The Emirate’s Intriguing Wealth Fund

Interview with the Emir of Qatar.

October 26, 2010

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story_images_camels-and-sandThe FT has a fantastic interview with the Emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, in which he talks at length about the Emirate’s objectives and the role of the Qatar Investment Authority therein. If you read this blog, you’re aware that Qatar has perhaps the most active SWF in the world today. Moreover, it also happens to be one of the more strategically oriented SWFs. So this is a unique opportunity to gain some insight into the operations of one of the more intriguing SWFs in the world. Anyway, I encourage you to read the entire interview, but here are the bits of particular relevance:

On the rationale for setting up the QIA in 2005:

“So now we plan to save money for the future of our generations, and to make sure that we secure them, as I mentioned to you, for education, for health, culture, museums, sports; to make sure that we have money for the future and that the standard of living can continue as it is. We are investing everywhere. Even your Harrods, we took it…”

On how the SWF is helping the Emirate:

“We are trying to attract companies from outside to invest here in Qatar, whether with the Qatar Investment Authority [the sovereign wealth fund] or with the private sector.”

On the role of the Emir in the SWF’s investment decision-making:

If I have an idea, yes, I tell them I am thinking about this. But they are not obliged to do what I want. The main thing is that they have to do our strategy, how to find the best things which would help the future of our generation. This is clear. If I want anything for myself this is different. It might be sort of gambling; if I lose, I lose myself. But this money (the investment funds money) no, this should be for the generations.”

On how he comes up with investment ideas for the fund:

“For me it depends what comes into my mind, what I see on the television or in the news; because this is how humans think. Of course, I would like a good thing which would help our coming generations.”

On the geopolitics of SWF investments (in the UK):

No, because I’m sure in Britain they want us to invest instead of others. We are a small country, we are a peaceful country; we will not bother Britain at all.”

In short, the Emir appears to take an active interest in the activities of the SWF, offering investment ideas and weighing in on certain investment decisions. However, he is taking a very sophisticated position, noting that the fund must fulfill its objectives first and is in no way obliged to take his advice. (Though you’d probably have a hard time saying ‘no’ to ‘advice’ on investments from the Emir.)

And I also think the Emir is correct in his assessment of the geopolitics of the QIA’s strategic investments. Like I noted with respect to Mubadala, this SWF (while large and very active) is sponsored by a country perceived in the West to be friendly and unthreatening (what the Emir himself calls ‘small and peaceful’).  As such, this fund will likely be afforded a bit more leeway on GAPP 19 than, say, the China Investment Corporation (which matches the QIA in terms of the volume of strategic transactions).

This post originally appeared on the Oxford SWF Project website.

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