The calculus of the sheikhs
Where the Emirate of Qatar is involved everywhere in Germany
By Diana Dittmer
11/15/2022, 7:26 p.m
There is a lot of criticism for the World Cup in Qatar. The tones become much quieter when it is not about sport but about economic power. The many holdings of the autocratic regime, especially in large DAX companies, raise questions.
The closer the World Cup approaches, the more the small but rich Gulf Emirate of Qatar is becoming the focus of the German public. There is hardly a country in the world – apart from Russia – that because of Human rights violations is currently being criticized more. Simultaneously Qatar has been closely linked to the German economy for many years.
Although the emirate on the Persian Gulf is one of the smallest Arab states, it is also one of the richest countries in the world. It possesses large amounts of natural gas and petroleum. That means the source of money on which the desert state is built will dry up once the resources are exhausted. In order to secure wealth and prosperity for the future and to keep the subjects loyal and happy, Qatar and the members of the royal family have been on a worldwide shopping spree for many years to open up new sources of money.
Strong brands and promising sectors such as transport, financial services and renewable energies are at the top of the shopping list. Above all, through the investment division of the Qatar Investment Authority (QIA), the largest sovereign wealth fund in the world, the Qataris have secured some large blocks of shares, including in Dax companies.
Qatar already has a finger in the pie here:
- By far the largest position with a good 17 percent is the stake in the German car manufacturer Volkswagen. Qatar is not only the third largest investor at VW, the investors from the desert state also secured two seats on the powerful Supervisory Board of Wolfsburg.
- At 50 percent, car manufacturers have the greatest weight ever in the Qatar sovereign wealth fund’s portfolio. The almost 5 percent of another German car manufacturer also qualify for the top 10: Porsche. The fact that the QIA snapped up 23 million shares in the recent IPO was particularly worthwhile for the emirate. The issue price of the paper was almost 2 billion US dollars. In the first few weeks alone, this results in a return of 20 percent.
- Also at the provider RWE Qatar’s sovereign wealth fund holds a not insignificant block of shares. Only recently, QIA supported the Essen-based group in financing the takeover of the solar system developer and operator Con Edison Clean Energy Businesses – the largest since the energy giant spun off from Innogy. As part of the takeover, the fund subscribed to a EUR 2.4 billion mandatory convertible bond, earning a good nine percent at RWE and becoming the largest shareholder.
- at Siemens the emirate is also involved. It has held a good 3 percent of the shares in the Munich industrial group for more than ten years. Even if that doesn’t seem like much, the Qataris are still the fourth largest investor in the company. The Siemens family owns no more than six percent of the shares.
- Even before Germany’s largest financial institution, the German bank, the Qataris do not stop. Allegedly, two members of the ruling family have a good 6 percent stake in Paramount Services and Supreme Universal. Overall, Qatar holds about ten percent of the bank.
- The emirate also has a hand in the shipping company Lloyd table. Qatar Holding Germany GmbH secured a 12.3 percent stake in the world’s fifth largest shipping company. This participation also turned out to be a lucrative investment. The price has increased eightfold since 2016.
- Qatar also holds shares in the Tübingen vaccine manufacturer Curevacan Siemens Healthineers and in a Siemens joint venture, Fluence, a provider of energy storage technologies. There is also a stake in the specialist for data-driven process optimization celonis.
Experts urge caution in the face of such extensive involvement by an autocratic regime. At least so far, shares in the critical infrastructure in Germany have not been the focus, Rolf Langhammer from the Kiel Institute for the World Economy told the editorial network Germany (RND). Political or geopolitical interests are not excluded either. Qatar could one day use its influence “for its own interests,” the economist warns.
One thing is certain: Qatar is not just about returns. The ruling family is known as a strategic investor who invests for the long term. This is also supported by the performance of the sovereign wealth fund, which has lost 26 percent since the beginning of the year, while the world stock index MSCI World “only” lost a good 20 percent.
Observers fear that the World Cup could also be a means to an end and part of a longer-term strategy for the autocratically governed country. Qatar is trying to improve its battered image with sporting events such as the 2015 World Handball Championships, the 2019 World Athletics Championships – and now with the Soccer World Cup. Experts speak of “sports washing”. However, “sports washing” is not the first goal, says political scientist and Gulf States expert Nicolas Fromm from the Helmut Schmidt University in Hamburg: “International sporting events are part of a much larger strategic project that Qatar has been working on for decades.” It means economic power.
