Occupying the eastern corner of the Arabian peninsula, Oman commands a strategic position at the entrance to the Gulf. It is the least developed of the Gulf states. The most densely populated areas are the northern coast and the southern Salalah plain. Oil exports have given Oman modest prosperity under a paternalistic sultan, who defeated a Marxist-led insurgency in the 1970s.

Native Omanis, who include Arab refugees who fled Zanzibar in the 1960s, make up three-quarters of the population. Baluchis are the largest foreign grouping. Expatriates pose no threat to the regime and Westerners enjoy considerable freedom. Urban drift has taken place, and most Omanis now live in cities. Oman has a number of distinct minorities; the most numerous are the Jebalis in Dhofar – nomadic herdsmen who speak a language resembling Ethiopian. Many Dhofaris supported the Marxist-led insurgents in the 1970s, but they are now considered loyal. Most Omanis are Ibadi Muslims who follow an appointed leader, the Imam. Ibadism does not oppose freedom for women, and a few enjoy positions of authority; two were elected to the 82-seat Consultative Council in September 2000.

Strengths

Oil industry, led by Royal Dutch/Shell. Has benefited from staying out of OPEC and selling oil at spot prices without quotas. Soaring world oil prices in 2000 signified recovery from 1986 collapse. Rich Indian Ocean coastal waters have potential for sizable fishing industry.

Weaknesses

Overdependence on oil (90% of GNP), with less than 20 years' known reserves. Services sector less well developed than in United Arab Emirates. Foreign workers needed in all economic sectors.

Sultan Qaboos is an authoritarian but paternalistic monarch, whose dynasty traces its roots to the 18th century. As well as being head of state, the sultan is prime minister and minister for foreign affairs, defense, and finance. Family members hold other key positions. The regime faces no serious challenge, although Qaboos keeps a careful eye on the religious right wing. In 1991, he created the Consultative Council (Majlis ash-shoura), which gives a semblance of democracy. From 2000 its members were directly elected by provincial committees, rather than being appointed. Major political issues include the planned privatization of medium-sized government projects, and improving Oman's self-defense capability.

Relations with Israel were cut off after the outbreak of the renewed Palestinian intifada in 2000. Although still basically pro-Western, and supportive of the US-led "war on terrorism," Oman has ties with Iran and calls for an easing of sanctions against Iraq.

The UK is the main supplier of equipment. In the 1991 Gulf War, Oman provided communications and services to US and UK forces. Oman's Defense Council, established in 1996, has replenished tanks, ships, and aircraft in recent years. Baluchi mercenaries supplement army strength.

Oman's policy of limiting oil production to conserve resources was abandoned in 1993 following a number of exploration successes.

Overpumping of groundwater causes sea water to seep into traditional irrigation areas. Nature reserves and antihunting laws protect rich wildlife.

The cities of the north are well served by good roads, but some places, particularly in the south, are best reached by air.

There is a policy of replacing expatriate medical staff with Omani nationals. Rural areas are served by clinics.

Education has improved, but rural illiteracy is still high. Over 200 new schools were built between 1996 and 2000.

Reckless driving by young Omani males is a problem. A "flying court" serves remote communities.

Omanis in urban areas enjoy the same high living standards that are to be found in other Gulf states. Hunting trips to Pakistan are popular among the rich Omani elite, and a khanjar, a curved dagger, is a status symbol.

Until the late 1980s, Oman was closed to all but business or official visitors. The sultanate's rich cultural heritage, fine beaches, and luxury hotels are now enjoyed by thousands of Western visitors each year.

The present Albusaidi dynasty has ruled in Oman since 1749.

• 1932 Sultan bin Taimur in power.
• 1951 Sovereignty recognized by UK.
• 1970 Sultan Qaboos bin Said seizes power from his father.
• 1975 Suppression of Dhofar revolt.
• 1991 Consultative Council set up.
• 2000 Consultative Council members elected for first time.