The Library
To what extent has the sovereign wealth fund assisted Qatar’s security and foreign policy in resisting the blockade?
Tools
Al-Marri, Fahad (2020) To what extent has the sovereign wealth fund assisted Qatar’s security and foreign policy in resisting the blockade? In: Zwieri, Mahjoob and Rahman, Md Mizanur and Gaf Abbas, Arwa Kamal, (eds.) The Gulf Crisis 2017-19 : an interdisciplinary approach. Gulf studies, 3 . Singapore: Springer, pp. 303-324. ISBN 9789811587351
|
PDF
WRAP-what-extent-sovereign-wealth-fund-assisted-Qatar’s-security-foreign-policy-resisting-blockade-Al-Marri-2019.pdf - Accepted Version - Requires a PDF viewer. Download (1241Kb) | Preview |
Abstract
The tiny Gulf State of Qatar is currently being blockaded by fellow GCC members Saudi Arabia, the United Arab Emirates and Bahrain in collaboration with Egypt but has largely withstood the sanctions. One means by which the Qatari government has managed to withstand the challenges of the blockage is the use of its sovereign wealth fund (SWF). QNB (2017) indicates that $30 billion dollars of the domestic holdings of Qatar’s SWF has been transferred to the Ministry of Finance and that further assets could be sold from the SWF to meet budgetary requirements if required. With over $335 billion in assets invested around the world, Qatar Investment Authority, which manages the country’s main SWF, is the 14th largest according to the Sovereign Wealth Fund Institute (Sergie, 2017).
SWFs are national wealth management agencies that primarily invest in foreign assets with a relatively long-term investment horizon. They have become prominent institutional investors in the global capital market (Xie et al., 2015). Broadly, SWFs can be classified into two categories according to their source of funding: commodity-based and non-commodity-based. Countries in the GCC (of which Qatar is a member) as well as Russia and Norway, among others, have commodity-based SWFs. In contrast, most of China’s SWF’s are non-commodity based (Xie et al., 2015).
Although SWF investors have indicated that their investments are purely business transactions, concern about how they could possibly be used to influence domestic activities (especially from Western governments) has led to debate about their real purpose (Chhaochharia and Laeven, 2008). In this respect, Gilson and Milhaupt (2008) argue that SWFs’ voting rights in companies should be suspended so as to mitigate the concerns of Western powers. Bahgat (2011), however, indicates that GCC SWFs could have a foreign and security policy undertone. However, Fotak et al. (2008) indicate that SWFs have generated positive returns on their investments and it can be said that they are legitimate elements of the investment milieu. The investments of SWFs in foreign assets have been seen by SWFs as a way of insuring against challenges that could affect them in future. Additionally, SWFs have also been seen as stabilisation funds that have been set up to buffer the country’s budget from commodity price volatility or external shocks.
Qatar’s SWF and its innovative foreign and security policy have supported the country in its attempts to withstand the blockade. Instead of a purely bandwagoning foreign and security policy that would have seen the country within the sphere of influence of Saudi Arabia, Qatar has been able to deploy the vast proceeds from its gas and oil exports to carve out an independent foreign security policy that has given it influence. In addition to the investments made by its SWF around the world which have provided the country with some soft power, Qatar has been able to develop relations with the opposing side in the current geopolitical mixture.
Qatar’s relationship with Turkey means that its ports have been used to ensure the delivery of vital supplies during the blockade, while its relationship with Iran means that Qatar Airways has continued to have access to airspace to maintain contact with the outside world. Hosting two US military bases and its SWF investments in Russia also mean that the microstate has been able to use its SWF as well an innovative foreign and security policy to ensure that it can withstand what would otherwise have been an economic disaster. The use of its SWF to stabilise the domestic economy at this challenging time has demonstrated the importance of these funds. It also indicates that the current crisis should be a lesson for Qatar and other countries in the region of the need to accumulate emergency funds in SWFs to support governments in times of need.
Item Type: | Book Item | ||||||||
---|---|---|---|---|---|---|---|---|---|
Subjects: | H Social Sciences > HJ Public Finance J Political Science > JA Political science (General) J Political Science > JZ International relations |
||||||||
Divisions: | Faculty of Social Sciences > Politics and International Studies | ||||||||
Library of Congress Subject Headings (LCSH): | Sovereign wealth funds, National security -- Persian Gulf States, International relations -- Persian Gulf States, Persian Gulf States -- Economic conditions | ||||||||
Series Name: | Gulf studies | ||||||||
Publisher: | Springer | ||||||||
Place of Publication: | Singapore | ||||||||
ISBN: | 9789811587351 | ||||||||
Book Title: | The Gulf Crisis 2017-19 : an interdisciplinary approach | ||||||||
Editor: | Zwieri, Mahjoob and Rahman, Md Mizanur and Gaf Abbas, Arwa Kamal | ||||||||
Official Date: | 10 November 2020 | ||||||||
Dates: |
|
||||||||
Volume: | 3 | ||||||||
Number of Pages: | 348 | ||||||||
Page Range: | pp. 303-324 | ||||||||
Status: | Not Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 18 November 2019 | ||||||||
Date of first compliant Open Access: | 1 December 2022 | ||||||||
Related URLs: |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |
Downloads
Downloads per month over past year