(Spanish CNN) — The World Cup that began on November 20 in Qatar will not be one more. This is due to its geographical location —and its climatic conditions, which made it necessary to modify the dates—, to its form of Government —an absolute monarchy— and to its State religion —Islam. But there is another characteristic of this country located on a small peninsula on the Persian Gulf that makes it unique: its enormous wealth.
According to a list compiled this year by Global Finance Based on GDP per capita, Qatar is the fourth richest country in the world, at $112,789 per capita, just behind Luxembourg, Singapore and Ireland. With small variations, the truth is that this small emirate has been among the ten richest for at least the entire last decade.
But what is the source of his wealth?
Qatar’s economic prosperity is the product of the extraction and export of oil, discovered in 1939 and first produced in 1949, and natural gas—according to a World Bank report, the country has the largest reserves in the world.
Thus, the wealth of the small country is a figure of just the last half century. Before World War II, Qatar’s population was engaged in pearling, fishing and trading activities and, as a British colony, was one of the poorest in the world. At present, such activities are practically non-existent.
In the 1970s, a wave of nationalizations annulled the concessions Qatar had granted to companies such as the Iraq Petroleum Company (IPC), giving rise to the state-owned Qatar Petroleum (formerly Qatar General Petroleum Corporation). Although the state company oversees oil and gas operations, it does not do so to the detriment of private corporations, which continue to play an important role, according to information from Britannica.
According to the Global Finance report, Qatar benefits from proportions: oil and gas reserves are too large while its population is too small (just about 2.8 million people). It is this relationship that has allowed the economic flourishing of this country of ultramodern architecture, luxury shopping centers and excellent gastronomy that hosts the World Cup that will end on December 18.
Oil and natural gas reserves
Qatar has huge natural gas deposits. The North Field, offshore, is one of the largest gas fields in the world. The country’s oil reserves, which are found both onshore and offshore, are modest by regional standards, but also significant.
The country began developing its natural gas resources in 1990, in an attempt to reduce its dependence on oil. The strategy, in addition to resorting to international loans, has been to bet on joint projects with the main international oil and gas companies, focusing on the North Field.
In the first decade of the 21st century, natural gas overtook oil as the largest source of government revenue and the country’s GDP.
Other income of the Qatari economy
Despite the auspicious forecasts of international organizations for Qatar, especially after the huge investments around the World Cup, its economy is not without risk. The World Bank warned that some of them could be “volatility in energy prices and continued diplomatic tensions with its Gulf neighbors.”
“The diversification of the economy beyond hydrocarbons continues to be a key challenge,” the agency added.
The manufacturing sector is an example, since it is currently closely linked to its hydrocarbon resources. Qatar’s natural gas reserves are essential for the development of its liquefied gas industry.
At the financial level, the Qatari Central Bank manages state resources and issues the national currency, the Qatari Riyal. The country has been generous in lending to countries in trouble, mainly its neighbors in the Gulf and other Arab countries.
Just as Qatar exports oil and gas in its different forms and with its derivatives, imports consist of transport equipment, manufactured goods, food and live animals.
Britannica indicates that the services sector, including public administration and defence, accounts for approximately half of GDP and employs more than half of the workforce. The country has high military spending, which represents almost four times the world average.
In an attempt to diversify Qatar’s economy, the government is working to develop tourism, particularly by promoting the country as a venue for international conferences, though so far with little success. It remains to be seen what the effects are on this small but robust economy after the ball stops rolling on the football field.