Oman Faces an Unstable Future

Muttrah, Oman

Muttrah, Oman

By Henry Lewis

Photograph of Muttrah, Oman courtesy of National Geographic

Often overlooked, Oman has played a unifying role in Middle Eastern affairs. Neither Sunni nor Shi’a, a majority of the country’s population adheres to the Ibadhi strain of Islam. This religious difference has enabled Oman to bridge the overwhelming sectarianism gripping the region. For example, Oman maintains cordial relations with Iran and helped to facilitate the start of the recent nuclear talks. At the same time, the Sultanate remains a member of the Sunni-dominated Gulf Cooperation Council. Oman also bridges other geopolitical divides. Oman holds a tight economic relationship with China, while still closely collaborating with Japan. Despite this external unifying role, Oman faces many internal challenges ahead. Political and economic concerns could threaten Oman’s domestic stability in the near future.

At first glance Oman appears politically stable, yet this could prove ephemeral. Sultan Qaboos bin Said has kept Oman under an iron thumb since deposing his father in 1970. Qaboos maintains order through strict control over the country’s security forces. In fact, Oman spends the third highest percentage of GDP on defense, more even than Israel or America. Nevertheless, tremors loom under the surface. At the 2011 height of the Arab Spring, protesters challenged Qaboos. While he managed to ward off the threat with promises of reform, tensions still remain. Further, although it feels disrespectful to speculate on a man’s health, it bears mentioning that Qaboos is 74 years old. He recently received medical treatment in Germany for an unspecified ailment. Without Qaboos at the helm, factions could emerge over the still undetermined succession. The new Sultan may have a harder time keeping the 2011 dissidents in check. In addition, Yemen’s civil war across the border threatens Oman. As the Saudi campaign escalated last spring, nearly 3,000 Yemeni refugees flocked to Oman. The continuation or escalation of Yemeni unrest can only have a destabilizing impact on Oman. Calls for reform, uncertain leadership succession, and Yemen’s civil war all threaten Oman’s political stability.

Additionally, Oman faces economic challenges. Again, upon initial inspection the country seems economically secure. Qaboos’ subjects have a high standard of living, with a GDP per capita on par with Canada and Denmark. Further, debt makes up just 4.70% of Oman’s GDP- the third lowest proportion of any country. Nevertheless, other indicators bely this rosy outlook. Like most petroleum producers, the sultanate has suffered from the recent decline in oil prices. However, Oman has fewer cash reserves than its loaded Gulf neighbors, making it difficult to keep up with the Sauds during an era of belt-tightening. Further, unlike its regional counterparts, Oman’s fuel deposits largely consist of heavy-oil, which is more difficult to exploit. China’s recent economic blip also has a negative impact on Oman’s economy. As noted, China ranks as Oman’s largest trade partner. While Chinese demand has declines, Oman has lost sales from its key customer. On the whole, declining oil prices and a weakening Chinese economy both hinder Yemen’s financial status.

In the face of these challenges, Oman faces an uncertain future. From a liberal Western perspective, the best case scenario involves democratic reform. Post-Qaboos Oman would implement the proposals that the 2011 protesters sought. The country could remain a useful intermediary with Iran while still democratizing internally. In the worst case alternative, the country dissolves into factional conflict over the succession. Centralized control evaporates, the economy tanks, and various warlords jockey for position. This weakened Omani state could provide refuge for terrorists sneaking across the border in Yemen. In such a nightmare scenario, perhaps the Iran-Saudi proxy war expands into Oman, even threatening access the Gulf of Oman. Of course, such hypotheticals represent two extremes. A more likely alternative falls somewhere in the middle. A brief period of instability may ultimately end with a new Sultan’s enthronement. The new sultan in turn provides token, but still limited, reforms to appease dissidents. Either way, Oman stands at a crossroads. The next few years will prove crucial in determining the long-term direction of the country.

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