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DOHA (Reuters) - If this week's Arab summit didn't quite result in Arab unity as advertised, you could hardly tell from the smile on the face of the Qatari host.
Egyptian President Hosni Mubarak did not turn up but ridiculed Qatar as "small." King Abdullah of Saudi Arabia came only on condition that Iranian President Mahmoud Ahmadinejad made no surprise appearance, and Libyan leader Muammar Gaddafi publicly insulted Abdullah with a speech that soured the mood.
But the emir of Qatar, Sheikh Hamad bin Khalifa al-Thani, and his charismatic prime minister, Hamad bin Jassim, maintained high spirits throughout, and with good reason.
With its liquefied natural gas investments now paying dividends, Qatar has the second highest per capita income in the world, although its population has doubled in five years to 1.5 million. Only 250,000 of those are nationals.
Now the tiny Gulf state is seeking to match its wealth with a role as a regional powerbroker, as part of what diplomats and analysts say is a wider strategy for survival between a rock and hard place: Iran to the east and Saudi Arabia to the west.
"It was a complete backwater 10 years ago and it was said that Al Jazeera was the only game in town. That's not true any more," said one Gulf-based diplomat, referring to the Arabic TV station the emir set up after ousting his father in 1995.
Nonchalant displays of wealth are all around in the boutique-style array of architecture on show: an Islamic museum designed by I.M. Pei, the architect behind the Pyramide du Louvre, a building shaped like a giant vase, cuboid structures in mirror glass that play with the Gulf sunlight.
All this would have been at risk if the U.S. military base were not stationed in Qatar, said Abdel-Hameed al-Ansari, a newspaper commentator and professor of Islamic law.
"We can't protect the wealth here without America, since there are many regional and Arab designs (on Qatar)," he said. "The presence of the base is enough to create a form of deterrent. There was opposition to it, but it wasn't the majority."
Qatar declined to join other sheikhdoms in the United Arab Emirates (UAE) when Britain withdrew in 1972. When the UAE and Saudi Arabia made a border deal in 1974, Qatar found its only border was with Saudi Arabia, the leading power in the Gulf.
But it was not until plans to develop the gas fields were drawn up after the bloodless coup of 1995 that Qatar began to forge a distinct foreign policy.
When the United States said in 2003 it would pull forces out of Saudi Arabia -- a provocation to al Qaeda because of the Islamic holy sites there -- Qatar stepped up to host them.
Qatar has developed closer ties with other Western powers too. Qatar now supplies up to 20 percent of Britain's natural gas and Sheikh Hamad personally intervened to take major investments in Barclays Bank last year.
The former colonial power has a spanking new embassy in Doha's diplomatic district, a testament to Qatar's new importance to London. France is a major arms supplier.
Qatar has drawn close to Shi'ite power Iran since Shi'ites came to power in Iraq after the 2003 invasion and Iran's influence grew in Syria, Lebanon and the Palestinian areas.
Qatar says it is mediating between Iran and Arab powers such as Egypt and Saudi Arabia, where the ruling family feels threatened by Iranian power. The diplomat said that in the eyes of Washington and Riyadh, Qatar was "courting" Iran.
Qatar hosted Ahmadinejad in December 2007 during a Gulf Arab summit and again in January in a crisis meeting over Israel's war on Gaza, boycotted by Egypt and Saudi Arabia.
"Inviting Ahmadinejad was promotion, not mediation. But you only have to look at the map of the north fields to understand it: the Iranians could knock the economy out for 10 years easily," the diplomat said.
Sheikh Hamad made light of the controversy over Qatar's ties with Iran during the Arab summit. Ahmadinejad's absence was a form of Qatari "repentance," he joked to reporters.
Since the September 11 attacks in 2001, which alerted Western countries to religious radicalism in the Arab world, Qatar has tried to tone down the Wahhabism of its clerical establishment. Wahhabism is the puritanical school of Sunni Islam born in Saudi Arabia and traditionally followed in Qatar.
Unlike in Saudi Arabia, women can now drive cars in Qatar and clerics who serve as judges are now restricted to personal status courts. Qatar's rulers allow some hotels to serve alcohol to affluent Westerners.
An Arab businessman, who requested anonymity because of close ties to Qatari officials, described Qatar socially as half-way between Saudi Arabia and Dubai, a city known as a magnet for prostitutes and a seedy nightlife.
But he predicted the truce in relations with Saudi Arabia would not last because of the festering dispute over Iran. "The problem with Big Brother will come back," he said.
Editing by Jonathan Wright