Sultan Qaboos bin Said al Said has ruled Oman since 1971 © STRINGER/AFP/Getty Images
Sultan Qaboos bin Said al Said has ruled Oman since 1971 © STRINGER/AFP/Getty Images

Can the Sultan of Oman modernise the country?

30 July 2019

At Duqm, on the Arabian Peninsula, Sultan Qaboos bin Said al Said has effectively created an industrial city out of thin air.

It took the ruler of Oman – or more accurately, his government – six years to turn a sleepy fishing village into a booming maritime hub. The question facing the 78-year-old Sultan, an absolute monarch who has ruled Oman since independence in 1971, is whether he can reinvent the entire country as successfully.

“Sleepy” is the adjective foreign correspondents habitually used to describe Oman, an oil rich country with a population of around 4.9m, tucked away on the southeastern end of the Arabian Peninsula. The sultanate looks small on the map but is actually six times the size of Switzerland. Two of its neighbours – Saudi Arabia and Yemen – are at war.

Like almost every government in the region, Oman’s has a public plan to transform society. The years attached to these visions may change – 2030 for Saudi Arabia, Bahrain and Qatar, 2035 for Kuwait and 2040 for Oman – but the plans are remarkably similar. They all look, in differing degrees, to digital technology, innovation, privatisation, free enterprise zones, foreign investment and tourism to diversify their economies before the oil and gas finally run out.

In Oman’s case, the oil could run out as soon as 2033. Gas reserves are forecast to be exhausted by 2046, although that may be delayed if new fields in the northeast fulfill their potential. As the sector accounts for around 70% of the country’s economy, that will leave a huge hole which, according to the government’s National Program for Enhancing Economic Diversification, will be filled by manufacturing, tourism, logistics, mining (the country’s reserves of gold and copper are largely untapped) and fisheries.

That goal will only be fulfilled if thousands of new SMEs spring up – at present, this sector only accounts for 15% of GDP (compared to a global average of 50%). The government is trying to help – offering land and technical support and stipulating that many state projects must allocate one-tenth of spending to small businesses.

Such initiatives will achieve little unless Oman’s risk-averse banks start funding SMEs, something they have traditionally been reluctant to do. In one recent survey, 56% of CEOs running companies with 100 employees or less said they struggled to access credit.

Reinventing Oman will be tricky. Officially, unemployment is low but the International Labour Organisation estimates that one in five young people don’t have jobs. As 40% of the population of 4.97m are under 25, this is particularly troubling for the government. In January, it promised to confront the issue after rare public protests in the capital Muscat and the cities of Dhofar and Salalah.

The ‘Omanisation’ of the workforce could help: the government estimates that, in the past year, 65,000 expats have left. (Around 1.7m remain.)

A 10-fold expansion of the country’s logistics sector between now and 2040 will, the government hopes, create 300,000 jobs. Oman is strategically located between East and West, on trade routes between Asia-Pacific, Africa and the Middle East, and on the Strait of Hormuz, the only sea passage from the Persian Gulf to the Indian Ocean. Apart from the major investment in Duqm, the government is increasing air freight capacity, building a cargo village at Muscat airport and developing the port of Suwarq to handle more goods.

Change, on the scale envisaged by the Sultan and his ministers, inevitably creates losers as well as winners. The strategy of turning Duqm, now a special enterprise zone, into a port to rival the UAE’s Jebel Ali looks to be succeeding – a Chinese consortium has already pledged to invest up to $10.7bn in an industrial city there – but many local fishermen are unhappy.

Plans to house 400 large-scale fishing boats, processing plants and cold storage facilities there prompted Althebeeb Hamid, head of the local fishermen’s union, to complain: “The fishing community in Duqm dislikes those big boats because they will surely overfish and we are too modest [not rich enough] to invest in this project.” In response, the city’s mayor Ahmed bin Saliam al-Mahruqi effectively told the union leader to get with the programme.

In essence, the regime is arguing that Oman needs the jobs and the money. Officials have a point: the country’s break even price for oil is, the IMF estimates, $77 a barrel. The current market price is around $64. Since oil prices fell in 2014, the government has had to borrow so heavily that its debt now stands at over half of GDP. None of this precludes a more inclusive approach to development but the sense of urgency is understandable.

The Oman 2040 plan contains its fair share of grandiose rhetoric but officials have worked closely with experts in Malaysia and Singapore to hone their development model. In an absolute monarchy, where laws are made by royal decree, this transformation is, inevitably, a top-down exercise. Because the government controls the media and the internet, and often responds punitively to criticism, there are few obvious mechanisms for identifying mistakes or airing differing points of view.

This is why, when Omanis express dissent, it can take unusual forms. As the American anthropologist Dale Eickelman noted: “Only in Oman has the occasional donkey been used as a mobile billboard to express anti-regime sentiments. There is no way in which police can maintain dignity in seizing and destroying a donkey on whose flank a political message been inscribed.”

The biggest threat to Oman 2040 is the man who commissioned it. Although Sultan Qaboos bin Said al Said’s health has inspired much speculation, he has no sons and has not publicly named an heir. The process of appointing a new Sultan is complex and potentially destabilising.

The Sultan came to power in 1970, deposing his father in a bloodless coup backed by the British military. When he took over, Oman had no secondary schools, one hospital and just 10km of paved roads. He has modernised Oman once. The question is: can he do it again?

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