|Real GDP (US$bn)||12.0||12.7||13.1|
|GDP real growth rate (%)||-5.9||5.9||3.0|
|Fiscal deficit (% of GDP)||-10.3||-10.4||--|
|Annual Inflation (%)||1.5||3.0||3.0|
|Total Exports (US$bn)||4.25||4.35||--|
|Total Imports (US$bn)||4.37||4.7||--|
|Trade balance (US$bn)||-0.12||-0.35||--|
Just when it seemed as though Qatar and Bahrain were due to reach an amicable resolution to their lingering border dispute, high-level official accusations from both sides escalated this neighborhood row. Bahrain’s Foreign Minister expressed his regret over Qatar’s failure to respond to the Minister’s suggestion to attend a joint higher committee meeting on the disputed islands of Hawar and Fashat al-Dibble. Qatar’s counterpart reacted by describing Bahrain’s statement as provocative. The two Gulf neighbors will now wait for the International Court of Justice’s ruling.
Earlier this year, both states expressed their satisfaction over the budding progress in mutual relations. In mid-April, the two nations exchanged ambassadors and appeared to be on a path towards complete normalization and enhanced cooperation in a variety of domains. The two sides went so far as to enter into negotiations concerning a gas supply agreement within the framework of a planned Qatar to Kuwait gas pipeline.
On the domestic front, the case involving plotters of a foiled 1996 coup attempt ended with the February sentencing of the cousin of the Emir, along with 32 others, to life imprisonment for their role in planning the coup. A panel of three judges found former economy minister and police chief Sheikh Hamad bin Jassem bin Hamad al-Thani guilty of masterminding the plot to overthrow his cousin, Shiekh Hamad bin Khalifa al-Thani.
Even if relations with Bahrain continue to regress, Qatar should continue to attract vast quantities of foreign investment to its wealthy energy sector. The Qatar General Petroleum Corp. (QGPC) recently signed a $1 billion contract with Exxon-Mobil to develop this tiny Gulf state’s giant offshore North Field. This deal followed TotalfinaElf’s decision to invest $350 million over the next three years to expand oil production capacity at its offshore Al Khaleej concession, and Technip Italy SpA’s winning $50 million tender to modernize gas installations in Qatar.
Qatar continues to relentlessly invite multinationals to execute industrial projects aimed at exploiting its huge natural gas reserves, the world’s third largest. In the process, this country has borrowed extensively on the international market. Fortunately, a strong appetite for Qatari debt exists. Preparations are now underway for a second sovereign Eurobond, expected to be worth between $1-2 billion with a 30-year maturity. In May 1999, Qatar ventured into the international capital market for the first time and succeeded to raise $1 billion. Banks fighting for the mandate to arrange this forthcoming issue include Goldman Sachs, Morgan Stanley Dean Witter, Warburg Dillon Read, JP Morgan, Chase Manhattan and Credit Suisse First Boston.
While Qatar’s economic well-being remains relatively independent from its relations with Bahrain, the recent chill in what had been thawing relations will carry over into the business domain. For instance, planning for the construction of a bridge linking the two nations has already begun. Such a joint causeway, similar to the King Fahd Causeway connecting Bahrain to Saudi Arabia, could contribute meaningfully to augmenting bilateral exchanges. Initiatives such as this, however, will inevitably fail to progress while political tensions heat up. Both states now await the decisive International Court of Justice ruling. This consequential verdict could finally put an end to a bitter border dispute, which could just as easily erupt into a regional conflict.
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