Bahrain - COUNTRY PROFILE
Geography
Nestled between the Qatar peninsula and the coast of Saudi Arabia, The Kingdom of Bahrain is an archipelago of 33 islands. Taking its name from the largest of these islands (the Arabic word for two seas), the kingdom lies in the warm, shallow waters of the Arabian Gulf. Bahrain shares no land borders, but despite its small land area it has 161 km of coastline. The islands are composed of limestone and saline sand, which is particularly noticeable on the southern side of the main island, an area characterised by desert and oil fields. Historical records show that the islands were once abundant in lush vegetation, and various ancient myths have been connected with them, including that of the Garden of Eden. On the main island, a large desert plain rises gently to a low central escarpment, with the highest point being Jabal al-Dukhan at 122 metres.
To the north of the main island a wide fertile strip of land hosts the small and limited agricultural sector. This area is also where the majority of the population lives, in and around the capital city of Manama. The main island is linked to both Saudi Arabia and many of the smaller islands by causeways. Constructed in 1929, the oldest of these links Bahrain to Muharraq, the second-largest island and site of Bahrain's second-most-populous city, as well as the international airport. Another causeway to the island of Umm al-Nasan, site of the King's personal game reserve, carries on to the Saudi mainland town of al-Khubar.
Recent History
Being continuously inhabited for over 5000 years has endowed Bahrain with a rich history. Its strategic location in what was the main trading route from east to west made it a desirable location not only for merchants and traders, but also for those seeking to establish control over shipping in the Gulf. For this reason, Bahrain's history is characterised by successive waves of invaders and those seeking to make Bahrain their marionette.
Islam was introduced to the islands in 630 AD, while in the ninth century, Ismaili Shia fleeing the Sunni authorities in what is now Iraq began arriving in numbers. They dominated the region from this new base for a couple of centuries but, as is often the case in Bahrain's history, succumbed to pressures from Persia and Mesopotamia. Bahrain was subject to several rulers after this time and it was not until Europeans arrived that these influences were confounded. The Portuguese were the first to arrive in the region, but after coming into conflict with them the Safavid shah of Iran co-opted the British to re-assert influence. The British came to dominate the Gulf in a bid to ensure safe waters for their shipping routes to and from India.
The differences between the coast and interior also became a major feature within the Gulf. In the 18th century tribes from the interior began to relocate to the coastal regions. The prosperity of the past was gone, but limited agriculture existed. The waters of the Gulf contained oyster beds rich in pearls. Easy access to India made pearling very profitable. The tribes and clans that now control Kuwait, Bahrain, Qatar and the United Arab Emirates came to power during this period of the early 1800s, as British interest in the region began to rise.
Bahrain's ruling family, the Al Khalifa dynasty, first established themselves in present-day Qatar. However, they were subsequently successful in taking Bahrain, but were unable to maintain their hold their sway over it. They lost the peninsula to the Al Thani family, who still rule Qatar to this day. The British needed to maintain security for their east-west trade routes from India so they signed treaties with the Gulf states, which effectively handed over foreign relations to the British Empire. Bahrain entered such an agreement in 1835. However, by the end of the 19th century, the new route through the Suez Canal lessened the importance of the Gulf along the east-west trading route.
The discovery of oil after World War I turned the fortune of the Gulf states around. Bahrain was one of the first Gulf states to begin extraction after the discovery of reserves by the Standard Oil Company of California in 1932, but until the 1970s foreign companies owned and managed the oil industry. Only after independence did the ruling families secure part ownership of these bodies.
Independence came in the early 1970s. As British interests in the region declined, the Gulf nations came together to discuss whether they should unite as an independent state. The principle barrier to this was Iran's claim over Bahrain. The issue was considered by the United Nations, and it decided to deny the Iranian claim to the island and to allow the Bahrainis to form an independent state. Bahrain was better suited to independence than some of the other nations because it had been a centre of British administration and had a more developed infrastructure and education system. Thus, on August 15, 1971, Bahrain became an independent nation.
Government and Politics
Major Political Players
Sheikh Hamad bin Isa Al Khalifa: Following the death of his father, Sheikh Isa bin Salman Al Khalifa, Sheikh Hamad bin Isa Al Khalifa became Emir. He pushed ahead with constitutional reform and became a constitutional monarch with the title king in January 2002. Prior to his ascension to the throne he had engaged in dialogue with foreign-based opposition groups, and has sought to improve the liberties enjoyed by all Bahrainis.
Sheikh Khalifa bin Salman Al Khalifa: As well as being the prime minister, Sheikh Khalifa is also a leading businessman. He has long been a pillar of stability for the government since his appointment in 1971, and has been active in maintaining law and order. He has been a strong source of support for the reform process initiated in 2001 by his nephew the King.
Sheikh Salman bin Hamad Al Khalifa: As the eldest son of the King, Sheikh Salman is heir to the throne. Western educated, he has recently assumed a high-profile role in foreign relations.
Sheikh Ahmed bin Mohammed Al Khalifa: Appointed to the role of minister of finance and national economy in 2005, he replaced Abdullah bin Hassan Saif. Sheikh Ahmed was formerly the governor of Bahrain's central bank, the Bahrain Monetary Agency.
The system of government in Bahrain underwent radical change in 2002 when the King, Sheikh Hamad, pushed ahead with constitutional reform. The key change was from being an absolute monarchy to being a constitutional monarchy. This change involved the creation of a new, elected branch of the legislature called the Chamber of Deputies. Comprising 40 directly elected members, the elections were the first of their kind in Bahrain since the suspension of parliament in 1975.
This suspension was only part of the response to a confrontation between the assembly and Sheikh Hamad's father, Sheikh Isa. This also included a state security law and the suspension of articles in the constitution related to civil liberties and the possibility of re-electing another parliament. In the 1990s, the Emir created a government-appointed Consultative Council (Shura) as a small gesture to opposition voices, but it was not until after his death in 1999 that the new Emir, Sheikh Hamad, began in earnest to reform the system. His reforms were not welcomed by some members of the opposition, who disliked the new constitution granting the appointed Shura equal power to that of the elected house of deputies.
Ultimate constitutional power still resides with the King, who is "inviolate" and retains the right to appoint and remove from office the prime minister and ministers, as well as act as the supreme commander of the armed forces. The constitutional reform package also gave the King extra powers not in the 1971 constitution, particularly in the appointment of the Shura and also with regard to the selection of the judiciary and in amending the constitution. The constitution also allows for amendments to be proposed by both new chambers of the legislature. Members of the Al Khalifa family still play a prominent role in the running of the kingdom.
External Relations
The dominant external economic and political actor in Bahrain is Saudi Arabia. As relations have warmed between Saudi Arabia and Iran, a country accused of provoking dissent among members of Bahrain's Shia community, Bahrain has patched up its ties with the latter country. The relationship between Bahrain and Iran has improved over the years, and full ambassador-level ties have been restored. Sheikh Hamad has also paid a state visit to Iran, thus signifying the renewed friendship between the once frosty neighbours.
Close links with Kuwait and the United Arab Emirates are evidenced by the financial aid they have provided to the kingdom. The relationship with Qatar has traditionally been marked by arguments dating back to the Al Thani ascension in that country during the 1800s. The longest-running point of contention was finally resolved in 2001, when sovereignty over the Hawar islands was granted to Bahrain by the International Court of Justice. This verdict has been accepted by both parties, and plans are going ahead to build a causeway between Qatar and Bahrain, as well as agreements for Qatar to supply significant amounts of natural gas to Bahrain. The one remaining obstacle revolves around the Qatar-based al-Jazeera TV network, which has been accused of being deliberately hostile to Bahrain.
Bahrain has been staunchly pro-Western in its stance, and was designated a major non-NATO ally by the US. It openly supports the current "war on terrorism", but was opposed to the US-led invasion of Iraq. Sheikh Hamad has also signed a defence accord with Britain aimed at strengthening military co-operation.
Population
The population in July 2004 was 667,886. This figure includes around 235,108 non-Bahrainis who are mostly expatriate workers, largely from Asia, making up some 59% of the economically active population. This proportion may seem high, but nationals of Gulf nations are generally a minority in their own countries. Eighty-five percent of Bahrainis are Muslim; the remainder are mostly Christians or Parsees.
Bahrain is highly urbanised - over 90% of the population lives in towns or cities and 38% in the capital or Muharraq. The 2003 estimates show that 28% are under 15 years of age, with the largest age group - 68% of the population - being 15-64 years old. The proportion of males to females is 60:40, and is artificially skewed by the large number of expatriate workers living in Bahrain.
Economy
Conveniently, the change of the world pearl market coincided with the increasing importance of oil in the 1930s. Bahrain was the first country on the Arab side of the Gulf to exploit its oil wealth, but the relatively small size of its reserves forced it to diversify early on, meaning that other sectors have become of increasing importance.
No complete reserve figures are available, but estimates vary as to how much oil remains for extraction. Some officials claim there is sufficient oil to last for more than a decade, while other commentators suggest it may all be gone by 2010. Since 1997, Saudi Arabia has provided Bahrain with oil from the offshore Abu Saafa field at a heavily discounted (but undisclosed) price allowing Bahrain to benefit from the proceeds. Also, since the dispute over sovereignty of the Hawar islands was settled in 2001, the government has allowed Malaysia's Petronas and ChevronTexaco of the US to drill for oil and gas in the area.
Bahrain's output of refined petroleum products is dependent on imported crude. Domestic production only makes up 15% of the necessary input, and much of the remainder is met by imports from Saudi Arabia. Natural gas reserves are also large enough to be commercially viable, and use of the extracted gas ranges from injection to maintain oilfield pressure to use in metal and petrochemical production inputs.
Aluminium production has dominated Bahrain's manufacturing sector. The output of nearly 500,000 tonnes per year is set to be expanded in 2004 to over 775,000 tonnes, making the smelter the largest in the world outside the former Soviet Union. Further plans are being made to raise the smelter's output to 1m tonnes. At current levels, aluminium makes up 15% of total exports and around a half of all non-oil exports.
In 1985 a large petrochemical plant was built in Sitra and it has consumed an increasing amount of natural gas in the production of ammonia, methanol and urea. Sulphur derivatives have also been pushed following the setting up of the National Chemical Industries Corporation, formed to build a plant for the production of sodium sulphite and metabisulphite.
Bahrain has also become an increasingly important financial services centre. When the Lebanese civil war decimated Beirut's position as a regional financial centre in the late 1970s, Bahrain's position near Kuwait and Saudi Arabia, coupled with its credible regulatory system, made it an attractive place to move. While Bahrain faces regional competition, this early start has endowed it with the expertise and monetary policy experience that has meant it has continued to grow as a financial centre. There were worries in early 2003 that the US-led invasion of Iraq would destabilise the financial markets, but this never became pronounced enough to dent the sector.
Plans are going ahead for the construction of a new financial area called the Bahrain Financial Harbour. The banking sector is divided between investment banks, which are either headquartered or have representative offices there, and offshore banking units, which use Bahrain as a base. There is also a growing market for Islamic banking services based in Bahrain.
The government is keen to develop tourism. The largest number of visitors come from Saudi Arabia, whose citizens are attracted by the liberal slant Bahrain has on alcohol and entertainment. This has conflicted with Bahrain's attempts to clean up its tourism image, and it has introduced regulations related to the sale of alcohol in live entertainment venues. Bahrain does not attract the same numbers of high-spending European visitors as its principle regional competitor for tourists, Dubai, although it is actively looking to do so.
