Qatar probe into labour abuses exposes its financial crisis

Qatari authorities showed unprecedented flexibility in dealing with the recent workers' strikes - in order to avoid scrutiny of its deepening financial crisis.

Doha issued the second largest debt instrument in its history In March

Liquidity crisis in Qatari banks after withdrawal of Saudi, UAE assets

Rights groups call on Qatar to amend labour law

DOHA - The Qatari response to human rights violations against foreign workers, who held few days ago a strike in the infrastructure projects of the 2022 World Cup, revealed the depth of the financial crisis in the tiny Gulf emirate.

The government liaison office in Qatar issued a confusing and elusive statement saying it was about "the results of the investigation into the peaceful strike of a number of workers."

The statement said that the authorities "opened an investigation into the strike carried out by workers in al-Shahaniya district August 4, culminating in the arrest of the signatories authorised by the concerned companies."

The statement claimed that "the reason for the delay in the payment of workers' wages was due to the presence of negative cash flow in the two companies which occurred due to the late payment by other elements in the supply chain," without providing details on those "elements" responsible for the liquidity contracted by the two companies or naming them.

Informed sources said that the companies that were not mentioned in the statement were government entities or firms that were directly supported by the government that is experiencing a severe financial deficit which it failed to overcome.

Qatari authorities were quick to pay the salaries of the striking workers to overcome the scandal and close the issue of the violation of workers' rights that pop up whenever Doha tries to hide it.

"All workers' dues were paid through the Wages Protection System on August 6, after talks with the stakeholders," said the government liaison office, adding that "any worker has the right to change the employer as a result of the two companies' violation of the labour law."

The evasive Qatari response came days after strikes by foreign workers at the construction sites for the upcoming World Cup.

Activists on social media have circulated since last week videos of unprecedented demonstrations of workers in Qatar against their dire situation.

The videos showed large crowds of migrant workers blocking one of the roads to stage a protest against the harsh living conditions and non-payment of their wages.

Qatari authorities showed unprecedented flexibility in dealing with the recent workers' strikes. Eyewitnesses said that riot police were escorting striking workers who had gathered in the Asian city of Doha without trying to disperse them by force.

A worker involved in the strike was quoted as saying that some Qatari men suspected of being senior Labour Ministry officials came to the protest site "to calm people down and told us they would find solutions.

Observers attributed the sudden behaviour of Doha, which usually does not tolerate any protest movement, to the desire to contain the crisis and avoid any media resonance that would likely reveal the size of the difficulties experienced by Qatar, especially after the boycott campaign imposed by its neighbouring Gulf states since 2017.

Qatar is the subject of a two-year Saudi-led economic embargo including bans on direct air, land and sea travel between the boycotting nations and Qatar, as well as sanctions after accusing Doha of sponsoring terrorism.

Although Qatar has repeatedly denied backing or funding terror groups, western diplomats have accused it of allowing the funding of some Sunni extremists, including al-Qaeda’s branch in Syria.

The Qatari banking system is experiencing a severe shortage of liquidity due to the withdrawal of a deposits and liquid assets by a large number of institutions and individuals from the Gulf Cooperation Council (GCC), especially from the UAE and Saudi Arabia.

The value of Qatar's domestic debt issuance jumped 45.57 percent year-on-year in the first half of the year due to the fallout from the boycott.

Qatar Central Bamk's domestic issuances in the first six months of 2019 were worth 28.75 billion riyals ($ 7.92 billion), compared with 19.75 billion riyals ($ 5.44 billion) in the same period last year.

Qatari issuances included government bonds, Islamic bonds and treasury bills.

The rise in domestic debt issuance in Qatar comes despite the Qatari Ministry of Finance's predictions of a surplus in the general budget of QR4.3 billion in 2019 as it expected to collect revenues of QR 211 billion against an expenditure of QR 206.7 billion.

Doha failed to deliver on previous promises to amend its labour laws because of its financial crisis, while focusing on funding more important projects than human rights such as supporting Islamist groups and investing in strengthening their external influence in some countries at conflict.

Despite some labour reforms over the past year, Qatari authorities have not abolished the “exploitative” kafala (sponsorship) system, which fuels abuses and gives employers excessive authority over workers, Human Rights Watch said in a recent report.

Qatari law continues to prohibit migrant workers from joining unions or taking part in strikes.

HRW called on Qatari authorities to amend the labour law to guarantee all workers the right to strike, freedom of association and collective bargaining.

“The workers in Qatar are going on strike in a country that bans them from striking or joining unions, and against the backdrop of a labour system that leaves them vulnerable to abuse and exploitation,” said Lama Fakih, acting HRW Middle East director .

“Abusive labour practices that lead workers to take such a risk will continue until the Qatari government makes good on its promise to repeal the kafala system,” said Fakih.

There are around two million foreign workers in Qatar, many employed directly or indirectly on vast World Cup infrastructure projects.

Qatari authorities have for months contained a group of migrant workers protesting against their poor working conditions and delayed wages, by preventing them from demonstrating.

Peaceful protests consequently turned into riots that resulted in material losses amid a complete blackout from various Qatari media outlets.

Despite spending a lot of money on propaganda and the systematic use of its media to improve the image of the gas-rich emirate, the Qatari regime has failed to hide its human rights violations at home and the scandals of suspicious operations in various countries of the world.

In addition, Doha has been spending lavishly for years to improve its image and strengthen its influence externally by buying banks around the world, football clubs in Europe, and real estate in the heart of London at exorbitant prices, which forced its economy to collapse gradually, prompting it to issue the second largest debt instrument in its history In March in a bid to remedy the liquidity squeeze that has plagued it since the boycott by its Gulf Arab neighbours.

Among the suspicious operations that have recently surfaced is an alleged “dodgy” multimillion-dollar deal Barclays executives struck with Qatari investors.

Among the investors who contributed to the bank's funding to avoid a government bailout during the 2008 financial crisis was Qatar Holding, the main arm of Qatar's sovereign wealth fund.

Richard Boath, an executive in Barclays’ investment banking division and three other former Barclays executives, including the then chief executive, John Varley, are accused of conspiring to secretly pay Qatar £322m, in return for billions of pounds of investment in the bank, thereby allowing it to avoid a government bailout during the 2008 financial crisis.

Qatar's huge bribes to win the World Cup are still controversial across the world.

Leaked documents obtained by British media revealed that Qatar secretly paid $400 million to FIFA representatives just 21 days before it was declared the host of the 2022 World Cup.

The documents also revealed that executives from the state-owned Al-Jazeera television channel signed a television contract to buy the rights to broadcast the World Cup matches, the largest offer presented to FIFA.

The contracts are at the heart of an investigation that has been reopened, involving FIFA officials suspected of receivinag bribes from Qatar to host the 2022 World Cup in a corruption scandal that toppled former FIFA president Joseph Blatter and other officials.

It is noteworthy that the Government Liaison Office later deleted the report of the investigation from its sites and those of Qatari newspapers.