Thursday, 18th October 2018

Qatar: Doha seeks ‘strategic brotherhood’ and new economic partnerships

Isolated by its erstwhile ‘GCC-3’ allies, Qatar gave some very public thanks to those who had stuck by it following the boycott launched by Saudi Arabia, the UAE, Bahrain and Egypt in June 2017 when, in the first half of October, it invited senior officials and companies from the likes of Iran, Azerbaijan and Tajikistan to Doha to share a stage with Qatari government ministers. Outside the conference centre allied countries’ flags hung from poles against a backdrop of the ‘Tamim Al-Majd’ (‘Tamim the Glorious’ – GSN 1,043/1) imagery that adorns so may buildings. There were more familiar visitors too, from Oman and Kuwait, who remain committed to negotiating a resolution to a crisis that many see as representing an existential threat to the Gulf Co-operation Council (GCC). But it was the presence of Iranians, Azeris and other newer friends that underlined the likely shape of things to come, as Doha continues to search for a new economic direction while being frozen out of its nearest and most important markets.

The occasion for this diplomatic outreach was the prosaically-titled International Products Exhibition and Conference (IPEC). As a commercial opportunity the event lacked punch – the hall never seemed to fill with many visitors and most of the exhibitors GSN spoke to reported indifferent levels of business. The event’s real significance was to be found in the conference area, cordoned off in one corner of the hall, where a succession of Qatari ministers – led by prime minister Sheikh Abdullah Bin Nasser Bin Khalifa Al-Thani – came onto the stage to deliver messages about how their country was open for business and how grateful it was for the support of those present. In return, visiting dignitaries lavished praise on Doha’s resilience and friendship.

A notable presence was Iran’s Bushehr province governor Abdul Karim Grawend, who appeared alongside transport and communications minister Jassim Saif Ahmed Al-Sulaiti on the conference’s second day. Iran and Qatar “have always been together… solve problems together,” said Grawend. There were similarly warm words from Pakistan, as Ministry of Commerce official Javed Akbar Bhatti told how Qatar had helped Pakistan to overcome its energy crisis. (Pakistan is doing its best to stay friendly with all states in the region, Iran and Saudi Arabia included.)

In a world shaped by the boycott, Qatar needs friends in the wider region where it can find them. Unsurprisingly, it is not afraid to throw money at the problem, as evidenced by the $15bn in aid pledged to Turkey in August (GSN 1,065/6). Turkey’s deputy minister of trade Gonca Yilmaz Batur was present at the IPEC gathering and will have pleased her hosts when she described the Doha-Ankara relationship as a “strategic brotherhood”.

But warm words are not enough on their own. Despite being shunned by the GCC-3 and their allies, Qatar is trying to position itself as a regional trading hub. The peninsula now boasts the sort of modern airport and sea port that makes such an aim feasible; Qatar is building up its free zones. However, for as long as it is shut out of the biggest economies on its doorstep, it will be hard to convince investors that Doha is a better place to operate from than, say, Dubai.

The evidence that difficulties persist is not difficult to spot. Residents report that is rarely a problem to secure a table at a restaurant; the shopping malls are sparsely populated, with plenty of vacant lots, and the streets are blissfully free of the sort of traffic jams that bedevil life in some other Gulf cities. The million Saudi tourists who used to come to Doha to spend freely now go elsewhere. Qatar Airways chief executive Akbar Al-Baker refuses to say whether the big-spending national carrier will be forced to record a second straight year of losses.

All this is symptomatic of the excess capacity that confronts so many areas of the Qatari economy. One example is provided by the impressive new Sidra Medicine hospital on the western edge of Doha, which was built to deliver world-class healthcare to women and children. The Sidra hospital was built with the assumption that there would be a queue of patients from around the Gulf in search of complex procedures that would otherwise require them being flown to Europe or North America. That is no longer the case: when the 276-bed capacity hospital is formally inaugurated next month, it will open with just 150 beds operating.

The Dubai-style ‘build and they will come’ strategy for the tourism industry was similarly predicated on the idea that other GCC nationals would regularly fill the country’s burgeoning number of hotel rooms and restaurants. Now, as Qatar Tourism Authority acting chairman Hassan Al-Ibrahim diplomatically says, “we’ve just expedited our efforts to diversify the markets faster than expected”.

Optimists in Doha say events of the last 18 months have forced Qatar to innovate and accelerate a wide range of development plans is the best thing that could have happened to the ambitious emirate. A generation of younger Qatari officials have been called on to stretch their boundaries to overcome the threats posed by the GCC-3 boycott; in the process this is developing a national consciousness that may have not existed to such an extent before.

Thus, in the long-term, the shock of the boycott may yet work out well for the country, However, the short- to medium-term outlook does not look particularly comfortable. There is no doubt that it would be far simpler to develop the economy with the assistance, rather than opposition, of its most natural trading partners. After a bruising period, even if a resolution is found to the GCC crisis, Doha could decide that, having gone to the trouble of developing new friendships, it finds these new allies simpler to deal with and more trustworthy.

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