Hassan Ammar / AP Supporters of Egypt's Islamist President Mohamed Morsi chant slogans during a rally in Nasser City, Cairo, July 4, 2013

As far as snubs go, Egypt’s precipitous return of $2 billion in aid from Qatar earlier this week couldn’t have been any clearer. Then Egypt’s Civil Aviation Ministry turned down a Qatar Airways request to increase the number of flights between the two countries. For weeks Egyptian authorities had been hounding Qatar’s flagship satellite news network al-Jazeera, storming its local offices, deporting its correspondents and forcing the station off the air. Qatar, Egypt’s new leadership seems to be saying, is no longer a friend. And Egypt isn’t the only one: Libya, Turkey and Saudi Arabia all have, in one way or another, ganged up on Qatar. The tiny Persian Gulf nation that once seemed poised to take a decisive role in the politics of the Middle East by dint of its copious natural gas wealth and aggressive foreign policy was frequently said to be punching above its weight. Now it seems, others are punching back.

Last October, Qatar’s then Emir Sheik Hamad bin Khalifa al-Thani electrified the region with an unprecedented visit to Gaza to deliver $400 million in aid to the Hamas government, becoming the first head of state to break, in the most public way possible, an Israeli blockade that had been in place since 2007. Qatar was riding high on successes in Libya and Syria, where military aid and weapons seemed to be turning the tide against loathed despots. Al-Jazeera was celebrated worldwide for its fearless — some would say biased — coverage of the Arab revolutions, most notably in Egypt, where its reporting on the young revolutionaries of Tahrir Square bordered on adulation. Back then al-Jazeera was considered the voice of the Arab street, and Qatar, as the channel’s host, basked in its reflected glory.

Qatar, as a tiny nation overshadowed by regional behemoths Iran and Saudi Arabia, has long sought to prove its worth on the world stage through the judicious disbursement of cash and diplomacy — helping to broker peace accords from Lebanon to Sudan. After the fall of Egypt’s President Hosni Mubarak and other regional strongmen, Qatar stepped up its efforts by backing the Muslim Brotherhood, not just in Egypt, but also its counterparts in Libya, Tunisia and Syria. The Qatari monarchy has no great affiliation with the Brotherhood; in fact the group has a very limited presence in Qatar. But Qatar’s leadership saw the Brotherhood gaining in the region and wanted to be on the winning side, says David Roberts, director of the Qatar branch of the U.K.-based Royal United Services Institute for Defense and Security Studies.

When the Brotherhood’s Mohamed Morsi became President of Egypt, Qatar backed his government with investments and aid worth $8 billion. It helped the Brotherhood-dominated Hamas government in Gaza, and in Syria funded rebel groups that hewed close to an Islamist agenda. Betting on the Brotherhood was the culmination of Qatar’s long-standing goal to supplant the Middle East’s traditional powerbrokers Saudi Arabia, Egypt and Turkey, by visibly allying itself with a rising power. Eighteen months ago, that was a reasonable gamble, says Roberts. “The Muslim Brotherhood had been a political force in the region for decades, and finally, in the wake of the Arab Spring, it was on the ascendency. It was quite plausible that the Brotherhood would have had a lasting foothold in the region, so Qatar leveraged its money and contacts to bet on the Brotherhood.”

The bet has not paid off. On July 3, Morsi was ousted in a popularly backed military coup. Saudi Arabia, which has long viewed the Brotherhood, with its grassroots organization and potent mix of politics and religion, as a threat to the monarchies of the Gulf, breathed a sigh of relief and offered the new military leadership $5 billion in aid. Kuwait and the United Arab Emirates soon followed with an additional $7 billion. Morsi is now in jail, as are an estimated 2,000 high-ranking members of the organization. On Sept. 23 an Egyptian court outlawed Brotherhood activities and ordered the seizure of the group’s assets. An outright ban is expected to come soon. Qatar, as the most visible backer of the Brotherhood, has borne the brunt of Egypt’s about-face. “Egypt won’t be governed by Islamists anytime soon, so Qatar has lost a major channel of influence in the region,” says Shadi Hamid, director of research for the Brookings Doha Center, an international policy and research organization.

Elsewhere, resentment against the Brotherhood, and by extension Qatar, is cresting. Libya’s interim government has lambasted the emirate for its support of what it says are Islamist militias. “It’s not just a major blow to Qatar’s foreign policy, but the pro-Islamist bloc in the entire Middle East,” says Hamid. “Since the two are so linked, it is difficult to see how either will fully recover.” Even the Taliban, who in June opened an office in Doha to great fanfare and Western hopes for a peace agreement with the Afghan government, is now thinking of relocating. Afghan President Hamid Karzai, suspicious of Qatar’s aggressive push for negotiations, has threatened to call off talks if the Taliban keeps its office in Doha.

Morsi’s fall came at a significant transition point for Qatar. A little more than a week before, the 61-year-old Emir, who had been in power for 18 years, abdicated in favor of his 33-year-old son, Sheik Tamim bin Hamad al-Thani. A few days later, Qatar’s indefatigable Foreign Minister Sheik Hamad bin Jassim al-Thani, author of Qatar’s aggressive foreign policy, was replaced by 46-year-old Khalid bin Mohamed al-Attiyah, ushering in a new generation of leaders just as Qatar’s old foreign policy investments started earning negative returns. In many ways, the end of Morsi and the Brotherhood’s rise in the Middle East offers Qatar’s new Emir and his Foreign Minister the opportunity to start over with an evolved policy, says Brookings’ Hamid. “I think we will see a lighter, less confrontational approach with the new leadership.” With the flamboyant HBJ, as the former Foreign Minister was known, out of the picture, Qatar is likely to move more slowly on regional issues, and less likely to grab headlines by making bold moves, he adds. “We might even see a return to Qatar’s pre–Arab Spring policy of maintaining links to all sides so that it can play more of a negotiation and mediation role.” Given the evolution of events in the Middle East today, more mediation and less taking sides is probably the best bet of all.