Qatar on the Cusp

(page 2 of 2)

Browse Issues

Browse the BusinessWeek Archive

Sheikh and Sheikha: Their foundation has brought in Western schools Tom Stoddart/Reportage by Getty Images

Chart by David Foster/BW

Story Tools

• post a comment
• e-mail this story
• print this story
• order a reprint
• suggest a story
• digg this
• add to Business Exchange

And although Qatar's property market is quite soft, this inconvenience has cost the government just $7 billion in bank bailouts costs, a fraction of the likely final tab for Dubai.

The differences between Dubai and Doha run deeper still. Qataris keep nightlife restricted, have no interest in becoming a hub for mass tourism, and regret the loss of their past as fishermen and pearl divers. While Dubai has been racing to a western clock, Doha still does things in its own good time. Qataris continue to cherish the old custom of the majlis, the evening get-togethers where men (and only men) sip tea, smoke shisha tobacco, and solve the problems of the world through endless discussion. Grahame Maher, head of the local Vodafone (VOD) operation, had to master this age-old routine before he could win over the Qataris. Says Maher: "I learned a way to do business that we have forgotten in the West because it takes too much time."

Qatar is trying to invest its riches in human capital, the sort of initiative that, throughout the Gulf, seldom seems to make the leap from glossy brochure to hard reality. Qatar's Sheikh Hamad bin Khalifa Al-Thani, a big, affable man who overthrew his father in 1995, set up the Qatar Foundation that year to turn Qataris into financiers, engineers, and biotech specialists. The sheikh's wife, Sheikha Moza bint Nasser Al Missned, runs the foundation, whose green-tree logo is ubiquitous.

The foundation has persuaded some quality schools to establish Qatar campuses. Weill Cornell operates a medical school, Texas A&M churns out petroleum engineers, and Georgetown has a liberal arts program that graduated one of the ruler's sons. Virgin Health Bank, part-owned by British entrepreneur Richard Branson, has the sheikha's backing to establish a stem cell bank. Virgin Health CEO Rajan Jethwa wants to create a regional cell hub that attracts biomedical research firms. "There is no more powerful motivator than being part of the Qatar Foundation," he says.

It's too soon to say whether these efforts will pay off. Like most of the Gulf, Qatar is short of qualified people and has to attract them from outside—far from a sure thing. Some U.S. universities here have struggled to fill their classrooms with qualified applicants. "The high-tech diversification requires not only people but a massive development of human capital overnight," says Rachel Ziemba, senior analyst at Roubini Global Economics in New York. Because of the difficulties in training workers, "Qatar should not be an industrial hub."

It won't be a financial one. Although the Qatar Investment Authority has had a string of hits, its Qatar Financial Center has attracted only token commitments from the big banks (Credit Suisse is the exception). In finance, "Qatar is not comparable to Dubai or even Bahrain," says Emad Mansour, deputy CEO of Qatar First Investment Bank. Nor has Qatar been immune to real estate disease. Its population has more than doubled over the past six years. Bets that the trend would continue prompted overbuilding that drove prices and rental rates down 25% last year, according to Century 21 Qatar, a branch of the U.S. real estate firm. The government projects a 50% population jump by 2030, which may prove optimistic. But that may not matter as long as the North Field yields its riches on schedule. Dubai, in the end, has many things that people want. Doha has something they need.

Reed is London bureau chief for BusinessWeek. Robert Tuttle is a reporter for Bloomberg News.