Qatar Spreads The Wealth
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WSJ(1/28) World Economic Forum: Qatar Spreads The Wealth
Zawya Dow Jones Newswires
Monday, Jan 28, 2008
(From THE WALL STREET JOURNAL)
By Andrew Critchlow
DAVOS, Switzerland -- Leaders from the oil-rich sheikdoms of the Persian Gulf were in demand at this year's World Economic Forum here. None more so than Sheik Hamad bin Jassem Al Thani, the 49-year-old prime minister of Qatar, owner of the world's largest natural-gas field.
But Sheik Hamad hasn't always had things his own way. Back in 1998, when oil prices hovered at about $10 a barrel, Qatar was near bankruptcy, with its credit rating almost falling below investment grade.
Things are different these days as Sheik Hamad, who is also Qatar's foreign minister and chief executive of its $60 billion-$100 billion sovereign-wealth fund, holds court in his suite on the top floor of the Seehof Hotel in this Alpine resort.
Qatar's 800,000 nationals are now the world's wealthiest people, with a per capita income that the International Monetary Fund predicted would exceed $70,000 last year. According to HSBC Holdings PLC, the nation's economy has grown six-fold in the past decade.
Gas is at the forefront of this turnaround. The sheikdom will export almost 33 million tons of liquefied natural gas this year, making it the largest shipper of the fuel. By 2012, this will increase to 77 million tons a year. Added to its output of about 1.1 million barrels a day of oil, that makes Qatar one of the world's biggest energy producers.
"We have to save a good amount of money for our people, for the generation coming," says Sheik Hamad, remembering the time when Qatar would come to Davos to plead with Western bankers for funds to finance the development of its natural-gas resources. The sheik says those bankers are now lining up at his door with offers.
The Qatar Investment AuthorityQatar Investment AuthorityLoading..., or QIAQIA
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, established eight years ago, is central to ensuring the Persian Gulf monarchy doesn't squander its vast energy-derived wealth. The sovereign-wealth fund has a diverse stable of investments, with stakes in companies including London Stock Exchange Group PLC and Raffles Medical Group Ltd.
Delta Two Ltd., an investment arm of the QIAQIA
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, which in November scrapped a $20.7 billion takeover bid for the third-biggest British supermarket chain, J Sainsbury PLC after four months of negotiations, now directly owns a 25% stake in the company. It also owns nearly 10% of Nordic stock exchange operator OMX AB.
The fund was even approached by a third party, Sheik Hamad says, about helping to rescue U.K. mortgage lender Northern Rock PLC.
Sheik Hamad says these holdings are about to swell, as the fund plans to take advantage of a slide in financial stocks to invest between $10 billion and $15 billion buying stakes in a "basket" of between 10 and 12 blue-chip U.S. and European banks within the next month.
As foreign minister, Sheik Hamad -- part of an inner circle around the nation's emir along with oil minister Abdullah bin Hamad Al Attiyah and Crown Prince Tameem Bin Hamad Al-Thani -- has been among the Gulf's most active officials in the diplomatic arena.
Qatar's foreign policy under Sheik Hamad is best described as pragmatic. In Davos, Sheik Hamad said he met with Ehud Barak, Israel's defense minister, amid rising concern over a reoccupation of Gaza.
"We don't want another war in the region, and it's a tough time, yes. The way to solve this is through consultation," he said.
Qatari pragmatism has also brought it into conflict with its Gulf neighbors, most notably Saudi Arabia. Riyadh has repeatedly objected to the Doha-based al Jazeera satellite networkal Jazeera satellite network
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and last year, a 30-year-old border dispute flared up when Saudi Arabia threatened to block the opening of a $3.5 billion gas pipeline project between the United Arab Emirates and Qatar.
Sheik Hamad shrugs off concerns over those tensions. With no sign of a slump in energy demand, or an end to the economic boom in the Gulf, he expects the line outside his door to only grow longer.
