Oman: Neutrality Under Pressure

Between Iran and Saudi Arabia

The Sultanate of Oman has always taken care to maintain a balance in its relations with Saudi Arabia and Iran, which has enabled it to act as a mediator in regional disputes. However, this independence may be compromised by the mounting geopolitical tension, particularly after the US withdrawal from the agreement on Iran’s nuclear program, all the more so as the sultanate has its own problems on the home front.

“Confrontation is not in the interest of any of the parties involved,” the Omani foreign minister declared on 18 May 2018 in a press release reacting to President Donald Trump’s announcement that he was withdrawing from the agreement on Iran’s nuclear program. The sultanate had played a key role in the conclusion of that historic agreement by playing host to the secret negotiations between the USA and Iran. Caught in the middle of the rivalry between Iran and the Sunni countries of the Gulf, Oman has tried its best to maintain a balance, hoping the agreement would defuse the tensions in the region. In vain. The US withdrawal has dashed all hopes of mediation and placed Oman at the center of the escalation.

Intermediary Between Iran and Gulf Countries

Neutrality and mediation are constants of Omani foreign policy. Ever since he ascended the throne in 1970, Sultan Qaboos has sought to pacify relations between the countries of the region, a policy which results from the history of the sultanate and its singular geographic location. Its small dimensions and its position on the Strait of Hormuz through which some 40% of the world’s hydrocarbon shipping travels, and just a few kilometers from the Iranian coastline, make it especially sensitive to regional tensions and the hegemonic temptations of its powerful neighbors.

Ever since the Gulf Cooperation Council (GCC) was created in 1981, Oman has constantly warned its fellow members against making the organization an anti-Iranian coalition. Fearing an excessive Saudi influence, the Sultanate has tried to maintain an arms-length relationship with the GCC, voicing reservations in particular about the plans for unification and a common currency.

In its foreign policy, the sultanate has on several occasions distanced itself from its neighbors by taking very independent stands. It is for example the only Gulf country to have maintained diplomatic relations with Bachar al-Assad’s Syria after the Arab Spring, and the only one to have refused to join the Arab coalition forces in Yemen, led by Saudi Arabia. Nor did it adopt the Qatar boycott, stepping up on the contrary its trade relations with that country.

But it is regarding Iran that Oman’s foreign policy differs the most from that of its Gulf allies. Indeed, the two countries have enjoyed a privileged relationship ever since the Shah helped the Sultan put down the Dhofar Rebellion in the 1970s. The links between them have never ceased to grow stronger. Since 2014 Tehran and Muscat have regularly held joint maneuvers in the Strait of Hormuz and have signed many cooperation agreements in the economic and energy areas. Thanks to this special relationship, Oman has been able to play the vital role of the conduit between Iran and the Arab countries of the region, notably during the Iran-Iraq war, and later, above all, during the secret negotiations between Tehran and Washington which led to the signing of the agreement on Iran’s nuclear program on 14 July 2015. Oman has also hosted several secret negotiations concerning the conflicts in Syria and Yemen.

Ambitious United Arab Emirates

Saudi Arabia and the United Arab Emirates cast a jaundiced eye on the cordial relations which Oman maintains with Iran and Qatar. Indeed, they feel that Muscat does not take adequately account of their security concerns, in particular by allowing the weapons supplied by Iran to the Houthis in the Yemeni civil war to transit through their territory.

Saudi Arabia and the Arab Emirates have lately stepped up their political and economic pressure on the sultanate to force it into line. King Salman’s decision in December 2016 not to attend the GCC summit in Oman already illustrated the cooling of relations between the two countries. One also hears talk in Oman of economic pressures which take the form of delays in signing this or that contract, or added constraints on trans-border trade. In particular, the Emirates are said to have made every effort to slow down the construction of the rail line between Oman and the other GCC countries, which had a negative impact Omani firms.

Similarly, the Omani are quite worried about the regional ambitions of the Emirates, which they have dubbed “little Sparta,” whose increased activity throughout the region makes them feel more and more surrounded. Indeed, the Emirati troops have made huge advances in Yemen, in the Mahrah region along the border with Oman and around the southern port cities like Mocha, Aden, Mukalla and Socotra. The Emirates have also projected their presence as far as the coast of the Horn of Africa and the Indian Ocean. Their increased investments in Oman itself, in the Al Batinah border region and on the Musandam Peninsula have the Omani worrying about an economic and political takeover. Will they have to turn to China and India?

Turn to China and India?

In the face of this increase of Emirati power in the region, Oman is trying to take better advantage of its strategic position to ensure its economic independence. Indeed, the Persian Gulf has in recent years become a locus of exacerbated competition for control of the trade routes between Asia and Europe. China has made many of the harbors in the region focal points in its plans for a new Silk Route. It has invested massively for several years now in the development of Dubai, Gwadar in Pakistan, Chabahar in Iran but also Duqum and Sohar in Oman. By the same token, this strategy has enabled it to secure its access to the hydrocarbons on which it is so heavily dependent—indeed, China is the number one buyer of oil and gas in the region. India as well is seeking to assert its presence. A glance at the map shows that Oman has the potential to occupy a strategic position. The ports of Sohar and Duqum in particular could enable ships to avoid the highly sensitive Strait of Hormuz and connect directly with the Arabian Peninsula by rail.

The massive Chinese investments in the Sino-Omani industrial zone in the port of Duqum are a sign that China is fully aware of the Omani potential. Similarly, only a few days after President Trump’s withdrawal from the nuclear agreement, the Omani foreign minister Yusuf bin Alawi met with his counterpart in Beijing to reconfirm the economic and political cooperation between the two countries.

However, the Omani harbors have a long way to go before they can compete with the Emirati installations at Jebel Ali and Khalifa Port. But above all, Oman appears to be increasingly fragile economically and politically. The US withdrawal from the Iranian nuclear agreement may call into question its plans to develop trade relations with Iran. The project for a pipeline between India and Oman via Iran may also be compromised. Added to which are the consequences of the drop in oil prices on the country’s domestic stability, since 80% of the national income depends on hydrocarbons. With youth unemployment at 49% and a budget deficit at 21%, there is a major risk of social unrest.

Up till now, his popularity has enabled Sultan Qaboos to nip any nascent protests in the bud, but his illness and the lack of a legitimate heir to the throne leave unanswered many questions regarding the future of the sultanate. These economic difficulties are going to make Oman increasingly dependent on the investments of its powerful neighbors and as a result more vulnerable to outside pressures. Thus far, the sultanate has been very reluctant to accept financing from countries of the region for fear this would diminish its political independence. Nonetheless, in January 2018 it did accept 210 million dollars from Saudi Arabia for the development of the harbor at Duqum, in what seemed an infringement of this principle. While Europe strives to save what can be saved of the Iranian nuclear agreement, it should not neglect to support those who could be its natural allies in the region. Helping Oman to maintain an independent and balanced foreign policy is essential for the interests of Europe.