The tiny Persian Gulf state of Qatar is per capita the richest country on the planet, and it’s been flashing a lot of that wealth around the world.
It’s been on a $60 billion a year foreign shopping trip, snapping up trophy assets in Europe, as well as pouring billions into supporting the Arab Spring. That splurgefest may be drawing to an end.
The foreign spending spree peaked last year when Qatar bought the lion’s share of London’s newest — and Europe’s tallest — skyscraper known as “The Shard.” The acquisition capped an extraordinary run of purchases: the British luxury department store Harrods, the Paris Saint-Germain soccer club and big share stakes in companies like Volkswagen, Tiffany & Co. and Barclays Bank.
That’s not bad for a country with only 250,000 citizens, many of whom were living in tents only a generation ago.
Qatar has also acquired a prize, which is slowing the pace of its foreign investment. The country has won the right to host soccer’s World Cup in 2022.
“Now it’s going to be spending a lot more at home preparing for the World Cup,” says Toby Iles of the Economist Intelligence Unit. “It could spend as much as $200 billion on sporting facilities and on infrastructure, on things like the metro, the airport, a new deep sea port, lots of housing and hotels and more roads. There will be less money for foreign purchases.”
Qatar may also wind down its financial support for the Arab Spring, but for different reasons. The country has poured billions into liberation movements in Libya, Tunisia, Egypt and Syria as a way of buying status and influence in the Middle East.
Now there are signs that policy is backfiring. Qatar has been accused of arrogance and interference. Its flag has been burned by protesters in Libya, Tunisia and Egypt.
“Qatar’s enormous influence because of its wealth is now widely resented in the Middle East,” says George Joffe of Cambridge University. “So the backlash is hardly surprising.”
The world’s richest country is discovering the limits of its purchasing power and may now seek to lower its international profile.