World Cup Construction frenzy has put labour conditions QATAR under scrutiny Page 3 FINANCIAL TIMES SPECIAL REPORT | Saturday December 17 2011 www.ft.com/qatar­2011 | twitter.com/ftreports Wealthy state with a big presence

Michael Peel and Modern metropolis: some say Roula Khalaf consider modernisation is going too fast Getty the prospects for a are making the locals an increasingly state that is flexing small minority. Questions are also raised about the priorities of govern- its diplomatic, financial ment spending. and media muscles Abdallah al-Athbah, a columnist and local blogger, says Qataris want he bay at the heart of Doha, more representation and more of a Qatar’s capital, is a striking say in how resources are directed. sight after dark. Across the “Qataris want more hospitals than water from the blocks and stadiums,” he says. Tcurves of the a rapidly multiplying The emir, who took power in 1995 skyscrapers downtown, the softly lit after pushing his father aside and Islamic art museum sits next to a promised a modernisation drive, made huge sports stadium, long boat docks waves in the Gulf back then when for arriving spectators trailing ele- Qataris voted on a constitution. gantly from its sides. But a planned vote for a two-thirds Like much about this small country elected advisory council has been with big ideas, the nocturnal image is repeatedly delayed – and even that part fact, part fantasy. It is the prod- will probably maintain real power in uct of an artist’s impression of what the hands of the al-Thanis. the area might look like by the time As protests have raged all year else- the 2022 football World Cup, which where in the Arab world, the Qatar Qatar won against the odds, comes to government has moved to ensure that town. a pampered population remained con- The museum and the skyline are tent, raising public sector salaries by real enough, but the stadium – like 60 per cent. It has also set 2013 as the most of the rest of the massive infra- date for the advisory council election. structural development planned over As the country gears up for those the next decade – is still just a twinkle polls, the potential strains now facing in a designer’s eye. it are familiar from other oil-rich Gulf It is the next stage of the extraordi- nations and made more acute by its narily ambitious journey planned by small size. Analysts point out that Qatar, the world’s largest exporter of Qatar is essentially run by a handful liquefied natural gas and a growing of people, which allows for decisive regional political force, to establish action but provides limited ability to itself as a leading Middle Eastern follow up on policy edicts. country and a big actor on the world Sheikh Hamad bin Jassim bin Jabr Using the World Cup as a fulcrum, One political analyst says: “The big- stage. Inside this issue al-Thani, the prime minister, says Qatar is planning a transformation of gest vulnerability for this country is As Hamad al-Ibrahim, a young Politics There Energy Demand in the US for Doha had no choice but to back the a capital city and hinterland that has the gap between its capabilities and Qatari who has just started a local appears neither Qatari natural gas has been hit by popular struggles. “It was very clear already begun to feel small and con- its ambitions. They could be self-con- think tank, puts it: “We are small but the scope nor the the arrival of shale gas for Qatar – when we saw bloodshed … gested, cars regularly clogging the tained like Brunei. But they want to we are everywhere.” popular appetite but demand from we could not sit back and not say main bay road and highways leading project themselves as a model in the Since winning the World Cup bid for radical change conveniently located something, especially when excessive to locations such as the new national region – and wider than that.” just over a year ago, Qatar has had a Page 3 Asian markets is force has been used,” he says. convention centre. In the coming Qatar’s increasing assertiveness spectacular ride, pushing forward holding up well Page 5 Qatar’s rise to the status of world’s years, a metro, a railway system and internationally also carries risks. with its development plans at home, wealthiest country by some measures, an airport are among the many There is the danger of retaliation, as if unaffected by the world eco- Economy The task of turning Healthcare Debate with an average annual income per projects due to be completed. through terrorist attacks or other nomic downturn. Qatar into a well­functioning over medical care head of more than $100,000 at purchas- Yet for all its economic and foreign means, from supporters of regimes it Analysts are looking for the next diversified economy has only just echoes a wider ing power parity, is confirmation of policy ambitions, Qatar’s enthusiasm opposes. moves of its sovereign wealth fund, begun Page 4 argument its status as a leading power in one of for political reform at home has been Qatar has already succeeded in estimated at $80bn, which earlier about energy sources of the moment: gas. wanting. Most of the politics that take imprinting itself on the international snapped up stakes in western banks Finance The question is whether how gas While it has been conservative in its place in the country seems to centre consciousness and it has the financial such as Credit Suisse and Barclays. the banks are in a position to be riches exploitation of its golden egg, the on rivalries within the ruling family. power to act independently and Transcending its tiny size and popu- more than mere recyclers of state are directed giant North Field, it has benefited Like elsewhere in the Gulf, the lines aggressively. The tasks it faces are to lation of only 1.7m (most of them for- investment Page 4 Page 5 from high prices for gas among the between the finances of the monarchy socialise that wealth without wasting eigners), Qatar has also sought emerging Asian economies to which it and that of the government are often money, and to bring political reform greater political influence by champi- is conveniently close. blurred. without changing society faster than oning this year’s Arab revolutions, It has just reached its production While few in Qatar are clamouring people want. For an emir apparently flexing its diplomatic, financial and celebrated – if not contributed to – the Libya’s rebels, providing the Nato-led targets for liquefied natural gas pro- for revolution, there are local grum- committed to social activism at home media muscle in support of protest collapse of autocracies in Tunisia, mission with a necessary Arab cover. duction and is now focusing on diver- bles about a modernisation that is and curbing abusive leadership movements. Egypt and Libya, Qatar’s independent- He has since been leading the charge sifying into areas such as petrochemi- going faster than a largely conserva- abroad, the greatest test could yet be While the widely popular Al Jazeera minded emir, Sheikh Hamad bin Khal- in the Arab world to raise the pres- cals and liquid derivatives of natural tive society would like and complaints not in how he wields power, but in channel, owned by the government, ifa al-Thani helped finance and train sure on the Syrian regime. gas. about the influx of expatriates that how he gives some of it up.

Al Jazeera Heavy responsibilities of a powerful voice

Pragmatic pursuit At Al Jazeera’s Doha airing al­Qaeda videos after In the midst of the unrest, headquarters, the security is the September 11 attacks, Waddah Khanfar, after eight a giveaway. Tighter than at providing in­depth coverage years, was replaced by a US embassy, passport in the early days of the Sheikh Ahmed bin Jassim of regional interests details are required in Afghan war and, most al­Thani, a little­known advance to enter the recently, covering the revolts member of Qatar’s ruling compound, after which across the Middle East. family, in a move that many that are still largely unaf- where Qatar provided fund- printed permission is “It’s a superb way to win criticised as an Foreign policy fected by the Arab spring ing and military advisers as granted, like a private visa. Arab friends and creates a uncomfortable step towards dread the rise of Islamists well as diplomatic support As the Arabic­language pattern of modernity, as government control. Roula Khalaf finds as the new political power, to the rebels, paid off. But news channel has grown in long as it doesn’t criticise Explanations regarding his that the country is Qatar is in good standing had Muammer Gaddafi sur- prominence over the past 15 too close to home,” says replacement abound, with with many of these move- vived – and for many weeks years, it has earned many one Doha­based media even Mr Khanfar himself treading a fine line ments. in the summer a dangerous followers – and enemies. It expert. tempting others to guess As its prime minister, stalemate had set in – he has been banned from In the past year, as why he resigned on Twitter, Sheikh Hamad bin Jassim might well have tried to countries, a number of its revolutions have gripped the the message­broadcasting The sudden outpouring of bin Jabr al-Thani, told the exact revenge on Doha. international offices have Arab world, the channel has network. Commentators rage against Arab autocra- FT, Islamists should be In both Libya and Egypt, been bombed and its come under increasing have cited the need to place cies over the past year sent “tried” to see if they can moreover, Qatar’s promi- reporters detained and scrutiny over its coverage, a Qatari at the top, the shudders through the corri- bring something to the nent role has exposed it to killed. which has varied in depth problems created by dors of power in the con- table. accusations that it is Operating in the Middle from country to country. suggestions in WikiLeaks servative Gulf. “Qatar’s foreign policy is favouring one group (the East, a region known for its Critics have charged that cables that Mr Khanfar was But while some of the about pragmatism,” says Islamists) over others – government control over the the channel has not paid too close to the US absolute monarchies were Abdallah al-Athbah, a local charges that the govern- media, Al Jazeera has enough attention to government, and coverage confronted with popular columnist. “Do you support ment says are unfounded. managed to break the age­ protesters in places where of the revolutions. Others protests and others sought good companies or bad com- “The higher your profile old model of censorship, the Qatari government is just say that, after eight to placate opposition with panies? The Qataris read rises, the more room there often using local journalists supporting that country’s years, his time had come. financial handouts, Qatar what is going on and they is for a fall,” quips an Arab to get closer to the story. government, namely Shia­led As Al Jazeera’s Arabic stood out with a typically know Islamists are going to official speaking about How it manages its protests in Bahrain and language channel has come individualistic attitude. win, so why not support Qatar. relationship with the Qatif, Saudi Arabia. under closer scrutiny, Al It aligned itself with the them?” The country’s relations government at a time of However, in Libya, where Jazeera English, now in revolutionaries, using its Policy analysts say that, with Russia have also been increased scrutiny will the government openly 250m households worldwide, financial and media power ironically, it is the tight strained by the Arab spring. determine whether it will be supported the rebels, and has earned its stripes in to promote their cause, in concentration of power in In early December, Moscow perceived as an independent now in Syria, critics say the recent months with its the region as much as Doha that allows Qatar to said that it was downgrad- media operator on the reporting on the government abroad. This attitude might project itself, making quick, ing diplomatic ties with Syria protest: Qatar condemned Damascus early on Reuters global stage. Mostefa crackdown in Bahrain, an have come as a surprise to sometimes ad hoc, decisions Doha after a bizarre inci- There has always been an Souag is important ally of Saudi some of Doha’s neighbours and reversing them rapidly dent in which it says its ally reaching agreement heavyweight that the awareness that, if Qatar wary of Arabia, the largest country but it was in line with the if the need arises. Its leader- ambassador was attacked at within the group on a set of Qatari leadership has long really wanted the channel to government in the Gulf. country’s pragmatic pursuit ship also uses a host of peo- the airport. financial and economic sought independence from. succeed, it would have to interference Its documentary on these of policies that can safe- ple it has welcomed into the It is perhaps in Syria that sanctions on Syria. Indeed, much of Qatar’s “keep out of any kind of at Al Jazeera protests, Shouting in the guard future interests, even Doha is taking its biggest Brookings’ Mr Shaikh maverick approach to interference in this Dark, was one of the most if they appear at odds with risk yet, analysts say. Not says Qatar is running the diplomacy has in the past institution”, says Mostefa detailed and pointed other long-held positions. ‘The Qataris’ long ago, Qatar considered risk that its Syria policy been blamed on an obses- Souag, managing director. channel is sticking too reflections on the situation. A state that has juggled core interest is Syria’s regime a friend, pits it against Iran, one of sive rivalry with Saudi Ara- The channel started as a closely to Qatar’s own The video, available online, relations with Israel while investing in the country in Damascus’s few remaining bia. project backed by Sheikh expansive foreign policy. has drawn tens of supporting some of that stability but they support of its perceived eco- allies. Doha’s longstanding The neighbours have radi- Hamad bin Khalifa al­Thani, As one analyst says: “It’s thousands of viewers. country’s enemies and that do it through nomic reforms. It also position has been not to cally different views of the the emir. The founding team not necessarily daily With a population of only has hosted a large US mili- appears supportive of the alienate Tehran. Arab spring – with Doha was mostly taken from a directives. But there have 1.7m, Qatar has certainly tary base while keeping active diplomacy’ same groups that Damascus The prime minister has celebrating it and Saudi discontinued BBC Arabic been too many instances – raised its head above the lines open to Iran, was this backs, including Lebanon’s spoken out against any mil- Arabia trying to protect the service. It began to whether it’s Bahrain or parapet. As its voice gets year offered a rare opportu- Hizbollah and the Palestin- itary attacks on Iran’s status quo. But it was by broadcast from a country Libya or Syria – where louder, its relationship with nity for a higher profile on country as mediators, ian Islamist Hamas. nuclear facilities, instead co-operating that other that few westerners could things have been switched the channel is bound to get the world stage. Standing whether they are intellectu- After the outbreak of pop- urging a return to the nego- states in the region were place on a map. Over the on and off. It would be silly ever more complicated. alongside France and Brit- als, Islamist dissidents, cler- ular protests in southern tiating table with western convinced of the need to past decade, Al Jazeera has to deny this.” Neither the country nor Al ain, it went further than ics or western think-tanks. Syria in March, Qatar tried governments. turn the heat up on Damas- emerged as one of the most Al Jazeera rejects any Jazeera’s ambitions are most Arab countries in “If they have an inkling, a to mediate, advising Bashar Qatari and other Arab cus. powerful voices in the suggestion of government likely to be tamed. backing international inter- whim, they do it. The al-Assad to embark on a officials expect the crisis in Meanwhile, despite Qatari Arabic­speaking world. intervention in its reporting. In a region where making vention in Libya. advantage is that they are serious process of political Syria to play out over a misgivings about the way As social media and “It just so happens that friends with the government “Qatar has guile and quick and decisive; the dis- reform. long period, raising the risk the Shia uprising that citizen journalism have burst Qatar, during the Arab can be an easy ploy for determination and it cham- advantage is that it could Soon, however, as it of a broader regional con- erupted in Bahrain earlier on to the scene, Al Jazeera spring, has been supporting journalists, the channel is in pions causes,” says Salman go wrong,” says David Rob- became apparent that the frontation or perhaps retali- this year was handled, is not alone in struggling to the people, rather than the some ways proud of the Shaikh, director of the erts, deputy director at the Syrian president was ation from a ruthless Doha backed Saudi Arabia’s pick the truth from the dictators,” says Mr Souag. enemies it has created. Brookings Doha Center, a Royal United Services Insti- unwilling or incapable of Damascus regime. strong intervention through barrage of footage it “Al Jazeera has been “There are threats to Al think-tank. “[The Qataris] tute, a military think-tank, change, Doha switched poli- Syrian officials have been the Gulf Cooperation Coun- receives every day, often supporting the people not Jazeera, there are so many want leadership and they in Doha. cies, becoming one of the attacking Doha’s role and cil in support of the ruling from countries where it the dictators since 1996 people that don’t like Al want to project themselves. But while Qatar’s thrust first Arab countries to turn have warned that Arab eco- al-Khalifa family. cannot get cameras on the when it was created; it’s not Jazeera, so many powerful Their core interest is stabil- into the limelight at a time against Damascus. nomic sanctions are consid- When asked about Bah- ground. new for Al Jazeera.” governments who don’t like ity but they do it through of historic change might fit As the current holder of ered a declaration of war. rain, Sheikh Hamad points Over the years, the As a new director­general Al Jazeera,” says Mr Souag, active diplomacy, not by sit- with the pan-Arabian ambi- the rotating presidency of Qatar’s Syrian policy has out that his country had channel has made a name takes the helm, he will have explaining the reason behind ting in the middle.” tions of Sheikh Hamad bin the Arab League, it also also highlighted another tried to mediate between for itself by exposing to tackle head on these the security. Involvement in this year’s Khalifa al-Thani, the emir, played an instrumental role important change of priori- the opposition and the developments in the criticisms that threaten the uprisings provided some- it also reflects a willingness in building up support for ties in Doha – a much regime, and had only sent Palestinian­Israeli conflict, perception of the channel. Camilla Hall thing of an insurance pol- to take gambles. Arab pressure, taking small closer co-ordination with four observers as part of the icy, too. While other states The Libya intervention, steps at a time but eventu- Saudi Arabia, the regional GCC force. 2 ★ FINANCIAL TIMES SATURDAY DECEMBER 17 2011 FINANCIAL TIMES SATURDAY DECEMBER 17 2011 ★ 3 Qatar Eager to counter Archaic sponsorship system in spotlight Labour conditions football Camilla Hall looks at life on a doubters construction site

World Cup abour conditions in Qatar are set to Michael Peel move increasingly reports on Qatar’s into the spotlight as Lthe vast amount of con- charm offensive struction required for the World Cup, pushes the gas- rich Gulf state firmly on to In the Doha pavilion where the radar of international Qatar produced the football human rights groups. star Zinedine Zidane from a The number of labourers, cupboard as part of its suc- mostly from countries such cessful 2022 World Cup bid, as India, Pakistan, Nepal a wall montage tells the and Sri Lanka, and whose story of how the beautiful population dwarfs Qatari game took root locally. It nationals, are already being describes how British oil sought as construction com- workers posted to the Gulf panies prepare for projects, started playing soccer in many of which have been the 1940s, much to the stalled in other parts of the amusement – and bemuse- Gulf. ment – of many Qataris. “The World Cup, with all According to Ibrahim al- the attention it has already Muhannadi, an industry brought to Qatar, will be a employee of the time key opportunity to call quoted in the display: “We attention to the conditions had no idea of sports like faced by migrant workers World Cup victory: securing the 2022 tournament has unleashed a frenzy of construction and provided a catalyst to the debate over the treatment of foreign workers Getty that … But we used to in the country,” says Priya- enjoy watching the strange nka Motaparthy, a Middle tinue. Not all are against rights will suffer. month, plus a 200 riyal food many are unable to with- Another, who says his pass- spectacle.” East researcher for Human the system, however; some Already, the World Cup allowance. That is in stark stand. port was stolen by the Contributors The comment seems a gift Rights Watch. employers argue that, with- organising team is facing contrast to Qatar’s own Some of the migrant recruitment agency he Michael Peel to the sceptics who have The World Cup, still a out it, it would be very diffi- close scrutiny from interna- national population, and workers die as young men. moved with, is finally leav- Middle East Correspondent attacked Fifa, world foot- decade away, merely pro- cult to maintain staff. tional rights’ groups. the salaries of white collar The death rate among ing the country after legal ball’s embattled governing vides a catalyst to the Dubai the glitzy emirate Last month, the Interna- workers propping up the Nepalis in Qatar for exam- battles and 14 months with Roula Khalaf body, for awarding the debate over labour issues in only an hour’s plane ride tional Trade Union Confed- country’s financial services ple, is about 200 out of no job, forcing him to live Middle East Editor quadrennial tournament to Qatar and more broadly from Qatar, received its fair eration, which represents sector. 300,000 each year, even off the goodwill of others. a country they say lacks across the Gulf states; share of bad publicity as 175m workers, met Jerome The workers often spend though the migrant work- Aside from their accom- Camilla Hall the footballing culture, the many of which still adhere towers spurted up across Valcke, the Fifa general sec- north of 4,000 riyals to ers are mainly aged modation, the workers’ Gulf Correspondent climate and the ambience to to an archaic sponsorship the city, all built by a retary, to demand that, between 20 and 30, accord- complaints include delayed hold a soccer jamboree. system in which workers migrant labour force, many unless Qatar upholds work- ing to government statis- payments, a refusal to put Robin Wigglesworth The World Cup Capital Markets The remark’s prominence are forbidden from leaving of whom arrived during the ers’ rights, the movement tics. Cardiac arrest, suicide stamps on visas that would Correspondent also shows an awareness a company without its per- construction boom indebted will campaign against the organising team is and falling from high build- allow them to get a health among the Qatar tourna- mission. and effectively enslaved to World Cup taking place ings account for 80 per cent card and companies refus- Stephanie Gray ment organisers that this is Sheikh Hamad bin Jassim their employers. Abu Dhabi there. already under of those deaths, according ing to let workers to leave. . Commissioning Editor an allegation they must bin Jabr al-Thani, the prime then took the spotlight as Mr Valcke said Fifa would scrutiny by human to the statistics. For all the progress diplo- tackle head-on – and do, minister said more than a artists boycotted the work jointly over the next Most of the problems mats say has been made, Steven Bird arguing that what they dub year ago that the Council of planned Guggenheim few months to address rights groups hark back to the sponsor- much still needs to be done Designer the “compact World Cup” Ministers was “seriously Museum over labour condi- labour issues with the ship system that prohibits in a society where govern- Andy Mears has the potential to ener- studying” abolishing the tions for construction work- Qatari authorities. The workers from moving com- ment and companies trade Picture Editor gise a whole new constitu- sponsorship system. “We ers. Now the attention is World Cup organisers say recruitment agents to ena- panies without the prior on the desperation of men ency of fans as well as offer- are studying the issue very likely to turn to Qatar. the tournament will provide ble their trip, usually a sum approval of their sponsor, who leave their countries to For advertising details, ing traditional supporters carefully to preserve the Large construction “a vehicle for the accelera- that is borrowed from local even if they complain that try to escape poverty. contact: unparalleled convenience rights of citizens and for- projects, including a metro, tion of reform” in a range of villagers or loan sharks at they are not paid or are “It’s a real opportunity Mark Carwardine on: and spectacle. eign workers,” he said, railway and tens of thou- areas, including labour extremely high rates of treated badly. for Qatar to improve its +44 (0) 207 873 4880; Hassan al Thawadi, secre- according to media reports. sands of hotel rooms, will practices, adding that Qatar interest. One 26-year-old restau- record,” says Rothna email: tary-general of Qatar 2022 Diplomats and human all be built by the guest has been committed to When payments are rant worker says his com- Begum, Middle East cam- [email protected] supreme committee, says: rights activists say the workers. As companies sub- change for some time. delayed by companies in pany would not allow him paigner at Amnesty Inter- or your usual “Obviously when you first sponsorship system remains contract to other smaller A labourer in Qatar Qatar, a knock-on effect to leave after three years of national. “It’s worrying the representative win the World Cup there is in place, although discus- groups for various services, receives a basic salary of then takes place back at employment, refusing to way things work right a little bit of scepticism. sions over abolishing it con- there is a risk that workers’ about 600 riyals ($165) a home, creating stresses that return his passport. now.” But I think if anyone

Qatar’s entire population of nationals would fall Rulers with time and short of filling the 12 stadiums money on their side focuses closely on the bid- ding process and on the demonstrations that have transparency about how activities we have done and Politics defined the year in the Mid- much goes to the ruling the effort that we have put dle East, nor are there any family itself. in, then [Qatar] is a logical Elections will test obvious signs of organised One journalist complains choice – or it’s not a sur- ability to keep opposition to the emir and about self-censorship in a prising choice.” his absolute monarchy. Qatari media that is – as Mr Thawadi, an engaging people happy, says Abdullah al-Athbah, a one observer puts it – a con- 32-year-old lawyer who is Michael Peel Qatari columnist, says: stant “good news show”, juggling his World Cup post “There are not many people part of a broader lack of with the job of general who want a real change of civil society institutions. counsel at Qatar’s main As Arabs around the Middle scene. There are intellectu- As for the reforms, scep- sovereign wealth fund, is East have hit the streets to als who do. But ordinary tics point out that the emir open about the amount of bring down leaders and people do not care very is merely delivering on a work that needs to be done. even take up arms against much about that.” longstanding promise. He laughs about a photo them, Qataris have been Mr Athbah lists what he There is also no clarity yet taken when his country’s vigorous in their own dis- has observed people criticis- on how powerful this body victory was announced, in tinctive kind of activism. ing online lately: the per- will be or who will be able which he looked stunned The country has seen a formance of Qatar Airways, to vote for it: at worst it and sober while colleagues series of online social media the publicised availability could be an advisory coun- erupted in joy around him. campaigns whose targets of pork – a forbidden food cil with no legislative teeth, Mr Thawadi reckons the have ranged from the in Islam – in shops in Doha, and be voted on by a hand- two biggest fears his coun- alleged deficiencies of the and the inclusion of a film picked electorate. try must allay are that the national telephone com- about a gay man in the One interesting imponder- tournament will not be pany, to a Doha bookstore’s Doha film festival. Another able about Qatar’s political fatally undermined by decision to bow to western- campaign that has grabbed future is the impact of edu- either the scorching sum- ers’ calls for it to pull Adolf attention is no2nudity, an cation reforms that are sup- mer temperatures or by the Hitler’s Mein Kampf from its Emirati-originated protest posed to equip their recipi- lack of variety inherent in recommended reading list. against revealing outfits – a ents with greater powers of all the matches taking place Analysts see the focus on source of tension in Qatar, critical thinking. That car- at stadiums in or near the consumer rights and cul- with its large invited popu- ries risks as well as benefits capital city. He says Qatar tural sovereignty as a lation of non-Muslim expa- for the government, as one 2022 hopes to take advan- Qatari sublimation of the triates. business person points out: tage of cooling technologies energy of the Arab awaken- “Someone goes out and edu- already in use at the Al ing, in a country where the Emir Hamad cates themselves, they Sadd sports stadium, while ruling monarchy’s author- bin Khalifa become dangerous.” the flipside of the country’s ity is total and where there al­Thani: Another subtlety is the tiny size is much shorter appears neither the scope pushing nature of contentment in a than usual travel times. nor wide popular appetite for political rich society such as Qatar: He says he is equally con- for radical change. reform by pouring money into pub- fident that Qatar will be As Emir Hamad bin Khal- lic sector salaries and pen- able to deliver full houses ifa al-Thani pushes forward sions, the government is for matches, even though proposals for political Some observers argue setting itself a high bar of its entire population of reform, including advisory Qatar has two striking fea- popular satisfaction to con- nationals would fall well council elections in 2013, tures that make it almost tinue reaching, vast oil and short of filling the 12 the question is whether he the antithesis of Arab coun- gas revenues or not. planned stadiums. The can appeal during these res- tries where there have been If a Qatari’s annual earn- World Cup has been held tive times to a wide range uprisings. On the one hand, ings shoot up from $10,000 before in countries where of constituencies – from the its population who – accord- to $100,000 in 10 years, then football was not as deeply apparent conservative ing to opinion polls – care drop to $80,000 over the fol- embedded in popular cul- majority to an educated less about democracy and lowing two as government ture as it is in Europe and minority who query Qatar’s more about stability than a spending is tightened, that Latin America, but in those financial management and year ago; on the other, it person may experience a cases – such as the US and its lack of democratic insti- has a leader who seems to visceral feeling of being 20 Japan/Korea – the nations tutions. be dragging his public per cent poorer, rather than were big enough to still pro- One political commenta- towards political reform eight times richer, than vide a large pool of local tor says: “This society is rather than the other way before. interest. not going through a politi- around. Unlike many of their Mr Thawadi counters that cal revolution, but it is One government adviser Arab world counterparts, Qatar has both a significant going through a social revo- says: “In some countries, Qatar’s rulers appear to population of expatriates lution. They care about sta- people fight for [change]. have public support, time and the potential to attract bility, especially when eve- Here you get it for free. The and money on their side as supporters from across the rything about them is in emir has given democracy. they push their own brand region, as well as families – flames, they care about ris- It has come from the top.” of reform amid the Arab not a normal World Cup ing prosperity and they do While undoubtedly con- world turmoil round them. constituency – lured by his care about keeping a cer- taining an element of truth, The run-up to the elections country’s safe atmosphere. tain identity.” this sentiment is somewhat will be a test of whether He is also eager to move It has become an analyti- misleading in its simplicity. they can offer enough to the debate on from allega- cal truism to depict Qatar Even in Qatar, it is possible keep most people happy in tions publicised earlier this as the last domino to fall in to hear murmurings about a country that is both less year that Qatar bribed Fifa the Arab awakening, given how the monarchy uses the passive and more intellectu- officials, claims he says its mammoth wealth and country’s money: however ally diverse that its tiny were unfounded. “We won tiny population. Certainly it much is distributed to the size and monolithic politics it fairly and squarely.” has seen none of the public population, there is little might suggest. 4 ★ FINANCIAL TIMES SATURDAY DECEMBER 17 2011 Qatar

Islamic finance Banks will be divided

As of next year, Qatar’s conventional banks are no longer allowed to do Islamic banking. That much is clear. However, the process of separating the Islamic banking business from the conventional, as stipulated in the central bank’s regulations in February, is far from simple and is taking longer than hoped. As the country moves to split its banking system, a shift it thinks will facilitate risk management for lenders, concerns are Sheikh Abdullah al­Thani emerging as to how much progress the biggest banks the country’s largest lender, will have made by the contributed 16 per cent of intended deadline of the net profit last year, while end of the year. sharia­compliant assets Sheikh Abdullah bin Saud represented 14 per cent of al­Thani, Qatar’s central the total. bank governor, says: “Banks The bank accounted have been making the for around a third of the necessary preparations in Islamic banking industry this regard and it is in Qatar. expected that their retail Commercial Bank of portfolios will be adjusted Qatar, another local lender by this time frame, although with a sizeable Islamic the rationalisation of the finance portfolio, is also yet corporate portfolios might to sell its assets. Building site: conscious of the throttling back by other Gulf states after they spent too much too widely and too soon, Qatar is taking its time Getty take some more time.” “There were always When the announcement going to be issues over was made, bankers had valuations,” says one Doha­ expected Qatar’s lenders to based banker. sell their sharia­compliant “There’s been a lot of branches and assets to conversations with a lot of Emphasis shifts to investment pure Islamic banks, a boon people.” for the country’s four fully It was not just local fledged sharia­compliant banks that were affected, economy of a country ple and government offi- tions. The atmosphere is ment in regional rail net- attacked the steep pay lenders. the decision also had an Economy where excitement about the cials say Qatar is moving very bullish, it’s a case of works. A national develop- increase, which he says However, since then, only impact on international scale of big public works is from an era of very high oil- ever onwards and ment strategy published in makes it harder for finan- one deal has been done. banks. Executives are tempered by uncertainty and gas-driven growth to a upwards.” March says the case for a cial institutions to compete So far, only the HSBC Amanah had only salivating over about what exactly they phase in which – while still But one looming difficulty new port is still “compel- with government counter- International Bank of Qatar opened its first branch in will look like and whether notching up gross domestic is that Qatar may still make ling”, but calls for the parts and more difficult for has completed the disposal Qatar a few months before projects, says they are all wise. product increases for the some flawed decisions design and the phasing in private companies to hire of its relatively small Islamic the decision was Michael Peel Conscious of the throt- western world to envy – because of its lack of legal of the project to be more Qataris – which the banking operation, Al Yusr, announced. The bank said tling back by other rich will shift its emphasis to frameworks and institu- reviewed. government desperately to Barwa Bank. in May it would absorb staff Gulf governments after investing some of the pro- tions seen in more industr- “Qatar is enormously wants foreign businesses to The lenders with the into its conventional n the road into they spent too much too ceeds. ialised countries. wealthy but it doesn’t really do. most at stake, such as business. Doha, a huge bill- widely and too soon, Qatar GDP growth is forecast to have the wherewithal in One lawyer described Qatar National Bank and The four Islamic banks board proclaims is taking its time before slow from almost 19 per government yet to manage interviewing a Qatari for a Commercial Bank of Qatar, that remain “should have “Lusail: realising committing fully to largesse cent this year to 6 per cent Excitement is the process in ways that are job as a junior analyst only have yet to sell their Islamic the capacity to meet Othe vision”, in a celebration that could transform the next, says the International directly linked to its own to find out that the person assets. indigenous demand”, says tempered by of a planned new water- country – or fritter way Monetary Fund – hardly ambitions,” says one econo- was in the running for a “Given the complexity of one banker. “The need is to front city whose forecast some of its energy bonanza. calamitous given that the uncertainty about mist. “Without the soft- director-level job in a state disassembling for sale have well­capitalised banks population of 200,000 is well Trevor Bailey, chief busi- country has suffered a whether projects ware, the hardware is not company, while the head of highly integrated operations, able to support the over half Qatar’s entire citi- ness development officer at severe real estate slump. going to work properly – another organisation said the banks may have found business.” zenry. Aamal, a local conglomer- Executives are salivating are all wise and without the software he was forced to pay a it isn’t worth their while, There is still some Further details of this ate, says: “We have seen over government-funded you might even invest in Qatari administrative especially given the very confusion over whether development are harder to 2011 more as a year of plan- projects that include a new the wrong type of hard- assistant, who was aged limited time horizon,” says bankers were prepared for come by: the “facts and fig- ning than of implementa- airport, a mass transit sys- One example of a conten- ware.” just over 30, 40,000 riyals a Raj Madha, an analyst at the move, something that ures” section of Lusail tion. We believe that tem and various schemes to tious project is the develop- Another potential inhibi- month – twice what a non- Rasmala, an investment could explain why more City’s website is blank save projects will really kick promote entrepreneurship ment of the new port that is tor of the kind of economic national in a similar job bank in Dubai. sales have not yet taken for the message “under con- start in the second or third and small and medium scheduled to open in 2015, development the govern- would get. Mr Madha says that place. struction” and some line quarters of next year – and sized companies. but faces the impact of the ment wants to see is the 60 The lawyer says: “The banks have tried to move Though some maintain drawings of cranes and dig- that’s what we are gearing One business person says: western economic crisis, per cent pay rise awarded thing is, there is no relativ- as many of their client that they did not see the gers. The jokey aside up for.” “People are planning on the competition from regional this year to the country’s ity now. They know that if relationships as possible to decision coming, the central reveals a truth about the Economists, business peo- most extraordinary expecta- ports and a planned invest- vast cadre of public sector you don’t hire them, they their conventional bank has reiterated that workers, further damping can go and get a [public sec- operations. talks were in place long the push to be entrepre- tor] job anywhere they Banks are loath to sell before the announcement. neurial and hardworking want.” their Islamic divisions as Because of that, the among many Qataris who Qatar’s income is very they have been quite central bank is urging banks are already rewarded gener- high – but so are its ambi- profitable over the years. to comply as quickly as ously. tions and the expectations The timing is also hard to possible with the directive, Official statistics suggest of a population that is used swallow, considering the to ensure the process public sector workers start to viewing government as a Islamic banking industry in progresses. winding down into retire- financial honeypot and may the Middle East and north Sheikh Abdullah warns ment between the ages of 40 need persuading to look at Africa is expected to more that he will not turn a blind and 44, after which they it another way. Like the than double to $990bn by eye: “We will do a will often devote them- work on Lusail and the var- 2015, according to Ernst & stocktaking exercise after selves to business interests ious other mega-projects Young, the professional the stipulated deadline and they are allowed to build up foreseen over the next dec- services firm. take the process forward.” while in state employment. ade, the task of turning The Islamic unit of Qatar Simon Cooper, chief exec- Qatar into a well-function- National Bank, for example, Camilla Hall utive of HSBC Middle East ing diversified economy has and north Africa, has only just begun.

Huge infrastructure projects could develop banking sector

investment. The banks will Bank lending to construc- all this will be financed, Finance have to strengthen their tion companies expanded and whether it will favour lending capacity, without by 8.4 per cent in the first local banks with bigger Camilla Hall says government backing and at six months of the year, deals to help them grow. private lenders a moment when capital compared with a contrac- With estimated annual markets are extremely vola- tion of 25 per cent in the hydrocarbon revenues of could benefit tile. same period a year ago, $27bn and economic growth Sheikh Abdullah says: according to data from of 21 per cent, the govern- “As credit growth picks up Qatar National Bank. ment could probably fund Banks in Qatar have weath- and the competition for Even though many of the the majority of projects ered the financial crisis bet- deposits intensifies, banks projects were announced without the need for much ter than many others will need to increase the before the granting of the involvement from the pri- around the world – not proportion of market fund- hosting rights, there is a vate sector. because they are particu- ing in their liability mix, a clear deadline now, mean- “Given the projected larly well run, but because challenge that they will ing lenders can count on budget surpluses, there is the government has need to confront squarely government projects getting always the argument that pumped money into the sec- amid the current problems pushed forward. Qatar doesn’t need private tor time and again. affecting the eurozone.” “Everything here is sub- investors to complete its Over the past three years, Local lenders have contracted,” says one Doha- vision,” says Mr Brown. the government has bought expressed their intentions based banker. “As long as However, the government the investment portfolios of to tap the bond market. they’re using local compa- wants the private sector to local banks, their property However, the government play a role, he adds. assets and minority stakes last month completed a Expectations have been in lenders. $5bn international debt ‘As long as high for the past year, On top of these measures, sale, a move that analysts they’re using local though, as yet, little new totalling 32bn riyals fear may hinder other issu- business has been created ($8.8bn), it has also sold bil- ers’ chances of immediate companies, there’s as a result of winning the lions of dollars in debt with sales. definitely a benefit bid, bankers say. generous yields to further Qatari lenders, most of “Planning doesn’t mean bolster local banks. which are still too small for for local banks’ funding,” one Doha-based Sheikh Abdullah bin Saud the government’s multibil- banker remarks. al-Thani, the governor of lion-dollar deals, hope to Despite the slow pace, Qatar’s central bank, says: benefit from increased busi- nies for some of the work, international banks are also “The measures were essen- ness for local companies then there’s definitely a trying to position them- tially proactive in nature and subcontractors, who benefit for local banks.” selves to get their piece of and were structured to ena- will rely on them for bilat- Whether it is the subcon- the pie. ble the authorities to eral financing. tractor providing vehicles Standard Chartered is tar- address the issue in a Martin Brown, a partner to shift equipment, or the geting what it expects will sequenced manner.” at SNR Denton, a law firm, cable-laying company, it is be an increased involve- As everywhere else, gov- in Doha, says: “The big at the broad end of the ment of Asian companies in ernment intervention is a Qatari banks have been bol- pyramid that the local construction projects, double-edged sword, staving stering – and continue to banks are likely to cash in. whether through financing off crisis at the price of bolster – their balance An increase in personnel to or on the retail side, says holding back the develop- sheets, initially with injec- manage and construct the Charles Carlson, Qatar ment of independent finan- tions from the Qatar Invest- projects may also form a chief executive. cial institutions and a ment Authority – during new deposit base, helping to As banks of all shapes strong private sector. the worst days of the crisis boost their retail opera- and sizes are set to reap the As Qatar prepares to – but, more recently, proac- tions. rewards of Qatar’s infra- launch a huge infrastruc- tively in capital markets.” The country’s infrastruc- structure spending, most of ture programme – not least Although banks and con- ture plans span a railway those benefits can be traced for the 2022 football world tractors say there has been system, a metro, tens of to one fundamental. cup – the question is little movement on the thousands of hotel rooms, As one local banker puts whether the banks are in a infrastructure plans, lend- and even a new city. How- it: “Ultimately, it all goes position to be more than ing to the construction sec- ever, the government has back to the government as mere recyclers of state tor is already picking up. yet to lay out details of how paymaster.” FINANCIAL TIMES SATURDAY DECEMBER 17 2011 ★ 5 Qatar

Shell GTL Masterstroke or a wrong turn A measure of the vastness of shale gas have been discovered Gas status Shell’s new Pearl GTL chemicals in the US, driving down gas plant in the Qatari desert is that prices there. So Shell would it contains enough steel to build appear to be very handily placed 40 Eiffel Towers. That figure – now, having seen the oil price one of series of mega­stats rise by at least 50 per cent gleefully thrown out by Andy since it gave the project the go­ puts country Brown, managing director of ahead five years ago. Pearl GTL – is also a sign of But the situation has been the size of the gamble Shell and complicated by high gas its government partner are demand and prices in Asia, a taking on the potential of the convenient location for Qatari at centre of myriad chemical products exports. If raw gas is selling so derived from the country’s well in Asia, it risks making GTL plentiful natural gas. less financially compelling, Conceived in 2006 at a time especially given the costly initial when oil prices were about two­ investment required – though global forces thirds of today’s $100 or so, the Mr Brown says the Pearl project next few years will determine came within the Shell board’s whether Pearl was a far­sighted budget. pace of development they have, and lucrative masterstroke or a Despite the uncertainties, Mr Energy what market share they want to wrong turn in an era when Brown insists Pearl GTL is a keep, and how they can manage demand for raw gas in leading strong venture, adding that the Michael Peel looks at that,” says Stéphane Michel, emerging economies is so brisk company is already seeing the strategy designed head of upstream operations in that it is pointless and expensive “good market demand and good Qatar for Total, the French to fiddle around with it. uptake” for Pearl products. The to compete with rivals energy company. As a rival oilman puts it: project – together with an Qatar’s short-term energy “Shell took a big bet and went associated liquefied natural gas boom is shown by the dramatic in with Qatar Petroleum. The venture known as Qatargas 4 – s the brass section of rise in natural gas revenues – question is: knowing what they is forecast to generate $4bn of the Qatar Philharmonic oil is increasingly the lesser know now, would they still have revenues a year at an oil price Orchestra struck up part of the mix – from $33.2bn made the same decision?” of just $70 a barrel. Pearl GTL Fanfare for the Com- last year to $51bn this. The project – a so­called gas­ is expected to produce 3bn Amon Man, it made an incongru- While demand for Qatari natu- to­liquids production facility that barrels of products over its ous accompaniment to an occa- ral gas in the US has been hit turns gas into substances with lifetime at an operating cost of sion that was anything but ordi- by the arrival of shale gas – uses ranging from chemical only $6 a barrel. nary. which is chemically extracted plant feedstocks to “clean” The fate of Pearl – which The players’ audience was from rocks – markets are hold- diesel fuels – has consumed builds on technology first thousands of oilmen and women ing up well in Asian countries $18bn and is now, says Mr developed in the 1920s but only gathered in Doha for the trien- conveniently located for Doha’s Brown, “the most valuable asset being polished now – will be an nial World Petroleum Congress exports. Qatar gas is also seen Shell has anywhere in the important indicator of whether – the first time in the confer- as having benefited from greater world”. Its concrete was large­scale GTL has a future in ence’s 78-year history it had international suspicion of sufficient for a pair of replicas of Qatar and elsewhere. been held in the Middle East, nuclear power after this year’s Dubai’s Burj Khalifa, the world’s For all his bullishness, Mr and a recognition of Qatar’s meltdown at the Fukushima Gas works: revenues from liquefied natural gas rose from $33.2bn last year to $51bn in 2011 Newscast tallest building, and it has Brown’s hints at the risk his growing importance as a global reactor in Japan. broken a series of construction company and Qatar have taken energy operator. Now, Qatar’s energy industry want to take “utmost care” with and sustainable income stream the decade – though industry records, including housing the in sinking so much money into As Issa al Ghanim, chair of stands at something of a cross- the country’s reserves and plan for years to come. insiders say the blow will be sof- largest oxygen plant ever built. Pearl at a time when the the congress’ organising com- roads in its development, hav- to take technical steps to max- In recognition of the changing tened by the long-term supply The logic behind Pearl GTL is economics of gas production are mittee, put it in a speech just ing reached its production tar- imise the lifetime of existing international landscape, Qatar contracts Qatar holds in Asia that, since natural gas has in flux. He says: “Qatar is now after the musical interlude: get of 77m tonnes of liquefied fields. He also emphasises that has been looking to deepen rela- and the time lag until the rival historically sold at a the LNG and GTL capital of “This industry has not only natural gas annually. It has also oil revenues are viewed as part tions with both rival gas export- output arrives. significant discount to the world. It’s delivering transformed the country in a come to the tail-end of a long of a wider plan for diversifying ing states and consumer coun- A more pressing uncertainty crude in many parts of high quality, high short space of time. It’s chang- and large investment pro- the economy. tries. Mr Sada said last month is the security situation in the the world, the money volume products to the ing the world energy scene.” gramme, notably an $18bn Shell that Qatar was interested in wider Middle East region, is in turning gas into global energy Mr Ghanim could be forgiven project to turn natural gas into buying a stake in Novatek, Rus- including not just the multiple chemicals that sell markets. And it has a touch of bombast over the other chemicals used to make Doha needs to work sia’s biggest independent gas uprisings but the growing ten- for something done so in a extraordinary rise of Qatar as a products ranging from deter- out ‘what pace of producer, while Doha has been sions between the west and close to the oil spectacular way, gas power – although he might gents to aviation fuel. looking at increasing its sup- Iran, its neighbour across the price. The case pushing the have added the coda that global Most importantly, Doha must development and what plies to India and has provision- Strait of Hormuz. While Qatar for spending on boundaries of trends are shaping the country, decide what to do with its still- market share they ally agreed to be part of a petro- itself is seen as an unlikely can- these projects has technology and size as well as the other way around. vast energy reserves concen- chemical and refining project in didate for revolution, protests in appeared more like no other country While Qatar’s energy industry trated in North Field, holder of want to keep’ China. Oman and Bahrain are a compelling as the oil has dared to do.” is booming, Doha faces a 15 per cent of the world’s natu- Qatar this year spent €2bn reminder that Gulf oil-produc- price has risen and new number of strategic decisions ral gas. on a 6.2 per cent stake in Iber- ing states are far from immune sources of so­called Michael Peel over what to do about the emer- Further immediate export The billboards around Doha drola, the Spanish utility com- from the effects of the Arab gence of rival gas sources, the expansion is seen as unlikely, advertising the part Qatari- pany, taking it into the Euro- awakening. Andy Brown: rise of Asian economies – and with the government committed funded film Black Gold – a retro pean – and potentially Latin If not exactly at the mercy of is seeing the political balancing acts to a 2005 moratorium on new epic about the tumultuous early American – power generation international forces and events, ‘good needed to survive in the energy projects until at least 2013, to days of oil in the Arabian penin- markets. Analysts say future Qatar’s geographical position demand industry as a small country prevent possible damage to gas sula – are a reminder that the threats to Qatar’s energy posi- and status as the world’s largest and competing with much bigger reservoirs. country will still need all its tion include significant new pro- exporter of liquefied natural gas uptake’ ones. Mohammed Al Sada, the oil political shrewdness to turn its duction in Australia due to certainly puts it at the centre of Doha needs to work out “what minister, says the authorities energy bonanza into a rising come on stream by the end of them.

Medical care suffers from lack of capacity

Health The sector offers quality but needs more basic services, says Camilla Hall

At the women’s hospital in Doha, scores of ladies gather around recep- tion, competing for the attention of the staff. Doctors in black niqabs and white coats sweep through rooms built more than two decades ago. Next The Sidra Medical and Research Centre should relieve some of the burden door, at the main hospital, men are waiting for treatment, lined up in cent. This was because of an increase little capacity in Qatar to perform the wheelchairs in a bustling corridor. in the population, according to a operations that would reintroduce the “We cannot carry the capacity of recent government report. That com- extracted cells. this population,” says one doctor at pares with the Organisation for Eco- The government has also invested the hospital. Doctors are forced to nomic Co-operation and Development in the Qatar Robotic Surgery Centre. send patients home prematurely average of $2,984 per capita. “It’s like building a cathedral dome because there are not enough beds This year, the council has initiated before you’ve built the foundations,” and some operations have to be can- a five-year plan to boost the number says one observer. “They would celled, she says, withholding her of hospital beds, while improving the rather have something ambitious and name as she is not authorised to primary healthcare system in order to do it half way” than embark on a speak to the media. reduce the number of people who rely more pragmatic project. The women’s hospital alongside the on hospitals for basic services. More basic, and potentially more mixed Hamad general hospital, mark In the past, the authorities have helpful, projects promoted by the what is arguably the frontline of focused on tertiary healthcare, which foundation include the Sidra Medical Qatar’s healthcare battle. Despite bil- involves buying expensive equipment and Research Centre, a project lions of dollars of government spend- and technology. Now, “the whole announced seven years ago and ing in this sector, the two hospitals drive is to push everything to preven- touted as “an ultra-modern, all-digital are seemingly bursting with patients. tion, to screening, to what we call a academic medical centre”. It should The debate over healthcare echoes a self-care model”, says Dr Ali. relieve some of the burden on the wider argument about how well Qatar government’s current medical facili- is directing its gas riches for social ties, officials say. spending. ‘Sometimes, when you The foundation has also brought in The country has been widely have too much money, some of the world’s top medical insti- praised for investing heavily in areas tutions, with Weill Cornell and the such as health and education, but it is as bad as having University of Calgary-Qatar offering many observers say it is still too early no money’ programmes to train local healthcare to pronounce these initiatives a suc- professionals and attract foreigners. cess. “Hospitals are not buildings and Despite a rise in the number of pri- The first step has been to analyse machines, they are the people,” says vate clinics and the opening of new where and how the state’s funds are Dr Ali. state hospitals outside the city centre, being spent. According to the report, The country is moving towards full some of the country’s doctors are still about 77 per cent of government insurance of nationals and expatri- overloaded by what the government healthcare expenditure is managed ates. Companies will be encouraged to estimates is a near trebling of the through the Supreme Council of cover the cost for their staff, while population over the past 10 years. Health, followed by 14 per cent nationals will have their policies In the same period, what was the through the Qatar Foundation, a non- funded by the government. Citizens health ministry has been reformed profit organisation established by the currently receive funding for treat- and renamed twice, to become the emir. ment abroad if they cannot get it at Supreme Council of Health. Critics say the foundation, which home. “Sometimes, when you have too has aimed to develop elite healthcare, The staff at Hamad general hospital much money, it’s as bad as having no has spent vast sums on advanced can see the new building they will be money because you can actually send technology and ambitious projects in moving into across the road. Parts of it in the wrong direction,” says Faleh a Gulf state that has yet to tackle the it are said to have been unoccupied Mohamed Hussein Ali, assistant secre- basic needs of the population. since the Asian Games in 2006, for tary-general for policy affairs at the The foundation, for example, has which it was built. They will have to council. invested in Virgin Health Bank, a wait until next year or the year after Per capita health expenditure even company that parents can pay to har- before they get the extra space. fell slightly last year, from $1,579 in vest and store stem cells from their “It’s actually how the money’s been 2009 to $1,561, even though gross baby’s placenta to use in case of ill- spent, not how much – it is enough,” domestic product increased by 16 per ness in later life. However, there is says Dr Ali. 6 ★ FINANCIAL TIMES SATURDAY DECEMBER 17 2011