Sultan Qaboos and the Omani Economy

Sultan Qaboos and the Omani Economy
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A GRI Power Brokers feature on Sultan Qaboos of Oman.

In a region torn by war and civil strife, it is sometimes difficult to look at those political and economic actors who have created dramatic change in a positive way for their citizens in the Middle East. Dubai, Abu Dhabi, and Qatar act as a shining example of Gulf economies that have diversified their industries and amassed considerable wealth since the oil boom of the 1970s. However, as the Middle East descends into chaos, Oman has been an island of stability in the region.

Not only has Oman achieved massive economic growth, it has also exponentially increased the standard of living for its citizens. At the helm of this remarkable economic prosperity has been Sultan Qaboos bin Said Al-Said. Over forty years Sultan Qaboos has overseen a program of both modernization and economic liberalization that has transformed Oman from a former agriculturally and isolated sultanate to a strong economic and diplomatic actor in the Gulf and the Middle East Region.

Under the rule of Sultan Qaboos’s father, Oman had maintained its feudalistic characteristics despite the rapid change occurring in the Middle East at the turn of the century. Infant mortality rates and illiteracy skyrocketed, and general unrest manifested itself in a Marxist rebellion in Dhofar in the country’s south.

However, in July 1970, Sultan Qaboos ousted his father Said bin Taimur, and once he took power, he promised Omani citizens that he would transform their ‘life into a prosperous one with a bright future.’ Now forty-six years have passed, and Oman’s feudalist history is nowhere to be seen.

From 1970 onwards, Sultan Qaboos set about a massive infrastructure project to bring Oman into the 20th Century by establishing a network of schools, hospitals roads, public transport and universities. Sultan Qaboos also created a highly functioning national health care system and sanitary facilities for food handling, waste disposal and water purification.

The Omani economy has seen spectacular GDP growth, increasing from USD$256m in 1970 to around USD$79.66 billion in 2012. Omani oil reserves provide the backbone for economic development, but Oman is not as rich in hydrocarbons as its GCC neighbours. With the implementation of the Eighth Five-Year Plan in 2011, Sultan Qaboos has set in motion an ambitious goal to diversify the economy with an aim to reduce the contribution of oil to the Omani economy from 37.2% to 9% of GDP.

By 2020, Oman also seeks to have the correct conditions for economic diversification, optimal exploitation of both the Sultanates geostrategic location and its oil and gas resources, while also focusing on human resources to guarantee that Omani citizens benefit greatly from this development. As part of its economic diversification goals, there has been increased government expenditure in the country’s gas deposits, and the development of massive infrastructure projects such as the expansion of three major ports in Sohar, Duqm and Salalah.

Once completed, these ports are set to make Oman a leading logistics hub in the Middle East. Alongside the advances in investment in infrastructure, there has been exponential growth and investment in the Omani tourism sector and manufacturing industry.

Oman provides an example of both internal and external political and economic stability in an increasingly unstable Middle East.

With the tensions in Syria and Yemen involving many of the region’s principal actors, Oman has been an essential diplomatic intermediary in the Middle East and its independent foreign policy has placed it in a unique strategic position. It has acted independently in its dealings with Iran and has diminished Saudi Arabia’s leverage in the GCC. Sultan Qaboos’s ability to maintain close relationships with the United States, the United Kingdom and other western powers as well as links to the areas major regional actors, Iran and Saudi Arabia, leaves Oman in a unique and balanced role in the region. Oman played a crucial role in facilitating the Geneva Agreement between the US and Iran, as well as acting as a broker in the continuing conflict in Yemen between Saudi-led forces and Iran-backed Houthi Rebels.

Domestically, there has been some demonstrations focused on local economic and political grievance, but unlike its neighbours, Oman does not suffer severe ethnic or sectarian tensions. Also added to this is the popularity of Sultan Qaboos who commands both respect and praise from the local population. This gives Oman both a unique external and internal stability that is not found in other states in the region.

Overall, Sultan Qaboos and Oman’s position in the Middle East demonstrate what a tour de force the monarch is. To develop a relative economic and political backwater in the 1970s to one of the truly stable states in an increasingly chaotic Middle East is by no means an easy feat. However, under the tutelage of Sultan Qaboos, Oman is a safe place for investment and provides a shining example for other developing countries of the possibilities that may lie ahead with good strategic economic planning.

However, there is a potential crisis looming for Oman. With oil prices continuing to decline and the region becoming more turbulent, whether Oman can maintain its independent foreign policy and economic development will depend on sound and agile policy formulation. There are also concerns that Sultan Qaboos may be suffering from colon cancer and is terminally ill. As all political authority is vested in Sultan Qaboos’s hands, and there is no declared heir as he has no children, the potential for a succession crisis and instability is becoming more of a reality. The probability of an internal power struggle may undermine the political and economic stability that Oman under Sultan Qaboos has experienced over the last forty-six years.

Whether his eventual successor can maintain Oman’s diplomatic and economic clout in the Middle East will remain to be seen. However, for the moment, Oman under Sultan Qaboos bin Said Al-Said is an island of stability in the chaos that is the Middle East.

GRI Power Brokers features high-level individuals having a positive impact on political risk environments. Through interviews, in-depth analysis and insider profiles, GRI explores how power brokers are affecting the distribution of political or economic power, offering unique insight into those individuals that are shaping market trends in all corners of the world. 

About Author

Iain MacGillivray

Iain MacGillivray is a GRI Commissioning Editor and an Independent Political Risk Analyst who focuses on Australian, European, and Middle Eastern Politics. He has worked as a Senior Academic Tutor in Middle Eastern Politics at the University of Melbourne and has been a freelance journalist for many years. Iain currently holds a Masters of International Relations from the Melbourne School of Government, University of Melbourne and is currently undertaking a Masters of Middle East Studies at Middle East Technical University (ODTÜ) in Ankara, Turkey.