Leaked Documents Expose Stunning Plan to Wage Financial War on Qatar and Steal the World Cup

A PLAN FOR the United Arab Emirates to wage financial war against its Gulf rival Qatar was found in the task folder of an email account belonging to UAE Ambassador to the United States Yousef al-Otaiba and subsequently obtained by The Intercept.

 

The economic warfare involved an attack on Qatar’s currency using bond and derivatives manipulation. The plan, laid out in a slide deck provided to The Intercept through the group Global Leaks, was aimed at tanking Qatar’s economy, according to documents drawn up by a bank outlining the strategy.

The outline, prepared by Banque Havilland, a private Luxembourg-based bank owned by the family of controversial British financier David Rowland, laid out a scheme to drive down the value of Qatar’s bonds and increase the cost of insuring them, with the ultimate goal of creating a currency crisis that would drain the country’s cash reserves.

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Rowland has long had close relationships with UAE leadership, particularly with Abu Dhabi Crown Prince Mohammed bin Zayed, known as MBZ. The bank is currently in the process of creating a new financial institution in cooperation with the UAE’s sovereign wealth fund, Mubadala, according to contracts and correspondence obtained by The Intercept outlining the terms of the deal. That project is separate from the Qatar operation, but it reflects the close relationship between the bank and the UAE.

The Qatar debt project would be grandiose in its ambitions. “Control the yield curve, decide the future,” reads the planning document, referring to a standard financial-industry graph showing a country’s borrowing costs for debt that is due at different dates. The height and shape of the yield curve is thought to be a reflection of how healthy an economy is and influences what financing options are available to a country.

Targeting a nation’s economy using financial manipulation would be a dramatic break from traditional norms of diplomacy and even warfare.

The plan the document presents is far-fetched and appeared to have been put together by someone with little or no experience trading in credit and currency markets, two industry veterans who reviewed the plan for The Intercept said. Both were granted anonymity because speaking to the press could jeopardize their employment. “I can’t believe they put this on paper,” one of the credit veterans added. “They are talking about colluding to manipulate markets.”

There is no conclusive evidence the plan has been initiated, nor that it will ever be launched — and the current pressure Qatar’s currency is under as a result of an ongoing blockade imposed by the UAE means those direct, overt steps may be more effective economic sabotage than anything the slides outline. Additionally, the publication of this story means the secrecy the plan says it requires no longer exists.

The Intercept reached Edmund Rowland, David’s son and CEO of the U.K. branch of Banque Havilland, at a mobile phone number listed in internal company documents obtained by The Intercept and asked about the status of the plan to short Qatar on behalf of the UAE, referencing the document. “We’ve never done anything,” Rowland said. Asked for more details, Rowland responded, “I can’t make any comment,” and hung up.

After the call with Rowland, Herbert Kozlov, a lawyer with the firm Reed Smith, reached out to The Intercept and said on behalf of the bank that it had not traded in Qatari bonds or credit default swaps, the financial products the plan proposed to use. “Banque Havilland does not trade in bonds, securities, CDS, or any other instruments of Qatar and it has no plans to do so,” Kozlov said, reading a statement. As for the plan to take down Qatar, he said, “The bank is a prestigious private banking group and will not be drawn into or make comments on what are political storylines.”

The metadata of the slide deck obtained by The Intercept indicates Vladimir Bolelyy, an analyst with Banque Havilland, as the creator. A call by The Intercept to Bolelyy’s receptionist was rebuffed. “He’s been told by Herb Kozlov not to contact this company,” said the receptionist, referring to The Intercept. The Intercept had not previously told Kozlov that Bolelyy was listed as the author of the document.

THE NEW PROJECT comes amid — and, if implemented, would escalate — a regional crisis that reached new heights in June, when the UAE and Saudi Arabia led a bloc of Gulf nations in blockading and cutting off diplomatic relations with Qatar. U.S. Secretary of State Rex Tillerson recently faulted the blockading countries for intransigence, but President Donald Trump has largely taken the opposite approach, emboldening Saudi Arabia and the Emirates at the expense of Qatar, which is home to one of the largest overseas U.S. military bases in the world. Tillerson traveled to the region on October 20 in the latest effort to defuse the crisis.

According to a report in the American Conservative, Tillerson previously told people close to him that he believed Trump had undermined him at the behest of Otaiba, the UAE ambassador, working through Trump’s son-in-law and White House adviser Jared Kushner, to whom Otaiba is close.

Both Kushner and Trump have reason to take sides with Otaiba in the dispute. The president has a Trump-branded golf course in Dubai and bragged at a press conference before his inauguration about a deal he was offered by a billionaire Emirati real estate developer.

The president’s attempts to get his hands on Qatari money have been less successful. In 2010, Trump traveled to Qatar with his daughter Ivanka Trump in an attempt to secure two different sources of investment funding. He was unceremoniously rebuffed by both.

More recently, Kushner sought a $500 million bailout from a Qatari royal as part of a plan to redevelop his badly underwater flagship investment in a New York office tower. The money for such bailouts often comes from the Gulf. As The Intercept first reported, the Qatari royal agreed to help bail out the Kushners, contingent on their ability to raise the rest of the funding they needed from other sources. The remainder of the funding, however, fell through, and the Qatari royal pulled out of the deal.

After the deal fell apart, Kushner helped orchestrate an unyielding response to the Saudi- and UAE-led economic blockade of Qatar, which Trump took credit for sparking with a hardline approach at a summit in Riyadh. Former top White House adviser Steve Bannon also credited Trump with stoking the blockade at a recent event in Washington. “I don’t think it’s just by happenstance that two weeks after that summit, that you saw the blockade by the United Arab Emirates, Bahrain, Egypt, and the Kingdom of Saudi Arabia on Qatar,” Bannon said at a think tank. “And I’ve said from day one, even with the situation in the Pacific, with northwest Korea, I think the single most important situation in the world, that’s happening right now, is the situation in Qatar.”

In late June, Trump waded further into the conflict with remarks aimed at Qatar during a private fundraiser, according to audio obtained by The Intercept. “We’re having a dispute with Qatar — we’re supposed to say Qatar,” Trump said, mocking the pronunciation of the country’s name by varying the syllabic emphasis. “It’s Qatar, they prefer. I prefer that they don’t fund terrorism.”

Regional tensions ratcheted up another few notches over the weekend, as Saudi Arabia’s Crown Prince Mohammed bin Salman, a close ally of both Otaiba and MBZ, arrested dozens of princes and other top officials in a swift consolidation of power and followed it up with a threat to wage war against Iran.

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THE ECONOMIC BLOCKADE has already directly impacted Qatar’s economy, decimating trade, travel, and finance flows in and out of the country. Qatar’s sovereign wealth fund recently brought $20 billion back to the country to prop up the country’s banking system, and the country’s currency is already showing signs of financial stress.
The cost of insuring Qatari debt has risen some 70 percent since May, the stock market is down 24 percent this year, and yields are rising ahead of a bond offering to be made by the end of the year. Ahead of that debt sale, the country abruptly changed how it calculates how much foreign currency reserves it has, a key metric investors use to assess how risky it is to buy a country’s debt. The move doubled Qatar’s foreign currency reserves and came as a complete surprise to international officials, who normally discuss and review foreign reserve accounting before they are publicly announced. Instead, in this case, Qatar simply released a six-word statement changing its accounting. Despite the unexpected move, the Wall Street Journal noted that “Qatari bond yields are still relatively low for an emerging-market country, reflecting the country’s vast oil reserves and attendant wealth.”

Banque Havilland is best known for its role in a previous incarnation in the bankruptcy of Iceland, from which it sprung as a new bank out of the Luxembourg branch of the Icelandic bank Kaupthing, and for a willingness to work with controversial clients, such as Nigerian tycoon Kola Aluko.

David Rowland launched Banque Havilland with the help of his friend Prince Andrew. Rowland has been an active ally of the conservative British Tory Party and is said to be close to David Cameron, the former British prime minister. Rowland was said to have paid £20,000 — about $23,000 — for a portrait of Cameron at a Conservative Party fundraiser and was briefly named treasurer of the Tories in 2010, before withdrawing amid controversy.

The bank is named after the Rowland’s family home on the tax-haven island of Guernsey, Havilland Hall. Though Edmund Rowland runs the bank, internal documents show his father David remains involved. Documents marked “secret and confidential” outlining the plan for the financial attack against Qatar were being circulated between Banque Havilland and the Emirati embassy in Washington as recently as late September.

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A PRIVATE FINANCIAL institution like Banque Havilland would be very familiar with the first step of the plan as laid out in the outline: creating a new offshore investment fund constructed to obscure its links to the UAE. The fund would hold Qatari bonds already owned by the UAE, as well as additional debt the fund could buy. The fund would also buy credit default swaps, which would rise in value as Qatari debt sank.

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Source: theintercept

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