After its attempt to benefit from the economic war against Qatar, Banque Havilland got its license revoked by the European Central Bank (ECB) last month. The story of the Luxembourgian bank under British management could be part of a spy movie or an anti-capitalist pamphlet. Yet, it also provides an interesting case study of the role of private companies in economic warfare.

Banque Havilland is owned by the Rowland family. David Rowland, one of the bank’s founders, is known for being an influential donor of the British conservative party and a financial advisor to Prince Andrew. Mr. Rowland also entertained good relations with sheikh Mohammed Bin Zayed, the de facto ruler of the UAE. So, in addition to offices in Luxemburg, Monaco, Liechtenstein, and Switzerland, the bank also maintains an office in Dubai. As a result of the close relations to Emirati royalty, one of the bank’s employees started figuring as a special advisor to the sheikh in 2017.

Later that same year, the UAE, its close ally Saudi Arabia, Bahrain, and Egypt started an economic war against Qatar. The coalition banned Qatari ships and aircraft from using its territory, while Saudi Arabia also closed its shared (and Qatar’s only) land border. The coalition, which was later joined by a handful of other countries, imposed a de facto blockade on Qatar, one of the oldest economic warfare tricks in the book.

The exact trigger of the conflict is unclear, but Qatar’s independent course and close ties to Iran had earlier caused diplomatic spats. This time, the coalition accused Qatar of sponsoring terrorism and being too close to Iran, which was reflected in the demands of the coalition for stopping the blockade. At first, the demands consisted of thirteen points that required Qatar to get in line with its neighbors’ foreign policy, stop alleged financing of terrorist organizations, wind down its relations with Iran and - to a lesser extent - Türkiye, and shut down news channel Al Jazeera. Although the demands were moderated to six principles later on, Qatar did not back down.

Nevertheless, the blockade hit hard. Qatar is a peninsula and the land border with Saudi-Arabia, which was the main point of entry for its food imports, was shut. At the same time, global shipping companies had trouble getting goods in and out of the country as they were refused access to the neighboring countries’ ports if they were going to or coming from Qatar. However, in the beginning of 2021, the Saudi-led coalition realized that Qatar would not give in and reconciled. Soon after, the borders reopened and diplomatic relations were restored.

Where others saw peril, Banque Havilland saw opportunity. In the early days of the crisis, the bank came up with a strategy to harm the Qatari economy even more and offered its help to UAE officials. Specifically, the bank proposed to create a new investment fund that would have no visible links to the UAE and stock it with Qatari bonds, as well as with credit default swaps that would serve as an insurance against the devaluation of the bonds. The fund would then trade the bonds for low prices with another fund, also controlled by the bank, to create the illusion that the market was dumping Qatari assets. The bank expected that other investors would panic and sell off their Qatari assets. Since these assets were denominated in Qatari riyals, a fire sale would decrease the demand for the riyal and lead to downward pressure on its exchange rates. As the riyal is pegged to the dollar, the Qatar Central Bank would have needed to buy riyals with its foreign currency reserves. Consequently, Qatar’s reserves would decrease rapidly, and foreign investors and trade partners might start to worry about Qatar’s capacity to pay. As Qatar already faced higher import prices, which by itself contributes to inflation and downward pressure on its currency, and a restricted export of its raw materials due to the blockade, the attack on the riyal would have significantly added to the economic crisis.

The final stage of Banque Havilland’s strategy was to take advantage of Qatar’s economic distress by starting a PR campaign questioning the country’s capacity to host the FIFA World Cup in 2022 and to convince the football organization to let the neighboring countries co-host the event. Losing the World Cup would have been the ultimate humiliation for ambitious Qatar.

In return for its services, Banque Havilland would get a fee for the transactions between the two funds, but it is unknown whether the UAE or its allies ever set the plan in motion. The strategy did have consequences for the bank, however, as an article by The Intercept based on leaked documents caught the attention of the UK’s Financial Conduct Authority, which fined the bank for 10 million pounds. In addition, some of its employees and manager also got fined and the bank was banned from providing financial services in the UK. Because of the conviction and some other offences, the ECB decided to revoke the bank’s license.

The story of Banque Havilland is an example of how, in a globalized economy, private companies can play a role in economic warfare and statecraft. William Norris has argued that the success of economic statecraft hinges on the control of the state over the commercial actors it needs to manipulate in order to affect the economy of its adversary. In this example, the UAE would have needed an offshore company to hide the Emirati ownership and make the staged transactions of Qatari bonds convincing to other market players. The UAE therefore would have required the help of a private company to set up the two funds. What is striking, however, is that it was the private company, Banque Havilland, that approached the UAE, offering its illegal services to wage economic war against Qatar. The company didn’t get caught in the crossfire by accident, nor was it pressured into cooperation. Instead, the bank reached out to one of the belligerent countries and offered its services in the same way as a mercenary or an assassin would.

At the same time, this story is a cautionary tale for companies that want to make a quick buck out of economic wars. Qatar and its neighbors reconciled, the Word Cup took place as foreseen and the Saudi team even participated, resulting in a surprising victory against Argentina. Banque Havilland, on the other hand, is now banned from financial activities in the eurozone and the UK.