How Qatar Get So Rich
How Qatar Become The Richest Economy In The Middle East
Qatar got its independence from the UK in 1971. At that time, Qatar was one of the poorest economies in the middle east. its economy relied heavily on the fishing industry.
But over the last three decades, Qatar has transformed itself into one of the richest economies in the world.
Most people believe that the cause of their economic success was the discovery of oil and natural gas. Although, oil and natural gas had indeed played a big part in transforming Qatar into one of the luxuries economies.
But having natural resources doesn’t mean you will become rich. For example, look at Venezuela or North Korea. Qatar was not only blessed with rich natural resources like oil and natural gas, but it also knew how to use them effectively, making them so rich.
Today, Qatar is one of the most open economies in the middle east.
So how has this tiny country that is smaller than California been able to transform itself into a global economic power?
Discovery of Oil and Natural Gas
There is no doubt that Qatar won’t be as rich as it is today without oil and natural gas.
Demand for oil and natural gas has increased over several decades. It has benefited Qatar to become the richest economy in the Middle east.
The first oil fields were discovered in the 1940s. But it didn’t transform Qatar into a luxurious country.
In the 1970s, It found the biggest asset in this country, The North Field, which is the largest gas field in the world.
But at that time, demand for natural gas was not much because, in the 1970s, Gas only be transported via gas pipelines.
Qatar was also distant from places where natural gas was demanded, which was a big problem. So they soon forget about their huge amount of gas fields.
But In 1996, the emir Hamad bin Khalifa al Thani staged a coup while his father was in Switzerland. In his leadership, Qatar again started to exploit its large gas fields.
The new emir started investing in rare technology like liquefaction which can carry natural gas in a liquid form. Which can transport via large ships just like oil.
But to do this, natural gas needs to cool down at a temperature of -161 Celsius. Qatar invested a lot of money into developing these technologies to increase the demand for their gasses from far away economies.
By developing these technologies, Qatar became the largest exporter of liquefied natural gas.
Qatar has the cheapest cost of extraction and liquefaction than any other country in the world, which allows them to make a profit even at low prices.
Most of its natural gas goes to Asian economies like Japan, South Korea, and china.
Qatar has been able to export its natural gas to the rest of the world, which made Qatar one of the most prosperous economies in the middle east.
Save rather than spend
But having large oil and gas reserves does not guarantee that an economy can be wealthy. For example, look at Valenzuela.
Most oil-rich economies spend the money today rather than save later to build their economy.
But Qatar knew that oil revenue is highly volatile, So it began saving money it received from oil revenue and investing them around the world.
Qatar’s investment Authority is a fund launched by the government in 2005. As a sovereign wealth fund, it invests the money it receives from oil revenues to make its economy more resilient and reduce the dependence on oil in the long term.
Qatar’s sovereign wealth fund invests funds internationally to diversify and grow its economy’s assets around the world.
As of 2022, the Qatar investment fund was worth a whopping 360 billion dollars. It has invested globally in many asset classes such as real estate, public companies, and currencies.
The goal of the sovereign wealth fund is to produce good returns and eliminate the dependence on oil and natural gas.
It Invests the funds it receives from oil revenues. That is the difference between Qatar and other poor economies blessed with natural resources.
Qatar Global Influence
As the Qatar Economy becomes richer and grows in size. Qatar’s global influence has also increased, and it has been a concern for many middle eastern economies such as Saudi Arabia and UAE.
When the new emir reached power, one of the goals he had for Qatar was to gain global influence.
In 2003, Saudi Arabia requested the US to take its troops out of their country. Qatar saw an opportunity. It presented itself as a new destination for US troops. They spent more than a billion dollars on building the military base, which had made Qatar comfortable about its nation’s security.
In 2016, Saudi Arabia, Bahrain, Egypt, and the United Arab Emirates imposed sanctions on Qatar because of its alleged support for terrorist organizations. But those sanctions have failed in their attempt to slow down Qatar’s economic growth.
Conclusion
Qatar is the first middle eastern economy to host the FIFA world cup in 2022, Which shows the power and wealth of Qatar.
Although, There were some allegations when preparing for the world cup 2022. Qatar gave poor living conditions to migrant workers, mainly from Nepal, India, Bangladesh, and Pakistan.
Individuals subjected to forced labor, Most people can’t change jobs and leave the country. Also, it takes several months to get paid.
The oil and natural gas sector is still a key driver in its economic growth. But Qatar is taking steps to shift from an oil-dependent to a more stable service and tourism-based economy.
It is trying to develop its financial center, which may become a financial center of the middle east.
Qatar had gone from a backward desert nation to the wealthiest economy in the middle east.
Qatar’s GDP per capita had gone from 2,755 in 1970 to a whopping 61,276 in 2021. It is one of the highest in the world.
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