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Regional moderator: U.S. – Oman

The Sultanate of Oman has been the strategic ally of the U.S. since 1980, when it became the first “conservative monarchy” in the Gulf to provide military base to the U.S. in its territory. It was a response to the Islamic Revolution in Iran. The military buildup of the U.S. in Oman meant a long-term foreign policy shift from the UK – Sultanate of Oman Muscat was a UK Protectorate since late 19th century - to the U.S. For instance, in early April 2016, the UK and Oman signed a memorandum of mutual assistance to build a British military base near the port of Duqm in Oman for about $110 million. The port will house Royal Navy aircraft carriers and other ships on a permanent basis.

The agreement on military bases signed by the U.S. and Oman in 1980 was extended in 1985, 1990, 2000 and 2010. The United States can use the military air bases in Muscat, Masirah, Musnah, and Thumrait subject to preliminary notification and for certain goals. The U.S. Air Force stores equipment, including ammunition, at the bases. In 1980, the U.S. used the airbase in Oman, on Masirah Island to launch its failed Operation Eagle Claw to rescue U.S. hostages in Tehran. The military bases in Oman were used in Operation Enduring Freedom in Afghanistan in 2001, and Operation Iraqi Freedom in 2003.

At the beginning of the operation in Afghanistan, about 4,300 U.S. troops and B-1 jet-powered heavy bombers were deployed at the bases in Oman. During the U.S. invasion in Iraq, Oman bases housed about 3,750 U.S. troops. Since 2004, the military bases in Oman have not been used for military operations in Iraq and Afghanistan. At present, Oman houses several hundreds of U.S. troops, mostly air force.

The Oman army comprises about 45,000 troops and is considered the most trained army in the Gulf Cooperation Council (GCC) countries. However, it is the least equipped with advanced U.S. weapons, since Oman has limited financial resources.

Having historical ties with the UK, Oman used to buy British weapons and hire British officers to train and command squadrons. However, during the last two decades, Oman has been buying mostly U.S. weapons and the status of British officers in the Oman troops was reduced to the level of advisers.

Oman is one of the least wealthy states in GCC and cannot afford as much U.S. weapons as others do. Nevertheless, it uses special funds and U.S. aid to expand and modernize its arsenal.

In October 2001, Oman bought 12 F-16C/D fighting falcons armed with Harpoon and AIM missiles paying approximately $825 million from own funds. The supplies were completed in 2006. In 2010, the United States approved sale of additional F-16 fighting falcons to Oman that cost up to $3.5 billion, including the accompanying support and arms. So far, Oman has bought 12 of the total 18 jets. On May 21, 2013, Secretary John Kerry travelled to Oman reportedly to complete sale of THAAD, the most complicate anti-missile defense system exported by the United States, to Oman. The deal with an estimated cost of $2.1 billion was announced on May 27, 2013. THAAD was sold to three CGG countries: UAE, Qatar, and Saudi Arabia. In September 1996, Oman received 30 advanced M-60A3 battle tanks, U.S. In October 2011, sale of 266 Stinger portable air defense systems and other weapons and equipment for $1,248 billion was reported, in November 2012 - 400 Javelin anti-tank systems for $96 million. In December 2015, potential sale of 400 TOW-2B anti-tank systems for $51 million was announced etc.

On September 11, 2001, Oman supported U.S. legal, intelligence and financial efforts to fight terrorist groups, including Al-Qaeda and Al-Qaeda in the Arabian Peninsula in neighboring Yemen. United States fills Oman aid funds to fight terrorism.

In 2005, Oman jointed U.S. Container Security Initiative (CSI), agreeing on preliminary inspection of cargoes transported to U.S. from Salalah Port, Oman, to prevent contraband of nuclear materials, terrorists and weapons. Oman is a member of Middle East – North Africa Financial Action Task Force (MENA-FATF). In January 2015, Oman agreed to “unload” the U.S. anti-terrorist prison in Guantanamo and move prisoners to its detention facilities.

Oman’s place in regional policy and related interests of United States. Noteworthy that Oman most than other GCC countries supports U.S. policy in the Middle East, including initiatives related to Israel and Arab-Israeli settlement. The U.S. uses a “special stance” of Oman in GCC for its own interests. In particular, Oman unlike its allies avoids direct involvement into regional conflicts, such as Syria and Yemen. Oman joined the U.S.-led anti-terrorist coalition to fight “Islamic State” (ISIS – terrorist organization banned in Russia), but it is not involved in the military campaign. Oman refused to join the wider anti-terrorist coalition set up by Saudi Arabia in December 2015.

During the last several years, Oman’s stance on many issues has differed from the stances of its GCC allies, especially Saudi Arabia. Nevertheless, Oman supports the consensus in GCC on many important issues. For instance, Oman supported Al-Khalifa’s regime in Bahrain against local Shiites.

At the GCC summit on May 14, 2012, Saudi Arabia introduced a plan of political unity of GCC states as a sign of overall solidarity of GCC against Iran. Saudi Arabia seeks to expand Wahhabism in Oman, though most of the local population (75%) are Kharijites in their most moderate expression of Ibadism. Unlike Sunnites and Shiites, Kharijites accept only first two caliphs. That religious tradition drives Oman out of the Sunni-Shia disputes that embraced the Middle East region. In religious aspect, Oman does not tend either to Saudi Arabia and Qatar or to Iran. Oman has no big Shiite community and Iran cannot use it to interfere with Oman’s domestic affairs.

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Therefore, Oman traditionally and basing on “thankful” historical memory, supports good relations with Iran explaining it with “involvement strategy” necessary allegedly to reduce potential threat from that country. In particular, Oman has become the only GCC country not to break relations with Iran over execution of Saudi Shia cleric Nimr al-Nimr in January 2016. Sultan Qaboos of Oman and his assistants consistently support ties with Iranian leaders. In mid-March 2014, President of Iran Hassan Rouhani visited Oman despite its GCC membership. Sultan Qaboos had explained long ago that Oman’s alliance with the United States and its GCC membership and Oman’s relations with Iran are not incompatible.

Due to its special relations with Tehran, Oman repeatedly acted as moderator in many sensitive issues protecting Washington’s interests, as U.S. and Iran lack formal diplomatic relations. Oman’s diplomacy paved the way towards transitional nuclear deal between Iran and the international community made on November 24, 2013 that was eventually developed into a Joint Comprehensive Action Plan on July 14, 2015. In August 2013, Sultan Qaboos held talks with President Rouhani in Iran and contributed to the nuclear deal. Preliminary talks to finalize the deal were held in November 2014 by Secretary of State John Kerry and Foreign Minister of Iran Mohammad Javad Zarif in the capital of Oman, Muscat.

Some experts and officials of the Gulf countries say the relations of Oman and Iran, especially their cooperation in the security field undermine GCC defense solidarity. Thus, in 2009, Oman and Iran made a cooperation agreement to fight contraband via the Gulf of Oman that divides the two countries. On August 4, 2010, Oman signed a security pact with Iran which reportedly binds the sides to conduct joint military exercises. Oman is trying to balance between Iran and its GCC allies not to be criticized that much. For instance, in February 2016, Oman joined other GCC countries and declared Lebanese Hezbollah movement as a terrorist organization. However, Oman did not restrict trips of its citizens to Lebanon unlike other countries of the Gulf Cooperation Council. Oman showed that it differentiates Iran and non-state allies of Iran.

U.S. administrations have refrained from criticizing Oman’s relations with Iran. Oman banks de-facto received immunity against U.S. laws on anti-Iranian sanctions when transferring money to Central Bank of Iran. Oman’s relations with Iran show that it does not mind lifting the sanctions against that country. Even in the period of the most severe sanctions, in 2010-2015, Iran and Oman had usual trade relations and informal trade supplies despite sanctions. Reportedly, Oman’s government has been closing eyes on contraband of a wide assortment of goods to Iran from the territory of Musandam Peninsula. Despite sanctions, Iran and Oman are jointly developing Hengam gas field in the Persian Gulf. During Iranian President Hassan Rouhani’s visit to Oman in March 2014, the two countries signed a cooperation agreement to build an undersea pipeline cost $1 billion to deliver Iranian natural gas to Oman, where it will be processed into liquefied natural gas and exported. As regards financial relations, after sanctions were lifted, Central Bank of Oman licensed a private Bank Muscat to open a branch in Tehran.

Generally, unlike other GCC countries, Oman wages moderate foreign policy. For instance, Oman has never joined airstrikes against ISIS targets in Syria. Oman offered its air bases to the U.S.-led anti-terrorist coalition, but they are located rather far from the operation areas, unlike similar facilities in other GCC countries.

Reportedly, Oman has not provided any funds or weapons to rebels in Syria. However, in November 2011, to show its solidarity with the GCC, Oman voted, though with certain reservations, for suspension of Syria’s membership of the Arab League. In August 2015, during Syrian Foreign Minister Walid Muallem’s to Oman, Syria sounded out Oman’s possible mediation for launching talks to achieve a political solution to the Syrian conflict. In February 2016, Foreign Minister of Russia Sergey Lavrov visited Muscat to discuss war in Syria and other regional issues. Historically, Oman has had complicated relations with neighboring Yemen. However, Oman became the only GCC country not to join the Arab coalition led by Saudi Arabia for interventions in that country. Oman built several camps for refugees from Yemen not far from the border and in January 2016, it closed the last two border crossing points on the border with Yemen. Oman’s restraint and concerned stance again helped it become a mediator for U.S. in settlement of the Yemen conflict. Oman hosted talks between U.S. diplomats and a Houthi delegation. On November 6, 2015, Foreign Minister of Saudi Arabia Al-Jubeir travelled to Muscat to discuss Oman’s mediation efforts in Yemen and Syria.

Oman did not play any active role in supporting uprising in Libya unlike other Gulf countries – Qatar and UAE. Oman did not supply either weapons or advisers to rebels in that country. However, it instantaneously recognized the opposition’s Transitional National Council as a temporary government of Libya after Tripoli fell on August 21, 2011. Later, in March 2013, Oman provided shelter to the widow of Libyan leader Muammar Gaddafi and his children.

In the case of Egypt, Oman’s mass media harshly criticized Egyptian military for suppressing Mursi’s supporters. At the same time, Oman joined majority of other GCC countries to normalize the ties with government of al-Sisi’s military.

Oman was one of the few Arab countries to support Egypt in its relations with Israel after Camp-David Accords. Oman was the first country which the Persian Gulf Israeli Prime Minister Yitzhak Rabin paid an official visit to. In October 1995, Oman exchanged trade representations with Israel abandoning the idea of boycotting Israel. However, the sides failed to establish diplomatic relations and the trade representations were closed after uprising of Palestinians in September 2000. Anyway, Oman demonstrated the most moderate stance on Israel.

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In the domestic policy, succession of power and, consequently, policy in Oman is the prior task for U.S. Oman’s all-time leader (since 1970) Sultan Qaboos is seriously ill. In March 2015, he returned to Oman after almost a year-long treatment in Germany. Now, he rarely appears in public. Succession to the throne is the key issue for foreign experts, since the sultan has neither children nor a declared successor. In an absolute monarchy like Oman, “Ruling Family Council” – a relatively small Al Said family comprising about 50 men - will convene to determine the legal succession. If the “Family Council” fails to name the successor within three days, it will have wait for opening of Qaboos’ sealed letter after the sultan’s death. Nevertheless, despite the current uncertainty, most of competent observers in U.S. are sure that a natural change of the monarch will hardly damage Oman’s ties with the United States.

In 1970s, the United States repeatedly praised Sultan Qaboos’ policy as an example of liberalization and consistent reforms. Sultan is a likeable leader who has done much for his people. The Arab spring events in 2011 shook Oman with unprecedented for it demonstrations and unrest. However, Sultan Qaboos’ true popularity inside his country coupled with his additional economic and political reforms help stabilizing the situation. Protests ended in mid-2012.

Sultan charged creating 50,000 new jobs in the government sector and increase the minimal salary by one-third –approximately to $520. Doles were raised to $400. In 2011, demonstrators did not call for the sultan’s overthrow or state reform, they demanded higher salaries. High rate of unemployment is very characteristic to Oman. It is 15% now, which is a very high rate for GCC countries.

The United States’ response to disorders in Oman was not tough, since Oman is its key ally. The latest human rights report by the Department of State revealed the following human rights problems in Oman: restrictions on freedom of speech, on the right to assemblies and unions, lack of representative political institutions with the legislative authority.

Despite Oman’s efforts to diversify its economy, oil export in 2016 was still over 50% of state revenues. Oil recovery in Oman is about 860,000 barrels a day, of which 750,000 barrels are exported. The current oil reserves in Oman are 5-5.5 billion barrels. With the current rate of oil recovery, the reserves will be enough for 15 years. Due to low share of recovery, Oman is not a member of the Organization of Petroleum Exporting Countries (OPEC).

As alternative, Oman tries to develop gas recovery in the sector of liquefied natural gas (LNG). In December 2013, Oman made a $16 billion deal with British Petroleum to develop natural gas reserves. With 840 billion cubic meters of gas reserves, Oman is now recovering 24.7 billion cubic meters and exports 11.5 billion cubic meters of gas, which is less than half of total recovery. Incomes from sale of gas are estimated at about 20% of state budget revenues for 2016. Besides, Oman is part of The Dolphin Gas Project, under which Qatar exports natural gas to UAE and Oman via underwater pipelines. In Oman, the gas supplied by Qatar is liquefied and exported.

To diversify economy, Oman also tries to come out as an economic trade center asserting that the ships that unload at the Port of Salalah in Oman pay lower insurance rates than the ones that have to pass the Strait of Ormuz to unload in Dubai or Bahrain. Besides, Oman has a geographically favorable location with regard to Iran, Pakistan and India, as well as Eritrea and Somali to the south. Under the new transport policy, Oman’s government is trying to raise $60 billion for construction of a new, modern port in Duqm. The country plans to build an oil refinery (for $6 billion), a container port, a dry dock and other facilities there. The planned transit hub will be linked to other GCC countries with a railway, and perhaps, with pipelines to reach the Indian Ocean passing by the Strait of Ormuz and export oil and gas.

Falling prices of energy resources since mid-2014 have affected Oman dramatically. In 2016, the budget deficit totaled $8.6 billion, in 2015 - $6.6 billion. Despite Sultan Qaboos’ traditional social policy, the government had to reduce subsidies to the population significantly.

Oman joined WTO in September 2000. Oman and U.S. signed a free trade agreement on January 19, 2006. United States is the fourth trade partner of Oman and the bilateral trade in 2015 totaled almost $3.25 billion. United States’ export to Oman totaled $2,364 billion, with import totaling $905 million. U.S. does not import rough oil from Oman, which is one of the reasons behind the bilateral trade deficit for Oman. U.S. significant export items to Oman are cars, planes (including military aircrafts) and related spare parts, drilling and other oil-field equipment, other machinery. Oman imports from U.S. mostly fertilizers, industrial goods, and “offal” plastic.

Formally, the FTA with U.S. looked to help Oman diversify economy and recompense for the shrinking reserves of rough oil. Under diversification programs, a good example of the two countries’ cooperation are two modern companies directly not engaged in the oil sector – General Cables and Dura-Line Middle East LLC. In the height of the development projects, in 1980s, U.S. rendered about $15 million annual assistance to Oman. In 1996, after Oman achieved a certain level of development, the U.S. assistance was suspended. The current state of affairs in Oman does not need resumption of the U.S. assistance so far.

EADaily’s Middle East Bureau

Permalink: eadaily.com/en/news/2017/04/06/regional-moderator-us-oman
Published on April 6th, 2017 06:57 PM
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