Saudi-Iran crisis, economic woes strain Oman’s neutrality
Muscat - Caught between two vast neighbours locked in a regional struggle, Oman has sought to be to the Middle East what neutral Switzerland is to global diplomacy but its policy of being friends to all and enemy to none is under heavy strain.
Oman has never found it easy to balance relations with Saudi Arabia to the west and Iran to the north but worsening rivalries between the region’s dominant Sunni and Shia powers is testing its cherished policy of non-alignment.
That policy has been felt far beyond the small but strategically located sultanate on the Strait of Hormuz, through which about 40% of the world’s seaborne crude oil flows.
Oman helped to mediate secret US-Iran talks in 2013 that led to the historic nuclear deal signed in Geneva two years later. It has also helped to free American hostages in Yemen.
Omanis say this Swiss-style peacemaker role is vital to prevent the Middle East from sinking even deeper into chaos.
“We hope Oman will stick to the same policies. A full-blown conflict between Iran and Saudi Arabia would be a disaster for everyone,” said Tawfiq al-Lawati, a member of Oman’s consultative Shura Council.
However, an assertive Saudi Arabia, which is leading a bombing campaign against Iranian-allied rebels in Yemen, has insisted that the Gulf Arab monarchies draw closer together to confront Tehran.
At the same time, Oman is struggling with a vast budget deficit largely due to low global prices for its oil exports. Muscat is therefore looking to increase trade with Iran, following the easing of international sanctions on Tehran under the nuclear deal, to buttress its economy.
As a result, Muscat has had to walk a diplomatic tightrope. “With Saudi Arabia, we do sometimes have disagreements and with Iran, too,” said Lawati, “but there is still more bringing us all together.”
Muscat surprised neighbours this month by agreeing to join a Saudi-led military coalition, not the one fighting in Yemen but a separate, larger grouping. This is officially aimed at fighting the Islamic State (ISIS) and other militants but suspected of serving also as a counter to Tehran around the Muslim world.
Gulf Arab citizens hailed the decision as a sign that their countries were closing ranks against the perceived Iranian menace. Oman had “returned to the bosom of the Gulf”, said prominent Saudi columnist Turki al-Dakhil.
Saudi King Salman bin Abdulaziz Al Saud is expected to visit Muscat soon, Saudi and Gulf sources have said, in what would be a sign of strengthening relations. “In grave times, clear positions are needed,” said a Gulf Arab official. “We, of course, know Oman will stand with us.”
And yet Oman may struggle to please its wealthier fellow Gulf Arabs consistently. They interpret neutrality as disregard for the Gulf’s shared security during wars in Iraq, Syria and Yemen where Riyadh and Tehran back opposing sides.
Joining the Saudi-led alliance signals Oman’s concern over the spread of ISIS and al-Qaeda militants who have vowed to attack Gulf Arab monarchies. Oman also faces some domestic uncertainty as 76-year-old Sultan Qaboos bin Said Al Said has no named successor.
However, a transformation of foreign policy balancing act does not appear to be in prospect.
A former Omani diplomat, who declined to be named, described the move as a “largely symbolic” gesture to accommodate Riyadh and said it would involve “little material commitment”.
Ahmed al-Mukhaini, a former assistant secretary-general for the Shura Council, suggested the move may give Oman more influence to calm strained regional nerves but “would not compromise our independence”.
“It might even give Oman more leverage, more space, to play a better role in this coalition and the region. By joining the coalition Oman is shielding itself from criticism from Saudi Arabia,” he added.
There are economic risks to a Saudi rapprochement. Any perception that Muscat is allying with Riyadh may irk Tehran, analysts say. Iran has billions of dollars of foreign reserves in Omani banks and could pull the plug on promised projects in the sultanate.
The nuclear deal offered hope of a leap in trade between Oman and its gas-rich neighbour. Muscat expects the end of sanctions to speed the completion of a liquefied natural gas pipeline, which it hopes will feed energy-intensive industries.
“Oman needs the economic cooperation that Iran has pledged… The two countries’ planned subsea gas pipeline is an important part of the sultanate’s plans for economic improvement,” said Giorgio Cafiero, chief executive officer of Gulf State Analytics.
Oman sees foreign investment from Iran, including a car factory, a hospital complex and a nanotechnology plant, as helping economic diversification away from oil, he added.