AL MAZYOUNA, Oman // Salam sits smiling as waiters carry trays of strong tea and Yemeni-style grilled fish to the lorry drivers, government officials and local businessmen who fill his new restaurant’s tables and private booths in this growing trade hub on the border with Yemen.

“Trade is increasing ... and I am quite happy about it,” says Salam, 27, who did not want to give his full name. “People from all the villages around here are trying to move to Mazyouna because if you open a business here it will definitely do well.”

The Al Mazyouna economic free zone that Oman set up in 1999 to facilitate and regulate commerce with Yemen is expanding steadily, in part due to the war economy that has emerged over the past 18 months of conflict across the border. With Yemen’s ports functioning only partially and the border with Saudi Arabia impassable due to the war, Oman is a major transit route for necessities such as petrol and food, as well as consumer goods like cars. On a recent afternoon, lorries carrying used cars purchased in Dubai idled in line as they waited to cross into Yemen.

The Omani government is adding infrastructure and services to the free zone to entice the tribal communities who live in nearby rural desert to move here. Blocks of new grey and white government-built houses are under construction, the completed homes uninhabited so far. A military base and police station are also being built, while a new bank, hotel, hospital and school sit nearby.

The development of Al Mazyouna is just one part of Oman’s response to what diplomats and other observers say is its most immediate security challenge – securing the long and porous border with Yemen and preventing any spillover of the war there, including, most crucially, infiltration by militants of Al Qaeda in the Arabian Peninsula (Aqap), the Yemen-based branch of the terror network.

In addition to encouraging the resettlement of communities away from more remote and porous parts of the border region, the government is also constructing a fence along what until now was a mostly unmarked border between the provinces of Dhofar in Oman and Al Mahrah in Yemen. The presence of military and security forces has also increased markedly over the past two years, according to residents, and there are now multiple military checkpoints along roads that feed into the border regions.

As Oman works to increase its security presence here and regulate the flow of people and goods across the border, the key challenge is how to secure the border without disrupting the trade that supports poor populations on both sides or creating conditions that could give militant groups such as AQAP a foothold.

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READ: Family ties bind Oman and Yemen across border

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“It’s a very tricky balancing act that Oman has to engage in,” says Sigurd Neubauer, a non-resident fellow at the Arab Gulf States Institute in Washington, DC.

Tribal and Sunni, Dhofar province is a very different place from northern Oman. A leftist rebellion in Dhofar against Muscat triggered a civil war for 14 years until it was finally put down by Omani troops backed by British, Iranian and Pakistani forces in 1976. Sultan Qaboos then personally oversaw successful efforts to integrate Dhofar. But there are pockets of rural areas that are still underdeveloped.

A sprawling desert slum only a couple of kilometres from Al Mazyouna, unconnected to the newly expanded road and electricity grid, hints at the challenge of the new infrastructure projects keeping pace with population growth, especially in a time of fiscal austerity in Oman.

Across the border, Al Mahrah province has remained peaceful and provides a buffer zone that insulates Oman from Yemen’s war. While Oman has taken in a few thousand wounded Yemenis for medical treatment, it prefers to send food and other aid to Yemeni refugees in Al Mahrah rather than allow them into Oman.

Some residents of Al Mahrah hold Omani citizenship, and many more have deep ties across the border, through marriage and tribe. Before the war Al Mahrah was administered by authorities based in Hadramawt province to its west who had little incentive to spend funds on its development. As such, Al Mahrah’s economy has subsisted almost solely on smuggling between Oman and Yemen, says Elisabeth Kendall, a senior research fellow at Oxford University’s Pembroke College who conducts research in Al Mahrah.

Maintaining Al Mahrah as an effective buffer against Yemen’s violence and chaos is crucial to Oman’s new border management strategy. Residents of Al Mazyouna say they see Omani government lorries filled with food aid crossing the border daily. But observers worry that Muscat’s fencing of the border and regulating of trade, while necessary, must be implemented in a way that does not hurt Al Mahrah’s economy.

The Yemeni region itself is changing rapidly. The United Nations estimates that the province’s population is increasing by 4.6 per cent annually, the fastest rate in Yemen outside of the capital, Sanaa. Official population estimates for Al Mahrah were kept artificially low by its Hadramawt administrators so that it would receive less funding, says Ms Kendall, whose own calculations put Al Mahrah’s population at around 350,000.

But as the province’s population grows, with little diversification of its smuggling-dependent economy, some say Oman has maintained particular tribal partners who do not necessarily distribute the aid and other benefits they receive. “These old patronage structures just don’t work in the same way anymore,” Ms Kendall said. “We have massive growth in the youth population, and so allowing things to [stay] in the hands of a few old sheikhs who were a big deal a few years ago isn’t really going to work.”

It is much more difficult now for Al Mahrah residents to visit relatives across the border or to graze their cattle in the mountainous border regions in Oman that become green and lush during the late-summer khareef (rainy) season. “More recently what they’ve been trying to do is transport the grass by car and they can’t even do that very easily now,” Ms Kendall says.

As the Saudi-led coalition, in coordination with US counter-terrorism forces, has turned its attention to fighting AQAP in its south-western strongholds in Yemen, Al Mahrah has seen an increasing, if still relatively small, threat from the terrorist group. After the port of Mukalla, not far from Al Mahrah’s border with Hadramawt, was cleared of AQAP by the Saudi-led coalition in April, Ms Kendall says that tribesmen in Al Mahrah told her that militants had sought refuge at four separate locations inside the province. There has also been unconfirmed talk amongst tribesmen that AQAP sent operatives into the region to look for potential targets, but that they found none and left, she adds.

While Al Mahrah has no native problems with militancy or sectarianism, Al Qaeda or ISIL could try to exploit grievances if they are not addressed, such as those of young people against a tribal elite that has not shared resources, Ms Kendall says.

For its part, Omani officials have “pressured very hard the [tribal] leadership in Al Mahrah not to integrate with any of the AQAP forces”, Mr Neubauer says. But despite this, the threat does appear to be closer to Oman’s border than before.

tkhan@thenational.ae