Fueling Ambitions - Qatar in 21st Century

Qatar's gas reserves offer economic and political security. It will likely be more influential than its size suggests.

With a native population of just over 300,000 people, the state of Qatar should be an insignificant player on the global stage. However, the country's rulers have leveraged considerable mineral resources, media assets, and central geographical position to become a significant regional power. Its wealth and relationships with powerful non-regional actors give Qatar a degree of independence from other Gulf states.  

The country is at the heart of a complex and sensitive set of relationships between parties at odds with one another, attempting to balance the concerns of far larger and more powerful actors in the gulf to further its self-interest. Navigating these relationships has been challenging, and Qatar suffered when neighboring states of Saudi Arabia, Bahrain, and the UAE cut off relations in 2017. Still, political flexibility underpinned by hydrocarbon wealth allowed Qatar to weather the storm until the situation was resolved. 

Qatar's decision to move towards liquid natural gas exports (LNG), first made by the previous Emir in the 1990s, looks especially clairvoyant since 2022 and the increase in gas prices since the Russian invasion of Ukraine. However lucrative this may be in the short term, the LNG bonanza may complicate Emir Tamim bin Hamad Al Thani’s ambitions to move the Gulf state away from hydrocarbons and towards a more balanced economy. Like other Gulf states, it is in fierce competition to continue providing economic benefits to its citizens while maintaining the political status quo for its ruling family. However, its delicate position between far more powerful states and ambition to punch above its weight internationally, if not navigated carefully, may one day place the regime in an uncomfortable position.

Qatar's position as a significant exporter of a more politically acceptable fossil fuel (gas), significant investments in Western companies, and its willingness to invest over a longer time horizon than many Western states or institutions likely means it will continue to have an outsized influence on the world.  

Sheikh Tamim bin Hamad Al Thani

The House of Al Thani   

Qatar is ruled by Sheikh Tamim bin Hamad Al Thani (for the rest of this post, Tamim), who has been the Emir of Qatar since 2013 when his father, Hamad bin Khalifa Al Thani (for the rest of this post, Hamad), abdicated. This was a return to tradition by Hamad, as the two previous transitions of power in 1972 and 1995 had been (bloodless) coups. Earlier transitions of power in Qatar had, in 1913, 1949, and 1960, unusually for Arab monarchies, also been abdications. The Al Thani family has ruled Qatar since the mid-19th century under the Ottoman and British Empires until the country became independent in 1971 and continues to rule until now. There are no political parties, and NGO activities are strictly constrained. The current Deputy and heir apparent to the Qatari throne is Tamims brother, Abdullah bin Hamad Al Thani. Still, as Tamin has seven sons, this will probably change when one of his children is ready to assume the position of heir. 

Qatar strictly limits (and does not publicly disclose) how many Qataris hold citizenship. Even amongst the estimated 310,000 or so Qatari citizens, there are tiers to citizenship, and a citizen can be unaware of which of three ranks they are until they apply for a specific job or permit. In 2021, when very limited elections were held, only those whose grandfathers were born in Qatar could vote. Although citizens' political rights are unequal, they receive considerable benefits, including the right to sponsor visas, allowing Qataris to host cheap domestic help from abroad (there are an estimated 300,000 domestic workers in Qatar). Foreigners make up the overwhelming majority of Qatar's population. One group is migrant laborers whose treatment, particularly around constructing facilities for the 2022 World Cup, led to international condemnation. 

Migrant professional classes, which make up a far larger percentage of the population than laborers, work in almost all other sectors of the economy. The most important contributors to the economy - the gas export industry, financial services, and the flagship airline (over 90% of Qatar Airways staff are non-Qatari) are all numerically dominated by foreigners, although Qataris hold key roles in practically every firm due to an explicit government policy that aims to promote Qatari nationals into leadership positions. These advantages for Qatari citizens and the temporary nature of residence for the non-Qatari population translate into significant domestic political power for Tamin. The reliance on foreign workers means falling fertility rates, which affect almost all advanced economies, are much less of a problem for Qatar throughout the 21st century, although amongst Qatari citizens it has fallen below the replacement rate. 

Domestic political power is also intertwined with Islam. Qatar officially practices Salafist Sunni Islam, which is written extensively into the constitution. Although this is the same form of Islam practiced in Saudi Arabia, traditionally, in Qatar, this has been less strict than in its famously draconian neighbor - pork and alcohol are available in Qatar, although only to non-Muslims. Qatar's relationship with Islam is mainly concerned with its support for aligned groups and states abroad. 

Tamim inherited a state that his father primarily shaped. Under Hamad, Qatar took the risky bet to build extensive LNG export facilities when LNG prices were far lower, and coal was more acceptable as a power source. Hamad loaned Al Jazeera $137 million, helping kickstart one of the Middle East's most influential and controversial media organizations. Hamad was also responsible for inviting the US to build, expand, and use the Al-Udeid Air Base, now the largest US military base in the Middle East. Hamad also started the Qatari Investment Authority, the sovereign wealth fund managing over $475 billion. Although Hamad abdicated in 2013, he is reportedly consulted on some state matters, although rumored poor health keeps him from interfering too much. 

Foreign Relationships 

Tamim has yet to radically deviate from his father's strategy of enriching Qatar and balancing competing foreign interests. Tamim’s main challenge has been managing an acrimonious relationship with other Gulf states, principally Saudi Arabia. 

Although a member of the Gulf Cooperation Council since its founding in 1981, Qatar has never enjoyed a harmonious relationship with Saudi Arabia or other Arab states. Partly, this is due to the Al Jazeera media network, which was founded in 1996 after Saudi Arabia shut down the BBC Arabic Television station. The $137 million loaned by Qatar to start the network was in part used to recruit former members of the BBC's network, and the channel began broadcasting news that other Arab regimes preferred its citizens not to know. The network gained prominence in the West when it broadcast interviews with Osama Bin Laden but had been upsetting authoritarian neighboring countries for years before this. Other Arab countries sometimes took extreme measures to prevent some programs from being aired - in 1999, Algerian authorities cut power to parts of Algiers when critics of the government appeared on the channel’s live program El-Itidjah el-Mouakass (“The Opposite Direction”). Al Jazeera’s website was blocked in Saudi Arabia and the UAE in 2017, and the channel is blocked in Saudi hotels.  

Both during and after the Arab Spring (in which only Qatar and the UAE did not experience any protests), Al Jazeera prominently featured members of the Muslim Brotherhood, infuriating Arab rulers who were dealing with unrest related to the movement's activities. Qatar’s relationship with the Muslim Brotherhood was far deeper than allowing them onto Al Jazeera. During the presidency of Mohammed Morsi, who was affiliated with the Muslim Brotherhood, Qatar loaned the Egyptian state $7.5 billion. It hosted Muslim Brotherhood exiles from Egypt, allowed senior Hamas figures from Gaza to use Doha as a base of operations, and allegedly provided funding for MB-associated organizations across Europe. 

As Qatar shares the North Dome gas field with Iran, its main gas field, it has had far friendlier relations with the Islamic Republic than other Gulf states to avoid antagonizing the more powerful and populous state on the other side of the Gulf Sea. In contrast, Saudi Arabia views Iran as its most significant regional rival, driven by the revolutionary ideology of Iran's leaders, differences over theology, and competition in oil exports. Although relations between Iran and the UAE are slightly warmer, Iran still occupies islands claimed by the UAE, and the Emirates broadly supports measures to limit Iranian influence. 

These relationships with the Muslim Brotherhood and Iran are why Saudi Arabia, the United Arab Emirates, Egypt, and Bahrain broke off relations in 2017. Qatar was not just diplomatically isolated but was cut off from food imports, airspace access, and Qatar-flagged vessels were banned from docking at the ports of the coalition. It survived the blockade and maintained its independent foreign policy by leaning on Turkey and Iran for food imports, although it also built up its own domestic production capabilities, becoming self-sufficient in dairy production, for instance. Additionally, Turkey deployed thousands of troops at a base near Doha in a show of support, which Qatar reciprocated by investing in the struggling Turkish economy. 

The boycott was eventually ended in a US/Kuwaiti brokered agreement after the election of President Biden, as Mohammed Bin Salman, the de facto ruler of Saudi Arabia, sought to repair ties with the US after the killing of Jamal Khashoggi and American dissatisfaction with the Saudi led war in Yemen. Despite Qatar’s relationship with Iran and Hamas, its relationship with the US was boosted during the US withdrawal from Afghanistan, as allowing the Taliban an office in Doha turned out to be a place where the US could negotiate with the group, which it had been at war with for more than 20 years. Qatar’s now prime minister, Mohammed bin Abdulrahman bin Jassim Al Thani, was awarded the Department of Defense Medal for Distinguished Public Service to recognize Qatari efforts during the wind-down of the American presence in Afghanistan. 

It is difficult to judge how warm US/Qatari relations are in the current context of the Israeli/Hamas war. Qatar claims it has been central to negotiating the release of some hostages because it hosts Hamas leadership and has supported the group in the past. However, Hamas leadership has reportedly left Doha for the time being after being based there for more than a decade. Whether they have returned at any point to continue negotiating or are currently residing in other Middle Eastern countries is unknown. 

Qatar has a close military partnership with the US and is a designated non-NATO ally—South Korea, Egypt, and Australia are other nations with this designation. Although this doesn’t constitute an automatic mutual defense pact, it includes exemptions to arms export controls and strategic-level working partnerships. Qatar hosts the largest US base in the Middle East and an advanced early warning radar system only deployed to a select few allies in critical locations. 

Although most of Qatar’s most recent defense purchases have been made by the United States, the checkbook has also been out for other Western nations. Since 2017, Qatar has bought 24 Eurofighter Typhoons from the British defense company BAE in a deal worth $7.25 billion. This deal also included the formation of a joint Qatari-British fighter squadron, which aimed to train Qatari pilots on fighter jets and help provide security for the 2022 World Cup. France has sold billions of dollars of Rafale fighter jets to Qatar since 2015. Since 2013, the Qatari army has been equipped with 62 German-made Leopard 2A7 main battle tanks in a deal worth $2.48 billion and also purchased 24 PzH 2000 155mm self-propelled howitzers. 

However, these vast arms purchases are only part of Qatar's strategy to secure itself from foreign aggression. Instead, they are mainly done to ensure favor from Western states with the capability and experience to deter attacks and keep the peace. This bargain may be less secure if Western militaries are drawn into a conflict with China, which is partially why Qatar buys equipment from various Western countries. Unlike Taiwan, which faces significant opportunity costs in buying specific Western capabilities, expensive procurement projects are not the primary problem that Qatar’s military faces, but a lack of proven combat experience and only a small population to be drawn upon to man its military. Although Qatar maintains a more open relationship with Russia than most US allies and did not divest from Russia in 2022, it does not buy any military equipment from them.

The North Dome/South Pars gas field.

Gas 

Although a significant contributor to past government revenues and responsible for much previous growth, oil is not central to Qatar's energy production or potential. Instead, with Qatar sitting on the 3rd largest proven reserves in the world, natural gas will underpin Qatar's economic and financial muscle in the coming decades. Gas contributes 44% of Qatar's GDP, and Qatar Energy, the state-owned energy company, made over $42.4 billion in profit in 2022. Energy Minister Saad Al-Kaabi has the country's aim to become the world's largest LNG exporter, more than doubling export capacity to 142 million tons a year by 2030. The world's largest gas exporters are Russia and Iran, both countries that face sanctions on exporting their gas to Western countries, making Qatar a naturally attractive place for Western countries to source energy, especially if they wish to diversify away from the US, which has seen a massive expansion in LNG exports. 

Given the distances to export markets in Europe and Asia and fractious security situations, Qatar naturally exports the vast majority of its gas by sea rather than by pipeline. At 21% of global LNG exports, it is the second-largest exporter of LNG in the world and third largest of natural gas. These figures have remained relatively stable since 2012, when the last large LNG facility was completed, but new facilities will be completed in 2025. Total natural gas exports are around 4.4 Tcf/y, and includes gas exported to the UAE via the Dolphin pipeline.

Qatar tends to build export facilities linked to long-term contracts and relationships rather than speculatively, so it could not substantially increase exports when demand for LNG spiked in the wake of the Russia/Ukraine war. Recent QatarEnergy contracts include a 27-year deal with Sinopec and a deal with Germany, but these are not due to start delivering gas until 2026. Although the relationship with China is growing, South Korea is currently the largest recipient of Qatari gas, followed by India, with Japan and China following in third.  

Qatar's massively capital-intensive plans for LNG expansion predate the Russian/Ukraine war and are not just based on exports to Asian countries with less ambitious climate goals. In an interview with Bloomberg, Al-Kaabi said, “Renewables will definitely happen—we’re doing a lot ourselves—but you need gas to complement that. “Gas is sort of in a Catholic marriage with renewables. They would need to stay together for a very long time for you to have the transition successfully.” 

In spending billions preparing to continue to export gas for decades to come, Qatar is in part betting both that some European ambitions to transition to near-total renewable energy generation will fail and that Europeans will struggle to develop their own sources of gas from either substantial new offshore sources or by fracking, despite large reserves across the continent. It is making this bet even as other countries, such as the US and Australia, expand their capacity to export natural gas. As nations like Britain ban onshore shale gas development or are expected to ban offshore gas development, this bet may prove highly lucrative. 

The bet that gas will continue to be used extensively even by countries with high amounts of renewable generation may also enhance Qatar's relationship with the US. Although the US itself is not dependent on Qatari gas due to the US's position as a net energy exporter, Qatar will contribute to America’s European allies' economic security by either directly supplying them with gas or keeping costs lower than they otherwise would be. Although the natural gas market is less of a global market than the oil market, the more LNG is brought online, the more prices will become global.

Gas revenues will also continue to provide funds for the Qatari Investment Authority (QIA). Started by Hamid in 2005, the QIA soon invested in distinctive Western brands such as Harrods. Many are done in times of Western financial distress, with notable outlays during the last financial crisis, with QIA investing in Barclays Bank to help keep it solvent in 2008. Sovereign wealth funds supporting vital industries are not confined to the financial crisis, with a willingness to invest in crucial national infrastructure implicitly linked to investments in more sensitive industries. QIA was an early investor in Rolls Royce SMR, and Qatari money has been crucial to keeping the project alive as it has suffered under the British Government’s lack of haste.  

Conclusion

Tight domestic political control and significant energy resources mean the principal challenge for Qatari elites will be navigating its complex foreign relationships. In particular, if Qatar continues to be successful at exporting LNG, this could provide relief for European countries intent on transitioning to a tricky renewable energy future, although this may come at the “cost” of greater Qatari influence in Western companies and institutions. This may be unpopular with Western publics and elites, which have demonstrated opposition to Gulf ownership of news outlets.