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Oman au fil du temps. Une nation de la Nahda à l'Oman Vision 2040

The Foundation, Development and Future of the Omani Rentier State: From the Dhofar War to Vision 2040

Nicolai Due-Gundersen et Francis Owtram

Résumés

La pérennité de l'Oman moderne est incertaine après la mort de son fondateur Qaboos bin Said (1970-2020). Dans un contexte d'isolationnisme et de guerre civile, Qaboos s'est appuyé sur la richesse pétrolière pour unifier l'État et fonder une nation sociale moderne sur le modèle typique des rentiers. Dans le même temps, en 1995, Qaboos a annoncé la Vision 2020 (plus tard 2040) pour se diversifier et ne plus dépendre du pétrole. Cet article explore le développement d'Oman en tant qu'État rentier, en contraste avec les plans de diversification officiels, soutenant que l'objectif principal de Qaboos était la construction d'un État moderne et que la diversification économique en dehors du pétrole était probablement comprise comme un objectif au-delà de sa vie, passant à son cousin Haitham bin Tariq, qui a effectivement été chargé de cette tâche en tant que ministre responsable avant de devenir sultan à la mort de Qaboos. L'article discute également la diversification économique dans le contexte de la pandémie actuelle de COVID-19 et de la manière dont cette pandémie peut être utilisée dans un discours de « temps de guerre » qui renforce la légitimité provisoire de Haitham bin Tariq.

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Texte intégral

Introduction

1Gulf states must end oil and public sector employment dependence, yet Oman lacks its neighbours’ generous hydrocarbon reserves or sovereign wealth funds, factors compounded by a high youth population. In Oman this challenge was first addressed by Sultan Qaboos in 1995 with Vision 2020, a programme aiming to diversify the economy away from oil. Subsequently his cousin, Haitham bin Tariq was tasked with developing Vision 2040 as responsible minister and then Qaboos’ successor, Sultan Haitham.

  • 1 See “The Two Sultans of Oman: from Qaboos to Haitham bin Tariq”, Al Bawaba, February 2020, online. (...)
  • 2 “Is Oman’s model of governance about to shift?”, Al-Monitor, April 2020, online. URL: https://www.a (...)

2Did Qaboos intend to fulfil major steps of Vision 2040 during his rule? What are the implications of expanding state employment as part of Qaboos’ countering of Oman’s Arab Spring? An analysis of documents from Qaboos' time emphasising oil importance over diversification informs our main argument: Vision 2040 would never replace the rentier model under Qaboos, particularly in his final years. Qaboos may have recognised the long-term challenge of diversification but due to circumstances was forced to focus on modern state building, understanding that post-oil diversification was unlikely to be achieved in his lifetime. Hence, ‘modernization’ is divided into two stages: Qaboos’ rentier era and the post-Qaboos/Haitham era1. Achieving a diversified modern state was to be fulfilled by Qaboos’ successor as hydrocarbon exhaustion provokes difficult choices. This argument is bolstered by the context under which Qaboos came to power. Having overthrown his father amid a civil war, Qaboos would have been cautious with deep reforms, fearing that reduced welfare could trigger unrest.2 Furthermore, we assess the impact of the COVID-19 pandemic on Oman and Vision 2040 – what are the constraints and challenges of the new economic reality and does it provide an opportunity for Haitham to be a “wartime” leader with the legitimising potential that provides, echoing the early years of the reign of Sultan Qaboos. The surge in oil prices with the war in Ukraine and the concomitant creation of a budget surplus for Oman in 2022 is contextualized in terms of the drive to diversify away from oil.

  • 3 See Owtram 2004; Valeri 2017.

3Using digitised archival and government documents, extant literature and news sources we trace our analytical theme through the Omani rentier state’s development3, highlighting key points linked to oil price fluctuations and popular protest. The structure of the article is as follows. Firstly, we review key aspects of the rentier state paradigm. We then offer a review of a periodization of the Omani rentier state and the role of oil revenues in the foundation (1970-1986), development (1987-2014) and future (2015 onwards looking to Vision 2040) of the Omani rentier state arguing that diversification from oil was not Qaboos’ main focus and likely to be undertaken by Qaboos' successor. We then assess and analyse the specificities of the Omani rentier state in answer to our research questions, before concluding.

I. The Gulf States: Rentier Theory Revisited

  • 4 Beblawi and Luciani, 1987.
  • 5 The following is drawn from Luciani, 2019, p. 119-125.

4The rentier state concept was initially articulated in Hazem Beblawi and Giacomo Luciani’s seminal edited book4. Pertinent issues in the rich and full conceptualisation encompassed in this debate have been expertly summarised by Luciani5 where he notes the following key features. Contrasting productive states where the state is supported by society and must extract revenue from it. To do this, the state is forced to concede representation – hence the old adage “no taxation without representation”. In contrast, rentier states are able – through revenues deriving from the sale of oil on the world market – to become independent of society. Rentier states support society by distributing the revenue from the sale of oil and are thus “distributive states”.

  • 6 Luciani, 2019, p. 120.
  • 7 Ibid.

5The issue of definition, Luciano argues, is extremely important in order for the concept to maintain its analytical accuracy. Firstly, it is vital that “the source of the rent be the rest of the world. States that use the control of a specific domestic source of rent to extract surplus from society are not rentier states, because they are supported by society rather than vice versa”6. Secondly, it is also essential that the revenue “accrues directly to the state”. He notes that some authors have regarded the receipt of remittances from workers who have migrated to the oil-rich states and send back money to their families, as giving the recipient state rentier characteristics. His key argument as to why this is fallacious is that these “remittances are private income flows and the state must resort to taxation in order to appropriate them”7.

6Significantly for the purposes of our consideration of Oman, Luciani adumbrates key periods relating to Middle East oil rent. Examining the historical record, he highlights that oil rent suddenly increased in the first period of high oil prices from 1973 to 1983, and “flooded” the entire region, engulfing all states in the process of rent circulation. But this was a limited experience, which was not repeated in the second period of high prices (2004-14): the major oil-exporting states were rentier, in the sense of being independent of domestic taxation, already before 1973, and continue to be so. As the state does not have to compromise with society, there is a distinct authoritarian tendency in which the provision of wide-ranging benefits and state employment for citizens obviates the need for the state to make concessions on political participation.

  • 8 See for example Gray, 2011, the contributions to Herb and Lynch, 2019, Moritz, 2018.
  • 9 Gray, 2011.

7While it remains much celebrated, there has in recent years been considerable critical analysis interrogating the utility, nuances and even basic assumptions of Rentier State Theory (RST)8. Following a deft review and assessment of the development of RST, Matthew Gray9 adumbrates a theory of “late rentierism” pertaining to the wealthy Arab states of the Gulf. Of particular interest in connection with our consideration of Oman, he identifies that early RST and a number of later variants also made connections with the theory of neopatrimonialism. Most strikingly, when considering Oman, Gray notes that:

  • 10 Ibid., p. 7.

“[…] neopatrimonial theory argues for a particular style of leadership where a sovereign – a monarch or president – is at the center of an elite web, with subordinate elites that are submissive to the leader but between which the leader encourages competition. This arrangement suits a leader anxious to keep any potential rivals for power in check. […] The neopatrimonial leader will, as necessary, foster a cult of personality and a public image of strong leadership or build a message of charisma and popularity, while usually conducting elite relations in an opaque, personal fashion that obscures and informalizes the political process.”10

  • 11 Ibid., p. 17.
  • 12 Ibid., p. 35.

8Gray goes on to aver that neopatrimonialism is also important in late rentier strategies. He also posits, in the case of Oman, that Valeri’s work is closest to the late rentier approach he advocated, in his treatment of rentierism “as a characteristic of politics rather than a model for the entire political structure”11. A further significant point in relation to Oman, made in the generality by Gray, is that early RST literature assumed that “along with a limited economic policy, rentier states had little need for a sustained foreign policy”12. Gray does not specifically expand on this point in relation to Oman and his study of foreign policy of a small state, uses Qatar as the case study. The significance of this in the case of Oman – which has undoubtedly pursued a sustained foreign policy – are manifest and will be returned to later in this paper.

  • 13 Herb and Lynch, 2019.
  • 14 Moritz, 2019.

9Another key publication for our purposes of revisiting RST is the collection of research notes edited by Michael Herb and Marc Lynch: The Politics of the Rentier States in the Gulf13. A key issue a number of these research notes identify – most centrally by Michael Herb’s note on labour markets and economic diversification in the Gulf rentiers – is the skewed structure of the labour market in the Arab monarchies of the Gulf. Namely that citizens prefer to work in the public sector of state employment, whilst the private sector prefers to employ cheaper and more competent foreign nationals. Indeed, recent research has investigated citizen’s expectations and the nature of the “rentier social contract” specify that it is the provision of public sector jobs with concomitant high wages and undemanding conditions of employment that is perceived by citizens as their due under the “rentier social contract”. It is worth noting here that Simon Mabon prefers the phrase “relationship between ruler and ruled”, the notion and phrasing of a “social contract” being too grounded in the European experience. Also extremely salient work for the purposes of this paper is that which has been produced by Jessie Moritz. In her contribution to Herb and Lynch14, drawing on extensive field research in Oman, Qatar and Bahrain, Moritz has questioned the central tenet of the rentier state bargain, the linkage between individuals receiving material benefits from the rentier bargain but still engaging in actions and activity critical of the state. In other words, that central tenet that holds that material reward will lead to political acquiescence and acceptance of the lack of representation due to the state not levying taxation and providing a range of material benefits such as public sector employment and subsidies leading to free utilities, for example.

10Drawing on the empirical examples from these works we can confidently assert that Oman, holding far lower hydrocarbon reserves and with a much higher population, is in a very different situation to the rich and “most rentier” Arab Gulf states: Kuwait, Qatar and the United Arab Emirates. In Oman the issue and need for diversification from oil is not a question for some point in the distant future but an ever-looming obstacle that needs to be addressed immediately and as a matter of priority. It materialises itself in the thorny question of the year-on-year increasing budget deficit which has grown ever larger, threatening to relegate Omani government bonds to junk status.

  • 15 Valeri, 2017, p. 239.

11We now apply the insights of this analysis to examine the development and future of the Omani rentier state under Sultan Haitham following the death of Qaboos in January 2020; but in order to do this it is first necessary for context to review the founding of the rentier state by Qaboos and his legacy, and the ways in which Haitham was already involved, as the responsible Minister charged by Qaboos with the development of Vision 2040. It was, in some ways, a poisoned chalice handed over to Haitham, in that Qaboos had fashioned a strategy of a sort to address the manifest problems of the Oman rentier state but, arguably, mentally assigned the difficult task of implementing it to his successor. This is undoubtedly a challenging situation in Oman for the al Busa’idi regime as the measures – notably, reductions of state spending and increased taxation of society and therefore, it would seem, concomitant demand for more meaningful representation – needed to address the key manifestation of the black hole at the centre of the Omani rentier state – the budget deficit – necessarily, strike at key vested interests who have benefitted from the status quo and on whom the regime relies to sustain itself. These vested interests have massively benefitted from the corruption which is also part and parcel of the contemporary Omani rentier state to which Qaboos turned a blind eye or was regally unaware but then, as Valeri notes, this provided a convenient opportunity, through his sacking of “corrupt ministers” to demonstrate that he was the saviour of society, standing above the petty interests of squabbling and corrupt Ministers15. This corruption mushroomed in the 1970s with the massive increase of oil revenues in that decade and the vast expenditure on defence and infrastructure that was the response to the Dhofar War to defeat the rebels and the accompanying “hearts and minds” campaign, two sides of the same strategy.

II. Oil and the foundation of the Omani rentier state (1970-1986)

  • 16 We will return to this later but at this point it is salient to note the ideological nature, contou (...)

12The 23 July coup that brought Qaboos to power is often seen as the founding moment of the modern Omani state. This period of modernisation since 1970 is often referred to uncritically and reflexively in the sultanate by the authorities, many Omanis, and expatriates as the nahḍa or “Omani renaissance”16.

13To focus on the Dhofar war, 50% of Gross Domestic Product was allocated to defence. In this effort the recently flowing oil revenues were a critical asset which increased by fourfold as a result of the 1973 Arab-Israeli War and again after the 1979 revolution in Iran. It is thus important to note that from Qaboos’ coming to power in July 1970 until the end of the Dhofar War (effectively in 1975), oil profits were essential to fund defence and a war economy before Oman was stable enough to consider only the typical welfare rentier model of the Gulf. Hence, Qaboos’ early years were punctuated by heavy oil-reliance for political and military survival amid conflict that questioned his legitimacy from the beginning. This reliance would also feed into state development, as will be later discussed.

  • 17 “Revealed: Hoe the British military supplies ‘mercenary’ forces to a Gulf dictatorship”, Declassifi (...)
  • 18 “Defence Secretary announces investment in strategic Omani port”, gov.uk, September 2020, online. U (...)

14Qaboos, with British strategic support, pursued a “hearts and mind” campaign in which the “legitimate” grievances of the people were met through healthcare and employment provision alongside the gradual military elimination of the resistance to the British-backed Sultanate regime. Through a series of lines after each monsoon season the rebels were gradually moved back until in 1975 it was declared that the war was over. In 1977, the British Flag at Oman’s airfields was lowered for the last time as the facilities were handed over to the Omani authorities. It should be noted that until 1994 the Commander of the Royal Air Force of Oman was a seconded British officer. Even in 2020, a number of British seconded military personnel provide important services for the Omani armed forces17. Moreover, Britain maintains strategic military involvement in Oman. September 2020 saw the United Kingdom’s Defence Secretary announce a 23.8 million Great British Pounds (GBP) investment in Oman’s Duqm port to “triple the size of the existing United Kingdom base” as part of the United Kingdom’s focus on the Gulf for “shared security challenges”18.

  • 19 See Rabi, 2016.

15In addition to the expansion/upgrading of the Omani armed forces, massive construction programmes in transport infrastructure, hospitals and healthcare facilities, and educational establishments at all levels were initiated according to a series of five-year plans starting in 1976. As elsewhere in the Gulf this involved the “importation” of many expatriate staff from the Asian subcontinent as construction workers and managers. The provision of employment for nationals as civil servants in the government accelerated so that nearly 80% of Omanis are employed in the public sector. In this process delicate balances were pursued between the various components of the Sultanate and the powerful tribes of the interior19.

  • 20 See “Political Relations between Oman and the United Nations, 1971”, The National Archives, UK, FCO (...)
  • 21 Valeri, Marc, “Oman’s new Sultan faces mammoth challenges”, 21 January 2020, online. URL: https://w (...)
  • 22 Baabood, 2017, p. 112.

16Qaboos established his rule and consolidated his authority in Oman, eventually eclipsing his uncle Tariq bin Taimur, who was initially appointed Prime Minister. Tariq had quite a different vision for Oman from Qaboos, leaning towards a vision more along the lines of a constitutional monarchy20. When Tariq resigned in 1971, Qaboos left the position of Prime Minister vacant but became his own Foreign Minister and Defence Secretary, positions he retained until the day he died. In contrast to the other Gulf state rulers Qaboos occupied a position alone at the apex of authority. Whilst he engaged in a number of top-down reforms to widen participation in various ways, citing the Ibadhi tradition of shura or community-government consultation, the regime retained power through a policy of co-option, collaboration and coercion, with Qaboos being characterised as “a moderniser with an iron fist”21. Baabood deftly outlines the strategy of Qaboos to achieve modernisation of Omani society. To break the hold of tribes, Qaboos created a cult of personality “in order to unify the Omani people around something else rather than tribalism”22 and to establish himself as the sole authority.

  • 23 Ibid.

17As a result, all the old trends of identifying the Omani people were abolished and replaced by the reinvention of the Omani identity, leading to a process of national unification that evolved around the person of the Sultan. In this process of territorial unification Qaboos was aided by his Dhofari roots and the state monopoly of oil allowed Qaboos to co-opt different groups23.

  • 24 Owtram, 2004, p. 165.
  • 25 “’Colonialism never ended’: The elite British cabal propping up a Gulf dictatorship”, Declassified (...)
  • 26 Ibid.

18The Omani state during this period related to oil revenues has suffered from corruption. Indeed, there seems some opaqueness to the award of a contract to build Sultan Qaboos University to the British firm Cementation which happened to be employing Mark Thatcher, the son of then Prime Minister Margaret Thatcher, as a consultant24. In addition to the Thatcher connection, recent developments have revealed that high-ranking British figures from the British Intelligence Service, MI6, British Armed Forces and various former ministers provided intelligence and related services to the Sultan. Qaboos himself was “advised by a secret privy council right up to his death last year”25. Such meetings were undisclosed and without the knowledge of Omanis, lavishly paid for by Qaboos himself to include high-ranking officials such as General Sir Nick Carter, head of Britain’s Armed Forces and Field Marshal Charles Guthrie, former head of the UK military. Other attendees included senior figures from Britain’s Royal Airforce and “Sir Erik Bennett […] the key figure in a group of elderly former military and intelligence officers who help the Sultan to run his rich, strategically vital country at the mouth of the Gulf”26.

III. The Development of the Omani Rentier State (1987-2014)

19By the 1980s, Oman had enjoyed an oil boom and Qaboos had established himself as the founder of modern Oman. This notion of Qaboos as the centralised father of the nation was summed up by Omani comments several years after the 1970 coup: “Before him there was nothing, now there is everything”27. It was time to focus on development, with an emphasis on increasing government capabilities. Although the 1970s saw a steadier flow of oil profits, it was not until the end of the Dhofar war toward the end of that decade that more resources could be devoted to increasing the reach and competency of government services. Not only had civil war drained state resources but it had also hindered centralised planning, construction and expansion of infrastructure. The first five-year development plan set up in 1976 sought to include Dhofar in such expansion to minimize potential grievances after the war and would also develop Muscat as modern Oman’s capital, with Muscat’s hosting of central seaports and airports emphasising Oman’s desire to be globally connected. However, the 1986 oil glut uprooted Qaboos’ first five-year plan. Muscat received some of its upgrades but many such projects in Dhofar were frozen, a reminder that Oman’s modernisation was inextricably linked to and fuelled by the state’s hydrocarbon sector. Qaboos was more than aware of this fact, illustrated by outside observations that he avoided the towering constructs of some Gulf neighbours, preferring instead ‘carefully planned development’ that shunned extravagance28.

  • 29 Ibid.
  • 30 Ibid., p. ii.

20The volatility of oil wealth also encouraged Oman to establish the State General Reserve Fund (SGRF) in 1980. The SGRF was founded in 1980, partially cushioning the impact of the 1986 oil glut. Simultaneously, a separate Contingency Fund was established for unforeseen circumstances. The idea was to ensure that a second fund was available to prevent ad hoc rather than planned use of the SGRF during financial emergencies29. However, the SGRF did not perform as expected and ironically did become an emergency fund to cushion ad hoc price spikes in the very resource it was funded by. Oil price fluctuations and rising state debt in the 1980s meant declining contributions to the SGRF. A 1994 World Bank report reflected that the “use of the SGRF as an oil revenue stabilization fund has pre-empted its potential as a vehicle for long-term public savings and investment. The planned allocation of most of the money flowing into the […] Fund to the financing of planned public sector deficits means that funds are not available to deal with genuine emergencies”30. This reality of plugging public sector deficits reflected Oman’s dependence on oil to maintain welfarism. The expansion of public services, especially healthcare and education, punctuated Oman’s development in the late 1980s.

  • 31 Smith, 1988, p. 542.

211987 onward thus saw an emphasis on specific infrastructure that would feed into social services such as healthcare. 1987 saw the opening of the Royal Hospital in Muscat, which specialised in curative medicine. The construction of this and other hospitals under the mobilisation of the military aimed to create an extensive healthcare system that could tackle “immunisation, diarrhoeal disease, tuberculosis, trachoma, acute respiratory infections, and other issues”31.

  • 32 Al Nabhani, 2007, p. 31.
  • 33 Ibid., p. 30.
  • 34 Ibid., p. 31.
  • 35 Ibid.

22Another expansion of public services was education under Oman’s third five-year development plan (1986-90)32. It should be noted that from 1970 onward, expanding education was a priority. At the start of Qaboos’ reign (1970), Oman had under 20 schools. By 1975, this had increased to 207 and by 1985 to 37333. The third five-year development plan sought to enhance and diversify existing educational services. This included ensuring that the education system was aligned with labour market needs, ensuring educational services reach remote places and the omanization of teaching posts34. Under the fourth five-year development plan (1991-95), education was further addressed, with the establishment of a Ministry of Higher Education distinct from the existing Ministry of Education, the widespread foundation of teacher training colleges and their simultaneous upgrading to university status35.

  • 36 Khan, 1993, p. 1.
  • 37 Peterson, 2004.
  • 38 Ibid.
  • 39 “Father of Oman: The Fragile Legacy of Sultan Qaboos”, Al Bawaba, May 2019, online. URL: https://ww (...)
  • 40 Peterson, 2004.

23However, the 1990s also saw the invasion of Kuwait by Saddam Hussein. The First Gulf War provoked a 1990 Oil Price Shock, briefly increasing oil prices for oil-importing states. With Kuwait under siege, clients turned to other Gulf States to meet hydrocarbon demands36. Oil funded the expansion of education and healthcare at a time when oil prices exceeded state expenditure on such expansion, a reminder that five-year plans seeking to reform education to meet labour market demands away from oil were still funded by Oman’s sole commodity. 1990 also saw a major political development for Oman’s governance system: the establishment of the Majlis al-Shura (Consultative Council). Qaboos announced its formation during his 1990 National Day speech as a replacement for the more rigid State Consultative Council37. Majlis al-Shura replaced government representation with representation from the governors of Oman’s 59 districts or wilayahs38. This novel political structure paralleled Oman’s natural tribal lines, ensuring that the heads of Oman’s communities could negotiate differences using traditional customs but under a formalised political framework in which Qaboos acted as head and guarantor39. Citizens could vote for up to three candidates, from which the government chose one individual to represent that district in the Council40.

  • 41 Ibid.

24From 1987 onward, oil funded Qaboos’ expansion of public sector services to create a modern welfare state. On the political front, the formation of the Majlis al-Shura meant for the first time, limited citizen participation in Omani politics. The fact that the new Majlis also included live televised hearings was significant; ministers would have to attend such hearings to report to the council on their activities41. This emphasis on accountability was a tentative attempt to tackle grievances that would crystallise during Oman’s brush with the Arab Spring. A far tougher campaign on high-profile corruption would follow after 2011.

1. Vision 2020

25In addition to the formation of a Consultative Council, the 1990s saw another significant development in Omani politics. 1995 saw the announcement of Vision 2020 (precursor to Vision 2040), an economic plan to develop Oman’s human resources and stabilise private sector business42. Vision 2020 was to ensure that per 1995 capita income would not drastically drop over the next two decades, with a further aim of doubling such income by 202043. According to a related Royal Decree, Vision 2020 was to:

26- Develop Oman’s human resources and technical expertise to match global standards

27- Strengthen private sector capabilities within the context of a more holistic economic environment

28- Lay the groundwork for economic diversification that is balanced with Oman’s exploitation of natural resources

  • 44 Ibid.

29- Enhance living standards and reduce socio-economic disparities across the Sultanate44

  • 45 Ibid.

30It must be noted that official statements discussing Vision 2020 described the plan as relying on “oil and gas revenues to achieve economic diversification” and that such diversification will still be achieved in conjunction with “optimal exploitation of the natural resources of the Sultanate”45. This context implies that Vision 2020 assumed a reliance on hydrocarbon profits and that laying the groundwork for economic diversification was not the same as achieving such diversification independent of hydrocarbon income. This fact foreshadows the notion that Vision 2040 would not replace the oil rentier model that bolstered Qaboos’ rule, and that any serious economic diversification would not be undertaken in his lifetime but by a successor. Just over a year after Vision 2020, Qaboos issued the 1996 Basic Law.

2. Basic Law 1996

  • 46 Siegfried, 2000, p. 359.
  • 47 Ibid., p. 360.
  • 48 Ibid., p. 379.
  • 49 Ibid.
  • 50 Due-Gundersen, 2019.

31In 1996 the Basic Law was announced in a Royal Decree; this is the closest that Oman has come so far to a constitution. Like most political developments in Oman up to now this was a top-down initiative. The Basic Law can be regarded as building on the 1990 creation of a new Majlis, not necessarily through democratic overtures but rather through formalising political processes to create authoritative legitimation46. Such legitimation was enshrined through succession. While commentators like Siegfried have argued that the democratic elements of the Basic Law were symbolic47, it seems to be agreed that the document utilised language that augments a centralised nationalism under the Sultan48. Such language “suggest[s] a unity of the Omani nation that is historically unfounded”, and by ensuring Oman’s Sultan is the head of such unity legitimises his authority49. The formalisation of a united Omani identity under centralised leadership coincided with the tentative notion of economic diversification under Vision 2020 and came in the 1990s after two significant factors in past decades: the civil war of the 1970s that saw Qaboos heading national unity through resistance to communist rebels and the social care expansion of the 1980s50. With unity through resistance gone by the 1980s and careful welfare expansion dependent on oil prices, constitutional legitimacy may have allowed Qaboos to address fears of succession continuity and formalise his brand of nationalism as the key to legitimate leadership.

32The fact that the Basic Law addressing succession was issued a year after Vision 2020 is arresting. Vision 2020s weak references to economic diversification already implied that true economic diversification was not the Vision’s goal. Rather, the groundwork for such diversification would be laid without altering the oil rentier model. By issuing a law formalising succession shortly after Vision 2020s announcement, it would seem that Qaboos was acknowledging that core economic reforms and diversification would be required beyond his lifetime.

  • 51 “Petrodollars: Oman gripped by action against oil corruption”, April 2014, online. URL: https://blo (...)
  • 52 “Oman Corruption Report”, March 2020, online. URL: https://www.ganintegrity.com/portal/country-prof (...)
  • 53 “Oman protestors call for fight against corruption”, Arabian Business, January 2011, online. URL: h (...)
  • 54 “Rallies in Oman Steer Clear of Criticism of Its Leader”, The New York Times, March 2011, online. U (...)
  • 55 “Petrodollars: Oman gripped by action against oil corruption”, S&P Global Platts, April 2014, onlin (...)

33In 2004 a series of arrests were made including oil company officials. Corruption has been especially rampant in the oil industry, an ongoing concern as it is through oil that Oman has financed its development, including social services and attracted foreign investment51. Corruption has traditionally been linked to dealings with the political/business elite, risking a negative effect on foreign investment by enforcing the image of pervasive corruption52. As with other Arab states, corruption not only impacted international trade but domestic stability. By 2011, the so-called Arab Spring was penetrating Oman’s hydrocarbon sector. In January and February of that year, demonstrations began across the capital, Muscat and Sohar, a strategic port town53. Such unrest composed hundreds and many protests respected Qaboos while emphasising the expectation that corruption would be addressed54. Demonstrators included domestic employees from Oman’s hydrocarbon sector, who despite buttressing the nation’s largest export industry claimed low wages and poor working conditions55. No doubt, such demands were more acrimonious within the context of perceived corruption within the business/political elite.

  • 56 Ibid.
  • 57 “Omani CEO jailed for 23 years in graft case: court”, Reuters, February 2014, online. URL: https:// (...)
  • 58 Ibid.
  • 59 “Oman hands down more sentences in oil corruption case”, Gulf News, March 2014, online. URL: https: (...)
  • 60 Ibid.

34It is therefore no coincidence that 2014, the year of another oil price crash saw a slew of corruption charges that targeted high-profile business and political figures56. After 2011 protests, Qaboos ordered an anti-corruption campaign to address popular grievances. Prosecutions targeted senior figures in the hydrocarbon sector. Heavy sentences sent a message that corruption in the hydrocarbon sector would no longer be tolerated. In February of that year, CEO Ahmad al-Wahaibi of state-owned Oman Oil company was found guilty of accepting bribes, abuse of office and money laundering and sentenced to 23 years in prison57. The same trial also found Adel al-Raisi, former aide to the economy ministry guilty of organising a bribe transfer from a senior official at a South Korean firm to al-Wahaibi. Al-Raisi was sentenced to 10 years in jail. His South Korean counterpart, Myung Jao Yoo was handed the same sentence58. March saw further high-profile cases targeting the oil and gas sector. Adel al-Kindi, CEO of Omani Oil Refineries and Petroleum Industries received a three-year sentence and 1 million-riyal fine (approximately 2.3 million euros) after being found guilty of accepting a bribe. As a former member of the appointed State Council he was also banned from government service for 30 years59. The same case also saw Oman’s Director General of Ports, Qasim al-Shizawi accused of accepting a 200,000-riyal (approximately 46,000 euros) bribe. His sentence was a dismissal from service, a three-year jail term and 750,000-riyal fine (approximately 1.8 million euros)60.

35These cases illustrate a hardened stance toward corruption after Oman’s brush with the Arab Spring. Furthermore, it is interesting to note that each trial sentenced not only business elites but also targeted government officials and even foreign business executives, as exemplified by the sentencing of Myung Jao Yoo. The jailing of government officials on corruption charges alongside business officials emphasised that there would be no distinction between those of the business elite and those from the more traditional political elite: corruption was corruption. As for the jailing of a senior official representing a South Korean conglomerate, this stance also sent a message to satisfy domestic politics, indicating that while Oman was open for business, this did not mean it would ignore bribery in exchange for international trade. Returning to the argument that Qaboos would prioritize the rentier model over Vision 2040, the extensive clampdown on corruption in the hydrocarbon sector can be regarded as a further indication that a stable oil and gas sector was essential to maintaining Oman’s state revenues and the oil rentier model.

3. The ‘Arab Spring’ in Oman

  • 61 Worrall, 2012, p. 98.
  • 62 Schoeberlein, 2019, p. 1.
  • 63 Fuller Thomas, “Rallies in Oman Steer Clear of Criticism of Its Leader”, New York Times, 1 March 20 (...)
  • 64 These details on the Arab Spring in Oman are drawn from Worrall, 2012, p. 98-106.

36Oman’s Arab Spring was overlooked as the world focused on NATO interventions in Libya and the masses gathered in Cairo’s Tahrir Square61. Nonetheless, it must be remembered that Oman has experienced its own corruption — a key factor in why Arab leaders faced popular unrest62. The conspicuous anti-corruption campaign in response to the Arab Spring may very well have bolstered Qaboos’ final years of governance, in addition to the fact that many protestors respected Qaboos but blamed his cabinet and other influential political figures63. Yet, Oman’s protests appeared shortly after the January 2011 unrest that overthrew Tunisia’s Ben Ali64. Around this time, up to 200 people began Oman’s Arab Spring, focussing on corruption and rising prices of basic goods. As other small-scale protests began, authorities adopted a relaxed stance, prompting a rise in more focussed and better organised protest movements. In February, teachers organised demonstrations for better benefits and pay, with the teachers’ movement closing down schools across Oman. After the Arab Spring spread to Bahrain, Oman’s own unrest increased in a series of protests known as the Green March, which was organised online. The Green March was characterised by collective pleas to Qaboos to address corruption while insisting that it was those around him who were guilty and had used their access to Qaboos for personal gain. However, some demonstrations did gain further traction, spreading beyond Muscat and provoking large sit-ins in Sohar, Oman’s northern port city and established industrial zone. Protests in Sohar escalated to see demonstrators blocking access to and eventually torching a local hypermarket. Clearly, not all were satisfied with simply delivering a petition to their Sultan, especially as skilled and unskilled jobs were often occupied by non-Omanis. It was once demonstrations targeted security and police infrastructure that rubber bullets and tear gas were introduced.

  • 65 Peterson, 2004, p. 125.
  • 66 Due-Gundersen, 2019.

37It should be noted that while the government seemed slow to respond, they first addressed political rather than economic demands. The formation of a committee to address demands was carried out through an emergency meeting of the Majlis al-Shura. This response connected with an awareness of the fact that there were strong political demands, as evidenced by sit-ins outside local councils that emphasised the need for young blood in government was urgent, as Qaboos had remained with the same ministers for decades after beginning his rule. The emergency meeting was followed by a cabinet reshuffle. However, this seemed to simply shuffle existing ministers to different departments. This reaction did not connect with the demands of Omanis for fresh faces in government. Hence, while Qaboos may have recognised the urgency of political demands, there seems to have been a reluctance to fire loyal and well-known comrades. This gap between protestor demands and government reaction may reveal how Qaboos’ legitimacy in the final years of his reign could no longer rest on ending the Dhofar War. As previously discussed by John Peterson, Qaboos enjoyed a visible image after 1970 as the father of Oman: “Before him, there was nothing. Now, there is everything” was a common phrase punctuating his early years65. Having overthrown his father, Qaboos headed a highly centralised monarchy, and it is possible that the fear of being unseated left Qaboos in a position of wanting to either head most portfolios or to work with figures associated with the period of his ascension and hence trustworthy66. This same fear also returns to the issue of why Qaboos may have been hesitant to initiate deep reforms, having relied on the modern welfare state for stability, the fear of unrest kept socio-economic restructuring at bay. Under Oman’s Arab Spring, popular pressure from a new generation removed from Dhofar clashed with Qaboos’ preference for centralised authority under familiar political figures. Instead, more attention was paid to responding to popular economic grievances.

  • 67 Worrall, 2012, p. 106.
  • 68 Ibid.
  • 69 Ulrichsen, 2016, p. 6.

38Economic concessions included the creation of 50,000 jobs overnight, unemployment benefits of almost four hundred USD a month (approximately 154 riyals or 352 euros) and an increase in the student monthly stipend67. Further, in response to the hypermarket attack, Qaboos established a Public Authority for Consumer Protection, recognising the need to monitor basic goods prices68. Although there were political reforms alongside the economic package, substantial economic responses were prioritised and typical of oil states during unrest, offering financial sweeteners to cushion the long-term problem of underemployment and weak private sectors69. Again, the state’s emphasis on economic demands and their financial response indicates a continued reliance on hydrocarbon cashflow, rather than focused effort on economic diversification.

  • 70 “Patriotism from fragmentation: the personal nationhood of Qaboos”, Open Democracy, June 2017, onli (...)

39Despite the economic challenges and unrest facing Qaboos toward the end of his reign, the years that followed the Arab Spring and anti-corruption purges saw Omanis continue to express support and affection for his rule. This was most apparent as Qaboos began undergoing medical treatment abroad. Shortly after his return to Oman in late 2015, there seemed to be a public outpouring of relief. This was especially noticeable on Twitter, where Omanis welcomed home Qaboos70. In the early days of January 2020, knowing that Qaboos was not long for this world, Omanis poured out their prayers and grief, as they started to come to terms with the knowledge that the only Sultan they had ever known, was gone. The intensity of this outpouring may be partly explained by the cult of personality the Qaboos regime cultivated in the populace.

IV. The Development of the Omani Rentier State under Sultan Haitham

  • 71 See the Royal Decree No. 101/1996 Promulgating the Basic Statute of the State Article 6, Ministry o (...)
  • 72 Due-Gundersen, 2019

40Sultan Qaboos died on 10 January 2020. A smooth transition process followed that had been established by Qaboos himself. Ironically, what followed was the reverse of the formal process outlined in the 1996 Basic Law: upon Qaboos’ death, the Royal Family Council could have agreed on their own successor. Should there be disagreement, it was then that the successor would be chosen from the envelope left by Qaboos71. Nonetheless, no debate within the Council took place. Qaboos’ chosen successor was immediately announced in a televised address that emphasised a smooth succession process and continuing stability under a system of highly centralised governance72.

41While still alive Qaboos had tasked his cousin, Sayyid Haitham bin Tariq, with the development of Oman Vision 2040 which was to be a way forward for Oman to diversify its economy under diminishing oil profits. This built on Vision 2020, an earlier version of this drive towards diversification away from an oil-based economy, of which a significant plank was the involvement of China.

1. Oman and China’s Belt and Road Initiative

  • 73 Rakhmat, 2019.
  • 74 Ibid.
  • 75 Ibid.
  • 76 Mogielnicki, 2020.
  • 77 Jabarkhyl, 2017.
  • 78 Ibid.

42Of note in Oman’s diversification hopes has been China’s Belt and Road Initiative (BRI) across the Gulf. This initiative has seen Chinese state and private firms becoming increasingly involved in business partnerships across the Gulf, including in the energy sector73. For Oman, this has meant Chinese funds on transportation projects such as railway infrastructure and construction of Duqm Port, to include a high-capacity refinery/petrochemical complex74. For China, investment in Oman is part of a bigger plan to accelerate oil flow from the Gulf to Beijing, with Duqm Port regarded as a vital energy hub along this new Silk Road75. Chinese media outlets have presented BRI as “building a China-Arab community with a shared future”76. Despite such statement of mutual equality, there are concerns that promises of Chinese Yuan for megaprojects could lead to dependence on Beijing77, especially in an age of oil price fluctuations and COVID-19. China seems central to Oman’s economic diversification. Projects like Duqm Port are set to create much-needed jobs for Omanis, and as oil prices take a hit, Oman views its Chinese cooperation with greater reliance78.

  • 79 “Oman Counters Chinese Influence With Two New Energy Megaprojects”, Oil Price, August 2020, online. (...)
  • 80 “CNPC In Talks to Buy $1.5-Billion Stake in BP’s Oman Gas Field”, Oil Price, July 2020, online. URL (...)

43At the same time, Oman has launched independent projects, including a large-scale solar power field, with said project a partnership between Japanese Marubeni Corporation, Qatari Nebras Power and Oman Gas Company79. Nonetheless, the reach of such a project may be limited. It is estimated that such a solar field may meet 21% of Oman’s energy needs by 2030, and at the same time China National Petroleum Corporation (CNPC) entered advanced talks in summer 2020 to purchase a 10% stake in Oman’s Khazzan gas field, which would be worth 1.5 billion USD (approximately 577 million riyals or 1.3 billion euros) and dilute British Petroleum’s current 60% ownership80. The increasing involvement of China in Oman’s diversification plans, including ownership of Omani energy assets seems to be feeding into China’s strategy to increase oil and gas flow between the Gulf and Beijing, prompting the question of who benefits most from BRI in Oman and to what extent the China-Oman partnership will contribute to Oman’s hopes for long-term diversification away from oil and gas.

44Such a partnership seems focused almost exclusively on hydrocarbon assets and/or transportation. Hence, Oman’s benefit from China’s BRI is ultimately tied to its hydrocarbon resources and China’s desire to ease access to those resources. Such a partnership bolsters Oman’s hydrocarbon sector rather than diversifying away from it, with Oman’s more independent solar projects not projected to meet even half of Oman’s energy needs in a decade. An international partnership bolstered by hydrocarbon assets is an extension of the rentier model, feeding into Luciano’s concept that the “source of the rent be the rest of the world”, in this case, China as an oil consumer. Under Sultan Haitham, it will be interesting to see whether Oman’s relationship with China deepens to include non-hydrocarbon trade, investment and cooperation, whether through tourism, language programmes or other forms of cultural exchange.

  • 81 “Oman’s new sultan quietly carves Gulf Nation’s way forward”, The Christian Science Monitor, Octobe (...)
  • 82 Garlick and Havlova, 2020, p. 82.

45Such deepening ties are vital for Oman, as it is clear that the current relationship with China remains under Beijing’s pleasure. Oman has taken out loans in the billions that must eventually be repaid to China, risking that Muscat becomes yet another unequal partner in China’s Belt and Road Initiative, with China often seeking control of territory if partners are unable to repay.81 However, Oman may possess one distinct advantage: its traditional role as mediator between Iran and other states. Authors Jeremy Garlick and Radka Havlova point out that China’s main interest of securing energy supply has encouraged approaching both Iran and Saudi Arabia, a balancing act that must be careful not to alienate either state due to mutual distrust. It is for this reason that China uses economic diplomacy, but as a new actor in the Gulf, Oman may hold the political status to assist China in its ambitions with the two nations in exchange for a more equal partnership82.

2. Riding the roller coaster of oil prices: the COVID-19 pandemic and related oil price crash to the Ukraine conflict and oil price spike

  • 83 Owtram and Hayek, 2020.

46The opportunity and the question of China for Oman is thus well-embedded in Omani geopolitics and economic considerations. While Omanis were still coming to terms with the death of Qaboos on 10 January 2020, a world-shaking pandemic emerged from China83. The novel coronavirus spread from Wuhan province around the world forcing governments to impose lockdown measures on their population leading to economic shutdown. Indeed, to the undoubted challenges of diversification from oil was added the catastrophe of COVID-19 – both as a public health issue and associated pandemic measures with concomitant massive economic impact and related political implications. With planes grounded world-wide and a global economic shutdown the price of oil plummeted. Thus, in a strange echo to the wartime circumstances of Qaboos’ ascent to power in 1970 the new Sultan Haitham found himself in short time leading the Omani front of what has been likened to a world war against an invisible enemy: the battle against COVID-19.

47As in other Gulf oil monarchies, a large percentage of Omani citizens are directly employed in the public sector, with the government able to ask them to stay at home and support them in their lockdown, thus helping to reduce the spread of the virus. It is worth noting that, for most non-Omani migrant workers (45% of the country’s population) this choice was not available to them. There have been alleged reports of rioting by workers at sites for Al Tasnim company, where 2000 workers were laid off for demanding immediate repatriation, which the company argued it could not provide given recent economic hardships.

  • 84 Castelier, Sebastian, “Oman moves ahead with overdue reforms”, Al Monitor, 14 January 2021, online. (...)
  • 85 “Respite for Reform: Sultan Haitham Stamps His Mark on Oman”, April 2021, online. URL: https://www. (...)
  • 86 “Oman’s Sultan Haitham forges on with ‘administrative revolution’”, July 2020, online. URL: https:/ (...)

48Thus, since January 2021, Sultan Haitham has implemented a raft of new policy measures to address pressing questions of dependence on oil and issues concerning unemployment and participation for a young population. These have included forcing the retirement of most civil servants with over 30 years employment, rationalising its sovereign wealth funds, abolishing the NOC for migrant workers and acceding to a range of international conventions on human rights, as well as reconsidering the powers of the consultative council. In addition, Haitham has implemented a 5% value added tax, removed utilities subsidies and offered the prospect of reduced royal expenditure84. Such moves may address the power structure of the monarchy itself. In this case, reforms that include Haitham devolving power away from himself can be regarded as addressing the previous absolute rule of Qaboos by decreasing personalisation. Of note, Haitham’s revised Basic Law allows for an independent judiciary, removing the Sultan’s previous position as “sole arbiter of national priorities” and raising hopes that political elites can be held further accountable and that a gradual shift to parliamentary monarchy may be possible85. Although these are difficult waters for Oman, this may also prove to be an opportunity for true diversification and economic reform. In addition, Haitham mirrored the notion of public accountability punctuated by Qaboos’ campaigns in 2014 with a new directive to lead comprehensive reviews of state administration and state-owned companies. The directive was regarded by in-country analysts as a way to root out “projects that have been found to be unproductive or tainted with corruption.” Further, such companies saw a change in boards of directors as part of the reviews, emphasising Haitham’s focus on all companies needing to justify their economic viability to new observers86.

49However, despite public debt set to rise to a record 77,1 % of GDP, Sultan Haitham ordered the formation of a committee concerned with studying the pandemic’s economic impact. Its first measures included offering interest-free loans to struggling businesses suffering from the lockdown. Nevertheless, despite these actions in August 2020, Fitch for the second time in 2020 downgraded Oman.

  • 87 Castelier, Sebastian, “Oman on the cusp of introducing personal income tax”, Al Monitor, 22 April 2 (...)

50Since the Russian invasion of Ukraine the price of oil has spiked to well over one hundred US dollars pushing the Omani economy from a situation of budget deficit to a budget surplus. Whilst this has led to an upgrade of the Omani economy by the ratings agencies and may buy Oman some time to make the transition, the fundamental challenge to diversifying its economy away from oil and balance its budget in the long term remains. This is beginning to usher in changes to the relationship between rulers and ruled: reports that Oman is on the verge of introducing personal income tax which will surely increase calls for great political representation87.

3. Revisiting Oman Vision 2040 in a new economic reality

51Vision 2040 was developed by Haitham as the responsible minister charged by Qaboos. Since becoming Sultan, Haitham has begun a series of wide-ranging reforms. Has Vision 2040 been revisited in the revised circumstance and to what extent does rhetoric match reality? A sobering analysis outlining the scale of the task faced is to be found in a report of economic consultant, John Davis, in which he notes that:

  • 88 Davis, 2020.

“The severity of the economic challenge facing Oman will persist long after the COVID-19 pandemic has receded, requiring the country to rethink its long-term approach to economic development. Vision 2040 remains a top priority for the leadership under Sultan Haitham but with insufficient funds to carry out legacy spending commitments, it will have to rely on the private sector to drive diversification, including further dismantling of foreign investment restrictions, privatisation, closer ties with China and a new tourism strategy”88.

  • 89 Ibid.
  • 90 Ibid.

52Davis goes on to outline the “challenging new normal for Oman’s economy” and notes that it was already on “shaky foundations” going into 2020 before being hit by the virus and associated oil price collapse precipitating an “economic reckoning”89. The International Monetary Fund (IMF) forecast the worst recession in Oman in two decades with minimal economic growth thereafter as oil prices are anticipated to remain low in the near to medium term. Concomitantly, the non-oil economy will “take years to recover from the surge in bankruptcies accompanying COVID-19”90. Davis posits that this environment will compel Oman to adjust its long-term economic strategy and contends that a “prolonged economic slump would risk a resurgence of the large-scale protests that occurred in 2011, and to a lesser extent, in 2018”.

53Noting Sultan Haitham’s promise of policy continuity after succeeding Sultan Qaboos including reaffirming to Vision 2040s programme of diversification away from oil to areas such as manufacturing, logistics and tourism, Davis suggests that structurally lower tax revenues in Oman means that the government will have insufficient funds to carry out legacy spending commitments that form part of Vision 2040. The IMF predicts wider fiscal deficit in the coming years, hence, the government’s capacity to fund deficits through borrowing is declining. Notwithstanding a 10% reduction to 2020 public spending commitments since the start of 2020 Oman’s credit rating has gone down to sub-investment grade or “junk” status as assessed by all three major ratings agencies, Moody’s, Standard and Poor’s and Fitch.

  • 91 Ibid.
  • 92 Castelier, Sebastian, “Oman kicks off ambitious reform project”, Al Monitor, 20 August 2020, online (...)

54He notes various routes for attracting foreign capital: relaxing foreign ownership restrictions, privatisation and deepening ties with China. Oman could also relax tourism restrictions, as tourism has seen a collapse due to COVID-19. Up to now, Oman has targeted the luxury tourism market as a way of maximising revenue but minimising impact and disruption from foreign visitors. He also notes that omanisation could be perceived as an obstacle to investment and that seeking regional assistance will be a last resort as it could impinge on Oman’s “long standing foreign policy independence”91. In August 2020 Sultan Haitham issued 28 royal decrees delegating his own authorities and appointing new finance and foreign ministers. Sa’id al-Habsi was appointed Minister of Finance and Badr Al-Busaidi was appointed Minister of Foreign Affairs92.

55Before the change, Oman had ministers responsible for financial and foreign matters whose work was overseen by the Sultan. This system was established and consolidated when Qaboos was alive. Haitham had pledged in February to overhaul the system. With the retirement of long-standing ministers such as Yusuf bin Alawi, it can now more concretely be said that Oman has entered the post-Qaboos era with a more technocratic hue.

56Haitham has taken measures to reduce bureaucracy in the Omani system of government. In June 2020 the Oman Investment Authority was created. It effected the consolidation of government companies except Petroleum Development Oman, and the management of $17.7 billion assets held in various sovereign wealth funds. Castelier outlines that this cutting back of government bureaucracy not only aims to increase efficiency but to address increasing public debt accumulating since the 2014 oil price crash and curb increasing reliance on external loans. Oman has been severely affected by COVID-19 measures and concomitant low oil prices and recession. The pandemic related events have intensified previously existing trends. Oman is on course for one of the highest budget deficits in the Gulf.

  • 93 Joyce, 1995.
  • 94 Ibid.
  • 95 “Middle Eastern Petro-States’ Reliance on China Surges with Covid”, Bloomberg, June 2020, online. U (...)
  • 96 “Oman’s Bittersweet Economic Relations with China”, The Arab Gulf States Institute in Washington, J (...)

57In seeking to address these issues it would seem that Haitham is taking measures as envisaged by Vision 2040. These include further encouraging foreign direct investment including China. Although the precise details of a pandemic could quite obviously not have been foreseen by Qaboos, it is highly likely that he was more than aware of Oman’s economic vulnerability in the face of oil price spikes. In a 1995 interview, he admitted that “depressed oil prices have inevitably had an effect on our country’s domestic programs. So […] we have been […] exploring other possible avenues of national income”93. However, in the same interview, which was given in the year of Vision 2020s announcement, Qaboos also emphasised an expectation of international involvement in the Gulf’s stability. “Given the fact”, Qaboos explained, “that this region produces a commodity that is vital to the rest of the world-oil-the whole international community has an interest and responsibility in assisting in every way possible the maintenance of peace and security in this region”94. The latter comment feeds into Oman’s policy of neutrality and security relations with the United States but implies that there is an expectation that oil will ensure that Oman’s stability will be supported by external powers. The factor of admitting to oil price difficulties while hinting at Oman’s geostrategic status and global partnerships foreshadows an expectation that external actors will be more involved in Oman’s stability as oil decreases, feeding into the notion that a modern, diversified state would see a shift from the rentier model to reliance on global politico-economic involvement, which is happening under Vision 2040 and successor Sultan Haitham through, inter alia, China. The prospect of such reliance has increased under COVID-19 for many Gulf States. In the wake of the pandemic, China has increased oil purchases from the Gulf. By June 2020, one-third of oil shipments from the Gulf was for Beijing, while Western economies still struggle to restart during COVID-19. China has also bought vast quantities of Oman crude95. However, Oman’s relationship with China has also been described as bitter-sweet, with China focused primarily on investment in Oman’s energy sector rather than diverse infrastructure96.

4. Oman after Qaboos: change in governance or same old family rules?

58At the time of his passing Sultan Qaboos held most significant government sovereign portfolios – he ran the government as prime minister and retained the sovereign portfolios: defense minister, foreign minister, supreme commander of the armed forces and at the same time had a controlling overview of the economy as finance minister and head of the board of governors of the central bank. His monopoly of the reins of power was such that for a state’s sovereign, as Kristin Smith Diwan notes:

  • 97 Smith Diwan, 2020.

“Much of the analysis considering Oman’s future following the death of Sultan Qaboos bin Said has focussed on Oman’s foreign policy and the probability that the sultanate will maintain the same degree of independence from regional rivalries. Internally, the change in leadership will also impact the balance among domestic power centers in the sultanate. Qaboos wielded an exceptional degree of autonomy and authority within the Omani power structure, grounded in his historic role as the unifier and builder of the modern Omani state. It is doubtful that the new Sultan, Haitham bin Tariq al-Said, will be able to monopolize power to the same degree, especially given Oman’s economic challenges, which will require buy-in and collaboration to be met successfully.”97

  • 98 “Oman designates a crown prince, a first for the country”, Atlantic Council, January 2021, online. (...)

59Smith Diwan argues that whilst Haitham is understandably not monopolising power individually in the way that Qaboos did, the appointments remain within the purview of the royal family. In these decrees Haitham created new ministries: Ministry of Culture, Sports and Youth; Ministry of Labour; Ministry of Economy; Ministry of Transport, Communications and Information Technology. Haitham appointed his son, Theyazin as Minister of Culture, Sports and Youth and his brother as deputy prime minister of defense. Haitham appointed Badr bin Hamad bin Hamoud Al Busaidi as foreign minister. Significantly, Haitham also appointed Theyazin as Crown Prince, creating certainty in a more transparent succession process than his predecessor98. This move builds on the attempt to emphasise the stability of post-Qaboos Oman and the intention is to continue the independent foreign policy formulated and implemented over decades by Qaboos and Yusuf bin Alawi. However, the current financial and economic realities may necessitate a pragmatic shift to become more supportive of the concerns of its direct neighbours on the Arabian Peninsula, the United Arab Emirates and Saudi Arabia.

V. The specificities of the Omani rentier state

1. Oil prices and political participation

  • 99 “As Oman enters a new era, economic and political challenges persist”, Brookings, January 2021, onl (...)
  • 100 Oman Vision Draft Document, 2019, p. 14.

60The case of Oman poses questions and invites analysis about the correlation between the highs and lows of oil price, and the establishment, consolidation and ongoing maintenance of contemporary monarchical rule including the timings of moves to increased political participation. Returning to Luciani, the maxim “no taxation, no representation” is no doubt under threat, as this rentier model is directly funded and dependent on Oman’s oil revenues. This fact is all the more important when considering that Oman’s contemporary economy has often been regarded as stable but weak, with Oman’s modest oil reserves making its rentier model even more vulnerable to oil price shocks and inevitably the victim of hydrocarbon depletion within two decades99. To a point, Vision 2040 seems to acknowledge that with both unpredictable oil price movements and the end of the oil era, the political participation of youth especially will be required to maintain legitimacy100. Again, as Vision 2040 was an initiative given by Qaboos to current Sultan Haitham, it would seem that achieving not only economic diversification but political participation was a burden also to be shouldered by Qaboos’ successor.

2. The legacy of Qaboos: how centralised is the Sultan’s rule?

  • 101 See “The lesser-known early years of Sultan Qaboos”, British Library, July 2020, online. URL: https (...)

61It also poses the question of the role of the royal family and the individuals involved. In comparative terms, a leading scholar of dynastic rule in the Gulf, Michael Herb, sums up succinctly that ‘While the Al Saud rule Saudi Arabia, and the Al Sabah rule Kuwait, Qaboos rules Oman’. The explanation for this may lie in the circumstances of his coming to power, his troubled relationship with other members of the Al Said royal family, as well as his personality and early experiences101. Qaboos married his cousin in 1976, but the marriage did not last long, and the couple soon divorced - the Sultan never remarried or had any children. Thus, the issue of who was involved in governance inevitably would become interlaced with who was a potential successor. The procedure for succession was laid out in the Basic Law. Much speculation followed but in the event Sultan Haitham was appointed Sultan without reference to the Defence Council, the Ruling Family Council affirming Qaboos’ written choice.

  • 102 See Pridham, 1986.

62In the 1970s, although it was initially and understandably asserted that there was a complete break between the methods and character of the rule of Qaboos and his father Said, it was in due course noted that there were actually strong continuities as well102. In the same way, we may find that after an initial fanfare of change the underlying continuities of Al Said rule will exert themselves in subtle and not so subtle ways. For example, although the previously pledged restructuring of government structures and change in faces by Haitham in August 2020 has been heralded in terms of a new “inclusivity”, it can be noted that the government continues to be predominantly headed by members of the Royal Family and those closely linked to them. Haitham has involved his half-brothers, their sons and indeed his own son. Although Qaboos relied on advisors rather than his family, “alone on the throne” is in some ways just another variant of the al-Busaidi family rule in which power is concentrated in an autocratic form: a ruling family.

3. The presumed rights of monarchy under the spotlight

  • 103 As termed by Omani analyst Hatem Al-Shanfari, Anglo-Omani Society seminar, “The Impact of COVID-19 (...)

63The existence and rights of the ruling families in the Gulf is partially constructed and perpetuated as being the traditional and inevitable natural order of things. However, this obscures that in the past there have been challenges to this narrative. Nowhere has this been greater than in Oman – during the Jebel Akhdar War and the Dhofar War. In understanding the unfolding dynamics in Oman it should not be forgotten that, in the challenging circumstances or the current “perfect storm” – the COVID-19 recession, low oil prices, spiralling budget deficits103 – potentially everything is up for grabs. Unless their grievances are addressed and their aspirations met, the ever-expanding number of unemployed and underemployed youth in Oman will begin to pose more vocally and forcefully the question as to why the key issues relating to the government of their country should necessarily be deemed an Al Said family affair. This reflects a global trend manifesting a key insight of political economy that never should be overlooked - that economics and politics are inextricably interlinked, nowhere more so than in the Gulf.

Conclusion

  • 104 See video address by Jordan’s king Abdullah II, in which he wears a military uniform, discusses his (...)

64This paper has surveyed the development of the Omani rentier state from its founding moment in 1970, through its initial oil-fuelled phase and subsequent attempts to diversify and now its future prospects as envisaged in Vision 2040 and Oman’s new economic reality of needing to balance its budget over the long term. This overview has revealed that Qaboos built the modern welfare state through oil-reliance. Throughout his reign, hydrocarbon revenues were Oman’s central economic buttress and although Qaboos acknowledged the vulnerability of oil prices, no major five-year plans or Vision 2020 pushed structural diversification away from oil. Hence, it is likely that Qaboos understood that true oil diversification would not be reached in his lifetime. Further, as COVID-19 inflamed pre-existing conditions of unemployment and Oman’s financial stability, Haitham may find himself in a quagmire, wanting to continue Qaboos’ political neutrality in foreign policy yet needing urgent cash flow to pursue not only long-term diversification but more immediate issues of youth joblessness. A turn to the Gulf Cooperation Council would threaten neutrality while embracing China may lead to dependence on an external power. Finally, COVID-19 does not seem to have provoked strong parallels between the Dhofar Civil War and present-day challenges. It is true that some Arab monarchs have responded to COVID-19 with militant language104. However, Haitham’s rule has just begun and with Oman’s limited oil reserves he may not respond to the pandemic with belligerent rhetoric but socio-economic decrees, illustrating the potential gap between Qaboos’ legacy and his own. Oman is no longer at war and is united, and the test for Haitham’s legitimacy will not be militancy but food prices, joblessness, fiscal instability and issues of political participation–the very threats oil has kept at bay and the key demands of the Arab Spring.

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Notes

1 See “The Two Sultans of Oman: from Qaboos to Haitham bin Tariq”, Al Bawaba, February 2020, online. URL: https://www.albawaba.com/opinion/two-sultans-oman-qaboos-haitham-bin-tariq-1340223

2 “Is Oman’s model of governance about to shift?”, Al-Monitor, April 2020, online. URL: https://www.al-monitor.com/originals/2020/04/oman-model-governance-shift-oil-prices-coronavirus.html#ixzz6t8fRH62h

3 See Owtram 2004; Valeri 2017.

4 Beblawi and Luciani, 1987.

5 The following is drawn from Luciani, 2019, p. 119-125.

6 Luciani, 2019, p. 120.

7 Ibid.

8 See for example Gray, 2011, the contributions to Herb and Lynch, 2019, Moritz, 2018.

9 Gray, 2011.

10 Ibid., p. 7.

11 Ibid., p. 17.

12 Ibid., p. 35.

13 Herb and Lynch, 2019.

14 Moritz, 2019.

15 Valeri, 2017, p. 239.

16 We will return to this later but at this point it is salient to note the ideological nature, contours and purposes of this “renaissance ideology” have been expertly and persuasively outlined by Marc Valeri. See Valeri, 2017, p. 121-124.

17 “Revealed: Hoe the British military supplies ‘mercenary’ forces to a Gulf dictatorship”, Declassified UK, July 2020, online. URL : https://www.dailymaverick.co.za/article/2020-07-20-revealed-how-the-british-military-supplies-mercenary-forces-to-a-gulf-dictatorship/#gsc.tab=0

18 “Defence Secretary announces investment in strategic Omani port”, gov.uk, September 2020, online. URL: https://www.gov.uk/government/news/defence-secretary-announces-investment-in-strategic-omani-port

19 See Rabi, 2016.

20 See “Political Relations between Oman and the United Nations, 1971”, The National Archives, UK, FCO 8/1675 p. 9, accessed 14 September 2020, online. URL: https://www.agda.ae/en/catalogue/tna/fco/8/1675/n/9

21 Valeri, Marc, “Oman’s new Sultan faces mammoth challenges”, 21 January 2020, online. URL: https://www.bbc.co.uk/news/world-middle-east-51112191

22 Baabood, 2017, p. 112.

23 Ibid.

24 Owtram, 2004, p. 165.

25 “’Colonialism never ended’: The elite British cabal propping up a Gulf dictatorship”, Declassified UK, April 2021, online. URL: https://www.dailymaverick.co.za/article/2021-04-20-colonialism-never-ended-the-elite-british-cabal-propping-up-a-gulf-dictatorship/?fbclid=IwAR2gl0jA34C4V_JDNh1WKKQwSbMGv9bWmVgkuMOpJbOXufoKOmK9kV1hn0w

26 Ibid.

27 Peterson, 2004.

28 “Oil Shock Buffets Oman”, Washington Post, April 1986, https://www.washingtonpost.com/archive/politics/1986/04/04/oil-shock-buffets-oman/f939d30a-26ba-4f40-a638-9a5af70e910b/

29 Ibid.

30 Ibid., p. ii.

31 Smith, 1988, p. 542.

32 Al Nabhani, 2007, p. 31.

33 Ibid., p. 30.

34 Ibid., p. 31.

35 Ibid.

36 Khan, 1993, p. 1.

37 Peterson, 2004.

38 Ibid.

39 “Father of Oman: The Fragile Legacy of Sultan Qaboos”, Al Bawaba, May 2019, online. URL: https://www.albawaba.com/insights/father-oman-fragile-legacy-sultan-qaboos-1283394

40 Peterson, 2004.

41 Ibid.

42 O’ Reilly, 1998, p. 76.

43 See “Vision 2020”, Ministry of Economy, Sultanate of Oman, online. URL: https://www.economy.gov.om/en/Page.aspx?I=14

44 Ibid.

45 Ibid.

46 Siegfried, 2000, p. 359.

47 Ibid., p. 360.

48 Ibid., p. 379.

49 Ibid.

50 Due-Gundersen, 2019.

51 “Petrodollars: Oman gripped by action against oil corruption”, April 2014, online. URL: https://blogs.platts.com/2014/04/28/oman-oil-corruption/

52 “Oman Corruption Report”, March 2020, online. URL: https://www.ganintegrity.com/portal/country-profiles/oman/

53 “Oman protestors call for fight against corruption”, Arabian Business, January 2011, online. URL: https://www.arabianbusiness.com/oman-protestors-call-for-fight-against-corruption--374524.html; “Deaths in Oman protests,” Al Jazeera, 2011, online. URL: https://www.aljazeera.com/news/2011/2/27/deaths-in-oman-protests

54 “Rallies in Oman Steer Clear of Criticism of Its Leader”, The New York Times, March 2011, online. URL: https://www.nytimes.com/2011/03/02/world/middleeast/02oman.html

55 “Petrodollars: Oman gripped by action against oil corruption”, S&P Global Platts, April 2014, online. URL: https://blogs.platts.com/2014/04/28/oman-oil-corruption/

56 Ibid.

57 “Omani CEO jailed for 23 years in graft case: court”, Reuters, February 2014, online. URL: https://www.reuters.com/article/us-oman-corruption-sentences/omani-ceo-jailed-for-23-years-in-graft-case-court-idUSBREA1Q1OW20140227

58 Ibid.

59 “Oman hands down more sentences in oil corruption case”, Gulf News, March 2014, online. URL: https://gulfnews.com/world/gulf/oman/oman-hands-down-more-sentences-in-oil-corruption-case-1.1298303

60 Ibid.

61 Worrall, 2012, p. 98.

62 Schoeberlein, 2019, p. 1.

63 Fuller Thomas, “Rallies in Oman Steer Clear of Criticism of Its Leader”, New York Times, 1 March 2011, online. URL: https://archive.nytimes.com/www.nytimes.com/2011/03/02/world/middleeast/02oman.html

64 These details on the Arab Spring in Oman are drawn from Worrall, 2012, p. 98-106.

65 Peterson, 2004, p. 125.

66 Due-Gundersen, 2019.

67 Worrall, 2012, p. 106.

68 Ibid.

69 Ulrichsen, 2016, p. 6.

70 “Patriotism from fragmentation: the personal nationhood of Qaboos”, Open Democracy, June 2017, online. URL: https://www.opendemocracy.net/en/north-africa-west-asia/patriotism-from-fragmentation-personal-nationhood-of-om/

71 See the Royal Decree No. 101/1996 Promulgating the Basic Statute of the State Article 6, Ministry of Justice and Legal Affairs, Sultanate of Oman, online. URL: https://www.mjla.gov.om/eng/basicstatute.aspx

72 Due-Gundersen, 2019

73 Rakhmat, 2019.

74 Ibid.

75 Ibid.

76 Mogielnicki, 2020.

77 Jabarkhyl, 2017.

78 Ibid.

79 “Oman Counters Chinese Influence With Two New Energy Megaprojects”, Oil Price, August 2020, online. URL: https://oilprice.com/Energy/Energy-General/Oman-Counters-Chinese-Influence-With-Two-New-Energy-Megaprojects.html

80 “CNPC In Talks to Buy $1.5-Billion Stake in BP’s Oman Gas Field”, Oil Price, July 2020, online. URL: https://oilprice.com/Latest-Energy-News/World-News/CNPC-In-Talks-To-Buy-15-Billion-Stake-In-BPs-Oman-Gas-Field.html

81 “Oman’s new sultan quietly carves Gulf Nation’s way forward”, The Christian Science Monitor, October 2020, online. URL: https://www.csmonitor.com/World/Middle-East/2020/1002/Oman-s-new-sultan-quietly-carves-Gulf-nation-s-way-forward

82 Garlick and Havlova, 2020, p. 82.

83 Owtram and Hayek, 2020.

84 Castelier, Sebastian, “Oman moves ahead with overdue reforms”, Al Monitor, 14 January 2021, online. URL: https://www.al-monitor.com/originals/2021/01/oman-reflect-sultan-qaboos-covid19-economy-said-security.html

85 “Respite for Reform: Sultan Haitham Stamps His Mark on Oman”, April 2021, online. URL: https://www.ispionline.it/en/pubblicazione/respite-reform-sultan-haitham-stamps-his-mark-oman-30092

86 “Oman’s Sultan Haitham forges on with ‘administrative revolution’”, July 2020, online. URL: https://thearabweekly.com/omans-sultan-haitham-forges-administrative-revolution

87 Castelier, Sebastian, “Oman on the cusp of introducing personal income tax”, Al Monitor, 22 April 2022, online. URL: https://www.al-monitor.com/originals/2022/04/oman-cusp-introducing-personal-income-tax

88 Davis, 2020.

89 Ibid.

90 Ibid.

91 Ibid.

92 Castelier, Sebastian, “Oman kicks off ambitious reform project”, Al Monitor, 20 August 2020, online. URL: https://www.al-monitor.com/originals/2020/08/oman-ministerial-reshuffle-sultan-haithan-economy-employment.html

93 Joyce, 1995.

94 Ibid.

95 “Middle Eastern Petro-States’ Reliance on China Surges with Covid”, Bloomberg, June 2020, online. URL: https://www.bloomberg.com/news/articles/2020-06-03/china-is-getting-its-hooks-deeper-into-middle-east-oil-supplies;

96 “Oman’s Bittersweet Economic Relations with China”, The Arab Gulf States Institute in Washington, July 2020, online. URL: https://agsiw.org/omans-bittersweet-economic-relations-with-china/

97 Smith Diwan, 2020.

98 “Oman designates a crown prince, a first for the country”, Atlantic Council, January 2021, online. URL: https://www.atlanticcouncil.org/blogs/menasource/oman-designates-a-crown-prince-a-first-for-the-country/

99 “As Oman enters a new era, economic and political challenges persist”, Brookings, January 2021, online. URL: https://www.brookings.edu/blog/order-from-chaos/2020/01/15/as-oman-enters-a-new-era-economic-and-political-challenges-persist/

100 Oman Vision Draft Document, 2019, p. 14.

101 See “The lesser-known early years of Sultan Qaboos”, British Library, July 2020, online. URL: https://blogs.bl.uk/untoldlives/2020/07/the-lesser-known-early-years-of-sultan-qaboos.html

102 See Pridham, 1986.

103 As termed by Omani analyst Hatem Al-Shanfari, Anglo-Omani Society seminar, “The Impact of COVID-19 and the Oil Price Crisis on Oman's Domestic and Foreign Policy”, 12 June 2020, online. URL: https://www.youtube.com/watch?v=8wnVzOJ_BFs

104 See video address by Jordan’s king Abdullah II, in which he wears a military uniform, discusses his experience as a soldier and emphasises the importance of armed forces in “countering this threat”. “Speech by Abdullah II on combating COVID”, Alghad TV, 23 March 2020, online. URL: https://www.youtube.com/watch?v=nOUSyX9eDzY, accessed 16 February 2022.

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Nicolai Due-Gundersen et Francis Owtram, « The Foundation, Development and Future of the Omani Rentier State: From the Dhofar War to Vision 2040 », Arabian Humanities [En ligne], 16 | 2022, mis en ligne le 01 juin 2022, consulté le 02 octobre 2022. URL : http://journals.openedition.org/cy/8328 ; DOI : https://doi.org/10.4000/cy.8328

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Auteurs

Nicolai Due-Gundersen

United Nations Institute for Training and Research (UNITAR)

Francis Owtram

University of Exeter

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