Economic transformation processes similar to those in neighboring countries are being observed in Oman. According to the country's socio-economic restructuring plan, "Oman Vision 2040," the sultanate aims to diversify its foreign policy. The country is rich in resources and possesses significant economic potential, with Oman's GDP in 2023 amounting to $99.2 billion.
Despite the intensification of contacts between Moscow and Muscat at various levels, particularly Oman's participation as an honorary guest at the St. Petersburg International Economic Forum (SPIEF) in 2024, there is a notable lack of domestic and foreign analysis of the relations between the two states. The state and evolution of economic cooperation between the Russian Federation and the Sultanate of Oman are gaining special significance in the context of Russia's foreign policy reorientation towards the East.
History of Russian-Omani Relations
The Soviet Union was an important external player in the Arab world; however, there were a number of states in the region with which contacts were either non-existent or superficial. Oman was one such state. Relations between the two countries during the Cold War period were rather cool. Two main reasons can be identified for this situation. Firstly, it is believed that Moscow supported pro-communist rebels during the Civil War of 1962-1976, who opposed the sultan. Secondly, the Sultanate of Oman was viewed as a zone of exclusive Western influence, particularly that of Great Britain. Consequently, any cooperation, including in the economic sphere, was out of the question.
Diplomatic relations between the Soviet Union and the Sultanate of Oman were established only in 1985. Against the backdrop of transformations in the USSR's foreign and domestic policies in the second half of the 1980s, this track did not appear important and was not on the list of priorities for the Soviet leadership. In general, this period can be characterized by Russia's withdrawal from the region and a decrease in its priority for the foreign policy of the USSR, and later the Russian Federation.
The legal basis for expanding economic partnership was established by the Intergovernmental Agreement on Trade, Economic and Technical Cooperation between Russia and Oman, signed in 1994. This agreement highlighted key areas of mutual interest: industry, energy, mining, agriculture, trade, transport, construction, communications, water resource development, rural development, healthcare, personnel training, and tourism. The signing of this document was likely formal in nature, as no concrete steps were taken to implement it. For example, a similar agreement was concluded with the Kingdom of Bahrain during the same period, identical in content and structure. Overall, the 1990s can be characterized as a period of forming the legislative framework and rare bilateral contacts, largely due to the lack of "common ground" between the countries.
Economic and political contacts with Oman intensified in the 2000s. The Sultanate supported Russia's accession to the WTO and participated in the meeting of the Russian-Arab Business Council. However, this was primarily due to the reassessment of Russia's foreign policy during this period and attempts to re-establish ties with countries in the Middle East region. Thus, this "intensification" resulted from Russia's regional policy rather than Moscow's desire to develop bilateral ties specifically with Muscat.
Regarding high-level contacts, it's important to note the visits of the Russian Foreign Minister to Oman in 2008, 2016, and 2022. Since 2016, several important meetings have taken place, including visits by Russian Energy Minister A.V. Novak in 2018 and Russian Agriculture Minister D.N. Patrushev in 2022. Additionally, a significant event signaling interest in developing economic relations was the signing of an Agreement between the Government of the Russian Federation and the Government of the Sultanate of Oman on the elimination of double taxation on income and the prevention of tax evasion in 2023. Analyzing the frequency of mutual visits and meetings, one can conclude that 2016 can be considered the starting point for strengthening economic ties between the Russian Federation and the Sultanate of Oman, with full-scale activation occurring in 2022, as evidenced by the trade volume.
Since 2010, trade turnover between the countries has been growing dynamically. In 2010, it amounted to $12 million, in 2014 it reached $84 million, and by 2023 it exceeded $400 million, which is 60% more than in 2022. In the trade structure between Russia and Oman, Moscow has a clearly positive balance. For example, according to 2022 data, Russia exported goods worth $246.8 million to Oman and imported goods worth $4 million. The fuel and energy complex remains the most active area of interaction in foreign trade with Oman. Supplies of Russian oil and petroleum products, including naphtha, diesel, and fuel oil, remain relevant. Nevertheless, despite the steady growth in mutual trade, it should be noted that the trade volume is extremely small compared to other external players in the region. For instance, Oman's trade turnover with the United States in 2023 amounted to more than $3.4 billion, and with China, which is increasing its influence in the region, it exceeded $2 billion.
From Words to Actions: Platforms for Strengthening Ties
Since the beginning of intensified contacts between Russia and Oman, many meetings have taken place between representatives of the countries on various platforms, including the UN, the Organization of Islamic Cooperation (OIC), and the Russian-Arab Business Council. In 2005, the Russian-Omani Business Council was established. In 2016, the first Russian-Omani Business Summit was held. All this further demonstrates the increased interest in developing relations. In 2024, an Omani delegation attended the international economic forum "Russia - Islamic World: KazanForum." Of particular interest is the participation of representatives from the sultanate in SPIEF 2024 as the largest international economic event in Russia, which, in the case of Oman, became a kind of summary of the strengthening ties between the parties. The Omani delegation at the forum was led by the Minister of Commerce, Industry and Investment Promotion of Oman, Qais bin Mohammed bin Moosa Al Yousef.
During the forum, a Russia-Oman business meeting was held, where Russian Minister of Economic Development M. Reshetnikov outlined the main areas where Moscow and Muscat will further enhance economic cooperation: trade, investments, technology, logistics, and tourism. Trade between Russia and Oman is showing steady growth, and currently, there is no reason to believe that the situation will change in the foreseeable future, especially considering Russia's importance as a partner in the fuel and energy complex.
Promising Areas of Cooperation
Speaking about the development of scientific and technical cooperation, it is primarily related to oil and gas processing, geological exploration, water desalination and purification, and improving agricultural efficiency. Russia has extensive experience in these areas, while Oman needs technologies to update its technical base. Some success has already been achieved in this direction. For example, Russian oil geologists are collaborating with their Omani colleagues in developing the sultanate's oil industry. Another example of such cooperation is the opening of an electric submersible pump manufacturing plant in Oman in 2017, built by a Russian company.
Tourism has become a somewhat unexpected area of cooperation between Russia and Oman, but today we can already speak of the success of this sector. Since 2022, Oman has become one of the popular destinations for Russian tourists. In 2023, the country welcomed 20,000 Russian tourists, which is 35% more than in 2022. Moreover, the number of travelers from Russia is projected to grow by 300% in 2024. There are several objective reasons for this situation. Firstly, direct air communication between Russia and Oman has recently been established. Secondly, Oman is actively developing its tourism industry today, which fully aligns with the Omani strategic program aimed at diversifying the economy, including the construction and renovation of relevant infrastructure and entertainment complexes. Of course, it's worth mentioning that in light of recent geopolitical events, Russians had to seek new vacation destinations. Oman, with its sandy beaches, access to the ocean, and interesting history, became a logical choice.
Last but not least is the sphere of logistics. The unique geographical position of the Sultanate of Oman at the intersection of trade routes and its extensive coastline make the country an attractive transport and logistics hub with a well-developed port infrastructure. In this regard, Oman is considering the possibility of joining the "North-South" project, which is actively promoted by Russia. Oman could become an important center for distributing Russian agricultural products to the growing markets of Africa and Asia.
Moreover, at recent major Russian events, the thesis that Oman could serve as another entry point for Russian business into the Gulf region has been repeatedly voiced. This has become possible due to the existence of a double taxation elimination agreement and balanced relations between the two countries. In fact, the state located at the southern tip of the Arabian Peninsula with developed infrastructure could become a platform for promoting Russian products to the entire GCC market, considering the relatively high level of cooperation within the integration association.
Additionally, in 2014, the design of railways in the Sultanate of Oman began. However, there is still no railway communication in Oman. Undoubtedly, this could become an area for interaction, given Russia's extensive experience in implementing railway projects.
The Most Suitable Time for Strengthening Economic Ties?
To understand the prospects for cooperation, it's important to consider Russian-Omani interaction in the context of processes occurring at both global and national levels. Today, Oman, like many of its neighbors, is pursuing a policy of economic diversification. This policy is implemented within the framework of the strategic comprehensive plan Oman Vision 2040, according to which the main goal is to build a developed and diversified economy. To achieve this goal, a system of measures and tools is envisaged, mostly related to investing in non-oil sectors. A logical result of the intention to conduct such a policy is the need to diversify external relations, as these sectors require experience and investments from new partners and extra-regional players.
In this context, Russia, which has enormous potential in such areas as transport and agriculture, represents an important partner that will contribute to achieving this ambitious goal. It's worth noting that the sultanate realizes that the world is changing and transitioning to a multipolar system, which Moscow has actively advocated for in recent years. It's important to emphasize that an integral element of the Oman Vision 2040 program is attracting foreign investments. Although the participation of the Omani delegation in SPIEF 2024 became effective advertising for attracting such investments, given the economic situation in Russia and the colossal sanctions pressure, this area of cooperation raises questions at this stage. The concerns of the sultanate's authorities and business representatives about falling under secondary U.S. sanctions, which have been tightened recently, may lead to some slowdown in the implementation of the set goals and objectives. Thus, despite Russian President V.V. Putin's invitation to visit Russia, the Sultan of Oman, Haitham bin Tariq Al Said, did not lead his country's delegation to the forum in St. Petersburg. Since the establishment of diplomatic relations between the two countries in 1985, the leaders of the two countries have not held personal meetings, and the first telephone conversation took place only in 2023.
Also, on June 14, 2024, the main Omani air carrier Oman Air announced the suspension of direct flights to Moscow at least until the end of October. This decision, made a few days after the conclusion of SPIEF 2024, was truly unexpected, as the importance of direct air communication between the two countries was repeatedly emphasized at the business meeting. In addition, direct air communication is one of the main factors in strengthening ties in the tourism sector.
Furthermore, in July 2024, a terrorist attack occurred in Oman for the first time in a long while. As noted by a number of Russian experts, this attack may have a negative impact on the sultanate's tourism potential in the future. At the moment, it's difficult to say how significant this effect will be for the country's tourism industry. However, we can definitely say that this attack will affect the country's image in the eyes of Russian tourists.
Analyzing Oman's foreign policy in the context of ongoing transformations in the country, it's necessary to note that it's extremely important for Muscat to maintain its neutral status and developed relations with Western countries, especially with the UK and the USA, as these processes require technologies and large investments. Accordingly, under certain conditions, Muscat will take into account the geopolitical situation when building relations with Moscow, especially in the sphere of economy and transport routes. However, at the moment, it's difficult to assess the impact of this factor on the further strengthening of ties between the two countries.
Despite the intensification of contacts between Moscow and Muscat at various levels, particularly Oman's participation as an honorary guest at the St. Petersburg International Economic Forum (SPIEF) in 2024, there is a notable lack of domestic and foreign analysis of the relations between the two states. The state and evolution of economic cooperation between the Russian Federation and the Sultanate of Oman are gaining special significance in the context of Russia's foreign policy reorientation towards the East.
History of Russian-Omani Relations
The Soviet Union was an important external player in the Arab world; however, there were a number of states in the region with which contacts were either non-existent or superficial. Oman was one such state. Relations between the two countries during the Cold War period were rather cool. Two main reasons can be identified for this situation. Firstly, it is believed that Moscow supported pro-communist rebels during the Civil War of 1962-1976, who opposed the sultan. Secondly, the Sultanate of Oman was viewed as a zone of exclusive Western influence, particularly that of Great Britain. Consequently, any cooperation, including in the economic sphere, was out of the question.
Diplomatic relations between the Soviet Union and the Sultanate of Oman were established only in 1985. Against the backdrop of transformations in the USSR's foreign and domestic policies in the second half of the 1980s, this track did not appear important and was not on the list of priorities for the Soviet leadership. In general, this period can be characterized by Russia's withdrawal from the region and a decrease in its priority for the foreign policy of the USSR, and later the Russian Federation.
The legal basis for expanding economic partnership was established by the Intergovernmental Agreement on Trade, Economic and Technical Cooperation between Russia and Oman, signed in 1994. This agreement highlighted key areas of mutual interest: industry, energy, mining, agriculture, trade, transport, construction, communications, water resource development, rural development, healthcare, personnel training, and tourism. The signing of this document was likely formal in nature, as no concrete steps were taken to implement it. For example, a similar agreement was concluded with the Kingdom of Bahrain during the same period, identical in content and structure. Overall, the 1990s can be characterized as a period of forming the legislative framework and rare bilateral contacts, largely due to the lack of "common ground" between the countries.
Economic and political contacts with Oman intensified in the 2000s. The Sultanate supported Russia's accession to the WTO and participated in the meeting of the Russian-Arab Business Council. However, this was primarily due to the reassessment of Russia's foreign policy during this period and attempts to re-establish ties with countries in the Middle East region. Thus, this "intensification" resulted from Russia's regional policy rather than Moscow's desire to develop bilateral ties specifically with Muscat.
Regarding high-level contacts, it's important to note the visits of the Russian Foreign Minister to Oman in 2008, 2016, and 2022. Since 2016, several important meetings have taken place, including visits by Russian Energy Minister A.V. Novak in 2018 and Russian Agriculture Minister D.N. Patrushev in 2022. Additionally, a significant event signaling interest in developing economic relations was the signing of an Agreement between the Government of the Russian Federation and the Government of the Sultanate of Oman on the elimination of double taxation on income and the prevention of tax evasion in 2023. Analyzing the frequency of mutual visits and meetings, one can conclude that 2016 can be considered the starting point for strengthening economic ties between the Russian Federation and the Sultanate of Oman, with full-scale activation occurring in 2022, as evidenced by the trade volume.
Since 2010, trade turnover between the countries has been growing dynamically. In 2010, it amounted to $12 million, in 2014 it reached $84 million, and by 2023 it exceeded $400 million, which is 60% more than in 2022. In the trade structure between Russia and Oman, Moscow has a clearly positive balance. For example, according to 2022 data, Russia exported goods worth $246.8 million to Oman and imported goods worth $4 million. The fuel and energy complex remains the most active area of interaction in foreign trade with Oman. Supplies of Russian oil and petroleum products, including naphtha, diesel, and fuel oil, remain relevant. Nevertheless, despite the steady growth in mutual trade, it should be noted that the trade volume is extremely small compared to other external players in the region. For instance, Oman's trade turnover with the United States in 2023 amounted to more than $3.4 billion, and with China, which is increasing its influence in the region, it exceeded $2 billion.
From Words to Actions: Platforms for Strengthening Ties
Since the beginning of intensified contacts between Russia and Oman, many meetings have taken place between representatives of the countries on various platforms, including the UN, the Organization of Islamic Cooperation (OIC), and the Russian-Arab Business Council. In 2005, the Russian-Omani Business Council was established. In 2016, the first Russian-Omani Business Summit was held. All this further demonstrates the increased interest in developing relations. In 2024, an Omani delegation attended the international economic forum "Russia - Islamic World: KazanForum." Of particular interest is the participation of representatives from the sultanate in SPIEF 2024 as the largest international economic event in Russia, which, in the case of Oman, became a kind of summary of the strengthening ties between the parties. The Omani delegation at the forum was led by the Minister of Commerce, Industry and Investment Promotion of Oman, Qais bin Mohammed bin Moosa Al Yousef.
During the forum, a Russia-Oman business meeting was held, where Russian Minister of Economic Development M. Reshetnikov outlined the main areas where Moscow and Muscat will further enhance economic cooperation: trade, investments, technology, logistics, and tourism. Trade between Russia and Oman is showing steady growth, and currently, there is no reason to believe that the situation will change in the foreseeable future, especially considering Russia's importance as a partner in the fuel and energy complex.
Promising Areas of Cooperation
Speaking about the development of scientific and technical cooperation, it is primarily related to oil and gas processing, geological exploration, water desalination and purification, and improving agricultural efficiency. Russia has extensive experience in these areas, while Oman needs technologies to update its technical base. Some success has already been achieved in this direction. For example, Russian oil geologists are collaborating with their Omani colleagues in developing the sultanate's oil industry. Another example of such cooperation is the opening of an electric submersible pump manufacturing plant in Oman in 2017, built by a Russian company.
Tourism has become a somewhat unexpected area of cooperation between Russia and Oman, but today we can already speak of the success of this sector. Since 2022, Oman has become one of the popular destinations for Russian tourists. In 2023, the country welcomed 20,000 Russian tourists, which is 35% more than in 2022. Moreover, the number of travelers from Russia is projected to grow by 300% in 2024. There are several objective reasons for this situation. Firstly, direct air communication between Russia and Oman has recently been established. Secondly, Oman is actively developing its tourism industry today, which fully aligns with the Omani strategic program aimed at diversifying the economy, including the construction and renovation of relevant infrastructure and entertainment complexes. Of course, it's worth mentioning that in light of recent geopolitical events, Russians had to seek new vacation destinations. Oman, with its sandy beaches, access to the ocean, and interesting history, became a logical choice.
Last but not least is the sphere of logistics. The unique geographical position of the Sultanate of Oman at the intersection of trade routes and its extensive coastline make the country an attractive transport and logistics hub with a well-developed port infrastructure. In this regard, Oman is considering the possibility of joining the "North-South" project, which is actively promoted by Russia. Oman could become an important center for distributing Russian agricultural products to the growing markets of Africa and Asia.
Moreover, at recent major Russian events, the thesis that Oman could serve as another entry point for Russian business into the Gulf region has been repeatedly voiced. This has become possible due to the existence of a double taxation elimination agreement and balanced relations between the two countries. In fact, the state located at the southern tip of the Arabian Peninsula with developed infrastructure could become a platform for promoting Russian products to the entire GCC market, considering the relatively high level of cooperation within the integration association.
Additionally, in 2014, the design of railways in the Sultanate of Oman began. However, there is still no railway communication in Oman. Undoubtedly, this could become an area for interaction, given Russia's extensive experience in implementing railway projects.
The Most Suitable Time for Strengthening Economic Ties?
To understand the prospects for cooperation, it's important to consider Russian-Omani interaction in the context of processes occurring at both global and national levels. Today, Oman, like many of its neighbors, is pursuing a policy of economic diversification. This policy is implemented within the framework of the strategic comprehensive plan Oman Vision 2040, according to which the main goal is to build a developed and diversified economy. To achieve this goal, a system of measures and tools is envisaged, mostly related to investing in non-oil sectors. A logical result of the intention to conduct such a policy is the need to diversify external relations, as these sectors require experience and investments from new partners and extra-regional players.
In this context, Russia, which has enormous potential in such areas as transport and agriculture, represents an important partner that will contribute to achieving this ambitious goal. It's worth noting that the sultanate realizes that the world is changing and transitioning to a multipolar system, which Moscow has actively advocated for in recent years. It's important to emphasize that an integral element of the Oman Vision 2040 program is attracting foreign investments. Although the participation of the Omani delegation in SPIEF 2024 became effective advertising for attracting such investments, given the economic situation in Russia and the colossal sanctions pressure, this area of cooperation raises questions at this stage. The concerns of the sultanate's authorities and business representatives about falling under secondary U.S. sanctions, which have been tightened recently, may lead to some slowdown in the implementation of the set goals and objectives. Thus, despite Russian President V.V. Putin's invitation to visit Russia, the Sultan of Oman, Haitham bin Tariq Al Said, did not lead his country's delegation to the forum in St. Petersburg. Since the establishment of diplomatic relations between the two countries in 1985, the leaders of the two countries have not held personal meetings, and the first telephone conversation took place only in 2023.
Also, on June 14, 2024, the main Omani air carrier Oman Air announced the suspension of direct flights to Moscow at least until the end of October. This decision, made a few days after the conclusion of SPIEF 2024, was truly unexpected, as the importance of direct air communication between the two countries was repeatedly emphasized at the business meeting. In addition, direct air communication is one of the main factors in strengthening ties in the tourism sector.
Furthermore, in July 2024, a terrorist attack occurred in Oman for the first time in a long while. As noted by a number of Russian experts, this attack may have a negative impact on the sultanate's tourism potential in the future. At the moment, it's difficult to say how significant this effect will be for the country's tourism industry. However, we can definitely say that this attack will affect the country's image in the eyes of Russian tourists.
Analyzing Oman's foreign policy in the context of ongoing transformations in the country, it's necessary to note that it's extremely important for Muscat to maintain its neutral status and developed relations with Western countries, especially with the UK and the USA, as these processes require technologies and large investments. Accordingly, under certain conditions, Muscat will take into account the geopolitical situation when building relations with Moscow, especially in the sphere of economy and transport routes. However, at the moment, it's difficult to assess the impact of this factor on the further strengthening of ties between the two countries.
****
From the collapse of the Soviet Union to the present, bilateral relations between the Russian Federation and the Sultanate of Oman have dynamically evolved from rather cool to partnership-like, including in the economic sphere. This is evidenced primarily by the increase in trade volumes and the frequency of contacts at different levels. The beginning of rapprochement can be considered 2016, with rapid intensification occurring in 2022. This became possible largely due to the similarity of tasks and principles of a pragmatic approach to foreign policy against the background of both global processes and transformations at the country level. Muscat, pursuing a policy of economic diversification, desperately needs to develop relations with new players, while Moscow has begun a rapid policy of "pivot to the East".
Over the years of economic relations evolution, various platforms for strengthening ties have been developed. For example, the Russian-Omani Business Council, the Russian-Omani Business Forum, and the Russian-Arab Business Council. In addition, the countries strive to participate in various international multilateral events, such as SPIEF and the economic forum "Russia - Islamic World: KazanForum".
The two countries have a fairly large list of areas where it is possible to strengthen ties, but the most promising today are trade, logistics, tourism, and scientific and technical cooperation. Trade is predominantly represented by fuel and energy complex products. Logistics has great potential due to Oman's advantageous geographical position, which can make it an important element of the "North-South" project. Additionally, it is critically important that, according to many experts and officials, Oman can become another entry point for Russian business into the markets of the Gulf countries.
The development of tourism appears promising. Already today, we can talk about successes in this track, as evidenced by the large growth in the number of tourists and the opening of direct air communication. There are prerequisites that in the future there will be a deepening of relations in the field of scientific and technical cooperation. At the moment, this area of cooperation is in its initial stage, but there are already concrete examples of successful cooperation between Moscow and Muscat in this direction. In the future, it will be built around oil and gas processing, geological exploration, water desalination and purification, and improving agricultural efficiency.
However, when building further relations, it is necessary to take into account possible risks, primarily associated with a slowdown in the pace of development of ties against the background of increasing sanctions pressure on Russia. For Muscat today, it is vital to build sustainable communication with various international actors.
From the collapse of the Soviet Union to the present, bilateral relations between the Russian Federation and the Sultanate of Oman have dynamically evolved from rather cool to partnership-like, including in the economic sphere. This is evidenced primarily by the increase in trade volumes and the frequency of contacts at different levels. The beginning of rapprochement can be considered 2016, with rapid intensification occurring in 2022. This became possible largely due to the similarity of tasks and principles of a pragmatic approach to foreign policy against the background of both global processes and transformations at the country level. Muscat, pursuing a policy of economic diversification, desperately needs to develop relations with new players, while Moscow has begun a rapid policy of "pivot to the East".
Over the years of economic relations evolution, various platforms for strengthening ties have been developed. For example, the Russian-Omani Business Council, the Russian-Omani Business Forum, and the Russian-Arab Business Council. In addition, the countries strive to participate in various international multilateral events, such as SPIEF and the economic forum "Russia - Islamic World: KazanForum".
The two countries have a fairly large list of areas where it is possible to strengthen ties, but the most promising today are trade, logistics, tourism, and scientific and technical cooperation. Trade is predominantly represented by fuel and energy complex products. Logistics has great potential due to Oman's advantageous geographical position, which can make it an important element of the "North-South" project. Additionally, it is critically important that, according to many experts and officials, Oman can become another entry point for Russian business into the markets of the Gulf countries.
The development of tourism appears promising. Already today, we can talk about successes in this track, as evidenced by the large growth in the number of tourists and the opening of direct air communication. There are prerequisites that in the future there will be a deepening of relations in the field of scientific and technical cooperation. At the moment, this area of cooperation is in its initial stage, but there are already concrete examples of successful cooperation between Moscow and Muscat in this direction. In the future, it will be built around oil and gas processing, geological exploration, water desalination and purification, and improving agricultural efficiency.
However, when building further relations, it is necessary to take into account possible risks, primarily associated with a slowdown in the pace of development of ties against the background of increasing sanctions pressure on Russia. For Muscat today, it is vital to build sustainable communication with various international actors.
- Melkumyan E.S. Arab Gulf Monarchies in the 21st Century: Regional and Global Aspects of Foreign Policy. Moscow: IV RAN, 2023. P. 239.
First published on the RIAC website.