By Lisa Barrington and Nayera Abdallah
DUBAI (Reuters) - Oman's Sultan Qaboos bin Said, one of the Middle East's longest- serving rulers who maintained the country's neutrality in a turbulent region, died on Friday and his cousin Haitham bin Tariq al-Said was named as his successor in a smooth transition.
With his death, the region loses a leader seen as the father of modern Oman, who balanced ties between two neighbors locked in a regional struggle, Saudi Arabia to the west and Iran to the north, as well as the United States.
In a televised speech, Haitham promised to uphold Muscat's policy of peaceful coexistence with all nations while further developing Oman. "We will continue to assist in resolving disputes peacefully," he said.
Oman and other Gulf states declared three days of official mourning with flags at half-mast for the Western-backed Qaboos, 79, who ruled since taking over in a bloodless coup in 1970 with the help of former colonial power Britain.
His funeral procession passed along Muscat's main road amid tight security as Omanis thronged the palm tree-lined route, some reaching out their hands and others taking pictures.
The casket, draped in the Omani flag, was carried into Sultan Qaboos Grand Mosque where hundreds joined prayers inside. Haitham stood facing the casket, with the traditional curved dagger, or khanjar, strapped to his waist. Qaboos was later buried in a family cemetery.
Omanis took to social media to mourn the death of a ruler who had made regular tours of the country to speak to citizens, often driving his own vehicle in the convoys.
"The first words I heard from my weeping mother after news of the great Sultan Qaboos' death was: The father of orphans, of the poor, of the downtrodden, of all of us, has died," Twitter user Abdullah bin Hamad al-Harthi wrote.
State media did not give a cause of death. Qaboos had been unwell for years and underwent treatment in Belgium last month.
SECRET LETTER OPENED
Qaboos had no children and had not publicly appointed a successor. A 1996 statute says the ruling family must choose a successor within three days of the throne becoming vacant.
A family council on Saturday chose Haitham after opening a sealed envelop in which Qaboos had secretly written his recommendation in case the family could not agree, opting to follow his "wise" guidance, state media said.
Born in 1954, Haitham, who studied at Oxford, had served as minister of culture and as foreign ministry undersecretary. He was appointed in 2013 to chair Oman's development committee.
"The swift appointment of a successor is positive as the lack of clarity was a key economic uncertainty,” said Abu Dhabi Commercial Bank chief economist Monica Malik.
He takes power as domestic challenges loom large, from strained state finances to high unemployment in the indebted oil producer, and at a time of heightened tension between Iran and the United States and U.S. ally Saudi Arabia.
"The wild card is whether any of Oman's neighbors might try to pressure the new sultan as he settles into power," said Kristian Coates Ulrichsen of Texas-based Rice University's Baker Institute.
Condolences poured in for the white-bearded Qaboos with Arab and Western leaders praising what they described as his wise rule. Former U.S. President George W. Bush said Qaboos had been a stable force in the Middle East.
"He leaves a profound legacy, not only in Oman but across the region," British Prime Minister Boris Johnson said.
Israeli Prime Minister Benjamin Netanayhu, who met Qaboos in Muscat in 2018, lauded him for working to promote regional peace and stability. Iran's foreign minister, Mohammad Javad Zarif, voiced hope the new leadership would take "inspiration from the past".
Oman has friendly ties with Washington and Tehran and helped mediate secret U.S.-Iran talks in 2013 that led two years later to the international nuclear pact which Washington quit in 2018.
Muscat did not take sides in a Gulf dispute that saw Riyadh and its allies impose a boycott on Qatar, or join a Saudi-led military coalition that intervened in Yemen.
"It is hard to see how Oman can involve itself in the Yemen, Iran and Qatar issues until a new leader has established himself - which means for the foreseeable future," said Simon Henderson of the Washington Institute for Near East Policy.
(Reporting by Lisa Barrington, Alexander Cornwell, Davide Barbuscia and Tuqa Khalid in Dubai, Nayera Abdallah and Omar Fahmy in Cairo, Steve Holland in Washington, Estelle Shirbon in London and Ari Rabinovitch in Jerusalem; Writing Ghaida Ghantous; Editing by Clarence Fernandez, Shri Navaratnam, Jane Merriman and Giles Elgood)