and away from the Gulf itself.

According to the press reports, a 200m-wide channel will be dug to a depth of up to 20m, allowing the canal to accommodate cargo, container and passenger ships up to a length of 295m, a width of 33m and with a maximum draft of 12m. The preliminary cost has been estimated at SR2.8bn ($747m).