Qatar’s Finance Minister Yousef Hussein Kamal deserves praise for the part he has played in turning the state’s once fragile economy into an economic powerhouse within a decade. While its gas riches have given it a massive advantage, many forget it also undertook a highly unpopular reform programme in the 1990s, slashing budgets and cutting subsidies to ensure its long-term financial health.
The threat of inflation could yet undo much of that work. But even so, with oil and gas prices hitting new records by the day, it would be easy for Doha to sit back and reap the benefits of its previous reforms. Instead, Kamal is leading the country down an even more ambitious path.
Last year, he set a goal for its non-energy sector to account for a staggering 80 per cent of its economy by 2015, despite energy receipts currently accounting for two-thirds of revenues.
That ambition has now been expanded to zero oil dependence by 2020. To facilitate this, about $130bn has been earmarked to build the state’s infrastructure and diversify its economy, with a new focus on research and development and international investment.
Qatar’s overseas investment strategy is still at a relatively early stage, but will act as a fall-back once its energy reserves run out.
Questions remain, however, over Qatar’s claim to be a true rival to other Gulf business hubs, such as Dubai, Abu Dhabi and Bahrain. While the state continues to attract the cream of international oil majors, lured by its massive gas prospects, few big players in other sectors are choosing Doha as the site for their Middle East headquarters.
Kamal argues that as the state’s investment in education matures, the country will create its own new ideas and technologies, rather than having to import them. That remains a pipe dream for now, albeit one Qatar can indulge in given its plentiful resources. But the economy would be far stronger and more resilient if more big international companies were based there.