Time for a substitute?

Qatar: in the midst of a diplomatic storm with its neighbours

“From the moment that FIFA president Sepp Blatter revealed the name of the host country of the 2022 World Cup, the entire nation of Qatar was overcome by joy and jubilation,” began a press release by FIFA in late 2010. It continued: “It was not just native Qataris who reacted to the news with great emotion, but residents of all nationalities.”

The latter comment will raise an eyebrow, since there was quite a bit of emotion outside Qatar but it was mostly anger over a FIFA decision viewed as hugely controversial. Business Insider even penned a story with the headline: “11 reasons why the Qatar World Cup is going to be a disaster”. The American news website noted in 2013 it would cost Qatar $220 billion to construct new infrastructure and that “the city that will host the final, Lusail City, doesn’t exist yet”.

Head of the English Football Association Greg Dyke was also a vocal critic, complaining the event would have to be held in winter – a major break with tradition – due to the appalling summer heat and he later added that if Swiss prosecutors found any evidence of corruption in the FIFA bidding process he thought Qatar would lose the tournament to an alternate country.

That said, none of the above did much to threaten Qatar’s host status and seemed only to boost the determination of the world’s richest country per capita. However, the most serious challenge to its World Cup ambitions emerged last week when its neighbours Saudi Arabia, the United Arab Emirates and Egypt all severed diplomatic and transport ties – over accusations Qatar was funding terrorism. This blockade led to shocked Qataris clearing their supermarkets’ shelves, worried that food shortages would follow.

An event of such geopolitical proportions obviously got widespread attention in China, which has important trade links with Qatar and all the other countries concerned. But interestingly, the question quickly posed by state newspaper the Global Times was ‘Will the 2022 World Cup move to China?” It suggest that if the crisis is not quickly resolved the World Cup will be at risk and claimed the major speculation was that China – which under its football fan leader Xi Jinping would love to play host – would be the natural plan B.

Indeed, in virtually every respect China’s credentials to play World Cup host far exceed Qatar’s (as do many nations, to be fair). It has the necessary infrastructure in place and in recent years it is the country where grassroots development of soccer has accelerated fastest.

The Global Times went on to note that Qatar fell out with the same regional neighbours in 2014 too and the dispute was resolved eight months later through the mediation of Kuwait and Oman. However, this time “the situation is clearly more serious and the crisis is expected to last longer, so some people have begun to worry about whether it will affect the World Cup”.

In fact, China already has a hefty exposure to Qatar’s soccer dreams. China Railway Construction is building Qatar’s flagship soccer stadium in Lusail. This is the first time a Chinese state firm has been the main contractor on the stadium set to host the World Cup final.

Away from sport there has also been wider analysis in the Chinese media about the impact of the Qatari crisis on business and the economy. Hydrocarbons are obviously the first thing to be considered, as any Middle East crisis in the past has tended to drive up prices. But as crude oil analyst Gao Jian told Shanghai Securities News, Qatar’s crude oil output is small (only about 6% of Saudi levels in terms of barrels produced per day) and prices are likely to be held steady by the ongoing market rivalry between US shale producers and OPEC.

Qatar plays a much more substantial role in the liquefied natural gas (LNG) market where it is currently the world’s top supplier, sending 60% of its exports to Asia. In this regard, China is much less reliant on Qatari sources (Japan imports three times what China does from the Gulf state) and has instead increased its supplies from Australia, and Belt-and-Road neighbours, including Russia (China has a major stake in the 16.5 million tonnes Yamal LNG terminal, though that will not be operational till next year).

China is, of course, Qatar’s biggest source of imports, which suggests any economic slowdown in the blockaded nation will have some effect on Chinese exporters, though owing to the country’s size this is likely to be marginal.

However, Shanghai Securities News reports that at least 43 Chinese A-share companies did have Qatar-related business. Seven of these, including the oil service unit of CNOOC, are energy-related. The other big players are construction firms, with China State Construction having worked on the Doha airport, Gezhouba on a large local water project and China Communications Construction on the Doha New Port.

Their suppliers also have skin in the game. Gold Mantis (mentioned in our article about Saipan casinos; see issue 368) has a local branch and sells building materials, as does Jangho Group after it won a bid to supply the Qatar Barwa financial district.

And providing all that construction equipment are Zoomlion, Xugong and Sany Heavy Industry (in 2016 its quarterly revenues were growing 45% year-on-year in Qatar).

Feng Songtao, a senior figure in the Qatari Overseas Chinese Association, told the Global Times that there are only 8,000 Chinese in the country, most of whom are employed by Chinese enterprises. “I do not feel any tension,” said Feng. “Chinese naval warships are in the Gulf of Aden, which is our reassurance.”

Another major question: will China be forced to pick a side in this dispute? If the Global Times is any indicator, Beijing may already have opted to support the blockaders. It interviewed an academic at the Institute of Modern Relations and quoted Tian Wenlin as saying Qatar had a “Napoleon complex” – a forthright putdown of the small nation’s big ambitions. The state-backed newspaper could easily have censored this unflattering remark – which Qatari diplomats won’t like – which makes its inclusion the more telling.

And back to soccer where a meeting between Xi Jinping and FIFA President Gianni Infantino in Beijing this week did little to stem speculation that China could be a backup host for the 2022 World Cup. “I do believe the China-FIFA cooperation has a good future.” Xi said.

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