The country's oil deposits were discovered in 1964 and
commercially exploited from 1967. Since then, oil has been
the focal point of the economy and accounts for half of the
gross domestic product. More than half of the country's
population is employed in agriculture. They cultivate the
narrow coastal strip that is the only one suitable for
With assistance from the United States, Qabus created a
rental army to fight the People's Front for the
liberation of Oman and the Arabian Gulf. When the army
became insufficient, he signed an agreement with Shah Reza
Pahlevi on the deployment of Iranian troops in the conflict.
the guerrillas had to retreat because of the military
superiority of the Iranian force. At the same time, the
Iranian troops remained in the country, virtually made Qabus'
regime their protectorate, and brought full control over the
important Strait of Hormuz.
Following the fall of the Shah in 1979, the Iranian
troops were quickly replaced by Egyptian commandos and
soldiers. The Sultan also decided to leave the US island of
Masirah as an airbase. It was later followed by the bases of
Ihamrit and Sib, as well as the naval bases of Matrah and
Salalah. Two-thirds of the country's state budget was
reserved for the military.
Oman is strategically located as the country has full
control of oil traffic out of the Persian Gulf. That caused
the US to concentrate its efforts on getting stuck in the
The country's isolation has gradually been lifted
following Qabus' takeover of power. It has been opened to
foreign capital and limited educational and cultural
development has taken place. Yet, the regime has retained
its authoritarian orientation that characterizes old feudal
societies. The only opposition is the People's Front for
the liberation of Oman and the Arab Gulf,
which in 1980 abandoned the armed struggle. It has sought to
form a democratic front in alliance with the Arab
nationalist sectors. In particular, it has emphasized
support for the Palestinian cause, and for all foreign
troops to leave the country.
During the war between Iran and Iraq in the 1980s, the US
presence in Oman was reinforced. The superpower reached
10,000 troops in the country - mostly at the base of Masira,
where nuclear weapons are located and where Rapid Deployment
Force aircraft are stationed. During the same period, Oman
purchased 2 squadrons of F-16 fighters.
In June 1989, the Oman Petroleum Development Corporation
was able to report the discovery of the largest natural gas
discovery over the previous 20 years. In March, Oman
initiated a more conciliatory course vis-à-vis Iran and
entered into an economic cooperation agreement conditional
on the development of political stability in the region.
In the wake of Iraq's invasion of Kuwait and the
subsequent Gulf War, Oman suspended its financial aid to
Jordan and the PLO. That same year, the foreign ministers
from Egypt, Syria, the United States and the 6 Gulf states
signed an agreement in Ryad to preserve the region's
In 1991, the government also published a plan for
democratizing the country, which included the creation of a
parliament to be directly elected by the people.
With the prospect that the country's oil reserves will be
exhausted before the year 2010, the Sultan launched a plan
for diversifying the economy with the aim of developing
fisheries, agriculture and tourism in particular.
Since 1981, the country had run with a government deficit
and in 1995 it had the World Bank declare that the state's
level of spending could not be "maintained". It prompted the
Sultan to publish a program for reducing public spending, a
number of privatizations and steps to promote foreign