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Jan 27, 2017 | 09:15 GMT

A Different Outlook for Reform Elsewhere in the Gulf

Reform processes in Oman, Qatar and the UAE may be helped by their relative lack of sectarianism.
(Mark Kolbe/Getty Images)
Editor's Note

This is the final installment of a five-part series that explores the economic and social challenges facing the countries of the Gulf Cooperation Council, how their governments are responding and what effect their actions will have on the region's sectarian dynamics.

The governments of the Gulf Cooperation Council (GCC) are heeding the call to reform. Low oil prices have shaken their economies — even the economies that have diversified away from energy production — and the threat of unrest looms large. In each of the six countries that make up the bloc, enacting reform will be an uphill battle. But some Gulf governments, and their people, will have an easier time than others.

For leaders in Saudi Arabia, Bahrain and, to a lesser extent, Kuwait, change will entail immediate and difficult choices to prioritize policies and decide who will bear the brunt of cutbacks. The heads of Qatar and the United Arab Emirates, by contrast, have the luxury of time on their sides. Though the governments in these countries understand the need for change, their smaller populations and territories, coupled with ample financial and energy reserves, put them in a more comfortable position to undertake reform. What's more, Doha and Abu Dhabi have already achieved some success in steering their economies away from oil. Qatar has nurtured its sovereign wealth fund through an array of risky but lucrative international investments, and the royal families of the United Arab Emirates' constituent kingdoms have poured money into developing a range of competitive economic sectors. Having already laid the groundwork for future reform initiatives, these countries will hit fewer bumps along the way compared with other bloc members.

What Sets Them Apart

Unlike Saudi Arabia, Kuwait and Bahrain, moreover, Qatar and the United Arab Emirates historically have few problems with sectarianism, in part because Shiites make up only about 10 percent of their populations. Even so, Qatari and Emirati Shiites have been assimilated into the fabric of their Sunni-majority countries, where they occupy prominent roles in business and government. They are also widely dispersed throughout their home countries rather than concentrated in specific locales, as Saudi Shiites tend to be. To manage their Shiite populations and mitigate unrest, Doha and Abu Dhabi work to limit the transmission of radicalizing messages online or from abroad. At the same time, they closely monitor Shiite migrant workers from countries such as Pakistan, Lebanon and Iraq to nip any perceived intransigence in the bud. This strategy has proved surprisingly effective, considering Qatar and the United Arab Emirates have the highest proportion of non-native workers in their populations of all the GCC states — 90 percent and 88 percent, respectively.

Doha and Abu Dhabi also have a different relationship with Tehran than do many of their fellow GCC governments. Though, as Sunni nations, they have aligned themselves with Saudi Arabia's strategy in the region, both countries espouse their own independent foreign policies and cooperate with Iran in a variety of sectors. Qatar, for instance, shares the operation of the South Pars/North Dome natural gas and condensate field with Iran. The United Arab Emirates depends on trade with the Islamic republic, an important transit point for many Emirati imports. To maintain trade flows in the midst of the heavy sanctions against Tehran, the Emirate of Ras al-Khaimah has even built smuggling networks with Iran. These ties, along with the countries' small Persian populations, help Doha and Abu Dhabi minimize conflict with Tehran while also giving them a more neutral view of their neighbor across the Gulf.

Oman in the Middle

Oman's stance toward Iran is more neutral, thanks in part to its demographics. Despite Oman's narrow Sunni majority, much of its population practices a form of Abadi Islam that combines elements of the Sunni and Shiite traditions. This has saved the country from getting embroiled in regionwide sectarian feuds. Oman has far and away the most independent foreign policy of all the GCC's members. At times, Oman's resistance to Saudi Arabia's vision for the bloc has created friction with Riyadh; such was the case when Muscat hosted talks between the United States and Iran over the Joint Comprehensive Plan of Action in 2015. (Oman has also provided a venue for negotiations over the conflicts in Libya and Yemen and facilitated talks on the Syrian civil war.) But the country's reputation as a negotiator state has also earned it the critical role of mediator between the GCC and Iran. Furthermore, since Oman controls some of the waters of the regionally and internationally strategic Strait of Hormuz, its neutrality is an asset for the GCC and Iran alike.

Oman's position has enabled the government in Muscat to reap not only the economic benefits of collaborating with Saudi Arabia on security but also those of maintaining close trade ties with Iran. Still, the country has run up against the same economic challenges that face the rest of the GCC. Without implementing reforms to increase its revenues outside the oil industry and decrease its subsidies, Muscat's budget deficit will continue to grow. The country has already been trying for decades to diversify its economy to compensate for its comparatively paltry energy reserves and production. It has struggled, however, to compete with the bustling financial sectors and high salaries that draw foreign workers elsewhere in the Gulf region. Still, even in the throes of financial hardship, Oman has avoided stoking sectarian strife among its population. The country's Shiites fall into three categories: the baharna, Arab Shiites who migrated from Bahrain; the ajam, who migrated from Persia and modern-day Iran; and Oman's oldest Shiite community, the lawatiyya, who have Arab and South Asian roots. Regardless of heritage, Shiites in Oman have established themselves in the country and made their place in society, though the wealthy lawatiyya occupy the most prominent posts in business and government.

But all of this could change with the inevitable death of Sultan Qaboos bin Said al Said. The longtime leader has governed Oman with absolute power since 1970. In that time, he has instituted many of the policies that define the country today. Now, old age and ill health are threatening his continued rule, and the lack of a clear succession plan could jeopardize his legacy. With transition on the horizon in Oman, fears are mounting that Muscat may resort to exploiting sectarian divides to keep its population under control, particularly as government benefits and job opportunities start to dwindle. If the country's next leader decides to break with habit and ally more closely with Saudi Arabia or Iran in Qaboos' wake, these worries may come to fruition.

As Riyadh and Tehran keep vying for influence in the Middle East, tensions in the region will remain high. Traditional regional powers such as Egypt, Iraq and Turkey, depending on their strength, could overshadow the rivalry between Riyadh and Tehran, thereby reducing sectarian strife in the Gulf. In the meantime, the leaders of the GCC will continue their quest to prepare themselves and their countries to survive a new era. 

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