June 25 (Bloomberg) -- Qatar’s Emir Sheikh Hamad Bin Khalifa Al Thani, who stripped his father of the title in a 1995 coup, today handed that power to his son, saying the moment for new leadership in the world’s richest country had arrived.
“The time has come to turn a new page in our country’s journey and see a new generation assume responsibility,” Sheikh Hamad said in an address to the nation. The outgoing ruler and his son, Sheikh Tamim Bin Hamad Al Thani, later stood side by side as citizens lined up to pledge their allegiance.
Sheikh Tamim, 33, assumes leadership of a country of 1.9 million people that has developed into a regional power during his father’s 18-year reign. The emirate bought stakes in Barclays Plc, the U.K.’s second-biggest bank, and Volkswagen AG, Europe’s largest carmaker. It supported uprisings in Syria and Libya and has lent $8 billion to Egypt since the 2011 ouster of President Hosni Mubarak.
The outgoing emir and his prime minister, Hamad Bin Jassim Al Thani, “put Qatar on the map,” Shadi Hamid, director of research at the Brookings Institution’s Doha Center, said by phone from the Qatari capital. “There might be some shifts in emphasis and tinkering around the margins, but the main thrust of Qatari foreign policy will continue.”
Sheikh Tamim graduated from the U.K.’s Royal Military Academy Sandhurst in 1998 after leaving Sherborne School in England a year earlier, according to the official palace website. The fourth son of Sheikh Hamad, he has steadily acquired power since being appointed crown prince in 2003. He served as chairman of the Qatar Investment Authority, the country’s primary sovereign wealth fund, and headed Qatar’s failed bid for the 2020 Olympics.
“Historic day for Qatar as new generation takes over,” U.K. Foreign Secretary William Hague wrote on Twitter.
Qatar is an “important partner” for the U.S., President Barack Obama said in an e-mailed statement.
“The United States looks forward to working with Sheikh Tamim to deepen the ties between our two countries,” he said.
Sheikh Tamim inherits power from an emir who transformed Qatar into a regional leader from a fragile, debt-ridden Persian Gulf emirate. Sheikh Hamad ruled as the country’s economy grew sevenfold and its population more than tripled. He introduced municipal elections and, a year after assuming power, started Al Jazeera, the Doha-based news network that now operates worldwide.
Today’s announcement marks the first voluntary abdication in the emirate since 1960. Sheikh Hamad, 61 this year, overthrew his father, Sheikh Khalifa Bin Hamad Al Thani, in a bloodless coup almost two decades ago. Sheikh Khalifa had deposed his cousin in 1972.
Sheikh Tamim will lead Qatar’s effort to expand infrastructure before it hosts the 2022 soccer World Cup, even as gas exports level off and economic growth slows. The country plans to build a $35 billion rail network as well as a new port, highways and stadiums.
Qatar, holder of the third-largest gas reserves, produces about 30 percent of the world’s supply of liquefied natural gas, which is chilled for transport by ship. Exports of the fuel gave Qatar the largest per capita gross domestic product in the world, according to the International Monetary Fund. The country plans to spend $200 billion on infrastructure before hosting the most-watched sporting event.
Under the outgoing emir, Qatar has also taken on an increasingly prominent foreign-policy role. It’s providing financial and military aid to the rebels seeking to oust Syrian President Bashar al-Assad, hosting proposed talks among the Taliban, the Afghan government and U.S. officials, and backing Hamas in Gaza.
There were setbacks, too. In Syria, peaceful protests that started in 2011 have evolved into a bloody civil war. The emirate’s support for the opposition was undermined by the rebel loss of the strategic city of al-Qusair in early June.
In Libya, where the emirate sent fighter jets to join NATO against Qaddafi in 2011, Qatar’s flag and effigies of the emir were burned last month by protesters in Benghazi who accused Qatar of funding the Muslim Brotherhood. Qatari flags were also burned in Egypt, the Al Ahram newspaper said on April 20.
“It would be good for Qatar to go back to being quiet again,” Michael Stephens, a researcher at the Royal United Services Institute in Doha, said in a phone interview. “Half the Arab world hates Qatar right now.”
Economic growth slowed to 6.2 percent last year from 17 percent in 2010, according to a report in May by Qatar National Bank SAQ, the country’s largest lender. Citigroup Inc. estimates Qatar’s budget surplus will turn to a deficit by 2015. Money from the sovereign wealth fund will start diminishing and some investments may be sold to finance the government, Farouk Soussa, the bank’s Dubai-based chief Middle East economist said on May 20.
Qatar Holding LLC, the foreign investment arm of the sovereign wealth fund, said on June 17 it sold its 10 percent stake in Porsche Automobile Holding SE to the Porsche-Piech family. The fund holds stakes in Total SA, Credit Suisse Group AG, Tiffany & Co. and owns outright Harrods department store in London.
Credit Risk Steady
The emirate’s credit risk was little changed yesterday, rising three basis points to 88, according to data compiled by Bloomberg. Abu Dhabi’s credit default swaps gained five basis points to 85. The two emirates are rated AA by Standard & Poor’s, the third-highest investment grade.
The rating won’t be “immediately affected” by the transition, S&P said in a statement. “We expect executive power to remain concentrated in the hands of the emir,” the rating company said.
Qatar’s gross domestic product will expand 5.2 percent in 2014, faster than Saudi Arabia and the United Arab Emirates, the biggest Arab economies, according to the median estimate in a Bloomberg survey.
Its foreign policy won’t change much under Sheikh Tamim, who will probably consult his father, said Ghanem Nuseibeh, the London-based founder of Cornerstone Global Associates.
“This is a bit of internal housekeeping,” Nuseibeh said in a phone interview. “We’re unlikely to see much change in the way Qatar is run for the time being.”
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