‘Controlling the situation’: Oman leader quickly quells protests

COVID-19 pandemic and drop in oil prices it triggered have exposed the weaknesses of the Omani economy.

Sultan Haitham bin Tariq
Oman's Sultan Haitham bin Tariq at al-Alam palace in Muscat. [File: Andrew Caballero-Reynolds/Pool via Reuters]

Oman is traditionally considered a relatively stable pole in a volatile region but recent protests have laid bare manifold issues facing the Gulf country on the southeastern coast of the Arabian Peninsula.

The turmoil played out last month culminating in demonstrations in various cities. Speculation is growing over what is behind the Omani people’s frustration, and whether it can be fixed.

Ten years ago, the Sultanate of Oman weathered the Arab Spring, which altered the region’s landscape and ended several regimes. Unlike in Tunisia, Egypt or Libya, however, the Omani demonstrators primarily demanded political reforms, and not the Sultan’s departure.

At the time, Sultan Qaboos bin Said Al Said obliged and pledged various political reforms. These included creating 50,000 new jobs in the public service, welfare programmes for the unemployed and wage increases for civil servants.

Local demonstrations were brought under control relatively quickly, although they did not entirely cease, said James Worrall, associate professor in International Relations & Middle East Studies at the University of Leeds.

It has become apparent that Qaboos’s reforms merely managed the country’s issues temporarily, without fixing them permanently.

“There have been small-scale protests across the Sultanate since 2011, which have largely gone under the radar,” Worrall told Al Jazeera.

‘Twin shocks’

The COVID-19 pandemic and drop in oil prices it triggered exposed the weaknesses of the Omani economic system, which is more than 60 percent dependent on oil and natural gas, Yasmina Abouzzohour, visiting fellow at Brookings Institution told Al Jazeera.

“Oman’s economy – which had already been struggling prior to 2019 due to its over-reliance on hydrocarbons and high levels of debt – has been exacerbated by the twin shocks of the global pandemic and fallen oil prices,” she said.

As a result, economic output decreased by 6.4 percent while the national budget was expanded to 17.3 percent of gross domestic product (GDP) since the reforms were first implemented. Within a year, the country’s deficit rose from 60 percent to 81 percent of GDP in 2019.

Meanwhile, the country’s economic underdevelopment has led to growing underemployment, particularly among young people, with an unemployment rate of 10 percent.

Here, the coronavirus catastrophe has added a new dynamic on an individual level, Worrall said.

“The pandemic added an element of the pressures which has hit the economy pretty hard and of course has led to people being cooped up, bored and frustrated – this latter element is important.”

Sultan Qaboos passed away in January 2020, leaving his successor Sultan Haitham bin Tariq Al Said challenging circumstances. Nonetheless, the leadership change may be to the country’s benefit, said Worrall.

“It is clear that there are many similarities, and that is important, but we have also seen some interesting differences too. Haitham clearly has more energy. There has been much activity whereas towards the end of the Qaboos era things naturally slowed down and some difficult decisions were not made,” he said.

These difficult decisions Qaboos postponed were left for Haitham, who had no choice but to make fiscal adjustments given the economic downturn Oman has witnessed.

‘Rentier response’

Haitham instructed all authorities to cut their budget by 10 percent. It is precisely this administrative apparatus that has explicitly been expanded over the past decades in order to offer work to as many people as possible.

Oman’s administrative bureaucracy now devours almost three-quarters of national revenues from the oil sector. He also introduced a five percent value-added tax (VAT) and, from 2022, an income tax for high earners.

In addition, the government has reduced grants, actioned early retirement and introduced lower wages for new hires.

A re-emergence of people’s frustration is hence not surprising, and the renewed protests are the result of the reoccurring economic hardships, said Abouzzohour.

“They were triggered by economic grievances, specifically unemployment and layoffs,” she said.

Among other moves, Haitham announced a package of measures designed to create 32,000 jobs in the public and private sectors, and provide additional social benefits.

“The response to the protests of the creation of new government jobs – interestingly many of them temporary – and the announcement of reforms to private sector employment look much more like a typical rentier response but with a degree of messaging about the nature of the longer-term direction of economic reform and, of course, reality,” Worrall assessed of the measures taken.

With the current protests potentially causing immediate economic concerns for the government, as it could damage investor confidence at a time when Oman is desperately looking for foreign direct investment and seeks to stimulate critical sectors such as tourism, controlling the situation is essential for the Sultan’s vision.

Fortunately for him, the protests are unlikely to expand drastically, Abouzzohour said.

“It would be highly unlikely for these protests to escalate. First, these were small events with a few hundred protesters. Second, Sultan Haitham has moved swiftly to contain them by pledging the creation of government and private-sector jobs, as well as a six-month stipend for Omanis who became unemployed due to the pandemic.”

Moreover, much larger protests against unemployment and inflation took place in 2018 and 2019 and were de-escalated by the late Sultan Qaboos in a similar manner. There is no reason to suspect these recent smaller-scale sit-ins would end differently, said Abouzzohour.

Worrall concurred, noting the government has displayed a proclivity for de-escalation instead of exacerbating the situation.

“Nothing can be ruled out completely, but the likelihood [of protest escalation] is minimal. Indeed, it would be difficult to assemble a real coalition. The government remains responsive and shows that it cares about its people. The pandemic situation means people understand the pressures and can see everywhere else having similar issues,” said Worrall.

“The government continues to engage in dialogue and show a willingness to address people’s concerns as well as it can.”

A general view of Oman’s capital Muscat on January 12, 2020 [Christopher Pike/Reuters]

‘Decentralisation of power’

Politically, on the other hand, Oman is now faced with the question of whether the reforms should be accompanied by political liberalisation. While first indications are favourable, one cannot yet fully assess the Sultan’s modus operandi moving forward, Worrall argued.

“It is important not to think of political liberalisation as being something which looks like a Western model, but it is clear that Haitham’s direction of travel is to involve more people. We have not really been able to see his interaction with the population well because of COVID restrictions, but his decentralisation of power looks like a kind of political liberalisation.

“There will be more decisions made at the local level, but clearly there are other elements at play here, too, and it is a balancing act. So for example, the Majlis A’Shura [legislative body] has recently gained some interesting new powers, but at the same time has also had others amended or removed,” Worrall said.

However, even without an immediate liberalisation of the country on the agenda, the Sultan will have work to do.

According to Abouzzohour, the priorities are clear.

“The Sultan will focus on improving economic conditions, promoting tourism after the outbreak is under control, and moving towards diversifying the economy away from hydrocarbons,” she said.

While the challenge is great, the Sultan has the means to overcome the crisis, Worrall added.

“The situation is challenging for sure, but Haitham has a range of tools at his disposal and capable people around him to help. So we will see broad continuities but also continual, gradual evolutionary change too – the classic kind of balancing of interests, resources and priorities which has served the Sultanate well over the past five decades,” Worrall said.

While the current Sultan and his predecessor shared “many similarities”, differences are still present that could change the country’s dynamic moving forward, Worrall said.

“The fascinating dimension is that Haitham seems willing to delegate power, both within the royal family and beyond. The divestment of the key roles held by Qaboos is an important development, as is the acceleration of decentralisation programmes and activities.”

Worrall concluded: “The willingness to reform and restructure is both a new man wanting to make his own mark, but also of someone who can make decisions quickly and who knows that time is short given the economic situation.”

Source: Al Jazeera