Blockade beat, World Cup ahead
Qatar has overcome the worst impacts of its exclusion by neighboring countries and may be a big winner in economic slowdown
A year and a half after a bloc of neighbors and former allies sealed off this Gulf state’s frontiers, denouncing it for supporting Iran and international terrorism, Qatar faces 2019 with a solid economy, a popular ruler and a new strategy for overseas engagement.
The year ahead will likely see this natural-gas superpower take on an enhanced role in multilateral overseas projects, from Gaza to Mali, while at home, preparation for the FIFA 2022 World Cup will continue, alongside work on a major ramping up of liquefied natural gas (LNG) production.
The next 12 months will also likely see a persistently independent foreign policy by Doha, to the continued annoyance of neighboring Saudi Arabia, the UAE, and Bahrain. Their increasingly ineffective and counter-productive blockade may well continue.
When it came to politics, the past year saw the emergence of several declared rivals to Sheikh Tamim’s rule – notably Sheikh Sultan bin Suhaim, the brother of the deposed former emir, Sheikh Khalifa. The 38-year-old current emir, however, remains in power and was confident enough to launch his first cabinet reshuffle in November 2018.
“The cabinet shift is more toward a technocratic government,” Noha Aboueldahab, visiting fellow at Brookings Doha Center, told Asia Times.
“The naming of Foreign Minister Sheikh Mohammed bin Abdelrahman Al Thani as chairman of Qatar Investment Authority (QIA) also reflects a strategy that emphasizes the link between foreign policy and investments.”
QIA is the Gulf state’s sovereign wealth fund, worth around $320 billion.
Strategy and diplomacy
While Doha has preserved its independence through the blockade, it has also absorbed key lessons for survival.
Former emir Sheikh Hamad pursued an outsized foreign policy throughout the Arab uprisings, sanctioning Al-Jazeera Arabic as a tool of state policy and aggravating many of his neighbors.
“There was a lot of criticism of Qatar’s pushing for change in the region,” said Kristian Coates Ulrichsen, fellow for the Middle East at Rice University’s Baker Institute.
“Now, though, they have absorbed the lessons from the past. They’ve realized they are much stronger when part of an international effort,” he told Asia Times.
“Qatar will be trying to position itself increasingly as a humanitarian, as opposed to a political, actor in the region”
– Noha Aboueldahab, Brookings Doha
The year ahead will see Qatar play host to a handful of United Nations’ agencies, while also shoring up a ceasefire in Gaza. In recent months, Doha delivered two multi-million dollar cash grants to the Hamas-run government, paying the salaries of local government workers – with Israeli approval. Doha has also airlifted armored vehicles to Mali to support African Sahel countries fighting local jihadists, while competing with the UAE to facilitate a peace deal in Afghanistan.
“Qatar will be trying to position itself increasingly as a humanitarian, as opposed to a political, actor in the region,” adds Aboueldahab.
Qatar appears to have made it through the worst of the blockade imposed by its neighbors.
“Imports slumped in the immediate aftermath of the blockade,” Jason Tuvey, senior emerging markets economist at Capital Economics, told Asia Times, “but Qatar quickly established new supply routes and opened its new deep-water Hamad port in September of last year.”
Since then, the economy has largely recovered lost ground.
“Key economic and market indicators are all close to, or even above, pre-crisis levels,” Rory Fyfe, an economist with MENA Associates, told Asia Times. “We expect Qatar to record growth of 2.0% in 2018 … and in 2019, the drag on the overall economy from the blockade should fade as financial conditions and confidence recover, helping trade, investment and consumption. Overall in 2019, we expect growth of 2.2%.”
At the same time, Qatar continues to work on some massive infrastructure projects around the FIFA 2022 World Cup, although most of the big ticket items for this are already gone. More of an impetus in the year ahead will be created by the country gearing up to expand its LNG production by some 40%, come 2020.
With Qatar holding some 14% of the globe’s total known reserves of natural gas, it is already responsible for around 27.6% of the world’s total LNG deliveries. Boosting output will thus likely lead to a major surge in the state’s considerable hydrocarbon revenues.
The biggest market for that LNG is Asia, with some 71% of the giant LNG carriers carrying the country’s gas east.
China is one destination for these, with Qatar’s planned LNG expansion also targeting this market. The People’s Republic is switching electricity production from coal-fired to natural gas-fired power stations, boosting its need for LNG. PetroChina recently signed a contract with Qatar, doubling the volume of gas it will import.
At the same time, the global economic slowdown is likely to negatively impact demand, yet one of the reasons for the sluggish growth now widely predicted may be to Qatar’s advantage. A deepening of the US-China trade war might well rule US LNG exports out of the Chinese picture – to the benefit of Qatar and other competitors.