February 9, 2016

Qatar: Reshuffling Toward Austerity

A paraglider, with the image of Emir of Qatar Sheikh Tamim Bin Hamad al-Thani, glides over the capital during the Gulf emirate's National Day celebrations in Doha, on December 18, 2013. (KARIM JAAFAR/AFP/Getty Images)
by Kristian Coates Ulrichsen

The surprise Cabinet reshuffle undertaken on January 27 by Emir Tamim bin Hamad al-Thani reflected and reinforced the convergence of three trends that together are reshaping the policymaking and decision making landscape in Qatar. An influx of new ministers signals the continued clearing out of the “old guard” as Tamim consolidates his position after assuming power from his father in June 2013. A reduction in the overall number of ministries reflects the fiscal pressures on Qatar as government spending is scaled back considerably and the country enters a period of relative austerity after years of double-digit growth. Changes in the foreign and defense portfolios illustrate the centrality of policymaking in these key ministries as the Qatari military participates in ground operations (in Yemen) for the first time in its relatively short history as a sovereign state.

The headline item in the Qatari reshuffle was the appointment to foreign minister of Sheikh Mohammed bin Abdulrahman al-Thani, a relatively low profile member of the ruling family and a distant cousin of Tamim. At 35, Sheikh Mohammed bin Abdulrahman is the same age as the emir and another cog in Qatar’s transition to a much younger generation of leadership. Previously the assistant foreign minister for International Cooperation Affairs, Sheikh Mohammed bin Abdulrahman won plaudits for his handling of sensitive portfolios within the Ministry of Foreign Affairs, such as Qatar’s volatile post-2013 relationship with Egypt. It is probable that the new foreign minister will continue the consensual and lower profile approach to regional affairs that has marked Qatar foreign policy under Tamim. Similarly, the outgoing foreign minister, Khalid al-Attiyah, is expected to continue Qatar’s rapprochement within the Gulf Cooperation Council in his new role as minister of state for defense. Al-Attiyah was entrusted by Tamim to repair the fractured relationship with Saudi Arabia in 2013 and coordinated extensively with the Saudis on Syrian policy; he likely will do the same in his new post with regard to the Saudi-led coalition in Yemen, which Qatar committed ground forces to in September 2015.

Another notable feature about the appointment of Sheikh Mohammed bin Abdulrahman as foreign minister is that he constitutes one of only four ruling family members in the new 18-strong Cabinet – itself by some margin the most slimmed-down government in the six GCC states. Members of the al-Thani family still hold the “sovereign ministries” with Sheikh Abdullah bin Nassir al-Thani retaining his dual appointment as prime minister and interior minister, Tamim continuing to double up as emir and defense minister, and the Foreign Ministry returning to ruling family control after a 30-month hiatus under al-Attiyah. The fourth al-Thani minister is Sheikh Ahmed bin Jassim al-Thani, the former director general of Al Jazeera, who retains the post of minister of economy and trade he took up in June 2013.

Historically one of the most fractious ruling families in the region, Gulf States News, an industry newsletter, observed that the number of al-Thanis in ministerial positions has declined steadily from a peak of 14 in 1997 to seven in Emir Hamad bin Khalifa’s final Cabinet lineup in 2013 to four under his son, Tamim. Perhaps mindful of the difficulties that accompanied the overconcentration of power in the figure of Sheikh Hamad bin Jassim al-Thani (HBJ) during his father’s rule, one of Tamim’s first actions as emir was to relieve HBJ of his multiple roles, which included those of prime minister, foreign minister, and vice-chairman and chief executive of the Qatar Investment Authority. Tamim’s government also culled HBJ “allies” from key positions, particularly in the Foreign Ministry he had run for 21 years, in an effort to assuage spiraling tensions with other Gulf states over Qatar’s perceived support for regional Islamists. In 2013 and 2014, moreover, Tamim overhauled the leadership of Qatar’s flagship state-owned entities and appointed new heads at the Qatar Investment Authority, Qatar Petroleum, and the Qatar Foundation. These moves represented a concerted attempt to put in place his own team and broaden the base of decision making beyond the extremely small circle that had characterized his father’s and HBJ’s style of governing.

A similar break with the past is evident in the retirement of several long-serving ministers whose public service, in one case, dated back to the era of Emir Khalifa bin Hamad al-Thani, ruler from 1972-95 and grandfather of Tamim. In their place, Tamim has appointed a new generation of technocrats with a mandate to drive through austerity measures whose origins predate the oil price collapse but have now become more urgent and far reaching. This is an important move for Tamim, who has expressed consistently the need for financial discipline since his first speech as emir. The spur initially was an acknowledgment that the era of freewheeling economic growth and almost unrestrained spending prior to 2013 could not indefinitely be sustained, and measures quickly were taken to identify areas of excessive or wasteful spending. This initial drive for efficiencies has since morphed into a broader austerity program under the pressure of the relentless fall in oil (and gas) prices since mid-2014; Qatar’s 2016 budget predicts a deficit of $12.8 billion, the first in 15 years.

Early casualties of the greater financial rigor included two major petrochemical joint ventures planned by Qatar Petroleum with Royal Dutch Shell and the Qatar Petrochemical Company (Qapco), which were scrapped in autumn 2014 due to escalating cost concerns. Qatar Petroleum also laid off about one thousand employees in 2015 and folded its international investment branch, Qatar Petroleum International, back into the parent organization. Meanwhile, the Qatar Foundation’s budget has been slashed by up to 40 percent and all of the Western (primarily American) universities based in Education City have faced significant cuts. In the health sector, plans to roll out a countrywide health care scheme were put on hold indefinitely in December 2015 while Doha News has reported that hundreds of jobs have been lost at the flagship Hamad Medical Corporation and the long-delayed Sidra Medical and Research Centre.

With oil prices struggling to push much above $30 per barrel and unlikely to recover significantly any time soon, spending cuts are being augmented by revenue-raising measures. At less than a day’s notice, the Qatari government announced a 30 percent rise in gasoline prices in mid-January and is expected to begin rolling back electricity subsidies. Both the cuts and the new charges fall hardest on expatriates rather than Qatari citizens, which should blunt the political sensitivity arising from such austerity measures, at least in the first instance. Ironically, the “demographic imbalance” that has caused some social unease among Qatari nationals now allows a degree of breathing space for institutions to trim budgets quite substantially before having to impact the citizen population. The elephant in the room remains the preparations for the FIFA World Cup, which call for up to $200 billion in infrastructure investment through 2022, which may need reassessing or scaling back. The decision in January to end Al Jazeera’s ill-fated, loss-making American channel signified that nothing in Qatar is safe any longer from the sacrificial axe. It is conceivable that the ongoing turmoil at FIFA could provide a face saving way out of a commitment that looks ever more costly by the month.

Across the Gulf, governments are readjusting to the new fiscal realities of lower energy prices, and in Qatar’s case, Tamim is still engaged in the process of consolidating his rule and moving away from the politics of the past. These intersecting trends look set to dominate the Qatari policymaking landscape for the foreseeable future and inevitably require the government to address layers of vested interests that accumulated during the years of plenty. The recent reshuffle signals that the new team is very much in place as the emir sets about the delicate task of adapting to a quite different era than the one that propelled Qatar to regional and international attention in the first place.

Kristian Coates Ulrichsen is a Baker Institute fellow for the Middle East at Rice University.