Qatari people’s money serves Turkey despite Doha’s deteriorating economy

Ali Ragab

Despite Qatar’s suffering economy, the government of Emir Tamim bin Hamad Al Thani decided to issue and sell bonds worth $10 billion in international markets in April, while supporting Turkey’s economy with billions of dollars in the hope that the Turkish protection of the regime in Doha will continue.

Since Egypt, Saudi Arabia, the United Arab Emirates and Bahrain announced the severing of diplomatic relations with Qatar on June 5, 2017 because of its support for terrorism, Doha rushed to seek help from the Turks, as Turkish President Recep Tayyip Erdogan announced Turkish protection for Qatar and quickly dispatched Turkish forces to protect the emir from a possible popular revolution.

After the Turkish currency recorded the lowest levels in its history during the past weeks, the Turkish Central Bank tripled the size of the Turkish currency exchange agreement with Qatar from $5 billion to $15 billion, in an agreement that provides much needed foreign liquidity, according to Bloomberg.

The Turkish Central Bank said that the amendment of the swap agreement concluded in 2018 with the Qatari Central Bank aims to “facilitate bilateral trade” in the local currency, in addition to “supporting financial stability in the two countries.”

Reuters explained that officials from the Turkish Treasury and the Central Bank have approached their counterparts in Qatar and China about increasing the size of existing swap lines, and they have also talked to Britain and Japan about the possibility of establishing similar facilities.

Turkey’s depletion of Qatari funds has accelerated, which could further confuse Doha’s financial balances, as both countries suffer from similar crises and economic isolation.

Also, total Qatari direct investments to Turkey amounted to $601 million in 2019, compared to $85 million for the same period in 2018.

Yousuf Mohamed Al-Jaida, CEO of the Qatar Financial Center (QFC), has previously said that the amount of Qatari investments in Turkey has exceeded $20 billion.

Jaida explained at the Uludag Economic Summit in the Turkish state of Bursa in March 2019 that Qatari Emir Tamim bin Hamad Al Thani had announced in August 2018 an additional investment in Turkey worth $15 billion.

In 2018, the Qatari government obligated 130 Qatari companies in various sectors, as well as Qatari businessmen, to direct their investments to Turkey again despite the deteriorating economic situation, as Doha was forced to respond to Erdogan’s complaints.

The Qatari government was also forced to grant contracts without bids to Turkish companies in the upcoming World Cup facilities projects in Qatar, which was preceded by other projects, noted the Turkish Contractors Association, adding that Turkish companies have undertaken 128 projects valued at $14 billion.

The Qatari media reported that the trade exchange between Qatar and Turkey recorded 49% growth in 2018, amounting to more than 7 billion riyals, reflecting the Qatari financial flow from one direction.

The Qatari media said about the Turkish Middle East Economic Forum that Qatar is working to expand its investments in the field of food, as Hasad, the leading food company in the agricultural and livestock sectors in Qatar, decided to invest in the agriculture and livestock sector in Turkey with $650 million.

As the Qatari people’s money goes to serve Erdogan’s policies, the Doha regime has resorted to issuing bonds with large sums of money in the past two years. In April 2018, Doha launched the largest borrowing in its history through $12 billion in bonds, and it was repeated at the same value in March 2019.

The head of the Turkish-Arab Association for Economic and Strategic Cooperation (TASCA) in Ankara, Muhammed Al-Adil, described the goal of the strategic partnership between Qatar and Turkey as “enhancing security and stability in the region” and considered it the price of the Turkish alliance, which he revealed reached $35 billion in Turkish services and contracts, achieving a record rarely found in the world.

According to the Federation of Chambers and Exchanges of the Turkish Republic, the volume of trade exchange 15 years ago was in the range of $15 million but has now increased by sixty times to reach $900 million, according to the Anadolu Agency. The Qatari wealth invested in Turkey increased from $1 million to about $1.6 billion, and real Qatari government payments have increased tenfold, which are non-refundable.

A report published by Forbes also revealed that Qatar paid $15 billion to Turkey as “a price for military protection and diplomatic support”, adding that “the step reflects, on the other hand, great Qatari concern over its previous investments in Turkey if the Turkish economy were subjected to collapse, while Kuwait has denied rumors of providing financial support to Turkey.”

“The Qatari wealth, even if provided in a timely manner, is not likely to be sufficient to solve Turkey’s problems. There are some basic weaknesses in the Turkish economy that cannot be addressed simply by paying Qatari money,” the magazine said.