Energy | Israel

It's been hard to find bright spots in the global economy — but Qatar has managed to sustain remarkable momentum, posting year-over-year GDP growth of 13 percent in 2008. Stuart Pearce, CEO and Director General of the Qatar Financial Centre Authority, recently joined the Milken Institute Associates for a private breakfast to discuss opportunities and the broader economic outlook for the Middle East.

Designed to attract international financial services institutions and multinational corporations, the Qatar Financial Centre (QFC) affords Pearce a unique vantage point on one of the world's most strategically important regions.

He began by noting "the sheer scale of wealth being generated in the Middle East," a trend that led to the founding of the QFC as a means of developing and regulating a financial services industry.

Qatar's recent growth represents a rather amazing turn of events. The nation sits on an enormous reserve of natural gas — and no so long ago, "you couldn't give the stuff away," recalled Pearce. But the development of new technology and infrastructure to extract and transport liquefied natural gas (LNG) proved to be game-changing.

Qatar has built huge ports, an entire maritime industry and regassification plants, allowing it to control the entire supply chain. By entering into long-term energy contracts with Asia, Europe and United States, it now sits in a solid position.

The same steadiness of approach has served Qatar well in the financial sector. Unlike so many players around the globe, Qatar was not excessively leveraged or laden with toxic assets. Though falling commodity prices did hit Qatar, it has managed to weather the financial crisis with a minimum of disruption.

While previous oil booms saw much of the profit recycled back into Western economies, the recent rise in energy prices has seen sovereign wealth funds reinvesting in their home markets.

Qatar is intent on seizing this opportunity to "future-proof," according to Pearce — that is, diversifying beyond hydrocarbons, promoting research and nurturing the human capital that will be needed to build a knowledge-based economy. The country's leadership hopes that these moves will eventually make Qatar more immune to changes in technology or fluctuations in the global energy market. A number of U.S. universities have opened campuses in Qatar, which has also established an enormous cash endowment for medical research.

In response to audience questions, Pearce offered an overview of regional geopolitics and described the nuances of doing business in Qatar.

This event was open only to members of the Milken Institute Associates. To join, please contact Mindy Silverstein, director of Milken Institute Associates, at (310) 570-4634 or msilverstein@milkeninstitute.org.

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