Decision Points from Enquire: Good Host or Bad Host?

No. 14?

December 14, 2022

Summary:?Can football really unite? The FIFA World Cup 2022 is Qatar’s chance to showcase itself as an up and coming regional power. It is being held in a turbulent geopolitical climate and this tournament is showing itself to be one where values and historical grievances are aired as a proxy for emerging vs. developed markets.

Desert or Oasis?

Not too long ago, many people would have thought it outlandish to host a global football tournament in the desert. So far, Qatar appears to be proving the doubters wrong, though not without its fair share of controversies. Despite the?suspect?winning Qatari bid for the competition over a decade ago, the presence of the FIFA World Cup 2022 in Doha has marked a huge milestone for the Middle East overall, after decades of being synonymous with instability, terrorism, and violence. According to an analysis from the?Wilson Center, the strategic plan underpinning the World Cup is to broaden Qatar’s economic base through expanding its non-energy income.

While Qatar remains behind regional hubs like the UAE as a financial and tourism hub, the Wilson Center’s analysis lays out the sweep of Qatari plans to significantly bridge the gap between itself and the UAE in terms of infrastructure development,?hospitality, and as an overall investment destination. “Hosting the World Cup serves as a vehicle to achieve Qatar’s National Vision of 2030, a government initiative to transform the country into a global society and provide a higher standard of living, where approximately $200 billion has been spent to showcase the country to the world.”?

These plans to attract investment into Doha appear to be bearing fruit, with the country coming in at 24th place for its debut on the?Kearney FDI Confidence Index?for 2022. Most notably, it is one of only four emerging market economies on the list - alongside Brazil, China, and the UAE. While Doha’s FDI results have been weaker in the years leading up to the tournament, its?strong FDI recovery in the second quarter?of this year gave institutional leaders enough confidence to favorably rank Qatar’s FDI performance. This is in large part down to?significant infrastructure investment?leading to the World Cup (but which?hasn’t fully allayed pressures?during the tournament). Despite the ruling Al-Thani family overseeing a rapid transformation in the fortunes of their country and its movement towards the front-rank of Gulf Cooperation Council (GCC) states, the growing pains in the leadup to the World Cup highlight the distance the government needs to cover to move from an “emerging market” to one that has emerged.

However, Qatar’s increasing economic clout in the Gulf is not being met with universal commendation. Other regional players, chiefly Bahrain, see themselves as key players within the Gulf’s unique political and economic ecosystem, and the increased attention of global political elites and investors towards Qatar has caused a distinct?chill?in Manama. This stands in sharp contrast to the UAE's attitude, whose hospitality and aviation sector has been able to?exploit?the surge in travelers to the region by hosting the overflow crowd. Indeed, the overall negative disposition of the Bahraini government towards Doha’s “moment in the sun” stems from a?much deeper rivalry.?

That Bahrain feels the “publicity train” has bypassed them is also a product of its relatively clunky diplomatic maneuvering. Manama felt that Doha was getting too close to many GCC countries’ arch-nemesis in recent years, Iran, and, as such, sought to isolate Doha for its position as an “intermediary” that had friendly ties with its adversaries. During the Gulf boycott of Qatar from?May 2017-January 2021, Bahrain accused Qatar of “supporting terrorism” (in a nod to both Iran and the Muslim Brotherhood) and joined Egypt, Saudi Arabia, and the UAE in shunning the country for nearly four years which had placed serious question marks over the viability of the World Cup this year.?

Yet, with the signing of the?al-Ula Declaration, the UAE and Saudi Arabia made the most concerted efforts to rebalance their ties with Qatar, restarting flights, and permitting cross-border trade once again. Perhaps this had to do with the departure of the Trump Administration in January 2021, given that the White House didn’t object to Qatar’s isolation. Or perhaps it is part of a larger regional effort to isolate Iran through selective detente, as reflected in the 2020?Abraham Accords?with Israel. Nevertheless, despite the World Cup being in full swing and bringing the world’s attention and capital to the region, there are “still no direct flights and people-to-people exchanges between Manama and Doha.” Talk about being caught flat-footed amidst changing geopolitical winds.

While Qatari officials try and couch the country’s increasing stature in the global geopolitical firmament as a thrust towards “overall” development, it is hard to think that Doha’s plans and increasing economic liberalization are inseparable from its desire to show a “reformed” and diversified Qatar to a?global audience. Given that a lot of the visiting fans and much of the media narrative surrounding the World Cup come from the West, Doha has enacted policies and made statements trying to assuage some of the deeper concerns about this year’s tournament, with?workers rights?being the most egregious example.

World Cup Geopolitics

To make matters more complicated, this year’s tournament comes amid a backdrop of global turmoil. Russia’s invasion of Ukraine dominates headlines. The war has clearly devastated Ukraine socially and economically, but it has put wind in the sails of European resolve to stand up to Putin’s aggression and has hastened long dormant policy moves to ramp up military spending and defense capabilities.?

In solidarity with Ukraine, Russia was banned from the tournament at the outset of the conflict. Russia’s ban from the tournament is significant because FIFA has not typically banned countries?for?starting inter-state wars. Underscoring the depth of sentiment against Russia and for Ukraine, an exhibition qualifying match was supposed to take place against Poland in Moscow exactly a month after the war began. But Poland’s star captain Robert Lewandowski “boycotted the game?in solidarity with Ukraine.” In hindsight, it isn’t surprising that the most international of sports is serving as the arena for both countries and individual players to express their views and advocate for their interests. While much of the controversy at this year’s world cup has been geopolitical, a lot pertains to clashing social values between Qatar (and the broader Middle East) and Western countries. One vivid example of this tension was visible in the dustup surrounding the?OneLove armband, where European captains wanted to wear the rainbow band to advocate for LGBTQ rights, under severe scrutiny in Qatar. The players were threatened with yellow cards if they continued with the practice, at which point they dessisted. While some saw this as undue curtailment of free speech, the practical realities of abiding by the laws of the host nation, however unsavory, were on full display early on.

The geopolitical consequences of the Ukraine War go further and are also manifesting themselves in the increased value of Qatar’s most important resource (to its coffers at least): its enormous reserves of natural gas. As both lay observers and policy experts have come to understand in recent years, the EU’s (Germany and Central/Eastern Europe specifically) dependence on Russian oil and natural gas imports has left it?vulnerable?to blackmail and massive price hikes. As International Energy Agency Director Fatih Birol said in February: “Europe needs to rapidly reduce the dominant role of Russia in its energy markets and ramp up the alternatives as quickly as possible.” As much of Europe’s decades-old energy strategy has crumbled in one-fell swoop, officials in GCC capitals like Doha must be relishing that they now enjoy increased leverage over some of the world’s wealthiest countries.

In February, the EU’s decision to ban oil imports and begin to wean itself off of piped Russian gas is forcing European governments to look to the Gulf and Qatar in particular, as the primary backup source of LNG. German Chancellor Olaf Scholz was?in the region?in September as part of a broader campaign to rapidly diversify Berlin’s energy sources, and not surprisingly, Doha was one of the three stops Mr. Scholz made in the Gulf. To many people’s surprise, the LNG terminals his government built in the North Sea have been completed well ahead of schedule. This decisive step makes Berlin (and potentially significant portions of Western Europe) equipped to import LNG from countries like Qatar, who have seen their geopolitical importance skyrocket because of their possession of one crucial natural resource that Europeans, Asians, and others need to go about their daily lives.

The Continued Rise of the Global South — A clash of cultures?

Another noteworthy feature of the World Cup as mentioned earlier is the intense scrutiny Qatar has come under for its non-democratic political system, its treatment of foreign workers, and?methods like bribery?Qatari officials allegedly used to secure the games. Many of these criticisms are entirely legitimate and their past (and current) practices fall woefully short of internationally acceptable standards to secure a prestigious tournament like the World Cup. For instance, estimates point to?hundreds, even?thousands?of migrant workers dying during site construction. Additionally, exploitative labor practices have been the norm in the run-up to the tournament’s start. Yet, the concerted focus on Doha’s actions has raised hackles in many quarters, not least in the Arab world most directly, about commentators’ perceived hypocrisy and even anti-Arab or anti-Muslim bias.

While this is?not the first time?the tournament has been hosted in a country with a less than stellar reputation when it comes to democracy, corruption, and rule of law, the intensity of the criticism directed at Qatar bears some further examination that goes beyond moral equivalence. With regards to the 2018 tournament in Russia specifically, President Vladimir Putin ordered the attempted assassinations of Sergei and Yulia Skripal in Salisbury, England in March 2018, just a few months before the World Cup began. However, the intensity of criticism directed towards Russia hosting the tournament did not appear to reach the?same level?as that received by Qatar in 2022.?

Yet, others appear to be more tone deaf. In his Washington Post?column, Ishan Tharoor wrote that “Qatari officials grate at Western attempts to impose change on them.” He also quotes Qataris who said it made them resent Western commentary even more by not accepting that while Qatari society was changing and its economy developing, the process would not happen at another nation’s pace. Meanwhile, as the German team supported by the country’s leadership, for example, protested FIFA’s attempts to?muzzle?their criticism of Doha’s policies and ideological orientation, it contrasted with Germany’s recent?LNG deal with Qatar. The protest has been applauded by many but also criticized as a stunt.

In the stadiums and on local television Qataris and other Arabs have pointed to the German national team’s?hypocrisy?when considering its treatment of former star player Mesut ?zil, who felt he was?racially targeted?in being blamed for the nation’s dismal showing at the 2018 World Cup. Blaming immigrant or minority players who are not “sons of the soil” is not an uncommon feature of international football, seen historically in European countries, like?France?and?England. In addition, researchers such as Zahra Babar at the Georgetown Center for Regional and International Studies criticized the fervency of the Western criticism of Qatari labor practices, given that they fail to sufficiently take into account the?complexities of Gulf migration?patterns and the lives that foreign workers in the region lead.

In certain respects, reading Western commentary on this World Cup is a milder version of the torrent of criticism of the Arab and Islamic world received in the wake of the September 11th attacks. That this is the first time a Middle Eastern and majority-Muslim country has hosted a sports tournament whose largest fan bases are in Europe and Latin America, forces the question about whether there are unwritten rules in international football. Can Middle Eastern teams participate, watch, but not host the globe’s most prestigious sports tournament? Since hosting a global audience brings challenges in terms of balancing the host countries’ social and cultural values against those of visiting teams (and spectators), the last-minute decision to ban alcohol from the stands marks a particularly vivid example of such a “clash of cultures,” especially in footballing terms.

The timing of the decision was poor and points to a lack of operational sophistication. However, this decision also revealed Western fans’ lack of flexibility in adjusting to unfamiliar contexts and norms. Conversely, while some fans from the Global South had been expecting a somewhat hostile reception in the Gulf kingdom upon their arrival, they sensed that their presence was welcomed by the hosts. In line with Doha’s larger-scale plans to open up their economy to more foreign arrivals and investment in the years ahead, 96 countries will be eligible for visa-free travel from next year onwards. A Ghanaian spectator John Appiah said that he would like to visit the U.S. for the 2026 World Cup, but said that getting a visa might be tricky?“because I don’t know if they want me to come.”?To many, the rampant double-standards have been laid bare.

In addition, the tension between the Global South and North is?playing out on a macro-level, with many nations of the Global South pushing back against what they see as the impractical efforts of Western countries to get them to wean themselves off Russian energy, weapons, and raw materials trade. Poorer non-Western nations don’t have the financial resources to reduce their exposure to Russia or China as easily as richer and more developed Western countries do. As such, the common thread running through tensions playing out in Qatar and in terms of Western countries’ attempts to turn, say, the Ukraine War into a conflict with moral implications for all (while ignoring other, similar and long-standing, cross-border conflicts in Africa, Asia, and MENA) grates with many in the Global South. They see this dynamic as one where they have to play by the West’s rules when it’s convenient for them.

“We Are All Moroccans”

Amidst the backdrop of turbulent geopolitics, long-standing rivalries — many of which stem from some competitors’ status as former colonies — are playing out on the field. Morocco seems to be caught in the crosshairs of long-standing rivalries because of the international makeup of its team. The majority of its players were?born in?Europe but chose to represent their ancestral homeland. They have captured much of the World Cup audience’s attention with their end-of-game dances with their mothers, prayers on the field, as well as?Quranic recitations. Unfortunately, this multicultural paradigm has also brought the ire of far-right politicians like Eric Zemmour in France, who?criticized?the fact that French players of Moroccan ancestry have decided not to play for their home country. He also took aim at the “violent tendencies” shown by members of the Moroccan diaspora in France for their behavior during games Morocco has participated in.

As we send this out, Morocco will be?playing against its former colonizer, France, in a semi-final matchup that promises to rivet North Africa, the Arab world, and indeed much of the Global South. According to Monica Marks, professor of Mid-East politics at NYU Abu Dhabi, “Morocco is fighting a symbolic war, as it taps into a lingering sense of insult, which is a collective wound to their pride and history that lingers to this day.” As the first African team to ever reach the semi-finals, Morocco has been the “toast of the town” in Doha, on the front page of today’s Jerusalem Post which reads?“We Are All Moroccans”, and even in neighboring rival Algeria,?pan-Arab solidarity?appears to be winning out: “If we focus on politics, Morocco is an enemy after choosing Israel as its friend,” Miloud Mohamed, a taxi driver in Algiers,?told Voice of America, referring to Morocco’s entry into diplomatic normalization agreements with Israel. “But soccer is not about politics. That’s why I’ve supported Morocco this World Cup.”

Even with the possibility of this World Cup having a storybook ending, with the scrappy underdog prevailing against international football's Goliaths, and creating euphoria throughout the MENA region and the decolonized world, a few points of friction remain between the Global North and South. There has been a wider disconnect between Western wishes to “democratize” global sports and business more generally and the practical reality that such an endeavor could ultimately be self-defeating and efforts to clean up unseemly and even illegal and immoral practices could come across as “preachy”?if not attempted compassionately and with self-awareness. Yet, that underscores the challenge and the opportunity of playing sports and indeed living in today’s increasingly conflict-ridden planet where globalization is under severe threat.

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As this is the last newsletter of the year, we want to thank you for your support and readership. Below are some highlights about the broad themes we have covered and the assumptions on global issues and systems we have challenged. The implications for business decision-making remain more salient than before. We hope you continue to read our thoughts in 2023!?Happy Holidays!

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Annual Roundup: Goals! Our Takes Materialized

Globalization isn’t dead. Our newsletter from February accurately captured the emerging contours of the global economy and trade/ industrial policy. Many elements of the previous decades of globalization remain intact like many trade agreements, but it's the speed and scope of the process that is changing.?

Our newsletter in May featured Enquire’s take on the increased importance ESG has for shareholders. Shortly after, our predictions have been proven correct as the importance of environmental and social standards has increased in the wake of Russia’s invasion of Ukraine. Overall, there is less tolerance for investing in autocratic regimes, and the spike in oil and gas prices has made the clean energy transition more urgent than ever.

In September, we then wrote about the emerging Great Power rivalry between the US and China, which has non-aligned countries hewing to one side or another but doing everything possible to avoid being entrapped in one specific camp. This appeared to make emerging powers like India, Turkey, the Gulf kingdoms, and even close allies in the EU like France and Germany nervous. This perceived expectation to clearly position oneself in the global world order is also partially in place when we look at the criticism against Qatar.?

Finally, in our penultimate newsletter of 2022, we analyzed the impact of the CHIPS Act on the Chinese semiconductor industry and how it may impact Beijing’s long term competitiveness in this sector. The simmering conflict between Beijing and Taipei is also highlighted because Washington’s moves against China’s semiconductor industry put Taiwan in the crosshairs due to its preeminent status in the sector. We discussed the possibility of China invading the island to gain control over its industry, a possibility experts have contemplated.?