Growing sphere of influence

Qatar’s foreign policy in North Africa is coming under closer scrutiny as its sphere of influence widens further. Published in The Gulf, February 2013

The turn of the year has brought renewed international focus on North African and Saharan countries. Struggling with revolutions and their aftermath in 2011 and 2012, there is now concern about economic instability in Egypt and a resurgence of Islamist militancy in Algeria and Mali. For Qatar, these developments will undoubtedly test its diplomatic credentials.

When it comes to diplomacy, Qatar came to prominence brokering peace in Sudan, Lebanon and elsewhere. That role has not been completely abandoned. It hosted talks to resolve the Darfur crisis in Sudan this year, for example, and the Taliban is due to open an office in Doha as part of Qatar’s bridge-building efforts in Afghanistan. During the revolutions of the Arab Spring, Qatar took on a far more activist role, notably by providing money and weapons to rebel groups in Libya.

Its close involvement with North Africa has not stopped since its ageing rulers were overthrown. However, the nature of its support has shifted to finance and investment. Egypt has gained the most from Qatari largesse with some $7.5 billion in grants and soft loans already handed over and up to $18 billion of investment promised over the next five years. This financial support is not a selfless act but part of a wider strategy for the Gulf country.

“Qatar has a lot of money but it needs to do something with it,” says David Roberts, director of the Qatar branch of the Royal United Service Institute (RUSI), a defence think-tank. “No-one expects the Egyptian economy to rebound in the next 18 months, but I think Doha feels investment in Egypt is a fairly safe bet in the long-term.

“I think the strategic goal is to establish extremely strong relations with a key new power in the Middle East. Qatar’s foreign policy more generally is about having strong relations with a variety of actors, whether that’s through the US military bases, gas deals and investments with Britain, or gas sales to Asia. I think Egypt is another constituency that Qatar is trying to shore up.”

The aid has been vital for Egypt as it tries to prevent a collapse in its currency. At times it has seemed that, while Egypt has an unquenchable need for aid, Qatar has bottomless reserves of goodwill towards it. Indeed, Qatar’s prime minister and foreign minister Shaikh Hamad bin Jassim bin Jaber al Thani seemed to write a blank cheque for Cairo in January, while also quietly urging others to offer support.

“Qatar will stand by Egypt and the Egyptian people’s needs,” he said at the time. “We don’t want to see the biggest country in the Arab world bankrupt. I don’t think this is wise. I think it is in the interest of the World Bank and the international community not to see Egypt brought down.”

The vast amount of aid that Doha is pouring into Egypt has led one local investment bank, Beltone Financial, to call Qatar “the only positive trigger in Egypt’s economy”, although it adds that it was “wary of the sustainability of that, as well as of the complacency of the Egyptian government in reform implementation”.

Alongside the generosity, there has also been an emerging strand of criticism about some of Qatar’s actions, from both within the region and globally.

Among the international critics are some French politicians from the extremes of the political scene. Marine Le Pen, president of the far right National Front, accused Qatar last month of supporting the global expansion of violent radical Islamist groups.

Francophone countries of North and West Africa have long been seen by Paris as being in its sphere of influence and some are perhaps unhappy that another country is moving in on their territory, particularly given Doha’s implied criticism of French military action in Mali.

Reflecting on the situation in Mali at a press conference on 15 January, Shaikh Hamad bin Jassim said:

“I think political dialogue is important and necessary. I do not think force would solve the problem.”

In Libya too, there has been some disquiet about Qatar’s involvement with some groups. On his return from a visit to Doha in January, Libyan prime minister Ali Zeidan was quoted by local media as saying that Qatar had “agreed to deal with the state only through bi-lateral agreements and will no longer deal as it did before the formation of the state”.

Shaikh Hamad bin Jassim said as much earlier this year.

“We’re a state of institutions and deal with the official authorities in Libya with all respect and we do not interfere in affairs of any party,” he said. “Relations between the Libyan and Qatari peoples and governments are strong and this is important based on appreciation, respect and non-interference in the internal affairs of any party.”

Even in Egypt there has been some criticism about just what Qatar is up to, with Doha forced to publicly deny that it is interested in buying the Suez Canal. While it is all but unthinkable that Cairo would allow such a strategic asset to fall into foreign hands, the mere existence of the rumour points to the delicate ground that Qatar now sometimes finds itself in.

Part of the problem is uncertainty about Qatar’s aims and motivations, and whether the political goals, whatever they may be, will trump its economic and investment needs.

In terms of politics, Qatar’s involvement in North Africa fits in with its wider strategy of building up its diplomatic credentials. Indeed, until the Arab Spring uprisings, its international political efforts had been a test case in the use of ‘soft power’, fitting in alongside the activities of the Al Jazeera television network, which is based in Doha, and bids to host global sporting tournaments such as the 2022 FIFA World Cup. However, its willingness to back revolutionary movements over the past two years means people are bound to question its actions more closely now.

The economic aspect of its foreign policy is more straightforward. Qatar runs huge budget surpluses every year thanks to high energy prices and its vast gas reserves. Despite the huge amount of development work in Qatar in pursuit of economic diversification there is a limit to how much the local economy can absorb without overheating. In its latest Article IV review of the Qatari economy in January, the IMF urged Doha “to remain vigilant of any emerging inflationary pressures and stand ready to restrain current expenditures”.

That means it needs to find other places for investment. While real estate markets of some European capitals have been notable beneficiaries of this, it has also been keen to invest within the region. Recently, most of Qatar’s attention has been lavished on Egypt, but it has been getting involved in other North Africa countries as well. Morocco and Tunisia have both benefited from Qatari investments and, although Libya has no need of other people’s money, Qatari companies have also been starting to enter that market too.

Generally it has been state-backed groups that have been the first movers, including Qatar National Bank (QNB) and Qatar Airways. In addition, there have been large investments in industrial, tourism and real estate projects, such as the Tozeur Desert Resort in Tunisia, which is backed by Qatari Diar.

In January there was a wide-ranging series of cooperation agreements signed with Algeria for projects ranging from iron and steel production, to maritime transport, mining and petrochemicals.

It is still too early to say whether this strategy can be counted as a success. Doha will be hoping that, when major assets come up for sale or large tenders are on offer in these countries, its past support will be remembered. That could well happen. Layla el Wafi, a lawyer of Libyan origin with legal firm Addleshaw Goddard in London, says that Qatar is among the group of countries that look well placed to benefit from the turnaround in the Libyan economy.

“The political position that countries took around the revolution is important,” she says. “Most NATO countries are being looked upon more favourably than China or Russia. Turkey and Qatar are doing well, as are France, the US and Britain.”

But there is no guarantee of longer-term success. For all the thanks that Doha is currently receiving from Cairo and elsewhere, countries and their leaders can be fickle says Roberts.

“Qatar is playing quite a dangerous game,” he says. “While they are providing billions of dollars to Egypt they’ll get a good reception in Cairo but it doesn’t strike me that it’s a particularly strong foundation. This kind of policy doesn’t have a particularly happy history in the region. If you look at Kuwait’s foreign policy in the 1960s, ‘70s and ‘80s, it was a tale of offering money in return for security. Kuwait gave billions to Iraq over the years and then got invaded by Iraq. And it gave lots of money to the Palestinians too and they turned their back on Kuwait and supported [Saddam] Hussein.”

As a result, the coming years may prove to be just as important for Qatar’s foreign policy ambitions in North Africa as 2011 was. Having helped to turn protest movements into revolutions, it will now have to see whether it is able to reap what it sowed.