By Ghulam Haider
It is not so long ago that Doha, the capital of Qatar, which is currently set to host one of the world’s biggest sports galas – FIFA World Cup 2022 — was far from the vision of a modern and wealthy country.
Till 1922, this tiny Gulf state with a current population of around 3 million and an area of less than 12,000 km, was practically an uninhabited land. It was a tiny settlement of fishermen and pearl collectors, with majority of the inhabitants being nomadic travelers from the vast deserts of the Arabian Peninsula.
Today, few Qataris over the age of 90 can recall the dire economic hardships of the 1930s and 1940s when the Japanese invented pearl farming and ensured mass production, which nearly destroyed the Qatari economy.
In that decade, Qatar lost 30 per cent of its residents who left to seek economic opportunities abroad. Ten years later, in 1950, according to the United Nations, there were less than 24,000 inhabitants in the modern day Qatar.
However, at that time, Qatari economy was on the verge of a revolutionary turning point. It would be fair to say that Qatar was truly saved by a miracle – the discovery of one of the largest oil reserves in the world here. In fact, since the 1950s, Qatari treasury has become increasingly wealthy, and this has also been the starting point for its citizens to become some of the richest citizens in the world.
Now that Qatar has become a global star for its skyscrapers, luxurious artificial islands and state-of-the-art stadiums, an effort has been made to analyze three changes that have made the country as one of the richest countries on the planet.
The Oil Discovery in 1939
When Qatar discovered its ‘black gold’, it did not yet exist as a nation and was in the hands of the British, who took control of the region in 1916. After many years of exploration, the first deposits were discovered in 1939 in the Dakhan, on the west coast of the country and about 80 km from Doha. However, it took a few more years to capitalize on this discovery.
The discovery came at the start of the World War II, which halted oil exports until 1949 and the discovery was not immediately exploited. Meanwhile, the export of oil opened many economic opportunities in Qatar, helping the country rapidly transform and modernize.
The growing oil industry attracted immigrants and investors to Qatar and thus its population began to grow. There were less than 25,000 inhabitants by 1950, and the population grew to over 100,000 in 1970. A year later, Qatar was consolidated as an independent state following the end of British rule. However, during this time a new era also started, which led to a ‘second discovery’ which created more wealth.
The Natural Gas Discovery
In 1971, when ‘explorer’ engineers discovered vast natural gas deposits in the North Field on the north-east coast of Qatar, few could have imagined its significance. It took 14 years and dozens of drills to realize that the North Field was the world’s largest ‘non-associated’ natural gas field, containing about 10 percent of the world’s known gas reserves.
After Russia and Iran, Qatar practically has the largest gas reserves in the world and obviously both of these countries are much larger than Qatar in terms of population and area. Northfield covers an area of about 6,000 km, which is half of the entire diameter. Qatar Gas is the largest producer of liquefied natural gas in the world. The development of this industry is considered an important factor in Qatari economic development.
However, like oil, the profits from gas exports took time to come. For a long time, the demand wasn’t that big and there wasn’t much interest in developing it. Although everything started to transform in the 80s when the infrastructure started to be built in stages. It was distributed within the country, and in the 90s, it was developed to export for making it a great engine of the economy.
With the advent of the 21st century, Qatari economic development witnessed rapid growth. Between 2003 and 2004 alone, the Gross Domestic Product (GDP) grew at the rate of 3.7 percent to 19.2 percent. Two years later, in 2006, the economy grew by 26.2 percent. Double-digit GDP growth has been a sign of Qatar’s strength for years, and it’s a trend that can’t be explained by gas prices alone.
This became possible after the controversial political change in which Hamad bin Khalifa Al Thani, the father of the current Emir Tamim bin Hamad Al Thani, took the throne in 1995. Hamad bin Khalifa al-Thani deposed his father as Emir of the country while he was on a visit to Switzerland. Al-Thani is the family that has ruled Qatar for the past century and a half and this kind of power grab was nothing new.
The palace intrigues aside, analysts agree that the process proved to be actually drawing a line between the past and the future. However, investment in extraction, liquefaction and distribution infrastructure multiplied to improve the overall performance of Qatar’s large reserves and has led to an extraordinary increase in exports.
When, in 1996, a cargo full of natural gas left for Japan, it was the first major Qatari gas export and the start of a multi-billion-dollar industry that catapulted the Qataris to the pinnacle of global wealth. According to the World Bank, Qatar’s per capita was $61,276 in 2021. If purchasing power be taken into account, it reaches $93,521 which is the highest in the world.
Its low population makes a huge difference in this regard. At present, the number of Qataris in the country is only around three to three and a half lakh, which is only 10 percent of the total population of thirty lakh, with majority of them foreigners.
The population of Qatar that receives these great benefits of the state is very small. This was the reason why GDP per capita started growing so rapidly. The Qatari state, in addition to guaranteeing high wages, also provides a strong education and health system.
However, in recent years, Qatar’s impressive economic growth has suffered setbacks and is experiencing a slowdown. It also anticipates future challenges and its economy’s dependence on fossil fuels is looming over the future due to global climate change.
In 2013 and 2014, oil prices fell and economic diversification became the main topic of discussion. It also includes an embargo imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt between 2017 and 2021 following a diplomatic row with Doha that challenged the resilience of the Qatari economy.
Qatar has yet to innovate in an economy dependent on gas or oil exports. That is why they are trying to expand the private sector and invest heavily around the world to reduce their dependence on hydrocarbons. A good example of this effort is the Qatar Investment Authority’s presence in several famous properties in cities such as London or New York.
Or how they try to promote tourism and turn Doha into a hub for meetings, conferences and events, especially now with the World Cup. Qatar’s investment of more than two hundred million US dollars in the FIFA World Cup reflects the size of its economy. It is the most expensive World Cup in history, building eight stadiums, a new airport and a new metro line, to name just a few.
Most of the countries of the world are questioning the preparation of this World Cup. Human rights organizations have expressed concern about the conditions of many construction workers, the majority of whom are from countries such as Pakistan, Nepal, India and Bangladesh.
In addition, allegations of corruption and bribery have been leveled against Qatar and FIFA, with claims that the process was not based on transparency when it was entrusted with organizing the event in 2010. This and questions about women’s rights and the LGBT community in a country known for being conservative and hard-line for many, the event actually has been an effort to ‘improve country’s image’.
Despite these condemnations, it is clear that this is much more than a World Cup for a small country that grew rich in record time, and is now trying to position itself as a major geopolitical player as a modern and progressive country.
Some Facts about Qatar
- For years, Qatar has topped the Middle East and North Africa (MENA) region in the Global Peace Index (GPI). In the 2020 report, Qatar took the first position among the Arab countries and 27th place on the global level among 163 countries covered by the GPI. (Source: Vision of Humanity)
- Qatar ranks fourth highest GPD per capita income (PPP) country in the world at $94,028.6 USD (Source: World Bank GDP per capita, PPP (current international $)) and has prospered in the last several years with continued real GDP growth.
- Standard & Poor’s credit rating for Qatar stands at AA- with stable outlook. (Source: S&P Rating)
- In 2019 Qatar ranked 29th and reaffirmed once again its position as one of the most competitive economies in the MENA region, according to the World Economic Forum competitiveness index. (Source: World Economic Forum)
- Boasting one of the highest per capita income in the world, Qatar is emerging as the most dynamic and one of the fastest growing economies in the Middle East, almost tripling in size from 2005 to achieve a nominal GDP of approximately US$173.3bn in 2011. (Source: World Bank GDP per capita (current US$))
- The Qatar National Vision 2030 guides the country’s growth. The government is committed to creating a dynamic, competitive and broad-based economy by increasing economic diversification through the re-investment of Qatar’s significant energy wealth. Qatar has over $25.4 trillion USD in proven hydrocarbon reserves to be monetised over the next 100 years and sustain long-term growth and development. Source: British Petroleum, Statistical Review of World Energy 2011)