“Sorry, did you say Oman or Amman?” Faisal al Said is recounting a typical opening question when he travels abroad. (Incidentally, it’s the same question posed on several occasions to Monocle ahead of this trip.) As the head of Brand Oman, a government body designed to promote the country, al Said – a member of the Omani royal family – knows he has a difficult job. Changing a country’s image is hard enough without having to explain where it actually is. “Is it in the Middle East? Near Iran? Oh.” Al Said pulls a face.

Oman is used to life in the shadows. It has none of the religious fundamentalism problems that bedevil its neighbours, Saudi Arabia and Yemen, to the west. Nor do its leaders share the bombastic, sabre-rattling of Iran (a mere 35km across the Strait of Hormuz). And while Dubai, Doha and Abu Dhabi to the northwest were busy constructing glass and steel castles built on shifting sands, Oman was moving at a far gentler pace and imposing firm rules on how high buildings can be (not very) and what they should look like (white, mainly). Slow, steady and stable seems to have served Oman well. In the 40 years since Sultan Qaboos returned from the British military academy Sandhurst and ousted his father in a bloodless coup, Oman's capital, Muscat, has changed beyond all recognition. Squeezed between the Gulf of Oman and the Al Hajar mountains, the city has grown from a small walled town on the peninsula into an elongated city that stretches north up the coast. There are no skyscrapers or oversized shopping malls, with the only concession to Gulf-style development the smooth six-lane highways that link the suburbs with the city.

Muscat doesn’t just have a different look to Dubai and Abu Dhabi – it has a different attitude. It’s the little things: the name of the Ministry of Islamic Affairs was changed to the Ministry of Religious Affairs; the first policewomen were appointed in the 1970s and several members of today’s cabinet are female.

“My mother worked, my sisters work, my wife works,” says Wael al Lawati, the head of a government investment agency. “At one stage my wife earned more than me. Even today we have countries in this region where women aren’t allowed to drive.”

The man who Lawati – and almost every other Omani – credits for the country’s progress, both economic and social, is Sultan Qaboos. His name is evoked at every turn. The new opera house is based on “the vision of His Majesty”. Students at the university, which naturally bares his name, are taking advantage of “His Majesty’s strong belief in education”. Artists are “inspired by His Majesty’s love for culture”. The Sultan’s portrait is displayed throughout the city: hanging above tables in shisha cafés, staring out over the harbour from a roadside poster, pinned to the wall of every government office.

His conservative planning policies have not always been popular though. “Ten years ago I was a huge critic,” says Lawati. His office is on the top floor of one of Muscat’s tallest buildings; it is seven storeys high. “Why no skyscrapers, why no glass and steel, why just the white? You’re killing my ideas. But now I see that Muscat has a character, a sense of consistency. This man really is ahead of his time.” He is also rather fortunate. Sultan Qaboos took power just as Oman’s oil boom began. The country’s transformation, like the more ostentatious changes elsewhere in the Gulf, has been built on oil. Around 76 per cent of the government’s $12.2bn (€8.9bn) annual income comes from oil revenues. And like every other country that relies on oil, it is an income that will not last forever. “Sooner or later the oil is going to be used,” says Dr Mona Fahad al Said, a member of the royal family and a senior official at the Sultan Qaboos University. “We don’t know how long it’s going to last.” The best guess is that there are 25 years left and – so far – there is nothing that is likely to take its place. More worryingly, the end of the oil boom is coinciding with a demographic nightmare. Around half the population is under 18 and there are not enough jobs. Thousands of graduates are leaving university and failing to find work.

Previous generations of graduates could rely on secure civil service jobs. “The government isn’t in a position to accommodate everyone now. There’s a limit and we’ve reached it,” says Nasr al Busaid, part of an organisation trying to encourage a new generation of Omani entrepreneurs. “People need to be encouraged to follow their passions.” That’s easier said than done. Start-up loans are hard to come by and layers of red tape can stifle even the most committed. “It is killing innovation,” says al Busaid. “It is not just a financial risk. I have friends who couldn’t get married because they are self-employed. The father won’t let his daughter marry someone who doesn’t have a secure job.”

The wrath of the father-in-law is not the only obstacle for potential entrepreneurs. One of the biggest problems is “wasta”. It loosely translates as “connections” or “clout” – not having enough wasta can prevent a business getting off the ground. “If you don’t have ‘wasta’ you can’t get anything done,” says one businessman who claimed to lack it. “Simple as that.”

Like Dubai, much of Muscat has been built on the shoulders of migrant labour. There are estimated to be around 700,000 migrants, mainly from South Asia – a significant proportion in a country of less than three million. No accurate figures exist but the International Labour Organization (ILO) believes that many have been trafficked and are unable to leave, although the ILO also points out that the Omani government has shown “great interest in improving the conditions of migrant workers.”

The large number of these workers has also had an effect on Oman’s large unemployment rate. Most of the jobs taken by migrants tend to be manual and menial – jobs which pay poorly and which some Omani graduates freely admit they feel are beneath them. In an attempt to deal with the problem the government has introduced a policy of “Omanisation”, which sets down rules on how many ex-patriates each company is allowed to employ. But there are ways around Omanisation. Several business people tell stories (about other companies, naturally) of organisations that create Omani ghost workers who are on the payroll but not obliged to turn up to work. Or companies that employed a new expat in an executive position and then hired eight Omani cleaners to make up for it. Or the expat marketing director who, following a government decision to make marketing an exclusively Omani sector, simply removed the job title from his business card.

“There are genuine obstacles to employing Omanis,” says Khalid al Zubair, the head of one of Oman’s largest companies. “Too many don’t have the right education or enough skills. We can employ more Omanis but it has to be sustainable.”

The lack of jobs is “a very serious concern,” says al Lawati. “It will lead to unrest.” There are already some stirrings of discontent. During Monocle’s trip, we witnessed a small demonstration of a few hundred young men angrily denouncing the price of food and the lack of jobs. In a country where there are rarely demonstrations of any kind, it was a sign of frustration bubbling beneath the surface.

“There is a huge disconnect between the younger generation and the people in leadership positions,” says Hassan al Saleh, a young Omani who works for a pan-Arab communications company. “There is a frozen mentality in a lot of government entities. You can’t change the status quo.

There needs to be fresh blood and new ideas.” There is another problem on the horizon, although it’s one that is difficult to have a proper debate about in Oman: what happens when the Sultan dies? The mechanics for succession are well understood. Under the constitution the royal family has three days to agree upon a replacement. Should they fail to do so, the Sultan gets the final word: he will then leave an envelope containing the name of his preferred successor.

But whoever it is, they are unlikely to be as popular as the current Sultan. Nor will he have the oil revenues that helped Sultan Qaboos not only build the modern Muscat but deal with any dissent. As things stand, democracy remains limited. The shura council, a consultative body of elected representatives, has few real powers.

Newspapers self-censor. The demonstration witnessed by Monocle, for instance, was nowhere to be seen in the pages of Muscat’s newspapers. Echoing a popular view among the ruling elite, Faisal al Said suggests that democracy as practised in the West could be dangerous in Oman. “If it’s freedom to create chaos, what freedom is that? People have to be rational.”

Despite the current tumult in Tunisia, Egypt and across much of the Arab world, there are few calls for serious change in Oman. As in so many countries with popular leaders – and the Sultan appears to be well-respected – positive developments are credited to the Sultan, while the less successful are blamed on those around him.

A new Sultan with less money to spend and less goodwill from his subjects could be an uncomfortable combination. By then, Muscat hopes to have established itself as a city on a par with its more illustrious neighbours; although one which still follows its own distinct path. “Everyone who comes here is pleasantly surprised,” says al Zubair. “We like the pleasantly part, but not the surprise.”