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A
small group of islands linked by
causeway to Saudi Arabia, Bahrain
recently became a constitutional
monarchy. Since 1999, the country has
been ruled by Sheikh Hamad bin Isa
Al-Khalifa, who has committed to a
process of gradual democratization. In
February 2001, Sheikh Hamad held a
referendum on his National Action
Charter, which called for constitutional
reforms. The Charter received the
approval of 98 percent of the
electorate, and in February 2002, Sheikh
Hamad declared himself king and Bahrain
a constitutional monarchy. He also
called for parliamentary elections in
October. The new bicameral legislature
(to be made-up of a lower chamber of
elected representatives and an upper
house of appointed legislators) was
Bahrain's first since the National
Assembly was dissolved in 1975. Though
the elections occurred without
irregularity, turnout was only 53
percent due to the decision by Shi'ite
groups to boycott the election. The king
responded to Sunni Islamist candidates'
capture of most of the seats in the
lower house by appointing secular MPs to
the upper house.
Since 1948, the United States Navy has
made Bahrain its headquarters for
activity in the Persian Gulf, and more
than 5,000 U.S. military personnel are
currently stationed in Bahrain. At
present, its base occupies more than 60
acres of land in Manama, the country's
capital, and is the headquarters of the
U.S. Navy’s Fifth Fleet. The U.S. and
Bahrain also have a Free Trade Agreement
(FTA), which was signed in September
2004.
Already a regional financial services
center specializing in offshore banking,
Bahrain is intent on further
diversifying its generally liberalized
economy. For the time being, the country
remains heavily dependent on the oil
sector. Petroleum revenues make up about
two-thirds of government revenue and
export earnings. Hydrocarbons also
provide the foundation for Bahrain's two
major industries: refining and an
aluminum smelter. Accordingly, oil
prices dramatically affect Bahrain's
economy. The relatively high oil prices
of recent years have helped Bahrain's
real gross domestic product (GDP) to
grow at 5.4 percent in 2004 and an
estimated 5.3 percent for 2005. Growth
for 2006 is forecast at 5.5 percent.
These relatively strong growth rates
have not kept unemployment from becoming
a growing economic and political
problem. |
