Bahrain

OFFICIAL NAME: Kingdom of Bahrain
(Changed from State of Bahrain, February. 14, 2002)

Geography Area: 693 sq. km. (268 sq. mi.); about four times the size of
Washington, DC. Bahrain is an archipelago consisting of 33 islands, only
six of them inhabited.
Cities: Capital--Manama, pop. 145,000. Other city--Al Muharraq, pop. 81,000.

Terrain: Low interior plateau and hill on main island.
Climate: Hot and humid from May-September, temperate from October-April.

People

Nationality: Noun and adjective--Bahraini(s).
Population (2001 est.): 645,351; 66% indigenous.
Ethnic groups: Bahraini 63%, Asian 19%, other Arab 10%, Iranian 8%.
Religions: Shi'a and Sunni Muslim, with small Roman Catholic, Prostestant,
and Jewish communities.
Languages: Arabic (official), English, Farsi, Urdu.
Education: Attendance--73%. Literacy (2001)--85.2% (male 89.1% female 69%).
Work force: 330,000 (about 36% indigenous, 44% of the population in the
15-64 age group is nonnational).
Work force: Industry and commerce--74%; services--19%; agriculture--4%;
government--3%.

Government

Type: Constitutional Monarchy (as of February 14, 2002).
Independence: August 15, 1971.
Constitution: May 26, 1973; suspended August 26, 1975, amended and ratified
again February 14, 2001.
Branches: Executive--Amir (chief of state), prime minister (head of
government), Council of Ministers (cabinet). Judicial--independent judiciary
with right of judicial review. Appointed Consultative Council (40 members)
may review and propose legislation.
Administrative subdivisions: Five governorates.
Political parties: None.
Suffrage: There are municipal elections, and in February 2001 Bahrain held a
free popular constitutional referendum in which both men and women over the
age of 18 voted. However, this is the extent of Bahrani enfranchisement.

Economy

GDP (2001 est.) $8.1 billion.
Growth rate (2001 est.) 5%.
Per capita GDP (2001 est.) $12,790.
Natural resources: Oil, associated and nonassociated natural gas, fish,
pearls.
Agriculture (1% of GDP): Products--eggs, vegetables, dates, fish.
Industry (46% of GDP): Types--manufacturing (21% of GDP), oil (16%),
aluminum, ship repair, natural gas, fish.
Services (31% of GDP): Banking, real estate, insurance.
Public administration: 20% of GDP.
Trade (2000): Exports--$5.8 billion: petroleum and petroleum products (80%),
aluminum (7%), fish. Major markets--Saudi Arabia, U.S., Japan. Imports--$4.2
billion: machinery, industrial equipment, motor vehicles, foodstuffs,
clothing. Major suppliers--U.S., U.K., Japan.
Official exchange rate: 0.377 Bahraini dinar=U.S. $1 (fixed rate set in
1971).

PEOPLE

Most of the population of Bahrain is concentrated in the two principal
cities, Manama and Al Muharraq. The indigenous people--66% of the
population--are from the Arabian Peninsula and Iran. The most numerous
minorities are Europeans and South and East Asians.

Islam is the official religion. Though Shi'a Muslims make up more than
two-thirds of the population, Sunni Islam is the prevailing belief held by
those in the government, military, and corporate sectors. Roman Catholic
and Protestant churches, as well as a tiny indigenous Jewish community, also
exist in Bahrain.

Bahrain has traditionally boasted an advanced educational system. Schooling
and related costs are entirely paid for by the government, and, although not
compulsory, primary and secondary attendance rates are high. Bahrain also
encourages institutions of higher learning, drawing on expatriate talent and
the increasing pool of Bahrainis returning from abroad with advanced
degrees. Bahrain University has been established for standard undergraduate
and graduate study, and the College of Health Sciences--operating under the
direction of the Ministry of Health--trains physicians, nurses, pharmacists,
and paramedics.

HISTORY

Bahrain was once part of the ancient civilization of Dilmun and served as an
important link in trade routes between Sumeria and the Indus Valley as long
as 5,000 years ago. Since the late 18th century, Bahrain has been governed
by the Al Khalifa family, which created close ties to Britain by signing the
General Treaty of Peace in 1820. A binding treaty of protection, known as
the Perpetual Truce of Peace and Friendship, was concluded in 1861 and
further revised in 1892 and 1951. This treaty was similar to those entered
into by the British Government with the other Persian Gulf principalities.
It specified that the ruler could not dispose of any of his territory except
to the United Kingdom and could not enter into relationships with any
foreign government other than the United Kingdom without British consent.
The British promised to protect Bahrain from all aggression by sea and to
lend support in case of land attack.

After World War II, Bahrain became the center for British administration of
treaty obligations in the lower Persian Gulf. In 1968, when the British
Government announced its decision (reaffirmed in March 1971) to end the
treaty relationships with the Persian Gulf sheikdoms, Bahrain joined the
other eight states (Qatar and the seven Trucial Sheikhdoms, which are now
called the United Arab Emirates) under British protection in an effort to
form a union of Arab emirates. By mid-1971, however, the nine sheikhdoms
still had not agreed on terms of union. Accordingly, Bahrain sought
independence as a separate entity and became fully independent on August 15,
1971, as the State of Bahrain.

Based on its 1971 constitution, Bahrain elected its first parliament in
1973, but just 2 years later, in August 1975, the Amir disbanded the
National Assembly because the Parliament attempted to legislate the end of
Al-Khalifa rule and the expulsion of the U.S. Navy from Bahrain. Political
unrest broke out in December 1994 and included sporadic mass protests,
skirmishes with local law enforcement, arson, and property attacks. In June
1995, the first Bahraini cabinet change in 20 years took place, producing
mixed public response. In 1996, the Amir increased the membership of the
Consultative Council, which he created in 1993, from 30 to 40, to provide
advice and opinion on legislation proposed by the cabinet and, in certain
cases, suggest new laws on its own.
In 1998 Shaykh Hamad bin Isa Al Khalifa became Amir after the death of his
father, Shaykh Isa bin Hamad Al Halifa.

GOVERNMENT AND POLITICAL CONDITIONS

Bahrain is a hereditary emirate under the rule of the Al Khalifa family.
The Amir, Shaykh Hamad bin Isa Al Khalifa, his uncle--Khalifa bin Sulman Al
Khalifa (Prime Minister) and Crown Prince Shaykh Salman bin Hamad Al Khalifa
(Commander of the Bahraini defense forces), govern Bahrain in consultation
with a council of ministers. The government faces few judicial checks on its
actions. The Amir recently created the Supreme Judicial Council which is
intended to regulate the country's courts and separate the administrative
and judicial branches of government.

Despite their minority status, the Sunnis predominate because the ruling
family is Sunni and is supported by the armed forces, the security service,
and powerful Sunni and Shi'a merchant families.

Since 1998, the new Amir has worked to make Bahraini society more democratic
and open. Such changes have included the return to the Constitution as the
supreme source for the country's laws and the legalization of
nongovernmental organizations. On February 14, 2001, the people of Bahrain
took part in a popular referendum, in which they approved by 98.4% a return
to the Constitution. Among other issues, the referendum paved the way for
Bahrain to become a constitutional monarchy and to change the country's
official name from the State of Bahrain to the Kingdom of Bahrain (a change
which took effect in February 2002).

Along with improvements in basic civil rights protections and freedoms of
expression and association, the government took the first steps to return to
Bahrainis the right to elect a legislature. In his October 2001 speech to
open the tenth session of the Consultative Council, the Amir declared his
intention to hold municipal elections in 2002 and legislative elections
before 2004. He also stated that the legislative branch of government would
have two houses, one directly elected by universal male and female suffrage
and the other appointed. Bahrain's progress toward political and economic
reform has been steady.

Bahrain's five governorates are administered by the Minister of State for
Municipalities and the Environment in conjunction with each Governorate's
Governor. A complex system of courts, based on diverse legal sources,
including Sunni and Shi'a Sharia (religious law), tribal law, and other
civil codes and regulation, was created with the help of British advisers in
the early 20th century. This judiciary administers the legal code and
reviews laws to ensure their constitutionality.

Principal Government Officials
Amir--Shaykh Hamad bin Isa Al Khalifa
Crown Prince and Commander in Chief of Bahrain Defense Force--
Shaykh Salman bin Hamad Al Khalifa
Prime Minister--Shaykh Khalifa bin Salman Al Khalifa
Minister of Foreign Affairs--Shaykh Mohammad bin Mubarak Al Khalifa

Ambassador to the United States--Khalifa bin Ali Al-Khalifa
Ambassador to the United Nations--Abdul Aziz Bu Alai

Bahrain maintains an embassy in the United States at 3502 International
Drive NW, Washington, DC 20008; tel: (202) 342-0741; fax: (202) 362-2192).
The Bahraini UN Mission is located at 747 3rd Avenue, New York, NY 10017;
tel: (212) 751-8805.

DEFENSE

Under the Ministry of Defense, the Bahrain Defense Force (BDF) numbers about
9,000 personnel and consists of army, navy, air force, air defense, and
Amiri guard units. Separate from the BDF, the public security forces and the
coast guard report to the Ministry of the Interior. Bahrain, in conjunction
with its Gulf Cooperation Council (GCC) partners--Kuwait, Oman, Qatar, Saudi
Arabia, and the United Arab Emirates--has moved to upgrade its defenses over
the last 10 years in response to the threat posed by the Iran-Iraq and Gulf
wars. In 1982, the GCC gave Bahrain $1.7 billion to help improve its
defenses. Bahrain's defense spending since 1999 has been steady. The
government spends around $320 million annually on their military.

After the Gulf war, Bahrain received additional military support from the
United States, including the sale of eight Apache helicopters and subsequent
sales of 54 M60A3 tanks, 12 F-16C/D aircraft, and 14 Cobra helicopters.
Joint air and ground exercises also have been planned and executed to
increase readiness throughout the Gulf. Bahrain and the United States signed
a Defense Cooperation Agreement in October 1991 granting U.S. forces access
to Bahraini facilities and ensuring the right to pre-position material for
future crises. In October 2001, President Bush announced his intention to
designate Bahrain as a major non-NATO ally.

ECONOMY
Bahrain has a mixed economy, with government control of many basic
industries, including the important oil and aluminum industries. Between
1981 and 1993, Bahrain Government expenditures increased by 64%. During that
same time, government revenues continued to be largely dependent on the oil
industry and increased by only 4%. Bahrain has received significant
budgetary support and project grants from Saudi Arabia, Kuwait, and the
United Arab Emirates.

Privatization could help Bahrain's economy. However, as of the Spring 2001
the government of Bahrain still wholly owned the Bahrain Petroleum Company.
Utilities, banks, financial services, and telecommunications have started
though, to come under the control of the private sector.

The government has used its modest oil revenues to build an advanced
infrastructure in transportation and telecommunications. Bahrain is a
regional financial and business center. Regional tourism also is a
significant source of income. Bahrain benefited from the region's economic
boom in the late 1970s and 1980s. During that time, the government
emphasized infrastructure development and other projects to improve the
standard of living; health, education, housing, electricity, water, and
roads all received attention.

Petroleum and natural gas, the only significant natural resources in
Bahrain, dominate the economy and provide about 60% of budget revenues.
Bahrain was the first Arabian Gulf state to discover oil. Because of
limited reserves, Bahrain has worked to diversify its economy over the past
decade. Bahrain has stabilized its oil production at about 40,000 barrels
per day (b/d), and reserves are expected to last 10-15 years. The Bahrain
Oil Company refinery was built in 1935, has a capacity of about 250,000 b/d,
and was the first in the Gulf. After selling 60% of the refinery to the
state-owned Bahrain National Oil Company in 1980, Caltex, a U.S. company,
now owns 40%. Saudi Arabia provides most of the crude for refinery operation
via pipeline. Bahrain also receives a large portion of the net output and
revenues from Saudi Arabia's Abu Saafa offshore oilfield.

The Bahrain National Gas Company operates a gas liquefaction plant that
utilizes gas piped directly from Bahrain's oilfields. Gas reserves should
last about 50 years at present rates of consumption.

The Gulf Petrochemical Industries Company is a joint venture of the
petrochemical industries of Kuwait, the Saudi Basic Industries Corporation,
and the Government of Bahrain. The plant, completed in 1985, produces
ammonia and methanol for export.

Bahrain's other industries include Aluminum Bahrain, which operates an
aluminum smelter--the largest in the world with an annual production of
about 525,000 metric tons (mt)--and related factories, such as the Aluminum
Extrusion Company and the Gulf Aluminum Rolling Mill. Other plants include
the Arab Iron and Steel Company's iron ore pelletizing plant (4 million tons
annually) and a shipbuilding and repair yard.

Bahrain's development as a major financial center has been the most widely
heralded aspect of its diversification effort. International financial
institutions operate in Bahrain, both offshore and onshore, without
impediments. In 2001, Bahrain's central bank issued 15 new licenses. More
than 100 offshore banking units and representative offices are located in
Bahrain, as well as 65 American firms. Bahrain's international airport is
one of busiest in the Gulf, serving 22 carriers. A modern, busy port offers
direct and frequent cargo shipping connections to the U.S., Europe, and the
Far East.

FOREIGN RELATIONS

Bahrain plays a modest, moderating role in regional politics and adheres to
the views of the Arab League on Middle East peace and Palestinian rights.
Since achieving independence in 1971, Bahrain has maintained friendly
relations with most of its neighbors and with the world community. It
generally pursues a policy of close consultation with neighboring
states and works to narrow areas of disagreement.

Bahrain is a member of the GCC, established on May 26, 1981 with five other
Gulf states. The country has fully complied with steps taken by the GCC to
coordinate economic development and defense and security planning. In
December 1994, it concurred with the GCC decision to drop secondary and
tertiary boycotts against Israel. In many instances, it has established
special bilateral trade agreements. During the Gulf war, Bahraini pilots
flew strikes in Iraq, and the island was used as a base for military
operations in the Gulf.

Bahrain-Iran relations have been strained since the Iranian revolution and
the 1981 discovery of a planned Iran-sponsored coup in Bahrain. Bahraini
suspicions of the Iranian role in local unrest in the mid-1990s remain.
However, with the decline of Iraq as a regional powerbroker, Bahrain has
begun taking steps to improve relations with Iran and increase regional
harmony. These efforts have included encouraging Bahrain-Iran trade.

U.S.-BAHRAINI RELATIONS
When Bahrain became independent, the traditionally excellent U.S.-Bahrain
relationship was formalized with the establishment of diplomatic relations.
The U.S. embassy at Manama was opened September 21, 1971, and a resident
ambassador was sent in 1974. The Bahraini embassy in Washington, DC, opened
in 1977. In October 1991, Amir Isa bin Sulman Al Khalifa made a state visit
to Washington, after which he visited other parts of the U.S. as well. In
2001, Amir Hamad bin Isa Al-Khalifa made his first visit to the U.S. after
succeeding his father in 1999.

Since 1948 Bahrain has been the headquarters of U.S. naval activity in the
Gulf. Currently, the Naval Support Activity (NSA), occupying 79 acres of
land in the center of downtown Manama, is the headquarters of the U.S.
Navy's Fifth Fleet. Manama also is the home port for four U.S. Navy
minesweepers. During the Gulf War, U.S. and Bahraini aircraft flew
thousands of sorties against Iraq. Most recently, Bahrain provided
extensive basing and overflight clearances for a multitude of U.S. aircraft
operating in support of Operation Enduring Freedom, and the Bahrain Monetary
Agency moved quickly to restrict terrorists' ability to transfer funds
through Bahrain's financial system. Bahrain also cooperated effectively on
criminal investigation issues in support of the campaign on terrorism. In
October 2001, President Bush announced his intention to designate Bahrain as
a major non-NATO ally.