Backroom Deals and a Chinese-made City: Oman is a Diplomatic Linchpin

Published October 29th, 2018 - 02:17 GMT
Artists' rendering of the re-imagined Duqm, Oman (SOM)
Artists' rendering of the re-imagined Duqm, Oman (SOM)

The analysis covering the Middle East is dominated by stories of war, strife, economic uncertainty, sectarian differences and a constant sense that there are massive, tectonic shifts slowly re-shaping the region’s politics at all times—friends turning into foes, groups forming, merging and splitting, countries steadily breaking apart.

Oman has none of this.

A quiet, sparsely populated country, Oman is one of the most stable countries on Earth.  Its ability to disappear behind the chaos and avoid controversy has become its main asset, harnessing its own stability as an effective tool, solidifying itself as a neutral space within which wars, diplomatic disputes and lucrative trade deals can be negotiated.

As Chinese money continues to flow into the Middle East, and political disputes rear up around it, Oman will likely become one of the region’s linchpins.

An Ideal Destination for Backroom deals

Israeli prime minister Benjamin Netanyahu meets with Oman's Sultan Qaboos in Oman (Netanyahu Twitter/AFP)

Oman’s ruler, Sultan Qaboos, has insisted Oman remain neutral in any and all regional disputes. Historically, Oman has maintained friendly ties with both Iran and Saudi Arabia while steering clear of the rivalry’s regional flare-ups.

This has given Oman the ability to be a mediator in the Qatar diplomatic crisis, to help facilitate the signing of the Iran nuclear deal and offer a secret negotiation channel between warring parties in Yemen. Thanks to this Qaboos’ positioning, Oman has become a kind of Switzerland in the Arabian Peninsula; a hub where secretive communications between rivals can ease tensions and help to avoid conflicts from spiralling out of control.

 

 

For years, Oman hosted negotiations between U.S. and Iranian officials, sometimes reportedly taking place at Qaboos’ own house. The talks were jump-started by Iran’s detention of three American backpackers wandering through its country: Oman helped to free them and offered his country to be a facilitator between Iran and the U.S. The U.S. then approached Oman to host the first round of talks with Iran concerning its burgeoning nuclear program in 2012.

The talks at the time were secret, though they were revealed in Nov 2013. By this time, Oman had cemented itself as the ideal meeting point between the U.S. and its fellow signatories in the nuclear deal; China, France, Germany, Russia the U.K. and Iran.

A portion of the official talks occurred in Geneva, Switzerland as the nuclear deal began to take shape.

Oman has also been one of the few countries in the Gulf seeking to end the standoff between Qatar and the Gulf Cooperation Council (GCC) led by Saudi and the U.A.E. Though these efforts have proven less successful, it nonetheless signals Oman’s ability to freely navigate a contentious political landscape in the Middle East, staunchly remaining neutral even as the stakes grow higher.

Qaboos’ positioning of Qatar as a neutral political space has yielded some of the only diplomatic talks between warring parties in Yemen.

 

Oman’s Foreign Minister Yusuf bin Alawi meets with Iran President Hassan Rouhani (AFP/FILE)

 

 

According to Farea al-Muslimi, a Middle East analyst writing for the Carnegie Center, “since the start of the latest war in Yemen, Oman has played a key facilitation role.”

“It has hosted Houthi leaders and representatives of former president Ali Abdullah Saleh. This, as well as its good relations with Iran, enabled it to stake out a middle ground, allowing it to engage in a political process to help resolve the conflict,” he adds.

When the Saudi-led coalition sought to break the Houthis in a ‘shock and awe’ campaign in 2015 and early 2016, Oman offered a lifeline to the Houthis by allowing their negotiators to fly into their country to meet with Saudi officials. In May 2015 and Nov 2016, Oman also hosted secret talks between the Houthis and U.S. officials. Oman was even able to convince the Houthis to attend U.N.-backed peace talks.

Though they have so far failed to yield peace or a meaningful ceasefire, Oman has set the groundwork for any future political settlement to the war.

"The Yemen war has underscored Sultan Qabus’s richly deserved reputation for statesmanship in a region where that is rare," Bruce Reidel, a senior fellow at the Saban Center for Middle East Policy at the Brookings Institution, told Al Bawaba.

The Sultan refused to join the Saudi and Emirati reckless decision to intervene in a civil war. Its obvious in retrospect that the war is a terrible tragedy with a horrific human cost. Muscat has enhanced its reputation as a regional peace maker," he adds.

 

 

 

Oman’s unique ability to remain so neutral in an ever-changing region is thanks to the fact that Qaboos has held an uncontested grip on power since 1970, and controls every aspect of governance. He oversees the government’s domestic affairs, pens its foreign policy, runs its banks, controls the military and even appoints the judges. It is also illegal to speak ill of Qaboos.

Oman is, in other words, a textbook example of a personalist dictatorship.

With that said, Qaboos has urged the Arab world to accept Israel, a rare public move from an Arab leader where the fashion has so far been to quietly work with Israel but publicly denounce it as a foe. That Oman would come out with its relationship with Israel signifies that Israel’s partnerships in the Middle East are becoming normal-seeming. Saudi’s crown prince, Mohammed bin Salman, broke the ground for publicly working with Israel earlier this year when he urged Palestinians to accept a peace deal with the country or ‘shut up.’

 

Duqm and the Chinese Entry into the Middle East

Chinese business people pose on the future site of a Chinese-financed oil refinery in Duqm, Oman (AFP/FILE)

For decades, Oman has only been a political hub for the Middle East’s leaders to meet. But thanks to an influx of Chinese investments, Oman may also become a more formidable economic power.

Oman has been seeking to wean itself off of its oil dependency, and has found a friend in China to help.

So far, foreign capital has not been flowing to Oman’s capital, Muscat, but to a tiny fishing town called Duqm.

 

 

“It’s kind of like something out of a dream, right, like this new city rising up in the middle of the desert.” Wade Shepard, author of Ghost Cities in China,  told Al Bawaba.

“Duqm is a project of almost insane proportions.”

In 2014, prominent foreign affairs analyst Robert Kaplan made an offhand remark in an interview that Duqm could be the 21st century’s Singapore or Hong Kong. This transformation has officially begun.

A few years ago, Duqm was home to a few thousand Omani fisherman, though development began rapidly.

Now, they’ve been forcibly removed from the town to make way for massive, multi-billion dollar development projects to transform Duqm into a global trading hub.

China has pledged $10.7 billion to developing Duqm with an eye toward Oman’s oil and gas reserves as well the location of Duqm. Situated between both the Arabian/Persian Gulf and the Red Sea, Duqm offers a best-of-both worlds scenarios for a shipping point in the region.

Oman also borrowed $3.55 billion from Chinese banks in 2017. Oman and China are natural trading partners, due to both countries’ insistence on staying neutral between political rivalries in favor of fostering economic ties.

But China is not the only country developing Duqm. Turkey, Portugal Qatar and Iran are also infusing Oman will millions to build up the city.

 

 

Turkey and Portugal announced a $230 million joint venture to develop Duqm’s infrastructure, and Iran Khodro, an Iranian automaker, announced that it will develop a $200 million car manufacturing plant called ‘Orchid International Motors.’ Iran plans to sell thousands of cars inside Oman while using Duqm as a mid-way point to export tens of thousands of more cars to Ethiopian, Sudanese, Eritrean and Yemeni markets.

As long as the war in Yemen drags on and makes the Gulf of Aden a volatile trek, Duqm will remain an attractive if still-developing port.

In broader terms, Oman will likely become more important politically and economically. Saudi and U.A.E. tensions with Iran are reaching fever pitches, and Chinese investment into the Middle East is accelerating. On both fronts, Oman is positioned as a kind of facilitator: offering political backchannels to prevent uncontrollable conflicts and now boasting one of the most strategically located ports in the entire region.

All this, without ever becoming the center of a global controversy or a major news headline.


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