Following is the transcript of an interview with Ali Shareef Al Emadi, Qatar Minister of Finance in Doha. The discussion was broadcast on CNBC on 12 June 2017.
All references must be sourced to CNBC.
Interviewed by Hadley Gamble, Anchor, CNBC.
Hadley Gamble (HG): Your Excellency, thank you so much for joining CNBC. Last week Saudi Arabia, the UAE, Egypt as well, decided to cut diplomatic ties with Qatar. Why did they do that?
Ali Shareef Al Emadi: Well, I think if you look at what's happening around us, I think it's a lot to do that they would like to dictate our foreign policy and everybody knows that Qatar will not allow somebody, you know to dictate its foreign policy or to manipulate how their foreign policy should be run.
HG: So they were looking to manipulate?
Al Emadi: I think that was the main reason for whatever actions that they have done.
HG: Now when you talk about Qatar's relationship with the United States, you have two major U.S. military installations in Qatar. But we've seen some mixed messages from Washington. When you look at what's happening today, would you still say that President Trump is a man that Qatar can do business with?
Al Emadi: Well I think it's, if you look, we need to look at the history of the relationship. I think whenever you look at Qatar plus the western allies that were in Europe or were in the United States, this is a very long and historic relationship. We're not talking about you know, a president here or we're talking about a previous administration. We're talking about decades of relationship and it's been quite a very good relationship in all aspects, if it was military or economically or even socially and politically. So, and I think, what we're seeing today is a little but up and down here but we understand that this is a delicate situation for all the regions in the Gulf and hopefully that we can come out of this in a much stronger way for Qatar.
HG: We've heard from U.S. Secretary of State Rex Tillerson and he was urging calm while at the same time the President was saying – quote, that Qatar is a high level sponsor of terror. What do you think he's talking about?
Al Emadi: Well, I think if you go back to one week where the President Trump was actually praising Qatar and the GCC and the Arab-Islamic Conference which was in Riyadh I think. He started his speech by really praising Qatar and brilliant and Qatar is really an important partner and actually combating terrorism and money laundering and the war. So I think the message was very clear from the American administration that we're taking good part in this and we're working with our allies, with our partner, with our friend really to combat. This is a very difficult region. It's been a very difficult situation in the last 10, 15 years. We've seen what's happening around us in the region. We know that there's a lot of challenges in a lot of the countries around us and we know that this is more of a global issue rather than becoming a regional issue for us here.
HG: And just to be clear on this point there have been several accusations that the Qatari Government has supported Hamas, the Muslim Brotherhood, Hezbollah, Iran financially. Has your department at any time been involved in that kind of financial support?
Al Emadi: Well, I think go back to all the reports that we've seen, especially the report that we've seen in the last few weeks or the last few months. We know who's behind it. We know that all these things are really to put the propaganda against Qatar and to make all these allegations to weaken our point of views here and to really encourage the international community to take some stands against Qatar. But I think everybody that works on very closely with us will understand clearly where we stand on these issues. And that's why we're working very close with our allies to explain where we stand on those things and we're more than happy to address if there's any specific issue that we are not aware of.
HG: And when you say we know who is behind it, are we talking about Saudi Arabia?
Al Emadi: I will not put any names here but I think I will leave this for the audience to decide.
HG: Let's shift gears abit shall we? When we talk about the implications of this diplomatic crisis that you're in the middle of, we've seen a downgrade in your bonds by S&P. Billions have been wiped off the value of the stock market in the last week and the Qatari riyal is now under pressure. How far are you willing to go to defend your currency?
Al Emadi: I think if you look at, this is first, it's a big economy it's almost we're talking about, almost a 200 billion dollars GDP of state of Qatar. We are very much a well-diversified economy. We are, if you look at our energy sector and where we stand on this, that's also been that things are business as usual. So it's moving very well. If you look at where we stand on food securities and things happening inside the country, I think you're now in Doha. You had been here for a few days and you told me just before that you're going to spend another three or four days here. I'm more than happy to take another interview after two or three days that once you go and see the city, look at the banks, look at the grocery store, look at the business, go to the malls. We are business as usual and we're open for business. We know that you might have one or two challenges here and there but this is a country that's very resilient. We have the assets and the security that we need. Our foreign assets and our foreign investment is more than 250 percent of our GDP. So we are very much comfortable. We know we can defend the currency or we can defend the economy. But I don't think there's anything that we need to worry about in the local economy.
HG: So no chance of a sell down in assets like Barclays or VW or Sainsbury's?
Al Emadi: I will say we are extremely comfortable with our positions and on our investment or actually liquidity in our systems.
HG: So no worries about then, the reserves and how quickly those might be drained in supporting the currency.
Al Emadi: If you look at what happened in the last week, I think there were some reaction on the market, which is very much understandable I think if you take any action of any magnitude like this in any other countries, I think that's normal we've seen some good rebound coming back. Other issues specially the foods or the banking systems or doing business here I think that we're coming up to a very much normal activities.
HG: Let's talk bonds with some bond yields jumping sharply. Is there any plan to step into the market there and buy bonds?
Al Emadi: I don't think that we need to do anything like this. I think this is a lot to do with, that some nervousness and international markets of what's happening in the region. And I think if you look at where we stand on the rating agencies, we're still double-A counties and we're on of the top 20 or 25 globally on our ratings. And honestly, we're much rated than most of the countries that have started the embargo. So I think we are very much better than a lot of people around us.
HG: You mentioned that things are back to normal, business as usual.
Al Emadi: I'll tell you, you know today we're still focusing on our files; we're focusing on our turn on growth. You look at where the banks stand, the people, our airlines. I say that we're almost up to where we were before that. And I always said that we're open for business. We are not here to actually have a defensive strategy. But actually we're going to promote business for Qatar also.
HG: Even so we did see some panic buying in supermarkets last week. How long can you sustain the status quo?
Al Emadi: I think if you look at, let's say, we know that the border has closed with the three counties. But look at Qatar's geography and see what other alternatives that we have. Today, we have one of the biggest port in the region, that's just been opened last year. This can take five to seven million containers a year. If you look at where we were just two years back, our previous port was only 500,000 containers a year. So we have 10 times of the previous two year's capacity that's available. We have the biggest airport in the region, if it's not in the world. That's fully active. We have our biggest airlines also in the region. We have more than 200 planes that we have it for Qatar Airways. So I don't think there will be any challenges from food securities or accessing the countries or having business in Qatar. I think we have what it takes to run the country very smoothly.
HG: So your foreign minister was just in Russia having talks with Sergei Lavrov, the Foreign Minister. Turkey and Iran have both offered to offset the food situation when it comes to what's been cut off so far. Does that mean you're going to be looking toward new markets?
Al Emadi: I think let's look at it like this. We bring food previously even, you know as far as Brazil and as far as Australia. That was not even before this embargo happened. And we're going to continue this and we're going to make sure that we are even more diversified than we were before.
HG: Does that mean deepening your relationship with Iran?
Al Emadi: No, it is not. I think what we will do is we'll make sure that we have enough partners to get these things done for the sake of Qatar. You know we get food from Turkey, we get food from Far East. We get food from Europe. This is a well-diversified economy and we have a lot of international base here. If you look at how many people are living here, we're close to three million people. You know 80 or 85 percent of them are expats that are coming from multinational countries. So we have varieties of things that sometimes it's not only for the Qatari people, but it's also for a lot of people that live here. So we're not seeing any challenges on that area at this stage.
HG: Talk to me a little bit about what's happening with LNG prices in Europe jumping on fears of disruption. What do you say to your customers in Europe and those western energy groups that have spent billions investing in the Qatari energy space?
Al Emadi: I think I have an opposite assessment. I think this incident has proven really that Qatar is a reliable source of energy. Given whatever happened in the last week or two weeks, you know Qatar petroleum has issued a statement just yesterday, clarifying and making sure that people are aware that all the shipments, everything that we have in hydrocarbon and energy sector is working smoothly. We have not missed a single shipment during this time and we have been doing this for the last 20 years so this is as I said that's still business as usual in the oil and gas industries.
HG: So no disruptions to Japan, no disruptions to China?
Al Emadi: Not at all, not at all.
HG: So talk to me a little bit about what's happening in terms of the optics here because you have a large proportion of expats who've made their lives in Qatar who potentially have families elsewhere in the Gulf and you have Qatari nationals who are living in Saudi Arabia, living in the UAE and have made their homes there. Does this have long term implications, a crisis like this, not just for Qatar's economy but for the GCC as well?
Al Emadi: If you look at what's happened, sometimes a lot of people think that we're the only one to lose in this. I don't think so. Qatar is a very strong economy and it's a big economy. And I think if we're going to lose a dollar they will lose a dollar also. And I think there is a lot of business among everybody around us. So I think it's, I always like to have a win-win situation. But this incident it's very unfortunate to put a lot of life especially the human peoples in difficulties. Families are being disrupted around these countries. This is not the measure that we wanted to take, it was forced on us, it was taken by other countries. But I will say that Qatari is always open for business. We'd like the people that live here. They have all the respect and they have full accessibilities and actually getting in and out of the country as their previous life.
HG: So is this foreign policy at the expense of economic stability?
Al Emadi: I always say that you know whatever policy that you take it will have some sort of an impact on the economy. But this is something that we've not taken, we've not chosen, it was put on us from others.
HG: Finally, I have to ask you about how politics have really had an impact not just on economics but in terms of sports as well. There's been a recent report that those folks in Saudi Arabia who might be wearing Barcelona football jerseys that say Qatar Airways across the front could face jail time. What's your response to that?
Al Emadi: Well, I think I will leave this to the human rights and to the international community to look at these things.
HG: Do you think Qatar might follow suit?
Al Emadi: Well we are doing our homework very well, I know that for us you know stopping foods, cutting the borders, closing the airspace, those are all against international laws and that by itself says enough.
HG: And so no chance of folks in Qatar wearing an Emirates jersey being put in jail?
Al Emadi: You've been in Doha, you're more than welcome to wear one of those T-shirts.
HG: If you had one message to the current market, what would that be?
Al Emadi: What I can say, this is a strong economy, very strong market. We have the reserves; we have what it takes to defend if we have to do anything locally. As I said before, our other investment authorities, and Central Bank and Ministry of Finance, we have the reserves and all the tools, if we need to, we can take those steps. I have said our reserves and investment funds is more than 250 percent of GDP, so I don't think there is any reason that people need to be concerned about what's happening of any speculation on Qatar riyal.
HG: Your Excellency, thank you so much for joining CNBC.
Al Emadi: Thank you.