New Sultan Could Deepen U.S.-Oman Ties, Strengthen Economic Freedom

COMMENTARY International Economies

New Sultan Could Deepen U.S.-Oman Ties, Strengthen Economic Freedom

Sep 1st, 2020 3 min read
COMMENTARY BY
Anthony B. Kim

Research Manager and Editor of the Index of Economic Freedom

Anthony B. Kim researches international economic issues at The Heritage Foundation, with a focus on economic freedom and free trade.
Oman's Sultan Haitham bin Tariq meets with U.S. Secretary of State Mike Pompeo at al-Alam palace in the capital Muscat on February 21, 2020. ANDREW CABALLERO-REYNOLDS / Contributor / Getty Images

Key Takeaways

The U.S. is one of Oman’s largest trading partners, exporting about $2 billion in goods to Oman and importing around $1 billion in goods from the Gulf state.

As a “moderately free” economy, Oman’s economy has been undergoing modernization and liberalization, albeit gradually.

Washington’s renewed good relations with Muscat will benefit not only the U.S., but other partners in the region as well.

Under the leadership of new Sultan Haitham bin Tariq, who came to power in January upon the death of his cousin, longtime ruler Sultan Qaboos bin Said, U.S.-Omani relations have embarked on a new chapter.

Washington has a unique opportunity to build on the good existing relationship and to reaffirm Oman as a trustworthy partner in dealing with the many challenges facing the Middle East.

From a broad foreign-policy perspective, while Oman does not receive the same attention in the U.S. as some other states in the region, the small Gulf kingdom has been a friend of the U.S. for more than two centuries, often playing an important diplomatic role behind the scenes.

The first contact between the U.S. and Oman was in 1790, and the relationship became formalized in 1833 with a Treaty of Amity and Commerce, the first bilateral trade deal between the U.S. and an Arab Gulf state.

In 1840, Oman sent the first accredited diplomat from the Arab world to the U.S. 

Continuing that unique, long-established relationship with America, Oman has been a more strategic partner of the United States since 1980, when it became the first Persian Gulf state to sign a formal accord permitting the U.S. military to use its facilities.

The U.S. Navy enjoys access to the strategically located Duqm and Salalah ports, and the U.S. has permission to use Oman’s military airfields in Muscat and Thumrait, and on Masirah Island.

The U.S.-Oman free trade agreement—the sultanate’s only bilateral trade agreement—was signed in 2006, and since then, it has led to increased partnerships between Omani and U.S. companies in a broad range of industries, not limited to energy.

The United States is one of Oman’s largest trading partners, exporting about $2 billion in goods to Oman and importing around $1 billion in goods from the Gulf state.

Also notable is that Oman is the sixth-freest economy in the Middle East and North Africa region, according to the Heritage Foundation’s latest edition of the annual Index of Economic Freedom. The country’s overall economic freedom score has increased by 2.6 points from last year, with significant improvements in all areas related to the rule of law.

As a “moderately free” economy, Oman’s economy has been undergoing modernization and liberalization, albeit gradually.

Overall economic freedom remains constrained by lingering state involvement in the private sector and public enterprises, with the lack of market competition preventing more dynamic economic development from taking place.

Recognizing the importance of developing a dynamic entrepreneurial environment, the government has acted to diversify economic activity and stimulate broader-based development.

An effort is underway to develop a new bankruptcy and insolvency law, which would help to improve the country’s business environment and increase foreign direct investment inflows.

Further such improvements in economic freedom would aid the government’s efforts to develop the economy beyond the oil sector more rapidly, positioning Oman as an even more valuable trading partner for the United States and others, and increasing the country’s standing and influence in the region.

As a Heritage Foundation policy paper highlighted early this year:

In a region where many issues are dangerously viewed starkly as “black and white,” Oman’s nuanced and deliberate approach to regional challenges makes Muscat an important voice in the Gulf.

As the Trump administration continues to advance U.S. interests in the Middle East, now is the time for the U.S. to reinforce its relationship with Oman under the new sultan.

Washington’s renewed good relations with Muscat will benefit not only the U.S., but other partners in the region as well, as the two longtime partners move forward together.

This piece originally appeared in The Daily Signal