Focus: Oman-Saudi relations

Happy Neighbors

Dec. 4, 2021

Few international political ties in history have been as much of a win-win deal as those between Riyadh and Muscat.

It is no surprise that the Kingdom of Saudi Arabia (KSA) and the Sultanate of Oman have strong bilateral ties that go far back in history. These ties are due to shared interests, geographical proximity, and—above all—linguistic, cultural, and religious commonalities. Over the years, and even before the signing of the charter for the GCC in 1981, there has hardly been a single glitch in Riyadh-Muscat relations.

What is more, Oman follows a more lenient policy toward certain countries in the region such as Iran, which are not currently on the best of terms with KSA. In such cases, Oman has acted, on more than a few occasions, as a well-wishing mediator, sparing the region from unwanted friction, a boon given the amount of tension already going on in the Middle East. Oman also took on its usual role as a mediator for the KSA during the previous fallout between Qatar and the GCC.

In the case of Qatar, Muscat's efforts fortunately resulted in the lifting of the blockade and the renewal of diplomatic ties between all GCC member states and Qatar. The case of Iran, however, may be trickier, although there are signs that—thanks to Muscat's efforts—the hostilities between Tehran and Riyadh are declining. In May 2021, Saudi Crown Prince Mohammed bin Salman noted “Iran is a neighbouring country, and all we aspire for is a good and special relationship with Iran" during a televised interview, adding “we do not want Iran's situation to be difficult. On the contrary, we want Iran to grow."

Iran has similarly changed its tone toward the KSA, with a few high-ranking Iranian officials noting there is no unresolvable animosity between Tehran and Riyadh. This happened after Iranian Minister of Foreign Affairs Mohammad Javad Zarif dropped by Muscat earlier this year for a visit, which confirms Oman's positive role in the de-escalation of political tension in the region.
The KSA and Oman, which share a lengthy border, have a relatively large trade volume, as well. The value of Saudi exports to Oman, such as dairy and other edible products, plastics and petrochemical products, and steel, among many others, exceeds USD800-1,000 million. Oman, in return, exports metal ore, green-water seafaring vessels, organic chemicals, and livestock to the KSA. It is estimated that Oman's exports to the KSA have outweighed Saudi exports over the last three years, creating a positive trade balance of up to USD600 million for Oman.

The survival of many SMEs in Oman depends on their ability to find their way into the Saudi market—the largest and most vibrant market in the region. Said Al Rashid, CEO of Oman Manufacturers Association (OMFA), told TBY recently that “exporting to Saudi for some of our manufacturers is essential because it is the largest market in the region." Maintaining excellent political ties with this largest market in the region is exactly what Omani diplomats and policymakers in Muscat are working toward with remarkable success.

Given the importance of bilateral ties between the two neighbors, it is hardly surprising that the newly sworn in Sultan of Oman Haitham bin Tariq al-Said made his first overseas official trip to Saudi Arabia. The Omani Sultan was welcomed by King Salman of Saudi Arabia in July 2021 where the two leaders discussed trade, regional security, and investment. Sultan Haitham bin Tariq al-Said was separately greeted by Saudi Crown Prince Mohammed bin Salman.

“The Saudi cabinet authorized officials to prepare and sign draft agreements with Oman in fields including commerce, culture, investment promotion and post and transport," according to Al Jazeera citing a report by Bloomberg. The business-related cooperation will be welcome news for the Omani side, which has been trying to fight unemployment and keep the country's debt in check in recent year.

Relations with the KSA can indeed affect the economy of Oman. Saudi investments have often been the lifeblood of Oman's economy. A large investment may soon be made in the form of a Saudi-backed industrial zone in Oman. The idea of a joint Saudi and Omani special economic zone was unveiled during a meeting between high-profile delegations from Riyadh and Muscat in June 2021. The proposed special economic zone can cluster Saudi investors together in a particular area in Oman and thus create synergy, while cutting down on the costs of cross-border transportation for Saudi industries based in Oman. The required workforce, meanwhile, will be mainly Omani, which can alleviate the unemployment problem in Oman.

If past events are anything to go by, Riyadh-Muscat ties will only prosper in the foreseeable future due to several strategic co-dependencies: the KSA and its investments boost Oman's economy. Meanwhile, Muscat is a reliable ally of Riyadh, which can—with thoughtful mediations—help the Kingdom out of political stand-offs in the region and beyond thanks to Oman's progressive diplomatic approach and its competence in using dialogue to solve ostensibly difficult issues.

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