Cup loss wouldn't be end of the world for Qatar

Stripping out World Cup may threaten only a small slice of overall expenditure that Qatar has planned
Cup loss wouldn't be end of the world for Qatar
By Reuters
Wed 01 Jun 2011 02:09 PM

The World Cup is no small prize for Qatar. It’s far from clear that the Gulf state will lose the right to host the prestigious 2022 soccer tournament. But even if the worst happened, it might do no more than put a small dent in the $77bn of domestic spending promised as part of its aggressive bid campaign.

While Qatar flatly denies accusations that it bought votes, the wealthy nation certainly used its financial muscle in transparent ways to reinforce its bid: it promised to spend $3bn on stadium construction and renovation, $17bn on hotels, $24bn on metro/rail systems, $20bn on roads and $13bn on a new airport. All of which amounts to roughly 40 percent of forecast GDP for 2011.

In reality, though, the World Cup merely gave Qatar a reason to trumpet select aspects of much bigger and existing plans to invest around $225bn into infrastructure over 2011-2016. Stripping out the World Cup might well mean that the pace of investment will slow but would threaten only a small slice of the overall expenditure that is planned. Citigroup reckons it might only wipe out $10bn or roughly 4 percent of Qatar’s total spending plans.

Yet there are less tangible benefits associated with hosting the World Cup which are still significant. A successful tournament would certainly give Qatar its best opportunity to launch itself as a tourist destination and boost efforts to diversify the economy. EFG-Hermes reckons the World Cup could also, over time, encourage Qatari companies to seek stock market listings. It certainly appears to have encouraged conglomerate Aamal to take its chances in London.

The Qatari at the center of the controversy, Mohamed bin Hammam, even outlined a vision that the World Cup could consolidate peace in the Middle East. That’s probably far-fetched. But winning the right to host the World Cup has clearly emboldened Qatar to act on the world stage. It may be more than a coincidence that the emirate is participating in military action against Libya and has outlined $10 billion of spending in post-revolution Egypt.

Qatar is likely to develop quickly with or without the World Cup. But losing the right to hold the sought-after event would be much more than just embarrassing.

(Una Galani is a Reuters Breakingviews columnist. The opinions expressed are her own.)

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