How
Qatar becomes Richest Country in the Planet? Located in the Persian
Gulf, Qatar is a country with an area of little more than 10,000 square kilometres.
Just to give you some idea of just how small that it, it is nearly 40 times
smaller than California. So, when this country got its independence from the UK
in 1971, Qatar was faraway, hostile and very poor place. As a matter of fact,
it was one of the poorest territories of the United Kingdom. And that made a
lot of sense.
The
Qatar Peninsula is a place where temperature scans reach 50º Celsius in summer,
it is almost completely covered by desert and it was certainly one of the most
uninhabitable places on Earth. But it didn’t stay that way forever and today
Qatar is the richest country on the planet. That´s right, the citizens of this
tiny country enjoy a per capita income of more than $125,000, which is almost
three times the income in France and five times that found in Chile.
This
is a country which was almost uninhabited, a country that could hardly survive
on its fishing industry, and today it looks something like Scrooge McDuck’s
safe. The government of Qatar has investments and properties all around the
world. It is the birthplace of Al Jazeera, the most important Arabic media
company and then there is Doha, the capital, which is a sea of skyscrapers, malls
and luxurious cars. “A mix of Monaco and Vegas, but without the alcohol and
gambling. There is no room for simplicity; everything is sumptuous, hug hand
sparkling in Doha”. Qatar has gone from being a dark shelter for Wahhabis’
preachers and has become what might people might consider the most open country
in the middle east. (Other than Dubai, of course, but as you might know Dubai
is an emirate and not actually a country).
In
modern day Doha, we can find international universities or the so-called
“Church City”: a complex of protestant, orthodox and Catholic churches like the
Church of Our Lady of Rosary. “The $20m Catholic church, which seats 2,700, is
located in the southern outskirts of the city on land donated by Sheikh Hamad
bin Khalifaal-Thani, Qatar's emir”.
Now
the question of course has to be: How did Qatar achieve this remarkable
transformation? Well, let’s take a look at that. THE LNG BLESSING: LIQUIFIED
NATURAL GAS In other articles we have discussed some of the keys why some
countries are so rich.
But
in Qatar´s case it is much simpler and it can be summarized by two things: Oil
and, more importantly, Natural gas. Massive amount of natural gas. Yep,
that is pretty much it. Disappointed? Well, hold on a second because it is
actually quite an interesting story. The first oil fields were found in the
1940s, and by the 1960s exploitation was already consolidated. And things in
the poor country of Qatar changed but not a huge amount. The thing is that it
wasn’t until the beginning of the 1970s that Shell found the biggest treasure
of this country: “The North Field”, the largest gas field in the world. But at
that time natural gas was not really that profitable. You see, at that time,
gas could only be transported through gas pipes and Qatar was far too far away
from anywhere where the gas could be used. Even Shell soon forgot about it. But,
well, things they were about to change.
Hamad
Bin Khalifa Ideas & Strategy
In
1996, the old emir, Hamad bin Khalifa al-Thani(who abdicated in 2013) staged a
coup d'etat while his father was in Switzerland. This emir reached power with a
very clear idea: the future of Qatar was gas, they had to exploit their huge
fields. And so he did. The new emir decided to invest in an undeveloped and
rare technology: Liquefaction, which is the ability to carry natural gas in a
liquid form so it could be transported in large ships as if it were oil. In
order to do this, the gas needs to cool down and be kept at a temperature of
-161º Celsius (
Because
of that investment Qatar is now the world’s largest exporter of LNG. With this
technology, Qatar is able to export its enormous gas supplies to the rest of
the world. In fact, last year, three quarters of Qatar's gas went to Asian
countries like China, India, South Korea and Japan. And there is more: the
industrial complex Qatar has developed is so big, so large-scale, that the
country has managed to have the cheapest costs of extraction and liquefaction
in the world. To illustrate this, a methane tanker of LNG is four times cheaper
in Qatar than it is in the United States! And this, dear viewer, is the big
secret of this small and wealthy country.
Now,
this is only a part of the equation. Not only does a country need to exploit
the resources, but they also need to use the money it generates well, or they
are going to end up like Angola or Venezuela. So besides this innovative
process, Qatar has some other keys to their success. QATAR’S POWER Since Hamad
bin Khalifa al-Thani reached power in 1995, things have changed significantly.
In his 18 years leading the country, Qatar´s population has multiplied by 5,
while at the same time becoming richest country on Earth.
Qatar
Investment Authority
So,
the old emir has plenty of reasons to feel proud of him but, let’s move on. Qatar
started to generate a lot of economic resources and, well, what do you think
they are doing with this money? Well, despite what it may look like, they have
mainly invested it (both nationally and internationally). Qatar has created the
“Qatar Investment Authority”, a huge fund to invest money all around the world.
It is known as “Qatar’s Power” because they can have in their hands, more than
$330 billion!! And hey, the population of Qatar is less than3 million, but of
these 3 million people, only 300,000 are Qatari citizens, so, well, you can do
the math. This fund has made significant real estate investments all over the
world. In London, a big part of the city belongs to Qatar, including hotels,
offices, apartments and in the United States, Qatar was, in 2016,the fourth
largest office investor in the country.
In
Manhattan alone, this fund has invested $5 billion in the last two years. And
it is not just real estate, this fund also has major shares in many
multinationals: Qatar is, for instance, one of the largest shareholder of
companies like Volkswagen, Iberdrola, Barclays Bank, Tiffany & co,
Shellor even the giant Rosneft, the oil company of the Russian government. In
the article we are about to show you can see how foreign investment has
increased as the production of gas and oil has grown and it’s not just
international investment - they are also investing lots of resources inside the
country: Tens of billions has been spent on highways, ports, airports, research
centres, financial centres and so on. And, well, what’s the goal of all of
this? Well, that’s to be able to, in the future, replace with the income they
get from oil and gas, with the income from these investments.
But
the moment when the gas business runs out is still too far away to really be a
problem. "There are no analysts who can say when demand for gas will wane.
For oil, there are people who see peak demand in 2030, others in 2042 but for
gas, demand is constantly growing." This idea they have in investing,
instead of spending the money, from natural resources might be one of the most
important differences between Qatar and other countries who are also rich in
natural resources. Most of them find it too easy to spend the money today, and
not think too much about the future. TOWARDS EFFECTIVE INDEPENDENCE When Hamad
bin Khalifa al-Thani reached power, he also had another thing in mind: Qatar
had to gain international influence.
You
see, for years, Qatar was controlled, de facto, by Saudi Arabia and the new
emir just couldn’t forget about Iraq’s invasion of Kuwait. If Qatar wanted to
survive they needed to claim their identity and gain international influence.
Otherwise, any conflict with Riyadh could compromise the independence of the
country. Besides, natural gas could pay the bills now so in 2003, when Saudi
Arabia “requested” that the US take American troops out of their country, Qatar
didn’t hesitate to offer itself as a destination for those troops. They didn’t
even blink when it came to spending about a billion dollars to build the
military bases. “The sprawling base 20 miles southwest of the Qatari capital of
Doha is home to some 11,000 US military personnel”. Indeed, it could be said
that Qatar has taken out a very comprehensive insurance policy.
Al
Jazeera-Arabic Media Agency
And
then we have the founding of Al Jazeera. This has the objective of obtaining
global influence, and they succeeded! They also developed a foreign policy
driving towards international influence. THE BLOCKADE All this political
strategy made both the United Arab Emirates and Saudi Arabia very angry. In
June of 2017, they announced a blockade, accusing Qatar of supporting
fundamentalist groups and terrorists. Pot calling the kettle black Saudi
Arabia? Hmmm? Now, it is true Qatar has some dark secrets, it is an absolute
monarchy after all. But the country is a good ally for the West, especially the
US, and it is one of the most open countries in the region.
The
truth is the boycott had a different target: to cut down Qatar’s strategy of
international influence and to essentially put them in their place. However,
the blockade has been a total failure. First, Riyadh’s position is not that
strong. Very few countries have supported it, not even Kuwait or Oman. Also,
Qatar has developed better relationships with Turkey and even Iran. Qatar has
simply proved they are strong enough to weather the storm. “Qatar defies Saudi
Arabia by restoring diplomatic ties with Iran”. And finally, something does
need to be made clear: There are plenty of grey areas in Qatar: labour conditions
that are more consistent with the ones of a poor country, the situation of
women and the lack of democracy.
Furthermore,
the system needs to prove it can work without the government, because, unlike
Dubai, the lead has been taken by public initiative, not private. And this is
one of the reasons why Dubai is still above Qatar in pretty much all aspects.
But, hey, it wouldn’t be fair to acknowledge what they are doing right, like
their saving capacity, their productive investment, and their openness. And now
is your turn, who do you think will win this battle of the countries in the
Persian Gulf? Saudi Arabia or will it be Qatar? Leave your answer in the
comments below. Also don’t forget to subscribe to our blog for more interesting
articles.
