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Sustainable Growth Strategy of Qatar and Implications for Cooperation 경제성장, Economic cooperation

Author unsu Kang, Kwangho Ryou, and Jieun Lee Series 22-01 Language Korean Date 2022.10.31

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As a small state surrounded by great powers such as Saudi Arabia, UAE, and Iran, Qatar has historically had little influence within its region. Until 1971, Qatar was considered an emirate along with the other emirates, which formed the United Arab Emirates (UAE). Following its independence from the United Kingdom in 1971, Qatar did not demonstrate much diplomatic power, but Saudi Arabia exerted a strong influence on Qatar. Since the enthronement of King Hamad in 1995, Qatar has changed its diplomatic route. Aside from rapid economic growth, King Hamad pursued a policy of expanding its external influence through internal reform, neutral intermediaries, and pragmatic diplomacy. Specifically, Qatar has formed defense agreements with Western countries such as the U.S., UK, and France, as well as providing land to the U.S. for military purposes. Qatar not only maintains a friendly relationship with pro-Western nations, it also maintains close ties with anti-Western groups, such as the Muslim Brotherhood and Hamas. The broadcasting of Al Jazeera and the hosting of large events (e.g., the 2022 Qatar World Cup) are other ways in which Qatar strengthens its position within the Arab world. As a result, Arab countries such as Saudi Arabia, the UAE, Egypt, and Bahrain broke their diplomatic ties with Qatar in 2017 and implemented a blockade on the country. Following this, the GCC countries, including Saudi Arabia, the UAE, Bahrain, and Egypt, restored diplomatic relations with Qatar in 2021. As a result, Qatar has emerged as a mediating country expanding its influence, seen for instance in the mediation process of the U.S.-Afghanistan conflict.

Natural gas exports have contributed to Qatar’s economic growth. With natural gas accounting for 80% of Qatar’s export value, the country is vulnerable to changes in international conditions such as low energy prices. In terms of total gas reserves, Qatar ranks third in the world, and in terms of production volume, it ranks fifth. After Australia, Qatar holds the second largest share of the global natural gas market. In light of Qatar’s high dependence on energy, its GDP has declined since 2013 due to low energy prices. While global energy prices have spiked following the Russia-Ukraine war, the EU, which is highly dependent on Russian gas, has begun to diversify its sources of import. As a result, Qatar is receiving attention from the European Union and Asian countries.

Korea is Qatar’s top trading partner after Japan, India, and China. In addition, Qatar exports 16.6% of its natural gas volume to Korea. Korea and Qatar have worked to diversify their bilateral economic relationship since 2007, with the two countries holding high-level talks and agreeing to cooperate in the construction, energy, trade, investment, science and technology, health, defense, and education sectors. However, these efforts have not produced any notable developments to date, except in the energy sector. This study aims to propose bilateral cooperation strategies between the two countries beyond the area of natural resource trade.

The second chapter examines the internal and external environment as well as the national development strategy of Qatar. Several initiatives have been launched by the Qatari government to advance a sustainable society by reducing carbon emissions and responding to the effects of climate change. Among these initiatives are the Education City, the Al Jazeera broadcast, and the Science and Technology Park. Qatar also benefits from a favorable environment due to the high demand for natural resources from abroad. Due to this situation, Qatar has announced plans to diversify its economy and become a more sustainable society. To overcome its economic vulnerabilities and drive green transition, Qatar announced its Vision 2030 and National Development Plan 2018-22, focusing on economic diversity, environmental sustainability, human development, and social inclusion. Qatar has also launched a Smart City, e-Government, and the Smart Qatar program (e.g., Hukoomi) incorporating digital technology. As part of its efforts to diversify its economic structure, the Free Zone Authority was established and investment regulations were relaxed in order to attract foreign investors.

The bilateral relationship between Korea and Qatar has been described in Chapter 3, along with the demand for sector-specific cooperation. As part of our study, we selected five sectors, which include energy, digital technologies, food and water security, education, and health. In order to achieve an energy mix and industrial diversification, Qatar is developing the petrochemical sector and solar energy. Qatar strives to digitalize the public sector by integrating digital technology into all government sectors. Despite Qatar’s stable position in terms of food security, climate change may raise food and water security issues. Qatar does not perform well in the natural resource and resilience index despite its high food security index, compared to other developed countries, because of the extreme weather conditions. The Qatari government has therefore invested in adopting smart farms and reusing wastewater in agriculture as a result. There is a high demand in the education and health sectors for high-level education, science and technology, human resource development, medical devices, and pharmaceuticals.

In Chapter 4, we identify potential areas of cooperation between Korea and Qatar. Our analysis in previous chapters indicates that solar power, desalination, smart farming, education with digital technology, and health services could be areas of potential cooperation between the two countries. It may also be possible to encourage the private sector to participate and cooperate between two countries by holding regular high-level meetings.

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