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Maplecroft risk briefing - Qatar: immune to the Arab Spring?

30/01/2012

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Qatar has been largely immune to the regional upheaval associated with the Arab awakening in 2011 and 2012 due to several key factors. The al-Thani dynasty’s control over immense oil and gas revenue from the country’s hydrocarbon sector has allowed it to sustain high public spending in exchange for a popular mandate to rule. The country benefits from a small population with the highest GDP per capita in the world, while its citizens enjoy extensive subsidies and generous wages in the public sector. Significantly, the sheikhdom does not share the same types of structural challenges -- such as high unemployment and widespread poverty -- that helped account for unrest elsewhere in MENA. Potential challenges to regime stability are minimal in the short- to medium-term.

Yet, Emir Sheikh Hamad bin Khalifa al-Thani’s limited commitment to greater political freedom at home, combined with his support for emerging governments with popular mandates elsewhere in MENA, could increase domestic pressure for democratic reform. While the Qatari authorities have directly and / or indirectly backed popular uprisings in Tunisia, Egypt, Libya and Syria, the Emir also announced last November that Qatar’s first Shura Council elections would be held in 2013. These elections were originally scheduled to take place in 2008, but were postponed. The decision to hold elections next year is likely intended to pre-empt the risk- albeit minimal- of civil unrest.

Favourable economic and social conditions help account for political stability

• Cushioned by an economy that expanded by 20% in 2011 (according to the IMF) and an extensive welfare state, the government does not face the same structural problems that helped account for the removal from power of three North African regimes last year. Many countries envy the sheikhdom’s growth projections for 2012, which hover between 5% and 10%, according to the source. The country has a small population of approximately 250,000 and the highest GDP per capita in the world (IMF est. of US$88,000 – almost twice that of the US). These factors have largely buffered it from the instability witnessed elsewhere in MENA during the Arab awakening.
• Government investment in jobs with generous pay has been particularly noteworthy in accounting for the sense of social welfare and stability in Qatar. A 2010 report by the International Bank of Qatar found that 88% of Qatari nationals work in the public sector -- the highest percentage in the GCC region. It is little surprise, therefore, that unemployment stands at a mere 0.5% (World Bank). From an economic perspective, nationals have little reason to take to the streets.
• The authorities have also been fast to pre-empt potential demands for even better social and economic conditions. In September 2011, the government announced a 60% increase in wages and pensions for employees in the public sector. Although the al-Thanis are more than aware of the factors that set Qatar apart from less stable countries, sporadic unrest in Bahrain as well as upheaval in Yemen, Libya and Syria likely encouraged the authorities to adopt these measures. The government has certainly pulled out all the financial stops to pre-empt even low-level domestic disgruntlement or dissent.
• The Emir’s ongoing modernization projects are a source of national pride which, to a degree, mitigates the risk of political opposition. Since the 1990s Qatar has sought to portray itself as the pioneer of political and economic liberalisation in the Persian Gulf. In 1995, Sheikh Hamad Bin Khalifa al-Thani deposed his father in a bloodless coup and pushed for greater modernization during his consolidation of power. Significantly, in 1999, the country’s first democratic elections were held at the municipal level. Then, in 2011, women were allowed to vote for the first time in municipal elections. While Qatar cannot be characterised as a beacon of political liberty, it is certainly not one of the most oppressed countries in MENA.
• Political stability is likely to have been reinforced by the announcement that elections for the advisory council (Majlis al-Shura) will be held next year. On 2 November 2011, the Emir declared that the country’s first Shura elections will be held in 2013. The plan for elections reflects the al-Thani family’s efforts to further bolster its popular legitimacy amidst regional calls for political freedom and democracy. Domestically, however, there is not a great public demand for political participation, so the new reform initiative is unlikely to dramatically alter public attitudes towards the regime.
• While Qatar hosts the largest US air base in the region, the government exercises an independent and assertive foreign policy. This has been a source of increasing pride which the government has capitalised on. Qatar deployed its special forces in Libya and supplied rebels with weapons to topple Col. Gaddafi. It has also suggested that Arab forces be deployed in Syria against President Bashar al-Assad whose forces continue to kill protesters. The authorities have also used media as a tool to exert soft power in MENA. In 1996, the government launched the Doha-based Al Jazeera news corporation which has since become the leading media outlet covering popular protests and unrest in the Middle East. Although criticised in the Arab world and internationally for its politically selective reporting, Al Jazeera has nonetheless led coverage of the Arab Spring uprisings and continues to serve as an amplifier of Qatar’s foreign policy goals.
• Qatar will continue to enjoy political stability at least in the short- to medium-term, as the popular legitimacy and power of the al-Thani dynasty remains unchallenged. The Al-Thani dynasty maintains absolute executive, judicial and legislative authority and political parties are banned. Parliamentary elections in 2013 are not likely to challenge these powers. The current constitution, which was approved by national referendum in 2003, identifies the Majlis al-Shura and its legislative powers. Thirty members of the 45-seat assembly are to be popularly elected, while the remaining 15 are to be appointed by the Emir. Despite this requirement, the existing advisory council has only 35 members which have all been appointed by the Emir. Even if elections are held in 2013, al-Thani maintains veto power on all legislation, reinforcing the council’s role as a ‘rubber stamp’ body.

Domestic challenges may be a source of future turbulence

• Despite Qatar’s wherewithal, the lack of political freedom presents a potential challenge for stability in the long term. The country’s increasingly young and educated population could eventually seek greater liberalisation. With an annual population growth rate of around 9.6% (2010), Qatar’s welfare state system -- which is largely financed by hydrocarbon earnings -- is unsustainable in the long term. These concerns help account for the government’s ongoing drive to diversify the economy.
• More imminently, slowed economic growth in 2012 could restrict the resources available to the sheikhdom to boost social welfare spending should the public demand even more generous hand-outs. Qatar’s General Secretariat for Development Planning published a report in October 2011 predicting that the sheikhdom’s economic growth would drop to 5.1% in 2012 from 15% in 2011, as a result of the halt on gas expansion. However, the moratorium is reversible and the sheikhdom could rely on its budget surplus in coming years to offset the loss of government revenue from slowed economic growth. In the long term however, the sheikhdom’s ability to protect the political status quo through public spending may be weakened by the gradual depletion of gas reserves and a diversification policy which fails to sufficiently top up government coffers.
• Irrespective of national economic policy, the budget could suffer a loss in the coming months due to the volatile state of energy security in the Gulf. Mounting tensions between the EU, the US and Iran regarding the latter’s nuclear programme heighten the risk of energy insecurity in the short- to medium-term. In response to US and European-led embargos and sanctions against Iran’s oil sector and financial system, the Iranian government has repeatedly threatened to close the strategic Strait of Hormuz which accounts for between 20% and 25% of world oil supplies and 35% of all seaborne traded oil (EIA). Nearly all of Qatar’s LNG exports are shipped through the strait. Even though Iran does not have the capacity to close the strait for more than a few days at most, disruption would squeeze the country’s hydrocarbon-dependent economy. Qatar’s hydrocarbon sector accounts for approximately 70% of government revenue, underscoring the risk posed by the disruption of traffic through the strait. While Iran and the US do not seek to engage in direct military conflict, an increase in sabre rattling by Tehran could trigger a security incident and lead to disruption of traffic through the waterway.
• Qatar’s political backing for uprisings in the likes of Syria and Libya could have domestic ramifications in the short-to medium- term. The Emir’s call in January 2012 for military intervention against the Syrian regime attests to Qatar’s increasingly bold foreign policy in the region. Sheikh al-Thani has also expressed his support for the empowerment – as imperfect as it may be – of Islamists in Egypt, Tunisia and Morocco.  While Qatar’s foreign support reflects a regional strategy of alliance-building, its backing of anti-establishment movements with popular support could be a double-edged sword. The approach may encourage domestic pressures for political reform at home.
• The current power dynamics within the Al-Thani family are unlikely to be a source of instability in the short term, although the dynasty’s legacy of political infighting could pose a risk to regime stability in the long term. Political conflict within the royal family has led to three forced abdications in the country’s history, including the current Emir’s deposal of his father in 1995. An unsuccessful counter-coup was launched in 1996, and some proponents of the failed effort remain in prison. While the Emir and his father have since reconciled, the ruler’s ongoing need to consult with family members to ensure policy consensus means that internal disagreements could potentially challenge the authority of the Emir. Relatives are unlikely to challenge the Emir to the extent that it would in any way jeopardise the family’s legitimacy or control over the sheikhdom amidst the current climate of regional unrest. As such, the al-Thani family will likely remain supportive of the Emir’s rule and ensure regime stability for the short- to medium-term at a minimum.

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