The Lessons from Qatar

You’ll always miss 100 per cent of the shots you don’t take. Wayne Gretzky

Importance of Failure

As the England football team departs Qatar, it is time to learn. Another four years of hurt has ended in plucky sporting failure. Beneath its ability to “sportswash”, Qatar is a country that operates a harsh Kafala system of foreign labour, where homosexuality is punishable by imprisonment and is one of the world’s most significant liquified natural gas (LNG) exporters. Qatar ticks very few ESG boxes. It is a country that stretches our liberal tolerance.

Transformed

After WWII, Qatar ranked as one of the world’s poorest countries. Its primary export industry was pearl farming. Oil discoveries in the 1940s and 50s and the events of the 1970s, including the rise of OPEC and the rapid development of Qatar’s onshore oilfields, transformed Qatar into one of the world’s wealthiest countries.

Temporary Labour Required

Periods of rapid economic growth require a functioning labour market. Very often, domestic labour is not willing or able to undertake the required work. Post-war West Germany was in such a predicament in the 1950s and 60s. The German economic miracle or wirtschaftwunder required foreign workers known as gastarbiters. The Bonn government signed several bilateral agreements with countries, including Turkey, Italy, Spain, Greece, Morrocco, Portugal, South Korea and Yugoslavia (a formidable sounding World Cup qualifying group). These deals allowed unqualified workers temporary residence in the Federal Republic without being granted citizenship. German politicians were at first reluctant to use these measures. Cold War political pressures from Washington and the inability to attract workers from East Germany eventually made gastarbiters a central plank of West Germany’s post-war economic miracle.

Why Don't You Stay

Initially, gastarbiters had to be single men required to return home after two years. But German employers found the continuous recruitment costs expensive, later allowing married men, in some cases with their families, to work for extended durations. This relaxation proved particularly attractive for Turkish gastarbiters. (Today, the 2.5m people of Turkish origin are Germany’s most significant immigrant population). During the 1970s, as energy prices soared, Germany’s economic miracle slowed, and Qatar became more prosperous. Germany’s requirement for unskilled labour declined, while Qatar’s exploded.

How We Were

Religious bigotry makes homosexuality a criminal offence in Qatar, as it did in Europe until the 1960s. Homosexuality was illegal in West Germany until 1969. This does not condone or justify the domestic policies of Qatar today nor the corrupt decision by FIFA to stage the World Cup there. However, it does show how economic circumstances and social attitudes change over time.

Outplayed

Qatar bought the hosting and boasting rights to the 2022 World Cup because of its spectacularly successful pivot from declining oil production to LNG over the last twenty years. While the German players displayed disgust at their host’s politics by covering their mouths before their defeat against Japan, the country they represent has been more completely outplayed in the energy policy game. This time by China.

The Case for LNG

Earlier this year, Germany was looking to replace its natural gas supplier. Its primary supplier had proved unreliable. Qatar was an obvious call for the Scholz government. However, discussions broke down as Germany refused to sign a long-term deal due to its 2040 net-zero commitment. Undeterred, Olaf Scholz visited Canada, home to plentiful untapped LNG. Surely fellow tolerant liberal Justin Trudeau would be able to help. But just as Germany was bound by its net-zero commitments to strike a Qatari deal, Trudeau declined the approach. Despite the unprecedented historic price anomaly between N American and European natural gas, Trudeau said he didn’t see the business case for LNG export (a staggering claim and one the US has no qualms about profitably exploiting).

China Scores

President Xi was afforded full state honours as he visited Saudi Arabia last week, eclipsing President Biden’s embarrassed desert fist bump. As Xi secures his country’s future oil supply outside the US$ payment system, so did China outmanoeuvre Germany in Qatar. Last month QatarEnergy signed a 27-year deal to supply China’s Sinopec with liquefied natural gas, the longest-duration international agreement to date.

Gas for Coal

It is, however, worth giving Germany credit where it is due. The country has not only filled its short-term requirement for LNG for this winter, albeit by massively distorting to the global LNG market, but it has also done a fantastic job of rapidly expanding its LNG import facilities. All it needs is the political will to sign long-term supply agreements to fill these facilities and stop burning more coal.

Popper's Paradox

ESG is a catchy TLA that simplifies what it is to be morally responsible. Moral responsibility is not a fixed set of codifiable behaviours or universal priorities. Germany’s ugly history has created one of the most enduring tolerant liberal political regimes of the last 50 years. However, just as Germany was rising from WWII’s devastation, the philosopher Karl Popper pointed out in 1945 the paradox of tolerance in his masterful The Open Society and Its Enemies. Popper said, “unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them”.

Tolerating Intolerance

Post-war Germany went further than any other western country to reach out to Russia via its Wandel durch Handel (change through trade) policy. It had reasons of both self-interest and guilt, tolerating Russian behaviour others could not. Indeed Germany’s gastarbeiter policy was justified because it would provide economic and cultural benefits to the countries where its workers returned. A similar argument was used in the hope that China’s 2001 entry into the World Trade Organisation would promote political change in the People’s Republic.

What Doesn't Kill You ...

As the England football team returns home, the players will discover that failure is integral to learning and adaptation, improving chances of future success. While it is hard to disagree with the intent of adopting ESG, it needs modification as reality encroaches. ESG also needs to learn from failure. Renewable energy absolutism might be admirable, but it is unrealistic in any foreseeable time frame and threatens humanity’s existence. European energy policy is starting to reflect this stark reality, but there is more to learn.

Jeremy

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