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US concerns with Oman over financial ties to Iran: Report

Published: Updated:

The “real concerns” for US authorities over Oman are the country’s financial ties with Iran, including entities that were under US sanctions prior to the 2015 nuclear deal, according to a new report from the Foundation for Defense of Democracies, a Washington DC-based policy institute.

Oman has historically been referred to as the “Switzerland of the Middle East,” having maintained a commitment to diplomacy throughout the late Sultan Qaboos’s reign, with a friendly relationship with Iran and an alliance with the US as a trademark of its role in the region, the report explained. This position may no longer be tenable, however, as US policy towards Iran adjusts during the Donald Trump presidency, it added.

“American policymakers should be sympathetic as Oman adjusts to the diametrically opposing policies of the Trump and Obama administrations. However, Washington should also demand that Muscat shift back to a truly neutral position on Iran, both politically and economically,” the report said.

According to a 2018 US Senate report, Omani banks assisted Iran in gaining access to its foreign reserves while the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), was still in effect. This raises “troubling questions” over Oman’s efforts to financial assist Iran, the report said.

US policymakers should push Oman to take a genuinely neutral position that no longer advocates for dialogue with Iran, the report said. “Omani officials continue to insist that sanctions are the wrong policy and that engagement with Iran is the best way forward. This is not a neutral position. If anything, this is a policy that advocates for Iran’s interests,” it said.

Oman’s ties with Iran are, however, fundamentally a result of former US President’s Barack Obama’s move to broaden ties with the Islamic Republic, the report said. Obama’s shift in foreign policy led to Oman acting as a conduit for Iran-US ties, with the sultanate acting as a discrete backchannel for both parties, and a corresponding increase in political and economic ties between Oman and Iran.

Oman’s geographic position in the Arabian Gulf close to Iran has for a long time been of strategic interest to Washington. The US military maintains air bases and port facilities in the sultanate for this reason, while the US Navy uses the country as a base for its operations to maintain the freedom of movement in the Strait of Hormuz – a strategical important waterway through which 30 percent of all seaborne-trade crude oil flows.