BAHRAIN: 'We believe in openness'
Thomas Cromwell

Bahrain's ambassador to Washington, Naser Al Belooshi, is at pains to emphasize the peaceful nature of his country. In a recent interview with DiplomaticTraffic.com, he stressed again and again that Bahrain is a society open to others, and open to change, characteristics not usually associated with the Arab world. "We don't like extremism," he says. "Bahrain has always been a very tolerant society," he adds. "We always listen to others."

Bahrain's recent evolution can be attributed in good measure to forward-looking policies of King Hamad Bin Isa Al Khalifa, whose rule began on the death of his father in 1999. An early step of the monarch was to reconstitute Bahrain's parliament, which had been suspended over two decades earlier. Elections were held for a lower House of Deputies, and appointments to an Upper House, or Shura (Consultative) Council were broadened to include religious and ethnic minorities, women and professionals from various fields.

Al Khalifa also transformed Bahrain from an emirate into a kingdom, in the name of creating a more stable political structure for the small island in the Gulf, which is home to some 650,000 residents, only half of which are native Bahrainis. "He wanted to create a constitutional monarchy," the ambassador explained, "a more permanent system."

The reconstitution of the parliament went a long way towards pacifying a restless Shia community, that is estimated to account for more than half the population but which has complained that it has been marginalized in the Sunni ruling family and Sunni-dominated government. Ambassador Belooshi says there are still some in the community who insist on complaining to the king, or the media, but that Al Khalifa insists that they use the constitutional institutions that have been created to channel public opinion into policies.

Bahrain is an unabashed supporter of the US policy in Iraq. Ambassador Belooshi says Bahrain and other Gulf countries lived in fear and instability with Saddam Hussein running an often dangerous and aggressive Iraq, and the American intervention in Iraq, by bringing an end to the Hussein regime and continuing to work towards the formation of a lasting, stable and democratic government there, was creating a climate of stability that benefits the whole Gulf region.

"I think the US intervention was very positive," he says. "It has created stability and concentrated the fight against terrorism in one place." He says, "If you ask an ordinary Arab, they will say they want democracy." And "Americans want to make democracy available to the people in the region," says Ambassador Belooshi. "People should have the liberty to choose what [form of government] they want."

Long before the two Gulf wars brought a large American military contingent to the region, Bahrain had quietly hosted the US Fifth Fleet, and US-Bahrain relations had been excellent across the board. The ambassador says that his country has enjoyed more than a century of friendly relations with the United States. The first dispensary on the island was set up by American missionaries in 1893, and Bahrain was the first Arab country to invest in the New York Stock Exchange, in the 1930s.

Perhaps excellent relations with the West come from a positive memory of British colonial rule. "We always had a good memory of the British," the ambassador says. And British government systems, including security and education, have left a lasting imprint in the way Bahrain does things.

Bahrain is often thought of as a major oil or gas exporter, like Gulf neighbors Qatar, Saudi Arabia, Kuwait and Abu Dhabi, but it was never that lucky. Instead, it has focused on developing downstream industries that take advantage of the proximity of huge supplies of hydrocarbons. Long ago it invested in the production of aluminum, and today it is the world's largest exporter of that metal. It also manufactures aluminum products, such as wheel rims, including those used by Cadillac, Mercedes and BMW.

It has also focused on developing a strong financial services sector. Today Bahrain-based banks, or Bahrain-based branches of international banks, hold some $120 billion in assets, with almost half of them invested in American securities and other properties. These investments have generally been placed by US branches of Bahrain-based banks.

But government planners are concerned with creating a good standard of living for all citizens. "The ultimate goal of development is to bring growth to the people," says the ambassador. The Economic Development Board was created to analyze the economy and suggest policies and programs to better its performance. Headed by the crown prince, Salman Bin Hamad Al Khalifa, in February last year it issued a series of reports, beginning with: "Diagnosing Bahrain's Economy: Where Do We Stand?" This compared Bahrain to four Arab Gulf countries (Kuwait, Qatar, Oman and Saudi Arabia) as well as Ireland, Hong Kong, New Zealand and Singapore. The kingdom came out surprising well in such areas as GDP growth (3rd), GDP per capita growth (6th), employment growth (4th), but not so well in company formation (7th), the private sector's share in investment (last), and investment share in GDP (7th). Ireland ranked top in all categories, and clearly is the model of greatest interest to Bahrain's planners.

Those surveyed for the study listed several areas needing improvement. At the top of this list came access to capital, then infrastructure, adequate laws, access to land (a major issue on a small island), government responsiveness and rule of law. Red tape and nepotism were also identified as major obstacles to economic growth.

The conclusion of the document is the formulation of policies to improve Bahrain's economy dramatically by 2015, including a tripling of per capita income over 2003 levels, driven by an increase of annual GDP growth from 5 to 9 percent over the same period. Cutting red tape and meeting the needs of private business in general are among the suggestions put forward to reach these targets.

The good thing about the study is the process itself: a critical self-analysis that challenges the government to improve in key areas.

The ambassador says Bahrain is a good choice for companies wanting to do business in the Gulf region, for several reasons. The population is largely English-speaking, including many in the service industry. Foreign companies and individuals can own 100 percent of a Bahrain company, and their investments are protected by a good set of laws and efficient legal system. He says operating costs are low and the social life inviting, with most of the comforts of life one can find in any developed society. Visitors, your correspondent included, have found Bahrainis sincerely friendly and welcoming.

In January this year President George Bush and the ambassador signed a Free Trade Agreement between America and Bahrain, making the Gulf state the third Arab country to enjoy that status (after Jordan and Morocco). Not yet implemented, the FTA is expected by the two governments to triple the current $900 million a year in bilateral trade. "We are working on many things to make the free trade agreement work," Ambassador Belooshi says.

In the meantime, "reform is still in process," says the ambassador, "led by the king." Bahrain has no alternative but to reform and develop, he says. For one, it has few natural resources. Most of its water is produced by desalination plants, and it even gets rock for construction from the United Arab Emirates and sand from Saudi Arabia. "We cannot leave our future to whim and caprice," he says.

Of democratization, he says, "We have to do it in a way that suits our culture and our country." Some of Bahrain's inherent openness to democracy comes through the multi-religious origins of Bahrainis. Before Islam arrived in the 7th Century, there were Christian, Jewish and Zoroastrian communities on the island. Remnants remain, and there is even a synagogue and several churches in Bahrain. "We are very proud of this [diversity]," the ambassador says, "and we will continue this way."