How former Emir Sheikh Hamad bin Khalifa Al Thani built Qatar’s economy
Sheikh Hamad, who passed away aged 74 on Sunday, reshaped Qatar’s economy by building lasting wealth and growth. Qatar’s Father Emir Sheikh Hamad Bin Khalifa
Sheikh Hamad, who passed away aged 74 on Sunday, reshaped Qatar’s economy by building lasting wealth and growth. Qatar’s Father Emir Sheikh Hamad Bin Khalifa Al Thani has died at the age of 74. During his 18-year rule, Sheikh Hamad reshaped the energy-rich country’s domestic and global footprint. When he assumed power in 1995, Qatar’s economy was limited in size and relied mainly on oil, while the vast gas wealth of the North Field site was still in the early stages of development. In less than two decades, Qatar became the world’s largest exporter of liquefied natural gas (LNG), the owner of one of the largest sovereign wealth funds and one of the countries with the highest per capita incomes. This transformation was not just an oil or gas boom fuelled by rising energy prices, but an overhaul of the country’s economic model that was underpinned by a strategy of investing natural resource wealth in building productive assets, financial institutions, infrastructure and human capital. The economic shift did not begin with Sheikh Hamad’s assumption of power. It was preceded by his appointment in 1989 as chairman of the Supreme Council for Planning, the body then responsible for formulating Qatar’s economic and social policies, which allowed him to oversee the preparation of development programmes before he came to power. Here, we take a look at Sheikh Hamad’s economic legacy that helped transform Qatar from a small Gulf economy to a major and influential player in global energy and investment markets. How gas changed Qatar’s economy The development of the North Field, the world’s largest natural gas field, marked the true starting point of Qatar’s economic transformation. The decision to accelerate investment and expand gas liquefaction projects during the second half of the 1990s changed the country’s position in the energy market and propelled it towards global leadership. Qatar went from exporting its first LNG shipment in 1996 to becoming the world’s largest exporter of the commodity in fewer than 15 years. By 2010, production capacity had risen to 77 million tons per year, according to data from QatarEnergy and the International Energy Agency.
The impact of this boom was not limited to increasing revenues; it also cemented Qatar’s position as a strategic partner in global energy security, especially for the economies of Asia and Europe. Data from Qatar’s Amiri Diwan reflect the scale of the transformation witnessed by the energy sector, as the added value of the hydrocarbons sector rose from 11 billion Qatari riyals (about $3bn) to 403 billion riyals (about $110.4bn) during Sheikh Hamad’s rule. Unprecedented economic growth The gas boom was directly reflected in the performance of Qatar’s economy, which became one of the fastest-growing in the world during the first decade of the millennium. World Bank data cited by Bloomberg showed Qatar’s economy grew more than twentyfold during Sheikh Hamad’s reign, with gross domestic product (GDP) rising from about $8bn in 1995 to about $199 billion in 2013. According to the International Monetary Fund (IMF), the economy also recorded the highest growth rates in the world during that period, with real growth reaching 18 percent in 2006 before rising to 26.2 percent in 2011, as LNG production projects came onstream. From gas boom to capital export The economic transformation did not stop at increased production or revenues, but it also extended to the way wealth was managed. As part of building a system to manage financial surpluses, Qatar in 2001 established the Supreme Council for Economic Affairs and Investment under the chairmanship of Sheikh Hamad. The council was tasked with diversifying domestic and foreign investments “with the aim of developing Qatar’s financial reserves and diversifying sources of income”, according to the Qatari Amiri Diwan. Four years later, the Qatar Investment Authority (QIA) was established to manage the financial surpluses generated from oil and gas exports. Sheikh Hamad implemented a policy based on allocating part of the energy revenues to long-term investment, with the aim of building sustainable sources of income beyond natural resources. QIA quickly became one of the world’s largest sovereign wealth funds, acquiring stakes in companies such as Barclays and Volkswagen, as well as the United Kingdom-based Harrods department store in 2010.
The BriefWire