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UK relations with Qatar

Published Monday, May 21, 2018

A debate on ‘UK relations with Qatar’ has been scheduled for Wednesday 23 May 2018 in Westminster Hall from 2.30pm to 4.00pm. The debate has been initiated by Sir David Amess MP.

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Gulf diplomatic crisis

Qatar’s diplomatic crisis with Saudi Arabia and the United Arab Emirates began in 2017, as planes and cargo ships heading for Qatar were diverted, diplomatic relations were cut and Qatar’s only land border, with Saudi Arabia, was closed. The Saudis and their allies demanded that Qatar should:

  1. Curb diplomatic ties with Iran and close its diplomatic missions there. Expel members of Iran’s Revolutionary Guards and cut off any joint military cooperation with Iran. Only trade and commerce with Iran that complies with US and international sanctions will be permitted.
  2. Sever all ties to “terrorist organisations”, specifically the Muslim Brotherhood, Islamic State, al-Qaida and Lebanon’s Hezbollah. Formally declare those entities as terrorist groups.
  3. Shut down al-Jazeera and its affiliate stations.
  4. Shut down news outlets that Qatar funds, directly and indirectly, including Arabi21, Rassd, Al-Araby Al-Jadeed and Middle East Eye.
  5. Immediately terminate the Turkish military presence in Qatar and end any joint military cooperation with Turkey inside Qatar.
  6. Stop all means of funding for individuals, groups or organisations that have been designated as terrorists by Saudi Arabia, the UAE, Egypt, Bahrain, the US and other countries.
  7. Hand over “terrorist figures” and wanted individuals from Saudi Arabia, the UAE, Egypt and Bahrain to their countries of origin. Freeze their assets, and provide any desired information about their residency, movements and finances.
  8. End interference in sovereign countries’ internal affairs. Stop granting citizenship to wanted nationals from Saudi Arabia, the UAE, Egypt and Bahrain. Revoke Qatari citizenship for existing nationals where such citizenship violates those countries’ laws.
  9. Stop all contacts with the political opposition in Saudi Arabia, the UAE, Egypt and Bahrain. Hand over all files detailing Qatar’s prior contacts with and support for those opposition groups.
  10. Pay reparations and compensation for loss of life and other, financial losses caused by Qatar’s policies in recent years. The sum will be determined in coordination with Qatar.
  11. Consent to monthly audits for the first year after agreeing to the demands, then once per quarter during the second year. For the following 10 years, Qatar would be monitored annually for compliance.
  12. Align itself with the other Gulf and Arab countries militarily, politically, socially and economically, as well as on economic matters, in line with an agreement reached with Saudi Arabia in 2014.
  13. Agree to all the demands within 10 days of it being submitted to Qatar, or the list becomes invalid.[1]

Qatar has moved to comply with some of those demands. There seems to be no let-up in Saudi Arabia’s campaign against Qatar, however. In an interview conducted in April, Saudi Crown Prince Mohammed bin Salman reiterated allegations that Qatar is supporting extremist groups:

Mohammed bin Salman: One of the reasons we have a problem with Qatar is that we are not allowing them to use the financial system between us to collect money from Saudis and give it to extremist organizations.

Goldberg: You think you’ll ever be friendly again with Qatar?

MbS: It has to happen, one day. We hope they learn fast. It depends on them.

State-backed news sources in Saudi Arabia are carrying stories that Saudi Arabia will turn Qatar into an island. Saudi Arabia plans to dig a sea channel along its border with Qatar, and to site a toxic waste dump and a military base along the border too.[2] UAE, a close ally of Saudi Arabia, also plans to dump nuclear waste at the nearest point on its territory to Qatar.

Although they may be propaganda rather than realistic plans, these stories suggest that a quick reconciliation between Qatar and its neighbours is unlikely. This is a major change in the politics of the Arabian Peninsula, where previously the Gulf Cooperation Council coordinated friendly relations between its members. Gulf leaders still talk of a single Gulf currency,[3] but the Qatar dispute certainly complicates that plan.

The UK Government urges “Gulf friends” to find way towards de-escalation and supports Kuwaiti efforts to mediate.[4]

World Cup 2022

Stories that FIFA was planning to have 48 teams at the 2022 World Cup rather than the originally planned 32 caused controversy: the move would put more demands on club teams and would pose accommodation problems for Doha. Reports suggested that it might mean that Qatar has to share the tournament with another country, such as Kuwait.[5] In February 2018, the English Football Association signed a Memorandum of Understanding with its Qatari counterpart, to facilitate knowledge-sharing in the run-up to the 2022 competition.

Military cooperation

Qatar and the UK cooperate on defence projects. In December 2017 the two signed a statement of intent to supply 24 Typhoon fast jets and a package of missile and laser-guided bombs, worth a total of £6 billion.[6] The UK also uses the RAF base as al-Udeid, near Doha and Qatari cadets train at Sandhurst each year.

Trade with the UK

In 2016, the UK exported £3.0 billion worth of goods and services to Qatar and imported £2.2 billion, resulting in a trade surplus of £0.8 billion – a small deficit in goods was offset by a surplus in services of £0.9 billion.

Exports to Qatar represented 0.6% of all British exports in 2016; in the same year, imports from Qatar represented 0.4% of all UK imports. Overall, Qatar was the UK’s 32nd largest export market and 42nd largest source of imports in 2016.

British exports to Qatar peaked at £3.0 billion in 2016; UK imports from Qatar peaked at £5.1 billion in 2011.

The UK has recorded trade surpluses with Qatar in six of the last ten years for which goods and services trade data are available, though recorded a series of trade deficits between 2010 and 2013, the largest being -£3.3 billion in 2011.

Trade in gas

The UK’s recent trade deficits with Qatar and return to surpluses were largely due to a sharp increase, and a subsequent fall, in UK imports of gas from Qatar.

Gas imports from Qatar, primarily in the form of liquefied natural gas (LNG), reached a high of £4.3 billion in 2011, following falls in North Sea gas production; this was equal to 40% of all the UK’s imported gas, with Qatar briefly overtaking Norway as the UK’s largest source of imported of gas. The value of gas imports from Qatar fell between 2012 and 2014, rebounding slightly in 2015, before falling again, reaching £0.8 billion in 2017, their lowest level since 2009. Gas imports from Qatar accounted for 9% of all UK gas imports in 2017, with Qatar the UK’s second largest supplier of gas, after Norway.

Trade in oil

British imports of oil from Qatar reached an all-time high of £0.4 billion in 2017, though this represented just over 1% of all UK oil imports, with Qatar the UK’s 11th largest supplier.

Historically, Qatar has not been a significant supplier of oil to the UK – imports from Qatar have generally accounted for less than 1% of the UK’s total oil imports per year over the last ten years.

Investment

The Qatari Investment Authority (QIA), established in 2005, is one of the world’s largest sovereign wealth funds, built from Qatar’s oil and gas reserves. While it is difficult to compare the size of sovereign wealth funds, the Sovereign Wealth Fund Institute (SWFI) suggests that the QIA is the tenth largest in the world with assets of $320 billion.[7]

The QIA does not provide extensive data on its investments (the SWFI gives it a 5 out of 10 on its transparency metric) or its investment strategy. Sheikh Hamad bin Jassim bin Jaber Al-Thani, the former head of the QIA was quoted in 2016 as saying the total value of Qatari investment into the UK to date was £30 billion.[8]

QIA holdings in the UK include:

879 commercial and residential properties in London, including the Canary Warf Group, Chelsea Barracks, the Shard, the HSBC Tower and Harrods; the QIA also has a stake in the Savoy Hotel, while another unit of the QIA, Qatar Holding, owns Claridge's, the Berkeley and the Connaught, with an additional stake in the Intercontinental, Park Lane.

22% of Sainsbury's

20% of London Heathrow airport. Qatar Airways also has a 20% stake in IAG, owner of British Airways

6% of Barclays.[9]

 

[1]              ‘Qatar given 10 days to meet 13 sweeping demands by Saudi Arabia

[2]              ‘Turning Qatar Into An Island: Saudi Cuts Off Its Nose To Spite Its Face’, Eurasia Review, 19 April 2018

[3]              ‘Gulf single currency inevitable - Oman c.bank chief quoted’, Reuters, 31 October 2016

[4]              Written question - HL5659, 6 March 2018

[5]              ‘Why Fifa’s 48-team plan for the 2022 World Cup is bad news for Qatar’, Independent, 13 April 2018

[6]              ‘Defence Secretary strengthens UK-Qatar Defence relationship’, MoD press release, 17 September 2017

[7] Sovereign Wealth Fund Institute, Sovereign Wealth Fund Rankings

[8] Rhiannon Curry, Qataris own more of London than the Queen, Daily Telegraph, 17 March 2017

[9] See Jamie Robertson, Qatar: Buying Britain by the pound, BBC, 9 June 2017 and Mohammed Sergie, The Tiny Gulf Country With a $335 Billion Global Empire, Bloomberg, 11 January 2017

Commons Debate packs CDP-2018-0126

Authors: Timothy Robinson; Ben Smith; Matthew Ward

Topics: Foreign and Commonwealth Office, Middle East

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