Qatar’s spending spree is beginning to risk unintended consequences. The tiny Gulf country has made its presence felt by splashing its cash on seemingly random targets, buying Western luxury brands and large stakes in blue-chip stocks at the same time as propping up the Egyptian economy.
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BUYING CONNECTIVITY It’s not hard to see why Qatar might want to buy connections, familiarity and influence around the globe. The tiny country with a local population of around 250,000 is the richest in the world on a per capita basis. It is surrounded by larger powers in an unstable region. Iraq’s invasion of Kuwait in 1990 showed the vulnerability of small Gulf states. Qatar’s security is partly strengthened by its status as the world’s largest supplier of liquefied natural gas, and the fact that it is home to military bases used by US forces.” Still, international spending boosts Qatar’s visibility and gives others a stake in its sovereignty.
The problem is that Qatari cash is still perceived as a last resort by businesses in need of capital, rather than a supportive steward like, say, Warren Buffett. That’s partly because Qatar has made a reputation for aggressively targeting firms when they are in distress. Qatar’s investment in British bank Barclays in 2008 has generated good returns but it has also been dogged with controversy. In the latest example, Qatar is reportedly seeking an effective “first right of refusal” from the government over some of Britain’s biggest infrastructure projects in exchange for investing billions. It is often unclear what Doha wants back from its investments – an ego boost, political, or a financial return.
Read more: http://news.kuwaittimes.net/2013/03/19/the-cost-of-qatars-punchy-spending-style-spending-spree-is-beginning-to-risk-unintended-consequences/
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