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COUNTRY PROFILES


PROFILE

Country Profile

Area: 665 sq km
Population: 1,234,596, (Bahrain Central Informatics Organisation figures for 2010), including 666,172 expatriates. The CIO carried out a national census in 2009.
Capital City: Manama (Al Manamah)
People: Arab, Muslim majority, of whom some 33% are Sunni and 66% are Shia
Languages: Arabic is the official language; English is widely spoken and is the main commercial language
Religion(s): Islam is the state religion; places of worship for other faiths exist
Currency: Bahraini Dinar (BD); 1 Bahraini Dinar = 1,000 fils (tied to the US dollar, BD1=$2.65)
Major political parties: Political Parties are officially banned but Political Associations with the characteristics of parties are allowed. These include Islamic groupings (Sunni and Shi’a), as well as secular and liberal associations.
Government: Monarchy with appointed Government, appointed upper chamber, and elected lower chamber of Parliament.
Head of State: His Majesty King Hamad bin Isa Al-Khalifa
Prime Minister: His Royal Highness Khalifa bin Salman Al-Khalifa
Crown Prince: His Royal Highness Prince Salman bin Hamad Al Khalifa
Deputy Prime Ministers: His Excellency Shaikh Mohammed bin Mubarak Al-Khalifa, His Excellency Shaikh Ali bin Khalifa Al Khalifa, His Excellency Jawad Al-Arrayed
Foreign Minister: His Excellency Shaikh Khalid bin Ahmed bin Mohammed Al-Khalifa
Membership of international groups/organisations: Arab League, Gulf Co-operation Council, Organisation of the Islamic Conference, United Nations

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ECONOMY

Basic Economic Facts

GDP per head: US$20, 475 (2010 Source: IMF).
Inflation: 2% (2010)
Major Industries: Financial Services, oil and gas (production and refining), Aluminium, and ship building and repair, leisure and tourism.
Major trading partners: Saudi Arabia, US, India, Japan, UK, France, South Korea.
Exchange rate: UK£1 = BD 0.607 (Feb 2011) BD is tied to the US$)
Bahrain has a small, reasonably prosperous economy with less dependence on oil than most other Gulf States, but the economy depends heavily on hydrocarbon exports. Having been the first to discover oil in 1932, Bahrain’s economy is now well diversified and one of the acknowledged banking, financial services, and human resources development and training centres of the Gulf.

Social unrest has continued in Bahrain (see history below) and as a consequence economic activity continues to be affected. The uncertain environment has led to businesses shutting down which has impacted negatively on the government’s tax revenues and unemployment levels. Bahrain’s financial sector will suffer as a result of the recent unrest and political instability is likely to be damaging for the tourism sector.

The economic crisis has had less of an impact on Bahrain compared with neighbours in the Gulf, partly down to its size but also the caution displayed by the Central Bank in the years preceding the downturn. The economic environment is liberal, but well regulated; and the authorities managed oil price fluctuations sensibly. “Bahrainisation”, a policy employed by industry and government in the last twenty years, remains; but the Government is trying to move its approach from quotas towards making Bahrainis more attractive and competitive as employees. There are several schemes to support Bahrainis in the work force e.g. the Labour Market Regulatory Authority (LMRA) levies fees on companies employing non- Bahrainis; Tamkeen (formerly known as the Labour Fund) uses the proceeds to run projects to develop the Bahraini workforce, encourage entrepreneurship and support development of local enterprise.

In Bahrain, petroleum production and processing account for about 60% of export receipts, around 80% of government revenues, and circa 20% of GDP, exclusive of allied industries. Aluminium is Bahrain’s second major export after oil and gas. Bahrain is home to numerous multinational firms with business in the Gulf region. Financial and insurance services contribute over 25% of GDP (source: Bahrain Economic Development Board).

Long-term prospects for the small Bahraini market are linked to wider Gulf markets, particularly Saudi Arabia. Bahrain already has a large offshore financial sector serving Saudi and Gulf needs, although Saudi restrictions prevent Bahrain from becoming a more successful base for Saudi investments. Recent Saudi moves towards economic liberalisation and WTO accession could make it easier for Bahrain-based firms to do business in Saudi Arabia. Linked to this, the Central Bank of Bahrain has established Bahrain as the premier Islamic banking centre in the Middle East. As of April 2010 there were 406 licensed financial institutions in Bahrain; including 138 banks (32 retail banks, 78 wholesale banks and 28 representative offices), of which 28 are purely Islamic and many more offer Islamic products and services. There are a total of 169 insurance companies and organisations including 9 firms that offer exclusively Takaful and Re-takaful (Islamic Insurance) products and services. Assets held by the banking sector in Bahrain total $224.1bn (CBB, 2010).

In 2004 Bahrain signed a Free Trade Agreement with the US. An EU GCC FTA is being negotiated.

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HISTORY

Bahrain is an Arabic word meaning "Two Seas". Archaeological evidence indicates that Bahrain was inhabited at least 50,000 years ago. Originally the seat of the Dilmun civilisation, Bahrain had connections with Mesopotamia and the Indus Valley, and then in around 600BC became part of the Babylonian Empire.

By 650AD, the Arabian Peninsula, including Bahrain, came under the rule of the followers of the prophet Mohammed. The Al-Khalifa family took Bahrain from Persia in 1783 and by the end of the century had moved their capital to Bahrain from Qatar. In 1820, Bahrain became a British protectorate, along with several other Gulf States.

Bahrain was the first Gulf country to discover petroleum in 1932. Oil provided the Ruling Family with an independent source of income, with which they developed a modern state administration, and Bahrain became strategically and commercially more important. The UK’s naval forces in the Persian Gulf established their base port at Al Jufayr in Bahrain.

On 14 August 1971, following Britain's decision to withdraw its armed forces from East of Suez, Bahrain announced its Independence from the UK. In 1973, a National Constitution was introduced, together with a democratic National Assembly; the Amir dissolved the Assembly in 1975 after it refused to pass a proposed State Security Law.

In the mid-1990s, Bahrain suffered a spate of anti-government disturbances stemming principally from the disaffection of the Shia majority. The situation calmed during the summer of 1995, but in early 1996 a number of hotels and restaurants were bombed (seven people died in one of the restaurants). As a result of the disturbances, over one thousand people were held in detention without trial (since released - see below). There have been few major disturbances since then, and recent political reforms have widened the opportunity for all sectors to participate in political life (see below). Nevertheless, demonstrations and low-intensity disturbances are still common.

On 14 February 2011 (known as the Day of Rage), groups marched toward Pearl Roundabout, a central Manama landmark. Inspired by the Arab Spring, they demanded reform of the regime and some went as far as to call for its downfall. The demonstrations continued and in mid March 2011 the King imposed martial law and a State of Emergency. He invited GCC troops to bolster Bahraini security forces, giving them extensive powers to suppress the demonstrators. Over 35 people were killed, hundreds were arrested and given lengthy jail terms, and many lost their jobs. In response to international condemnation and pressure, the State of Emergency was lifted in June. The King commissioned an independent investigation of the events of February and March known as the Bahrain Independent Commission Inquiry (BICI), which reported its findings in November. The Commission found the authorities to be severely at fault, in particular the use of torture and excessive use of force against the detainees. King Hamad has promised to implement reforms based on the Commissions’ recommendations and hold to account those that are responsible for committing human rights abuses. A ‘National Dialogue’ was also launched in July to bring together various segments of Bahraini society to discuss areas of reform in political, social, economic and human right issues (See political and human rights sections below). Growing sectarianism is noticeable and society is divided between the Sunni and Shia populations. Demonstrations and disturbances have continued since, in particular during the night and in Shia villages.

BBC News Timeline: Bahrain (http://news.bbc.co.uk/hi/english/world/middle_east/newsid_817000/817505.stm)

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INTERNATIONAL RELATIONS

Bahrain’s key relationships are with its neighbours in the Gulf Co-operation Council (Qatar, Kuwait, Oman, Saudi Arabia, and the UAE), the US and the UK. It also has close relations with a number of other Arab states.

On 16 March 2001, the International Court of Justice (ICJ) announced its judgement on the long-standing maritime delimitation and territorial dispute between Bahrain and Qatar. The judgement redrew the international maritime border and awarded sovereignty over the Hawar Islands and Qit'at Jaradah to Bahrain. Sovereignty over Zubarah (which forms part of the Qatar peninsula), Janan Island and Fasht ad Dibal was awarded to Qatar. This peaceful settlement has provided the impetus for renewed co-operation between the two countries.

Bahrain hosts the annual IISS Gulf Dialogue (“the Manama Dialogue”). This is organised by the London-based International Institute for Strategic Studies (IISS), one of the world’s leading international affairs research institutes. The dialogue attracts Ministerial level attendance from a wide range of countries. This was cancelled in 2011 due to the ongoing protests, but is due to go ahead in 2012.

RELATIONS With the UK

The UK's longstanding bilateral relationship with Bahrain suffered as a result of the UK government’s response to the level of violence used by the Bahraini government to suppress the demonstrators, alleged human rights abuses and treatment of prisoners, including claims of torture. However, the UK continues to support and encourage political and economic reform, and as a long-standing ally of Bahrain has offered the Government assistance with their reform efforts. British advisers work in several Ministries. The UK Home Office signed a Memorandum of Understanding with the Ministry of Interior on 20 October 2005 aimed at promoting co-operation on a number of issues, including Counter Terrorism and Civil Policing. A bilateral Economic Memorandum of Understanding was signed on 6 September 2006; another on cooperation on environmental issues was signed in 2009; and a Double Taxation Agreement signed in April 2010. Relations between the House of Windsor and the Al Khalifa remain warm, even by regional standards.

Cultural Relations with the UK

Bahrain has traditionally had one of the best educational systems in the region. Educational reform is a key element of the wider economic reform programme and Bahrain has for some time been seeking to become the prime training centre in the region. It is also a key area of bilateral co-operation, for example in the field of Citizenship Education, and our support for the introduction of national standards for vocational qualifications based on the NVQ system. A large and growing number of Bahrainis study at UK universities at both undergraduate and graduate level.

British Council: Bahrain (http://www.britishcouncil.org/bahrain/index.htm)

Recent Visits from Bahrain:

December 2011 – HM The King

-- May 2011 – HRH the Crown Prince

December 2010 – Minister of the Interior

-- November 2010 – HRH the Crown Prince

July 2010 – HM The King

Recent Visits to Bahrain:
-- December 2011: HRHs the Duke and Duchess of Wessex
-- December 2011: Alistair Burt, FCO Minister for the Middle East
-- October 2011: Sir Peter Ricketts
-- April 2011: Liam Fox MP, Secretary of State for Defence
-- February 2011: William Hague MP, Foreign Secretary
-- December 2010: Liam Fox MP, Secretary of State for Defence
-- December 2010: Gen. Sir David Richards, Chief of Defence Staff
-- December 2010: Lord Astor of Hever, PUS for Defence
-- July 2010: William Hague MP, Foreign Secretary
-- May 2010: Andrew Mitchell, Development Secretary
-- May 2010: Liam Fox MP, Secretary of State for Defence
-- May 2010: William Hague MP, Foreign Secretary
-- May 2010: HRH The Duke of York

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GEOGRAPHY

Bahrain is a group of 33 Gulf islands off the east coast of Saudi Arabia, the largest of which is Bahrain Island. Causeways connect the four main islands. Bahrain Island is also connected to Saudi Arabia by the 16 mile long King Fahd Causeway. A causeway is due to be built to link Bahrain to Qatar. The population is concentrated in the north around the capital, Manama. The summer climate is hot and humid, with no rain. Winters are warm. Maximum temperatures average 30-40°C between May and October and 20-30°C for the remainder of the year.

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TRADE AND INVESTMENT WITH THE UK

Bahrain is a major trading hub and financial centre in the Middle East and is one of the UK’s smallest export markets in the Gulf countries.

There was a slight decline of 5% in the value of exports to Bahrain in 2010, compared with 2009, and a significant increase in the value of imports (518%). UK exports to Bahrain were £229 million in 2010 and UK imports were £161 million, Despite the political unrest in Spring 2011, export figures to Bahrain from January – June 2011 were down just 1% on the same period in 2010, and imports down 5%. (Source HMRC)

Bahrain continues to present opportunities for exporters. A US $10 billion stabilisation fund from the GCC will be used over the next 10 years to fund, in part, infrastructure developments in Bahrain. The principal sectors for UK businesses are:

Financial and professional services

-- Infrastructure Development, including sanitary engineering, airport and road infrastructure, and housing.

Education and Skills

Commercial Hours

Government offices: 07:00-14:15 Sunday to Thursday.
Commercial organisations: 08:00-15:30 or 08:00-13:00 and 16:00-19:30 Saturday to Thursday.
Shopping malls and supermarkets: 10:00-22:00 Saturday to Friday (NB: Some traditional markets and shops are open Friday mornings only).
Commercial banks: Times vary from bank to bank, but most are open between 08:30 - 15:00, Sunday to Thursday. All banks are closed all day on Friday.

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POLITICS

Shaikh Hamad bin Isa Al-Khalifa succeeded his father (Shaikh Isa bin Salman Al-Khalifa) as Ruler in 1999 on the latter’s death, and began to transform Bahrain into a constitutional monarchy. Shaikh Hamad pardoned political prisoners and detainees in 2001, including those previously exiled from Bahrain. He also abolished the State Security Law and State Security Court, which were much criticised by opposition groups for suppressing freedom.

After a referendum and consultation, Shaikh Hamad presented Bahrain’s new Constitution on 14 February 2002, which set out plans for a bi-cameral Parliament (the National Assembly) and transformed Bahrain into a Kingdom. The Parliament comprises two Houses - the Shura (Consultative, Upper House) and the Nuwab (Lower Council of Representatives). Both Councils consist of 40 members, the Shura appointed by the King, and the Nuwab elected by the public. Members of both Councils serve four-year terms. Sessions of the Shura and Nuwab are open to the public, unless the government requests a closed session. The King retains the power to amend the Constitution. The opposition is unhappy with the Constitution which they say does not reflect the earlier consultations and underpins the ruling families grip on power.

The country’s first municipal elections since 1957 took place on 9 May 2002. Women had the right to both vote and to stand as candidates. The turnout was 51%, with women making up 52% of voters. Candidates with links to Islamist groups won the majority of seats. Although women comprised 10% of candidates, none were elected.

Parliamentary elections took place on 24 October 2002. Due to a Shia boycott, over half of the 40 Members of Parliament elected were Sunni Islamists, with just 12 Shia. Despite strong participation by female voters, no women were elected to the new parliament. The Government put considerable resources into encouraging as many people as possible to vote. The elections themselves were noted for the use of state-of-the-art technology, and for their transparency. The elections were successful in terms of the government's neutrality, and high-standard logistical organisation.

Elections were held in November 2006. Voter turnout was 72% and saw major gains for both Shia and Sunni Islamist parties. The Shia Al Wefaq took 17 of the 40 seats and became the largest single group in the Chamber. The election was preceded by a political realignment in which some opposition parties that had boycotted 2002's poll agreed to take part.

Elections took place for a new parliament on 23 October 2010 with a number of second round votes on 30 October. The new parliament saw gains for the Shia block Al Wefaq taking 18 seats. 17 independent candidates were elected with a large number new to parliament. Sunni Islamist parties were the biggest losers, dropping to 5 seats. As in the 2006 election there have again been allegations of malpractice in the period running up to the election.

In March 2011, in response to the King’s perceived failure to deliver a promised new constitution, all 18 Al Wefaq MPs resigned from parliament. By-elections took place on 24 September and 1 October. Three out of the 18 candidates that won were women and 11 were independent Shia members.

The King established a National Dialogue in July 2011 following the events in February and March. The findings were handed to the King on 8 October. He approved all the recommendations for political reform and passed the report to Parliament to begin implementation

In 2008 Mrs Huda Nonoo, a Jewish Shura council member, was appointed as Bahrain’s Ambassador to Washington. In September 2011, Ms Alice Thomas Samaan, a Christian, was appointed as Bahrain’s Ambassador to the UK.

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HUMAN RIGHTS

Bahrain is a relatively liberal Gulf State, although its international reputation has declined since the unrest of 2011. Many communities are allowed their own places of worship and the Shura Council includes a Christian and had previously included a Jewish member (Huda Nonoo). Bahrain has introduced significant political reforms since King Hamad bin Isa Al Khalifa succeeded his father in 1999, although progress has stalled in recent years.

There have been continued accusations of police torturing detainees, with the High Criminal Court acknowledging evidence supporting this in a case in 2009, although their decision was overturned on appeal. A report published by Human Rights Watch in early 2010 alleged that torture in Bahrain was systemic. The Government said that it would look into these allegations.

There were many claims of human rights abuses, including torture in prison, following the protests which began in February 2011. In response to international condemnation and pressure, the King commissioned an independent investigation of the government’s response to the events of February and March, known as the Bahrain Independent Commission Inquiry (BICI), which was led by Professor M. Cherif Bassiouni one of the foremost authorities on international criminal, human rights and humanitarian law.

The Commission concluded that many detainees were tortured to extract confessions. Mistreatment and other forms of physical and psychological abuse while in state custody were also noted including a discernible pattern of mistreatment with regard to certain categories of detainees.

King Hamad accepted the Commission findings and promised to act on their recommendations. He ordered an Independent Commission to examine the report and propose concrete proposals; established an Independent National Human Rights Commission and a Victims Compensation Fund.

The press is relatively free although editors exercise self-censorship and the Government gives considerable direction. The Government have also introduced a blanket block on a large number of websites, aiming particularly at pornography and gambling but also capturing blog sites deemed critical of the ruling family. Political societies have suffered blocks on their newsletters in the election build up.

International Treaties

Bahrain is a party to the following UN conventions, which were ratified on the dates shown:

-- International Convention on the elimination of all forms of racial discrimination: 27/03/90;

-- International convention on the suppression and punishment of the crime of apartheid: 27/03/90;

-- Convention on the prevention and punishment of the crime of genocide: 27/03/90;

-- Supplementary convention on the abolition of slavery, the slave trade, and institutions and practices similar to slavery: 27/03/90;
-- UN Convention on the rights of the child: 13/02/92;
-- Convention against torture or other cruel, inhuman or degrading treatment or punishment: 6/03/98;

-- UN Convention on the Elimination of All Forms of Discrimination Against Women: 18/07/02; Bahrain

-- signed the Rome Statute of the International Criminal Court in 1999, but have yet to ratify;

-- International Covenant on Civil and Political Rights (ICCPR): 20/09/06 (accession);

-- International Covenant on Economic, Social and Cultural Rights (ICESCR): pending.

-- Bahrain was the first Arabic country to undergo a Universal Periodic Review in 2008. The next review is due in May 2012.

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Last Updated: February 2012

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