Qatar-Saudi relations flourish with surge in business activity

When Saudi Crown Prince Mohammed bin Salman buckled himself into a Bentley SUV with Qatar’s emir at the wheel, it was a moment of camaraderie that would soon come to define ties between the two countries.

Prince Mohammed’s visit to the neighbouring Gulf state in 2021 not only helped bury a political grudge that had rumbled on for three years, it also ignited a rise in Qatar-Saudi business ties that has gathered pace ever since.

His SUV tour of the Qatari capital took in a new 10-lane expressway, a futuristic metro and a 90,000-seat World Cup stadium radiant in gold-coloured cladding – exactly the kind of mega projects the Saudi prince is in a hurry to build back home.

Following the visit, the two countries have seen a subsequent burst of new business between Qatari and Saudi companies – from railways, to weapons and even a project to bring snow to the Saudi desert, which suggest his visit helped inspire a turning point in ties.

The Qatari and Saudi government media offices did not respond to requests for comment about growing relations between the two countries.

When the 2022 World Cup concluded, ending a decade-long construction boom in Qatar, Qatari companies seized the chance to offer the kingdom the know-how and capacity they had honed in the lead-up to the world’s biggest sporting event.

The move generated at least $10bn in contracts and cemented a partnership between Qatar‘s Sheikh Tamim bin Hamed Al Thani and Prince Mohammed, a development applauded by Western allies keen to shore up stability in an unstable region, four business executives, three analysts and two diplomats said.

The size of Saudi contracts won by Qatari contractors since the boycott has not been previously reported and shows Qatar firms are closely involved in completing Saudi so-called giga projects, big ventures that are central to ambitious 2030 targets to diversify the Saudi economy away from oil.

The alliance is in stark contrast to a rift that started in 2017 when Saudi Arabia, the UAE, Bahrain, Oman and Egypt cut off Qatar’s economy with a boycott, accusing it of backing terrorists. Qatar denied the charges and the rift was ended in a series of conciliatory moves in 2021.

“There is so much work (in Saudi Arabia), I think all the companies in the Middle East will go,” said Saif-ur-Rehman Khan, managing director and owner of Redco International, a Qatari construction company.

Redco’s Khan said the state visit by Saudi’s Crown Prince was important because it prompted a joint Saudi-Qatar committee charged with restoring ties to identify Qatari firms well-placed to contribute to Saudi projects.

Two years on, a December 2023 meeting of the Saudi-Qatari coordination committee was held in a “spirit of friendship, brotherhood and mutual trust” and sought to bring a “renaissance for the two countries”, according to a joint statement.

Redco is now focused on precast concrete and concrete plants that are now involved in NEOM, the multi-billion dollar Saudi flagship project, a huge economic zone the size of Belgium.

Giga projects rope in Qatari firms

For four decades, Redco made billions by focusing only on Qatari projects. But the company’s focus has shifted to Saudi Arabia in a big way: its first two contracts in the kingdom are worth $3bn, and it has moved the majority of its employees – more than 8,000 – and much of its heavy equipment inventory from Qatar to an industrial zone on the Red Sea coast, Khan said.

The Crown Prince’s 2021 visit prompted Saudi authorities to invite Qatar’s top construction companies to bid for work, Khan said. As Redco’s work on World Cup projects wrapped up, Khan travelled to NEOM and put together a proposal.

“They welcomed us and made it easy to bid,” he said, adding that NEOM waived a customary requirement for bidders to put down a 10 per cent bond because Redco had no banking facility in the kingdom.

Some NEOM projects are delayed but Redco has pushed ahead.

Over six months, Redco built a 1.5 kilometre long precast concrete factory, the world’s largest, and now is at work on tunnels for an underground railway and infrastructure corridor and culverts for a 147 kilometre long pipeline to supply water to make snow at Trojena, Saudi Arabia’s first ski hill.

“They wanted us to start right away, with no mobilisation period. And we did,” Khan said.

NEOM’s media office did not comment when contacted by Reuters.

The neighbours are also growing aligned diplomatically.

Saudi Arabia, for example, supports Qatar’s efforts to mediate between Israel and Hamas over the Gaza crisis.

Doha has avoided discord with Riyadh by dialling back some aspects of its foreign policy, like withdrawing opposition to Saudi efforts to welcome Syria back to the Arab League and taking a backseat on peace negotiations in Yemen and Sudan.

Projects worth $7bn

Qatar and Saudi Arabia are also exploring ways to make weapons and other defence items together, with Barzan Holdings, a defence company part-owned by Qatar’s defence ministry, agreeing in February to work with SAMI, its Saudi counterpart.

“If we did not have the political blessing from both sides, we would not have this opportunity to work together,” said Barzan CEO Abdullah Al-Khater.

Riyadh aims to spend half its arms budget domestically, which represents “something huge” for Barzan, he said.

“Stronger economic ties bind the interests of Qatar and Saudi Arabia closer together in ways that overcome the issues of the recent past and underpin the rapid improvement in the political relationship,” said Kristian Coates Ulrichsen, Gulf expert and fellow at Rice University’s Baker Institute.

For Qatar, a top liquefied natural gas exporter, it is a chance to strengthen ties with the most powerful Arab country, and in the process try to diversify its economy.

In an example of a reversal of fortunes, entrepreneurs Moutaz and Ramez Al Khayyat had side-stepped the Saudi-led boycott of Qatar by flying-in 4,000 milk cows to ease a critical food shortage in the desert country.

Riyadh had closed the border, cutting off Qatar’s main food and dairy supply route to try to bring Qatar to heel.

The Syrian-Qatari brothers, who did no business with Saudi Arabia during the rift, now have $7bn worth of construction projects in the pipeline inside the kingdom, Moutaz Al-Khayyat told Reuters.

They are hoping to double that amount, he added.

“The door is now open.”

Al-Khayyat, chairman of Power International Holding, a group of more than 40 companies, now shrugs off the Saudi-led boycott altogether: “It was a small period. An incident,” he said.