1TheEDGE

From ThE EDiTor

Miles MastersonManaging Editor

Do you have something to say? It is not all about us and we realise that often our readers are in the right place at the right time resulting in great stories. Is there a story that you want TheEDGE to cover? Are we delivering our readership with the content it demands? Are there new sections that you would like to see implemented in the magazine? Or do you simply want to make a comment? If so, send your letters to the editor at:

m.masterson@firefly-me.com

Though in my future editorials I hope to offer the kind of incisive, detailed insight into the Qatar business environment that

my predecessor Kelly Lewis brought to this page, I thought a more personal introduction was necessary to begin with.

At the risk of sounding somewhat self-aggrandizing, my name is Miles Masterson, a magazine editor and journalist, with (between bouts of satisfying my penchant for global travel), two decades of involvement in the publishing industry in both the United Kingdom and my native South Africa.

It is funny where you end up in life. Two years ago, if anyone had told me I was going to soon become the editor of a business magazine in Qatar, as a thriving and content freelance editor and internationally published journalist based in Cape Town, I would have laughed out loud.

Six months and a world economic implosion later, following the subsequent erosion of the publishing industry back home and the demise of more than half the publications I worked for regularly, I began to reconsider my options. As I have relatives and friends working here, Qatar increasingly became a distinct possibility, certainly more attractive than Dubai, where a similar fate of collapse as South Africa had befallen many newspapers and magazines.

Following a short, speculative holiday in 2008, where I found Qatar and its people more than amenable, the long, slow search for work here began, culminating rapidly in an editorial position at TheEDGE.

And so, through various occurrences influenced by personal decisions that never predicated this outcome, and especially, by professional decisions made by others over which I had no influence I feel it is somewhat fitting that my tenure of as editor at this magazine begins with the first issue of a new year, 2011.

For me, this is inextricably linked into another massive event, change, happening, epochal shift, call

it what you will, for Qatar. Here, similarly, if two years ago you had told all but the most fervent believers that this small Gulf nation would be hosting the worlds most prestigious sporting event in 2022, they would have also scoffed in disbelief. Little did they know.

Mabrouk Qatar!In fact, I must admit feeling quite fortunate to be in such

an undeniably special place at the right time. No more so than when Sepp Blatter announced that Qatar would be hosting the 2022 FIFA World Cup. Indeed, the hairs stood up on the back of my neck; to be the newly appointed editor of the countrys leading business magazine right now is both an amazing opportunity and formidable challenge.

But I think anyone living and working in Qatar today is incredibly fortunate to be in such a globally ascendant country and economy that sure, though it has some problems and flaws, like anywhere is also, in a business sense certainly, the place to be right now, Im sure you would agree.

Naturally, with the successful bid for the World Cup comes a flood of investment and growth potential for the country, and thus you will be reading about much of this subject in TheEDGE in the coming decade.

Although our cover story on the business of sport this issue inevitably includes detailed references to 2022 and some of our other features also cover it, where possible we have refrained from allowing this to dominate our entire narrative, preferring rather to report on these in the various affected business sectors as their potential unfolds.

As far as the magazine itself goes, like our home country we are constantly evolving and growing. As on the streets and in the board rooms of Doha, in the next few issues you will see some changes occurring here, which I trust you will agree will only make TheEDGE better and a truer reflection of the dynamic and exciting business environment it serves.

There are interesting times ahead for all of us, indeed.

from the editor

WhoWE ArE

Firefly CommunicationsPO Box 11596, Doha , QatarTel: +974 44340360Fax: +974 44340359www.firefly-me.com

About TheEDGE:theedGe is an ambitious business magazine targeting professionals operating within Qatars multi-sector business landscape. Printed monthly, theedGe was launchedin July 2009 to fill the market void and to provide the business community with insight into the latest business trends and market developments.theedGe is distributed 12 times yearly to a readership base of more than 7500 professionals, providing advertisers with the needed additional reach and frequency to their most important audience. theedGe is an authoritative business resource serving both large and small business operators.

theedGe is printed monthly 2011 firefly Communications. All material strictly copyright and all rights reserved. reproduction in whole or in part, without the prior written permission of firefly Communications, is strictly forbidden. All content is believed to be factual at the time of publication. Views expressed by contributors are their own derived opinions and not necessarily endorsed by theedGe or firefly Communications. No responsibility or liability is accepted by the editorial staff or the publishers for any loss occasioned to any individual or company, legal or physical, acting or refraining from action as a result of any statement, fact, figure, expression of opinion or belief contained in theedGe. the publisher (firefly Communications) does not officially endorse any advertising or advertorial content for third party products. Photography/image credits and copyright, where not specifically stated, are that of Getty images and/or iStock Photo.

MANAGING edItorMiles Mastersonm.masterson@firefly-me.com+974 66080447

CoPY edItor Megan Mastersonmegan.masterson@firefly-me.com+974 55348748

reGIoNAL SALeS dIreCtorJulia Toonj.toon@firefly-me.com+974 66880228

SeNIor SALeS MANAGerEmma Land e.land@firefly-me.com+974 33197446

SALeS exeCutIveGiuseppe Ciccarellog.ciccarello@firefly-me.com+974 33842744

MArketING AdMINIStrAtor/dIStrIButIoN ANd SuBSCrIPtIoNAzqa Haroona.haroon@firefly-me.com+974 55692471

CreAtIve dIreCtorRoula Zinati Ayoub

Art ANd deSIGNLara NakhlRena ChehayberRana CheikhaCharbel NajemHadeer Omar

FINALISerMichael Logaring

PhotoGrAPherHerbert VilladelreyMelissa Schober

PrINted BYAli Bin Ali Printing Press, Doha, Qatar

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CoNTENTS

www.theedge-me.com

CONTENTS

MarkET waTChMatthias Catn outlines the challenges facing the World Economic Forum as it prepares for Davos 2011.

INSIdE EdgEA closer look at the supply and demand factors affecting oil and gas pricing structures by Phil Strange.

SpECIal rEpOrT Oxford Business Groups Ed Harris takes a look at the effect of the 2022 World Cup on Qatari banking.

balaNCE ShEETPeter Kohut focuses on the significance of Basel III.

ECONOMIC barOMETErAs Irelandss leaders set out stringent measures to bring the country back from economic ruin, questions swirl over which vulnerable eurozone economy will falter next. Karim Nakhle looks back at where the Celtic Tiger went wrong and tackles the critical who-next question.

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FINaNCE & ECONOMICS

IN ThE SpOTlIghTThe WikiLeaks revelations look set to reverberate well into 2011 this time, with the banking sector in its sights. Mark van Dijk investigates the impact of Julian Assange and his infamous website.

COvEr STOryFrom endorsements and television broadcasting rights, to sponsorships and attendance profits, sport has become so much more than just having fun. Rachel Morris examines this lucrative sector and outlines where Qatar is set to benefit from it well into the next decade.

ON ThE pulSE While carbon capture and storage may take a while yet to take off, there is an opportunity for Qatar to play an important role today. Edward Jameson finds out more.

SpECIal FEaTurE Ten years on from 9/11, how have business and politics shaped the Western worlds response to Islam? Adrian Murphy asks whether the French veil ban, assimilation issues in Germany and Islamophobia will have a knock-on effect on the commercial interests of Gulf countries.

buSINESS vIEwMark Proudley asks what the impact of the 2022 World Cup is likely to be on Qatars real estate market.

buSINESS INTErvIEwMiles Masterson interviews Ali Al Humaidi, managing director of Almaras Consultancy, a company specialising in implementing equitable Qatarisation in local companies.

grEEN buSINESSSam Pickering reports on the Conference of Parties 16, held recently in Mexico, and finds reason to be optimistic.

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hOw-TO guIdECurtis Avery asks, Do you have what it takes to become an entrepreneur?

lEgal INSIghT A guide to joint ventures for foreign companies hoping to conduct business in Qatar.

hEalTh aNd SaFETyDeveloping an emergency response plan to address the risk of fire is a must for every business. Mark Kenyon offers advice on fire risk management.

braNd bEaTCharlotte Stubbs illustrates how companies are utilising coolhunting and trendspotting to grow their brands and build their revenues.

rEgularS

.09. CONTrIbuTOrS

.10. lOCal NEwS

.12. INTErNaTIONal NEwS

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.14. NEwS IN QuOTES

.15. NEwS IN NuMbErS

.16. dOha dIarIES

.18. MIddlE EaST MaTTErS

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the uSuAL SuSPeCtS...

All contributors to TheEDGE are well-regarded leaders in their respective industries. If you are interested in joining the esteemed panel of contributors, please contact the editor, Miles Masterson at m.masterson@firefly-me.com

P.66 SAM PICkerINGManaging DirectorBG2 Global SolutionsLondon, United Kingdom

P.72BreNdA hILLSenior Legal ConsultantDLA PiperDoha, Qatar

P.58MArk ProudLeYAssociate DirectorDTZ, Middle East OperationsDoha, Qatar

P.68CurtIS AverYEntrepreneurial MentorCollege of the North Atlantic Doha, Qatar

P.50edwArd JAMeSoNSenior Business Journalist Middle East and North Africa regionLondon, United Kingdom

P.34Peter kohutDirectorFinancial Risk ManagementKPMG AdvisoryManama, Bahrain

P.36kArIM NAkhLeSenior Business Strategist Doha, Qatar

P.32GreG hArrIS Editorial ManagerOxford Business GroupDoha, Qatar

P.44 rACheL MorrISFreelance JournalistMiddle East and North Africa RegionDoha, Qatar

P.3o PhIL StrANGeChief Financial OfficerDun and Bradstreet South Asia Middle EastDoha, Qatar

P.75MArk keNYoNHealth and Safety Group LeaderURS Qatar LLCDoha, Qatar

P.78ChArLotte StuBBSClient Services Creative Action DesignDoha, Qatar

P.72StewArt dIANAOffice Managing Partner DLA PiperDoha, Qatar

9TheEDGE

CoNTriBUTorS

NEWSiN BriEF

TheEDGE

New PLANet NAMed AFter QAtArA planet can now be considered as added to Qatars impressive list of terrestrial acquisitions. According to a report by Qatar News Agency in December, a Qatari astronomer who is leader of the Qatar exoplanet survey and a research director of the Qatar Foundation for Education, Science and Community Development, Dr Khalid Al Subai, was prominent in the discovery of a gas giant. The diameter of Qatar-1b, as it is has been named, is thought to be 20 percent larger than Jupiter itself, to contain around 10 percent more mass and is estimated to have a temperature of 1100 degrees celsius. In 2010, wide angled astronomical cameras, owned by Qatar but situated in New Mexico in the United States, identified a number of potential new planets. These photographs were then analysed by astronomers working together at St Andrews and Leicester universities in the United Kingdom and by Al Subai in Qatar, who along with a team from Harvard-Smithsonian, confirmed the existence of Qatar 1-b.

QFC CoMMerCIAL ANd CIvIL Court INAuGurAtedUnder the patronage of HH Sheikh Hamad bin Khalifa Al Thani, the Emir of Qatar, the Qatar Financial Centre (QFC) Civil and Commercial Court and Regulatory Tribunal was officially inaugurated in December by Prime Minister HE Sheikh Hamad bin Jassim bin Jaber Al Thani at the new courtroom in QFC Tower 2. Attended by senior ministers of state and Qatari lawyers, proceedings were started by Sir William Blair, Chairman of the Regulatory Tribunal, who explained how the Civil and Commercial Court and the Regulatory Tribunal together form the QFC Judiciary and the legal infrastructure behind the QFC. In addition, a purpose-built Alternative Dispute Resolution (ADR) Centre forms part of the Courts structure. The Civil and Commercial Court forms part of Qatars court system, with

LOCAL

judgments are enforceable as such. The presence of the ADR Centre provides parties with an integrated dispute resolution facility open to all, and has systems and procedures in place to ensure that cases will be dealt with efficiently. New QAtAr exeCutIve Jet CoMPANY LAuNChedExecuJet Middle East, a leading global business aviation organisation has announced a partnership with Qatari company Al Faisal Holding to form a new business aviation company in Doha, ExecuJet Qatar. The new company has been established to secure an Air Operating Certificate (AOC) and provide aircraft management and charter solutions to clients in Qatar. The application process for the AOC is already underway and is expected to be in place early in 2011.

QAtAr wINS 2013 worLd ChAMBerS CoNGreSS BIdApart from winning the bid to host the 2022 Fifa World Cup, Qatars Chamber of Commerce and Industry has also won the bid to host the eighth World Chambers Congress, in Doha in 2013. Somewhat of a watchdog for international business best practice and legal arbitration, among other roles, the International Chamber of Commerce was founded in 1919 with an aim to serve world business by promoting trade and investment, open markets for goods and

services, and the free flow of capital. The 2011 event will be held in Mexico City, and 2013 will be the first time the biannual event will take place in the Gulf region. Previous congresses have taken place in Marseille, France; Seoul, South Korea; Quebec City, Canada; Durban, South Africa; Istanbul, Turkey, and Kuala Lampur, Malaysia.

New ArrIvALS terMINAL oPeNed IN dohADoha International Airport opened a new terminal for passengers arriving in Qatar by air in late December, managed by Qatar Airways. The new Doha Arrivals facility will greatly assist the airlines expansion plans between now and the opening of New Doha International Airport in 2012, said Qatar Airways chief executive officer, Akbar Al Baker. From December 19, all passengers whose final destination is Doha will be transported from their aircraft by bus to the arrivals terminal. Free shuttle buses going from the arrivals terminal to the existing departures terminal will be provided for returning passengers who have parked their vehicles at the departures parking zone. Following the opening of the arrivals terminal, work will begin on expanding the departures and transfers terminal to provide larger check-in and transfer areas, as well as additional boarding gates and other amenities. New Doha International Airport, located four kilometres east of the existing airport, is scheduled to open in 2012.

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NEWSiN BriEF

INTERNATIONAL

CuBAS eCoNoMIC ShAke-uPCuban president, Raul Castro, has told legislators that the countrys economy would undergo significant change this year, but that it would not become a capitalist nation. Castro began a shake-up of Cubas Soviet-style economic model, announcing the elimination of a million state jobs and expanding private businesses. As the government attempts to boost productivity, Cubans are being encouraged to begin their own businesses. The Cuban economy is expected to grow by 3.1 percent this year.

the uNIted StAteS SueS BPThe United States (US) federal government joined 80 companies in a lawsuit against BP and eight other companies over the Gulf of Mexico oil spill. The government said it would hold the companies fully accountable for the billions spent on cleaning up the worst environmental disaster in US history. BP, its partners in the ruptured well, including Anadarko, and drilling contractor, Transocean, are being accused of failing to take necessary precautions to prevent or control of April 20 blowout. Tony West, head of the Justice Departments civil division, said the suit does not ask for a specific amount of damages because its going to take years to fully calculate the costs of the spill.

MAdoFFS SoN CoMMItS SuICIdeOn the second anniversary of his fathers arrest, Bernard Madoff s son, Mark, committed suicide in New York City. Mark Madoff and his brother, Andrew, were under investigation but had not faced criminal charges in the Ponzi scheme that led to their fathers imprisonment. Along with their uncle, the sons and five directors of the United Kingdom arm of Madoff s investment firm, were being sued by the court-appointed trustee recovering assets for Madoff s victims, investors who lost US$20 billion (QR72 billion) in principal.

uAeS retAIL SPACe GrowS deSPIte rISkUnited Arab Emirates (UAE) developers and retailers continue adding to shopping mall space, powered by retail hub, Abu Dhabi, but, says Colliers International, risks of oversupply are likely to persist. Dubai shopping mall space is expected to increase by 30 percent by 2013, leading to an oversupply of more than a million square metres, the property consultancy recently warned in a report. Abu Dhabi which holds most of the UAEs oil, fared better during the crisis.

SAudI ArABIA ForeCAStS deFICIt oF uS$10 BILLIoNThe Kingdom of Saudi Arabia (KSA) predicts a 2011 budget deficit of US$10 billion (QR36 billion) as it invests to create jobs and reduce its dependence on oil. Revenue is expected to fall 26 percent to US$144 billion (QR524 billion). The KSA is seeking to reduce an unemployment rate that is 43 percent for Saudis aged between 20 and 24 years. In August 2010, the government announced a US$384 billion (QR1.4 trillion) development plan for education, housing and transportation. Said Jarmo Kotilaine, chief economist at Riyadh-based NCB Capital, They are able to do this because oil prices have been trending up.

the euro IS CredIBLeThe head of the European Central Bank (ECB), Jean-Claude Trichet, recently told European Union (EU) governments to face up to their responsbilities and reduce budget overspending. Speaking after the eurozone leaders agreed to set up a permanent national rescue fund for eurozone members, Trichet insisted the crisis hanging over the eurozone was not a crisis of the euro, asserting, The euro is a credible currency. The crisis of the last year has pushed EU leaders increasingly towards a fundamental redrawing of the architecture of the EU and eurozone. Trichet warned that the suggestion that some countries under serious debt strains should leave the eurozone is an absurd hypothesis.

dP worLd SeLLS AuStrALIA StAkeDP World, the worlds fourth-largest port operator, sold 75 percent of its Australian unit for US$1.5 billion (QR5.4 billion) to Citi Infrastructure Investors and one of its partners to reduce debt. The Dubai government-controlled companys deal will allow Citi Infrastructure to operate and manage five terminals. DP World Australia had earnings before interest, tax, depreciation and amortization of US$95 million (QR345 million) in 2009.

12 TheEDGE

TheEDGE 13

WEB WATCh

www.africaneconomicoutlook.orgWhat is it? africaneconomicoutlook.org

is the online component of the annual African Economic Outlook report, and combines the expertise of the African Development Bank and a network of African think tanks and research centres.

Why should you log on? Any regional business undertaking or considering undertaking business ventures on the continent might benefit from this abundant online resource, which contains comparable data and analysis of 50 African economies.

TheEdges guide to websites in the region and around the world of interest to the Qatar and Middle Eastern business community.

www.qfinance.comWhat is it? Affiliated to the Qatar Financial Centre Authority (QFCA), this website, according to its about page, provides free access worldwide to a huge depth of financial content, with compelling updates and functionality.Why should you log on? As its contributors are experts chosen to write for Qfinance.com on the basis of the relevance and length of their experience, this is site is possibly an indispensable resource for local and international businesses.

www.thenextweb.com/meWhat is it? The Next Web is a conference held yearly in Amsterdam (the sixth edition is at the end of April 2011) that brings together companies to discuss the future of the web and mobile. The site was launched in January 2008 as an event spin off.Why should you log on? The Middle East page of this website contains many articles and links that might interest those involved in technology and related business in the region, including developments and investments in the sector.

www.Ameinfo.comWhat is it? Devoted to business in the Middle East, Ameinfo.com contains news from every conceivable sector, from aviation to tourism and hospitality, and features a variety of information and newsletter subscription options.

Why should you log on? Ostensibly an independent news resource, this website features a wide range of information, as well as access to articles written by professional journalists, and up-to-date data released by regional businesses.

www.usqbc.orgWhat is it? This is online home of the United States (US)-Qatar Business Council, a non-profit, private sector organization devoted to issues of interest to American companies doing or planning to do business in Qatar.Why should you log on? The site provides a forum for discussion of key economic, commercial and other information, as well as options to subscribe online and become a member, which includes a number of benefits to US firms.

TheEDGE14

NEWS iN QUoTES

We have always said we will go in for an initial public offering (IPO) once we register three consecutive years of profit.Qatar Airways chief executive officer, Akbar Al Baker, said as Qatar Airways unveiled plans to launch an IPO in early 2012.

I dont know if you have been following what has been happening with the Murdoch press, where I have declared war on Mr Murdoch, and I think we are going to win I have blocked [News Corporations takeover bid of British Sky Broadcasting] using the powers that I have got[Murdochs] whole empire is under attack.Liberal Democrat business secretary, Vince Cable, is secretly taped by two undercover reporters claiming he had declared war on media magnate, Rupert Murdoch. Cable was responsible for the enquiry into News Corporations proposed takeover for the remaining 61 percent of British Sky Broadcasting that it does not already own. Cable was due to take the final decision in a quasi-judicial capacity.

Its a great coup for the region. That one of the Gulf Cooperation Council countries can actually have the World Cup. And I think it will have an extremely positive effect on tourism and on business generally in this part of the world. We would be delighted to have a hotel project in Doha, and Im sure, definitely by 2022 we will, but I hope long before then.Gerald Lawless, executive chairman of the Jumeirah Group, of the indebted Dubai Holding, says the group plans a hotel project in Qatar.

Qatar is proud to contribute to the search for planets around other stars. The discovery of Qatar-1b is a great achievement one that further demonstrates Qatars commitment to becoming a leader in innovative science and research.Doctor Khalid Al Subai, leader of the Qatar exoplanet survey and research director at Qatar Foundation for Education, Science and Community Development, after Qatar, along with scientists from the United Kingdom and United States discovered a new planet orbiting a distant star.

CARTOON CORNER

It took us longer than we expected to take the snow from under the aircraft, to clear the stands, and we are really sorry for the disruption that resulted from that.British Airports Authority chief executive, Colin Matthews, after the operator faced criticism for its handling of Heathrow airports pre-Christmas crisis that stranded thousands of passengers. The Department for Transport told BBC News that the government offered army assistance to help clear the snow at the airport but was told that the help was not needed.

The likely deterioration in debt affordability over the medium term and ongoing concerns about the economys ability to withstand fiscal consolidationmean its outlook may no longer be consistent with an A1 rating.Anthony Thomas, Moodys lead analyst for Portugal, after the ratings agency announced it may cut Portugals rating by one or two notches within months, citing weak growth prospects and climbing borrowing costs.

15

A group of rising economies is building the showcase projects that were once the pride of the United States (US), western Europe and Japan. Half of the worlds 30 most expensive projects are in China, Brazil, the Middle East, and other parts of the developing world, according to The Associated Press (AP). Three of them are energy pipelines that will link western Europe with Russia and Turkey. Topping the list is Chinas South-North Water Diversion Plan, with a US$150 billion (QR546 billion) price tag that dwarfs the US$65 billion (QR236 billion) for all five US projects in the top 30. Developing countries are spending US$384 billion (QR1.4 trillion) on dams, highways, railways, bridges, canals and energy projects. Brazil is building a US$18.4 billion (QR67 billion) high-speed train link from Rio de Janeiro to Sao Paulo and US$11.3 billion (QR41 billion) on a hydroelectric complex on the Madeira River. Yet large projects are not confined to the developing world second on the AP list is Britains plan to spend US$132 billion (QR480 billion) on offshore wind farms, followed by Japans US$62 billion (QR225 billion) Daini Tomei Highway.

#150,000,000,000

Pic of the Month

If the eyes of the world are literally on Qatar following the 2022 World Cup announcement, so are its satellite cameras. This image of Doha, taken in late 2010, shows the full extent of The Pearl development as well as the New Doha International Airport, and provides an interesting colour perspective on the water depths surrounding the city. (Image courtesy NASA Earth Observatory)

News in Numbers

This Month in History

TheEDGE

NEWS iNNUmBErS

The first travellers cheques, which can be used in 90 European cities, go on sale in London.

1772

The Dutch East India Company is dissolved.1800

The United States (US) national debt is zero for the only time.

1835

L.A. Thompson patents the rollercoaster.1885

The first great Texas oil gusher is discovered at Spindletop.

1901

Abdul-Aziz ibn Saud becomes the King of Hejz and renames it Saudi Arabia.

1926

American president, Richard Nixon, signs a bill lowering the US speed limit to 55 miles per hour to conserve gasoline during an Organization for

Petroleum Exporting Countries embargo.1974

A single market within the European Community is introduced.

1993

The Financial Times Stock Exchange 100 has its biggest ever one-day points fall, European stocks close with their worst result since 9/11, and Asian

stocks drop by as much as 14 percent.2008

First recorded lottery in England.1569

O n my last visit to City Centre, which admittedly was during the early evening, I worked out that I spent longer looking for a parking space than I did buying groceries from Carrefour and having dinner and I am not a particularly quick eater.It amazes me that a shopping mall with 2200 parking spaces seems

to be constantly full unless you go at nine oclock on a Saturday morning! It is not that surprising when you consider this translates into a ratio of one space per 80 square metres of gross leasable retail area.

The scary thing about waiting for spaces is that fellow drivers who normally give way and show plenty of due care outside of shopping malls turn into complete monsters. We have seen these drivers going the wrong way around mall parking lots, intimidating other drivers and getting into hooting matches over a space.

Villaggio, with 3300 spaces (a ratio of one space per 43 square metre of gross leaseable area), fares better, and it is fairly easy to find a space if you do not mind parking in a slot without a sun shade.

Landmark, with 1500 spaces, has one of the best ratios at one space per 38 square metres of gross leaseable area almost as good as Hyatt Plaza which comes in at one space per 30 square metres.

Even the grand dame of Dohas shopping centres, The Mall (which is approaching its thirteenth birthday), with 600 spaces has a parking ratio of one space to 36 square metres of gross leaseable area.

Six years ago, despite less parking (and admittedly 800,000 less people!), this did not seem such an issue. Certainly, the Ministry of Municipality and Urban Planning is and has for sometime been addressing the parking issue. The ministry has ensured that new office developments provide a minimum of one space per 50 square metres of gross leaseable area, and that retail developments provide one space per 25 square metres. This is definitely good news and will also help the liability of commercial buildings.

In addition, a large 2000-space underground car park is being developed in front of the Sheraton at a cost of QR1.22 billion. This

will eventually form part of the travel interchange, where you will be able to leave your car in the parking lot and transfer to the overland high-speed rail link. This is impressive in itself, but the best feature of this car park will be the use of technology that will identify vacant spaces great news!

I would like to close my first column with a dedication. Unusual, I know, but this poem is dedicated to anyone who has ever bumped another parked car in a car park and not done the decent thing by leaving contact details for the other driver as I experienced last month when returning to my dear car only to discover the fender hanging off!

Dear Sir or Dearest Madam, Im so sorry bout your car...I backed out from my parking spot and must have gone too far;It seems my tow bars crashed into your Saab and smashed the light,I hope you get back early, coz youd best not drive at night.

A little crowd is watching me, they heard the crunching sound,And some of them have seen the fluid running on the ground;I must have holed your radiator, man, thats rotten luck,And my machine is perfect, lucky me, I drive a truck!

The European bits are so expensive to replace,How I wish that Id be here, Id love to see your face;Its not that Im a sadist, it was just an accident,A pity it will cost you heaps, and I wont spend a cent!

Im running rather late or Id have cleaned the road for you,I guess youll need a fender, and your bonnets buckled, too;Youll probably be angry when you see the mangled mess,And then youll see this note, and think Ive left you my address!

There will be plenty of opportunity in the future for further comment on the 2022 mega infrastructure projects taking place, so while this months subject may seem slightly dull, it is an issue that affects us all and has likely caused you great frustration. This month, Edd Brookes talks about parking or rather, the lack of it in Doha.

CoLUmNiST DohA DiArY

The PeRILSOF PARKING

TheEDGE16

Just after I graduated from university, I was advised, Be careful what you hope for as you may just get it. I must admit that at the time, the advice made no

sense to me at all. Now the wisdom of these words is clear there are often unwelcome surprises in the realisation of dreams.

Qatars leaders have been hoping, praying, dreaming, of the privilege to host the 2022 FIFA World Cup. Now the reality has arrived, and winning the bidding process may just turn out to be the easy part. Let us look at what does this victory means for business leaders in Qatar.

Success in big boom leadership requires giving attention to six vital areas: Action. The next step after celebrating

the victory of winning the bid, is for businesses to roll up their sleeves and get to work. Twelve years may seem like a long time, but it will be here before you know it. In the swell of activity, leaders need to determine if the people they are working with (partners, employees, consultants, contractors, and even themselves) are cannibals or contributors. Are they here to take advantage from the situation? Or are they here to make a contribution and an investment into the long-term sustainability of Qatars ambitions? In the middle of fast-moving action, it is easy to confuse the two.

Financing. What is your financial model for the growth of your business? The lessons learned from Qatars neighbours highlight what happens when a sustainable financial model is not in place. Successful leadership in boom times comes from managing the growth trajectory and balancing it with a controlled balance sheet. There are two famous quotes that show up in boom times: Count your costs before you build and Greed is good. They contradict each other, and unfortunately the wrong one usually ends up as reality. Count your costs and you will have a sustainable proposition.

Corruption. Throughout modern business history, boom times have been associated with corporate and personal corruption. One of the huge risks facing Qatars leaders is in balancing the need for speed and rapid growth while mitigating corruption. Careful consideration here will take into account the previously mentioned question that needs to be asked cannibal or contributor?

Speed. The pressure is on and the timeline for delivery will approach rapidly. Work will have to be completed at a lightning-fast pace to meet project deadlines. Speed is the reality that will define leadership in Qatar over the next decade. Yet exercise caution speed brings the enjoyment of a great ride or the risk of a major crash.

What does winning the bid to host the 2022 FIFA World Cup mean for Qatars business leaders? Dr Tommy Weir speculates.

CoLUmNiST miDDLE EAST mATTErS

MabRouk

QaTaR! Quality. A combination of high-speed

growth ambitions and first-time projects often lead to quality lapses. Completion schedules and quality will be determinants of how the world measures Qatars World Cup success. Over the coming years, there will be a constant pull from redefining project scopes, first generation innovation and pressured timelines. As a leader you will need to excel at managing the ingredients of high-performance quality, customer, inclusion and development.

Talent. This is perhaps the most challenging of all, as Qatar is already strapped for exceptional talent with the limited size and experience of the local workforce. Local businesses will have to import talent to deliver on schedule. As a leader of a multi-national workforce, you will have to pay close attention to understanding capacity planning, capability identification from first-generation corporate markets, and promotion criteria based on performance history and future potential.Leaders, you have received what you

hoped for. Now you will have to redefine your approach as Qatar is under the worlds microscope for the next twelve years. The responsibility is yours to deliver against promises for ambitious innovation, five-star quality and record-setting speed.

TheEDGE18

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Standard Chartered announced its brand promise Here for good, in March 2010, a bold statement but one that resonates in the mind of its clients, people and community.

has an interest in the EPL India 53%. Korea 64%. UAE 54%. 90% of football fans in Asia claim the EPL to be the football competition they follow most closely [Source: Sports Marketing Surveys, 2008] 98% of people interested in football claim to follow EPL (against 47% for La Liga, Spain and 18% Serie A, Italy). (source: Barclays Football Report) Liverpool has a huge fan base across the core markets that both partners can leverage off commercially (source Sport & Markt 2008): 131 million fans across 16 markets: China 58 million, India/South Africa 6 million each, Thailand 5 million, Malaysia/Japan 2 million each. 200+ fan clubs outside the UK.Is it any wonder then that Standard Chartered garnered

millions of dollars in media coverage within the first 24 hours of the official sponsorship announcement in July 2010?

However, whilst LFC may be a key component of the Banks brand marketing activity, its also about doing good. At a time when there is general mistrust for the financial sector, Standard Chartered announced its brand promise Here for good, in March 2010, a bold statement but one that resonates in the mind of its clients, people and community. The Bank has successfully demonstrated its resilience in the face of crisis and as its brand belief declares, putting people before profit; so it is with the tieup with Liverpool, a club that is an active participant in the community which complements the Banks sustainability strategy perfectly as the two work together in many areas of the world.

EPL with 40% within Standard Chartereds geography). EPL broadcast to 211 territories around the world, reaching 694 million homes, with a total cumulative audience of 4.8 billion of which about 40% is in Asia, Africa and the Middle East. (Source: Havas Sports Insight, 2008] EPL has mass appeal in key Standard Chartered markets that will have a positive impact on the Standard Chartered brand, as well as have commercial benefits for both the partners (source TNS Sport 2008): China 45% of the population

For starters, football is the worlds most popular sport and Liverpool FC is one of the most popular teams in the markets where Standard Chartered has its footprint, namely Asia, the Middle East and Africa.

Consider this: Whilst Liverpool is based in the UK, the global TV audience in the Banks key markets of Asia, Africa and the Middle East is huge and English Premier League is popular everywhere (about 5 billion cumulative audience for

Corporate organisations around the world are demonstrating an increasingly systematic and multi dimensional approach to brand sponsorship. A case study that perfectly describes this would be the Standard Chartered sponsorship of Liverpool Football Club in 2010. An announcement, that displays a well thought out and robust strategy for the Bank and its expected return on this investment.

THE BUSINESSOF SPORT IN THE FINANCIAL WORLD

STANDARD CHARTERED AND LIVERPOOL FC

Sustainability is at the core of doing business for Standard Chartered and Liverpool Football Club has an increasingly international programme of community engagement, as an example the Banks partnership with a university in Pune, India, where it has set up a football faculty.

This is an excellent opportunity to raise the profile, brand and recognition of Standard Chartered through a partnership with Liverpool Football Club, the most successful team in English club football history, with 40 major honours. And ultimately, when you think about it, football isnt all that different from banking - since successful teams need to develop talented individuals who can work together to win.

Article by:Haya MashhoodHead of Corporate AffairsStandard Chartered Bank - Qatar

When you think about it, football isnt all that different from banking - since successful teams need to develop talented individuals who can work together to win.

ThiNKErS CorNEr

by Julie Ray and Mohamed Younis

As the size of the labour force in the Middle East and North Africa (MENA) region continues to expand, the competition for quality jobs will likely only get tougher.

On average, around 30 percent of young people across the region have expressed a desire to migrate permanently to another country. Yet sustainable job creation and growth in the region will increasingly depend on cultivating a climate that encourages young, aspiring entrepreneurs to launch enterprises in their countries of origin. Otherwise, young people who want to start small- to medium-sized enterprises (SMEs) will take the fruits of creating private sector jobs with them when they emigrate to their desired destinations.

Gallup data on 15- to 29-year-olds in 19 Arab League countries in 2010 highlighted in the Silatech Index, indicate that many of these countries are poised to suffer not only a brain drain but also a SME drain.

Young Arabs who say they plan to start a business in the next 12 months aspiring entrepreneurs that account for about 15 percent of the youth population are significantly more likely than those who are not planning to start a business to say they would like to permanently move to another country if they had the opportunity.

mENAS SmE DrAiN how young Arabs desire to emigrate could affect job creation

Arab League

Entrepreneurs

Aspiring Entrepreneurs More Likely to Desire to Emigrate% young Arabs who desire to emigrate

GALLUP

Non-Entrepreneurs

Low-income countries Middle-income countries

28%42%

35%

55%

29%42%

The potential for SME drain is greatest in low-income countries. It is in these countries where the percentage of young potential emigrants is highest, and where the gap between aspiring entrepreneurs and non-entrepreneurs is widest.

This gap is somewhat narrower in middle-income countries. In high-income countries, too few young Arabs desire to emigrate (six percent overall) to make meaningful comparisons between aspiring entrepreneurs and non-entrepreneurs who would like to move permanently.

Interestingly, if such young, aspiring entrepreneurs who wish to emigrate act on their desires to leave, much of the regions entrepreneurial talent would mostly end up staying in the region (clustered in Saudi Arabia or the United Arab Emirates). Within the

Top Desired Destinations for Aspiring Entrepreneurs and Non-EntrepreneursAmong Arabs who would like to emigrate to another country permanently

GALLUP

Arab LeagueEuropean UnionUnited States and CanadaOther countries

Saudi ArabiaUnited StatesUnited Arab EmiratesFrance

Entrepreneurs Non-Entrepreneurs

42%32%17%9%

15%14%14%12%

38%39%18%5%

16%13%9%11%

European Union, where about one-third of aspiring entrepreneurs say they would like to emigrate, France is the most desired destination. A sizeable percentage of these potential emigrants also say they would like to move to the United States.

For the most part, prospective entrepreneurs and non-entrepreneurs desire to emigrate to the same countries, however aspiring entrepreneurs are slightly more likely to wish to resettle within the Arab League in general.

Increasing the availability of good jobs and improving economic prospects is key for countries looking to stem the potential exodus of such young people. When those who desire to leave are pressed to name the most important change that would need to occur in their

ThiNKErS CorNEr

TheEDGE 23

What would change your desire decision to leave?Amoung young Arabs who would like to emigrate to another country

GALLUP

Get a job/better jobImprovements to economyBetter educational opportunitiesMore freedomsIncreased safetyFamily or relatives would come homeLess need for connections to suceedImprovements to political situation

Entrepreneurs Non-Entrepreneurs

49%25%7%5%4%3%2%1%

41%35%5%7%1%1%3%2%

country of origin to change their minds about leaving, young Arabs particularly young men are most likely to say getting a job or a better one would be the most important factor. Improvements in the economy is the second most frequent response.

Overall, young aspiring entrepreneurs across the MENA region identify entry barriers as the most challenging hurdles they face in launching an enterprise. Countries will be better equipped to create an atmosphere that nurtures their young peoples entrepreneurial aspirations if they can effectively remove some of the perceived roadblocks to starting a business.

Similarly, those who say business start-up loans are relatively easy to obtain (26 percent) are less likely to say they would like to emigrate than those who say such loans are not easy to acquire (34 percent). Furthermore, young Arabs who say business owners can trust that their assets will be safe at all times or will be allowed to make a lot of money are less likely to say they wish to move away permanently.

Some argue that young Arabs desire to start businesses is rooted in desperation, not innovation.

To examine these concerns more fully, Gallup researchers categorised groups of aspiring entrepreneurs into two separate cadres (opportunity-driven versus necessity-driven) to better understand this socioeconomic dynamic. Opportunity-driven entrepreneurs are those who plan to start a business in the next year and say they are living comfortably on their current income. Necessity-driven entrepreneurs also plan to start a business, but are not living comfortably on their present level of income.

The Silatech Index highlights that young, necessity-driven entrepreneurs are more than five times as likely as young opportunity-driven entrepreneurs to express a desire to migrate permanently. Of the former group, 16 percent can be considered potential migrants versus three percent in the latter group. It may be that the necessity-driven group is willing or able to take on greater risk in general because of their relative financial disadvantage.

Such financial discrepancies between the two groups may also explain some of the differences in where potential migrants in each group desire to move. The Arab League and the European Union are the top desired regional destinations for each group, but necessity-driven entrepreneurs are slightly more likely to favor moving to destinations within the MENA region (42 percent) than the European Union (31 percent).

However, equal numbers of opportunity-driven entrepreneurs would like to move to countries within the MENA region (43 percent) or the European Union (41 percent).

IMplICaTIONSSustainable economic growth that bolsters job creation in the

region will increasingly depend on cultivating domestic climates that encourage keeping young, aspiring entrepreneurs and their future businesses within their countries of origin.

Gallup surveys of young people across the MENA region highlight the challenges that many countries face as young aspiring entrepreneurs, particularly those in low-income countries, are the ones who most desire to emigrate to other countries.

If such a desire is acted on, many countries in the region stand to lose a significant part of their potential for job creation to other nations.

While many of these young aspiring entrepreneurs are driven by necessity rather than opportunity, a sizeable component of those driven by opportunity also express a desire to leave the region permanently, which underscores the importance of the availability of good jobs in preventing this loss of entrepreneurial talent.

This Silatech Index analysis is conducted by Gallup scientists and researchers pursuant to the Silatech-Gallup partnership. In addition to systematically measuring the perceptions of young people across the MENA region on the challenges related to employment and entrepreneurship, Gallup analysts lead the effort in disseminating the findings of the Silatech Index to regional and global leaders and institutions engaged in addressing the challenges surrounding young people and employment in the region. To download the full report go to http://bit.ly/Silatech_Index2010

market Watch: Matthias Catn outlines the challenges facing the World Economic Forum as it prepares for Davos 2011 (P.26).

inside Edge: A closer look at the factors affecting oil and gas pricing structures by Phil Strange (P.30).

Special report: The effect of the 2022 World Cup on Qatari Banking (P.32). Balance Sheet: Peter Kohut focuses on the importance of Basel III (P.34).

ALSo IN thIS SeCtIoN:

TheEDGE 25

deAth oF the CeLtIC tIGer (P.36)As Irelands leaders acquiesce and ask the European Central Bank and International Monetary Fund for a QR400 billion bailout, questions swirl over which vulnerable economy will fall next. Karim Nakhle looks back at where Ireland went wrong, and tackles the who-next question.

FINANCe & eCoNoMICS

mArKET WATCh

Matthias Catn discusses the challenges facing the World Economic Forum as it gears up for Davos at the end of January 2011.

The Road To davos:

A Look At

2011

mArKET WATCh

TheEDGE 27

The world enters 2011 facing new challenges as well as a significant number of unresolved issues from 2010 and before.

At the end of this month, about 2500 leaders from business, politics, academia and society will once again assemble in the scenic mountain village of Davos, Switzerland, to discuss these topics and hopefully move towards solving them.

For the World Economic Forum (WEF), the Annual Meeting is about listening to people, identifying new topics and making sure that the items on the agenda match the needs of the world and the interests of the leaders.

Although it all started with the Annual Meeting in Davos forty years ago and the Annual Meeting is still the WEFs most important event WEF today is about much more than meetings. It is a platform where high-level people interact and is a catalyst for ideas. Its motto, Committed to improving the state of the world,drives all activities.

ThE ChallENgES ahEadThe WEF recently asked the members of its Global Agenda

Councils, a network of more than 1200 international experts across 72 different topics, what the biggest challenges for 2011 are likely to be. The five most significant challenges identified included global power shifts, population growth, uncertain

economic recovery, income inequality and shortage of resources.As well as challenges, these could also be called trends, as

they reflect patterns of change in the world that will accompany us into the foreseeable future.

Beneath these broad trends are specific issues that will be important items on the political agenda in 2011.

Global power shifts will have a geopolitical and an economic component. Rising tensions in Asia, for example, between Japan and China, and between North and South Korea, indicate a shifting focus.

Economically, the world still faces a conflict between the United States and China about the supposedly undervalued Chinese currency and the global threat of a relapse to trade protectionism.

Population growth is also a long-term trend. The worlds population, currently at almost seven billion, is forecast to peak at around nine billion in 2050. However, the growth rate is falling and

underneath the umbrella of population growth, there are very different challenges. Whereas population grows quickly in some regions, others including Japan and Europe face ageing and declining populations. China will also face this as a consequence of its one-child policy.

This calls for creative solutions in terms of migration and talent mobility but many questions are not addressed, not least because they are hugely unpopular in countries that need increased immigration.

Economic recovery is still uncertain and, above all, unequal. Even within the relatively homogeneous Europe, there is an increasing gap between highly competitive countries such as Germany and the Nordic countries, and the south Greece, Portugal and Spain which are not only suffering from a debt crisis (in both the public and the private sector), but, more importantly, are seriously uncompetitive and need to undertake painful structural reforms.

TheEDGE28

mArKET WATCh

two years on proposals to reform the systems, institutions and mechanisms of global cooperation to make it easier for the world to solve joint challenges together.

Many of the 58 proposals that are part of the initiative address the challenges outlined above. For the World Economic Forum, this marked a milestone in its development towards becoming a true catalyst of ideas, not just at meetings, but continuously throughout the year.

NOT juST gOvErNMENTSAt the start of 2011 the world faces many

challenges. Many of them are left over from 2010, challenges for which solutions could

not be found. That is the bad news. The good news is that the tools are available and there is the possibility of making real progress.

Modern technologies make worldwide communication easy. In emerging countries, growing new middle classes can and should take an interest in the worlds problems and play a vital role in solving them.

The financial crisis of the past two years has made it clear that neither business nor governments alone can deal with these issues. The public and the private sectors must work together with non-profit organisations to make it happen.

The WEF, with its experience and unique ability to bring together these diverse groups, is ideally positioned to facilitate this process.

Matthias Catn is associate director for the Global Redesign Initiative at the World Economic Forum in Geneva. He is writing in a personal capacity and the views expressed here do not necessarily reflect those of the World Economic Forum and its members. He can be reached at matthias.caton@weforum.org or through his website at http://www.caton.de.

In the US, the unemployment rate is still close to 10 percent, only slightly below its all-time high. Although the situation in emerging countries looks better, high levels of liquidity mean that a lot of capital flows into these countries, with the associated risk of creating asset bubbles.

Income inequality seems to be rising. Here, it is necessary to distinguish between inequalities within and between countries.

Huge inequalities within countries can destabilise societies. Traditionally, the most unequal region was Latin America, but by some estimates, China has now reached similar levels. Destabilisation can have wider security implications, but it should be noted that neither Latin America nor China is a source of international terrorism and, therefore, the equation that is sometimes made between the two seems far-fetched.

Inequality between countries will stimulate migration and lead to challenges similar to those mentioned above related to population growth.

Finally, as China and other emerging countries continue to grow, the demand for natural resources will increase. This will lead to competition with the West over access to these resources, as can be seen in the critical stance of many Western countries on Chinas engagement in Africa.

For exporters of natural resources often developing countries this can be an opportunity, as there are now more potential buyers. However, whether this can be used well depends on local governance structures more than anything else.

In the medium-term the question will be how growth can be made less resource-intensive.

SharEd NOrMS FOr ThE NEw rEalITy

This years Davos emphasises that the world we are living in is different. Different not just because of the financial crisis that shook the world two years ago and whose consequences can still be felt, but different because the trends outlined above fundamentally change the way we see the world and how we act in it, as individuals, as companies and as nations.

To discuss these issues, the sessions are organised into four clusters.

The first deals with the new reality and the ways to respond to it. The second is about the economy and more inclusive growth. This cluster also deals with unresolved lessons

from the financial crisis. The third cluster is about the G20 agenda. Although the G20 is no cure-all, it is one of the most important new structures in global cooperation. The WEF would like to stimulate the discussion around the G20 agenda and bring non-governmental actors to the table to support it.

Finally, the fourth cluster concerns risk. In todays interconnected world even local natural disasters can have a global impact. Instabilities from systemic risks, including financial ones, can spread quickly and spin out of control. The WEF seeks to facilitate ways to understand and react to global risks in a more comprehensive, proactive way.

To this end, the WEF will launch at the

Annual Meeting its Risk Response Network, a new process to continuously monitor and assess risks that affect the business community and the world.

MOrE ThaN juST davOSAlthough the Annual Meeting in Davos is

the most visible of WEF activities, 10 different summits were organised by the Forum in 2010 in Europe, Latin America, Africa and Asia.

In addition, public-private partnerships bring together the business community with governments and non-profit organisations around issues as diverse as water, education and the fight against corruption.

Through the Network of Global Agenda Councils, established in 2008, the Forum has built a strong intellectual resource with more than 1200 experts to harness collaborative insights from the worlds brightest minds, breaking down barriers and silo-thinking.

The most visible outcome of this network so far has been its work on the Global Redesign Initiative. The Councils and other Forum communities worked over the past

In emerging countries, growing new middle classes can and should take an interest in the worlds problems and play a vital role in solving them.

The current depressed price of natural gas relative to the oil price is caused by several factors, one of which is the increasing level of global supply, while demand is not picking up at the same rate.

However, in the medium- to long-term the incremental competing supplies to Qatars output will benefit Qatar and the whole gas industry.

The security and volume of supply will encourage and increase adoption rates, with consumers switching from oil and coal as they gain trust in the larger, continuous, predictably priced supply of gas.

Estimates of the size of the worlds resources of natural gas continue to grow as a result of innovations in exploration and extraction techniques. It is estimated that a significant amount of natural gas remains to be discovered.

United States (US) natural gas reserves increased by the most in history last year, rising 11 percent, or 28.8 trillion cubic feet (Tcf), in 2009 to total 284 Tcf. This underscores the dramatic impact that new gas pumped from shale rock formations utilising newer extraction technologies is having on world energy supply.

iNSiDE EDGE

A bright future

for gas?Phil Strange weighs up the prospects of the price of gas in a world where supply exceeds demand and oil continues to dominate.

QaTarS lNg FuTurEAccording to Oil & Gas Journal, Qatars proven natural gas

reserves stood at approximately 899 Tcf as of January, 2010. Qatar holds almost 15 percent of the total world natural gas reserves and is the third largest reserve in the world behind Russia (1680 Tcf) and Iran (1046 Tcf). The majority of Qatars natural gas is located in the massive offshore North Field, the worlds largest non-associated natural gas field.

Qatar began 2009 with liquefied natural gas (LNG) production capacity of 31.7 million tons a year and will reach a capacity of 77 million tons per year in 2011. Qatar is already the worlds largest producer of LNG, but the new facilities will further widen the gap over its nearest rival.

This will give Qatar a share of between a quarter and a third of projected world LNG export capacity, and is expected to make Qatar the dominant player in world LNG with unrivalled influence over markets. As a result, Qatars plans for its new capacity will have a significant effect on prices.

iNSiDE EDGE

TheEDGE 31

however, have increased rapidly over the last two years to currently more than US$85 (QR309) per barrel.

Historically, gas prices have also displayed more seasonal volatility. This is because the natural gas market is regional and segmented due to the difficulty and costs of overseas transportation, so uses of gas tend to be relatively close to the point of production.

As the world market for natural gas is fragmented in different regional markets it is not possible to talk about a world price for natural gas. Crude oil, on the other hand, is a global market having a fairly common price level worldwide.

The reason that the ratio of the price of oil to the price of natural gas has changed so dramatically is due to the time lag in fuel switching. Some users can switch from oil to gas overnight, but for others, it takes time.

Since the ratio has trended up for the last three years, those who could easily switch probably have already done so. Thus the additional supply of natural gas has not been quickly met with increased demand.

gaS, gaS, EvErywhErEWith burgeoning gas production in the US, a global gas glut has

depressed LNG prices and shrunk the market for Qatars exports. It is estimated that the US has enough supplies of natural gas to make it self-sufficient. New LNG output in the next five years from Australia and other countries could exacerbate this situation.

Since shale is present in abundance, it is possible that there are large reserves of natural gas in other parts of the globe as well. Europe and China are keen to explore their shale reserves since they are large importers of natural gas. The International Energy Agency estimates the global total of unconventional natural gas reserves to be around 921 trillion cubic metres.

Such exploration will not impact supply for some time to come, but it does present a cause for concern for those who export to these markets.

For example, in February this year, Gazprom, one of the largest extractors of natural gas in the world and the largest Russian company, postponed its Shtokman gas-field project by three years because of the change in market conditions. Some of the gas from that field was to be exported to the US, but that seems a distant possibility now. On the other hand, recent announcements about discoveries in Brazils offshore subsalt have generated considerable excitement in the countrys oil and gas sector. Along with their potential to significantly increase oil production in the country, the subsalt areas are estimated to contain sizable natural gas reserves as well and could increase Brazils total natural gas reserves by more than 50 percent.

The most important implications of global shale gas exploitation and other non-conventional sources of gas, are that development of such resources would provide LNG for use on a global scale, reducing reliance on imports.

It appears that the age of plenty for consumers of gas is dawning. However, realising the full promise of shale and other resources is not a certainty, and there are technical and economic challenges.

Yet despite the difficulties expected on the path to a plentiful supply of natural gas, such abundant reserves should bring about changes in energy consumption patterns.

Ultimately Qatar will benefit from increased global supply and competition, as this exact phenomenon will encourage energy consumers to convert to gas as the planets viable alternative.

The years 2008 and 2009, plagued by the financial crisis, witnessed a decline in demand for natural gas, at a time when conventional and unconventional gas supplies were increasing, which led to a sharp downward trend in gas prices. With gas prices falling sharply, there has been speculation that LNG producers might shut capacity until demand and prices improve.

However, Qatar has shown no intention of slowing down LNG development. On the contrary, it seems to have striven to limit delays to the construction of the mega-trains. Much of Qatars new production is destined for the export markets and revenues in the short term will not be maximised because gas prices are low. Also, the new volumes themselves may have a depressing effect on prices, at least in the short-term.

The global glut of natural gas is affecting the upstream investment strategies of even the most ambitious producer and largest exporter of LNG, as Qatar has indicated that it will not pursue any greenfield projects until 2014. The moratorium on new developments based on Qatars North Field came into effect in 2005, and will not be lifted before 2014, a move likely to disappoint the countrys neighbours.

gaS aNd OIl prICE TrENdSInternational energy majors operate both in oil and natural

gas exploration and marketing. Project lifetimes are measured in decades and investment levels are measured in hundreds of millions or billions of dollars.

An understanding of how price movement in one commodity is expressed in the price of the other could prove useful in predicting price behaviour over the long run, facilitate project planning and profit maximisation, and identify potential hedging strategies.

Gas and oil price trends

Gas LH scale $/MMBtu : Oil RH scale $/Barrel

In the recent past, as can be seen from the graph, a disconnect between crude oil and gas prices has been observed. A barrel of oil has roughly six times the energy content of a million British thermal units of natural gas, and if the fuels were perfect substitutes, oil prices would be about six times natural gas prices.

In practice, however, the ease of using oil for making gasoline makes oil more valuable. As a result, oil has usually traded between six and 12 times the price of natural gas.

This scenario has recently changed, with gas prices having fallen sharply, weighed down by new supply and weak demand. Oil prices,

SPECiALrEPorT

QaTar: Banking goals for 2022By Greg Harris

Although the 2022 World Cup is more than a decade away, analysts are already predicting increased loan activity and investment management in Qatars banking sector as the economy gears up to host footballs showcase event.

Following the decision awarding Qatar the tournament on December 2, Moodys Investors Service issued an advisory note forecasting that, as a result, Qatari banks would enjoy enhanced business opportunities, better development of domestic franchises and increased revenues.

As the country prepares for the World Cup, we expect all Qatari banks to benefit from stronger economic activity and higher credit demand in the next 12 years, said the report, issued on December 5.

We estimate that accelerated government spending of US$57 billion (QR207.5 billion) over the next decade for infrastructure development projects relating to stadium construction, accommodation and upgrading of existing transportation systems, will create new lending activity for all banks, wrote Moodys.

While the ratings agency said Qatars larger banks would stand to benefit the most from the heightened financial activity associated with preparing for the event, there will also be opportunities for smaller lenders involving more modest projects, contracting and sub-contracting.

It is on the sidelines of World Cup preparations where domestic banks are expected to score big, with the private sector set to invest heavily in hospitality and property projects.

While some have raised concerns over whether Qatar will have to dip into the debt market, the state and the banking sector may be able manage the massive demand for financing without it.

As in the past, most of the infrastructure will be financed via the budget revenues, directly coming from the oil and gas sectors, Luc Marchand, an associate director at credit ratings agency, Standard & Poors, said in an interview with Abu Dhabis The National on December 5. Private sector financing [will be] asked to play a bigger role, notably in the hotel industry and real estate.

Qatars banks are in a good position to expand as the economy continues to post strong growth figures, being well capitalised, profitable and only having a low level of non-performing loans on their books, Qatar Central Bank (QCB) governor, HE Sheikh Abdullah bin Saud Al Thani told Oxford Business Group.

The countrys banks have taken a series of steps aimed at strengthening the sector, including boosting liquidity and encouraging lending activity, while even more is being done to reinforce risk management measures, according to Sheikh Abdullah.

A good starting point is, therefore, to have prudential regulations that allow diversification of assets so as to spread risk. Taking these considerations into account, the QCB has instituted a gamut of regulations to diversify risks, Sheikh Abdullah said.

Another step to ensure that banks are not affected by future stresses is fast-tracking the implementation of the Basel III guidelines, which include raising minimum capital levels and strengthening firewalls against risk.

On December 6, HE Yousef Hussein Kamal, Qatars minister of economy and

billion) at the end of September, according to data issued by the Qatar Central Bank in late November.

Even without the stimulus of the World Cup, Qatars economy has been expanding at a world-beating rate, with growth expected to be 15 percent or more for the year. Now, with the goal of helping to stage an event second only to the Olympic Games on the international sporting calendar, Qatars banking sector is looking towards even greater loan activity and investments.

Greg Harris is the editorial manager at Oxford Business Group.

SPECiAL rEPorT

TheEDGE 33

finance, announced that the Basel III proposals for the banking sector would be in place by 2013, five years ahead of deadline.

Given that most Qatari banks are already carrying capital adequacy ratios of around 15 percent, more than twice the level set under Basel III, and with the sector only likely to get stronger in the coming years, it seems as if the core requirement of the guidelines will easily be met.

With these fundamentals secured, Qatars banks are starting to play a more expansive game, increasing lending. In October there was a 2.2 percent rise in lending month-on-month, with bank loans standing at U$75.3 billion (QR274 billion), up from the US$73 billion (QR265

why yOu ShOuld CarE abOuT baSEl

B asel is a picturesque town in the north-west region of Switzerland dating back to the Roman Empire and bordering Germany and France. Despite being home to a mere 165,000 inhabitants, the worldwide impact of what happens here at the Rhine bend, is not to be underestimated.

If you are into luxury watches or fine jewellery, then you will surely be interested in BaselWorld, the annual watch and jewellery fair. Or you might be an art lover, in which case Art Basel, the worlds biggest contemporary annual art exhibition known

as the Olympics of the art world, will tickle your fancy. Both these events feature highly-priced items with a combined value of hundreds of millions of dollars.

However, the impact of the topic I want to talk about is not measured in millions or even billions of dollars, but in trillions.

Basel is also happens to be home to the Basel Committee on Banking Supervision (BCBS), a committee which comprises central bank representatives from 27 countries, including from the Gulf Cooperation Council and the Kingdom of Saudi Arabia. In the words of the BCBS, its objective is to enhance understanding

of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable.

The BCBS considered it necessary to react to the financial crisis and develop the third installment of its guidance to regulate financial institutions, which it calls, simply, Basel III.

Whether it is expensive watches, contemporary art or financial regulation, the Swiss town of Basel has something to offer everyone, some more pleasant than others. But the global impact on the regulation of the banking sector and potential importance of this town is not to be underestimated. Peter Viktor Kohut takes a closer look.

BALANCEShEET

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35TheEDGE

Basel III, which is expected to be finalised at the end of this month, consists of a new set of rules for banks drawn up with the intent to prevent a recurrence of the wide ranging, severe problems experienced during the crisis in the financial system.

Although the pronouncements of the Basel Committee are legally non-binding, the member states as well as a large number of non-member states have pledged to implement the rules locally.

FOr baNkSFor banks, there will be a direct impact on

the quantity and quality of regulatory capital that they are expected to hold against a risk-weighted measure of their on- and off-balance sheet assets, increasing from the current minimum of eight percent on a global level, to at least 10.5 percent and potentially much more in the future.

In addition, banks will have to deal with a non risk-sensitive leverage ratio which limits the absolute amount of assets that they hold to a multiple of their common equity, likely to be about 33.

Since much of the crisis has been caused by liquidity problems, there will also be some tough requirements on their short-term, as well as longer-term, structural liquidity positions. And, if they happen to be one of the more sophisticated banks with advanced trading operations, they might also be faced with new, more complex risk calculations.

FOr rEgulaTOrSThere are also fundamental issues that

regulators for many Islamic banks would have to ponder.

For example, the liquidity ratios specify the characteristics of qualifying instruments that can count towards the pool of high quality liquid assets. Included in these allowable instruments are high quality corporate bonds that are expected to form a significant part of the liquidity pool.

As Basel III stands right now, this might cause a big challenge for Islamic banks where sukkuks lack the necessary market depth or might not even meet the qualifying criteria.

However, you also would need to grapple with various macro-economic considerations. Basel III introduces a range of capital buffers that would be added on top of the 10.5 percent minimum, in particular, a buffer to counter procyclicality in capital levels and prevent excessive credit growth. Set this buffer too high, and the breaks on economic growth might be too severe. Set it too low and unwanted bubbles might form.

FOr ThE rEST OF uSThe Basel regulation is expected to have

wide-reaching effects on the overall financial system on an international, as well as, national level.

There will undoubtedly be a shift in the costs or benefits to a range of banking products and, as a result, to the attractiveness of certain banking business models and business lines relative to others.

The cost of banking will be, in general, more expensive and it would not be surprising if such increased costs would filter down to consumers. Bank loans, whether commercial or retail, could see an increase which some estimate to be upwards of 50 basis points.

Experts, most prominently from the big trade finance houses, Standard Chartered Bank and HSBC, are predicting a massive drying up of the trade finance market with long-term consequences for global trade.

Whether such doom and gloom prognosis will materialise remains to be seen, as in this interconnected, complex and dynamic world of finance, nothing is certain or clear-cut.

On the plus side banks will, in general, woo retail and small- and medium-enterprise clients, as the deposits from this client segment will receive relatively preferential treatment under the rules.

But banks will value your money with them the most if your banking behaviour is such that it fulfills the stable deposit criteria. This includes building relationships with your bank on several, varied levels and with different products or using some of your accounts for transactional purposes.

Corporate deposits, on the other hand, will be somewhat disadvantaged but less so if you have an operational relationship with the institution.

If you are in the fortunate position of being able to issue corporate bonds of the highest quality, your financial instrument will be in strong demand and will decrease the cost of funding for you. This is a result of the liquidity ratios in Basel III and the resulting need of banks to build up their liquidity positions.

whAt to do ABout BASeL IIIWhatever your business, Basel is a force to be reckoned with. Impact on global and local economies in significant ways is a given. At this point in time, however, there still remain many unanswered questions. In order to cope with such uncertainties and to position your organisation optimally to leverage opportunities, a few basic tactics are recommended. Playing through a range of scenarios as part of a strategic scenario-planning exercise with board members and the most senior executives is a good way to identify possible future states and directions, and to position the organisation to confront threats or opportunities. Such long-term strategic planning should take into account the impact of the tightened, or at least reshaped, financial conditions on the entire value chain your organisation may be involved in.

BASeL III uPdAteAt the time of going to press, the Basel Committe stated that their tougher new bank capital and liquidity rules will have only a modest impact on economic output. The committee confirmed that if the Basel III requirements are phased in over a period of eight years, as planned, this would lead to a maximum decline in gross domestic product of 0.22 percent. Basel III will be introduced from 2013 and take effect from 2019.

More sad news in from the eurozone hospital: After a sudden worsening in her condition, the Irish Patient, formerly

known as the Irish Republic, has been moved into intensive care and put on artificial ventilation. While the hospital spokesmen of the International Monetary Fund (IMF) and European Central Bank (ECB) tried to sound upbeat, they had to absorb the pressure and declare to the patients family that there is no prospect of recovery anytime soon.

As Greeces bankruptcy emerged as a major news story in 2010, the Irish Republic, its politicians, and policymakers worked quietly in the background to avoid a bankruptcy of their own.

Yet Irish economists knew that the country ceased to exist as an autonomous fiscal entity, and was probably next in line to become a ward of the ECB. When they revealed and argued that the Irish bank guarantee would lead to national insolvency, they never expected the financial collapse to be anywhere near as swift or as deep as has occurred.

Nobody could have predicted that the markets would put Irish sovereign debt into the same risk group as the Ukraine and Pakistan, two notches above the junk level of Argentina, Greece and Venezuela.

ECoNomiC BAromETEr

IrElaNd & EurOpE'S FragIlE hOuSE OF CardS

Just when you thought things could not get worse for the eurozone they did. Karim Nakhle offers his sharp analysis, tackling head-on the key economic issues of Ireland, and its consequential knock-on effect.

(Getty/Gallo Images)

ECoNomiC BAromETEr

of trouble in mid-2008. Government deficits increased, many businesses closed, immigrant workers left, and unemployment increased. Irish banks, already over-exposed to the Irish property market, came under severe pressure in September 2008 at the peak of the global financial crisis, and in January 2009, economists predicted that house prices would fall by 80 percent from peak to trough in real terms by 2010 to 2011.

Anglo Irish Bank was particularly exposed to the Irish property bubble. A hidden loans controversy in December 2008 led to a further drop in its share price. The Irish Stock Exchange Quotient (ISEQ) index dropped to a 14-year low on September 14 2009, probably triggered by the unexpected resignation of former Anglo Irish Bank director, Anne Heraty, from the board of the Irish Stock Exchange the night before.

TheEDGE 37

For a country or company, insolvency is the equivalent of death, and is usually swiftly followed by the legal process of bankruptcy, the equivalent of a funeral. Two things have delayed Irelands funeral.

First, in anticipation of being booted out of bond markets, the government built up a large pile of cash a few months ago, so that it can keep going until the first quarter of 2011 before it runs out of money.

Secondly, not wanting another Greek-style mess, the ECB intervened to fund the Irish banks.

On the evening of November 21, 2010, Ireland formally requested financial support from the EUs European Financial Stability Facility (EFSF) and the IMF, a request that

The entire bailout mechanism forged by the eU leaves too many questions unanswered and will keep financial markets jittery.

the CeLtIC tIGer YeArSThe term Celtic Tiger referred to the

country during its boom years, 1995 to 2007. The term was first used in a 1994 Morgan Stanley report, and referred to Irelands similarity to the East Asian Tigers South Korea, Singapore, Hong Kong, and Taiwan during their periods of rapid growth in the late 1980s and early 1990s.

The Celtic Tiger period has also been called The Boom or Irelands Economic Miracle nowadays, it is more referred to as The Doom or Irelands Miraculous Bailout.

During its Celtic Tiger time, Ireland experienced a boom transforming it from one of Europes poorer countries into one of its wealthiest. The causes of Irelands growth are the subject of some debate, but credit has been primarily given to state-driven economic development social partnership between employers, government and unions, increased participation in the labour force of women, decades of investment in domestic higher education, targeting of foreign direct investment, a low corporation tax rate, an English-speaking workforce, and crucial European Union (EU) membership, which provided transfer payments and export access to the single market.

the ProPertY BuBBLe BurStSThe return of the boom in 2004 is

claimed to be primarily the result of the large construction sector catching up with the demand caused by the first boom.

The construction sector represented nearly 12 percent of gross domestic product (GDP) and a large proportion of employment among young, unskilled men.

That same year saw the construction of 80,000 new homes, compared to the United Kingdoms (UK) 160,000, a nation that has 15 times Irelands population. It is estimated that home completions in 2006 may have reached 90,000.

This led to an expansion of credit and a surge in the property market that included a property bubble that petered out in 2007.

Government finances began to show signs

Ireland entered into an economic depression in 2009. The Economic and Social Research Institute predicted an economic contraction of 14 percent by 2010. In the first quarter of 2009, GDP was down 8.5 percent from the same quarter the previous year, and gross national product (GNP) was down 12 percent. Unemployment was up 8.75 percent to 11.4 percent.

The economy exited recession in the third quarter of 2009, with GDP growing by 0.3 percent in the quarter, but GNP continued to contract by 1.4 percent. Ireland officially left recession in the first quarter of 2010.

According to some sources, approximately 65,000 people left Ireland in 2009, and some

estimate that the number may be closer to 120,000 in 2010.

At first, most of those leaving were immigrants returning home to Central Europe. But in time, the Irish themselves started leaving the country.

September 2010 marked Irelands point of no return in the banking crisis.

During that month, EUR55 billion (QR264 billion) of bank bonds (held mainly by UK, German, and French banks) matured and were repaid, mostly by borrowing from the ECB.

The number of people signing up for unemployment benefits dropped about three percent in October 2010, prompting the government to announce this as a sign of an improving economy. But opposition parties quickly disputed that claim, attributing this change to the increased rate of emigration.

was welcomed by the ECB and EU finance ministers. The request was approved a EUR85 billion (QR409 billion) rescue deal, of which EUR22.5 billion (QR108 billion) will come from the European Financial Stability Mechanism, EUR22.5 billion (QR108 billion) from the IMF, EUR22.5 billion (QR108 billion) from the EFSF, and bilateral loans from the UK, Denmark and Sweden.