Larger foreign donors have been cautious about lending money to economies hit by the Arab Spring, but Qatar - with a population of just 1.7 million - is using its natural gas wealth to establish itself as an economic force in the region. The aid appears to have both political and economic motives, diplomats and analysts say. By supporting economies in North Africa, Qatar helps to limit further social unrest that might spread to the Gulf. Meanwhile, some of its aid involves investment that could be very profitable if North African economies eventually resume growing rapidly. "Qatar is attempting to achieve major political and economic goals with its dynamic foreign policy in reshaping North Africa in the wake of the Arab Spring," said Theodore Karasik, director of research at the Institute for Near East and Gulf Military Analysis in Dubai.
The $2 billion deposit from Qatar would be a significant boost to Egypt's foreign reserves, which have more than halved since the start of last year to $14.4 billion in July. The Egyptian finance minister said on Monday that the first $500 million payment from Qatar was expected within a week.
The announcement followed news in June that state-owned Qatar Petroleum (QP) was involved in a $3.7 billion financing package to build an oil refinery on the outskirts of Cairo, one of the biggest industrial projects announced since Egypt's revolution. QP International committed over $362 million to buy a 27.9 percent stake in the project. And last October Qatari Diar, the property arm of Qatar's sovereign wealth fund, signed a $544 million contract to develop two real estate projects in Egypt, in Cairo and Sharm el-Sheikh.
Since Egypt's revolution, only Saudi Arabia appears to have made a larger financial commitment to the country. It transferred $500 million to the Egyptian central bank in May last year, and in June this year it provided a further $1.5 billion to support Egyptian government finances, according to officials in Cairo; it has also promised $430 million in project aid and a $750 million line of credit for oil imports. The International Monetary Fund has been discussing a $3.2 billion loan to Egypt, but agreement has so far been delayed by changes in the Egyptian government and the IMF's concern about the wisdom of the country's economic policies.
Qatar has also thrown an economic lifeline to Tunisia, which in April raised $500 million at a 2.5 percent interest rate via a private placement of debt to Qatar. In May the Qatari government said it was reviving plans to build a build a $2 billion oil refinery in Tunisia after years of delays, potentially expanding the North African country's refining capacity more than fourfold. In Morocco, Qatar's plans include a 50-50 investment joint venture worth $2 billion, agreed late last year, to help the country fund major development projects. Qatar's sovereign wealth fund, Kuwait's Al Ajial Investments and Abu Dhabi's sovereign wealth fund Aabar Investments have also agreed with Morocco's Fund for the Development of Tourism to inject 20.8 billion dirhams ($2.5 billion) into a newly created vehicle called Wessal Capital to focus on developing new tourism resorts in Morocco.
Publicly, Qatar has been noncomittal about the motives for its support of North African economies, beyond saying it wants to spread prosperity and foster good ties with all countries. "Don't you think this is a good policy for a small country?" Qatar's Emir Sheikh Hamad bin Khalifa al-Thani said in an interview with US television program 60 Minutes in January, when asked about its efforts to build bridges in the region.
Its motives appear partly ideological, however. In contrast to Saudi Arabia, which has been suspicious of the Muslim Brotherhood's potential to stir social unrest in the Gulf, Qatar's close ties to the Brotherhood extend over decades; it has provided exile to prominent Brotherhood members, the most prominent of them Egyptian Sheikh Yousef al-Qaradawi, viewed as the movement's spiritual leader.
But the motives are also economic. In recent years Qatar, like other Gulf Arab countries, has embarked on a policy of investing around the world to prepare for the eventual depletion of its energy resources. In North Africa, its investments since last year have focused on energy and banking, two sectors which can be expected to grow because of young populations and relatively high population growth rates, as well as on tourism. "Given the amount Qatar has to invest, it is looking for opportunities in the region that offer commercial return and/or political leverage," said a Doha-based economist. "The three North African countries that have undergone political transition naturally offer a rare opportunity to increase Qatari engagement, both because these countries have urgent needs for investment and assistance, and because the new governments are more naturally sympathetic to Qatar than the outgoing regimes." Doha Reuters