THE financier Stuart Pearce used to take a cab each morning to his windowless office in Mayfair where he would stare out over 150 traders surfing the wave of money that crashes over London each day. These days he can see real waves. His new office looks out over the sparkling waters of the Gulf that are studded with tankers so large they look like islands.

At first glance, you might be forgiven for thinking that Pearce is the latest Briton to buy into Dubai’s desert dream of high returns and the high life. But this is not Dubai, or anywhere else in the United Arab Emirates. It’s Doha, capital of Qatar.

Do-where? It’s a question many still ask but Pearce believes it won’t be long before this Yorkshire-sized patch of desert that sticks out of Saudi Arabia into the Gulf like a thumb will be better known, in financial circles at least, than its razzle-dazzle neighbour, Dubai.

“This place can become the preeminent financial centre for the region,” said the 56-year-old former head of HSBC investment management, who now runs the Qatar Financial Centre Authority, the centrepiece of the country’s efforts to lure western financial talent.

Can sleepy Doha really overtake powerhouse Dubai with all its banks, private-equity houses and sovereign wealth funds? Last week The Sunday Times spoke to senior government officials and the country’s powerful sovereign wealth fund, the Qatar Investment Authority (QIA), as well as key western investors. They set out a vision which, if successful, will make Qatar the Switzerland of the Middle East: small, powerful - and very rich.

When the mercury hits 50C, the air-conditioning in Yousuf Hussein Kamal’s office struggles to cope but if the finance minister was feeling the heat, he wasn’t showing it. Over coffee and dates, he coolly outlined the nation-building programme that, he said, would “make us the best”.

Two mini-cities - Lusail and Pearl - to house up to 200,000 people are rising on reclaimed land. Fast-growing Qatar Airways will double in size in the next few years. Eight-lane motor-ways are carving streaks across the desert, linking vast new ports with research and science parks that are attracting top European and American companies, including Exxon Mobil, Microsoft, Shell and Rolls-Royce.

The Qatar Financial Centre Authority is up and running and has already attracted the likes of Barclays, Goldman Sachs, Citi-group, Morgan Stanley, Credit Suisse and JP Morgan. The local stock exchange, the Doha Securities Market, is established.

With £35 billion already invested in blue-chip assets overseas, the QIA, which Kamal oversees, is the ninth-largest sovereign wealth fund in the world. It owns 7% of Credit Suisse and has sunk billions of pounds into Britain, snapping up Chelsea Barracks for £600m, buying 80% of the £2 billion Shard of Glass office development at London Bridge and taking a 15% stake in the London Stock Exchange.

The fund will “increase dramatically in the coming years as we diversify,” Kamal said, and Britain is a prime target for fresh investment. “I met Gordon Brown this month and he is encouraging us,” Kamal added. The QIA is considering investing in the Royal Bank of Scotland and wants to increase its stake in the LSE.

The bill for this spending spree is about £150 billion. It is an almost ungraspable figure – double every single foreign dollar invested in China last year. But it scarcely raises an eyebrow. “We have the money,” Kamal grinned.

According to the latest IMF figures, Qatar, which was an impoverished pearl-diving economy until oil was discovered there in the late 1930s, is now the richest country in the world on a per-capita basis. Oil production, which was 400,000 barrels per day a decade ago, will reach 1.1m barrels by 2010.

Liquid natural gas production, 31m tonnes a year now, will soar to 77m tonnes by 2010, making Qatar the world’s biggest exporter. GDP is expected to reach £55 billion by 2010, making the country’s 200,000 local-born residents richer, on paper at least, than anyone else.

It is this boundless wealth that Qatar believes will be a key factor in the race to become the Gulf’s financial hub.

Investors agree. “It guarantees long-term sustainability,” said Christopher Jobson, managing partner of the international law firm Eversheds, who moved to Qatar three years ago to set up the firm’s operations in the Middle East.

“Dubai has had a great 15-year run but its oil is almost gone and the economy is based on property, tourism and shopping - with a financial sector bolted on. You can’t build a future like that.”

But cash alone will not be enough to derail Dubai. So ministers, working under the country’s ruler, Sandhurst-trained Sheikh Hamad bin Khalifa al-Thani, are setting out to learn from the mistakes they believe Dubai has made as it has diversified away from oil.

There will be a single financial regulator, based on Britain’s Financial Services Authority, rather than myriad international and local bodies. Ministers promise that western firms will be able to set up insurance and wealth management operations and deal in local currency, the riyal, rather than in foreign exchange alone.

Qatar wants to build on its investment in the LSE to become the first Gulf state to offer companies the chance of dual-listing on the Doha exchange and the LSE. There are no restrictions on doing business with any companies in Qatar or abroad, including Israel. Publicly at any rate, Dubai does not deal with Israeli companies.

By building infrastructure that vastly exceeds projected demand, ministers promise that Qatar will avoid the chronic congestion that plagues Dubai. They are eschewing mass, western tourism in favour of upmarket, local cultural attractions.

The world-class £1 billion Museum of Islamic Art, designed by the Chinese-born American architect IM Pei and run by the emir’s daughter, Sheikha Mayassa, opens this autumn. “We don’t want that low tourism, with cheap operators,” sniffed one minister.

They point out that Qatar is a sovereign state, unlike Dubai, which is one of seven emirates that answer to the UAE federal government in Abu Dhabi. Officials won’t say so publicly but they also believe that Qatar’s strict interpretation of Islamic laws - alcohol sales are restricted and prostitution is frowned on - mean that Qatar is less likely to become a terrorist target.

This week Britain and America raised their assessment of the risk of terrorist attack in the United Arab Emirates, amid increasing intelligence of a potential Al-Qaeda strike.

The pitch is clear: we’re richer, more pukka, better planned, more independent and safer. Mix our petrodollars with the genie of western financial expertise and - poof! - behold, the Gulf’s new capital of capital.

Nobody doubts that Qatar has the cash, or that it can deliver world-class infrastructure. Qatar Airways is giving the dominant regional carrier, Emirates, a run for its dirhams. The science parks boast some of the best labs and offices anywhere, and the Pearl and Lusail cities are of glitteringly high quality.

But Qatar has a long way to go to convince investors to bid Dubai goodbye. It has yet to deliver the promised laws regulating business and show that they work. The Qatar Financial Centre Authority may be enjoying a strong start but it can’t compete with the list of blue-chip companies now in Dubai.

“There are still ‘suitcase bankers’ flying into Qatar from Dubai on Sundays and going back on Thursdays,” one local banker pointed out. And until new hotels, notably the Shangri-La, the W and a second Four Seasons arrive, the city will remain, as one local puts it, “suicide-inducingly dull”.

And then there is the big question: does Qatar have the exper-tise to claim a seat at the top table of international finance? The QIA may be among the top 10 sovereign wealth funds but its reputation – and, by extension, that of Qatar as a whole – was severely tarnished recently when it made a £10.5 billion takeover bid for supermarket group J Sainsbury and negotiated very publicly for almost six months only to pull out at the eleventh hour, complaining the price was too high. One critic accused the fund of slithering “lower than a snake’s belly”.

In his office on Doha’s sweeping corniche, one senior QIA official conceded that the Sainsbury deal was “problematic”. But he said: “When you do business in an open way - and we want to be as open as we can - someone somewhere is always going to criticise you. We’ve moved on.”

This month the QIA sacked its British adviser, financier Paul Taylor, who coordinated the Sainsbury bid. Some see the move as a positive break with the past, while others regard it as further evidence of the financial immaturity of a country that shook off its colonial shackles only a generation ago. “Dumping the adviser rather than taking responsibility themselves is weaselly,” said a City source.

Perhaps. But it’s early days. Like the youngster it is, Qatar is learning fast and, with all the money in the world, even its critics concede that there is little it cannot do.

A sign of just how determined the government is to dominate such a fast-growing region can be found in the office of the emir’s wife, Sheikha Mozah. Her favourite sculpture, that has pride of place, is of a foot kicking through a wall. It may be small but Qatar is determined to kick - and punch - above its weight.

POWERED BY GAS

QATAR became an independent state on September 3, 1971, after centuries of domination by the British and Ottoman empires. Britain initially used the emirate as a staging post en route to India but the discovery of oil in the late 1930s changed its interest in the country.

Qatar played a significant role in the 1991 Gulf war, supporting the American-led coalition. In 2003 it was the base for the command centre for the invasion of Iraq.

Emir Hamad bin Khalifa Al-Thani has ruled Qatar since 1995, when he seized control from his father.

The country’s primary income is derived from the export of oil and natural gas. Its proven reserves of natural gas are 25 trillion cubic metres, or about 15% of the world’s total known reserves.

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