The Emirati media covered the United Arab Emirates (UAE) President Sheikh Mohamed bin Zayed Al Nahyan’s visit to the Sultanate of Oman this week extensively, reflecting what many in the region see as a change of policy.
It is not the first meeting between the Emirati leader and Sultan Haitham bin Tariq of Oman, but it is the first since Sheikh Mohamed replaced his elder brother Sheikh Khalifa who died in May this year as president. Its highlight was signing a three billion dollar deal to connect the Omani port of Sohar to the UAE via a new rail link. Emirati investment funds also explored investments worth more than eight billion dollars in various sectors of the Omani economy.
Since he came to power in early 2020, following the death of the veteran Omani leader Sultan Qaboos bin Said, the new Sultan of Oman has faced an economic downturn exacerbated by the coronavirus pandemic. Sultan Tariq bin Haitham is therefore embarking on an attempt to restructure the country’s economy. He also seeks a clean slate in terms of relations with Gulf neighbours like Saudi Arabia and the UAE.
Sheikh Mohamed’s two-day state visit has reinforced those efforts. According to both countries official media channels, it resulted in the Abu Dhabi Investment Fund (ADQ) and the Oman Investment Authority agreeing to establish a venture capital fund worth more than half a billion Emirati dirhams (162 million US dollars) to invest in technology companies in Oman, and explore investments worth 30 billion dirhams (over 8 billion dollars) in renewable energy, food and agriculture, communications, logistics and healthcare.
But there is more to the visit than meets the eye. Oman has long sought a distinct stand on regional and international issues. At some points, Muscat was at odds with Gulf heavyweights Saudi Arabia and UAE due to its close relations to Iran and its position on war in Yemen. When the UAE, Bahrain and Saudi Arabia cut relations with Qatar in 2017, Muscat kept its close relations with Doha.
Border demarcation issues between Oman and its Gulf neighbours were also a source of friction in the past. Relations with Abu Dhabi soured during the Arab Spring, when Muscat accused the UAE of meddling in its internal affairs.
By the end of January 2011 Oman’s state news agency reported that the Omani security services had “uncovered a spying network belonging to the state security apparatus of the United Arab Emirates, targeting Oman and the way its government and military work”. The UAE denied the accusation, with the Emirati Foreign Ministry issuing a statement through the state news agency (WAM): “The UAE expresses its full willingness to cooperate with Oman in any investigations that it carries out in full transparency to uncover those who try to mar the relations between the two countries.”
Analysts at the time suggested that, if the accusations were true, it would be because the UAE was keen to find out about Omani-Iranian cooperation.
A few years late the war in Yemen broke out, and Oman stayed neutral, not taking part in the Saudi-led coalition to support legitimacy in Yemen, in which the UAE was the most active partner. This was not only the result of Omani relations with Iran, since Tehran backs the rebel Houthi militia in Sanaa. But Houthis are a Shiite sect also to be found in Oman, and the sultanate was keen on keeping its porous border with south-east Yemen secure by avoiding involvement in the conflict. On some occasions, Oman was accused of helping the Houthis by facilitating Iranian assistance to them.
The Emirati president’s visit to Muscat seems to mark the closing of all those files and the opening of a new chapter in relations between the two countries. “Such ‘brotherly’ visits between Gulf capitals are sometimes cordial meetings with not much policy implications. But this visit by the Emirati leader to Muscat is very indicative and should not be seen as separate from recent UAE foreign policy advances towards Iran,” a veteran Western diplomat who previously worked in the Gulf told Al- Ahram Weekly.
The UAE is working on developing its relations with Iran, probably anticipating a revival of its nuclear deal with world powers. It is also using its financial might, newly enhanced by the windfall from high energy prices, to advance regional interests. Its investment funds are funnelling billions into countries in the region some of which were seen as antagonists only a few years ago.
Of course, there are business benefits with that approach, whether for the UAE or those countries receiving its investments. But, as an Emirati source told the Weekly, this is not solely for economic and business benefits. “We invest in regional security and stability. Strategic and political gains from cooperation are very important, not only to the UAE, but for regional peace and prosperity as a whole”.
It might be too early to see how this approach will impact regional issues like war in Yemen or potential reconciliation between the Gulf and Iran. What is clear is that Oman now has an opportunity to diversify its economy with the help of a more economically diverse neighbour.
*A version of this article appears in print in the 6 October, 2022 edition of Al-Ahram Weekly.