The Qatar Investment Authority, along with commodities trader Glencore, recently bought a 19.5 percent stake in Rosneft, Russia’s largest oil company, for $11.5bn - injecting much needed capital into an economy decimated by sanctions.
Why did Qatar’s state-owned investment authority feel compelled to potentially help Russian President Vladimir Putin claim a political win against the US?
Why did Qatar’s state-owned investment authority (QIA) feel compelled to get involved in Russia’s risky market and potentially help Russian President Vladimir Putin claim a political win against the US?
Although the QIA has previously been involved in the Russian market, this is the first time the investment fund has sought entry into Putin’s inner oil circle. Russia’s state-owned Pravda dismissed Qatar’s involvement outright, saying that the QIA might be replaced with a Russian company.
Even given that possibility, Qatar is also the majority shareholder in Glencore, providing it with further leverage. Some form of a diplomatic compromise with Russia might be in the offing as Qatar, an outspoken critic of the Assad government, is beginning to realise that Assad might continue to have a future in Syria.
Qatar’s foreign policy has shown pragmatism in times of change. In 2013, Qatar’s emir Hamad bin Khalifa al-Thani suprisingly handed the reins of power to his son Tamim bin Hamad bin Khalifa al-Thani. Although the hand-off was seen as a bit premature, it resolved two issues.
First, it put to rest the question of who would lead the country after the ailing emir who took the throne by overthrowing his own father in 1995.
Secondly and more importantly, it allowed for the dismissal of Qatar’s powerful Foreign Minister Hamad bin Jassim bin Jaber Al Thani who was also the prime minister and the head of the QIA.
Not only did Hamad bin Jassim hold key offices in government, but he also irked his Gulf neighbours with a Bismarckian foreign policy that was perceived by many to be too aggressive, meddlesome and a platform for hostile groups like the Afghan Taliban and the Muslim Brotherhood.
Although the Al-Thanis have pursued a foreign policy independent of Gulf neighbours - which will likely continue - a call for balance post-Arab Spring was necessary to avoid further rebuke.
With the recent recapture of Aleppo, the Syrian regime seems to have emerged from the throes of certain defeat thanks in large part to the Russia-Iran-Hezbollah axis dedicated to protecting its geopolitical interests.
Qatar has been a vocal opponent of the Assad regime and therefore an opponent of a Russian proxy government. Now the country has to reevaluate its position on the Syrian crisis to remain a relevant player by maintaining a balance between Gulf and Russian interests.
President-elect Donald Trump’s recent appointment of Exxon Chief Rex Tillerson as secretary of state has further confirmed Trump’s close relationship with Putin who is accused of orchestrating an election hack that helped get him elected. Tillerson, who managed the company’s operations in Russia before becoming CEO, also has close relations with both Putin and Rosneft chairman, Igor Sechin.
With the US possibly extricating itself from the Middle East and Russia seemingly taking its place, an ally in Qatar would prove an asset, if not a valuable commodity going forward
From Qatar’s standpoint, a favourable Russia-US relationship presents not just economic opportunities, but also political opportunities that can only be leveraged by bolstering the heart of Russia’s sputtering economy. Providing an $11bn cash injection into Russia’s oil business is one way to do that and possibly buy influence in Moscow.
The deal may also impact Qatar’s relationships with other important players in the Middle East. More interestingly, right after the Qatar deal, Italian oil and gas major Eni agreed to sell Rosneft a 30 percent stake in Egypt’s Zohr gas field, the largest natural gas discovery in the Mediterranean in the past decade. This means Qatar now has indirect access to Egypt’s gas fields.
And this is the same Egypt whose leader President Abdel Fattah al-Sisi praised Trump’s victory and backed a Russian draft resolution that stopped short of calling for a halt to the devastating bombing of Aleppo, a move that caused Saudi Arabia to suspend its oil aid to Egypt.
There is no doubt that tensions between Qatar and Egypt still simmer as recently exemplified by Egypt blaming Qatar for a church bombing carried out by the Islamic State. Yet given the changing external dynamics, Qatar’s business moves could be an indication of indirectly inserting itself into an emerging Russian-US-Egypt nexus.
With the US possibly extricating itself from the Middle East and Russia seemingly taking its place, an ally in Qatar would prove an asset, if not a valuable commodity going forward.
Despite their political differences, both Russia and Qatar remain tied together as two of the world’s leading energy producers and exporters, and as leading members of the Gas Exporting Countries Forum (GECF). Both also have an interest in continuing to supply natural gas to the European market which has historically resulted in competition.
It's not inconceivable that the country would cede its elaborate pipeline machinations for a seat at the table on Syria’s future
Although Russia will remain a key player in Europe, given the extensive pipeline network that connects it to Ukraine, Europe will, over time, further diversify its LNG imports through Norway, the US and Qatar. Russia is aware of this eventuality and is diversifying its own markets by looking towards Asia most recently punctuated by a $400bn gas pipeline deal with China in 2014.
Qatar is unlikely to give up on penetrating the European market where it is looking to take a more aggressive stance, but it's not inconceivable that the country would cede its elaborate pipeline machinations for a seat at the table on Syria’s future.
Business and politics may not always necessarily mix and, more often than not, occupy their own domains. In the case of Qatar and Russia, however, the stakes in Syria may be high enough to merit such consideration.
- Aurangzeb Qureshiis a political analyst who writes on energy geopolitics and social issues in the Middle East. He blogs at GeoPipelitics.com and his analysis and commentary have appeared in outlets such as Al Jazeera English, Al Arabiya English, Foreign Policy Journal and Business Insider, among others. He can be reached on Twitter @aqureshi80
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
Photo: A gas flame is seen behind a barbed wire at a Rosneft production plant in Prirazlomnoye, western Siberia (AFP)