There is more to gain in friendship than in rivalry

It has a point. Last year The Times newspaper of London, on a fact-finding mission by its business editorial staff, published an article entitled “ugly, unloved Doha” and went on to compare it unfavourably to its precocious rival to the south, Dubai.

Then another weighty London newspaper, the Financial Times, took a swing at Qatar’s failure to acquire the British retail group Sainsbury’s, quoting an opinion that the actions of the Qatari bidders were “lower than a snake’s belly”. Both attacks were arguably unjustified and unsubstantiated value-judgements, but they went down badly in Doha.

Financiers in the city smile ruefully when the subject is raised, but there is no faking the pain such comments must have caused.

One player in the Qatar financial industry told me: “They [Qataris] hate being compared with Dubai and being called backward and behind the times. They are different from Dubai, that’s all. They have great plans and ambitions but go about implementing them in a different way to Dubai. Not better or worse, just different.”

After an eye-opening visit to the city and conversations with some of the people behind the Qatari business strategy, I have to say I agree with him. Qatar has a master plan, which is being carefully and methodically implemented. It will take time and application, but it is real, and, if it comes off, it might just make Dubai and the UAE sit up and take notice.

The country has the highest per capita income in the Middle East and sits on 30 per cent of the world’s reserves of natural gas. It wants to move away from dependence on this incredible natural asset and within a few years live off the investment income from the accumulated cash. It is estimated a fund of $250 billion (Dh917.5bn) will be sufficient to achieve this goal – to construct and operate a global investment portfolio that will replace energy as the country’s main source of income.

Its rulers, advised by some of the world’s top financiers, have identified financial services as the main way to reach that goal. Qatar wants to be a regional market place where the world’s great industrial and financial corporations will focus their Middle East operations. The problem, however, is that Dubai and Bahrain each have very similar ambitions, and it can be legitimately argued that, however big the liquidity of the energy-rich Gulf, there cannot be room for three financial centres, quite apart from the giant but aloof Saudi Arabia.

Nearly three years ago, the country set up the Qatar Financial Centre to drive its strategy and QFC believes it has a unique advantage compared with Dubai. It has an integrity and unity that is still lacking in the UAE markets. International groups coming to Qatar will find a “one-stop-shop” of markets, infrastructure and regulatory regime that will persuade them to set up there rather than the UAE, which is still split between three markets, two regulators and different geographical locations. It is a valid point, assuming Qatar can get agreement from vested interests in the existing regulatory regime to push the plan through.

The QFC believes it is offering a different product to Dubai or Abu Dhabi. It has avoided the “free zone” approach of the DIFC and argues that via the QFC groups can gain access to all levels of Qatari business. Again, that is a persuasive argument – there are disadvantages to Dubai’s “offshore” mentality as well as advantages.

These differences between the UAE and Qatar models, QFC believes, will give it the crucial edge in attracting international and regional corporates to list on the Doha Stock Market, do business in Qatar and make it the regional market place of choice.

Qatar has once ace up its sleeve in the rivalry with Dubai – its relationship with the London Stock Exchange. Qatar’s sovereign wealth fund, the Qatar Investment Authority, has a 14 per cent stake in LSE, bought last year in a hectic round of international share transactions.

The share-buying spree also saw Dubai end up with 20 per cent of LSE, but Qatar has friends in high places in London who it thinks will make the difference. Chris Gibson-Smith, Chairman of the LSE and with a background in the oil business, is on the QFC board, and another high-ranking City of London player, Phillip Thorpe, is head of the Qatar regulator.

These relationships give QFC confidence that it will beat Dubai to the big prize – a permanent link-up with London and all the access to Europe’s premier equity market such an alliance will bring. These are advantages for Qatar.

There is a feeling in Doha that a deal with London is there for the signing, regardless of the Dubai shareholding.

I am not sure it will necessarily pan out this way. Dubai too sees the attractions of the London link and is making great efforts to smooth over London’s concerns about its long-term intentions and over its 20 per cent holding.

There are signs of greater co-operation between Qatar and the UAE on a number of fronts and it makes no sense for the two countries to be in competition for the London connection. Somewhere along the line a deal will have to be done to reconcile the competing claims of Doha and Dubai and to square the shareholdings.

But that time has not yet come. I sense a quiet confidence in Qatar that it can overcome past set backs and propel itself back into pole position in the Gulf. There is, to be sure, a distinctly Qatari way of doing business that values long-term, strategic thinking. But I think that it would do no harm at all if Doha adopted some of the pizzazz and dynamism of its neighbour. Building a global financial centre requires audacity as well as strategy.