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Oman, officially called the Sultanate of Oman, is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It has a strategically important position at the mouth of the Persian Gulf. It is bordered by the United Arab Emirates (UAE) to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the southeast and the Gulf of Oman on the northeast. The Madha and Musandam enclaves are surrounded by the UAE on their land borders, with the Strait of Hormuz and Gulf of Oman forming Musandam's coastal boundaries. From the 17th century, Oman had its own empire, and vied with Portugal and Britain for influence in the Gulf and Indian Ocean. At its peak in the 19th century, Omani influence or control extended across the Strait of Hormuz to Iran, and modern day Pakistan, and as far south as Zanzibar. As its power declined in the 20th century, the sultanate came under heavy influence from the United Kingdom, though Oman was never formally part of the British Empire, or a British protectorate. Oman has long-standing military and political ties with the United Kingdom and the United States, although it maintains an independent foreign policy. Oman is an absolute monarchy in which the Sultan of Oman exercises ultimate authority, but its parliament has some legislative and oversight powers. In November 2010, the United Nations Development Programme (UNDP) listed Oman, from among 135 countries worldwide, as the nation most-improved during the preceding 40 years. According to international indices, Oman is one of the most developed and stable countries in the Arab world. As with other Gulf nations, oil is the mainstay of the economy, providing a large proportion of GDP, although compared to its neighbours Oman is a modest producer. Agriculture and fishing are also important sources of income. A diversification drive includes tourism; the policy of Omanisation aims to replace expatriate workers with locals.
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