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MUSCAT, July 4 (Reuters) - When the "Arab Spring" protests started to threaten - and eventually topple - the leaders of Tunisia and Egypt, the sultan of Oman took note and defused his own potential bombshell with promises of jobs and reforms.
It seems to have mostly worked: nearly a year after scattered strikes and protests against unemployment and corruption, Oman had yet to experience anything like the anti-government protests in Gulf neighbour Bahrain, or those that paved the way for military intervention in Libya.
But a new wave of strikes - this time in the oil sector, which provides 70 percent of Oman's revenue - suggests discontent continues to simmer, and is even fuelling muted criticism of the sultan, now the longest-serving ruler in the Arab world.
"The reforms that were taken, the handouts and promises, were not enough and the expectations are much higher," said an Omani academic who spoke on condition of anonymity, fearing possible government reprisals.
A country of just 2.8 million people perched on the shipping route through which a fifth of the world's oil trade moves, Oman tolerates no political parties or other forms of political representation and invests virtually absolute power in the sultan over the government and armed forces.
Sultan Qaboos bin Said al Said, who has wielded power in Oman since he deposed his father in 1970, is held by many to be above the country's tribal and regional divisions.
Criticism of the ruler is taboo, so the government has born the brunt of activists' attacks on Internet forums in recent years.
But in recent public demonstrations, protesters chanted slogans that made indirect references to the sultan and put them on placards, according to witnesses and people involved.
Activists said one sign referred to horses being "more valuable" than people, for example -- a reference to the sultan sending more than 100 purebred Arabian horses, part of the Royal Cavalry, on chartered planes to Britain to participate in Queen Elizabeth's Diamond Jubilee celebrations.
Another slogan criticised the sultan for spending time out of the country at a time of crisis.
Many ordinary Omanis are concerned about the turn of events, some political commentators said.
"The strikes themselves were divisive," said an Omani who has worked in the oil industry and is familiar with the political sensitivities around the sector.
"Then to see this (insulting the sultan) in the streets, in the capital, was shocking. And a lot of people didn't like that. The impulse to politicise the strike this way scared people, whatever they thought about it initially."
The sultan's reforms included sacking more than a third of the cabinet, creating thousands of public sector jobs and paying a dividend to the unemployed, which the IMF estimates amounts to a quarter of Omanis.
Wealthier partners in the six-member Gulf Cooperation Council (GCC) also promised - but not yet delivered - a $20 billion development fund to be split with Bahrain, where Saudi troops intervened to crush anti-government demonstrations last year.
An official in the Oman Employment Committee, part of the Ministry of Manpower, said the government created 50,000 jobs between May last year and April this year and was allocating $1 billion a year to create 40,000 additional jobs in the government sector.
But still sporadic protests have taken place since last year's unrest, in which at least two people were killed as security forces sought to end sit-ins across the country.
In the latest incident on Saturday, up to 200 young Omanis, many of them recent graduates, demonstrated in Sohar with placards demanding jobs, better living conditions and an end to corruption.
The ministry official called the protests "isolated cases".
"The present protesters are job quitters who want to work only on unrealistic salaries, are lazy or just troublemakers," the official told Reuters, and asked not to be named.
"We are not worried by protests because they are isolated cases of job quitters who need to know to accept jobs at reasonable salaries."
The Ministry of Information referred questions to the Ministry of Manpower.
The strikes in the critical oil industry occurred in May, when hundreds contracted to firms working with the main state oil company downed tools to demand wage hikes. The company, Petrol Development Oman, said the dispute was largely finished by June 2 and most of the strikers returned to work.
Three activists, including at least one lawyer, visited the installation to monitor developments and were arrested, though two have since been released.
The arrests sparked a wave of criticism on social media, to which the government responded with further arrests of at least six bloggers at their homes between June 1 and 10.
When about 30 people gathered outside police headquarters in the capital's Qurum distract on June 11 to protest against the crackdown, another 22 were arrested. Eleven of those were freed on bail last week pending a court ruling due later this month on charges of illegal assembly and obstructing traffic.
The office of Oman's public prosecutor, Hussein bin Ali al-Hilali, said in a statement carried by the state news agency on June 13 that the government was cracking down on increased use of "defamatory statements... on social media" that contained insulting language and threatened security by inciting strikes.
Hilali declined to comment about the specific charges the bloggers and others might face.
An Omani writer who has lobbied for their release, Hamoud Shkeili, said he believed the charges would be trumped up.
"It is a security services affair, and they can come up with whatever charge they want, including illegal assembly, though that isn't what happened," he said.
The harsh response to the unrest suggests that those who favour cracking down on dissent are holding sway along with Oman's security apparatus, which sees the situation as a pure security threat, the academic said.
"The hardliners have started to gain some ground, and are opting for security measures rather than talk and appeasement ... It's a false belief that this is simply a matter of people trying to unsettle the country," he said.
The academic said he believed the new criticism of the sultan indicates the degree of estrangement between the state he founded and Omanis for whom unemployment matters as much as the country's relatively good roads and public services.
"The new generation does not remember what happened in the 1970s and how he transformed the country," the academic said.
"He is still loved by a large majority. But it is foolish to believe this love is infinite, and things have reached a level where people make noises about him."