Qatar’s mediation Role and its Impact on economic diversification efforts

The State of Qatar is five years away from its Vision 2030 benchmark, a long-term national plan introduced in 2008 to address the country’s economic, social, and environmental challenges. Central to the plan is the goal of building a knowledge-based economy with less reliance on fossil fuel revenues. Although much of this transformation is expected to be driven domestically, foreign direct investment (FDI) remains a core pillar of Qatar’s development strategy and an essential source of income. In the first quarter of 2025, the non-hydrocarbon share of gross domestic product (GDP) rose to 63.6% from 62.6% in the first quarter of last year.

While executing the national vision, Qatar has also built a reputation as a key diplomatic player in the region through its mediation and conflict resolution efforts. Since the late 1990s, it has facilitated negotiations between parties across multiple continents, such as the Darfur Peace Talks in 2008. While Qatar’s mediation role has elevated its global profile, it may inadvertently distract its strategic focus away from domestic priorities, particularly FDI attraction, green transition, and broader economic diversification goals.

In Qatar and across the wider GCC, FDI has been a major source of economic growth, shaping the region as an attractive destination for international business and foreign labour. According to the Investment Promotion Agency Qatar, the country attracted USD 2.74 billion in FDI in 2024, creating approximately 9,348 new jobs across diverse sectors. FDI also promotes international partnerships and economic cooperations, encouraging further investments, especially in areas that produce jobs requiring high skill sets. In 2024, Qatar earned USD 1.4 billion in FDI from Japan and China in high-growth fields, such as information technology and automotive ventures. Also, more recently, Qatar has sought to introduce sustainable technologies in its public infrastructure, channeling FDI into projects that improve the country’s green transition and promote low-carbon urban growth.

While Qatar’s active mediation role may enhance its diplomatic image and improve investor confidence, it can also produce unintended challenges that affect the performance of non-oil sectors. For instance, Qatar’s central role in the Hamas-Israel mediation efforts in 2023 has led to significant reputational backlash. In response to these pressures and safeguard investor confidence, the government introduced some legal reforms, including the Bankruptcy Law and Commercial Registration Law, to restore economic momentum. These reforms were especially critical after the country’s FDI dipped to -$474 in 2023. More recently, the Iranian missiles targeting the American airbase in Qatar unleashed a new wave of uncertainty across the region. Numerous experts have warned that the event could deter the influx of FDI, posing a threat to Qatar’s diversification agenda.

The Director for GCC countries at the World Bank, Safaa El-Kogali, stressed that foreign investors will likely adopt a wait-and-see approach until stability is restored. She also emphasized that conflict-induced inflation could negatively affect both investor sentiment and consumer spending. In response, the Qatari government may be compelled to allocate more resources toward reputation management and expand its soft power investments abroad to restore investor confidence. However, as regional perceptions of risk shift, Qatar may face some disruption in foreign talent recruitment and some workers living in the country might decide to relocate. A reduction in foreign talent may lead to project disruptions and delays, particularly for ongoing green transition initiatives. The expertise of renewable energy engineers, consultants, and technical workers are essential for delivering complex infrastructure projects. A reduction in this workforce may lead to project delays or cancellations, ultimately slowing Qatar’s ability to meet its green transition goals.

The vulnerability also extends to low-income migrant workers, whose labour underpins Qatar’s infrastructure and major projects. When project deliveries are frozen or contracts canceled, these workers face financial instability and disruption in their living arrangements. Losing their jobs can result in lost income, inability to access affordable housing and healthcare, and potential forced return to their home countries. Therefore, as a starting point to ensure protecting worker welfare, decision makers and law enforcement bodies should closely monitor companies’ commitment to and compliance with the Wage Protection System (WPS). Qatar should also consider establishing a social protection fund, similar to the Omani model, to provide migrant workers with end-of-service benefits and financial support during periods of economic uncertainty. Aligning such measures with international labour standards, as set by the International Labour Organization (ILO), would improve Qatar’s reputation and its commitment to fair labour practices, while also enhancing investor confidence and promoting labour market stability over time.

Considering the rising regional instability, it is essential that Qatar balances its foreign policy ambitions with a renewed focus on domestic economic resilience, particularly in the areas of foreign direct investment, green transition, and social sustainability. These pillars are critical to driving growth in the country’s non-oil sectors and advancing the government’s vision of a sustainable, knowledge-based economy. Highlighting Qatar’s green transition commitments alongside global diplomacy efforts could help enhance its international image, not only as a peace broker, but also as a hub for sustainable development & regional lead on fairer labour practices.