Oman: Between Iran And A Hard Place

Oman has historically been careful to balance its relations with Saudi Arabia and Iran, allowing it to play a useful role mediating regional disputes. However, as the region’s anti-Iran rhetoric is ramping up and the Sultanate is having to deal with its own domestic issues, neutrality is becoming harder to maintain.
Posted on 05/7/18
By Camille Lons | Via ECFR
Oman is very vulnerable economically. Oil generates about 80% of government revenues, which means fluctuating oil prices have often created hardships for the economy. (Photo courtesy Oman News Agency)

Oman doesn’t like to take sides. In an increasingly polarized region, the oft-ignored Sultanate stands out for its efforts to seek common ground, finding paths to peace that sometimes elude larger powers. small size and its strategic location on the Strait of Hormuz makes it vulnerable to regional tensions and to the ambitions of its more powerful neighbors. Oman has therefore consistently sought to promote regional détente, often by providing a neutral site for talks and serving as a mediator.

 

Effective mediation requires neutrality. So, Oman has long sought to maintain independence in its foreign policy. It was the only Gulf Cooperation Council (GCC) country to maintain diplomatic relations with the Assad regime, it refused to join the Saudi-led coalition in Yemen and did not align itself with Saudi Arabia and the UAE’s stance against Qatar. It has long warned against turning the GCC into an anti-Iran block.

 

True to this tradition, Oman recently hosted secret talks between the Saudis and the Houthis to try to end the brutal conflict in Yemen. The talks have stalled after recent strikes in Yemen in April 2018 by the Saudi-led coalition, but as Muhammad Al-Bukhaithi, deputy head of the department of external relations of the Houthis, declared last October that Oman “can play a key role in stopping the war”.

 

Oman’s independent foreign policy is on most prominent display in its special relationship with Iran. Oman has been careful to maintain strong relations with Iran despite the escalating anti-Iran rhetoric amongst its Gulf neighbors. Ever since the Shah of Iran helped the Sultanate crush the Dhofar revolution in the 1970s, the two countries have enjoyed close ties that only expanded after the 1979 Islamic Revolution in Iran. The two countries have organized joint military exercises in the Strait of Hormuz since 2014, and have signed multiple trade and energy cooperation agreements. Omani leader Sultan Qaboos met in 2017 with Iranian President Hassan Rouhani and Foreign Minister Javad Zarif to reaffirm his commitment to the diplomatic relationship between the two countries.

 

This special relationship has allowed Oman to play the role of interlocutor between Iran and Arab countries on several occasions, including during the Iran-Iraq War in the 1980s. More recently, Iran hosted the secret talks between Iran and the US in 2013 that paved the way for the nuclear talks between Iran and the E3+3 (US, Russia, China, Germany, France, and the UK.)

 

Neutrality under threat

Saudi Arabia and the UAE take a dim view of the cordial relationship that Oman enjoys with Iran. Both have criticised the sultanate as dismissive of GCC security concerns. The fact that Oman did not inform them of the 2013 US-Iranian talks remains a particularly bitter pill. They even accuse Oman of not doing enough to interdict arms smuggling from Iran through its territory to the Houthis in Yemen.

 

As regional tensions have escalated, Saudi Arabia and the UAE have increased the political pressure on Oman to fall into line. King Salman’s decision in December 2016 to skip Oman during his tour of the GCC countries demonstrated Saudi discontent. But with the exception of this episode, Oman’s two neighbors have been careful to keep their grievances and diplomatic pressures private. But on my recent visit to Oman, the talk was all about Saudi/UAE economic pressure, including delayed deals and increased bureaucratic burdens placed on trade and border crossing between the UAE and Oman.

 

Oman is very vulnerable economically. Oil generates about 80% of government revenues, which means fluctuating oil prices have often created hardships for the economy. Youth unemployment has recently soared to 49 per cent and the budget deficit to 21 percent of GDP. The Sultan has used his popularity to maintain stability, but he is old and the succession is uncertain.

 

Saudi and Emirati political and economic pressures have been coupled with an increased Emirati presence in Yemen, near the Omani border and in the southern Yemeni ports. The Emiratis are also investing in Oman’s north Batinah coast and Musandam peninsula, in what is seen by Oman as a further move to strategically encircle it and increase its economic dependence.

 

In the context of a possible US withdrawal from the Iran nuclear deal, Oman also fears that its hopes of increased trade relations with Iran will be compromised by a return to international sanctions on Iran. Renewed sanctions would further delay a subsea gas pipeline between Iran and Oman which is an important part of the sultanate’s plan for economic improvement and which already suffers from Emirati opposition.

 

Oman has responded to these pressures by trying to use its strategic location to reinforce its economic independence, in part by encouraging Chinese and Indian investments in the ports of Sohar and Duqm that might eventually allow them to bypass the Strait of Hormuz. But Oman is still far from competing with Emirati ports, and the UAE is

putting severe constraints on the development of a railway network linking Duqm to other GCC countries.

These pressures will make Oman yet more vulnerable. Oman will likely find itself increasingly reliant on foreign funds and investments coming from its wealthy neighbors. The Omanis have long feared that accepting such money would undermine its economic and political independence. But Oman’s recent acceptance in January 2018 of a $210 million Saudi aid package to finance the development of Duqm port marks a partial reversal of this policy.

 

Neutrality has a price

Those who favor peace and stability in a volatile and strategic region need the services that Oman provides and should support its independence. Europeans, in particular, can be natural partners in supporting Oman’s mediating role and protecting it from external pressures through increased trade, investments, and partnerships. Maybe it is time to pay attention to Oman.

 

This article first appeared in ECFR. Click here to go to the original.

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