Will Oman be next? Rumors swirls that Gulf State will sign peace deal with Israel

While the sultanate publicly approved of the UAE and Bahraini announcements regarding normalization with Israel, its relations with Iran may hold it back.

By Batya Jerenberg, World Israel News

As the UAE and Bahrain prepare to sign a normalization accord with Israel at the White House on Tuesday, the question on everyone’s lips is who’s next – and Oman seems to be the leading candidate in the rumor mill.

Sultan Haitham bin Tariq al Said, installed as ruler only in January after his cousin, decades-long leader Qaboos bin Said al Said died, publicly approved of Manama’s decision on Friday.

“The Sultanate welcomes the initiative taken by the Kingdom of Bahrain and hopes that the new strategic path will lead to peace in the Middle East, based on the end of the Israeli occupation and the establishment of an independent Palestinian state whose capital will be East Jerusalem,” the state TV channel’s Twitter account said.

The Sultanate similarly welcomed the UAE decision to normalize ties with Israel in August.

After Oman’s announcement, the country’s official news agency reported on a phone call between Israeli Foreign Minister Gabi Ashkenazi and his Omani counterpart to discuss regional issues and the need to strengthen ties between the two countries.

Oman, Bahrain, and the UAE make up half of the Gulf Cooperation Council, a political and economic union of Gulf Arab states. Oman may be induced to follow their lead for financial reasons as well as political ones, because its economy has been in the economic doldrums for several years, well before the coronavirus pandemic wreaked havoc on the world economy.

A Fitch Ratings report expects Oman’s government debt to reach at least 80 percent of GDP this year. Its sovereign rating has been downgraded twice in 2020, and now stands at BB-, which is considered junk bond territory. Meanwhile, the UAE is Oman’s most important trade partner, and according to a BBC report in January, it is increasingly infringing on Oman’s sovereignty.

There are counterbalancing considerations that could hold Oman back.

Unlike other Persian Gulf countries, chiefly Saudi Arabia, the sultanate still has good relations with Iran, which sits a short distance away from it across the strategic Strait of Hormuz. Riyadh would like to see everyone back American sanctions against its Persian rival because of its nuclear ambitions and sponsorship of terrorism. However, according to official Tehran figures, Iran exported $768 million worth of goods to Oman in 2019 and the two countries are actively encouraging economic cooperation and trade on multiple fronts.

“The reason why open and full relations have not yet been established [with Israel] is the reasonable possibility that Oman’s relations with Iran will be significantly harmed,” an Arab diplomatic source told Israel Hayom Monday.