Strategy Note /
Oman

Oman: New Sultan faces serious challenges

  • Sultan Haitham bin Tariq bin Taimur Al Said has succeeded Sultan Qaboos bin Said al Said.

  • The new Sultan inherits a range of existing challenges on the economic & geopolitical fronts.

  • Domestic political risk is, in the short term at least, higher as a result of this succession.

Oman: New Sultan faces serious challenges
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

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Tellimer Research
11 January 2020
Published byTellimer Research

In Oman, Sultan Haitham bin Tariq bin Taimur Al Said (aged 65, former Heritage and Culture Minister) has succeeded Sultan Qaboos bin Said al Said (aged 79) in a legally compliant manner (his was the name on a letter left by Sultan Qaboos). Domestic political risk is, in the short term at least, higher as a result of this succession, in our view. 

Domestic political risk will likely be heightened both because, in general, the identity of and access to key decision-makers is inevitably going to change given Sultan Qaboos ruled since 1970 and, specifically, an arguably very well placed rival to the throne, Sayyid Asad bin Tariq all Said, the most senior royal family member with military experience, also aged 65, was not selected.

Sultan Haitham inherits a range of existing challenges on the economic (fiscal and current account deficits, rising government debt, slow growth and job creation) and geopolitical (finding ever less neutral space amid US-China, US-Iran, Saudi-Iran, Qatar-GCC conflicts) fronts. The economic risks, particularly, are likely already baked into cheap equity market valuations (trailing price/book of the local MSM30 Index is on a c30% discount to the five-year median, the cheapest on this measure in the GCC) and high yields on US$ sovereign debt (5.2% on the Jan 2028, albeit down from 7.2% a year ago).

Higher domestic political risk, at least in the short term, may delay the implementation of necessary structural reforms: fiscal consolidation, natural resource (oil, gas and mineral) development, state enterprise privatisation and reform, port and logistics free zone development.

Oman succession: Haitham chosen ahead of cousin rivals in Sultan Qaboos's letter

Foreign policy: Likely to continue seeking neutral ground between larger powers, particularly Iran

Establishing a balancing act between more powerful external forces is nothing new for Oman. 

Qaboos himself acceded in a coup that deposed his father in 1970, supported by the UK, Iran and Jordan, in opposition to the Dhofar Rebels, who were supported by the Gulf states and Iraq. 

Most recently, Oman has had to find increasingly narrow neutral space amid the bigger weights within the GCC (eg it did not support the aborted monetary union proposals prior to the 2008 global financial crisis, amid UAE and Saudi rivalry, and it has not taken sides in the Qatar embargo post-2017), within the region (ie between Israel, Saudi, Abu Dhabi and Iran) and globally (between the US, China and Iran).


Oman's economic challenges: Growth, twin deficits, citizen job creation

Sources for data in charts and graphics above: IMF, WB, AJ Centre for Studies 2014, GlobalSecurity, Tellimer Research