Qatar (RLE Economy of Middle East)

Development of an Oil Economy

Ragaei el Mallakh

• Publisher: Routledge
• Year: 2015
• Print ISBN: 9781138810075
• eBook ISBN: 9781317592341
• Edition: 1
• Topic: Ciencias sociales
• Subtopic: Estudios regionales

No region in the world has seen so much development activity in the last ten years as the Gulf area. Since 'black gold' catapulted the oil-producing countries into the limelight of the international political and economic scene, there has been a proliferation of studies on the larger exporting states. However, many of the so-called 'small countries' have been neglected in this exercise. This book presents the first detailed examination of the bases and extent of economic development in Qatar and considers the need to translate the petroleum-generated growth into viable, self-sustained development. Qatar, though not one of the oil 'giants', was first in the field of oil development and exhibits a number of special features not shared by its Gulf neighbours: for example in pre-oil boom days it was already in advance of many other Gulf states in the field of education; it has a modest agriculture sector and there is a comparatively strong attachment to the land; and finally it has played an important role in OPEC as a member of the 'moderate price' camp. The individual chapters trace the development of the oil industry, outline public financing and economic policy and sketch the issues involved in industrialisation, absorptive capacity and agricultural development. Examination is made of the social and physical infrastructure as well as money and banking, and the international linkages in trade, foreign aid, economic cooperation efforts and investment opportunities are elucidated. Planners in Qatar know that their revenue base in petroleum is finite, and thus investment of present surplus needs careful planning. The book therefore also outlines current government priorities and suggests areas for future investments.

First published in 1979.

1 An Overview

DOI: 10.4324/9781315744513-1

Introduction

No region of the world has seen so much development activity in the last ten years as the Gulf area. Needless to say, the rapid structural changes which have taken place and will continue to occur in the future in this area are the result of increased oil revenues accruing to the producing countries in the 1970s. A more important aspect has been the greater degree of attention which this oil wealth has focused on the Middle East nations.

Since ‘black gold’ catapulted the oil-producing countries into the limelight of the international political and economic scene, there has been a proliferation of studies on individual exporting states, especially Saudi Arabia and Iran. However, a majority of the so-called ‘small countries’ in the oil-producing Arab world have been neglected in this exercise. Despite some articles and short, rather specialised studies, no single comprehensive examination of the economy of Qatar has been published. A number of factors have accounted for this.

First, Qatar is definitely a ‘small’ member of both the Organization of the Petroleum Exporting Countries (OPEC) and the Organization of the Arab Petroleum Exporting Countries (OAPEC), either in terms of population or by the comparative volume of oil produced annually. Second, Qatar is a relatively new country in the sense that it attained full independence barely seven years ago. Lastly, Qataris are, by nature, modest people: hence, they do not immediately volunteer extensive data on programmes and goals. These factors have given rise to two other complications tending to perpetuate the absence of a comprehensive study on this rapidly developing member of the oil-rich Gulf region. An obvious consequence of this lack of material on official matters in Qatar is the paucity of data and information on the nation necessary for a study of its economic, political, and social system. Second, because of the low-profile information activities of the country, it is not well known in non-Arabic literature and, with ‘giants’ such as Saudi Arabia and Iran to write about, the labour and time needed for collecting sometimes almost inaccessible material on smaller countries such as Qatar is considerable.

Yet, Qatar has peculiar characteristics which make a study of it valuable. The very lack of information noted earlier coupled with a modest outlook, for example, have their good aspect in that they have created a cautious approach towards development of the country. This approach has spared the nation some of the unpleasant consequences of a rush to industrialise that has plagued other Middle East states. The most recent government budget (1977/8) reflects the commitment to avoid the ‘boom-bust’ cycle of hyperinflation, in turn followed by overcapacity, then a period of recessionary cooling of the economy – a cycle not at all unfamiliar in the countries of the Gulf. Thus, although the capital budget has increased 25 per cent over the previous year to some QR 3.54 billion ($908 million), only a handful, perhaps 24, of the 200 projects listed are new and those primarily minor in scale. In short, capital spending in 1977/8 will be to continue and/or complete ongoing projects. Some of the more extensive undertakings have been postponed, including the second airport project, and some scaled down, such as eliminating the university, hospital, and light industrial enterprises.¹

Another attitude characteristic of the country is that education in Qatar, even prior to the burgeoning oil-generated affluence, was evaluated in advance of many other Gulf states. Numerous leading figures in that region received their training in Qatar. Yet another rather special feature is the comparatively strong attachment, by Gulf standards, to the land itself. With a history of trade and mercantilism and despite an arid climate, the Qataris have had a modest agricultural sector. The capital city of Doha, which means ‘garden’, gives an indication of this attitude. Finally, while not one of the ‘giants’, in the world picture Qatar has played its role within OPEC, sometimes a critical one. There was the now famous December 1976 OPEC meeting in Doha which resulted in a brief period of two-tier pricing. (The current Secretary General of OPEC is an Oxford-educated Qatari.) And in 1977 at the July (Stockholm) and December (Caracas) DPEC sessions, Qatar joined what might be called the moderate pricing camp which brought about a price freeze in a crucial period for global energy and monetary stability.

This study will attempt to fill out the perspective on the economic development and rapid growth characterising the Middle East today by offering a description and analysis of the Qatari experience to the growing body of literature dealing with the Gulf region. Working within the data limitations, the following pages strive to delineate the most important economic, social and political forces at play in Qatar and, by extension, within the region.

Background, Government, Geography, and History

During the mid- and late eighteenth century a branch of the Utub tribe in Kuwait known as the Al Khalifa emigrated to Qatar and eventually settled on the northwest coast of the peninsula. The Al Khalifa had a long-established reputation as accomplished sailors and skilled traders, and they soon became the mainstay of commercial development in this region of Qatar.

Further external influences contributed to the early development of Qatar’s statehood. By the early nineteenth century the influence of the Islamic sect of Wahabism had spread from the Arabian desert to the Gulf. In fact the British, as the only European power in this region of the world at the time, sought to bring a measure of control to the unstructured, free-moving sea traffic of the Gulf through the colonial government in Bombay. By 1820 the British had persuaded the Arab sheikhs on the then so-called ‘pirate coast’ to sign a General Treaty of Peace, and in 1835 the First Maritime Truce was signed to outlaw warfare during the all-important pearl-diving season. (Hence, from this ‘truce’ was derived the term Trucial Coast which applied to the sheikhdoms along the western coastline of the Gulf to the south of Kuwait.) British interest in maintaining stability in the region basically stemmed from a desire to protect the shipping lanes of the Gulf and to the Indian sub-continent since oil had not yet been discovered in the Arabian peninsula.

It was during this time, in the mid-nineteenth century, that the burgeoning power of the Al Thani family was beginning to be felt. The Al Thanis had emigrated from Central Arabia to settle ultimately around Doha. On 12 September 1868 a treaty was signed by Muhammad bin Thani and a British officer, Colonel Pelly, to outlaw war at sea and to refer any conflict to the British Resident of the region. This treaty was similar to other trucial pacts concluded with the British by the neighbouring sheikhdoms.

This period in Qatar’s history continued to be somewhat stormy. The Ottoman Turks had since moved into the Gulf region and effectively controlled the port city of Doha. However, the Al Thani family waited to assert themselves once again as the de facto rulers of Qatar. In 1879, Muhammad bin Thani’s son Sheikh Jasim was appointed Governor of Qatar by the Turks in Doha. In March 1893, Sheikh Jasim seized the opportunity to score a rousing victory over the Turks, although their influence was not totally eradicated. In July 1913, Sheikh Jasim died and was succeeded by his son Abdullah whose crowning achievement was to complete the trea...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Title Page 01
• Copyright Page 01
• Table of Contents
• List of Tables and Figures
• Dedication
• Foreword
• 1. An Overview
• 2. Development of the Oil Industry
• 3. Public Finance and Economic Policy
• 4. Industrialisation, Absorptive Capacity and Agricultural Development
• 5. Social and Physical Infrastructural Development
• 6. Money and Banking
• 7. International Links: Trade, Aid, Investment and Regional Cooperation
• Select Bibliography
• Index