Donald Trump's administration and Qatar have signed a Memorandum of Understanding (MoU) to fight financing of terrorism.The US described the MoU reached between the two nations as a major step, amid the isolation of the energy-rich Gulf nation by Saudi-led allies in the region. 

The Gulf Cooperation Council (GCC) had alleged that Qatar supports Islamist groups associated with terrorism and they would continue to alienate Qatar until it meets the demands set by the countries. 

Saudi Arabia and its allies have presented a list of demands to Qatar to end the dispute.

"We worked out an arrangement with the Qataris separate from the Qatar feud. And this is something were pretty proud of. That is the Qataris and the United States have signed a memo of understanding between the United States and Qatar on counter terrorism financing," the State Department spokesperson Heather Nauert told reporters at her daily news conference, according to PTI.

The State Department spokesperson said she hoped the decision reached between the two countries would keep Qatar in good stead.

"We know that all of those countries, as we talked about in Riyadh, share the concern about ISIS, the global terror network, and they recognise that we are all stronger when we are working together and coordinating in the fight against ISIS," Nauert said.

Qatar's Emir Sheikh Tamim Bin Hamad Al-Thani meets with U.S. President Donald Trump in Riyadh
Qatar's Emir Sheikh Tamim Bin Hamad Al-Thani meets with U.S. President Donald Trump in Riyadh, Saudi Arabia, May 21, 2017.REUTERS/Jonathan Ernst

"So we believe that this memo of agreement between the United States and Qatar is a good first start to get that underway," she added.

Why have Saudi Arabia, UAE, Egypt, Bahrain, Yemen and Libya broken ties with Qatar?

"I think to highlight that the United States and Qatar have this agreement on terror financing sends a really good message to all of the nations that we can get to this agreement on this. We can get to an agreement that terror financing is a major issue and a major concern."

"So, I think that helps set a good example for the other nations that we hope that they will come to the table with us as well," Nauert said.