Egypt’s Former Ambassador to Qatar Reveals 3 Reasons Behind Qatari Economy’s Collapse

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By Mahmoud Ali


 

Mainly, Supporting Terror, Investments in Natural Gas In light of ​​the scorching financial and economic crises in light of the decrease in the oil prices and the tension in the majority of Middle Eastern countries, Qatar is facing an economic crisis, which affects its normal budget in previous years, leading to a budget deficit this year that has not been witnessed by Doha in 15 years. This forces the country to adopt some austerity policies in the coming phase.

Observers believe that Qatar’s sinking and its unlimited support to armed groups that are close to its ideology such as the Muslim Brotherhood, is the reason behind such deficit, after Doha has allocated large funds to support these fronts.

It seems that Doha’s support and funding of a large number of these groups in several Arab countries, especially Syria, Egypt and Libya, has not realized its repercussions well. It has been spending billions without being aware that this would backfire on the security and the economy and, therefore, the signs of economic collapse and austerity are looming.

Despite the statements of Emir of Qatar Tamim Bin Hamad to calm down his people that he is working on new plans for next year’s budget to avoid a large budget deficit, some opposition parties revealed that Doha is facing a large budget deficit that could lead to austerity and spending cuts.

Qatari Minister of Finance Ali Sherif Al Emadi said his country’s general budget for 2016 will witness the first deficit in 15 years, pointing out that the government’s options are open in terms of financing the expected deficit through offering local or international debt tools without resorting to the cash reserves or the state’s sovereign wealth fund.

The International Monetary Fund previously warned through its general director Christine Lagarde the Gulf states, particularly Qatar, that if new policies were not adopted the financial reserves will shrink dramatically and may dry up after 5 or 6 years. Bankers said that Qatar is holding talks with banks to get a collective loan of up to ten billion dollars at a time when the Gulf state is seeking to enhance its cash which has shrunk because of the drop in oil prices. One banker said that Qatar is holding talks about a five-year loan whose interest is expected to be less than 100 points based on the interest rate prevailing in the London interbank trading (Libor).

Egypt’s former ambassador to Qatar Mohammed Almenessi said the government has been rushing in spending over the past twenty years in a way that led to such deficit, stressing that there are three main reasons resulted in the deteriorating financial situation in Doha recently, which was reflected in the announcement of some government austerity measures.

He added that the first reason is the rush in spending in the wake of the overthrow of Hamad, the father, pointing out that they relied on pumping a lot of funds in gas investments which are very costly without near-term returns. This leads to spending without revenues, he added. The second reason is related also to natural gas as new competitors are now exporting gas to the world, such as Pakistan and Uzbekistan, across the Caspian Sea. This has led to a lack of demand for the Qatari gas. In addition, Europe depends heavily on Russian gas after Moscow completed its gas line in the past few years.

Menessi, who was Egypt’s first ambassador to Qatar, said the third reason, which is the most important, is the pumping of billions of dollars by Qatar to support terrorism in the Arab countries and from the perspective that it is a small country in size and had a dream to play a role and have a decision on an international scale in line with their financial position, he said. Qatar had an inferiority complex when it comes to Egypt, the Arab decision-maker, and therefore tended to spend a lot to financially support political Islam and extremist organisations, he said.


 

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