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Bovis Lend Lease, a UK based construction company with a global reach, is suing Blue City management (presumably BCC1), for unpaid bills accrued for its tenure as project manager of the first phase of the Blue City development between 2005 and 2008.

The company is claiming £920,000 ($1.5million) of damages and interest in addition to the fees owed. The writ against the developer alleges that Dr Fari Akhlaghi, CEO of the company at the time, had assured Bovis that it “should have no worries or doubts” about receiving payment. The fact that the project was government-backed added credibility to BCC1.

Bovis is just one of numerous British companies that are owed a lot of money in the Gulf. The estimated total of fees owing is at least £400 million. A spokesman for a group representing British consultants overseas has said that there has always been a problem of delayed payment in the Gulf region, but the money would usually come in eventually. Now it is not.

Bovis Lend Lease has now ceased work on the Blue City project.

If you follow the news, it's highly unlikely that you would be unaware of the turmoil in Iran this week following last week's presidential elections.

Swift announcement of results giving Mahmoud Ahmadinejad a clear majority of the vote seemed suspect to many. Supreme Leader Ayatollah Ali Khamenei has given full backing to Ahmadinejad. The authorities have arrested many eminent 'reformist' individuals, restricted Internet and SMS services and stopped renewing visas for foreign journalists in a bid to prevent organised opposition and news leaking from the country. Armed police stormed a dormitory at Tehran University.

The principal opposition candidate, Mirhossein Mousavi, has called for a day of mourning in memory of several people who have been killed in street battles.

In spite of the best efforts of the Iranian authorities to exert control, thousands of people still pour into the streets in quiet order to support Mousavi and to protest at the election results.

Amidst all these uncertainties, the Oman News Agency released a statement yesterday announcing that His Majesty Sultan Qaboos bin Said of Oman would be visiting Iran late this month at the invitation of the Iranian president Dr Mahmoud Ahmadinejad.

The statement therefore implies that the Omani authorities believe the present turmoil in Iran to be a passing phase, and that order will be restored by the date of the visit. Given the time scale, this has to be projected to next week or early the week after.

The Omani deputation includes the Minister of the Diwan of the Royal Court, Sayyid Ali bin Hamoud al Busaidi; the Minister responsible for Foreign affairs, Yousuf bin Alawi bin Abdullah; the Minister for National Economy, Ahmed Bin Abdulnabi Macki; the Minister for Commerce and Industry, Maqbool bin Ali bin Sultan; the Minister of Oil and Gas, Dr. Mohammed bin Hamed al-Rumhi; the Inspector General of Police and Customs, Lt.Gen. Malik bin Sulaiman al Maamari; as well as the Ministers reponsible for Cultural affairs and Health.

The presence of the Inspector General of Police and Customs in the party suggests that there will be discussions about border controls, smuggling and people trafficking.

The nature of the visit could presage a major agreement over development of gas fields in the Persian Gulf, which has been in the offing for some time. Oman, it has been claimed, would foot the bill for development of the Kish/Henjam gas field, contiguous with Oman's own West Bukha block, but has been unable to raise the finance in the current global economic environment. Iran has become impatient at the delay. Today, the Tehran Times has reported that companies from China and the UAE are interested in entering into the development plan.

Oman needs extra energy supplies to sustain its policy of developing its manufacturing sector, and to reduce reliance on hydrocarbons.

Of course, His Majesty is making his visit to Iran in reply to the invitation extended by the Iranian president when he visited Muscat two years ago. But to visit against the backdrop of the current political situation shows that someone in Oman has very strong reasons for keeping to the plan.

With the help of a technological solution from WebPartner, I have been able to revive my original news headline service from Oman, which I began compiling in 2001.

When I set up newsBriefsOman all those years ago, the task was very laborious. Every title and every link had to be pasted by hand, even after the revision of the website in 2005.

Because if there's one thing that I'm wary about, it's automated news scraping. Not all relevant stories are discovered, and irrelevant stories get included. This means that I vet all links personally.

But I've been very pleased about WebPartner, which has taken away a lot of the tedium. AND, I can annotate the stories as I go. So you get a mini-blog with most of the stories.

I've also been able to put watch points on the Headlines, Local headlines, Business headlines and Feature pages of the Oman Observer, making it easier to track the Observer on a daily basis. The links are only good for the day of publication though.

WebPartner can feed Twitter accounts. Thus you will find a Twitter feed on the Headlines page of this website.

For the complete listing, visit my newsBriefsOman WebPartner page.

Earlier this week, Upstream Online announced what seemed to be a turnaround in Omani policy towards joint development with the Iranians of Iran's Kish gas field.

An Omani source was quoted as saying that the Sultanate was finding it hard to obtain credit in order to proceed with financing the operation in the current economic situation. The development would be put on hold for at least a year.

Just last November, Oman's Oil and Gas minister, HE Mohammad bin Hamad bin Seif al-Rumhy, told Reuters that Oman would have to slow down some of its oil and gas developments.

Oman had been in discussions to develop the Iranian gas field and to build a 200km pipeline to the LNG gas refining plant at Sohar

This idea came to the fore, when, back in 2007, Oman was seeking to extend its access to gas sources following Qatar's announcement that it would have no gas to spare for export to its Gulf cousin. Thus Oman was intensively seeking other energy sources to power its other industrial projects.

Simultaneously with the announcement of the delay in the Kish venture, Upstream Online also published news that Oman was seeking to buy more gas from UAE's Dolphin Energy. Dolphin Energy processes gas from Qatar's offshore North Field, which is probably contiguous with Iranian gas fields.

Essentially, Oman has switched back to its original, favoured supplier. Prices are likely to be more favourable too, since there is currently a glut of gas on the market.

The Iranians were always likely to ask for a higher price for their gas, dependent on the use to which the gas was put. and it's been suggested that the price per thousand standard feet that Iran was asking was 14 times that currently being paid by industry in Sohar.

Two days later, Energy Intelligence Group (subscription only), published another version of the story. Allegedly according to Omani sources, it's the Iranians who are dragging their feet. It seems that there are elements within the Iranian government who want to keep the gas for Iran rather than sending it to Oman. Iran has its own energy supply shortages. Naturally, the Omanis would be loath to finance development of a gas field when the gas might not be sent to Oman after all.

The gas field would also be technically difficult to develop. The project would need a foreign partner with the appropriate technical expertise.

Negotiations are said to be continuing.

Of course, it must be entirely coincidental that Oman's foreign minister has recently held discussions in Washington with Secretary of State Hillary Clinton while HM Sultan Qaboos received George Mitchell, US Special Envoy to the Middle East, in Muscat. It is conceivable that the Americans reminded Oman that they might be uncomfortable about Oman having substantial trade relations with Iran, particularly now that the Sultanate and the USA have a bilateral free trade agreement, and also because of the Americans' own strained relations with Iran.

The Economist published an item a couple of weeks ago, suggesting that Google Trends could help in forecasting economic trends. The argument hinges on whether the frequency of searches for specific keywords or phrases indicates changing patterns of consumer behaviour.

No less a person than Google's chief economist, who is also an economics professor at the University of California Berkeley campus, together with a fellow Google colleague, propose that because Google updates the data on searches daily, the frequency of search terms can be used to refine econometric models before official data is released.

Amongst other illustrations, it seems that searches for Hong Kong made in different countries predicted eventual arrivals in the territory from these countries rather well.

I thought I'd try out Google Trends to look at the pattern for searches on 'Oman holidays.'



The image shows that usable data was available to Google only from the end of 2006, with a flat period in the first half of 2007. Searches using the expression 'Oman holidays' peaked around Christmas time in 2007, declined towards late Spring and early Summer 2008, before rising again towards December 2008. If you recall, all five star hotels in Muscat were closed for the AGCC conference between 23rd-30th December, effectively cancelling all Christmas and New Year bookings.

Searches on 'Oman holidays' have declined since then, although whether they will rise later in the year remains to be seen. Perhaps not, given the December 2008 experience and current economic restraints.

Then I examined the locations from where the search term 'Oman holidays' had originated. This was puzzling. The overwhelming number of searches seem to have been made in Oman itself, followed by the UAE.



So I looked for Hong Kong on Google Trends and discovered the same characteristic. Most searches on Hong Kong are made in Hong Kong itself. Which probably means that most searches for Oman do originate within Oman.

How about a comparison between 'Oman holidays' and 'Dubai holidays'? Perhaps unsurprisingly, there has been a much greater proportion of searches for 'Dubai holidays' (the red line on the graph) than 'Oman holidays' (the blue line on the graph). Incidentally, we're looking at relative results here rather than absolute numbers of searches, so don't take too much notice of the left hand axis of the graph.



When looking at the provenance of searches on 'Dubai holidays', notice the greater volume originating in UK and Ireland for 'Dubai holidays' compared with 'Oman holidays.'



Overall, there is no doubt that people are looking for Dubai holidays much more than they are for Oman holidays. Oman will have to work much harder at raising its public profile to obtain the same level of interest.

Given that Oman Air has been tasked with boosting tourism in Oman, I thought it might be instructive to compare trends for Google searches on 'Oman Air (the blue line on the graph below), 'Gulf Air' (the orange line on the graph below) and 'Emirates Airlines' (the red line on the graph below).



The graph shows a small rise in searches for Oman Air beginning in 2007 at about the time that Oman left Gulf Air to focus on its national airline. The concomitant drop in searches for 'Gulf Air' from early 2007, is much steeper. But note that the number of searches for 'Emirates Airlines' increased sharply from the same time. The patterns on the graph suggest that Oman's withdrawal from Gulf Air rewarded Emirates Airways rather than Oman Air, always assuming that the trends on the graph in any way reflect numbers for passenger travel.

Note the steep rise in searches for 'Emirates Airlines' in the first months of 2009. I would suggest that this is because people were looking for flights out of the country rather than flying to it. The bar chart below shows that most of the searches were made in UAE, other Gulf countries and Pakistan.



Oman Air has had to rebuild itself from being a small, regional carrier in order to assume its new role as a mainline flag carrier, as admitted by Peter Hill late in 2008 New aircraft are to come into operation over the next two years, and the company has had to lease other aircraft in order to develop its new routes. Earlier this year, the Omani government raised the paid-up capital of the company from RO50 to RO300 in order to cover last year's losses caused by higher fuel costs and the purchase of new aircraft.

Data from Google Trends suggests that Oman Air will require a lot of PR support from its partner, the Ministry of Tourism, in order to promote Oman's tourism industry. At least in the short term, there is likely to be much more interest at the regional, rather than the global level.

Just to show you that the trends shown here are not necessarily diagnostic, try doing an investigation of 'Oman tourism.' You'll get rather different results. But then, 'tourism' does not have the same meaning as 'holidays.'

Oman's minister responsible for foreign affairs, Yousuf (Yusuf) bin Alawi bin Abdullah, has been in Iran this week. He met President Ahmedinejad in southern Iran and gave a joint press conference alongside Iran's Foreign Minister Manouchehr Mottaki yesterday.

Prior to that, he had been in Yemen on a 3-day visit for discussions with President Ali Abdullah Saleh and Dr Ali Mohammed Mujur, the prime minister.

As ever, the diplomatic language relating to both visits spoke of "exchanging views on regional and international issues of common concern." I think we can be certain that the wider repercussions of the tensions surrounding the recent Doha Summit would have received close attention.

Only a day before Yusuf bin Alawi bin Abdullah's held meetings in Iran, Lieutenant-General Malik bin Sulaiman Al Ma’amari, inspector-general of Oman's police and customs and his delegation had met Brigadier Ahmadi Muqadam, head of Iran's Internal Security Services. The Royal Oman Police battle problems daily with illegal immigrants and drug smugglers landing on Omani beaches. Many of the offenders from Afghanistan and Pakistan have travelled via Iran.

As usual, the English language Omani press reportage on the meetings was relatively low key. The Irani media was also careful in its reporting, not obviously attributing views expressed by Manouchehr Mottaki to Yusuf bin Alawi.

Nevertheless, Mottaki asserted that "certain outside countries are seeking to disrupt the (forthcoming Lebanese) election through political sedition," naming Israel in particular. But Egypt was also a target. The Egyptian authorities have uncovered what they claim to be a Hizbullah cell comprising 25 men including Lebanese, Sudanese, Syrians and Egyptians. The authorities in Cairo say that the cell was planning attacks in country and proselytising Shi'ism. Hizbullah is widely regarded as a proxy for Iranian influence.

During the Israeli assault on Gaza early this year, Hizbullah leader Hassan Nasrallah, charged Mr Mubarak with complicity with the “Zionist regime” urging him to open the Rafah border crossing to allow food and humanitarian aid to reach the beleaguered Palestinians.

Both Hassan Nasrallah and Iran have repudiated the Egyptian allegations as an attempt to disrupt forthcoming elections in Lebanon, despite Egyptian sources leaking confessions from some of the suspected men that they were planning to store supplies in safe houses near the Egyptian-Gaza border from where they could set off to operate against Israel.

Egypt must feel very isolated in the region at present. President Mubarak in turn had been hoping to use the opening of the Rafah crossing as an incentive to get Hamas and Fatah to peace talks. He must surely have relished his recent opportunity to get away from the pressure during his recent state and private visit to Oman.

The Iranian president was reported to have told Yusuf bin Alawi bin Abdullah that "security in the region cannot be achieved except through regional cooperation." Cooperation which is evidently lacking at present.

So it was with some surprise that I read the following in today's edition of the Khaleej Times: "Oman’s minister in charge of foreign affairs Youssef bin Alawi this week praised the chief of Hezbollah," and “Iran’s and Oman’s position in regards to regional and global issues coincide.” Although the report is credited to Reuters, I haven't traced it there.

Oman was said to be more wary of Saudi Wahhabi influence than of Iran inasmuch as Wahhabism could affect social cohesion.

On the whole, I would agree that Oman takes a pragmatic and conciliatory approach to Iran. See an earlier post on this site, Diplomacy with Iran, a synthesis of reported meetings and contacts between the two countries.

The writer in the Khaleej Times explained that Omanis believe the GCC should not depend on the USA as its sole protector.

”When relations between America and Iran improve, as is expected, the Gulf countries will pay the price again,” Zaher al-Mahrouqi wrote in Omani daily al-Shabiba last week. “Iran has become stronger and is the only major player in the region.”

I recommend the article as useful background but bear in mind that it appears to have been written in the context of a US oriented view.

Also see A glimpse into foreign policy, my analysis of Yusuf bin Alawi bin Abdullah's address to Oman's Press Club in October 2006.

Remember the Doha summit at the end of March? Probably not. And I expect many in the Arab world would probably like to forget about it too.

This year's Arab League summit meeting, held in Doha, capital of Qatar, was intended to promote Inter-Arab reconciliation following Israel's violent invasion of Gaza at the end of last year. A united front was also sought to take a stand against the spread of Shi'ism sponsored by Iran.

King Abdullah of Saudi Arabia met the presidents of both Egypt and Syria earlier in the month to broach a rapprochement. Egypt and Saudi Arabia support "Palestinian president Mahmud Abbas, while Syria and Qatar back the Islamist(? an interesting attribute conferred by the reporter) Hamas." Both Hamas and Hizbullah in Lebanon are supported by Shi'ite Iran.

King Abdullah was reported to have warned that the dispute between the Palestinian factions was a far greater threat than Israeli aggression.

It was evident that Qatar's ruler, the emir Sheikh Hamad bin Khalifa Al Thani, was keen to promote Doha as a viable alternative mediator in the region in opposition to Egypt and Saudi Arabia. But Arabs generally are mistrustful over Qatar's identification with Iran.

The additional flaw in the ointment was the invitation to Sudanese President Omar Al-Bashir, who has been indicted by the International Criminal Court for war crimes against civilians in Darfur. Asharq alAwsat reported that UN Secretary-General Ban Ki-Moon was angered by the ICC's decision because, with UN troops fighting in southern Sudan, he felt that negotiations ought to continue with the Sudanese government.

Omar Al-Bashir was duly welcomed at the summit by his Arab brethren, if only because he is an elected representative of his country, and it doesn't do to incite mutiny. (I stand corrected. Omar Al-Bashir came to power in a bloodless military coup in 1989. He is a candidate in democratic presidential elections in Sudan to be held in 2010.) Ban Ki-Moon was said to have defied the advice of UN Legal Counsel in meeting President Al Bashir on the sidelines of the Doha conference. Ban Ki-Moon did address the conference urging the Sudanese government to reverse its decision to expel 13 international aid groups.

Ultimately, the meeting issued a joint communique, delivered by Arab League Secretary General Amr Moussa. The statement began with a rejection of the ICC's arrest warrant for Omar Al Bashir and "support of Sudan to bring peace in Darfur."

Thereafter came the usual platitudes requesting Palestinian unity, Israeli withdrawal to pre-1967 borders, Iraqi sovereignty, IAEA investigation of Israel's nuclear capability, an affirmation of Arab rights to develop nuclear energy, a call for "the international community to support developing countries to fill the gap between rich and poor countries," and the importance of emphasising Arab culture and identity.

Iran was mentioned only in the context of the three islands in the Arabian/Persian Gulf contested with UAE.

The issue over Sudan seemed to have sidetracked the original objectives of the summit.

The meeting was hardly unified. Libya's Muammar al Gaddafi was initially said to have strode out of the meeting after "denouncing the Saudi king [ ] calling him a "British product and American ally." A later report indicated that Gaddafi was challenged by the Qatari Emir and mollified his earlier remarks, Gaddafi justified his outburst saying, “I am king of the kings of Africa and leader of the faithful and could not take another position.” Sheikh Hamad was even reported to have apologised to Mr Gaddafi for having misunderstood him.

King Abdullah of Jordan was said to have left the summit early as a protest at not being met at the airport by the Qatari emir in person. It might just be that he left in order to distance himself from the proceedings.

What was Oman's part in this?

For one thing, HM Sultan Qaboos bin Said Al Said did not attend. His Highness Sayyid Fahd bin Mahmoud Al Said, deputy prime minister for the Council of Ministers represented Oman, leading a delegation which included Yousef bin Alawi bin Abdullah, Oman's minister responsible for foreign affairs.

I think Oman was probably conducting quiet diplomacy of its own. Foreseeing a possible impasse at the summit and not wishing to be directly involved with it, His Majesty chose instead to speak with other Arab leaders individually. President Mubarak of Egypt went to Oman for a two-day state visit before the Doha summit, but following his meeting with King Abdullah of Saudi Arabia earlier in March. He was given full ceremonial and due.

President Mubarak was also absent from the Doha Summit.

Early in April, Syrian President Bashar Al Assad, who had been at Doha, visited Muscat for a two-day meeting with His Majesty Sultan Qaboos. One can only conclude that there was a cordial and frank exchange of views and information.

I rather liked the following comment reportedly made by Dr Bouthaina Shaaban, the Syrian president’s political and media adviser: "Arabs have to change the mechanisms through dealing with each other in a scientific and practical way."

I recommend reading the editorial in Asharq AlAwsat: The Doha Summit of Repentance: "What we saw take place in Doha was the continuation of a recurring error and Arab emotionalism that we are yet to understand in spite of all the tragedies that have occurred."

Reuters has announced the resignation of Mohammed Ali Al-Wahaibi as CEO of Omantel, for personal reasons. Rumours were circulating on Twitter a couple of days ago.

A local telecommunications consultant speculated that Wahaibi had been unhappy about the government's decision in December 2008 to postpone plans to sell off 25% of its 70% share in the company.

Omantel (Oman Telecommunications) bought 65% of Pakistan's Worldcall Telecom a year ago, since when Worldcall's share price has dropped sharply. In addition, regulatory and legal issues in Pakistan have prevented Omantel from taking full charge of its investment. Reuters reported that "Omantel's net profit fell 66.9 percent in the fourth quarter" because of losses related to Worldcall.

Dr Amer al-Rawas, Chief Operating Officer of Omantel, is now acting chief executive.

BankMuscat announced four days ago, that it had sold 40% of its holding in HDFC, an Indian bank, and proposed to sell the remainder of its holding when market conditions were right.

That seems to have come round very quickly. Today, The Hindu Business Line reported that BankMuscat had confirmed that it had sold 81% of its stake in HDFC realising RO39 in pre-tax profits. BankMuscat had held a 2.13 per cent stake in HDFC Bank as on December 31, 2008.

Apparently, Bank Muscat acquired the HDFC Bank stake when HDFC acquired Centurion Bank of Punjab in India.

The income will be welcome given that BankMuscat has forecast losses of RO4 million to RO7 million in the first quarter of this year relating to its equity portfolio, about which no further details were published. Evidently, the bank is guarding its cash flow status.

Yesterday, BankMuscat announced that it would be issuing a 20% dividend and a 30 per cent convertible bond to its shareholders for the financial year ended 31st December 2008.

So despite forecast losses, the shareholders are not to be deprived of annual income.

Although, the bank's operating profit rose 48.7 per cent to RO152.6 million from RO102.6 million in 2007, net profit for the year was only 11.2% more than that in 2007, after writing off "impairment losses" - bad loans?

Two American navy vessels collided in the 54km wide Straits of Hormuz, separating Musandam, Oman, to the south and Iran to the north, on Friday 20th March.

Fifteen sailors were slightly injured on the nuclear attack submarine Hartford while the amphibious craft, New Orleans, lost 25,000 gallons of marine diesel oil. A report from the Marine Corps said that monitoring from the air showed no sign of a sheen of oil on the surface of the sea, so it's being assumed that the discharged oil has sunk. The Marine Corps report was very anxious to state that the submarine's nuclear power plant had not been affected at all.

RoPME's website has no news of any intervention to monitor spillage. RoPME (Regional Conference of Plenipotentiaries on the Protection and Development of the Marine Environment and the Coastal Areas of Bahrain, I.R.Iran, Iraq, Kuwait, Oman, Qatar Saudi Arabia and the United Arab Emirates) seemed to be much more active a few years ago.

Oil prices, which had been languishing that morning, rose by just 39 cents a barrel on the New York Mercantile Exchange. Brent prices rose 50 cents to $51.17 on the ICE Futures exchange in London, a considerably more muted response than would have been the case a year ago.

This is the second collision of an American nuclear submarine with another boat in the Straits of Hormuz in two years. USS Newport News collided with a Japanese tanker in January 2007. On that occasion, the submarine commander was dismissed because of "a lack of confidence in his ability to command."

Back in September 2005, "the attack submarine Philadelphia [ ] collided with a Turkish cargo ship off the coast of Bahrain. No one was injured in the collision."

The Arab Advisors Group of Jordan, a specialised research, analysis and consultancy company, has just published a report entitled, 'Oman Internet users and e-commerce survey 2009,' based on research carried out in January 2009.

Since the report itself costs non-members of the group US$2750 to buy, I have to rely on the published press release which has been reproduced in various media outlets in the Gulf. You can download a table of contents of the Arab Advisors' report.

The author, Mr Hussam Barhoush, was careful to emphasise his methodology, and that the results "passed rigorous quality control checks." 696 respondents were selected randomly from an email shot in cooperation with Omantel. It's not clear if the original survey request went to all registered Internet users in Oman.

On the basis of this sample, and presumably independent data from Omantel, AAG estimated the total number of Internet users in Oman who had used e-commerce was more than 158,000, representing 5.62% of the total population of Oman, and 40.2% of all adult Internet users in Oman.

The 100 page report contains various graphics showing the breakdown of Internet users by nationality, age and gender. The table of contents promises a lot, but you'd need to see the report to judge.

E-commerce users in Oman spent US$236 million online in 2008. That's roughly US$1494 per user on average. That seems to me a lot of money, given the level of salaries in country. So presumably one could assume that the people who spent online were from the wealthier segment of society.

The report doesn't appear to give details of what was actually bought online. Holidays? Flights? Investments? Banking? Bill payments? etc but it also probes the extent of use of mobile phone transactions, and whether respondents were aware of 3G services.

I was intrigued by the reference to use of VoIP (Voice over Internet Protocol) using Skype and Google Talk. While over 73% of the respondents had not used VoIP, 20.7% of the respondents did use this software in 2008! I was under the impression that VoIP services, such as Skype, were banned in Oman. How did they beat the ban? And I wonder if the report's author was aware of this ban?

I wouldn't be surprised if people yawned at yet another blog post about Al Madina al Zarqa (Blue City), but I want to mention two recent articles about the project for the sake of keeping references up to date.

To recap briefly, AAJ Holdings of Bahrain, headed by Mr Ahmed Abubaker Janahi, claims to hold 70% of the shares in Ocean Developments, the caretaker company for the 'Blue City' project, a tourist and urban mega-development proposed for the Al Sawadi area on Al Batinah, west of Muscat. See details of company holdings.

Mr Ahmed Abubaker Janahi brought his case to the attention of the Bahraini press early in February. Virtually identical articles appeared in both Gulf Daily News - Lawsuit 'is testing global confidence' and Trade Arabia - Blue City lawsuit 'testing global confidence'.

According to February's articles, "AAJ Holdings had acquired its 70pc shareholding in the project company in two stages; 58pc on May 22 2005 and 12pc on October 17, 2005."

Cyclone LLC, the Omani partner, with 30% of the shares, took AAJ Holdings to court claiming that,

"AAJ Holdings had violated the Commercial Companies Law in Oman, which states that partners in a company shall have the pre-emptive right to acquire shares that any partner in that company intends to dispose of to third parties.

Cyclone claimed that the terms of the sale offered to it to exercise its right of first refusal were not the same as the terms under which the sale of the project company shares was actually concluded."

The Primary Court in Muscat rejected Cyclone's case and confirmed "AAJ Holdings' shareholding in the project company and the validity of the share sale and purchase process."

Cyclone has appealed the decision. The verdict of Oman's Court of Appeal has yet to be announced.

Mr Janahi spoke of his confidence in the Omani Judiciary but also of his concern that a new expert had been appointed to adjudge the case. His lawyers had objected to the appointment of an academic from Sultan Qaboos University, who Mr Janahi says is not an accredited expert with the Ministry of Justice, nor allegedly experienced in commercial litigation. In fact, claims Mr Janahi, this is the expert's first case.

Furthermore, Mr Janahi claims that he sent a representative to company offices in Muscat following the court's verdict, in order to access company records and carry out administrative tasks, but that the representative was 'thrown out' by Cyclone's staff.

Mr Janahi maintained that global investor confidence in Oman could be tested by the prolonged dispute over ownership. Regardless of problems with the slowdown of construction and real estate development in other parts of the Gulf, he "believes the effects of the economic meltdown are less substantial in the GCC, as governments are actively involved in the regulation of investment activities and many of the regions' central banks adopt a conservative approach."

Maybe so, but the Gulf is not immune from the effects of the 'credit crunch.' Does Mr Janahi believe that government is going to step in to keep Blue City solvent? Or is he betting on taking over the company with its new management team?

The other article of note reports an interview with Mr Richard Russell, currently CEO of Blue City Company One, which has the task of delivering Phase 1 of the Blue City project, high-end residential and tourist sectors. The interview appears in this month's issue of Euromoney, which provides information briefings for financial institutions and professional investors.

Mr Russell affirms the original concept of the Blue City as a commercial centre. Indeed, he suggested that some people already speak of Al Madina al Zarqa as the potential trade centre of Oman, built on the "back of six economic drivers: tourism, entertainment, education, medicine and healthcare, sports and wellness, and trade." The scheme ties in with Vision 2020, conceived in 1995, to direct Oman away from reliance on sales of hydrocarbons as a source of revenue, towards economic diversification.

I noted that the previous CEO of BCC1, Professor Fari Akhlaghi, has been retained as an advisor to the Board of Directors.

Mr Russell was at pains to point out that the redesign of the master plan, by Norman Foster and partners, had put the project back by nine months. He says that he is now working with the ratings company Fitch, who put "$526 million of the debt on ratings watch negative in July after it fell behind revenue targets," to review the debt documentation and align it with actual sales.

Mr Russell made an interesting aside that the original design had been inefficient. Go back to review some history on the project. He did not shy from outlining the current dispute over legal ownership.

Euromoney challenged Mr Russell over freehold rights for foreigners. Mr Russell replied that Oman's laws concerning freehold and inheritance were very straightforward, without actually providing detail on what foreigners' status would be.

As I understand it, foreigners can buy property in designated tourist projects, but this does not give them a right to work in country. So you'd need a stash of cash to go and live in Oman, without being able to work there. I know that some residents with work permits have found ways around this, but that option isn't available to all.

Even though Blue City is being funded by private financing, one suspects that considerable influence is being wielded to keep the project afloat.

There are rumours that another real estate development at Yiti, on the other side of Muscat, which was being undertaken jointly between Sama Dubai and Omran, a fully government owned company with the aim of expanding tourism in Oman, appears to be in abeyance. You can still register your interest on the Sama Dubai website but you can't view the masterplan. Or at least, you couldn't when I looked earlier.

I have fond memories of camping on the beach at Yiti, overnight at Eid, with the waves breaking on the beach and the sound of gunfire as the men of the village fired off their rifles to celebrate the dawn. Bet modern tourists wouldn't experience that!