Tuesday, February 2, 2016

Britain Receives Proposals for ‘Better Deal’ to Stay in the E.U.

Prime Minister David Cameron of Britain, right, and Donald Tusk, president of the European Council, at Downing Street in London on Sunday.




LONDON — The European Union offered a proposal on Tuesday intended to keep Britain as a member of the bloc, setting out compromises on hot-button issues like immigration and setting up a referendum as early as this summer on whether the country wants to retain close ties to the Continent or go its own way.

The proposal, drafted by the European Council president, Donald Tusk, addressed all the issues that Prime Minister David Cameron had insisted be revisited if he was to campaign to keep Britain in the union. But it remained vague on some crucial points, and in any case was unlikely to sway those most committed to Britain’s exit from the bloc.

Mr. Cameron’s task in the months before the referendum is to rally enough supporters of continued membership and win over enough of those on the fence to avert a vote to leave, a choice that many predict could have global ramifications.

Written after weeks of diplomacy, the dense texts still need to be approved by leaders of the other 27 members of the bloc, who, along with Britain, will meet for a crucial summit meeting in Brussels this month. A deal there could pave the way for a British referendum as early as June.



Not only would a British exit from the bloc cause acute economic uncertainty in and beyond Britain, it could also trigger an existential crisis for the union, which has struggled in vain to react coherently to a growing wave of migration from the Middle East and elsewhere.

Mr. Cameron has said that he wants to negotiate a “better deal” from the bloc, one that would then allow him to campaign for the country to stay. On Tuesday, speaking in Chippenham, England, Mr. Cameron called the new plan a “very strong and powerful package,” adding that, while there was no final agreement and more work was needed, “strong, determined and patient negotiation has achieved a good outcome for Britain.”

Immediate reaction was divided along well-established lines, with critics of the European Union denouncing the proposals as insubstantial.

Nigel Farage, leader of the U.K. Independence Party, called them “truly pathetic.” Steve Baker, a Conservative Party lawmaker who also wants Britain to quit the bloc, said that “nothing in it would stand up to serious scrutiny.”



But Carolyn Fairbairn, director general of the Confederation of British Industry, a business lobby group, described the offer as “an important milestone on the way to a deal that could deliver positive changes to the E.U. that will benefit not just the U.K., but the whole of Europe.”

Significantly, one senior euroskeptic figure in Mr. Cameron’s Conservative Party, Home Secretary Theresa May, signaled cautious support for the plan on Tuesday, describing it a “basis” for a deal.



Prime Minister David Cameron spoke to workers at a Siemens factory on Tuesday in Chippenham, England. He spoke approvingly of a new proposal to keep Britain in the European Union.



The most delicate issue on the table was Mr. Cameron’s call for the right to restrict welfare benefits for non-British citizens of European Union countries, namely by limiting access to “in work” payments that typically supplement the earnings of low-wage employees."

These curbs could apply for up to four years, and the documents published on Tuesday state that the scale of immigration into Britain would justify them. However, it also stipulated that there would need to be a final agreement among the 28 nations for the restrictions to kick in.


Plans would also be drawn to reduce the “child benefit” payments to workers whose children have not accompanied them to Britain. This plan would involve Britain paying a lower amount based on costs in the nation where the child lives.

Mr. Cameron’s welfare proposals were seen by some nations, most notably in Eastern Europe, as a breach of the principle that all European Union citizens should be treated equally.

In a letter accompanying the release of the documents, Mr. Tusk defended his attempt to balance British demands against the sensitivities of other countries. “To my mind, it goes really far in addressing all the concerns raised by Prime Minister Cameron,” Mr. Tusk wrote. “The line I did not cross, however, were the principles on which the European project is founded.”

In a Twitter post, Tomas Prouza, the Czech minister for European affairs, described the mechanism as “acceptable” but said there would be a crucial debate over how long the restrictions would apply.



Mr. Tusk’s proposals also offered assurances to Mr. Cameron that a treaty commitment to “ever closer union among the peoples” of Europe would not bind Britain to the goal of political union.

Instead the proposals argued that this was “compatible with different paths of integration,” does “not compel all Member States to aim for a common destination” and allows for “an evolution towards a deeper degree of integration among the Member States that share such a vision of their common future, without this applying to other Member States.”

Another proposal ensured safeguards for the large financial sector in Britain, which decided to keep the pound rather than adopt the euro. The British government worries that, as the 19 nations that use the single currency integrate further, rules might be skewed against European Union nations that do not.

Offering such guarantees to Britain is sensitive in some eurozone nations, such as France.

In another concession, European Union legislation could be blocked if enough national parliaments oppose a measure, though critics doubt that that would be easy to deploy.

Mr. Cameron’s enthusiasm for the plan is crucial because those who want Britain to stay in the bloc believe his opinion will prove decisive with the public in a referendum.

He argues that, inside Europe’s single market, but outside its euro single currency and the passport-free Schengen travel zone, Britain could have the “best of both worlds” if it succeeds in its negotiation.

Britain voted in 1975 to stay in what was then called the European Economic Community, which it had joined two years earlier, but has held no plebiscites on European issues since.

On Tuesday Mr. Cameron said that, providing that the deal is reached, he would not argue that “the European Union is now a perfect and unblemished organization” but that “on balance, Britain is better off” inside it.


What Can Today’s Peace Movement Learn From Vietnam?

Members of the activist group Code Pink gather for a Senate Armed Services Committee hearing, September 16, 2014. (AP Photo / J. Scott Applewhite)

It was half a century ago, but I still remember it vividly. “We have to help South Vietnam,” I explained. “It’s a sovereign nation being invaded by another nation, North Vietnam.”



“No, no,” my friend protested. “There’s just one Vietnam, from north to south, divided artificially. It’s a civil war. And we have no business getting involved. We’re just making things worse for everyone.”

At the time, I hadn’t heard anyone describe the Vietnam War that way. Looking back, I see it as my first lesson in a basic truth of political life—that politics is always a contest between competing narratives. Accept a different story and you’re going to see the issue differently, which might leave you open to supporting a very different policy. Those who control the narrative, that is, are likely to control what’s done, which is why governments so regularly muster their resources—call it propaganda or call it something else—to keep that story in their possession.

Right now, as Americans keep a wary eye on the Islamic State (IS), there are only two competing stories out there about the devolving situation in the Middle East: think of them as the mission-creep and the make-the-desert-glow stories. The Obama administration suggests that we have to “defend” America by gradually ratcheting up our efforts, from air strikes to advisers to special operations raids against the Islamic State. Administration critics, especially the Republican candidates for president, urge us to “defend” ourselves by bombing IS to smithereens, sending in sizable contingents of American troops, and rapidly upping the military ante. Despite the fact that the Obama administration and Congress continue to dance around the word “war,” both versions are obviously war stories. There’s no genuine peace story in sight.

To be sure, peace activists have been busy poking holes in these two war narratives. It’s not hard. As they point out, US military action against IS is obviously self-defeating. It clearly gives the Islamic State exactly what it wants. For all its fantasies of an apocalyptic final battle with unbelievers, that movement is not in any normal sense either planning to attack the United States or capable of doing so. Its practical, real-world goal is to win over more Muslims to its side everywhere. Few things serve that purpose better than American strikes on Muslims in the Middle East.

If IS launches occasional attacks in Europe and tries to inspire them here in the United States, it’s mainly to provoke retaliation. It wants to be Washington’s constant target, which gives it cachet, elevating its struggle. Every time we take the bait, we hand the Islamic State another victory, helping it grow and launch new “franchises” in other predominantly Muslim nations.



That’s a reasonable analysis, which effectively debunks the justifications for more war. It’s never enough, however, just to show that the prevailing narrative doesn’t fit the facts. If you want to change policy, you need a new story, one that fits the facts far better because it’s built on a new premise.

For centuries, scientists found all sorts of flaws in the old notion that the sun revolves around the Earth, but it held sway until Copernicus came up with a brand-new one. The same holds true in politics. What’s needed is not just a negative narrative that says, “Here’s why your ideas and actions are wrong,” but a positive one that fits the facts better. Because it’s built on a new premise, it can point to new ways to act in the world, and so rally an effective movement to demand change.



At their best, peace movements in the past always went beyond critique to offer stories that described conflicts in genuinely new ways. At present, however, the US peace movement has yet to find the alternative narrative it needs to talk about the Islamic State, which leaves it little more than a silent shadow on the American political scene.
VIETNAM REDUX

That’s not to say that the peace movement is stuck story-less. One potentially effective narrative that might bring it back to life is sitting in plain view, right there in the peace activists’ most common critique of the US war against the Islamic State.

IS is not making war on the United States, the critique explains, nor on Europe. Its sporadic attacks on those “infidel” lands aim primarily to radicalize Muslims living there in hopes of recruiting them. Indeed, all IS strategies are geared toward winning Muslims to its side and gaining more traction in predominantly Muslim lands. That’s where the vast majority of IS-directed or inspired violence happens, all over what Muslims call dar al-Islam, “the home of Islam,” from Nigeria to Syria to Indonesia.

The problem for the Islamic State: the vast majority of Muslims are just not buying its story. In fact, IS is making enemies as well as friends everywhere it goes. In other words, it is involved in a civil war within dar al-Islam.

Every step we take deeper into that civil war is a misstep that only makes us more vulnerable. The stronger our stand against the Islamic State, the more excuses and incentives we give it to try to attack us, and the easier it is for IS to recruit fighters to do the job. The best way to protect American lives is to transcend our fears and refuse to take sides in someone else’s civil war.



That’s the positive narrative waiting to be extracted from the peace movement’s analysis. One big reason the movement has had such a paltry influence in these years: it’s never spelled out this “Muslim civil war” narrative explicitly, even though it fits the facts so much better than either of the war stories on offer. It radically shifts our perception of the situation by denying the basic premise of the dominant narrative— that IS is making war on America so we must make war in return. It points to a new policy of disengagement.

And it’s a simple, powerful story for Americans because it’s so familiar. It sends us back half a century and half a world away— to Vietnam. At that time, my friend and, a bit later, I too, embraced the narrative that Vietnam was, indeed, gripped by a civil war. That explanation would play a major role in boosting the success of the Sixties peace movement. Within a few years, many millions of Americans, citizens and soldiers alike, saw the conflict that way— and not so many years after, all US troops were gone from Vietnam.

The peace movement’s story then was both simple and accurate. No, it said, we’re not the good guys protecting one independent nation from invasion by another nation. Nor are we fighting an enemy intent on doing us harm. Boxing champion Muhammad Ali got it right when he said: “I ain’t got no quarrel with the Viet Cong.”

Intervening in Vietnam’s civil war cost us more than 58,000 American lives and did untold damage to the vets who survived, not to speak of what it did to millions of Vietnamese. It showed us that, no matter how superior our technology, we could not swoop in and win someone else’s civil war. Our intervention was bound to do more harm than good.

Fifty years later, we are repeating the same self-defeating mistake. Military action against the Islamic State is leading us into another Vietnam-like “quagmire,” this time in Iraq, Syria, and elsewhere across the Greater Middle East. Once again, we have enmeshed ourselves in a complex civil war abroad with no strategy that can lead to victory. It was wrong then. It’s wrong now.

To put it mildly, the United States has a less than stellar track record when it comes to intervening in other people’s civil wars. We’ve also interfered quite selectively. In the last two decades, we stayed out of brutal conflicts in places like the Congo and Sri Lanka. So a decision not to intervene militarily in a foreign civil war should be familiar enough to Americans.



To become neutral is not to condone the grim brutality and reactionary values of the Islamic State. It’s hardly likely that twenty-first-century peace activists will give the IS anything like the sympathy many Vietnam-era protesters offered the insurgents of that moment. In this case, becoming neutral merely means suggesting that it’s not Washington’s job to fight evil everywhere. Its job is to adopt the strategies most likely to keep Americans safe.

That’s a view most Americans already hold to quite firmly. So the “Muslim civil war” story just might get a sympathetic hearing in the public arena.
THE BEWILDERING MAZE OF MUSLIM CIVIL WAR

Of course, the Islamic State is not involved in what we conventionally think of as a civil war, in which two sides fight for control of a single nation. Even inside Syria, the number of factions involved in the struggle, including the oppressive government of Bashar al-Assad and rebels of every stripe from Al Qaeda–linked to Saudi-linked to US-linked ones, is bewildering. Since IS is fighting for control not just of Syria but of all dar al-Islam, many other movements, factions, and forces are involved in this Muslim civil war as well.

Some observers are too quick to simplify it into a battle of “traditionalists versus modernizers.” In the US mainstream media that usually translates into a desire for us to intervene on behalf of the modernizers. Thomas Friedman ofThe New York Times is probably the best-known advocate of this view. Others simplify it into a battle between Sunnis and Shi’ites. Since Iran is the leading Shi’ite power, those in the media tend to favor the Sunnis.

All these simple pictures are painted to build support for one side or another. The only kind of peace they aim at is one that leaves their favored side victorious.

In fact, no simple dichotomy can capture the tangled maze of struggles in dar al-Islam. Sunni traditionalists battle other Sunni traditionalists (for example, Al Qaeda versus IS). Modernizers join traditionalists to fight other traditionalists (for example, Turkey and Saudi Arabia in an uneasy alliance to weaken IS). Sunnis and Shi’ites become allies too (for example, Kurdish Sunnis and Iraqi Shi’ite militias allied against IS). The United States supports both Shi’ites (like the government of Iraq) and Sunnis (like the oil-rich Gulf States), while it resists the growing power of both Shi’ites (like Iran) and Sunnis (like IS).

By emphasizing the true complexity of the Muslim civil war, a peace movement narrative can cast that war in a different light. Precisely because there are not two clearly demarcated sides, it makes no sense to cast one side as the good guys and launch our planes and drones to obliterate the bad guys. It’s bound to lead to incoherence and disaster, especially in this situation, where the Islamic State, however repugnant to most Americans, is arguably no worse than our staunch allies, the royal family of Saudi Arabia.

Given the confusing, some might say chaotic, maze of intra-Muslim conflict, it is equally senseless to go on promoting the American fantasy of imposing order. (“Without order,” Friedman has written, “nothing good can happen.”) Taking this road so far has, since the invasion of Iraq in 2003, actually meant unleashing chaos in significant parts of the Greater Middle East. There’s no reason to think the same road will lead anywhere else in the future.
BRING THE BOYS, GIRLS, AND DRONES HOME

The Muslim civil war story leads directly to a radical change in policy: stop trying to impose a made-in-America order on dar al-Islam. Give up the dubious gratification of yet another war against “the evildoers.” Instead, offer genuine humanitarian aid, with no hidden political agenda, to the victims of the civil war, especially those fleeing a stunning level of violence in Syria that the United States has helped to sustain. But cease all military action, all economic pressures, and all diplomatic maneuvering against any one side in the Muslim civil war. Become, as we have in other civil wars, a genuine neutral.

To call this change of narrative and policy a tall order is an understatement. There would be massive forces arrayed against it, given the steady stream of verbal assaults the Islamic State levels against Washington, which have already inspired one terrible mass killing on American soil. We don’t know when, or if, other attacks will succeed in the future, whether organized by IS or carried out by “lone wolves” energized by that outfit.

The important thing to keep in mind, however, is that none of this is evidence of a war directed against America. It’s mainly tactical maneuvering in a Muslim civil war. For the Islamic State, American lives and fears are merely pawns in the game. And yet this reality in the Middle East runs against something lodged deep in our history. For centuries, most Americans have believed that our nation is the center of world history, that whatever happens anywhere must somehow be aimed directly at us— and we continue to see ourselves as the star of the global show.

Most Americans have also been conditioned for decades to believe that what’s at stake is a life-or-death drama in which some enemy, somewhere, is always intent on destroying our nation. IS is at present the only candidate in sight for that role and it’s hard to imagine the public giving up the firmly entrenched story that it is out to destroy us. But half a century ago, it was difficult to imagine that the story of Vietnam would be just as radically transformed within a few years. So it’s a stretch, but not an inconceivable one, to picture America, a few years from now, ringing with cries that echo those of the Vietnam era: “US out of dar al-Islam.” “Bring the boys— and girls and bombers and drones— home.”

And if anyone says the analogy between Vietnam and the current conflict is debatable, that’s just the point. Rather than a rush to yet more war, it’s time to have a real national debate on the subject. It’s time to give the American people a chance to choose between two fundamentally different narratives. The task of the peace movement, now as always, is to provide a genuine alternative.

Slowdown leads to exodus of Western law firms from Abu Dhabi





Simmons & Simmons is the latest in a wave of Western law firms to shut their offices in Abu Dhabi in the last year as low oil prices put a damper on business.

London-based Simmons & Simmons plans to close its office in the United Arab Emirates capital by the end of April, a spokeswoman said.

It follows US-based law firms Latham & Watkins and Baker Botts, as well as London and Sydney co-headquartered Herbert Smith Freehills (HSF) in announcing plans to close offices in Abu Dhabi over the past 12 months.

Many international law firms had piled into the capital in the past five years, hoping to bag lucrative contracts linked to the government, in particular the energy sector and the launch of a new financial free zone.



"That hasn't happened as planned and adding to that is the uncertain times we are in now with oil prices around $30," said a source familiar with the matter.

The retreat underscores growing pressure on international law firms for billable hours, prompting a review of their need to have a presence in the capital.

Simmons & Simmons, which decided to close its Abu Dhabi office after a review, said in an emailed statement it would serve its clients through its office in Dubai, moving its Abu Dhabi-based partners to Dubai or London.

Abu Dhabi has cut back or slowed spending on non-essential projects and has lifted subsidies on petrol to ease finances as state revenues decline due to cheap oil.


The International Monetary Fund has cut its growth forecast for the UAE to 2.6 percent in 2016.

Abu Dhabi is more reliant on the energy sector and government contracts, whereas Dubai has a more diversified economy propelled by a larger private sector.

HSF said it closed its Abu Dhabi office in the middle of last year and transferred its five resident lawyers to its offices in Dubai or Doha.

Latham & Watkins said in March 2015 it was closing its Abu Dhabi and Doha offices, consolidating the Abu Dhabi office with its office in Dubai.

Baker Botts said it closed its Abu Dhabi office in January 2015.

Malala Yousafzai seeks to raise $1.4bn to educate Syrian refugees

Malala Yousafzai seeks to raise $1.4bn to educate Syrian refugees




Nobel laureate Malala Yousafzai will seek to inspire world leaders at a conference in London on Thursday to commit $1.4 billion this year to give Syrian refugee children access to education.

Heads of state and government and ministers from countries around the world will converge on London for the "Supporting Syria and the region" conference, which aims to raise funds for humanitarian crises caused by the Syrian war.

Some 700,000 Syrian children living in refugee camps in Jordan and Lebanon and in other Middle Eastern countries are out of school, according to a report issued by the Malala Fund, which campaigns and fundraises for educational causes.

"I have met so many Syrian refugee children, they are still in my mind. I can't forget them. The thought that they won't be able to go to school in their whole life is completely shocking and I cannot accept it," Malala said.



"We can still help them, we can still protect them. They are not lost yet. They need schools. They need books. They need teachers. This is the way we can protect the future of Syria."

A Pakistani teenage education activist who came to prominence when a Taliban gunman shot her in the head on her school bus in 2012, Malala continued campaigning on the world stage and in 2014 became the youngest Nobel Peace Prize winner.

Now 18, she lives in Britain but devotes much of her time and energy to the cause of education for Syrian refugee children. An accomplished public speaker who brought a United Nations audience to its feet in a celebrated speech in 2013, she hopes to make a powerful impact at the London event.

"I'm hoping to encourage and inspire world leaders to take action. I'm not going to wait. We can't wait. It needs to happen."


She will appear at the London conference alongside 17-year-old schoolgirl Muzoon Almellehan, who will be the only young Syrian refugee to address world leaders at the event.

"Without education we cannot do anything," Muzoon said on the same call as Malala.

She said she was working hard on improving her English so she could complete her schooling in Britain and go to university, but also wanted to dedicate herself with "my sister" Malala to the cause of education for fellow Syrian refugees.

The pair first met in 2014 at the sprawling Zaatari refugee camp in the Jordanian desert, and were reunited in December last year when Muzoon was resettled in northern England.

"She is the one that I want people to listen to. Her story is so powerful, it's so inspiring. She's going to tell world leaders that these children have a right to an education and they must not ignore it," said Malala.

Co-hosted by the United Nations and the governments of Britain, Germany, Norway and Kuwait, the London conference is not limited to education but aims to obtain pledges from countries to meet a range of Syrian humanitarian needs.

U.N. agencies are appealing for a total of $7.73 billion to cope with Syria's needs this year and an additional $1.2 billion are required by regional governments for their own plans to deal with the impact of Syria's conflict.

In previous years, donor funding has fallen short of UN appeals.

Bahrain set to issue tender to build 1,200 homes

The Al Ramli Housing Project is situated in Bahrain's Northern Governorate. (Photo for illustrative purpose)




Tenders to build 1,200 housing units within Bahrain's Al Ramli Housing Project will be launched in February.

Sami Bu Hazza, assistant under-secretary at the Kingdom's Housing Ministry, said work is underway to prepare the project site and ready it for construction work.

This process commenced once the development's budget procedures were finalised, he continued, adding tenders will be launched upon approval by the country's Tender Board.

Based in the Northern Governorate, the 3,520-unit housing project will feature key facilities such as mosques and schools.



The Housing Ministry completed preparing general and detailed designs, as well as the documents of the tenders.

Bu Hazza said he hopes the units will be handed over to the beneficiaries in 2018.

In 2014, Gulf Daily News reported the project is intended to cater to old applicants on government housing waiting lists, who will be given priority when the units are allocated.

The project forms part of the Kingdom's wider social housing programme.


Bu Hazza indicated that work is ongoing at all projects currently implemented by the Housing Ministry, including the Northern City, the East Hidd, the East Sitra and Southern Governorate’s Housing Project.

He attributed this construction progress to the Bahraini government's support and the provision of funds from the state budget and the GCC Development Fund.



Cold snap forces school closures in Saudi Arabia



Wintry weather in Saudi Arabia has led to the closure of some schools in the Hail province, local media have reported.

Arab News said that ten cities in the kingdom had registered temperatures below zero on Sunday, with Saudi Arabia’s meteorological office forecasting that the cold snap would continue.

The coldest city was Hail, in northern central Saudi Arabia, which saw temperatures drop to -6.

Taif recorded a temperature of -5, while Arar saw a temperature of -3.

Temperatures also fell below freezing in Riyadh, which recorded a temperature of -1 on Sunday at 6am.





The newspaper said that schools had been closed by the government in “some regions, including Hail”.

Education Minister Ahmad Al Essa cancelled morning assemblies until the end of the week.


Meanwhile, Kuwait’s education ministry has given school directors the authority to cancel classes due to extremely cold weather.

Minister of Education and Minister of Higher Education Dr Bader Al-Essa already had given authority to cancel outdoor assemblies, Kuwait Times reported.

The minister did not stipulate what constituted “extremely cold” weather.

The daytime temperature rarely dips below double-digits in Kuwait. Maximum temperatures are this week forecast for the high teens, with pre-sunrise temperatures between 2-10 degrees Celsius in different parts of the country.



Oman says remains committed to FX peg after forwards move






Oman remains committed to the peg of its rial currency against the US dollar, the head of the central bank said on Tuesday, after the rial dropped to its lowest level in the forwards market for a decade.


Low oil prices are hurting Oman's state finances and depleting its foreign reserves, fuelling speculation among some foreign bankers that it may eventually have to abandon the peg of 0.3849 rial to the dollar, set in 1986.

One-year dollar/rial forwards - deals that will be settled in 12 months' time - jumped on Monday as high as 1,500 points, their highest since 2006. That implied the rial would depreciate about 4 percent from its peg.

Forwards came down slightly to 1,400 points by Tuesday afternoon, but currency dealers said the market's move this week showed some bankers were identifying the Omani rial as the most vulnerable currency in the six-nation Gulf Cooperation Council of wealthy oil exporters.



"The currency pegs in Oman and Bahrain are not robust to severe terms-of-trade shocks, and sustainability issues may become increasingly more pressing over the next 12-24 months if oil prices stay at below $60-$70 per barrel," Goldman Sachs said in a research note in late January.

A dealer with a foreign bank in the Gulf, speaking on condition of anonymity because the matter is sensitive, said: "Oman is the weakest link in the GCC and its peg may come under pressure as early as end-2016."

Bahrain and Oman lack the deep financial resources of their neighbours and while Bahrain is widely believed to be able to count on financial support from Saudi Arabia, to which it is closely allied politically, the markets believe Oman may not have such automatic backing.

That has left traders focusing on the damage which cheap oil is doing to Oman's state finances. The government posted an $11.7 billion deficit last year and has forecast another big deficit this year despite spending cuts.


The plunge of the Brent oil price to near $30 a barrel, from around $100 18 months ago, has created some unease about all the GCC currencies. But the United Arab Emirates, Qatar and Kuwait have hundreds of billions of dollars of overseas assets and small populations, so the markets think they are safe for now.

Saudi Arabia's riyal has come under pressure in the forwards market but that pressure has eased since Riyadh warned banks not to speculate against its currency and threatened to mobilise its huge reserves against speculators.

Central bank executive president Hamood Sangour al-Zadjali told Reuters on Tuesday that Oman had no intention of altering its currency peg.

"Nothing changed. We are committed to the peg with the USD. The interest rate hasn't changed," he said, adding that the rial's weakness in the forwards market might be partly due to the strength of the US dollar globally.

Nevertheless, speculation against the rial may continue unless there is a substantial rebound of oil prices. The Goldman Sachs report estimated the probability of a devaluation in Oman could reach over 80 percent within three years.

Keen to boost economic growth, the Omani central bank has so far resisted pressure to raise its official interest rates in line with the U.S. Federal Reserve, which hiked rates by 0.25 percentage point in December.

Within hours of the US hike, Saudi Arabia, the UAE, Kuwait and Bahrain raised their rates in what was seen by markets as a signal that they would defend their currency pegs.