Scotland may turn to Qatar funds for investment

From an economic standpoint, the prospect of a deal being struck between Holyrood and Doha could make perfect sense.

Salmond's Scottish Nationalist Party (SNP) has made much of the need to upgrade the country's creaking infrastructure, but, put simply, it does not have the capital.

And through its concerted criticism of botched deals under the Labour government, the SNP has effectively ruled itself out of making use of conventional private finance initiatives.

For Qatar, investing in projects such as a new Forth Road Bridge, or a proposed undersea electricity cable, could provide up to $17bn worth of rock solid assets. The more pressing question for Qatar's leaders, perhaps, is whether the state wishes to involve itself in the internecine world of Scottish politics.

While the scenario might have sounded unlikely a year ago, Qatar faces the prospect of occupying a central role in any Scottish debate over how national projects are financed. In an editorial accompanying the news, the Scotland on Sunday newspaper articulated the nature of the risk that Qatar could be about take.

'Anyone who doesn't think Middle Eastern money should pay for such projects should grow up: We live in a global economy in which a riyal is every bit as suitable for investment as a dollar or yen. If Arab cash comes cheaper than more conventional borrowings, it'll be all the more welcome.'

Secure investment returns

While the leader obviously supports the idea of Middle Eastern investment, it is telling that a defence has to be made for this eventuality. Competing politicians will look to use any deal with Qatar as political leverage against Salmond and the SNP.

Nevertheless, if Qatar can look past the political posturing of others, it could have the opportunity to enter into a partnership that should offer a stable return and excellent security.

That the world is looking towards the Gulf for such projects is testament to the region's growing strength. Qatar's sovereign wealth fund is estimated to be worth $60bn and is expected to double by 2010. The opportunity to function as a banker to the West is unprecedented.

While investing in foreign governments might incur political parochialism in the short term, if Qatar can remain magnanimous in its lending then further, similar European opportunities are likely to present themselves.