Political Risk Analysis - US T ies T o Remain Strong, Continued GCC Realignment Ahead

17 Fe b 20 17 Q atar P o litical Ris k

BMI View: Qatari-US ties will remain strong under the Trump administration, despite the latter's tough stance on the Muslim Brotherhood. Doha's realignment of foreign
policy with the GCC will continue amid heightened regional instability. Social and political reforms will see minimal progress, a s international pressure on Doha over
human rights issues ease and Qatari citizens continue to enjoy exceptionally high living standards.

We expect relations between Qatar and the US to remain s trong under the new Trump adminis tration, as military and economic cooperation limits pres s ure
from Was hing ton on Doha to s ever links with the Mus lim Brotherhood. In any cas e, Qatar will prioritis e foreig n policy realig nment with the Gulf Cooperation
Council (GCC) over maintaining friendly ties with a broad rang e of reg ional actors , due to heig htened levels of ins tability acros s MENA. As the US' foreig n
policy focus s hifts away from human rig hts is s ues - and amid ris ing populis m in the Wes t more broadly - external pres s ure on Qatari authorities to
implement s ocial and political reforms will moderate. Given the g overnment's continued ability to provide its citizens with g enerous s ubs idies and economic
opportunities , Qatar will remain the mos t politically s table country in the MENA reg ion in the quarters ahead.

Few Implications Of Tough US Muslim Brotherhood Stance For Qatar

We expect US Pres ident Donald Trump to take a much toug her s tance towards the Mus lim Brotherhood than his predeces s or, g iven his s trong antipathy
towards radical Is lamis m and warming ties to Eg ypt. Indeed, we s ee potential for the US to des ig nate the Brotherhood a terroris t g roup in the quarters
ahead; cong res s ional Republicans reintroduced a bill urg ing Trump to either do s o - or publicly explain why he would not - in January.

Due to Doha's pro-Brotherhood reputation, this introduces an element of uncertainty reg arding the future of US-Qatari ties . The Gulf s tate provided billions
of dollars in nancing to former Pres ident Mohamed Mors i's Brotherhood adminis tration in Eg ypt before its overthrow in July 2013, and has hos ted
numerous Brotherhood members in-country, including prominent Eg yptian-born cleric Yus uf al-Qaradawi.

Political Stability To Prevail

MENA - Political Ris k Indices (Out Of 100)

Note: Lower s core indicates hig her ris k. Source: BMI

For s everal reas ons , we nevertheles s do not expect US pres s ure on Qatar to s ever Brotherhood links or expel members from its territory to move beyond
rhetoric in the years ahead. Mos t importantly, Qatar hos ts forward headquarters of the US Central Command and the two countries maintain s trong military
relations . Moreover, thoug h Qatar's reputation as a mediator of reg ional dis putes was damag ed in the Arab Spring - during which it was accus ed of 'picking
winners ' and criticis ed for a perceived lack of long -term peace implementation s trateg ies - Doha's ties to a broad rang e of s tate and non-s tate actors mean
it is s till cons idered a facilitator of MENA neg otiations in Was hing ton. The two countries als o have deep trade links , particularly in the energ y s ector, and
Doha has announced plans to inves t USD45bn in the US over the next five years .

Maintenance Of US, GCC Ties To Remain A Priority

In the unlikely event that Trump does rais e pres s ure on Qatar over its Brotherhood ties - for example by threatening economic or targ eted s anctions - we
would expect Doha to comply, as the maintenance of relations with the US and the res t of the (larg ely anti-Brotherhood) GCC becomes increas ing ly important
for the emirate amid the ong oing reg ional ins tability. Keeping friendly links to a broad rang e of reg ional actors - while s till part of its foreig n policy, g iven
Qatar's s mall s ize and g eog raphical location - will be of s ubordinate priority to Gulf unity.

Indeed, s ince Emir Tamim bin Hamad al-Thani as s umed power in 2013, there has been a marked s hift away from the purs uit of an independent foreig n policy
and Brotherhood s upport, towards realig nment with the GCC, as reg ion-wide threats from Iran, Is lamis t militancy and s ocial unres t have increas ed. Qatar's

This mate rial is pro te cte d by inte rnatio nal co pyrig ht laws , and us e o f this is s ubje ct to o ur Te rms & Co nditio ns .
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 decis ions to join the Saudi-led military coalition in Yemen in 2015 and withdraw its ambas s ador to Iran in s upport of Riyadh in 2016 illus trate this trend. Such
actions have res ulted in improving ties with the GCC, as underlined by the Council's December 2016 s tatement in s upport of Doha following Cairo's
accus ations that Qatar had been involved in terroris t attacks on an Eg yptian Coptic Chris tian complex.

Furthermore, we expect Qatari authorities to focus on domes tic, rather than foreig n, policy is s ues in the years ahead, as it works to develop local
infras tructure ahead of the 2022 FIFA World Cup; divers ify its economy away from hydrocarbons ; and maintain hig h levels of s ocial s tability.

Continued Focus On GCC Unity Amid Regional Tensions

Middle Eas t - Saudi-Iran Proxy Conflicts

Source: BMI

Criticism Over Human Rights Issues To Ease

Compared with the previous adminis tration, we expect the US g overnment under Trump to focus les s on human rig hts is s ues and the s pread of democracy
in its foreig n policy - a trend that will likely be welcomed in Doha, as it limits the potential for external pres s ure on it to implement political and s ocial reforms .

Qatar has been s ubject to s ubs tantial international criticis m in recent years as the World Cup has put a s potlig ht on the challeng ing conditions that many
expatriate workers in the emirate face. The kafala s ys tem, which keeps foreig n workers tied to their in-country employers , has been a particularly contentious
is s ue. Doha's backtracking on its 2016 decis ion to introduce minor reforms to the s ys tem in January 2017 s ug g es ts it feels condent that pers is tent human
rig hts is s ues will not s park reactions from the international community that would directly impact its political or economic s tanding (s uch as the cancellation
of its World Cup hos ting ).

Adding to this condence is the expanding role of Rus s ia - an actor whos e external focus on human rig hts (at leas t in the Wes tern s ens e of the term) has
his torically been limited - in the Middle Eas t. Indeed, Doha, which us es its vas t s overeig n wealth fund as a foreig n policy tool, has s oug ht to s treng then ties to
Mos cow in recent quarters , announcing billions of dollars worth of inves tments in Rus s ia.

Under thes e conditions , we expect little in the way of meaning ful prog res s on s ocial and political reforms in the emirate in the years ahead. Foreig n workers
will remain s ubject to heavy res trictions , and the local population's political participation will s tay minimal. Stability will prevail, g iven Qatar's ability to provide
its citizen population with g enerous s ubs idies and economic opportunities . National policies will continue to be s haped by a s mall g roup of elite decis ion-
makers who face few cons traints domes tically, in turn ens uring broad policy continuity.

This mate rial is pro te cte d by inte rnatio nal co pyrig ht laws , and us e o f this is s ubje ct to o ur Te rms & Co nditio ns .
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