Lebanon Pulse

Emir Replaces Head of Qatar Investment Authority

Article Summary
In the second article of a two-part series, the new Qatari emir seeks to separate politics and business.

Part One: Will Sheikh Tamim Rebalance Qatar’s Foreign Policy?

The decision to replace Sheikh Hamad bin Jassim as head of the Qatar Investment Authority, the emirate's sovereign wealth fund has drawn attention for a number of reasons. Hamad had for years been the architect of Qatar's investment policy, an assignment handed to him by former emir Hamad bin Khalifa Al Thani.

While the appointment of Ahmad al-Sayed as the new head of the fund was quick and decisive in terms of timing and implications, it was measured and careful in its content, given that Sayed had served as the chief executive officer of Qatar Holding, the sovereign fund's investment arm. Sayed is well known to banks and financial institutions, and the country's production partners knew him to be a close collaborator of Sheikh Hamad and a member of his work team. His new appointment is an additional indication of the continuity within Qatar's political and financial institutions and a message of reassurance to production partners, confirming that the transfer of power to a younger generation is moving ahead by leaps and bounds, but also quietly and firmly, spreading the seeds of change and modernization.

The previous era was characterized by a mixing of Qatar’s foreign policy and investment policy. In short, foreign policy was a lever for investment policy, while the latter served as the backbone of the former. This is not so odd, given that Sheikh Hamad directed both policies, moving deftly from diplomatic hallways to boards of directors, crafting Qatari foreign and investment policies, which though different, were integrated.

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Sheikh Hamad's approach was not without its challenges and hindrances. Being a dynamic person, he did not appeal to everyone abroad, and the multiplicity of his duties and his great influence were not unanimously hailed in Qatar. He applied his own approach, his walking-on-the-edge policy, in the business and political worlds.

Perhaps the most striking embodiment of this mingling of politics and money is the Qatari-French relationship. Qatar approached France during the 2007 presidential elections that put Nicolas Sarkozy in the presidential palace. Sarkozy confirmed on day one that he would not continue the efforts of his predecessor, Jacques Chirac, that had made the relationship between France and Saudi Arabia the pillar of France's Arab policy. Qatar and France both agreed to turn the page on the past.

A new special partnership emerged and was consecrated by obtaining the release of Bulgarian nurses imprisoned in Libya for allegedly infecting children with HIV and by strategic shifts, such as altering French policy toward Lebanon to be more open toward Hezbollah and Syria (until the outbreak of the Arab revolutions). Claude Guéant, Sarkozy's closest adviser, played the key role in drafting the policy in collaboration with Sheikh Hamad and his team. Qatari investments flowed into France in various sectors, from real estate to sports.

Among these investments were Qatar's acquisition of the football club Paris Saint-Germain (PSG), the Royal Monceau Hotel and the building at Champs Elysées 26. Each of these entities carries with it great heritage and moral value in addition to its monetary worth. In 2012, the total value of Qatar’s investments in companies listed on the French stock exchange stood at about 7.6 billion euros ($9.9 billion). Some investments have strategic dimensions, converging with Qatari industries and the economy. Earlier in the year, the sovereign wealth fund raised its stake in the Total Oil and Gas Petroleum Company from 3% to 5%.

Some have questioned Qatar’s intentions given its investment decisions. This is especially true of the French right-wing political parties, which were unsympathetic toward Sarkozy and denounced Qatar’s purchase of what they considered to be French heritage sites. Among the feared and suspected intentions is the Islamization of French society through the establishment of a fund to provide financial assistance in the French suburbs, where unrest among youth of Arab descent has flared from time to time. Most of the Arabs there have North African backgrounds, and according to their detractors, reject French values and refuse to integrate into French society.

The questioning of Qatar's intentions led to the formation of a special parliamentary committee to investigate its investments. To lift some of the suspicion hanging over the emirate's financial dealings in France, the state-owned Caisse des Dépôts et Consignations became a co-shareholder in the suburbs fund.

Perhaps the statement that best describes the French-Qatari relationship and its sometimes conflicting objectives, despite and perhaps as a result of their convergence, was that made by President François Hollande during his visit to Qatar in June, when he said that French-Qatari relations are naturally perfect, but not perfectly natural. One might interpret this as meaning that there is a need to manage the relationship, endowing it with a higher level of transparency and rationalization.

Qatar’s investments are, of course, not limited to the French economy. The Qatari sovereign wealth fund is worth more than $100 billion, the 14th largest in the world, behind those of such countries as Abu Dhabi, China, Kuwait and Russia. Its investment portfolio is, not surprisingly, diversified and includes stocks in first-class financial institutions and international companies covering an array of sectors, from real estate to jewelry.

The 2011 Qatar Investment Fund report revealed that the emirate owns shares in the German automobile manufacturers Volkswagen and Porsche, holding 17% and 10%, repectively. It also owns the entirety of shares in the British-based department store Harrod's as well as 20% of the shares of the London Stock Exchange, in addition to shares in the American jewelry maker Tiffany & Co.

Such wealth requires efficient management based on good governance criteria and the modern standards of the finance and investment sectors. This is particularly important today, when a great deal of attention is paid to sovereign funds. They are often accused of lacking transparency, driving financial speculation and having some responsibility for the 2009 economic crisis, the effects of which the world is yet to recover from.

Qatar's involvement in the Arab Spring and its financing of revolutionary movements do not favor risk mitigation or enhance return on assets. It is perhaps for these reasons that Emir Tamim asserted in his first speech on the occasion of taking the reins of power, “We will continue to invest in these sectors, but we’ll be more tough and clear on the results and outputs.” He added, “If we made big investments and did not get suitable results, this should not pass unnoticed.”

The first days or even hours of the young emir’s reign did not pass unnoticed. The decision to appoint a head of the country's sovereign wealth fund is a consecration of the separation of politics from economy and a complementary step to the process of a transfer of powers.

Sami Nader is an economist, Middle Eastern affairs analyst and communications expert with extensive expertise in corporate strategy and risk management. He currently directs the Levant Institute for Strategic Affairs, focusing on economics and geopolitics of the Levant, and is a professor for USJ University in Beirut. On Twitter: @saminader

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Found in: qatar, investment, france, emir

Sami Nader is a columnist for Al-Monitor's Lebanon Pulse, an economist, Middle Eastern affairs analyst and communications expert with extensive expertise in corporate strategy and risk management. He currently directs the Levant Institute for Strategic Affairs, focusing on the economics and geopolitics of the Levant, and is a professor for USJ University in Beirut. On Twitter: @saminader

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