Will graft claims hurt German affair with Qatar?

Source: Thomson Reuters Foundation - Wed, 1 Jun 2011 10:28 AM Author: Reuters Corrects value of Deutsch Bahn contract to 17 billion euros in section 2 PDF version: http://link.reuters.com/zub89r * 2022 Qatar World Cup should boost German companies * German building firms already working on infrastructure * Qatar taking strategic stakes in German companies * Political ties boost commercial opportunities By Josie Cox and Regan E. Doherty FRANKFURT/DOHA, June 1 (Reuters) - Crowds in Doha exploded in jubilation when Sepp Blatter announced Qatar had won the right to host the 2022 FIFA World Cup last December. Almost 3,000 miles away, a much smaller group also celebrated the surprise win. On the third floor of a grey office building in an upmarket residential district of Frankfurt, a team from German architecture firm Albert Speer & Partner GmbH (AS&P) popped champagne bottles and screamed with delight. Founded by the son of Nazi party official Albert Speer, AS&P designed eight of the 12 stadiums Qatar plans to use for the event, as well as the hulking 743-page, 5 kg (11 pound) bid book the country presented to football's governing body FIFA. "We were speechless and had a spontaneous party. It was just before Christmas and the best present any of us ever could have hoped for," AS&P partner Axel Bienhaus told Reuters. The architects were not the only Germans rejoicing that day. Dozens of German companies stand to benefit from Qatar's World Cup win; the successful bid should also help cement growing economic and political ties between Germany and Qatar. "Qatar's victory is in many ways a victory for Germany too," Bienhaus told Reuters. But now allegations by football officials that Qatar bribed FIFA members to give it the World Cup -- claims Qatar has denied -- might spoil the party. On Wednesday, the head of Germany's football federation Theo Zwanziger called for FIFA to re-examine how Qatar won the Cup. "There is a considerable degree of suspicion that one cannot simply sweep aside, and I must expect that awarding this World Cup under these conditions needs to be examined anew," he told German television, referring to Qatar. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TAKE A LOOK-FIFA corruption scandal [ID:nL3E7GU0IE] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> A PIPELINE OF BILLIONS However it won host rights for the world's biggest sports event, Qatar's ambitions are, by any measure, extraordinary. The government in the gas-rich state has allocated a whopping 40 percent of its budget between now and 2016 to infrastructure projects, including ${esc.dollar}11 billion on a new international airport, ${esc.dollar}5.5 billion on a deepwater seaport and ${esc.dollar}1 billion for a transport corridor in the capital, Doha. It will spend ${esc.dollar}20 billion on roads. Much of that was bound to be built anyway. But according to Bank of America Merrill Lynch estimates, Qatar will spend about ${esc.dollar}65 billion preparing for the tournament, including building nine new stadiums and renovating three at an estimated cost of about ${esc.dollar}2 billion apiece. Much of that is expected to be designed and built by German companies. Deutsche Bahn is already at work on a 17 billion euro, 320-km (200 mile) train line system in Doha, the capital. The project, one of the biggest foreign deals in German industrial history, will link the World Cup stadiums and won't wrap up until 2026, four years after the Cup. Germany's largest builder Hochtief will also construct the country's flagship project, Lusail City. The development, named for a desert flower, is the largest ever in Qatar. Owned by Qatari Diar, the real estate arm of the country's sovereign fund, it will transform a small mountain of sand alongside a highway in dusty northern Doha into a verdant 38-sq km (15 sq mile) city for 200,000 people. Hochtief will also build a separate rail network for Lusail City with 27 train stations, as well as Barwa Commercial Avenue, an 8.5-km (5.3 mile) shopping arcade with around 600 new retail units, 1,300 residential units and offices. Valued at ${esc.dollar}467 million, the project is due to be completed by the end of this year. And Hochtief has provided planning services for a 40-km Qatar-Bahrain causeway, linking the country to neighbouring Bahrain. Though the project has been long delayed, Qatar's successful World Cup bid may provide new momentum, with nearby Bahrain absorbing some of the tourist inflow in its hotels. Other contractors for the project include French group Vinci. When bids to build the new stadiums open, Hochtief "would certainly be interested", a spokesman for the construction group said. In December, Herbert Luetkestratkoetter, then Hochtief's Chief Executive, told Spiegel magazine that there was a "declaration of intent" that the company will be involved in the World Cup. German conglomerate Siemens and steel group ThyssenKrupp are also tipped by analysts and traders to be frontrunners in the race for contracts, up against everyone from South Korea's Daewoo to Luxembourg-based Arcelor Mittal. DOWN THE CHAIN And it's not just the big names. At an industrial trade exhibition in Qatar last month, German firms were the second most numerous after those from Qatar's Gulf neighbour United Arab Emirates. Many were small- and mid-sized companies from the country's famed "Mittelstand" -- firms like Weka, a tiny Stuttgart-based specialist manufacturer of aluminium door handles and locks. "There is huge potential in Qatar, obviously," said Weka's sales manager Matthias Imber, standing behind the counter at the company's exhibit at the mammoth expo. "We met this week with a hotel that will have 600 rooms. All of these rooms will need to be fitted with door handles. This is a great amount to start off with, and hopefully we will move on to bigger projects." At a stand touting the hair and hand dryers made by a company called Starmix, based in the state of Baden Wuerttemberg, sales manager Katrin Kotthaus sketched out the opportunity: to meet FIFA requirements, Qatar will need to increase hotel room capacity to 95,000 from 10,000 by 2022. The new stadiums, which will host an estimated 500,000 visitors, will also need thousands of dryers. "Wherever there is a public toilet, you need an electric hand dryer," she said, adding that Starmix had already supplied hair dryers for Qatari hotels including the Kepinski and the Grand Hyatt. "Everybody wants to come into this market. Everyone knows what is coming up for stadia and projects here. They have big plans," she said. German companies are there to help sell those plans, too. When the FIFA delegation visited Qatar last September to assess the strength of the country's bid, it was Berlin-based event planning firm Atkon that created the 39-minute interactive show to wow the visiting inspectors. Slogan: "Expect Amazing". Little wonder that trade between the two countries has boomed. Up until a little more than a decade ago, Germany lagged in terms of exports to Qatar. Since then it has passed Britain, France and other rivals. Two weeks after the FIFA vote in December, German magazine Der Spiegel predicted Germany AG could see an even bigger financial boost from the Qatar World Cup than it did from its own World Cup in 2006. A few weeks after the host nation decision was announced, remembers AS&P's Bienhaus, a colleague got a phone call from Qatari Emir Hamad bin Khalifa Al Thani "with a single message: 'I love my Germans!'"