Middle East: Faced with protests, Oman offered economic sweeteners. Will it work?

Notes from different corners of the world.
March 29 2011 11:30 AM

Paying for Peace

Faced with protests, Oman offered economic sweeteners. Will it work?

(Continued from Page 1)

Oman doesn't have current unemployment—or employment—figures.

"It's a rat race," said Eckart Woertz, a visiting fellow at Princeton University who heads the economics department at the Gulf Research Center in Dubai. "There are only so many jobs. A lot of them will still be left out. Educated, frustrated young men are more restless than uneducated men. These are the guys who make the revolutions, not the blue-collar couch potatoes."

Oman also is not as wealthy as some of its neighbors in the Gulf Cooperative Council. It produces less oil and has less revenue to distribute as a result.

Nader Habibi, an economics professor at the Crown Center for Middle East Studies at Brandeis University, said that if the Omani government decides to make larger economic concessions, it could run fiscal deficits and face higher inflation down the road. "Since GCC economies are relatively open, additional spending does not translate into higher prices for most consumer goods, because imports can be easily increased to address the additional demands," he said. "But housing and real-estate prices will come under pressure as some of the money that the government injects into the economy will go into these markets, and the supply is limited in the short run."

But Taqi bin Abdulredha al-Abduwani, dean of Gulf College Oman, a private business school, said he believes that the financial concessions can only help the economy, because the people who will receive them, such as pensioners and the jobless, will spend the benefits.

"What his majesty is doing is absolutely right, because you need to calm the people down," he said. "It will not destroy the economy. It will help, because the people will have better buying power. It's important we start somewhere."

Virginia Tech professor Salehi-Isfahani said the government still needs to address the larger issue of a higher-education system that promises jobs in the public sector in return for diplomas and degrees.

"What these young people need is subsidies to learn global skills," he said. "That would be the right subsidy coming from the oil money. Not to look to the government. These people are in search of government jobs often, and they realize that those jobs are basically allocated or rationed. This is a very unproductive way of promoting education. Getting a diploma, getting a degree, is not the same thing as obtaining skills that the global economy needs."

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Nasser al-Khatri, 23, who graduated in January from Sultan Qaboos University with a mass communications degree, acknowledged that he would prefer to work for the government. After graduation, he worked at a private media company for a short time, but he quit because of the hours and the pay.

"I liked that job, but the salary was too low," he said. He made about $900 a month and worked from 8 a.m. to 4 p.m., longer hours than most civil-service employees.

"If I work in the government, I can work in the private side for myself," he said. "I like shooting. My ambition is to open a production company."

In the end, Brandeis economist Nader Habibi said that he doesn't believe economic reforms will be enough for the people of Oman, particularly since they have suddenly became so vocal in making their petitions.

"In my view, these political and economic demands are not substitutes for each other," he said. "Cash payments and government job offers can help reduce the public anger marginally, but it will not eliminate it completely. Even if the Omani government offers economic incentives, political demands are likely to continue."

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