Omani foreign policy is deft; its fiscal policy, however, is struggling. Balancing domestic pressures against necessary economic reforms is proving difficult. In foreign policy, Oman has managed to maintain favorable trade and political relations with both Iran and its Gulf Cooperation Council neighbors in a time of increasing tension. In fact, much of Oman’s economic development planning now consists of increasing trade and investment ties with Iran. Oman is increasingly reliant on ties with Iran to meet Oman’s infrastructure needs and to stimulate its non-oil sector. It is also reliant on the GCC for financial support, most notably in aid commitments since 2011. To maintain good relations with its GCC partners, especially Saudi Arabia, Oman has recently made a (nonspecific) commitment to join the Saudi counterterrorism alliance. Oman spends heavily on defense and arms purchases, ramping up spending considerably after 2011, yet has little ability or visible intent to use them, particularly in military operations abroad. There has been some slow down in military spending between the 2016 and 2017 budgets, consistent with broader spending cuts. Yet for its size and defensive posture in the region, the outlays are increasingly difficult to justify. Most notably, Oman refuses to be militarily involved in the Saudi-led operation in Yemen, though Oman has hosted peace talks. These foreign policy choices have been nimble and carefully made, yet the looming challenge Oman faces is domestic.