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Economy of Oman

When Oman declined as an entrepot for arms and slaves in the mid-19th century, much of its former prosperity was lost, and the economy turned almost exclusively to agriculture, camel and goat herding, fishing, and traditional handicrafts. Today, oil and gas fuel the economy, and revenues from petroleum products have enabled Oman's dramatic development over the past 40 years. Oil was first discovered in the interior near Fahud in the western desert in 1964. Petroleum Development (Oman) Ltd. (PDO) began production in August 1967. The Omani Government owns 60% of PDO, and foreign interests own 40% (Royal Dutch Shell owns 34%; the remaining 6% is owned by Compagnie Francaise des Petroles [Total] and Partex). In 1976, Oman's oil production rose to 366,000 barrels per day (b/d) but declined gradually to about 285,000 b/d in late 1980 due to the depletion of recoverable reserves. From 1981 to 1986, Oman compensated for declining oil prices by increasing production levels to 600,000 b/d. With the collapse of oil prices in 1986, however, revenues dropped dramatically. Production was cut back temporarily in coordination with the Organization of Petroleum Exporting Countries (OPEC)--of which Oman is not a member--and production levels again reached 600,000 b/d by mid-1987, which helped increase revenues. By 2000, production had climbed to more than 900,000 b/d; however, it declined to roughly 750,000 b/d for 2006. Natural gas reserves, which will increasingly provide the fuel for industrial projects in Sohar and power generation and desalination plants throughout the Sultanate, stand at 24 trillion cubic feet. A liquefied natural gas (LNG) processing plant located in Sur was opened in 2000, with production capacity of 6.6 million tons per year (tons/yr), as well as unsubstantial gas liquids, including condensates. The completion of the plant's expansion in December 2005 has increased capacity to 10.3 million tons/yr. Oman does not have the immense oil resources of some of its neighbors. Total proven reserves are about 4.8 billion barrels. Oman's complex geology makes exploration and production an expensive challenge. Recent improvements in technology, however, have enhanced recovery. Agriculture and fishing are the traditional way of life in Oman. Dates, grown extensively in the Batinah coastal plain and the highlands, make up most of the country's agricultural exports. Coconut palms, wheat, and bananas also are grown, and cattle are raised in Dhofar. Other areas grow cereals and forage crops. Poultry production is steadily rising. Fish and shellfish exports totaled $104.7 million in 2006. The government is undertaking many development projects to modernize the economy, improve the standard of living, and become a more active player in the global marketplace. Oman became a member of the World Trade Organization in October 2000, and continues to amend its financial and commercial practices to conform to international standards. Oman signed a free trade agreement with the United States in January 2006, and continues to pursue, through the Gulf Cooperation Council (GCC), free trade agreements with a number of other key trading partners, including the European Union and India. Increases in agriculture and especially fish production are believed possible with the application of modern technology. The Muscat capital area has both an international airport at Seeb and a deepwater port at Mina Qaboos. The large-scale modern container port at Salalah, capital of the Dhofar Governorate, continues to operate at near-capacity levels. The government in early 2004 approved a project worth over $250 million to add two berths and extend the breakwater at the port. Port expansion is underway at Mina Qaboos, and a large industrial and container port is under construction in Sohar. A national road network includes a $400 million highway linking the northern and southern regions. The government also recently expanded passenger and cargo capacity at its main international airports at Seeb (Muscat) and Salalah, and will construct new airports at Sohar, Ras al-Hadd, and Duqm. In an effort to diversify the economy, in the early 1980s, the government built a $200-million copper mining and refining plant at Sohar. Other large industrial projects underway or being considered include an 80,000 b/d oil refinery, a large petrochemical complex, fertilizer and methanol plants, an aluminum smelter, and two cement factories. Industrial zones at Rusayl, Sohar, and several other locations showcase the country's modest light industries. Marble, limestone, and gypsum may prove commercially viable in the future. The Omani Government embarked on its seventh 5-year plan in 2006. In its efforts to reduce its dependence on oil and expatriate labor, the government projects significant increases in spending on industrial and tourism-related projects to foster income diversification, job creation for Omanis in the private sector, and development of Oman's interior. Government programs offer soft loans and propose the building of new industrial estates in population centers outside the capital area. The government is giving greater emphasis to "Omanization" of the labor force, particularly in banking, hotels, and municipally sponsored shops benefiting from government subsidies. Currently, efforts are underway to liberalize investment opportunities in order to attract foreign capital. Some of the largest budgetary outlays are in the areas of health services and basic education. The number of schools, hospitals, and clinics has risen exponentially since the accession of Sultan Qaboos in 1970. U.S. firms face a small and highly competitive market dominated by trade with Japan and Britain and re-exports from the United Arab Emirates. The sale of U.S. products also is hampered by higher transportation costs and the lack of familiarity with Oman on the part of U.S. exporters. However, the traditional U.S. market in Oman, oil field supplies and services, should grow as the country's major oil producer continues a major expansion of fields and wells. Major new U.S. investments in oil production, industry, and tourism projects in 2005 totaled several billion dollars. Moreover, negotiations on the U.S.-Oman Free Trade Agreement (FTA) were successfully concluded in October 2005; the FTA was ratified by the U.S. Congress and signed by President George W. Bush in 2006. It entered into force on January 1, 2009, providing further impetus to bilateral trade and investment. GDP (2008 est.): $59.946 billion. Per capita GDP (2008 est.): $21,646. Real GDP growth rate (2008 est.): 7.8%. Natural resources: Oil, natural gas, copper, marble, limestone, gypsum, chromium. Agriculture and fisheries: (2.1% of GDP). Products--dates, bananas, mangoes, alfalfa, other fruits and vegetables. Fisheries--kingfish, tuna, other fish, shrimp, lobster, abalone. Industry: Types--crude petroleum (not including gas liquids) about 750,000 barrels per day; construction, petroleum refinery, copper mines and smelter, cement and various light industries. Trade (2008 est.): Exports--$37.72 billion. Major markets--China (29.3%), U.A.E. (10.9%), Japan (10.6%), South Korea (9.6%), Thailand (6.8%). Imports--$22.92 billion: machinery, transportation equipment, manufactured goods, food, livestock, lubricants. Major suppliers--U.A.E. (27.2%), Japan (15.6%), United States (5.7%), China (4.7%), India (4.5%).

Geography of Oman

Area: 212,457 sq. km. (82,030 sq. mi.); about the size of Colorado. It is bordered on the north by the United Arab Emirates (U.A.E.), on the northwest by Saudi Arabia, and on the southwest by the Republic of Yemen. The Omani coastline stretches 2,092 km. Cities: Capital--Muscat. Other cities--Matrah, Ruwi, Nizwa, Salalah, Sohar. Terrain: Mountains, plains, and arid plateau. Climate: Hot, humid along the coast; hot, dry in the interior; summer monsoon in far south. Location: Middle East, bordering the Arabian Sea, Gulf of Oman, and Persian Gulf, between Yemen and the United Arab Emirates
Map references: Middle East Area: total area: 212,460 sq km land area: 212,460 sq km comparative area: slightly smaller than Kansas Land boundaries: total 1,374 km, Saudi Arabia 676 km, UAE 410 km, Yemen 288 km Coastline: 2,092 km Maritime claims: contiguous zone: 24 nm exclusive economic zone: 200 nm territorial sea: 12 nm International disputes: no defined boundary with most of UAE; Administrative Line with UAE in far north Climate: dry desert; hot, humid along coast; hot, dry interior; strong southwest summer monsoon (May to September) in far south Terrain: vast central desert plain, rugged mountains in north and south Natural resources: petroleum, copper, asbestos, some marble, limestone, chromium, gypsum, natural gas Land use: arable land: less than 2% permanent crops: 0% meadows and pastures: 5% forest and woodland: 0% other: 93% Irrigated land: 410 sq km (1989 est.) Environment: current issues: rising soil salinity; beach pollution from oil spills; very limited natural fresh water resources natural hazards: summer winds often raise large sandstorms and duststorms in interior; periodic droughts international agreements: party to - Law of the Sea, Marine Dumping, Ship Pollution, Whaling; signed, but not ratified - Biodiversity, Climate Change Note: strategic location with small foothold on Musandam Peninsula controlling Strait of Hormuz, a vital transit point for world crude oil

Government of Oman

Sultan Qaboos bin Sa'id rules with the aid of his ministers. His dynasty, the Al Sa'id, was founded about 250 years ago by Imam Ahmed bin Sa'id Al Bu Said. Sultan Qaboos is a direct descendant of the 19th century ruler, Sa'id bin Sultan, who first opened relations with the United States in 1833. Since his accession in 1970, Sultan Qaboos has balanced tribal, regional, and ethnic interests in composing the national administration. The Council of Ministers, which functions as a cabinet, consists of 30 ministers (but only 28 ministries), all directly appointed by Qaboos. The Sultanate has neither political parties nor legislature, although the bicameral representative bodies provide the government with advice. The bicameral Majlis Oman's mandate is to review legislation pertaining to economic development and social services prior to its becoming law. In November 1991, Sultan Qaboos established the Majlis al-Shura (Consultative Council), which replaced the 10-year-old State Consultative Council, in an effort to systematize and broaden public participation in government. Representatives were chosen in the following manner: Local caucuses in each of the 59 districts sent forward the names of three nominees, whose credentials were reviewed by a cabinet committee. These names were then forwarded to the Sultan, who made the final selection. Since then, reforms have permitted Omanis to freely run for office in contested elections featuring universal adult suffrage. The elected Consultative Council serves as a conduit of information between the people and the government ministries. It is empowered to review drafts of and provide recommendations on economic and social legislation prepared by service ministries, such as communications and housing, and to approve state financial plans. Service ministers also may be summoned before the Majlis to respond to representatives' questions. It has no authority in the areas of foreign affairs, defense, security, and finance. In early 2003, Sultan Qaboos declared universal suffrage for the October 2003 Majlis al-Shura elections. Two women were elected to sit with 81 male colleagues in those elections, which were observed to be free and fair. Roughly 194,000 Omani men and women, or 74% of registered voters, participated in the elections. Elections were held again in 2007. The appointed Majlis al-Dawla (State Council) acts as the upper chamber in Oman's bicameral representative body. As of 2005, Sultan Qaboos had expanded the Majlis al-Dawla to 59 members from 53, including nine women. In November 1996, Sultan Qaboos presented his people with the "Basic Statute of the State," Oman's first written "constitution." It guarantees various rights within the framework of Shari'a and customary law. It partially resuscitated long dormant conflict-of-interest measures by banning cabinet ministers from being officers of public shareholding firms. Perhaps most importantly, the Basic Statute provides rules for the royal succession. Oman's judicial system traditionally has been based on the Shari'a--the Quranic laws and the oral teachings of the Islamic Prophet Muhammad. Traditionally, Shari'a courts fell under the jurisdiction of the Ministry of Justice, Awqaf, and Islamic Affairs (since divided into the Ministry of Justice and the Ministry of Endowments and Religious Affairs). Oman's first criminal code was not enacted until 1974. In 1999, royal decrees placed the entire court system under the financial supervision of the Ministry of Justice, though the 1996 Basic Statute ensures the independence of the judiciary. An independent Office of the Public Prosecutor also has been created (formerly a part of the Royal Oman Police), as has a supreme court. Regional court complexes are envisioned to house the various courts, including the courts of first instance for criminal cases and Shari'a cases (family law and inheritance). The country is divided into 61 administrative districts (wilayats), presided over by appointed executives (walis) responsible for settling local disputes, collecting taxes, and maintaining peace. Most wilayats are small in area, but can vary considerably in population. The 61 wilayats are divided into eight regions. Four of those regions (Muscat, Dhofar, Musandam, and Buraimi) have been accorded a special status as governorates. The governors of those four regions are appointed directly by the Sultan and hold Minister of State or Under Secretary rank. Walis, however, are appointed by the Minister of Interior. Although Oman enjoys a high degree of internal stability, regional tensions in the aftermath of the 1980-88 Iran-Iraq war, 1990-91 Persian Gulf war, and Operations Enduring Freedom and Iraqi Freedom continue to necessitate large defense expenditures. In 2006, Oman spent roughly $3.84 billion for defense and national security--over 33% of its public expenditures. Oman maintains a small but professional and effective military, supplied mainly with British equipment in addition to items from the United States, France, and other countries. British officers, on loan or on contract to the Sultanate, help staff the armed forces, although a program of "Omanization" has steadily increased the proportion of Omani officers over the past several years. After North and South Yemen merged in May 1990, Oman settled its border disputes with the new Republic of Yemen on October 1, 1992. The two neighbors have cooperative bilateral relations. Oman's borders with all neighbors are demarcated, including a 2002 demarcation of the Oman-U.A.E. border that was ratified in 2003. Principal Government Officials Sultan, Prime Minister, and Minister of Defense, Foreign Affairs, and Finance--Qaboos bin Sa'id Al Said Minister of Royal Office Affairs--Sultan bin Mohammed al Nu'amani Deputy Prime Minister for Cabinet Affairs--Fahad bin Mahmud al-Said Minister Responsible for Foreign Affairs--Yusuf bin Alawi bin Abdullah Minister Responsible for Defense Affairs--Badr bin Saud bin Harib al-Busaidi Inspector General of Police and Customs--Malik bin Sulaiman al-Ma'mari Minister of Interior--Humud bin Faisal bin Said al Busaidi Ambassador to the United States--Hunaina Sultan al-Mughairy Permanent Representative to the UN--Fuad bin Mubarak al-Hinai Oman maintains an embassy in the United States at 2535 Belmont Rd. NW, Washington, DC 20008 (tel. 202/387-1980) Government Type: Monarchy. Constitution: On November 6, 1996, Sultan Qaboos issued a royal decree promulgating the Basic Statute which clarifies the royal succession, provides for a prime minister, bars ministers from holding interests in companies doing business with the government, establishes a bicameral parliament, and guarantees basic civil liberties for Omani citizens. Branches: Executive--Sultan. Legislative--Majlis Al-Shura (Consultative Council). Judicial--Magistrate courts handle criminal cases; Shari'a (Islamic law) courts oversee family law. Political parties: None. Suffrage: Universal adult. Administrative subdivisions: Eight administrative regions--Muscat, Al Batinah, Musandam, A'Dhahirah, A'Dakhliya, A'Shariqiya, Al Wusta, Dhofar Governorate. There are 59 districts (wilayats).

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History of Oman

Oman adopted Islam in the seventh century A.D., during the lifetime of the Prophet Muhammad. Ibadhism, a form of Islam distinct from Shiaism and the "Orthodox" schools of Sunnism, became the dominant religious sect in Oman by the eighth century A.D. Oman is the only country in the Islamic world with a majority Ibadhi population. Ibadhism is known for its "moderate conservatism." One distinguishing feature of Ibadhism is the choice of ruler by communal consensus and consent. Contact with Europe was established in 1508, when the Portuguese conquered parts of Oman's coastal region. Portugal's influence predominated for more than a century, with only a short interruption by the Turks. Fortifications built during the Portuguese occupation can still be seen at Muscat. Except for a period when Iran conquered Oman, Oman has basically been an independent nation. After the Portuguese were expelled in 1650 and while resisting Persian attempts to establish hegemony, the Sultan of Oman extended his conquests to Zanzibar, other parts of the eastern coast of Africa, and portions of the southern Arabian Peninsula. During this period, political leadership shifted from the Ibadhi imams, who were elected religious leaders, to hereditary sultans who established their capital in Muscat. The Muscat rulers established trading posts on the Persian coast and also exercised a measure of control over the Makran coast (now Pakistan). By the early 19th century, Oman was the most powerful state in Arabia and on the East African coast. Oman was the object of Franco-British rivalry throughout the 18th century. During the 19th century, Oman and the United Kingdom concluded several treaties of friendship and commerce. In 1908, the British entered into an agreement of friendship. Their traditional association was confirmed in 1951 through a new treaty of friendship, commerce, and navigation by which the United Kingdom recognized the Sultanate of Oman as a fully independent state. When Sultan Sa'id bin Sultan Al-Busaid died in 1856, his sons quarreled over his succession. As a result of this struggle, the empire--through the mediation of the British Government under the "Canning Award"--was divided in 1861 into two separate principalities--Zanzibar, with its East African dependencies, and Muscat and Oman. Zanzibar paid an annual subsidy to Muscat and Oman until its independence in early 1964. During the late 19th and early 20th centuries, the sultan in Muscat faced rebellion by members of the Ibadhi sect residing in the interior of Oman, centered around the town of Nizwa, who wanted to be ruled exclusively by their religious leader, the Imam of Oman. This conflict was resolved temporarily by the Treaty of Seeb, which granted the imam autonomous rule in the interior, while recognizing the nominal sovereignty of the sultan elsewhere. Following the discovery of oil in the interior, the conflict flared up again in 1954, when the new imam led a sporadic 5-year rebellion against the sultan's efforts to extend government control into the interior. The insurgents were defeated in 1959 with British help. The sultan then terminated the Treaty of Seeb and eliminated the office of the imam. In the early 1960s, the imam, exiled to Saudi Arabia, obtained support from his hosts and other Arab governments, but this support ended in the 1980s. In 1964, a separatist revolt began in Dhofar Province. Aided by communist and leftist governments such as the former South Yemen (People's Democratic Republic of Yemen), the rebels formed the Dhofar Liberation Front, which later merged with the Marxist-dominated Popular Front for the Liberation of Oman and the Arab Gulf (PFLOAG). The PFLOAG's declared intention was to overthrow all traditional Arab Gulf regimes. In mid-1974, PFLOAG shortened its name to the Popular Front for the Liberation of Oman (PFLO) and embarked on a political rather than a military approach to gain power in the other Gulf states, while continuing the guerrilla war in Dhofar. With the help of British advisors, Sultan Qaboos bin Sa'id assumed power on July 23, 1970, in a palace coup directed against his father, Sa'id bin Taymur, who later died in exile in London. The new sultan was confronted with insurgency in a country plagued by endemic disease, illiteracy, and poverty. One of the new sultan's first measures was to abolish many of his father's harsh restrictions, which had caused thousands of Omanis to leave the country, and to offer amnesty to opponents of the previous regime, many of whom returned to Oman. He also established a modern government structure and launched a major development program to upgrade educational and health facilities, build a modern infrastructure, and develop the country's natural resources. In an effort to curb the Dhofar insurgency, Sultan Qaboos expanded and re-equipped the armed forces and granted amnesty to all surrendered rebels while vigorously prosecuting the war in Dhofar. He obtained direct military support from the U.K., Iran, and Jordan. By early 1975, the guerrillas were confined to a 50 square kilometer (20-sq. mi.) area near the Yemen border and shortly thereafter were defeated. As the war drew to a close, civil action programs were given priority throughout Dhofar and helped win the allegiance of the people. The PFLO threat diminished further with the establishment of diplomatic relations in October 1983 between South Yemen and Oman, and South Yemen subsequently lessened propaganda and subversive activities against Oman. In late-1987, Oman opened an embassy in Aden, South Yemen, and appointed its first resident ambassador to the country. Since his accession in 1970, Sultan Qaboos has balanced tribal, regional, and ethnic interests in composing the national administration. The Council of Ministers, which functions as a cabinet, consists of 30 ministers (but only 28 ministries), all directly appointed by Qaboos. The bicameral Majlis Oman's mandate is to review legislation pertaining to economic development and social services prior to its becoming law. The elected Majlis al-Shura (Consultative Council) may request ministers to appear before it. In early 2003, Sultan Qaboos declared universal suffrage for the October 2003 Majlis al-Shura elections. Two women were elected to sit with 81 male colleagues in those elections, which were observed to be free and fair. Roughly 194,000 Omani men and women, or 74% of registered voters, participated in the elections. Since 2003, Sultan Qaboos has also expanded the Majlis al-Dawla, or State Council, to 59 members from 53, including nine women. The State Council acts as the upper chamber in Oman's bicameral representative body. In November 1996, Sultan Qaboos presented his people with the "Basic Statute of the State," Oman's first written "constitution." It guarantees various rights within the framework of Shariah and customary law. It partially resuscitated long dormant conflict-of-interest measures by banning cabinet ministers from being officers of public shareholding firms. Perhaps most importantly, the Basic Statute provides rules for the royal succession. The northern tip of Oman, called the Musandam Peninsula, is strategically located on the Strait of Hormuz, the entrance to the Gulf, 35 miles directly opposite Iran. Oman is concerned with regional stability and security, given tensions in the region, the proximity of Iran and Iraq, and the potential threat of political Islam. Oman maintained its diplomatic relations with Iraq throughout the Gulf War while supporting the UN allies by sending a contingent of troops to join coalition forces and by opening up to prepositioning of weapons and supplies. In addition, since 1980 Oman and the U.S. have been parties to a military cooperation agreement, which was revised and renewed in 2000. Oman also has long been an active participant in efforts to achieve Middle East peace. Following the terrorist attacks on the United States in September 2001, the Omani Government at all levels pledged and provided impressive support to the U.S.-led coalition against terrorism. Oman is a signatory of most UN-sponsored anti-terrorism treaties.

People of Oman

About 55% of the population lives in Muscat and the Batinah coastal plain northwest of the capital; about 215,000 live in the Dhofar (southern) region, and about 30,000 live in the remote Musandam Peninsula on the Strait of Hormuz. Some 580,000 non-nationals live in Oman, most of whom are guest workers from South Asia, Egypt, Jordan, and the Philippines. Since 1970, the government has given high priority to education in order to develop a domestic work force, which the government considers a vital factor in the country's economic and social progress. In 1986, Oman's first university, Sultan Qaboos University, opened. It has continued to expand, recently adding a law college, and remains the country's only major public university. In total, there are about 20 public post-secondary education institutions in Oman, including technical colleges, teacher training colleges, and health institutes. More than 300 full and partial scholarships are awarded each year for study abroad. There are three private universities and 20 private post-secondary education institutions in Oman, including a banking college, a fire and safety college, a dentistry college, and business and management colleges. Most of these public and private post-secondary education institutions offer four-year degrees, while the remainder provide two-year post-secondary diplomas. Since 1999, the government has embarked on reforms in higher education designed to meet the needs of a growing population. Approximately 40% of Omani high school graduates pursue some type of post-secondary education. Nationality: Noun--Oman. Adjective--Omani(s). Population (2009 est.): 3.37 million (includes 580,000 non-nationals). Annual population growth rate (2009 est.): 2.0%. Ethnic groups: Arab, Baluchi, East African (Zanzabari), South Asian (Indian, Pakistani, Bangladeshi). Religions: Ibadhi; Sunni Muslim, Shia Muslim, Hindu, Christian. Languages: Arabic (official), English, Baluchi, Urdu, Swahili, Hindi and Indian dialects. Education: Literacy--approx. 81% (total population). Health (2009 est.): Infant mortality rate--17 deaths/1,000 live births. Life expectancy--73.8 years. Work force: 920,000 total; Agriculture and fishing--approx. 50%.