Some cities in the world are well known for being unloved. People like to say that the best place to be in Brussels is on the train to Paris. But such is the oppressive heat, not to mention the oppressive political culture of Doha, that foreign residents cannot even find a witticism to disparage the Qatari capital.

As one expatriate put it: “It’s ugly and boring. My God, is it boring.” Despite all the money and free time enjoyed by locals, Doha is a destination that businessmen dread.

Unfortunately for a city which has ambitions to become an international financial centre, its reputation for the very opposite of cosmopolitan living is damaging its chances.

Vast natural gas and oil reserves have given Qatar, a small peninsula in the Gulf, a per capita GDP of $36,632, making its population of 900,000 richer than the British, French or Germans. The Qataris are so wealthy that many families never have to work, while others benefit from restrictive laws that require most businesses to be majority-owned by a citizen of the country. This has created an elite group of silent shareholders who cream profits from the toil of foreign workers.

Doha is a world away from Dubai, the emirate just 300km across the Gulf where sun, sand and (whisper it) sex have created a thriving city.

However, the two cities are finding that they are increasingly competing for the same prizes as both try to flex their economic power on the world stage. Doha announced its plan to bid for the 2016 Olympics last week, pipping Dubai, which is also rumoured to be interested.

This may be simply jostling among competitive neighbours, but a serious game of one-upmanship is being played by these two cities in their attempt to develop financial markets of global significance.

The secretive Qatar Investment Authority (QIA) has used its $50 billion wealth fund to buy a 14 per cent stake in the London Stock Exchange (LSE) as part of a broader strategy to develop the immature Doha exchange.

However, Dubai has gatecrashed this arrangement by taking a 20 per cent stake in the LSE. Qatar responded by buying 10 per cent of OMX, the Baltic stock exchange, which is seeking closer ties with Dubai.

Europe’s stock markets are embroiled in a tug-of-war between two emirates, both trying to diversify their economies before their natural resources run out. Both Dubai and Qatar have identified the money markets as a business to get into and they aspire to becoming the dominant financial centre in the Middle East.Doha wants to create a financial hub by enticing the world’s financial institutions to set up there. Two years ago, only three foreign firms were registered with the Qatar Financial Centre, a regulator-come-promoter of Doha’s money market. There are now 64 and Stuart Pearce, chief executive of the QFC, believes that this number could double by the end of next year.

“The Qataris know that to build this market they have got to allow firms in to compete, as this will bring in new ideas and new products,” Mr Pearce said. However, Doha is such an unappealing place to live that most foreign firms have had to offer staff big perks to go there. As a result, the Doha offices of most large banks, insurance companies and law firms are little more than fronts for operations in Dubai, London and New York.

These firms, which are the essential foundation of any attempt to build a sustainable financial community, want a slice of the estimated $130 billion that Qatar will spend on infra-structure in the coming years. They want a slice of the $200 billion that the QIA is expected to invest in the future – but they would rather do the work anywhere than in Qatar.

The Government is attempting to change Doha’s image by investing heavily in the city through both the Olympic Games and a building programme that could soon rival that of Dubai. It certainly has the potential to be one of the great cities of the world.

Unfortunately, the restrictions of dictatorship and religion are tighter in Qatar than in Dubai – local newspapers do not refer to a coup 12 years ago that saw the current emir remove his father, and Qatari men will not mention the names of unmarried female family members to other men.

This repressive environment is unlikely to foster an open financial market and the Qataris may be forced to project their wealth into other countries instead. The QIA has already caught London’s attention by backing a £10.6 billion bid for J Sainsbury, the supermarket chain, but governments are becoming nervous about this sort of investment and the Qataris could find even this outlet regulated.

In the competition to rule the Middle Eastern financial markets, Dubai is way ahead of Doha. Now all it has to worry about are the ambitions of an even richer neighbour, Abu Dhabi.

Doha by numbers

1 Doha is constructing the world’s first underground stadium. The $20 million (£9.7 million) project will be used during the 2011 Asian Cup football tournament and is a key part of the city’s 2016 Olympic bid

2 It is home to Education City, a sprawling 14 million sq m campus that is considered the Ivy League of the Gulf

3 With no income tax, Qatar and Bahrain rank as the two least-taxed states in the world

4 Doha became a focus of the invasion of Iraq in 2003 as the location of the US central command

5 Qatar’s wealth is built on oil and natural gas. The country has oil reserves estimated at 15 billion barrels. It also produces 23 million tonnes of liquid natural gas a year, destined mostly for Japan

6 Building is booming in Doha, with more than 50 towers under construction, including the Dubai Towers, a 400m skyscraper

7 Qatar lifted censorship on the media in 1995. Al-Jazeera TV was launched from Doha two years later

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