|Middle-East business environment | View point|
heading, alwen.com gives you the point of view of a specialist in Middle
| Qatar, a small Emirate on the
Arabian peninsula, enjoys enviable prosperity. The industrial gamble of
a few years ago has paid off and now brings in comfortable revenues. The
Emir Hamad Ben Khalifa al Tani has embarked on active diplomacy.
A geographical position and a source of disputes
Being almost an island, the Qatar Emirate is confronted with roughly the
same geopolitical problems of this configuration: disputes relating to how
far the continental shelf extends. This country, with a surface area of
scarcely eleven thousand five hundred kilometres, is often called the finger
of the Arabian Peninsula, a protuberance attached by its base to the Saudi
platform which advances northwards to the Iranian coastline. The four hundred
fishing boats which used to form the wealth of the Emirate before the oil
adventure, are evidence of a certain " vocation " which, if it
is not exactly insular, is at least coastal in character.
This umbilical revelation posed no problem until now, for contact with the
powerful neighbour did not bring the region's vital sovereign resources
into play, namely, the oil and natural gas deposits. Indeed, all the geopolitical
problems of this country and the security problems which they entail, are
based on the relationship between the definition of state territory and
the location of resources, problems which are posed beyond the shore line
towards Bahrain and towards Iran.
This ill-defined geographical contact has already been the source of a frontier
dispute with Saudi Arabia, which broke out in September 1992 and caused
the suspension by Qatar of the frontier agreement of 1965. Qatar also withdrew
from the common forces of the Gulf Cooperation Council. Negotiations in
progress to settle the dispute amicably and by diplomatic channels were
concluded in 2000.
A sponge of oil and gas
With a population of four hundred thousand, but only ninety thousand indigenous
Qataris, the Emirate is situated on a sponge of oil and natural gas, but
a sponge which is essentially marine. The first oilfields were discovered
on dry land (Dukhan, 1949), but it is the offshore fields that quickly provided
the majority of production: Idd al sharqi, 1960 Bul Hanine, 1970. The Al
Boundouq field, situated on the frontier with Abu Dhabi, was shared between
the two countries, and its production as well. Things seem clear with the
United Arab Emirates, and Haloul Island, on which a vast storage and export
centre has been built, has not been disputed.
Turbulent relations with Bahrain
On the other hand, relations have been and still are turbulent. Since independence,
on 3 September 1971, sovereignty over Hawar Island has been contested, following
closely on the heels of the town of Zubara, which is situated on the Qatari
peninsula, but whose population used to swear allegiance to the Emir of
Bahrain. What is in reality the Hawar archipelago, is a collection of reefs
very close to the Qatari coastline, and under Bahraini sovereignty, which
considerably limits the extension westwards of Qatar's continental shelf.
What is more, it is an area that is relatively unexplored.
At Qatar's initiative, this vexed question which casts a shadow over relations
between the two Emirates has been referred to the International Court of
Justice of The Hague.
Disputes waiting for a decision
Bahrain wants Hawar because it is the only hope of making up for a drop
in national oil and natural gas production, and its neighbour attaches importance
to it for approximately the same reasons. The Hawar dispute is poisoning
relations between the two countries and especially between the two ruling
families, who descend from the same dynasty. There are also disputes concerning
other small islands, including Fachtel Jibel Island, a submersible reef,
on which Bahrain had started work in 1986, which almost started a fratricidal
war. Serious problems of sovereignty between the two countries have been
the subject of many interventions by third parties, including the conspicuous
intervention by Saudi leaders, but the judgement of peers and Bedouin councils
was not sufficient, and the case is now before the court at The Hague.
Rich gas resources
Since 3 September 199, Qatar has also been one of the most important potential
producers of natural gas in the region, with the opening of the North Dome
or North Field gas field. Discovered in 1971, this vast pocket of natural
gas, totally separate, covers a surface of six thousand square kilometres
and contains five thousand billion cubic meters. The first production phase
came into service initially to supply local consumption. Everything would
be well in the best of all possible worlds if this dome did not extend beyond
Qatari waters. Because this is what the Iranian leaders have maintained
and they have undertaken to prove it by drilling boreholes.
Claims by Iran
Called " Pars ", or 'south' in the terminology of the NIOC (Iran)
engineers, the field was indeed successfully evaluated on the Iranian side
in 1992. The Teheran claim over " due " gift is explicit, but
it cannot automatically adopt an aggressive stance. Qatar has been successful
in attracting foreign investors to its export and industrial processing
project. The Iran of reconstruction and a certain normalisation could also
be interested not so much in the prospect of raising the military stakes,
as in the prospect of economic and financial cooperation, which would certainly
be more fruitful.
United States: arms' sales in the hot seat
Aligning itself with Saudi Arabian policy, Qatar quite naturally finds itself
in the pro-Western camp. But its relations with the United States have hit
some snags in recent years on the subject of the sale of American arms to
the Emirate. In August 1988, after the discovery of Stinger missiles in
Qatar - which refused to reveal their origin - the Senate approved a motion
forbidding the sale of arms to the Emirate. Nevertheless, the Gulf War re-established
links between the two countries because of the extremely conciliatory attitude
of Qatar, aware of its vulnerability.
Ex Communist bloc
In 1988, Qatar, along with its neighbours, established diplomatic relations
with the USSR, one month after forming similar relations with China. At
the present time, Qatar has diplomatic relations with the major countries
of the ex Warsaw pact countries.
France: special relations
Since the visit of the Emir to Paris in 1975, the first State visit he made
in Europe, Franco-Qatari relations have been strengthened. The French presence
is not very strong in statistical terms - there are fewer than 500 French
people there - but the two sides are keen to cultivate good relationships.
At the beginning the friendship was perhaps fed by a vague bitterness against
the British - Qatar, which was late in being integrated into the system
of protectorates, was always subordinate to Bahrain. It is in the armaments
field that the Franco-Qatari friendship is the most fruitful. France sells
among others Mirages and Exocets to the Emirate in exchange for deliveries
Great Britain: colonial nostalgia
Qatar, like the whole of the Arabian peninsula, has not escaped British
influence. Throughout history, the soldiers of Her Majesty have alternately
expelled the Persians and protected the Emirs from the covetousness of the
Turks. In exchange, the sheiks allowed exclusive and eternal treaties to
be imposed on them. They all in fact included a cause forbidding the signatory
Prince from conceding, renting, leasing or lending in any form and for whatever
reason the slightest part of its territory without authorisation from the
protecting Power. These agreements mentioned no limit of duration. Political
treaties followed, whilst exclusive oil concessions were granted by the
Princes of the Gulf to the protecting power. After Kuwait and Bahrain, in
1916 it was the turn of Qatar to sign an agreement of this type. After the
British withdrawal from the peninsula in 1971, Great Britain signed friendship
treaties with its former subjects. In Qatar, there are about 5000 British
A tiny State, not much bigger than Alsace (in the East of France) and with
only 250,000 inhabitants (of whom less than half are indigenous Qataris),
Qatar has only a derisory influence on the international political stage.
As a state built on petrodollars, the Emirate does not claim to conduct
its own policy. The ruling family prides itself on being related to the
al Saoud family. Belonging to the same religious movement, Wahhabism, strengthens
this union even more. So Qatari diplomacy aligns itself with that of Riyadh.
Moreover, on 21 February 1982, Qatar signed a security agreement with Saudi
Arabia. In September 1992, there was a frontier incident with Saudi Arabia
in the region of Khafous. Qatar suspended the frontier agreement of 1965
and boycotted the meetings of the Gulf Cooperation Council until mediation
by the Egyptian President Mubarak, who brought King Fahd and Sheik Khalifa
together at Medina in December 1992. The two parties finally agreed to implement
the frontier agreement of 1965.
Iran: a low profile
After a few local disagreements at the time of the Iranian revolution, Qatar
adopted a low profile in the Iraq - Iran war. For the first years of the
war, it limited itself to agreeing, but without great enthusiasm, grants
to Iraq, and then cancelled them in the name of the new austerity. Iran
for its part provoked Qatar several times, such as in 1989 when the Iranian
Oil Minister, Gholamreza Aqadeh claimed a third of the gigantic natural
gas North Field.
But for some years the countries of the region have had other preoccupations
as regards Qatar, seeing the Emirate authorities committing the country
to a democratic process which worries them more than the possible wealth
At the end of March 2002, Qatar organized an international conference on
the theme " Democracy and Liberty ". This initiative came in a
context of the authorities' desire to give thought to democratising the
political life of the country, with the prospect of increasing citizen participation.
This process, which was initiated in March 1999 with municipal elections,
during which women were able to vote and be eligible for office for the
first time, is to be followed in 2003 by the election by universal suffrage
of a Legislative Council within the framework of a new constitution. The
Committee charged with working out this new constitution, is due to complete
its work between now and the reassembly for 2002/2003.
In his inaugural address, the Emir declared that " the future of the
region depends largely on the success in establishing democracy and the
principles of political and economic liberty - underlining that political
stability could not be dissociated from economic and social stability.
Qatar's ambition, via the organisation of international conferences, is
to establish itself on both the regional and the international stage. By
organising this seminar to encourage consideration of new rules for international
trade and the link with democracy, the Emir is reaffirming his commitment
to the democratic process developing in the country and is setting out to
stimulate other countries in the region to follow in his footsteps. This
is not at all to the taste of the Saudis, who think that he is going too
quickly and too far. But for the moment the mark has not been overstepped
and above all, the decisions are still up to the Emir. In fact, the population
has not really adopted the approach spurred on by the Qatari authorities.
They recognise that the 1999 experiment is not yet conclusive, and that
the elected municipal council is struggling to fulfil its mission. There
is the question of training elites, and it is true that they are not up
to the task that awaits them. It is still tribal reflexes which dominate
and there is no real opposition; the nationals, few in number, leave it
to the Emir to take the important decisions. There is no tradition of political
awareness as in Kuwait; although criticisms were voiced in 1998-1999, because
of the financial difficulties due to the drop in the value of oil, prospects
are now good again, the economy is flourishing, and the criticisms have
been silenced. Nonetheless the Emir is convinced that the predominant attitude
of the people not doing anything for themselves has to be questioned.
Qatar is the richest country in the area thanks to its fabulous reserves
of natural gas. The gas gamble launched by the authorities has paid off
in full. Major contracts have been signed over 25 years for the purchase
of gas, with reliable clients such as Japan, Korea, India and even Spain,
and this offers good prospects. The Dolphin project which brings the gas
production from two units of the giant North Field deposit, situated off
the coast of Qatar, and the construction of a gas pipeline 3510 km long
to carry the gas to the industrial areas from Al-Tawilah to Abu Dhabi, and
from Djebel Ali to Dubai (in the United Arab Emirates) will enable Doha
to export 150,000 m3 of natural gas a day.
The 2002-03 budget (the tax year goes from April to March) has just been
approved by the government. The expenditure is evaluated at US$ 5.49 billion,
i.e. an increase of 14% on last year and the income at US$ 5 billion. The
forecast deficit is evaluated at about US$ 500 million, whilst in the previous
financial year, a surplus of US$ 136. 5 million was envisaged. But because
of the steady prices of oil during the past year, the positive result would
in fact seem be of the order of US$ 600 million. The calculations had been
made on the basis of US$ 16 a barrel (and in the new financial year the
chosen base is US$ 16.5) whilst it sold for an average of US$ 21.5 over
the first nine months of the budgetary tax year. As for the servicing of
the debt, which reached a repayment peak during the financial year just
finished, at US$ 1.4 billion, it will only be US$ 1 billion this year, falling
to US$ 660 million in 2003-04. So the servicing of the debt is no longer
an excessive constraint on the budget. On the other hand, the question is
focused on the amount of the currency reserves. According to the economic
mission at Doha, the surplus from the two previous financial years, after
the servicing of the debt, is estimated at US$ 4.5 billion.
At regional level, Doha hopes for the reintegration of Iraq, because it
thinks that a counterweight is indispensable for the two hegemonic countries
of the region, namely Saudi Arabia and Iran. The strategic alliance with
the United States should enable Washington to use the Emirate in the event
of any attacks against Iraq, but Doha still holds for itself the card of
France, as a strategic partner to avoid depending only on the Americans.
Similarly, with regard to the countries of the region, Qatar waited for
many months before closing the Israeli bureau.
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