Tamim bin Hamad Al Thani

Photo: en.kremlin.ru

When the „First Funding Conference of Coordinate Council of the Russian Compatriots of the State of Qatar” took place in Doha in October 2016, some observers were surprised to find out that it represented 7,000 Russian nationals permanently residing in Qatar. According to the Russian embassy in Doha, these include “physicians, engineers, sports coaches, pilots, musicians of the Qatari Philharmonic Orchestra and etc.”( “etc.” most likely also includes SVR/GRU operatives). This is an impressive number for a country of less than 2 million, particularly since the last such figures given by the Russian embassy in 2014 were only 2,500 people. This dramatic, almost 300%, growth has been directly related to the new rapprochement between the two countries, which started in 2016 following the visit to Moscow of Qatar’s emir Tamim bin Hamad Al Thani and his meeting with Putin.

 

Russia and Qatar: short diplomatic history

 

A history of the two countries’ official relations is short and has many vicissitudes.  During the Cold War era, there were no diplomatic ties between Russia and Qatar, a close ally of Saudi Arabia. With Gorbachev’s perestroika, diplomatic relations between Moscow and Doha were finally established in 1988. However, the first years of their relationship were not particularly friendly, to say the least.  Even though early on in the Putin era, there was a recognition in Moscow that Russia could benefit from cooperating with Qatar in the energy sector, these designs were put on hold primarily due to the Qatari support of Chechen separatists. The relations got to their lowest point in 2004 when Russian security operatives assassinated in Doha a prominent leader of the Chechen separatists, Zelimkhan Yandarbiev.

 

During 2005 and 2006, Russian-Qatari relations quietly improved, particularly after Putin paid a visit to Qatar (as well as Saudi Arabia and Jordan) in February 2007. It occurred shortly after a January 2007 proposal by Iranian Supreme Leader Khamenei that Russia and Iran work to form a natural gas cartel. The short lasting “thaw” was interrupted by the 2011 diplomatic scandal when the Russian ambassador was harassed and injured by guards at the Doha airport. The series of protests and revolutions that came to be known as the Arab Spring and the war in Syria drew Russia and Qatar further apart. Qatar’s leaders sought collaboration with Turkey to back anti-government forces in Egypt, Libya and Tunisia. After the uprisings, Qatar’s emir Hamad bin Khalifa al Thani abdicated, replaced by his younger, less experienced son – Sheikh Tamim bin Hamad Al Thani.

 

For years, Russia and Qatar have backed opposite sides in the war in Syria. However, the world’s two leading natural gas exporters evidently have had good reasons to overlook some of their differences over the Middle East and cooperate on energy and other issues, both officially and unofficially. Such “unofficial” ties and cooperation are quite common in Putin’s government’s dealing with authoritarian regimes in the region (Iran, U.A.E., Syria, and others).  It is particularly prevalent in a lucrative energy sector, where many of the principals have long-term personal ties and belong to their respective ruling elites.

 

One of the most prominent representatives of this circle is Mr. Viktor Zubkov, a former Russian PM, now top official at Gazprom and special representative at the Russian-created and favored Gas Exporting Countries Forum (GECF). It was after Zubkov’s visit to Doha in February 2013, where he met with Mohammad Al Sada, Qatari Minister of Energy and Industry and took part in the opening ceremony of the first regional (Arabian peninsula) office of “Gazprom”, one saw fast development of official ( as well as unofficial) cooperation between the two states.

 

2013

  • ▲ Qatar sovereign fund (the Qatar Investment Authority – QIA) finalized formalities on the purchase of shares of the Russian VTB bank for 500 million USD.
  • ▲ CEO of Qatar Investment Authority, Ahmed Mohammad Al Sayed, was appointed as a member of the Russian Direct Investment Fund International Advisory Body.
  • ▲ Doha saw the meeting between the Vice Governor of Saint-Petersburg, Mr. Oleg Markov and the Head of the Doha Municipality Eng. Mohammad Al Sayed.
  • ▲ A visit by a delegation from the Republic of Tatarstan headed by the CEO of the Tatarstan Investment Development Agency Mr. Linar Yakupov
  • ▲ Political consultations at the level of deputy foreign ministers (Mikhail Bogdanov and Ali Al-Hajri) that were launched in Moscow.

2014

  • ▲ The second round of this strategic dialogue between Mr. Bogdanov and H.E. Mr. Mohammad Al Rumaihi was held in Doha.
  • ▲ Olympic City of Sochi saw the working meeting between President Vladimir Putin and Emir Sheikh Tamim.
  • ▲ Visit of Russian parliamentary delegation headed by the Special Representative of the Russian President for cooperation with Africa, the Chairman of the Foreign Affairs Committee of the Council of Federation of Russia H.E. Mr. Mikhail Margelov

2015

  • ▲ Visit of Minister of Foreign Affairs of RF Sergei Lavrov
  • ▲ Qatari Minister of Foreign Affairs  Minister Khaled ben Mohammed al-Atyya  visit to Russia
  • ▲ The number of the Qatar Airways flights from Doha to Moscow increases to 12 per week. That made it possible to increase the number of Russian transit tourists traveling via Doha to 200-250 thousand per year. The opening of Doha – St. Petersburg and Doha-Vladivostok direct flights is anticipated in 2017.

2016

  • ▲ One of the most important cooperation results highly praised by the Kremlin was an OPEC consensus on limiting oil production. The appreciation of Qatar’s role here was a high government decoration that RF ambassador in Qatar, Mr. Nurmakhmad Kholov received along with Russia’s OPEC representative Vladimir Voronkov “… for a great contribution in preparation and realization of intergovernmental economic agreements…”. Undoubtedly, the unofficial ties were in play here.

 

Emir Sheikh Tamim bin Hamad Al Thani in Moscow

A “renaissance” in Qatari-Russian economic cooperation

 

Economic relations between Russia and Qatar have been rather sluggish in the last two decades. In 2010–2014, average bilateral trade turnover amounted to no more than USD 54 million and plummeted to half that figure in 2015. According to the Russian embassy in Qatar, “economic relations between the two countries have been developing mainly through cooperation in the energy sector and within the framework of the Gas Exporting Countries Forum. “The year of 2016 brought some important changes to that picture: following the Qatari emir’s visit to Russia in early January, Moscow and Doha’s rhetoric began to change and a number of important deals and agreements had been concluded.

 

In September 2016, the two nations signed a military cooperation agreement followed by a far more important development: the purchase of a 19.5% stake in the state-owned oil major Rosneft by the Qatar Investment Authority and Glencore. Starting from June 22, 2017, citizens of the Russian Federation can apply for a tourist visa for one month at the Hamad International Airport (Doha). These events may appear to herald a new age in Russia–Qatar relations, but in fact, the picture is not so simple and straightforward.

 

The 2016 meeting between the leaders of Russia and Qatar was a much-anticipated event. At the official level, it resulted in bilateral agreements for visa-free travel for diplomatic passport holders and cultural cooperation.  It also tasked respective business leaders with creating a framework to boost economic cooperation that had been meager in recent years. However, off the record, the parties had a more important agenda that they discussed for more than two hours.

 

First, unofficially ( at least unannounced) they discussed the agreement between Russia and Syria on Russia’s air force deployment in Latakia, which may in fact block Qatari’s gas transit to Europe via pipelines. Since the agreement is of unlimited duration, many regional experts believe that Moscow becomes a long-term regional player, which Doha can no longer rebuff if it plans to launch strategic energy projects beyond the Gulf. While Qatar was not happy about this new strategic situation, Russia on its part does not want to directly confront this country, which still has enough influence with Syria opposition as well as in OPEC. It is very likely that Qatar’s support of Russia’s position in negotiations with OPEC had been discussed.  In Putin’s words, “Qatar is an important component of the situation in the Middle East and the Gulf.”

 

Secondly, being two of the world’s biggest gas producers, Russia and Qatar, according to Putin, “feel the need to harmonize policies in the energy sphere, especially in the gas industry.” Both countries need to mitigate the negative effect of energy price fluctuations seeing potential threats in Iran’s re-entry in the markets and US shale oil production. Cooperation with Qatar in the gas area as well as in trade and investment is the highest item on Moscow’s official as well and unofficial agenda. With its LNG capacity, Qatar could increase its exports tremendously and sell its natural gas to any country with LNG re-gasification facilities, or countries that can build them — including those to which Russia either now exports or hopes to export gas via pipeline. What this means is that tiny Qatar may be in the position to become an alternative to Russia as a gas supplier to any country, which has a coastline (or even some of those which do not).

 

Being a cautious player, Qatar will likely avoid open confrontation with Russia on gas issues (particularly in the new situation with its neighbors). The question remains, what can Moscow get from its newly closer relationships with Qatar apart from energy policy consultations? As one of the observers put it, it can hope that, “… Qatar will not publicly play host to any other high-level Chechen opposition figures since Yandarbiyev’s assassination.”

 

Unofficial Partners: What brings Putin’s Russia and Qatar Together?

 

As it has been pointed out earlier, Putin’s regime enjoys good official and covert cooperation with authoritarian regimes throughout the world. These relationships are particularly well developed with some of the energy rich autocracies (Iran, Venezuela, Libya, U.A.E, etc). The Kremlin enjoys close (albeit closed to the public) ties with corrupt autocrats of these oil nations; some of these connections are personal, closely held and rarely become publicly known. Tightly controlled mass media on both ends clearly helps.

 

However, some known examples show how these two corrupt regimes work and why they find it easy to cooperate while avoiding publicity:

 

WC 2018 and WC 2022

 

A number of allegation of corruption involved in winning the rights for the football WC 2018 (Russia) and WC 2022 (Qatar) were made and subsequently denied by the governments of both countries. These accusations of corruption were related to how Qatar won the right to host the event. FIFA completed an internal investigation into these allegations and a report cleared Qatar of any wrongdoing, but the chief investigator Michael Garcia has since described FIFA’s report on his inquiry as “materially incomplete and erroneous”. Swiss federal prosecutors opened an investigation into corruption and money laundering related to the awarding of the 2018 and 2022 World Cups in Russia and Qatar respectively. These accusations of both Russian and Qatari officials having close ties with the corrupt FIFA leadership point to possible behind the scenes connections and/or coordination between these two. It is also important that both countries’ football ruling bodies are headed by the respective countries’ high government officials: Deputy PM of the TF Vitaly Mutko and Sheik Hamad bin Khalifa bin Ahmed al Thani, who is chairman of the Qatar 2022 World Cup Supreme Committee’s Security Committee as well as Minister of State for Internal Affairs.

 

Sheik Hamad bin Khalifa bin Ahmed al Thani, chairman of the Qatar 2022 World Cup Supreme Committee’s Security Committee as well as Minister of State for Internal Affairs, who chaired meetings with Hamas interior minister Fathi Hamad and offered training and equipment to ‘strengthen the Hamas security apparatus’ .

 

“Sale of the Century”: Selling a 19.5 Percent Stake in Rosneft

 

When in December 2016, Russia announced one of its biggest privatization deals since the 1990s, selling a 19.5 percent stake in its oil company Rosneft, it was impossible to determine from public records the full identities of those who bought it. The situation with this deal’s beneficiaries is still murky as of today. The stake was sold for 10.2 billion euros to a Singapore investment vehicle that Rosneft said was a 50/50 joint venture between Qatar and the Swiss oil-trading firm Glencore. In addition, public records show the ownership structure of the stake ultimately includes a Cayman Islands company whose beneficial owners cannot be traced.

 

The Qatari Investment Authority said it would not comment on the deal, beyond confirming that it has participated in it. Rosneft declined to respond to questions by news agencies, including a request for comment on how ownership of the 19.5 percent stake was divided, the identity of the Cayman Islands buyer, or details of the source of any undisclosed sources of funds. Predictably, the Kremlin also avoided most of the questions about this “privatization”. There was much speculation in Moscow that some of high ranking beneficiaries included Mr. Putin himself.

 

Recent investigations discovered that the Kremlin-friendly Italian bank Intesa SanPaolo leant the Singapore vehicle 5.2 billion euros to fund the deal, and Qatar put in 2.5 billion. However, the sources of funding for nearly a quarter of the purchase price have not been disclosed. Finally, public records in Singapore have shown that Russia’s second-largest bank, state-controlled VTB, loaned the Singapore vehicle QHG Shares the full 10.2 billion euros that it paid to the Russian state to buy the stake. VTB held the 19.5 percent Rosneft stake as collateral for that loan, before relinquishing it back to Rosneft’s state-owned parent company Rosneftegaz, which in turn relinquished it back to the Singapore vehicle when Intesa’s loan arrived.

 

What had been overlooked in this story was that Qatar’s friendly relationship with the Russian government controlled VTB bank had been developed much earlier. In May 2013, Qatar Investment Authority quietly acquired $500 million worth of VTB shares. There is no doubt that such unofficial cooperation eventually led to the 2016 financing of the secretive Rosneft deal.

 

As the Russian business paper Vedomosti succinctly put it, “In the world there is one thousand and one way to pay for the shares of a state company with the money of the state company itself, but so that the shares get to the private person. For example, the company places bonds, puts the money in a certain fund, and this fund is later fronted by an influential but non-transparent international corporation.”

 

Qatar Crisis and Moscow

 

A new regional crisis, in which Egypt, Saudi Arabia, Bahrain and the United Arab Emirates severed ties with Qatar, accusing Doha of supporting Iran and financing jihadis, seemed to catch Moscow by surprise.  Russia considers both Qatar and the Saudis to be protagonists of the crisis. Unlike Washington, Moscow has more experience and expertise dealing with the regional governing tribal alliances and leveraging their rivalries. However, as one of its experienced regional observers pointed out, “ Russia makes little distinction between the ideological tints of the radical movements over which Qatar and the Saudis spar”.

 

Most likely, Moscow will try to play its game in working with both side of the conflict. It is not going benefit from a possible fall of Qatar’s regime, since in that case other unfriendly parties would control the gas „valve”. It is in the Kremlin’s interest to support a ruling emir. In return, they may request more investment into Russia’s gas industry or an access to the “North Pars” gas fields or even change in Qatar’s position for “gas OPEC”.

 

Towards these ends, both official and “unofficial” relations can be utilized.

 

By Sergei Zamascikov

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