Qatar: Small State, Big Politics (25 page)

In Qatar, state capacity has manifested itself in multiple ways in both the domestic and international arenas, ranging from the creation of a cradle-to-grave welfare state to continuously transforming the physical landscape and architecture of the country.
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Although private corporations have played an important role in the country’s physical transformation, most major urban development projects are wholly or largely funded by the state.
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As is the case in much of the GCC and elsewhere in the Middle East, the Qatari state continues to remain by far one of the largest players in the construction sector, with significant stakes in major capital projects such as the new Doha International Airport ($11 billion
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), Energy City ($2.6 billion
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), the Pearl artificial island (estimated at $10 billion
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), and Dohaland (the first phase out of six phases of which costs $4.5 billion
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), not to mention countless high rise towers in downtown Doha and other similar projects around the country. Tellingly, this rapid physical transformation shows no signs of slowing down in the foreseeable future.

There is, of course, more to state capacity than mere wealth and generous expenditure on infrastructure. Just as important are the institutional characteristics of the state and the specific policy instruments at its disposal needed to pursue its goals in particular areas.
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State capacity should be assessed through the “identification of specific organizational structures the presence (or absence) of which seems critical to the ability of state authorities to undertake given tasks.”
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This, in simple terms, has to do with the
strength
of state power and its ability to plan and execute policies.
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As Linda Weiss points out, state capacity is derived from both
institutional depth
and
institutional breadth
. Institutional depth refers to “the degree to which the boundaries of the state and the orientations of state actors define a public sphere distinguishable from larger society.” Institutional breadth, meanwhile, describes “the density of the links between state activities and those of other social entities.”
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It is important to note that state capacity is not generated in a vacuum but is formed in relation to social actors and socially rooted dynamics that empower the state in relation to society. In fact, state capacity may be viewed as “a form of socially produced power [that] reflects the particular patterns of relationship current in a sociopolitical formation at any point in time.”
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Thus socially situated, an important aspect of state capacity revolves around the state’s ability to effectively promote certain interests while marginalizing others.
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Equally important, regime goals are central pillars of state capacity and should not be taken for granted. How policymakers choose to utilize the wealth and resources at their disposal makes a difference, with some states being “simply more purposive and better organized than others.”
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“Choices still exist,” reminds us Dan Breznitz, and “states and societies, through the political process of crafting and picking alternative modes of action, can follow diverse paths and still achieve industrial success.”
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Similarly, Meredith Woo-Cumings points to the centrality of ambition—“the will to develop”—as a constitutive feature of developmental states irrespective of their economic performance.
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Some of the key ways in which state capacity is increased include initiating changes to state structures; the creation of new economic instruments at the hands of the state; and new patterns of state-class relations.
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More specifically, states enhance their powers and capacities through international and domestic alliances, for example with business groups. Weiss calls these states “catalytic,” as they “seek to achieve their goals less by relying on their own resources than by assuming a dominant role in coalitions of states, transnational institutions and private-sector groups.”
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In order to adapt to new challenges, states are relying more and more on collaborative arrangements with international allies and domestic stakeholders to enhance their own capacities and to create more control over their economies. Qatar has emerged as a prototypical catalytic state.

Capacity is the key ingredient of developmental states. Qatar’s catalytic state is also developmentally successful. T. J. Pempel identifies several characteristics of developmental states in East Asia—most notably South Korea, Japan, and Taiwan—most of which can also be found in the Qatari state. Ideally these features include strength of state institutions; lack of a sharp dichotomy between state and society; open to entry based largely on merits; engaged in “hegemonic projects”; actively manipulate domestic markets; have had overall success in fostering economic growth and increasing national income and living standards; and are closely linked with the United States in economics and security.
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Developmental states often articulate a carefully devised strategic industrial policy and invest considerable resources to ensure its success.
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It is important to note that they are not always successful at delivering on their intended economic goals, nor, according to Michael Loriaux, do they always necessarily intend to foster rapid economic growth and development. Instead, Loriaux claims, the state is interested in delivering a kind of “moral good.” Premised on such goals as social stability, social cohesion, and self-sufficiency, such goals are not merely economic and “correspond to a customary good or social norm that has been constructed historically within a particular society.”
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The notion of “moral good” is particularly applicable to Qatar, where the state makes little or no pretensions of wanting to become a modern, industrial powerhouse, in the same way, for example, that the late Shah of Iran wanted to turn his country into the “Japan of the Middle East.” Instead, what the Qatari state is after, and what it seeks to promote domestically and internationally, is a particular
vision
, a conception of Qatar that is materially and infrastructurally modern yet remains respectful of and steeped in its tradition and heritage. The modernity of the Qatari state has its own unique attributes and characteristics: gleaming buildings, world-class venues and showcase projects, artificial islands, the diplomatic limelight, regional and international power, domestic wealth and prosperity, capped with political autocracy.

Rivaling capacity in importance to developmental states is autonomy. Turning broad national goals into state policy requires two central features that all developmental states need to have: “an unusual degree” of bureaucratic autonomy on the part of the state, and a robust level of public-private cooperation that is carefully engineered by the state.
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State autonomy should not be seen solely in terms of the state’s isolation from social forces and social currents. State autonomy and capacity are not zero-sum games and involve complex interactions between state and society.
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In fact, the two are mutually enforcing. A completely autonomous state lacks sources of information and intelligence. Only when autonomy is coupled with embeddedness, can a state be called truly developmental. Corporate coherence gives state apparatuses a certain kind of autonomy. But states also need to be embedded in a “concrete set of social ties” that bind them to society and “provide channels for continual negotiation and renegotiation of goals and policies.”
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“Connectedness complements autonomy,” Peter Evans writes. Moreover, “internal cohesiveness and dense external ties should be seen as complementary and mutually reinforcing. Efficacious states combine well-developed, bureaucratic internal organization with dense public-private ties.”
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This is the case in Qatar, with publicly owned corporations providing a key linkage between the state and key social actors.

In most developmental states, finance is the bond that ties industrialists to the state.
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In Qatar, real estate development companies perform this task. The links thus established enable the state to create and maintain ties with social classes. The developmental state is “a partner with the business sector in a historical compact of industrial transformation.”
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In South Korea, for example, by channeling capital to industrialists, the state created political interest groups that could be molded into a developmental coalition.
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The Qatari state similarly channels capital to its own base, made up of wealthy merchants and investors, skilled technocrats, and members of the upwardly mobile middle classes. Mutual reinforcement by state and society—derived from the state’s embeddedness in society—lies at the heart of successful developmental states.
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In the Qatari context, the state’s embeddedness has taken the form of establishing and funding publicly owned real estate companies, which are in turn tasked with carrying forward the multiple projects of modernity as defined by the state. Partly out of necessity and partly by design, the state in essence has privatized many of its modernization functions by relegating them to parastatals. Some of the most important and biggest of these publicly owned companies include Barwa, United Development Company (UDC), the Ezdan Real Estate Company, and Musheireb, all in charge of some of the country’s most noteworthy real estate development projects. By delegating its real estate development projects to these companies, the state bypasses the often inefficient government bureaucracy and creates what Evans calls “pockets of efficiency” by addition rather than transformation.
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More important, the state uses these companies to funnel wealth into society and to tie itself more effectively to various social actors. As the late Nazih Ayubi argued, rentier states have a higher degree of autonomy from certain social classes, and are able to “create new classes and/or to dismantle and reassemble existing ones.”
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This class engineering of sorts is achieved through devices such as general public expenditure, employment in the state bureaucracy, and specific public policies pertaining to economic subsidies and land allocation. What Ayubi did not foresee was attempts such as those of the Qatari state aimed at creating new wealth among the upper and middle classes by employing them in management positions in publicly owned companies or making them shareholders in extremely lucrative ventures.

In Qatar, the state appears to have made a deliberate effort to use publicly owned corporations to both create new public wealth and to establish and deepen its financial ties with the commercial classes. The top management and senior decision makers of these enterprises—their boards of directors and senior management teams—are often made up of a combination of technically skilled Qataris who acquired their positions because of their qualifications or merits, along with prominent businessmen with influence. Significantly, few of the major decision makers and senior managers in the publicly owned corporations are from the Al Thanis, though, naturally, members of the ruling family are not far from the decision-making process or the commercial advantages accrued through such commercial activities. That comparatively few Al Thanis are involved in the publicly owned companies is not due to lack of qualified or trusted ruling family members. In fact, state positions are used with great effect as a means of patronage for the larger Al Thani family, and Qatar tends to have the highest percentage of ruling family members in senior cabinet positions as compared to the rest of the GCC states (for more on this, see chapter 4).

Information from two of the larger of such companies, Barwa and the UDC, helps to better illustrate the point being made here (see
table 5.5
on some of Qatar’s other major publicly owned companies and their projects). In its 2010
Annual Report
, none of the five members of Barwa’s Board of Directors are Al Thanis. The company’s net assets totaled more than $20 billion that year, and its annual net profits jumped by 15 percent, reaching $386.6 million. Over the previous three years, Barwa’s profits had grown by an average of 13 percent, each year yielding an average net profit of more than $147 million.
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Barwa’s stockholders were no doubt happy, but perhaps not as happy as those owning stocks in the United Development Company. The UDC, in charge of developing the Pearl artificial island, is an equally significant state-owned enterprise in establishing critical links with influential social actors. In 2011, the company’s nine-man board of directors included only one Al Thani. There were two members of the Al Attiyah family, generally acknowledged to be the country’s second most prominent and powerful clan, as well as two Al Fardans—including the family patriarch Hussein Ibrahim and one of his sons Omar—which are one of Qatar’s wealthiest, if not the wealthiest, merchant families. The elder Al Fardan, in fact, served as the chairman of UDC’s Board of Directors in 2011. Coincidentally, the Al Fardans are generally assumed to be Shia. The company boasts that its board members are “among Qatar’s most successful investors and developers.” According to the company’s
2011 Annual Report
, its profits in 2011 grew by an astounding 511 percent, to a total of $1.03 billion, up from $169 million in 2010. The company’s assets grew by 75 percent, from $2.98 billion in 2010 to $5.22 billion in 2011.
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Some 75 percent of the company’s shareholders are reportedly Qataris, with the remaining 25 percent being made up of international investors.
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