Why is Qatar a super rich country?

FIFA World Cup Qatar 2022™ – A historic moment for Qatar. We call it a historic moment not because it’s the first time a Middle Eastern country has won the right to host the World Cup. It’s because this is the story of a small country that only 50 years ago was the poorest territory of the British Empire. With a small population, almost the entire land was covered by desert and temperatures could reach up to 50°C.

Now in 2022, that country has not only succeeded in winning the right to host the most exciting sports event on the planet, but also the most expensive event in Qatar’s history. Every World Cup, the host country spends a ton of money to organize the event, and this number is increasing every four years. But Qatar is something different. And Qatar is not a poor country that pours everything they have into the World Cup like a gamble. They are a super-rich country, and this country is always among the top countries with the highest per capita income in the world, even twice as high as powerhouse countries like England or France.

So how did the story of a small Qatar become so wealthy, and will this story be written by the people of Qatar?

The Story of Qatar’s Wealth

Qatar is a very small country with an area of only 11,571 km². With such a small area, most of which is covered by vast deserts and temperatures that can reach up to 50°C, it is not surprising that Qatar was once the poorest autonomous region of the British Empire in the past. But the British still came here because they smelled something: oil. However, since the British took over Qatar from the Ottoman Empire after World War I, it took more than 20 years for oil to be discovered in Qatar. Qatar transformed from a land of fishing and pearl diving into a hub for British oil transportation.

However, life in Qatar, although improved, did not change much, at least until the early 1970s. In 1971, Shell Oil Company discovered Qatar’s treasure, the North Field gas field – the world’s largest gas field. Most of this gas field belongs to Qatar, but a portion of it belongs to Iran. Therefore, although Arab countries usually do not have good relations with Iran, Qatar still maintains a certain degree of friendly relations with this country. But that was in the future, at that time, this gas field was not fully utilized. And Qatar’s magic had yet to appear.

What’s the reason? It’s because natural gas is typically transported through pipelines, but for Qatar – a small peninsula in the Middle East – this is not feasible. Even Shell, the company that discovered the gas field, quickly forgot about it. The British left Qatar in 1971, and two decades passed before The North Field was fully utilized. Things only began to change when Hamad bin Khalifa Al Thani orchestrated a coup in 1995. Whatever means he used to seize power, Hamad bin Khalifa Al Thani had a clear idea in mind once the coup succeeded – to turn the gas into the nation’s raw material. To do this, he had to solve the problem of transporting the gas. So what was the solution?

Hamad bin Khalifa Al Thani liquefied the gas by cooling it to -161°C, and then transported it by ship, just like oil. This is what we call liquefied natural gas, or LNG. Hamad bin Khalifa Al Thani took a gamble, investing in the technology to liquefy natural gas, and he won big. The world went crazy for Qatar’s LNG. Qatar quickly became the world’s largest LNG distributor. Their customers span from China, India, to Japan and South Korea. This is the secret to Qatar’s wealth, but it’s only the beginning of the story.

This small country that looks like a thumb is now rich, very rich. But reality has shown that wealth from resources can also lead to disaster. We see what happened to Iraq, Libya, Venezuela… Qatar saw that they could not rely solely on their gas resources. And they also had to build wise international relationships if they did not want to follow in the footsteps of Iraq or Libya. So they implemented a plan to diversify their economy, but before we get to investments and international relations, let’s take a look at Qatar’s domestic investments first.

Diversify The Economy

Hamad bin Khalifa Al Thani used the money earned from gas to invest in transportation, education, and healthcare. Among the 3 million people in Qatar, only 5% are Qatari citizens, while the rest are foreign workers. Hamad bin Khalifa Al Thani’s welfare programs are mostly for this 5%. Therefore, you can imagine how luxurious the life of Qataris is.

Once stabilized domestically, Qatar began to expand its influence worldwide. In 2005, Qatar established the Qatar Investment Authority, or QIA for short. QIA has huge real estate investments around the world, including in superpowers like the UK and the US. Taking the UK as an example, even in the capital of the UK, London, Qataris own numerous hotels, offices, and apartments. Qataris invest so much in the UK that they own more real estate in the UK than Queen Elizabeth II. The same thing happens in the US, Germany, and many other countries.

Another thing that QIA is very interested in is shares in large multinational corporations worldwide. Do you know that many famous brands we hear every day are mostly owned by this small Middle Eastern country? These include Volkswagen, Barclays bank – a very familiar brand if you are a fan of the English Premier League, Tiffany & Co., Shell lubricant company, and most notably, the Paris Saint-Germain football club. These are just a small portion of QIA’s numerous investments. According to Qatar, all of these investments are to prepare for a future when oil and gas are depleted or replaced by other sources of energy. However, there is no sign that day will come soon. Just look at the ongoing energy battle between Russia and Europe.

International Power

Thus, while Qatar still has a massive source of revenue from natural gas, it also has endless amounts of money from investments. However, to ensure this wealth is permanent, Qatar needs power or a voice in the international community. Qatar has a neighbor who is both rich and has immense power right next door, Saudi Arabia. And they have not forgotten what happened to Kuwait in the early 90s (1990 – Iraq invaded Kuwait). Therefore, they have to find a way to increase their influence on the world stage.

In 2003, when Saudi Arabia asked the US to withdraw its military base from its territory, Qatar seized the opportunity and allowed the US to place a military base on its territory as a way to both befriend the US and have protection from the rest of the world. Media is also an important factor in reaching out to the world, as it is the strongest tool to disseminate its ideas. Thus, Qatar established the Al Jazeera media channel. Try searching for it and you will see that it is the largest media channel in the Arab world.

However, Al Jazeera has also caused Qatar some troubles. During the Arab Spring in 2011, instead of supporting the governments of the countries experiencing protests, Al Jazeera cheered on the opposition. Adding to Qatar’s concerns about its growing wealth, Saudi Arabia launched a plan to isolate Qatar, which ultimately failed. Saudi Arabia was not strong enough, and Qatar had good relations with all parties from the West, Iran, to Russia. Therefore, hardly anyone responded to Saudi Arabia’s plan. The plan ended, and Saudi Arabia-Qatar relations have returned to normal.

Qatar wants its power to continue to be pushed to a new height. The quickest way to do this is to organize major events that the world pays attention to. With nearly endless money, Qatar used it to talk to FIFA – an organization that speaks the same language of money as they do, to successfully win the bid for hosting the 2022 World Cup. Although Qatar did not meet any standards to win the right to host such a major football event, they did it with money. A sports event with billions of people around the world watching it being held in their country means that all eyes will be on Qatar. Through this, Qatar will receive countless other benefits such as tourism, investment, and, more importantly, reputation.

With available resources, solid initial capital, wide-open relationships, and increasing soft power, all of these have made Qatar what we see today. Starting 50 years ago and being revamped 30 years ago, Qatar’s dragon story is still being written with new chapters. And it seems that it will not have an ending, at least in the near future.