Darwish al-Balushi, Financial affairs Ministrer of Oman, announced yesterday the government’s intention of cutting the 4.5 billion-rial deficit by 27 percent this year, down to 3.3 billion rials ($8.6 billion.) Al-Balushi said that the deficit will be reduced mainly by the reduction of spending.
The recent low oil prices have hit Oman hard. The original deficit projection was placed at 2.5 billion rials last year. But that calculation was based on the price of oil hovering at about $75 per barrel. Today’s price for Brent crude oil is closer to $40 per barrel.
Al-Balushi predicted that state spending for this year should reach about 11.9 billion rials, a much lower figure than last years’ 14.1 billion rials. Revenues are expected to reach about 8.6 billion rials.
Khalil bin Abdullah al Khonji, the former head of the Oman Chamber of Commerce and Industry says that the present economic reality demands a reduction and eventual elimination of the regions huge subsidies.
Despite the fact that the public will protest the withdrawal of subsidies, business leaders say “there is no other way out due to the new economic reality.”
Khonji stated that,
“The fall in oil prices is affecting Oman in a big way. All the reports indicate that the prices are unlikely to reach US$70 until 2020.
“I hope my predictions are wrong, but there is a strong indication that the prices might fall further after the crucial Organization of Petroleum Exporting Countries meeting in Vienna on Friday. It might even touch US$30.”
He added that now is the best time to phase out subsidies, especially those on oil.
“We understand from government officials that citizens will not be affected if the subsidy is removed. We have to prevent smuggling of diesel and petrol to other countries.”
According to the World Bank’s “Ease of Doing Business” ranking for 2015, Oman made significant strides, rising from 77th place in 2014 to 70th this year.
The ranking takes into account ten different regulatory aspects of business, such as “enforcing contracts,” “paying taxes,” and “getting credit.”
In the GCC region the sultanate was ranked the fourth best place to do business, ranking much higher than the UAE (31), Bahrain (65), and Qatar (68). Kuwait ranked 101st.
Oman’s rise is mostly due to great improvements in two measurements; ‘getting electricity’ and ‘trading across borders.’ Last year the country was ranked 124 in ‘getting electricity,’ and this year shot up more than 60 places to be ranked 60th in this parameter.
The report explained the change in Oman’s ability to deliver reliable power to business customers:
“In January 2015, the utility in Oman began recording the duration and frequency of outages to compute the annual system average interruption duration index and system average interruption frequency index. This enabled the utility to analyze outage date, identify and eliminate inefficiencies and accurately assess the impact of these initiatives on the distribution network.”
The sultanate climbed from 76th place to 69th in ‘trading across borders’ because
“Oman reduced the time for border compliance for both exporting and importing by transferring cargo operations from Port Sultan Qaboos to Sohar Port,” the report said.
Xi Jinping. Photo by Antilong
As the crisis in Syria and elsewhere in the Middle East continues, the plight of refugees and others worsens. China, whose president, Xi Jinping is scheduled to visit in Britain next week, promised additional humanitarian assistance to the embattled Middle East.
The Chinese Deputy Foreign Minister Wang Chao announced that China is carefully following the developments in the region, and is ready to add significantly to the 375 million yuan ($54.9 million) it has already given to the region.
Wang explained that the aid will help the refugees flowing out of the countries in conflict as well as reduce their numbers. He also said that President Xi will discuss with his British counterparts a variety of issues of concern to both sides. In the past the countries have cooperated on critical issues such as the Ebola epidemic, the Iran nuclear threat and the trouble in the South Sudan.
“China-Britain relations have surpassed the bilateral scope and adopted strategic significance and global influence,” Wang said.
Wang added that China and Britain will continue to cooperate on issues like world economic growth, global security, and the reform of global governance.
Weighing in on the Iran nuclear deal, Saudi Arabia is satisfied with US President Barack Obama’s assurances and they believe that the agreement will contribute to security and stability in the area. Saudi King Salman met with Obama on Friday at the White House and was the king’s first visit to the US since he took the throne in January of 2015.
Saudi Foreign Minister Adel al-Jubeir said,
“Now we have one less problem for the time being to deal with, with regards to Iran. We can now focus more intensely on the nefarious activities that Iran is engaged in in the region.”
Having skipped a Gulf Arab summit at Camp David in May, Salman was seemed to have snubbed Obama over the Iran strategy. However, the recent visit appears to have smoothed over those issues.
Saudi Defense Minister Mohammed bin Salman also met on Friday with US Secretary of Defense Ash Carter and they discussed Saudi Arabia’s defense needs.
As Obama said on Friday,
“We continue to cooperate extremely closely in countering terrorist activities in the region and around the world, including the battle against ISIS.”
As terrorism continues to rear its ugly head throughout the Middle East, several countries are taking an old approach to defending themselves, construction of walls and fences.
Tunisia, the country where a group of terrorists murdered foreign tourists along a popular beach is building a fence with watchtowers on its border with Libya. It is believed the killers were trained there.
After a suicide bomb exploded in a town in Turkey, the Turkish government announced its plans to strengthen the border with Syria, putting up a security fence.
Saudi Arabia is planning a wall along its entire border with its southern neighbor, Yemen.
In Morocco the world’s oldest functioning security barrier, built in the 1980s, protects the country from areas controlled by Polisario. Another barrier along the border with Algeria has been under construction since 2014.
“The Middle East and North Africa is now the most walled region in the world,” said Said Saddiki, a professor of International Relations and International Law at Al-Ain University of Science and Technology in Abu Dhabi. They range from “fences inside cities to anti-migrant walls and separation barriers to counter-insurgency” barricades, he said.
Saddam Hussain Iran-Iraqi war 1980s. Photo by AFP/Getty-images
Saddam Hussein ruled Iraq with an iron fist from July 1979 until April 2003. Saddam was finally forced out of power by the combined armies of the United States, Britain and their allies. During this time of upheaval and the downfall of Saddam Hussein, Crescent Petroleum continued to grow.
Crescent Petroleum began as Buttes Gas & Oil Co. International Inc, which was a subsidiary of Crescent Petroleum. Buttes was a holder of a concession first granted in 1969 by the Sharjah Government in the United Arab Emirates. In the early 1970s the Mubarek Field was discovered off the coast.
Headquartered in Sharjah, the 1980s proved beneficial to the growth of the burgeoning oil company. By this time, as Saddam Hussein began to flex his muscles, Crescent Oil truly established itself as a full-fledged oil company. The company was re-organized at this time, and began to assert influence on the international energy economy.
During the disruptive years of the Gulf War brought on by Saddam Hussein’s invasion of Kuwait, Crescent Petroleum added concessions in Yemen, Pakistan and Egypt.
Today, in the post-Saddam Hussein era, Crescent Petroleum continues to explore new opportunities for expansion and growth. One of its most promising areas is in the development of natural gas as a valuable asset in the region. It is speculated that the Gulf region of the Middle East holds more than 40 percent of the world’s natural gas reserves. In order to benefit from the richness of the area, Crescent implemented two cross-border pipeline deals. These deals are expected to create a new paradigm shift on the determination of the price of oil. It is expected that the gas business in the Arabian Peninsula and Gulf area will develop quickly, stimulating growth in economies around the world.
Nicola Mendelsohn, Facebook’s VP of the Middle East, Europe and Africa just completed a fact-finding trip to the area of her expertise. What she found there may be surprising.
Eighty-five percent of the 191 million Facebook users access the social media platform using a mobile device.
Mendelsohn explained why usage is so different in MENA than in the west.
“I was in Nairobi, Kenya, earlier this year and their whole payment system there is mobile. M-Pesa is unbelievable. So you can be walking down the streets of a market, and the market will be no different to something that you could have been in a thousand years ago, but everyone is trading by using their mobile phone. And you kind of go, ‘well how come I can go shopping on the streets of London and it’s unfathomable [to be able to do that]?’ So there’s a lot we can learn from being over there.”
In Kenya Mendelsohn met a woman who owned a fashion outlet called Fashion254. She is marketing her specialty clothing on Instagram. She has buyers call her or send her WhatsApp message to arrange delivery. In 2013 Mendelsohn said she met people in Kuwait who were selling their sheep using Instagram.
On her visit to Saudi Arabia she met several women business owners through a group called Glowork. They sell their products, mostly to the overseas market, on Facebook.
“There are very different rules and laws within that country, and they have found the internet as a way of connecting to the world. They have found Facebook as a way to connect with their friends, families, businesses they are interested in. So what they talked about was that Facebook gave them a gateway to the world that they wouldn’t have had otherwise.”
As Oman continues to diversify its economy, representatives of the computer technology giant Dell expressed their belief that there will be great opportunities for cooperation with the Gulf State country.
Brian Humphries, president of Enterprise Solutions Sales and Strategies at Dell, explained that he sees a fast-paced transition to e-governance in Oman. This transition positions Oman to be able to take advantage of newly emerging opportunities.
Humphries is visiting Oman as part of a multi-country tour of the region. In Oman he met with customers, partners and employees to better understand the ultimate potential of the market.
“It is important to understand where the next generation of growth will come from,” Humphries said, reiterating Dell’s commitment to the region.
While interviewed during the World Economic Forum in Southern Shuneh, Jordan, at a resort at the Dead Sea, Majid Jafar shares some of his perspective. Majid Jafar, CEO of Crescent Petroleum, discusses how low oil prices have forced Middle Eastern producers to focus on efficiency.
In the post Saddam Hussein era, Jafar answers a number of questions from the reporter. These questions include looking at who is the big winner and loser for oil prices and looking at the outlook for Saudi Arabia.
Hear the entire transcript and get up to date information on oil prices.