Outlook for 2011-15

• The emir, Sheikh Hamad bin Khalifa al-Thani, will focus on economic and foreign policy issues and is unlikely to initiate any substantive domestic political reforms during the forecast period.
• Qatar will continue to pursue an independent foreign policy, maintaining a high profile through its mediation efforts in various countries. Balancing its conflicting relations with the US and Iran will remain the top priority.
• Real GDP growth will remain very high in 2011, reaching 15.8%, but will slow to an average of 5.3% in 2012-15, as no new major energy projects are planned over the period.
• The fiscal surplus (excluding most LNG revenue) will have widened to an estimated 12.1% of GDP (QR58.3bn; US$16bn) in 2010/11. It will widen further to 14.8% of GDP in 2011/12 and to an average of 15.4% of GDP in 2012-15.
• The consumer price index declined by an estimated 1.9% in 2010, but consumer prices will rise again in 2011, by 2.1%, as property prices begin to recover and domestic demand stays strong.
• The current account recorded an estimated surplus of US$17.9bn (14.3% of GDP) in 2010 and is expected to remain heavily in surplus in 2011-15, owing to continued strong hydrocarbons exports.

Monthly review

• In December the king visited Iran on a trip reportedly aimed at allaying Iranian concerns that Qatar would allow its territory to be used for a US attack on the Islamic Republic.
• The Economist Intelligence Unit has released its latest democracy index, once again categorising Qatar as an "authoritarian" state, although its overall score and global rank have improved slightly.
• Qatar's energy minister, Abdullah bin Hamad al-Attiyah, has outlined plans to significantly increase the country's petrochemicals production capacity, to 18m tonnes/year (t/y) by 2016, up from 7m t/y at present.
• Qatar's Department of Industrial Development has commissioned India's National Small Industries Corporation to conduct a feasibility studies for 30 small-scale industrial units, in a new move by Qatar to promote SMEs.
• Qatar Holding, a unit of the Qatar Investment Authority, has signed a deal with Hochtief to buy a 9.1% stake in the German construction giant. Hochtief is already involved in several large-scale projects in Qatar.
• Qatar Petroleum and Royal Dutch Shell have signed a Memorandum of Understanding to build a US$6bn monoethylene glycol plant at Ras Laffan.

The Economist Intelligence Unit expects Qatar to remain stable and secure under the rule of the emir, Sheikh Hamad bin Khalifa al-Thani, in 2011-15. There will be little vocal opposition to his rule and economic policies, largely because the government has ensured that most Qatari citizens have benefited from the wealth that the country has accrued over the past decade, but also because the Qatari press exercises some self-censorship.

There is occasional friction within the ruling family and a history of internal coups, most recently when the emir overthrew his father in 1995, but the country has appeared stable in recent years. Although the emir (born in 1952) is younger than other Gulf rulers, there have been concerns about his health. His fourth son, Sheikh Tamim bin Hamad al-Thani, was appointed as heir apparent in 2003 (replacing his third son) and has been taking an increasingly active role in government. The emir's cousin (twice removed), Sheikh Hamad bin Jassem al-Thani, who is prime minister and foreign minister, would help to ensure a stable transition were the emir to die. Despite a suicide bombing at a theatre popular with Westerners in 2005, there have been no further attacks, and a sustained terrorist campaign is unlikely given that there is little social discontent in the country and the security apparatus has been strengthened considerably.

An electoral law was passed in May 2008 that settled a number of disputes about the franchise and paved the way for the creation of a two-thirds elected Advisory Council with limited legislative powers, although the term of the current (fully appointed) Council was subsequently extended until June 2011. Even if an election is held, the ruling family will maintain its hegemony over policymaking because of the limited powers granted to the Council by the 2005 constitution.

Qatar will maintain its high-profile foreign policy, spearheaded by Sheikh Hamad bin Jassem. By using its web of myriad (and, at times, conflicting) alliances in the region and beyond, Qatar has projected itself as an impartial mediator in many of the region's conflicts, often backing up its efforts with financial assistance. Although its mediation was successful in Lebanon in 2008, and its efforts in the Darfur conflict in Sudan appear to be making headway, Qatar's involvement in Palestinian affairs has been controversial. Its high-profile diplomatic engagement on multiple fronts also increases the risk of straining relations with allies that disapprove of its policies or feel that Qatar is interfering in their own spheres of influence.

Qatar will struggle to distance itself from the stand-off between the US and Iran over the latter's nuclear programme, not least because of the large US military presence on its soil, although it is unlikely that the US would launch an attack on Iran (although an Israeli strike is slightly more likely). Although Iran and Qatar have strong economic links-they share the giant North Field gas reservoir, for instance-and the emir has hosted Mahmoud Ahmadinejad, Iran's president, several times, the growing US military presence in the region will inevitably affect relations. For example, in February Iran and Qatar signed a defence co-operation agreement. However, this appears to be of less significance than the earlier disclosure that the US had deployed extra missile defence systems to the Gulf region, including to Qatar. The emir once again highlighted Qatar's policy of maintaining close relations with Iran and the US when, in September, he called on the US to start talks with the Islamic Republic and, in doing so, attempted to use Qatar's unique position to broker a solution to the nuclear dispute.

In the past, Qatar has maintained some low-level relations with Israel, and it would be one of the first Arab countries to make moves towards normalisation, such as permitting the reopening of an Israeli trade mission (closed in January 2009 during Israel's invasion of Gaza), in the low-probability scenario that the Arab-Israeli peace process progresses. Relations with Saudi Arabia have improved, following the reinstatement of a Saudi ambassador to Qatar in 2008 after a five-year hiatus and the subsequent signing of a bilateral agreement. (A final border deal between the two countries is also expected soon.) Relations will no doubt be boosted further by Qatar's recent release of ten Saudi prisoners serving life sentences in the country. However, there may be occasional setbacks over the forecast period as Qatar pursues an independent foreign policy, rather than deferring to its larger neighbour.

In spite of the global squeeze on credit in 2008-09, Qatar pressed ahead with infrastructure projects (such as a causeway to Bahrain and a railway network) and expanding its liquefied natural gas (LNG) production capacity, to 77m tonnes/year (t/y) by early 2011. A moratorium on signing new gas export agreements is in place, until at least 2013, and will only be lifted on the basis of the results of a study into the North Field's long-term potential and projections of global gas demand. Once the moratorium is lifted, the government will probably concentrate on projects that further domestic economic diversification, in particular in the downstream sector and petrochemical production, rather than export-oriented schemes. Qatar has traditionally used loans and bonds to finance economic development projects, and a number of major Qatari firms successfully tapped credit markets in 2009 and 2010 for both refinancing and expansion. However, if any key projects faced delays owing to an unavailability of credit, the government would draw on its sovereign wealth fund, the Qatar Investment Authority (QIA), to ensure that they proceed as planned. (Qatar began the development of its LNG programme during the 1997-98 oil price crash and so has positive experience of investing through downturns.)

In a signal of Qatar's confidence, branches of the QIA, such as Qatari Diar, are even taking on new debt to finance major foreign investments. The government will have re-evaluated some of its previous reform priorities because of the global recession-in January 2010, for example, the Qatar Financial Centre (set up in 2005, under its own byelaws, to attract major global financial institutions) cut one-third of its workforce-but it has implemented a long-promised cut in corporation tax to 10%, in line with a proposed flat tax across the Gulf Co-operation Council (GCC), and will further encourage investment by streamlining licensing and financial sector regulations.

We estimate that officially recorded government revenue, which fell by an estimated 10.2% in fiscal year 2009/10 (April 1st-March 31st), will have risen by 26.7% in 2010/11, as oil prices and condensate export volumes increased and investment income rose. Current expenditure will continue increasing steadily over the forecast period, as will capital expenditure (the latter has risen sixfold over five years). Qatar's fiscal revenue will grow considerably over the forecast period, although well below the rate of the previous five years because of the relative decline in global energy prices. Officially recognised revenue is forecast to grow by an average of 4.9% between 2011/12 and 2015/16, recovering well from a large fall in revenue in 2009, but dipping at the end of the forecast period with an expected decline in oil prices. The actual revenue growth rate (including all LNG revenue) will be 5.7%. Oil and gas will continue to represent about three-quarters of revenue, although the composition will tilt increasingly towards LNG. We estimate that income on foreign assets represented around 25% of officially recognised government revenue in 2009/10 and is forecast to remain substantial over the next five years, providing something of a buffer for the public finances if energy prices prove weaker than forecast. Following the recent decision to host the football World Cup in Qatar, the government will focus much of its efforts on ensuring that the vast infrastructure projects outlined in its bid are carried out, necessitating a large increase in the capital budget towards the end of the forecast period.

Our estimate for the official budget surplus in 2010/11 is QR58.3bn (US$16bn), or 12.1% of GDP, based on a fiscal year average oil price of US$78.4/barrel for Qatari crude. However, most LNG revenue is excluded from the official fiscal account and, were this to be included, our estimate would be an even larger surplus of 19.5% of GDP. In 2011/12 we expect the surplus to widen to 14.8% of GDP on the narrow, official method of recording revenue, owing to increases in oil export volumes, tax revenue and investment income from the QIA. The official budget surplus will average 15.4% of GDP in 2012-15.

Monetary policy is constrained by the Qatari riyal's peg to the US dollar. In October 2008, when the US cut its main interest rate to 1% (and then later to 0.25%), the Qatar Central Bank broke with its previous policy of mirroring US rate changes and held rates steady, but it has recently announced a 50-basis-point reduction in its deposit rate, to 1.5%, bringing it more into line with the US rate. However, the official lending rate has remained fixed at 5.5% since 2006 and is unlikely to be lowered as inflation picks up from the lows of 2009. Speculative flows will be dampened by the decision to not press ahead with the GCC single currency, which will mean that the authorities are unlikely to consider a revision to Qatar's exchange-rate regime. Separately, Qatar will maintain its support for the banking system, retaining substantial equity stakes in domestic banks (including additional 5% stakes taken in December 2009) and holding on to parts of their domestic loan books until liquidity concerns have eased in the latter part of the forecast period.

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Qatar avoided recession in 2008-09, and the economy surged ahead in 2010 because of the global recovery and the domestic boost provided by a near doubling of LNG production. The final LNG "super-train" (with a capacity of 7.8m t/y) is set to come on stream by the end of the first quarter of 2011. Concerns have been growing about the combined impact on the economy of a global slump in demand for LNG, particularly in the US, and the coming on stream of new LNG capacity in Qatar and further afield. The next two years will be difficult, but Qatar's dominant position in the market and low production costs should enable it to maintain export volumes, although profit margins will be squeezed and it will increasingly rely on the spot market. Although crude production capacity will rise by about 25% over the forecast period-largely owing to expansion at the Al Shaheen oilfield-production will remain constrained by OPEC quotas. A further boost to growth in 2011 will be provided by the commissioning of the first 70,000-barrel/day train in the Pearl GTL (gas-to-liquids) project, which is operated by Royal Dutch Shell, the Anglo-Dutch energy giant.

The government is expected to maintain high levels of capital spending on education, health and transport. Population growth is projected to remain strong over the forecast period owing to immigration, although at an annual average of almost 6% it will be well down from its peak of 17.9% in 2007. This in turn will support domestic demand. Growth will benefit from high levels of investment in the hydrocarbons sector but will be dampened by imports needed to develop Qatar's energy facilities and upgrade its infrastructure. Overall, we estimate that real GDP growth surged to 14% in 2010. We expect growth to remain very high, at 15.8%, in 2011 as the final LNG super-train comes on stream, before dropping considerably to an average of 5.3% a year in 2012-15, once the current round of investment in the country's gas export capacity has been completed.

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A period of high inflation came to an abrupt end in 2009, when deflation averaged 4.9%, mainly because of a fall in rents and global commodity prices, and we estimate that prices fell by 1.9% in 2010, largely owing to a continued dip in rental prices. Consumer prices will begin to rise again this year, as demand from the ongoing influx of immigrants outweighs any further declines in rents, and inflation is forecast to average 2.1%. Ongoing volatility of the dollar will influence short-term imported inflation. We expect inflation to average 4.4% in 2012-15, close to Qatar's long-run average, boosted by continued strong domestic demand. There are both downside and upside risks to the forecast, depending on the level of immigration and the outlook for the dollar.

The riyal is pegged to the dollar at a rate of QR3.64:US$1. The authorities are committed to maintaining the current exchange-rate regime, arguing not only that Qatar's gas and oil exports are denominated in the US currency, but also that the peg offers stability and reassurance to investors. Pressure for revaluation is unlikely to return unless the dollar weakens substantially later in the forecast period, although the constraints that a peg imposes on monetary policy remain problematic. The peg is likely to remain in place until the GCC decides on a co-ordinated move in preparation for the establishment of a single currency, a project that will remain in abeyance in order to allow the GCC to assess the fallout of the euro crisis. Although both Oman and the UAE have withdrawn from the monetary union project, Qatar is still committed to it. Monetary union is unlikely to happen before 2015.

After narrowing sharply in 2009, the current-account surplus recovered in 2010, reaching an estimated 14.3% of GDP. The surplus will reach record levels during the forecast period, averaging 27% of GDP in 2011-15. The surplus will be driven by strong export earnings growth, of a projected average of 10.2% a year, and relatively flat imports in the first half of the forecast period, as rising demand for consumer goods from a growing population only just offsets falling capital goods imports as the gas industrialisation programme winds down. The increase in exports will be driven mainly by the coming on stream of new LNG, GTL and oil production, which will cause the trade surplus to surge to US$54.6bn in 2011, and to widen further to an average of US$68bn in 2012-15. With workers' remittances rising and income debits surging as foreign companies' profits recover, net non-merchandise outflows will remain substantial over the forecast period.

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On December 20th the emir, Sheikh Hamad bin Khalifa al-Thani, paid his fifth visit to Iran, trying to convince its leaders that Qatar's strategic relations with Iran's arch rival, the US, would never be used to the detriment of Iran's interests. The latest visit came just after the latest round of cables were leaked by WikiLeaks, a whistle-blowing website, which purportedly contain details of the Qatari prime minister and foreign minister, Sheikh Hamad bin Jassem bin Jabr al-Thani, privately encouraging the US to impose greater economic sanctions on Iran. The purpose of the emir's visit was the subject of much speculation, but it is likely that Qatar is once again trying to act as a conduit between the US and Iran to coincide with the latter's return to the negotiating table to resolve the stalemate over its nuclear programme after an 18-month hiatus, despite there being very little optimism on all sides that a substantive resolution will actually be reached.

Qatar's anxiousness to placate Iran stems, in part, from its fear that Iran could move to disrupt its gas production from the North Field, which the two countries share, in the event of a conflict between Iran and the US. Qatar hosts the US Department of Defence's largest airbase outside North America, at Al Udeid, and the US Central Command's Middle East headquarters, besides a sprawling heavy equipment warehouse, at Al Sailiyah, west of the capital, Doha. So far, Qatar has managed to keep what it describes as "excellent and brotherly relations" with the Iranian leadership by hosting the Iranian president, Mahmoud Ahmadinejad, and signing a variety of bilateral agreements, including a defence co-operation accord. Qatar has also moved to allay Iranian concerns by repeatedly stating that it would not allow military strikes to be conducted from its soil. Qatar's reassurances have, however, been received with some scepticism by Iran; according to Sheikh Hamad bin Jassem, the agreement under which the US deployed its troops and military assets on Qatari soil provide that the deploying party shall have the right to use them whenever the need arose.

Qatar's relatively close ties with Iran are viewed with considerable suspicion by other members of the Gulf Co-operation Council and other Arab countries, which balk at Iran's alleged nuclear ambitions and its arming of militant allies throughout the region. Saudi Arabia has repeatedly expressed its displeasure over Qatar's courting of the Islamic Republic, and according to further documents released by WikiLeaks, the king of Bahrain, Hamad bin Isa al-Khalifa, was quoted as strongly criticising Qatar over its willingness to host Iranian military officials. The UAE and Kuwait have also expressed their displeasure. Qatar's Arab neighbours (all staunch US allies) feel that Iran has been using Qatar to weaken the US's protective umbrella over the Gulf and establish its own brand of security.

In the Economist Intelligence Unit's 2010 democracy index, Qatar is ranked 137th out of 167 countries and is categorised as an "authoritarian" regime with an overall score of 3.09. The absence of parliamentary elections means it automatically scores zero in the electoral process category. It scores below the regional average for political participation and political culture because of the near-total domination of politics by a few families, principally the Al Thani. However, although the system of government is undemocratic by international standards, the society is generally moderate, and Qatar is ranked third in the region in the civil liberties category.

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Unrest is unlikely

Qatar has one of the highest levels of GDP per head in the world, which, along with extensive civil liberties (relative to the region), makes the prospect of social unrest unlikely. In another recent Economist Intelligence Unit index, the 2009 political instability index, Qatar was ranked as the least likely country to suffer social unrest in the region, after Oman. The recent announcement by the governing body for world football, FIFA, that Qatar would host the 2022 World Cup has been greeted with palpable enthusiasm in the country. However, the huge infrastructure projects required to host the tournament, and the associated influx of foreign labour, could prove controversial, especially as the inflow of foreign labour is already a contentious issue for many Qataris (who only number around 230,000-13% of the total population).

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Democracy index 2010: Democracy in retreat, a free white paper containing the full index and detailed methodology, can be downloaded from www.eiu.com/DemocracyIndex2010.

Note on methodology

There is no consensus on how to measure democracy and definitions of democracy are contested. Having free and fair competitive elections, and satisfying related aspects of political freedom, is the sine qua non of all definitions. However, our index is based on the view that measures of democracy that reflect the state of political freedom and civil liberties are not "thick" enough: they do not encompass sufficiently some crucial features that determine the quality and substance of democracy. Thus, our index also includes measures of political participation, political culture and functioning of government, which are, at best, marginalised by other measures.

Our index of democracy covers 167 countries and territories. The index, on a 0 to 10 scale, is based on the ratings for 60 indicators grouped in five categories: electoral process and pluralism; civil liberties; the functioning of government; political participation; and political culture. The five categories are inter-related and form a coherent conceptual whole. Each category has a rating on a 0 to 10 scale, and the overall index of democracy is the simple average of the five category indexes.

The category indexes are based on the sum of the indicator scores in the category, converted to a 0 to 10 scale. Adjustments to the category scores are made if countries fall short in the following critical areas for democracy:

• whether national elections are free and fair;
• the security of voters;
• the influence of foreign powers on government; and
• the capability of the civil service to implement policies.

The index values are used to place countries within one of four types of regimes:

• full democracies-scores of 8 to 10;
• flawed democracies-score of 6 to 7.9;
• hybrid regimes-scores of 4 to 5.9;
• authoritarian regimes-scores below 4.

Qatar is due to hit its liquefied natural gas (LNG) production capacity target of 77m tonnes/year (t/y) next month, and is already the largest LNG exporter in the world. It has now turned its attention to expanding its already considerable petrochemicals industry, and on December 20th the deputy prime minister and energy and industry minister, Abdullah bin Hamad al-Attiyah, told reporters that the country had set a target of producing 18m t/y of petrochemicals by 2016, up from around 7m t/y at present.

Projects on the drawing board include the expansion of existing plants belonging to the Qatar Petrochemical Company (QAPCO) and the Qatar Fertilisers Company (QAFCO), as well as the start-up of new ones (December 2010, Economic performance). The rationale behind the new focus-part of the state's economic diversification strategy-is to promote the establishment of large-scale domestic gas-based downstream industries, which, it is argued, cost much less than setting up LNG facilities and create more local job opportunities.

Mr Attiyah said that Qatar had no immediate plans to lift a moratorium on further extraction of gas from the North Field (which was imposed in 2003 and which is expected to remain in place until at least 2013). He added that Qatar would "debottleneck" its existing LNG plants if it needed extra gas for domestic use. The process involves modification of existing LNG "super-trains" to boost production efficiency. In 2002-04 one of Qatar's largest gas companies, Qatargas, carried out such procedures on three of its trains, which resulted in an increase in annual capacity from 6m t/y to 10m t/y. Mr Attiyah hopes that by implementing the procedure, Qatar can expand LNG production from its six super-trains (each with a capacity of 7.8m t/y) by an additional 10m t/y.

The announcement of Qatar's new gas policy was quickly followed by a renewed thrust to promote small and medium-sized enterprises (SMEs) in the country. On December 20th Qatar's Department of Industrial Development commissioned India's National Small Industries Corporation (NSIC) to conduct a feasibility study for some 30 small-scale industrial units that can be set up to manufacture products, including petrochemicals, aluminium, steel and cement, using locally produced materials. The planned expansion of Qatar's petrochemical industry could potentially offer significant opportunities for SMEs looking to set up facilities to manufacture different types of polyethylene pipes, steel rolling sheets, scaffolding, automotive parts and a host of other consumer and industrial products. The NSIC is expected to submit its report within six months and, if needed, participate in joint ventures to facilitate technology transfers to domestic companies. The government, for its part, has set up a QR2bn (US$550m) special fund to support the initiative, and has offered to stand as a guarantor for bank loans to economically viable SMEs.

Qatar has long been trying to encourage its citizens to set up SMEs by offering incentives, including the provision of free plots of land, subsidised utilities, exemption from customs duties, soft loans and preferential treatment for local products in government purchases. However, few Qataris have come forward to take advantage of these offers, not surprisingly perhaps given the weak entrepreneurship (suppressed by the availability of lucrative public-sector jobs that are virtually guaranteed to Qatari citizens), as well as the paucity of know-how and skilled domestic manpower. To overcome these deficiencies, the government has extended the facilities available to Qataris to foreign investors in an effort to encourage them to team up with willing Qatari entrepreneurs. Last year, Qatar amended its foreign investment law to allow 100% non-Qatari ownership in several sectors, including consultancy services, information technology, services related to sports, culture and entertainment, and distribution services.

The recent push to prioritise the formation of SMEs follows the publication of a recent study, conducted by the UN Development Programme (UNDP) and the General Secretariat for Development Planning, which found that Qatar's SME sector was "underdeveloped" even when compared with those in other emerging economies. The study also found that the sector "does not provide a sufficient engine for the government's economic diversification and Qatarisation programme", two fundamental pillars of the country's economic vision. The report adds that although Qatar has the potential to develop a vibrant and productive SME sector in view of its sound macroeconomic development policies, regulatory regime, low taxes and good access to regional markets, its SMEs are concentrated in low value-added sectors, such as trade and retail distribution, and account for a very small proportion of total GDP. The study calls for multi-sectoral reforms to promote entrepreneurship, greater access to funding for start-up businesses and better access to land for industrial development purposes.

Qatar relies heavily on its oil and gas sector, which in 2010 accounted for almost 61% of its GDP. Despite efforts to reduce this dependence, the Economist Intelligence Unit forecasts that extractive industries will still contribute, on average, 67% towards the country's GDP throughout the forecast period, largely owing to the expansion of its LNG industry, which is expected to bring Qatar's production capacity to 77m t/y next month.

On December 6th Qatar Holding, a unit of the sovereign wealth fund, the Qatar Investment Authority (QIA), signed a deal with Hochtief to buy a 9.1% stake in the German construction giant. The deal is to be completed through the purchase of 7m new shares at EUR57.114 (US$75) each, costing a total of EUR399.8m (US$530m). As part of the deal, Hochtief will locate its Middle East headquarters in Doha, train local staff and run a research and development facility. Qatar's prime minister and foreign minister, Sheikh Hamad bin Jassem, who is also the chairman of the QIA, said that the deal was key to developing infrastructure for the 2022 football World Cup, which is to be hosted by Qatar. Hochtief is already involved in several large-scale infrastructure projects in the country, including the metropolitan railway and the Qatar-Bahrain causeway. The deal was believed to have been facilitated by the office of the German chancellor, Angela Merkel, who had expressed disapproval of a planned hostile takeover of Germany's largest builder by its Spanish rival, Actividades de Construction y Servicio (ACS). The Qatar Holding deal increases Hochtief's capital, and will dilute ACS's stake in the company to about 27% from 29.9%, making it more difficult for the latter to increase its holding beyond 50% and take control of the company. Qatar also has a 17% stake in two German carmakers, Volkswagen and Porsche.

On December 17th the Qatari finance minister, Youssef Hussein Kamal, announced that the country was keen to invest more in European information technology and SMEs.

On December 21st Qatar Petroleum (QP) and Royal Dutch Shell (Netherlands/UK) signed a Memorandum of Understanding (MoU) to build a monoethylene glycol (MEG) plant at Ras Laffan, which will have a nameplate production capacity of 1.5m t/y of MEG and 2m t/y of other olefins derivatives. MEG is an important raw material for industrial applications, and is used in the manufacturing of polyester (widely used in cloth), films and fibres. The project will use Shell's OMEGA technology and cost an estimated US$6bn.

Qatar's deputy prime minister and energy and industry minister, Mr Attiyah, who signed the MoU with Shell's chief executive, Peter Voser, said that the project had been fast-tracked to ensure that it is completed before the World Cup 2022-related infrastructure programme reached its apex. He expects the MoU to be converted into a formal heads of agreement in March 2011, and front-end engineering and design (FEED) to follow immediately after that, with the start-up expected in 2016. The project is part of Qatar's strategy to diversify the use of its gas and expand downstream industries (see Economic policy).

A meeting of the Gas Exporting Countries Forum (GECF) on December 2nd in Doha ended with a unanimous call for establishing parity between oil and gas prices, but without agreement on a mechanism for doing so. The forum, which brings together the energy ministers of 14 gas-producing countries, could not agree on the need to establish an OPEC-style cartel to regulate supply and demand, in an effort to boost gas prices. The most vociferous opposition came from the Russian energy minister, Sergei Shmatko, who declared that "achieving a fair price for natural gas does not mean imposing restrictions on production, or seeking quotas for production". He disagreed with the Venezuelan energy minister, Rafael Ramírez, who argued that gas prices must be regulated to allow greater parity with oil prices. Algeria's oil minister, Youcef Yousfi, agreed with Mr Shmatko, saying that the gas market was built on long-term contracts (between sellers and buyers), and that he did not think it was the time to change that. Qatar's stand remains sceptical, with Mr Attiyah saying that he wished the GECF could control gas prices, while casting doubt on its ability to actually do so. Qatar has long been opposed to limiting the supply of gas on the world market, largely because it holds a major competitive price advantage over most other producers. The ministers did, however, vow to work closely to develop a stable and transparent gas market and noted the progress being made by the GECF secretariat in developing a working plan for the forum for the 2011-15 period.

Despite rising oil prices, the price of gas has been in decline, as an increase in supply-thanks largely to shale gas extraction in the US-and weak demand have pushed the Henry Hub price down to US$4.26/mBtu (equivalent to an oil price of around US$24.70/barrel).

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Please see graphic below

Please see graphic below

Please see graphic below

Land area

11,521 sq km

Population

1,631,728 at end-2009 (Qatar Statistics Authority)

Main towns

Doha (capital), Messaieed and Ras Laffan (industrial cities)

Climate

Summer, hot and humid; winter, mild with minimal rainfall

Weather in Doha (altitude 5 metres)

Hottest months, July-September, when maximum temperature can be 45°C and humidity 85%; coldest months, December-March, average temperature 10-20°C; driest month, August; wettest month, December; annual average rainfall 39 mm

Language

Arabic; English widely used

Measures

UK (imperial) and metric systems

Currency

Qatari riyal (QR) = 100 dirhams. Exchange rate pegged at QR3.64:US$1

Time

3 hours ahead of GMT

Fiscal year

April 1st-March 31st

Public holidays

The dates of Islamic holidays are based on the lunar calendar and are therefore approximate: Eid al-Fitr (end of Ramadan, August 31st-September 3rd 2011); Eid al-Adha (November 6th 2011)

Fixed secular holidays are the Emir's Accession (June 27th); Independence Day (September 3rd); National Day (December 18th)

Official name

State of Qatar

Form of state

Emirate

Legal system

The 2005 constitution provides for an independent judiciary that should be answerable to "no power but the law". Judges may only be dismissed "in cases to be defined by law"

Legislature

Qatar's current Advisory Council was established in 1972, and is wholly appointed. It can issue advice on policy matters, but has no formal legislative role. The 2005 constitution makes provision for a two-thirds elected, 45-member parliament to be formed, which will have the power to draw up laws and question ministers. However, the parliamentary election has been repeatedly delayed, and the inauguration of the new body is not expected within the forecast period

Head of state

The emir, Sheikh Hamad bin Khalifa al-Thani, succeeded to the throne in June 1995. In October 1996 he appointed as his heir his third son, Sheikh Jassem bin Hamad al-Thani. However, in August 2003 Sheikh Jassem unexpectedly resigned as crown prince and was replaced by his younger brother, Sheikh Tamim bin Hamad bin Khalifa al-Thani

Executive

The cabinet is headed by the prime minister, who is appointed by the emir. In April 2007 the first deputy prime minister and foreign affairs minister, Hamad bin Jassem bin Jabr al-Thani, replaced Abdullah bin Khalifa al-Thani as prime minister

Main political parties

Political parties are not permitted

Government

Prime minister & foreign affairs: Hamad bin Jassem bin Jabr al-Thani

Deputy prime minister & energy, industry, electricity & water: Abdullah bin Hamad al-Attiyah

Key ministers

Business & trade: Jassem bin Abdulaziz al-Thani

Defence: Hamad bin Khalifa al-Thani

Education: Saad bin Ibrahim al-Mahmoud

Endowments & Islamic affairs: Ghaith bin Mubarak al-Kuwari

Environment: Abdullah bin Mubarak al-Midhadhi

Finance & economy: Youssef Hussein Kamal

Interior: Abdullah bin Khaled al-Thani

Justice: Hassan Abdullah al-Ghanem

Labour: Sultan bin Hassan al-Dhabit al-Dawsari

Municipal affairs & urban planning: Abdel-Rahman bin Khalifa al-Thani

Public health: Abdullah bin Khalid al-Qahtani

Social affairs: Nasser bin Abdullah al-Hemaidi

Key ministers of state

Cabinet affairs: Nasser bin Mohammed al-Thani

Emiri diwan: Abdel-Rahman bin Saud al-Thani

Energy & industry affairs: Mohammed Saleh al-Saddah

Foreign affairs: Ahmed bin Abdullah al-Mahmoud

Interior affairs: Abdullah bin Nasser al-Thani

Central Bank governor

Abdullah bin Saud bin Abdel-Aziz al-Thani