Bahrain: Still open for Business?

Dear Folks,

Some months back, I remember watching CNN’s manic man Richard Quest take a trip around Bahrain’s capital Manama, as the news network wanted to advertise the opportunities and possibilities that lay inside the business-friendly island. He met successful men and women who waxed lyrical about what Bahrain has to offer prospective entrepreneurs and investors.  Now the country has been catapulted into the spotlight as security forces and foreign troops engage in a tug of war with protestors who are predominantly from the majority Shia community. According to Human Rights Watch, at least 18 people have been killed, since protests began on February 14. Bahrain up to now has rarely been the site of major disturbances. The kingdom has tended to pride itself on being  a relatively open and  moderate place, but it could not escape the surge of unrest which has blown in from North Africa and the Levant. Now thousands of Bahrainis are asking for real democratic reforms  and not just a reshuffling of hand-picked appointees.

Until 1783, Bahrain was controlled by the Persians, who were ousted by the  Utub tribe, whose leading family were the al-Khalifa. In exchange for security, Bahrain was made a British protectorate until 1971. Even though there is an understanding that Iran has renounced its claim over the island, the Bahraini monarchy has always feared Persian meddling within its internal affairs, and this is certainly true in this latest series of clashes. Both the Iranian ambassador and chargé d’affaires were recently sent back to Tehran, after the emir blamed the Islamic Republic for trying to enact a plot to destabilise the country. However even one of Bahrain’s closest allies, the United States, is not convinced by these assertions, since according to a cable, released by WikiLeaks, from the US embassy in 2008, each time diplomats asked the Bahraini authorities to share their evidence regarding Iranian involvement with the opposition, “no convincing evidence of Iranian weapons or government money” have been found “since at least the mid-1990s”.  

Cambridge-educated King Hamad bin Isa al-Khalifa, has been in control Bahrain since the death of his father in 1999.  In 2001, he decided to turn the island into a constitutional monarchy, and the following year elections were held for the 40-member parliament. However by and large power remains firmly planted in the hands of the king and his hopelessly unpopular uncle, Prince Khalifa, who has been prime minister since 1971.  He is also widely seen as responsible for the marginalization of the Shia community. One of the largest factions in the parliament belong to the Al-Wafeq, which has 18 seats, but due to recent protests eleven members of the party have now resigned The island is in the midst of a three-month state of emergency following a massive crack down on March 16, which saw the deployment of both Saudi and Emirati troops who form part of the Gulf Cooperation Council’s Peninsula Shield Force. This is in addition to the regular security forces, which include many foreigners. According to Omar Al-Shehabi from the Carnegie Endowment for International Peace, the kingdom has been generous in speeding up the citizenship process for carefully selected foreigners in order to shape the country’s demographics. They are referred to as “politically naturalized”, and often come from Bedouin tribes in Saudi Arabia, Syria, Yemen, Jordan and Baluchistan. Roughly 60% of the country’s population is composed of Shia Muslims, who constitute a menace  in the eyes of the elite,  and therefore view it crucial to bring  in Sunnis from abroad.

 Bahrain was one of the first states in the Persian Gulf to discover oil and it is an important banking centre. Although Bahrain’s oil supply has dropped considerably, it is still a crucial revenue earner. According to the Economist Intelligence Unit’s March report on Bahrain, over the next two years 87% of the island’s earnings will come from the hydrocarbon sector. As in many states in the region, Bahrain boasts a large expatriate community: roughly forty percent of the work force, who depend on Bahrainis for sponsorship.

Even before the protests broke out in early 2011, Human Rights Watch reported that during the latter part of 2010, the Bahraini authorities initiated a crack down against twenty-five prominent opposition activists and accused them of “spreading false information” and “meeting with outside organizations”. A number of  blogs and websites associated with the opposition have been blocked.  The US government has expressed its concern regarding the treatment of opposition figures within Bahrain. Earlier this month, The State Department said that it was “deeply Troubled”  by the arrests against opposition figures such as Ibrahim Sharif, who heads a political society and Dr Ali Al-Ekri who was detained for simply criticising conditions in the hospitals. After the March 16 crack down, members of the Bahraini Defense Force seized control of the main medical facility in the capital, and deliberately set out to detain patients receiving treatment as a result of the protests.

It is clear given the actions of King Hamad, there is no stomach within Bahrain’s establishment to pursue a reformist agenda. For the Bahraini elite, the chaos is due to interference of outside forces. As long as the King is able to silence, and place the opposition in a stranglehold–which for the moment he is succeeding in doing–then there is a real possibility that Bahrain could weather the storm. Saudi Arabia has every incentive to support its neighbour, as it too wants to keep its own Shia population quiet. The United States and the EU will certainly not take dramatic measures to intervene or enter the fray, as it has done in Libya. However, in the medium term, Bahrain will lose its glossy image as a haven for investors and will be tainted as the pariah of the Persian Gulf.


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