JEDDAH, Saudi Arabia (Reuters) – U.S. Secretary of State Rex Tillerson began talks with four Arab states on Wednesday in efforts to ease a boycott of Qatar after the countries labeled a U.S.-Qatar terrorism financing accord an inadequate response to their concerns.

Any resolution of the dispute must address all the key issues for Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, including Doha’s undermining of regional stability, a senior UAE official said ahead of the talks in Saudi Arabia. His comments shed light on Tillerson’s uphill challenge.

The four countries imposed sanctions on Qatar on June 5, accusing it of financing extremist groups and allying with the Gulf Arab states’ arch-foe Iran. Doha denies those accusations. The four states and Qatar are all U.S. allies.

Tillerson arrived in the Red Sea port city of Jeddah where he met ministers from the four nations to seek an end to the worst dispute among Gulf Arab states since the formation of their Gulf Cooperation Council regional body in 1981. Kuwait, which is mediating in the dispute and not boycotting Qatar, also sent an envoy.

Tillerson also met Saudi King Salman and they discussed regional developments, especially efforts to combat terrorism and its financing, the Saudi state news agency SPA said.

On Tuesday, shortly after Tillerson signed a memorandum of understanding in Doha on combating the funding of terrorism, the four countries issued a statement labeling it as inadequate.

They also reinstated 13 wide-ranging demands they had originally submitted to Qatar, the world’s biggest producer of liquefied natural gas, but had later said were void.

The demands include curbing relations with Iran, closing the widely watched Al Jazeera TV channel, closing a Turkish military base in Qatar and handing over all designated terrorists on its territory.

The crisis goes beyond the financing of terrorism, said Jean-Marc Rickli, a risk analyst at the Geneva Centre for Security Policy, pointing to Gulf fears about the role of Iran, internal instability and the regional influence of the Muslim Brotherhood as well as competition for regional leadership.

“Whatever the outcome is, one of the two sides will lose face and losing face in the Arab world is something important. The consequences for the future will be negative for at least one camp or the other.”

ABSENCE OF TRUST

The four boycotting states said in a joint statement on Tuesday they appreciated U.S. efforts in fighting terrorism.

“… (But) such a step is not enough and they will closely monitor the seriousness of Qatar in combating all forms of funding, supporting and fostering of terrorism,” the statement said, according to the UAE state news agency WAM.

Anwar Gargash, UAE Minister of State for Foreign Affairs, said the dispute was rooted in an absence of trust and that any solution must address the four states’ grievances.

“Diplomacy must address Qatar’s support for extremism and terrorism and undermining regional stability. A temporary solution is not a wise one,” he wrote on Twitter overnight.

The United States worries the crisis could affect its military and counter-terrorism operations and increase the regional influence of Iran, which has been supporting Qatar by allowing it to use air and sea links through its territory.

Qatar hosts Udeid Air Base, the largest U.S. military facility in the Middle East, from which U.S.-led coalition aircraft stage sorties against Islamic State in Syria and Iraq.

Some Gulf Arab media took a critical stance toward Tillerson ahead of his visit to Jeddah.

“What makes Wednesday’s meeting in Jeddah difficult is that Tillerson has, since the beginning of the crisis, appeared to be taking the Qatari side,” a commentary published in Saudi-owned Asharq al-Awsat and Arab News newspapers said on Wednesday.

“Tillerson cannot impose reconciliation, but he could reduce the distance between the parties in the diplomatic rift — all of which are his allies — rather than taking the side of one against the other,” wrote columnist Abdulrahman al-Rashed, the former general manager of the Saudi-owned al-Arabiya channel.

(Writing by Sylvia Westall; Editing by Mark Heinrich)