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Double Whammy Could Cost Israel and Iran Their Key Gulf State Contact

19 12 0
06.04.2020

The streets of Muscat, Oman’s capital, are strangely quiet. Public transport, places of worship, tourism sites, gyms, malls and beauty salons have closed. The Omani military is manning checkpoints to deter movement between the country’s governorates. Non-residents have been asked to leave.

Nearly all 250,000 public sector employees (except for essential workers) have been requested to stay home. The government is levying fines of up to OMR 3000 ($7,800) for sharing misinformation about the coronavirus crisis online. The country has confirmed 298 cases of the virus so far, with two deaths.

Together with the coronavirus crisis, plunging oil prices caused by Saudi Arabia's sudden move to increase output - a questionable tactic to try and weaken the Russian and U.S. oil industries - is a double whammy for Oman. The hydrocarbon sector accounts for almost 80 percent of its national budget. Its already ballooning public debt - seven consecutive years in the red, so far - is thus expected to soar, leaving the country vulnerable.

A $20 billion stimulus package announced mid-March aims at funding sectors hit by the outbreak as the country tries to shore up its nascent non-oil industries from the pandemic-induced crisis. Despite this, small and medium-sized enterprises could still be decimated.

"A two percentage point decline in non-oil real GDP is to be expected as logistics, tourism and manufacturing will be impacted," says John Sfakianakis, senior scholar at the University of Cambridge and Chief economist of the Gulf Research Center in Riyadh, Saudi Arabia.

To support its medical response to the coronavirus, Oman’s government is even seeking donations to support its response to the coronavirus: text messages were sent to all Omani citizens urging them to give to two bank accounts, one general - "COVID-19" - and one health care-specific. Those bank details run on a constantly rolling chyron at the top of the Sultanate’s official coronavirus website.

But Oman faces more than a significant shock to its economy and employment: the COVID-19 pandemic, in addition to declining oil revenues, could endanger the unique and sometimes oversized role that this small Gulf kingdom has carved for itself in the region.

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© Haaretz