Emir Turns Qatari Riches Into Power Behind Middle East

When the Qatari emir stepped out of a helicopter and crossed into Gaza last month, the placards bearing his face and the flags draped from buildings marked more than just gratitude for $400 million of investment.

Sheikh Hamad Bin Khalifa Al Thani’s visit to the coastal enclave, the first by a head of state since Hamas’s violent takeover in 2007, was the culmination of a 20-year journey turning Qatar into the world’s richest country and a regional leader from a fragile, debt-ridden Persian Gulf emirate.

“It adds to his prestige as the first Arab leader to go there,” Allen Keiswetter, a scholar at the Washington-based Middle East Institute and retired foreign service officer, said in a telephone interview. “Qataris have an ambitious leadership, they have lots of money and they are quite capable of chewing gum and walking at the same time.”

Qatar, a country built on natural gas fields, is trying to translate energy wealth and breakneck economic growth into political influence. It’s playing an Arab leadership role traditionally held by Saudi Arabia and Egypt, whose population is more than 45 times bigger than Qatar’s, after revolutions spread across the Middle East.

Sheikh Hamad, 60 this year, has backed Syrian rebels against the four-decade Assad leadership and this week hosts meetings aimed at unifying and strengthening the opposition. He sent aircraft to enforce a no fly zone over Libya last year and is providing $2 billion to Egypt’s new Muslim Brotherhood president plus investing in an oil refinery and real estate projects in the North African country.

‘Bright Days’

“When Arab nations watched the people’s steadfastness in Gaza, they learned how to revolt,” the Qatari emir said in a speech in Gaza during his Oct. 23 visit. “This was one of the major reasons for the Arab Spring revolutions that will bring better bright days.”

His involvement in the region’s politics is rankling some countries in the region.

Iran, which shares a gas basin with Qatar, opposes support of Sunni Muslim rebels in Syria against President Bashar al- Assad, backed by the pro-Iranian Shiites. Israel criticized the trip to Gaza because Qatar appeared to side with Hamas, labeled a terrorist group by the U.S. and the European Union.

“There are many ways to contribute to Palestinian welfare and peace between Israel and the Palestinians, and siding with Hamas is diametrically opposed to each and every one of them,” Israeli Foreign Ministry spokesman Yigal Palmor said in a telephone interview on Oct. 31.

Cash Clout

At home in the Qatari capital Doha, a sleepy fishing port in the 19th century and now a city of skyscrapers in the desert to rival Dubai, the emir rules over a population that has more than tripled to 1.8 million since he took power in 1995. Locals are also 27 percent richer than Luxembourgers, based on purchasing power parity, International Monetary Fund data show.

The spending promises in Egypt and to pave roads, build houses and a hospital in the Gaza Strip reflect Qatar’s spreading financial tentacles.

The country’s sovereign wealth fund, the Qatar Investment Authority, owns stakes in Volkswagen AG (VOW), Barclays Plc and Credit Suisse Group AG. With $30 billion to invest this year, the fund will decide the fate of Glencore International Plc (GLEN) attempt to buy Xstrata Plc (XTA) in what may be the biggest takeover of the year.

Qatari investors funded the development of the Shard, London’s tallest building, and the takeover of Paris St. Germain soccer club in the French capital.

“Qatar has enormous financial resources right now which they are happy to deploy in support of causes they believe in,” said Richard Murphy, a former U.S. ambassador to both Syria and Saudi Arabia and also a scholar at the Middle East Institute.

Liquefied Gas

The Qatari government doesn’t employ official spokesmen and nobody at the emir’s palace in Doha could be reached for comment for this story when called by telephone. His 32-year-old son, Tamim Bin Hamad Al Thani, who has become more visible in handling day-to-day affairs, also couldn’t be reached.

In 1996, a year after Sheikh Hamad overthrew his father in a bloodless coup, Qatar exported $3 billion of oil a year and had the biggest government deficit in the Middle East as a percent of gross domestic product, according to the IMF.

Fast forward to today, and its economy is more than seven times bigger than in 1995 as the emir oversaw a government that tripled oil production as crude prices jumped seven-fold. He also began liquefying gas pumped from the country’s North Field, the world’s largest gas reservoir, where flames from flare towers light up the night sky and tankers dock to upload fuel for delivery to Japan, South Korea, the U.K. and the U.S.

‘Big Stamp’

Qatar is now the biggest producer of liquefied natural gas, accounting for about 31 percent of the world’s supply, according to the International Group of Liquefied Natural Gas Importers.

“Qatar has the potential to have a very big stamp across the region, from the Turkish border with Syria all the way across to the Libyan border with Egypt,” said Michael Stephens, a researcher in Doha at the Royal United Services Institute.

Sheikh Hamad, who is also defense minister, graduated from the Royal Military Academy at Sandhurst in England in 1971, the year Qatar won independence from the British. He started the Arabic television network Al Jazeera a year after taking power and invited U.S. universities to set up campuses in the country.

A diver and sports fan, Sheikh Hamad flew to Zurich two years ago when soccer governing body FIFA announced his country was awarded the 2022 World Cup. He has twice sought to host the Olympics. Qatar held the World Indoor Athletic championships in 2010 and will host the World Road cycling championships.

Islamist Future

The government plans to spend $130 billion ahead of the World Cup, including a $35 billion metro and rail system, a new port, multi-lane highways and nine new stadiums that will be air conditioned using solar energy.

When it comes to politics, Sheikh Hamad’s step into mediation isn’t new. His government brokered deals in Lebanon and Sudan’s Darfur region. He has tried to intervene in Yemen and urged dialog with Iran over its nuclear program, hosting a summit with President Mahmoud Ahmadinejad in 2010.

The emir believes “Islamists are the way of the future in the Middle East,” Gregory Gause, professor of political science at the University of Vermont and a Persian Gulf specialist, said in an interview. He “has done quite a bit to cultivate relationships with Islamist groups” including mediations involving Hamas and Lebanon’s Hezbollah, he said.

Supporting Islamists is based on the recognition that religion is becoming more important in the region, Stephens, the researcher at the Royal United Services Institute, said.

“If the region was moving more secular, Qatar would be more secular,” he said. “But the region is moving more religious, so it’s more religious.”

‘Rite of Passage’

While providing financial aid and diplomatic support for the Hamas government since the Islamist group ousted Fatah in 2007, Qatar’s closer involvement in Gaza came after the overthrow of former Egyptian President Hosni Mubarak last year.

Qatar helped broker an agreement between Hamas and Fatah that was signed in its capital, Doha, in February. The agreement envisaged a unity government and new Palestinian elections.

The country has provided a home for Khalid Mashaal, head of the Hamas politburo, after he pulled out of Syria earlier this year amid escalating violence, according to Al-Hayat newspaper.

“It’s always very good PR for a leader aspiring for regional ambition to deal with the Palestine question,” Stephens said. “Dealing with the Palestinian question is a rite of passage. If you are not talking about the Palestinian question, you are not really part of the program.”

To contact the reporters on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net; Nicole Gaouette in Washington at ngaouette@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net; John Walcott at jwalcott9@bloomberg.net

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