With the fluctuations of oil and gas prices creating shocks to their economies, Gulf states may want to rethink the peg to the U.S. dollar.
There is a certain nostalgia emerging among Qatar analysts as the state engages in policies not seen since the heydays of the mid-2000s when Qatar was in its regional consensus-denying pomp.
First, in early November, Qatari Emir Tamim bin Hamad al-Thani announced a Cabinet reshuffle. The headline change saw the foreign minister, Mohammed bin Abdulrahman al-Thani, given an additional role as chairman of the Qatar Investment Authority, the state sovereign wealth fund, mirroring the situation that prevailed in the 2000s. Also, Abdullah bin Hamad al-Thani, the deputy emir and brother of Tamim, was named chairman of Qatar Petroleum, which is expected to greatly expand Qatar’s gas exports over the next few years. The former head of Qatar Petroleum, Saad al-Kaabi, was promoted to minister of energy affairs. Then, in early December, Qatar announced out of the blue that it was withdrawing from OPEC. According to Kaabi, this was so that Qatar could concentrate more on its gas business.
Plus ça change?
Despite the headline grabbing nature of these decisions, they are not likely to herald a strategic shift in Qatar’s direction. The consolidation of the leadership of foreign affairs with the Qatar Investment Authority does, however, cement a transition that has been occurring over the past two years. Since Tamim became emir, the Qatari government has turned its focus more to internal matters, a change from the rule of his father and predecessor, Hamad bin Khalifa al-Thani. But recent international events culminating in the 2017 boycott of Qatar have reminded Tamim that, in reality, Qatar’s security rests upon its international relations. The reuniting of the sovereign wealth fund and foreign affairs portfolios under one man is thus a way for Qatar to easily and simply coordinate the deployment of its key asset – financial wealth – as a part of its foreign affairs to secure the state.
Meanwhile, leaving OPEC will have no discernible practical impact on Qatar. Qatar’s oil exports are minimal – less than 2 percent of OPEC’s total – and, in reality, Qatar’s expansion of its gas exports has nothing to do with OPEC. This decision, therefore, is essentially a piece of political messaging. For the domestic audience, it is popular, reinforcing the idea that Qatar is an independent state, beholden to itself alone. Externally, it is back to the good old days of Qatar pursuing individualistic policies heedless of wider regional preferences or status quo concerns.
Emir Hamad’s Foreign Focus
Tamim’s father, Hamad, took power in 1995, ruling in tandem with his long-time close confidant Hamad bin Jassim al-Thani, who held various portfolios over the years including minister of municipalities, minister of foreign affairs, and prime minister, as well as running the Qatar Investment Authority and the national airline, Qatar Airways.
Both men were fundamentally interested in foreign policy and wanted to play a role in shaping regional politics because they believed that this was critical to Qatar’s survival. As a state with a tiny indigenous population – around 300,000 Qataris today – it was impossible for Qatar to protect itself by force of its own arms. And there were genuine threats in their region. Within living memory, Kuwait was invaded and decimated, showing just what can happen to small, rich, defenseless states.
The answer of Hamad bin Khalifa and Hamad bin Jassim to this was threefold. First, to act as a deterrent, Qatar would invite the United States, the world’s most significant military power, to establish a meaningful presence at an air base near the Emiri Palace in Doha. Second, they sought to make Doha a center for high-profile international diplomacy. This boosted Qatar’s image internationally by associating the state with regional and international mediation efforts and, for the first time in the state’s history, it enjoyed a decisive role in important regional political events. Third, they ignored the Qatari military. This was because they could not see the point in pouring tens of billions of dollars into an armed force that probably could not defend the state and was not needed because of the presence of such significant U.S. forces in Doha. By limiting Qatar’s military power and so transparently posing no military threat to anyone, they sought to accentuate the role of Qatar as an inoffensive regional state.
By the late 2000s, Tamim began taking on increasing portfolios in apprenticeship for the top job that was to be his eventually. He started by investing in the world of sports and he also took on the defense portfolio. Tamim’s role as the decision maker in defense became more evident by 2008, as a lot more money was spent on Qatar’s armed forces, notably with heavy lift aircraft. Tamim reflected a more traditional approach to military matters, reckoning that Qatar could not remain intrinsically weak in defense.
Tamim Attends to the Home Front
Emir Tamim’s ascension to the throne in summer 2013 was followed immediately by a turbulent turn in regional politics, as the elected Muslim Brotherhood-led government in Egypt was overthrown by Egypt’s military. Under Tamim, Qatar’s support for Islamist groups around the region didn’t stop, but there was a gradual drop off in Qatari involvement. An immediate change might have seemed like a harsh repudiation of his father’s approach. And, while some Qataris may have privately questioned the wisdom of getting deeply involved in popular revolts in Syria and Libya, Hamad bin Khalifa remained a profoundly popular leader, having transformed Qatar from a small and irrelevant state to one of some geopolitical significance.
Tamim signaled his preference for a more internally focused state in his Cabinet appointments. Under Hamad bin Khalifa, the power of the foreign minister was augmented by his holding at the same time the portfolio of prime minister and serving as the head of the Qatar Investment Authority. Under Tamim, it was the minister of interior whose power was boosted by simultaneously serving as prime minister. Also, Tamim separated the roles of foreign minister and the head of the Qatar Investment Authority.
Yet, while Tamim might have wanted to focus internally, he never really got the chance. Within months of taking over, Tamim was beset with an international crisis. The United Arab Emirates, Bahrain, and Saudi Arabia withdrew their ambassadors from Doha for much of 2014. They hoped that by pressuring Tamim so early on in his reign that they could force him to abandon Qatar’s support for Islamist groups and what they argued were destabilizing strategies by state broadcaster Al Jazeera against Egypt and immediate Gulf neighbors. Tamim came to an accommodation by the end of 2014 that involved, for example, expelling some members of the Muslim Brotherhood from Qatar and toning down Al Jazeera.
Back to the Future
The 2014 imbroglio ended with an uneasy truce but re-emerged as an even more serious crisis in 2017 when the same three neighbors along with Egypt led a boycott of Qatar for many of the same reasons. A key part of the Qatari reaction was to look to international allies, as Tamim reverted to a more Hamad-like approach to foreign policy. Qatar increased purchases from defense industries of three of its more important allies, buying U.S., British, and French fast jets. In the face of the crisis, Tamim wanted to engage Qatar’s financial power in its international relations by building closer defense ties with key allies while actively responding with a well-orchestrated public relations campaign.
In this most recent Cabinet reshuffle, Tamim has once again aligned the Foreign Ministry with the Qatar Investment Authority, allowing for a quicker and more seamless integration of one of Qatar’s key tools of power – money – into state foreign policy.
The withdrawal from OPEC is a classic “old” Qatar gambit, demonstrating that Qatar is, once again, pursuing its own regional interests. Practically speaking, this makes no difference to Qatar as an oil producer. Its oil exports are small, and Qatar’s fields are old and not able to pump much more. The proposed rationale that this somehow frees up Qatar to focus on its gas industry makes little sense as OPEC posed no discernible impediment to Qatar’s gas production.
Rather, this decision is politically symbolic with little obvious downside. It is a public statement of self-confidence for Qatar that, even though it remains under an unprecedented boycott, it can voluntarily abandon a high-profile organization of which it has been a member for nearly 60 years.
is non-resident fellow at the Arab Gulf States Institute in Washington and an associate professor in the School of Security Studies at King’s College London.
The Arab Gulf States Institute in Washington's eighth annual Petro Diplomacy conference examined the upheaval in the oil and gas markets following Russia’s invasion of Ukraine and the role of Gulf Arab oil producing states in meeting the sudden demand surge.
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