BAHRAIN: FACING AN UNCERTAIN FUTURE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP88T00096R000200200003-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 32
• Document Creation Date: December 22, 2016
• Document Release Date: May 18, 2011
• Sequence Number: 3
• Publication Date: April 1, 1986
• Content Type: REPORT

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NESA 86-10021
April 1986
Directorate of -seemr
Intelligence
Bahrain:
Facing an Uncertain Future
346
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NESA 86-10021
April 1986
Directorate of Secret
Intelligence
Bahrain:
Facing an Uncertain Future
This paper was prepared byl (Office
of Near Eastern and South Asian Analysis. It was
coordinated with the Directorate of Operations.
Comments and queries are welcome and may be
directed to the Chief, Persian Gulf Division, NESA,
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Bahrain:
Facing an Uncertain Future 25X1
Key Judgments Popular discontent is rising in Bahrain, fed by the Gulf's economic
Information available recession, sectarian rivalries, the lack of avenues for political expression,
Khalifa family faces the continuing threat of Iranian-sponsored terrorism.
The United States has major interests in Bahrain-Manama offers home
port facilities to the US Navy and pre-positioning of some military
equipment. These equities will be at serious risk over the long term if
current trends toward instability on the island continue.
The complaints against the ruling family come increasingly from all sectors
of Bahraini society, suggesting that the Al Khalifa regime could face a
serious threat in the next five years.
Bahrain's business and professional communities also are becoming more
outspoken about the government's mishandling of the economy and the
need for political reform.
The recession and the fall in oil prices are seriously straining Bahrain's
already troubled economy. Government revenues, which are based for the
most part on oil earnings and Saudi aid, will drop further this year,
severely restricting the regime's ability to use financial incentives to buy
off critics. Unemployment will continue to rise, increasing tensions between
the regime and the Shia community, which constitutes 70 percent of the is-
land's population and is economically and politically disadvantaged. The
threat to the ruling family will increase if the Shias conclude that they are
the victims of renewed political discrimination and economic decline.
Bahrain's rulers seem unable to come to grips with the long-term
implications of the declining economy and the increased potential for
subversion. they view the gloomy economic
picture as temporary and refuse to acknowledge the need for economic
adjustments. They apparently believe that time-honored practices of co-
optation and repression will allow them to maintain control and hold the
opposition in check. These policies probably will be ineffective if the
economy deteriorates dramatically-a distinct possibility if the decline in
oil prices is prolonged. The US Embassy in Manama believes-and we
concur- that hard times are likely to continue for the next five years.
iii Secret
NESA 86-10021
April 1986
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Iranian clerics probably still hope to overthrow the Khalifa family and help
a pro-Iranian Islamic government take power in Bahrain. For now,
however, Tehran is distracted by the war with Iraq and is not providing sig-
nificant support to anti-Khalifa factions. Saudi Arabia will continue
economic assistance to Bahrain and will watch closely for signs of Iranian-
inspired Shia unrest that could spill over into its Shia-populated Eastern
Province. Manama's economic woes would become acute if Saudi financial
aid dries up.
In the short term, we do not believe the regime will respond to internal
pressures for political or economic reform, and the situation will probably
drift. The regime will try to control spending, but the risk will grow that
economic woes, or excessive repression will intensify popular
resentment of the ruling family. Over the longer term, serious trouble is
likely if Bahrain's economic problems continue, and we believe the risk of a
Shia uprising will grow over the next five years. The spark for the
disaffected Shias to coalesce could come from several sources, including
the assassination of a prominent government figure by Iranian-backed
dissidents or an Iranian victory in the war with Iraq.
The prospect for growing unrest puts US interests in Bahrain at risk. The
Al Khalifa family wants the protection that the US military presence
provides, although senior family members worry that US regional policies
put them at risk both from Iran and from domestic critics. Because of these
concerns, it is unlikely that the government will agree to expand the
defense relationship or conclude new agreements on pre-positioning US
equipment. Manama will, nonetheless, continue to look to Washington for
assurances of support against an Iranian threat while it relies on Riyadh to
fund military programs.
If a new government representing non-Khalifa interests were formed, it
would probably be more intensely nationalistic and could seek a less
conspicuous US presence on the island. A takeover by radical Shia
elements would probably result in an immediate break in relations with
Washington and would endanger US personnel and facilities in the
country.
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Key Judgments
The Shrinking Pie
Banking and Finance
Al Khalifa Infighting
4
Bahrain's Shias: Long Live Khomeini ... in Iran
5
Fissures in the Revolutionary Front
12
Outlook
13
Implications for the United States
14
Appendixes
A. The Bahraini-Saudi Causeway: Highway to Heaven and Hell
17
B. Bahrain's Left: No Signs of Life
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Road
Power station
Sitrah Island
tanker terminal
Saudi
Arabia
Persian
Gulf
Area of
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Bahrain:
Facing an Uncertain Future
The Al Khalifa have ruled Bahrain for more than 200
years by being generous to their friends, tolerant of
their critics, and tough on potential dissidents. They
have made occasional attempts at reform, although
the gestures have been largely cosmetic. We believe
the region's current economic hard times, however,
are affecting the Al Khalifa's ability to maintain
control. The financial tools at the regime's disposal
are more restricted than at any time in the 25 years of
Amir Isa's rule, and Bahrainis on all rungs of the
social ladder are feeling the squeeze.
The Shrinking Pie
The Gulfwide recession has hit Bahrain hard. Govern-
ment revenues have dropped 20 percent from a peak
of $1.5 billion in 1982, and business activity has
lagged significantly. Oil earnings-which account for
70 percent of government revenues-have been de-
clining steadily, and foreign aid receipts, mostly from
Saudi Arabia, are falling. Foreign exchange reserves,
which have declined by almost $350 million since
1981, are down to $1.6 billion and cover only six
months of imports.
As a result, the government reduced expenditures in
1985, and additional reductions are likely this year.
Manama has announced 5-percent budget cuts for all
government departments, reduced subsidies, restrict-
ed imports, and raised tariffs and fees for public
services. New development projects have been post-
poned, and payments on existing ones have been
stretched out. The government stopped short of im-
posing new taxes because of growing concern about
public discontent. Despite these measures, govern-
ment revenues have continued to decline, dropping to
their lowest level since 1980, according to the
Embassy.
Oil and Aid. Oil exports are still the keystone of
Bahrain's economy. Oil and oil products from the
Bahrain Petroleum Company's (Bapco) refinery ac-
count for over 85 percent of the value of Bahrain's
exports and approximately 70 percent of government
revenue. US Embassy sources report that the coun-
try's oil reserves are rapidly being depleted, however,
and the refinery has been operating at a loss for the
last two years.
With limited resources, Bahrain relies heavily on aid
from its richer Gulf neighbors, particularly Saudi
Arabia. We believe the Saudis, who also face a tight
budget, will continue to assist Manama, but the aid
will be late and probably less than Bahrain received in
1984 and 1985. Manama receives approximately $1
billion a year from Riyadh in direct cash subsidies or
payments for capital projects such as the causeway
linking Bahrain to the Saudi mainland. It also re-
ceives grants from a Gulf Cooperation Council fund
set up in 1983 to finance arms purchases for Bahrain
and Oman. The fund will pay for Bahrain's $100
million air defense system and other military needs.
Reliable sources told US officials earlier this year
that Saudi funding earmarked for the purchase of
US-made tanks and the construction of a military
airfield had been delayed.
Banking and Finance. The recession is also having a
dampening effect on Bahrain's major growth indus-
try, banking and finance. In good times, according to
Embassy estimates, the financial sector provides more
than 3,000 jobs for Bahrainis-many of them execu-
tive positions-and contributes about 16 percent of
the country's GDP. The banks are also a source of
direct income; they paid fees of nearly $4 million for
licenses in 1982-the last year for which we have
statistics.
US officials reported last year, however, that demand
for banking services was declining as the regional
recession deepened and that lending opportunities
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were fewer while the risk to lenders was increasing.
Moreover, competition from regional banks, in partic-
ular those in Saudi Arabia, is growing. We agree with
the Embassy that problems in the banking sector are
likely to worsen this year as plans for new construc-
tion projects are dropped and current projects, such as
the Bahraini-Saudi causeway, are completed. F_
Bahrain's offshore banking units (OBUs) once were a
key to Bahrain's hopes to become an international
financial center. In the 1970s and early 1980s, the
units flourished, in part because of the collapse of
Beirut as a Middle Eastern banking center. Although
their focus is international, the OBUs have a signifi-
cant impact on the local economy by creating substan-
tial employment opportunities for Bahrainis.
Problems for the units began in 1983 when the Saudi
Arabian Monetary Agency began to restrict Bahraini
banking activities in the kingdom. Embassy sources
claim 80 percent of all OBU activity from Bahrain is
focused on Saudi Arabia. As a result, some banks are
reducing operations or changing the type of business
they do in the Gulf. In 1985 five banks closed their
branches in Bahrain, while others announced signifi-
cant reductions in staff.
Labor. The recession and government cutbacks are
having a serious impact on Bahrain's population. The
Embassy reports that personal income among both
government and private-sector workers has been fro-
zen since the last general wage increase in January
1982. Unlike their oil-rich Gulf neighbors, many
Bahrainis are poor and their poverty is visible, making
the economic downturn particularly critical. A source
in Bahrain's statistics office told the Embassy in early
1985 that 10 percent of Bahrain's families have
incomes below $1,600 per year. An IMF study in
1983 estimated per capita income at $12,000, com-
pared to $21,000 for Kuwait and the United Arab
Emirates. Travelers to the area note that the villages
of better off Sunnis stand in marked contrast to the
predominantly Shia shantytowns, whose lack of devel-
opment serves as a reminder to the majority Shia
population of their second-class status.
The problems facing the Bahrain Petroleum Compa-
ny (Bapco) are typical of Bahrain's economic woes.
Reliable sources of the US Embassy have described
the refinery as plagued by faulty economic planning,
incompetent managers, uneducated and unskilled em-
ployees, and obsolescent equipment. The government
owns 60 percent of the refinery, which processes all of
Bahrain's crude oil as well as crude purchased by the
government from Saudi Arabia at OPEC prices.
When the refinery operates below capacity-as it has
for the past three years-Saudi crude costs more to
refine than it can be marketed for. According to
Embassy sources, the Saudis refused Manama's re-
quests for a price break in 1984 and will become
serious competitors with Bapco when their new refin-
eries at Al Jubayl and Yanbu ` al Bahr come on
stream.
In addition to being the country's largest income-
generating activity over the last half century, Bapco
has traditionally been the largest employer other
than the government, and it has trained many Bah-
rainis who now occupy senior positions in the govern-
ment and in other industries. It has been an especially
important avenue to influence for the Shia communi-
ty-according to Embassy sources, 70 to 80 percent
of its employees are Shias, including many of the top
managers. It is grossly overstaffed but is forbidden by
the government to fire or lay off any workers.
Plant managers have told US officials of their grow-
ing concern about security threats to the refinery.
They are particularly worried about sabotage by
disgruntled Shia employees, terrorism by Iranian-
backed factions, and Iranian military attacks. The
facilities are not well guarded and, in our judgment,
are vulnerable to attack.
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Unemployment has become a serious problem. Em-
bassy sources claim that, for the first time since the
1960s, Bahrainis are having trouble finding jobs. The
traditional major employers like Aluminum Bahrain
and Bapco have reduced employment by 13 percent
over the past two years. According to Embassy esti-
mates, as many as 10 percent of the estimated 70,000
Bahrainis in the work force may be unemployed. F_
The problem is most serious for young, unskilled, or
semiskilled Bahrainis seeking entry-level jobs. The
Embassy estimates that 3,000 to 5,000 young people
look for work each year and claims there is little
indication they are getting jobs. Unemployment has
not yet hit mature workers, most of whom benefit
from the government's policy that no employed Bah-
raini should be fired. The Embassy notes, however,
that the idleness of young jobseekers is a source of
great concern among all Bahrainis.
Despite this unemployment, the island continues to
employ large numbers of foreign workers, a practice
that is generating growing criticism among Bahrainis.
According to US Embassy estimates, one-third of the
population-estimated at 427,000-and nearly 60
percent of the work force is non-Bahraini. In the
private sector, 75 percent of the workers are foreign-
ers, while nearly 33 percent of government employees
are expatriates. They are preferred both by govern-
ment and private-sector employers because they have
the skills and/or the willingness to do the jobs natives
cannot or will not do. They also are usually cheaper
and more docile than native workers.
The US Embassy reported last year that the govern-
ment had implemented a Bahrainization program that
forced many private firms to hire Bahrainis before
they could obtain work permits for expatriates. It also
tried to provide vocational education for secondary
school graduates. Apparently neither program was
successful.
as a result of the Bahrainization program, many
young people were given "nonjobs" to satisfy the
government, while those completing vocational train-
ing still had difficulty finding jobs.
We believe that the job market in Bahrain will
continue to be tight for the next several years. Even if
the economy rebounds, the regime will continue to
refuse to hire Shias or Iranian-origin Bahrainis, whom
it views as politically unreliable, for managerial or
security-related positions. The Embassy claims there
is no indication that Manama is prepared to press
private-sector employers to replace expatriates with
natives, and we believe it will continue to urge
companies like Bapco and Bahrain National Oil Com-
pany not to promote or hire Shias, particularly in so-
called sensitive positions.
The foreign labor force will be hit hard as well.
According to the Embassy, reliable sources predicted
in mid-1985 that expatriate labor would decline by
about 30 percent over the next year, a reduction of
about 24,000 workers. In our judgment, this number
is exaggerated, but, even if this many were to leave
Bahrain in 1986, there would be no substantial new
demand for native Bahrainis because of the economic
slowdown and the unwillingness or inability of Bah-
rainis to take the place of expatriates.
Political Drift
Bahrain's economic woes are triggering criticism of
the ruling family from all sectors of Bahraini society.
Aside from attempts to reduce expenditures by cut-
ting the budget, the ruling family is doing little to deal
with the recession. US officials
say the family views the current gloomy
economic picture as temporary and refuses to ac-
knowledge the need for meaningful adjustments.
the apparent inertia in
decisionmaking is caused by the illness of the Prime
Minister
and a reluctance by family members to restrain their
investment activity.
The Embassy reports Bahrain's wealthy merchant
families are grumbling about having to compete with
the Al Khalifa in business,
"return" to democracy have appeared in the press.
Bahrain had an elected national assembly from 1973
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to 1975, but the Al Khalifa dissolved it following
rancorous debate over security laws. Some contacts of
the US Embassy are urging that the United States
use its leverage with the regime to bring about some
form of democracy as a way to safeguard stability.
Al Khalifa Infighting. The Al Khalifa family has
never been popular with either its Sunni supporters or
the Shia community. The exception to this-and a
stabilizing factor for the regime-is Amir Isa, who is
generally well liked by Bahrainis and foreign observ-
ers. the 53-year-old Isa as a
generous, good-natured, and accessible ruler who is
genuinely concerned about the welfare of his people.
the US Embassy says Isa is a shrewd
and able leader who deserves much of the credit for
the relative stability and prosperity Bahrain has en-
joyed since independence in 1971.
Isa's chief aide and confidant since he took power has
been his brother, Prime Minister Khalifa. US officials
have described the relationship between the two men
as that of "good cop ... bad cop." The genial Isa
encourages the view that he is remote from the
business of governing, while his brother,
takes responsi-
bility for unpopular decisions and the repression of
dissent.
uncle and more amenable to Shia concerns. It is an
image that the Crown Prince encourages. For exam-
ple, Hamad has suggested publicly that he favors
restoring some form of consultative assembly, a devel-
opment his uncle would strenuously oppose.
We believe Hamad's interest in limited political re-
form is genuine, but he also uses the issue to enhance
his public image. Reliable sources have told US
officials over the years that the Crown Prince resents
his uncle's extensive authority and is seeking more
power. The Prime Minister, for his part, mistrusts
Hamad's penchant for military trappings and, accord-
ing to the US Embassy, doubts that the Bahrain
Defense Force, which a US official has described as
the Crown Prince's plaything, needs the equipment
Although the infighting between the Crown Prince
and the Prime Minister is serious, we do not believe
either man would endanger the family's interests by
an open confrontation. In any event, the Amir would
not tolerate an open power struggle between his son
and his ailing brother. If anything, Khalifa's illness
has forced the family to appear united while giving
Hamad an opportunity to act as prime minister. F_
The Prime Minister's health problems have drawn
attention to this division of roles. In our view, most
Bahrainis see the Prime Minister and not the Amir as
the prime mover in the government, a characteriza-
tion we share. Khalifa has been out of the country
In that time, the
government has made no significant policy decisions,
Crown Prince Hamad assumed most of the Prime
Minister's duties The Embas-
sy has called the 36-year-old Crown Prince an un-
known quantity but says many Bahrainis apparently
see him as more democratically inclined than his
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Sectarian Woes
Underlying the country's economic and political woes
is the basic faultline that divides Bahrain-the Sunni-
Shia split. The Al Khalifa have maintained confes-
sional calm by supporting causes dear to both commu-
nities and a relatively tolerant religious environment.
Many Shias benefited from the economic expansion of
the 1970s and early 1980s, when Bahrain's new
Shia majority.
growth industries provided substantial employment
opportunities for native Bahrainis, regardless of fam-
ily connections, ethnic origin, or religion. Sources
described by the US Embassy as sensitive to these
distinctions say that the most highly motivated and
fastest moving private-sector employees are Bahraini
Shias, many of whose families are Iranian in origin.
As the economy deteriorates, however, and the Shias
continue to bear the brunt of the decline, we believe
the Al Khalifa could face a serious threat from the
Bahrain's Shias: Long Live Khomeini ... in Iran.
Shias comprise more than 70 percent of Bahrain's
native population of 280,000. In a small country
where religion is the primary criterion of social identi-
ty, they form a distinct and cohesive community that
has a long history of persecution at the hands of the
Sunnis. Shia sources who speak to US officials say
that Bahrain's Shias generally believe that they are
victims of social and economic discrimination and
even religious persecution, although the sources are
generally reluctant to reveal to outsiders the extent of
their unhappiness with the regime.
martyrdom for their cause.
Ba rams ias
say they use religion as a focal point for protest and
claim that some, like their Iranian cousins, seek
In our judgment, the political significance of religious
identification has intensified in the past decade, both
in reaction to the perceived failure of Arab national-
ism and, in greater measure, as a result of the Iranian
revolution. Arab nationalism, which in its Nasirist
and Ba'thist versions appealed to many in the Gulf in
the 1960s and 1970s, held little attraction for the
Shias who saw it basically as a Sunni Arab ideology.
We believe, however, that Bahrain's Shias viewed the
fall of the Shah as a vindication of their religion and
the establishment of an Islamic republic in Iran as a
source of pride and self-esteem. They were proud of
the accomplishments of the revolution, and many
revered Ayatollah Khomeini.
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Some of this enthusiasm has waned, according to
Embassy sources. Many in Bahrain's Shia community
are wary of the regime in Iran as they witness the
chaos and destructiveness that has accompanied the
introduction of clerical rule. We believe the majority
still subscribe to the goals of the Khomeini regime,
and Bahraini officials say many send money to Iran,
but US Embassy reporting suggests, and we concur,
that most favor moderate, homegrown fundamentalist
religious organizations. These offer a local refuge and
simple solutions to what seem to be overwhelming
social tensions, as well as providing a legitimate
means of voicing political opinions without bringing
down the heavy hand of the security forces. We
believe that a smaller number of Shias are activist-
minded and looking for an opportunity to confront the
regime. These are probably younger Shias who are
willing to follow fundamentalist leaders intent on
using religion to demonstrate their opposition to the
Sunni Al Khalifa family.
The Merchant Families. Bahrain's Shias appear to
have no central leadership or organization that guides
or directs them. We believe there is no Bahraini figure
who commands widespread Shia loyalties as Ayatol-
lah Khomeini did in Iran before the revolution.
Leadership in the Shia community has long been held
by a dozen wealthy families who act as sponsors and
mediators between the mass of poorer Shias and the
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Although the Al Khalifa claim that Sunnis and Shias
each constitute half of the population of Bahrain,
reliable observers have told US officials that more
than 70 percent of native Bahrainis are Shia and the
balance are Sunni, and that most Bahrainis believe
the Shias have a higher birthrate. The Shias are
divided ethnically into two communities-the Arab,
or Baharna, who were the original inhabitants of the
islands, and the Iranians, families of Persian origin
who migrated to Bahrain from southern Iran begin-
ning in the late 18th century because of the islands'
relative tranquillity and stability.
Little is known about the origins of the Baharna or
their conversion to Shia Islam. They were an ancient
Gulf people, centered in Bahrain and in Saudi Ara-
bia's Eastern Province. Many trace their origins to
Iraq or Iran or have family ties in those countries.
The Al Khalifa's bloodless conquest of the island in
1782 brought little change to the Baharna natives.
Excluded from power when Persia dominated Bah-
rain, they began paying taxes to their new Sunni
overlords but were otherwise allowed to go their own
way. The majority continued to live in small villages
in the north and west, working in agriculture, fishing,
government. In return for their loyalty and support,
the regime has given these families lucrative business
opportunities and some positions in the government,
including five of 17 Cabinet posts.
and pearling. Today, they form the bulk of the work
force in Bahrain's basic industries.
Until the Iranian revolution, most Bahraini Shias
probably benefited from the regime's benign neglect,
but they felt little loyalty to the Al Khalifa family.
The Al Khalifa fostered a liberal religious climate
and protected the Shias from the religious intoler-
ance of the Sunni Wahhabi movement, which spread
outward from the Arabian Peninsula in the 19th and
early 20th centuries. Bahrain's prominent Shia mer-
chant families also benefited from the liberal eco-
nomic and political environment that Amir Isa en-
couraged when he came to power in 1961. Families
such as the Urayids, Al Alis, Al Saffars, Al Bualis,
Al Jishis, Al Alawis, and Al Baharnas grew rich
because of their contacts with the ruling family. We
judge that they still believe their interests are best
protected by remaining loyal to the regime. These
wealthy merchant families usually support the Al
Khalifa government on land, trade, and labor issues
that generally work against the best interests of the
majority of Shias who are poor, rural-based, and
unskilled.
Despite these efforts, the Embassy believes-and we
agree-that the top Shia families will be unable to
win back influence or authority in the community.
Instead, we expect the cleavage between the wealthy
Shias and the Shia masses to widen, particularly if
As Shia economic grievances have grown, however,
we believe that the close association of these promi-
nent families with the Al Khalifa has cost them much
of their influence and is contributing to the deepening
tension between the rich and the rest of Bahrain's
Shias. The Embassy reports that most leading fam-
ilies are trying to ingratiate themselves with the larger
Shia community, and that nearly all have younger
members who are associating with religious groups
and showing solidarity with the new currents of
religious revival and militancy.
the wealthy Shia families are
funding dissident factions as a way of protecting
themselves.
there is a serious downturn in the economy.
The Clerics. The other major source of leadership in
the Shia community has been provided by clerics. The
Embassy reports that religious leadership is invested
in five to 10 respected clerics who live in the tradition-
al Shia villages and who come from old-line Bahraini
Shia families. They enjoy a following by virtue of
their long years of study, living upright Islamic lives,
and taking "just" and usually apolitical stands on
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Propaganda found in Islamic
Enlightenment Society follow-
ing its closure.
issues of the day. A wider group of about 100 Shia
teachers (called mullahs) are responsible for preaching
in mosques and maatim (burial societies), according
to the Embassy. their sermons
as strongly anti-Western and apocalyptic in tone.
They speak with strong feeling on reputed prophecies
from the time of the Prophet that great and revolu-
tionary events are at hand. According to US officials
and academic specialists, Shia clerics are not state
supported, as Sunni religious leaders are, but receive
stipends from the Shia community. They are educated
locally, but many travel to Iraq and Iran to study at
Shia shrines.
One Bahraini cleric has been actively involved in
organizing both overt and clandestine activities in the
Shia community and may be building the kind of
mass appeal necessary to challenge the regime. Isa
Ahmad Qassim is a native Bahraini who probably
studied under Khomeini while both were in An Najaf,
Iraq, in the 1960s. He may also have received instruc-
tion from the founder of the Iraqi Islamic Call (Dawa)
Party, Muhammad Baqr al-Hakim. On his return
from Iraq in 1974, Qassim and other young clerics
took over a Shia club in Bahrain, transforming it from
a sports and social hall into a religious and cultural
center called the Islamic Enlightenment Society.
They also founded the Dawa Party in Bahrain. F_
The society became the only overt Shia institution of
national scope, and, according to the Embassy, it soon
became the focus of the Shia awakening in Bahrain. It
offered religious instruction for all age levels, and the
Embassy reports it sponsored training in Iran for
particularly promising young men. The center was
located in Ad Diraz, a Shia village about 15 kilome-
ters west of the capital, and worked in alliance with
Shia mullahs throughout the country. The Embassy
estimates that half of the country's religious teachers
were closely associated with it. The government closed
the Islamic Enlightenment Society and arrested its
leaders in early 1984 when it uncovered evidence that
the center was being used as a cover for clandestine
activities by the Dawa Party. Despite pressure from
Shia leaders, the government refuses to allow the
society to reopen, but Qassim is still active in Bahrain
as a prominent Shia preacher.
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The Middle Class. In our judgment, Bahrain's Shia
middle class could provide new leadership to the Shia
opposition in the coming years. We believe this rela-
tively new class of businessmen, managers, techno-
crats, and civil servants is already playing an impor-
tant role in community affairs. The Embassy judges
that Bahrain's Shia middle and lower middle classes
are the principal suppliers of manpower and ideas for
the Shia religious revival. According to the Embassy,
Bahrain's security forces are concerned that some
middle-class commercial figures are active in Shia
subversive groups.
Bahrain's Shias and the Threat From Iran. Although
Bahraini Shias have not actively supported terrorist
activities by Islamic extremists, we believe that sym-
pathy for religious extremism is growing. F_
Estimates of the number of Bahrainis who support
official claims that several hundred Bahrainis are
members of clandestine groups, while as many as
5,000 Shias support their activities.
A US Embassy officer has described the emotional
catharsis that culminates in the 10-day annual com-
memoration of the passion and death of Husayn ibn
Ali, the Prophet's grandson, at the hands of a Sunni
usurper. He relates that:
On the 10th day-Ashura-of the month of
Muharram, Bahrain's Shias course through city
and village streets to lament the murder of
Husayn, grandson of the Prophet, rightful suc-
cessor and paragon of all virtue. Thousands of
men march in ritual procession, beating their
bared chests in rhythmic unison and chanting
slogans of hatred against the villainous murder-
er Yazid and slogans of anguish that the saintly
Husayn had been abandoned by the people of
God. The thousands who chant and beat their
chests in remorse are followed through the
streets by many hundreds more who flagellate
their backs with knife blades on lengths of
chain, and they, in turn, are followed by hun-
dreds more who brandish swords vowing ven-
geance while they beat their foreheads with the
blade. The streets are lined with wailing women
dressed in black who join the curses against the
hated Yazid and his cohort.... This drama
catches the breath of Westerners in Bahrain
who have become accustomed to life in a quiet,
peaceful community. It demonstrates graphical-
ly and frighteningly the undercurrents of reli-
gious fanaticism that exist all too closely be-
neath Bahrain's calm. To quote an Embassy
officer who witnessed Ashura for us, `the over-
whelming smell of blood at the Shia march
forces recognition of the power of this religion in
Bahrain's life.'
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regime and the establishment in Bahrain of a Shia
Islamic republic with close ties to Tehran. Both are
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bassy, Bahraini officials were worried last year that
Shia dissidents would exploit the emotional proces-
sions that mark the holy day of Ashura and that
demonstrations would be triggered by the death of a
Shia dissident then on a hunger strike. Local observ-
ers told US officials that Ashura demonstrations have
been growing in intensity since 1979 and that political
protests had occurred last year for the first time in
some outlying Shia villages.
In our view, the most serious threat is posed by two
factions that have been active on the island since the
Iranian revolution-the Islamic Front for the Libera-
tion of Bahrain (IFLB), a Tehran-based group that
planned the 1981 coup attempt, and the Islamic Call
Party, an indigenous group led by native clerics. Both
have as their goal the overthrow of the Al Khalifa
supported by Iran.
Bahraini officials believe that the IFLB is the largest
and most dangerous of the Iranian-backed subversive
groups. According to the Embassy, the IFLB was
founded by Abd al-Hadi Muhammad Mudarasi, an
Iranian mullah with ties to the leadership in Tehran.
Mudarasi served briefly as Khomeini's personal repre-
sentative in Bahrain in 1979, and US officials say he
attracted a following of mostly Arab religiously moti-
vated young men. He was expelled from Bahrain for
inciting public demonstrations after the overthrow of
the Shah. Mudarasi subsequently organized, with
Iranian help, the December 1981 coup attempt.
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Bahraini security officials have arrested Shias affiliat-
ed with the IFLB and uncovered cells in most of
Bahrain's rural Shia communities as well as in Bapco,
Bahrain Telecommunications Company, Bahrain Ra-
dio and Television, and the Sitra power station.
Nevertheless, Mudarasi and other IFLB leaders con-
tinue to recruit young Bahraini Shias who travel to
Iranian religious centers and Syria, and to rebuild
to train and work together.
Tehran favors the IFLB
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We judge that the Islamic Call (Dawa) Party poses a
greater long-term danger to Bahrain than does the
IFLB. Unlike the IFLB, the Dawa is headed by a
native Bahraini cleric, Isa Ahmad Qassim, and until
1984 was headquartered in the Shia village of Ad
Diraz, under the cover of the Islamic Enlightenment
Society. The local version of the Dawa Party was
brought to Bahrain by Shia clerics studying in An
Najaf, and we believe it has adherents among the
country's traditional Shia leadership. Although it
apparently has not conducted any operations against
the regime, the Embassy reports it has an established
cell structure and has infiltrated arms into Bahrain.
other Gulf states.
over the Dawa-Dawa leaders apparently honor Kho-
meini's rival for theocratic preeminence, Ayatollah
Khoi, and have links to Iraq's Shia dissident commu-
nity. We also believe that there may be a personal
rivalry between Mudarasi and Qassim and that the
Iranian's ability to sponsor terrorism in Bahrain de-
pends on the political success of his backers in
Tehran-who include Ayatollah Mohammad Shirazi,
his uncle, and Ayatollah Montazeri, Khomeini's des-
ignated successor. If Mudarasi's sponsors are growing
in influence-as they appear to be-then the IFLB
leader could receive more support in his goal of
overthrowing the Sunni regimes in Bahrain and the
The Sunni Side of Fundamentalism. Sparked by the
growth of Shia extremism, Sunni fundamentalist
groups also seem to be growing in popularity in
Bahrain and the other Gulf states. One such faction is
the Sunni Islamic Call Party. It was founded in India
in the 1930s and has been spreading through the Gulf
states in the last decade.
it has adherents in Saudi Arabia, Kuwait,
Qatar, and Bahrain. Like the Shia fundamentalist
factions, its goals include the creation of Islamic
republics and the removal of corrupt leaders. It
opposes coeducation, the sale of liquor, and other
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We believe they maintain links to other Dawa groups
operating in the Gulf, including Kuwait, where the
the Amir of Kuwait last May.
Fissures in the Revolutionary Front. We judge that
factionalism is the greatest weakness of the radical
Shia groups. IFLB and Dawa leaders seem unable to
put aside their personal rivalries and loyalties. We
believe it unlikely they will join together in the near
term to overthrow the regime, although Bahraini
security officials report that Iran has urged the groups
If Sunni and Shia extremists were to band together,
they would probably be a formidable challenge to the
regime. We believe it more likely that the two groups
will spark sectarian violence between Sunnis and
Shias that the security forces could have difficulty
containing.
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Outlook
In our judgment, the Al Khalifa family's immediate
hold on power is not threatened. Members of
Bahrain's prominent trading families, the military,
and the religious establishment-traditional and im-
portant sources of support for the regime-are unhap-
py and frustrated by the economic recession and by Al
Khalifa behavior, but they do not appear to be
organizing attempts to change government policies.
Still, we believe that the family's inability to deal
effectively with the country's economic problems and
sectarian tensions, as well as the precarious health of
the regime's alleged strong man, Prime Minister
Khalifa, raise questions about the long-term prospects
for the ruling family's political survival.
If the recession deepens over the next two years-and
we believe it will-complaints against the regime will
grow. More Bahrainis from the favored upper and
middle classes will criticize government spending and
conspicuous consumption by the ruling family at a
time when most Bahrainis will be feeling the pinch of
recession. Charges of royal corruption by themselves
will not lead to the overthrow of the Al Khalifa, but
they would become one of the rallying cries for
dissidents.
Tensions over how money is spent are also likely to
deepen divisions within the family. We believe that a
decision to increase military expenditures-even if
Saudi Arabia and the Gulf Cooperation Council pay
for them-will focus popular resentment, especially if
it comes at the same time that social programs face
budget cutbacks. If so, the Amir could join the Prime
Minister in questioning the need for new weapon
systems and expansion of the Bahrain Defense Force.
Bahrain's economic well-being will depend to a great
extent on the continuation of Saudi aid as well as on
the health of companies like Bapco and Aluminum
Bahrain and the banking industry. We believe that
Riyadh is unlikely to reduce financial assistance to
Manama, but competition from Saudi refineries and
banks will hurt Bahrain's economy. A Saudi decision
to further restrict Bahraini financial activity in Saudi
Bahrain Without the Al Khalifa-
Is There a Sunni Alternative?
We see no effective leadership emerging from the
nonroyal Sunni elite that is interested in or capable of
challenging Al Khalifa rule or able to provide an
alternative to the Shia opposition. Most prominent
Sunni families prefer to maintain their uneasy alli-
ance with the Al Khalifa regime to protect family
wealth and influence rather than risk incurring royal
wrath and the scrutiny of the security services.
A few prominent Bahraini Sunnis speak out occasion-
ally in public forums and to US officials against
family greed, the regime's handling of the economy,
and the prospects for a National Assembly in Bah-
rain. In a speech to the Sunni fundamentalist al-Islah
Society last spring, Hassan Fakhro, a prominent
Sunni businessman who once headed the Bahrain
National Oil Company, criticized government eco-
nomic development policy. Fakhro told US officials
that Bahrain's economic outlook was gloomy and
chastized the regime for not opening up the political
process. Other businessmen and some government
officials, including the Minister of Finance and Na-
tional Economy, described by the Embassy as a
protege of the Prime Minister, have complained to
US officials over the last year about waste in govern-
ment spending, particularly on defense items, and the
need for some form of parliamentary body.
The Al Khalifa appear unaware or unconcerned
about the level of political grumbling among the
Sunni elite. The Embassy once characterized the Al
Khalifa's view of this important support group as
contemptuous. In our judgment, the Al Khalifa are
making no special effort to cultivate their support
and risk alienating the Sunni merchant establishment
by competing directly with them for limited business
investments.
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Arabia would have a disastrous impact on the fledg-
ling banking industry. More closures or cutbacks in
staffing by Bahrain's banks or basic industries would
cut off the few areas of equal employment opportunity
for all Bahrainis.
We believe that Bahrain's employment problems are
likely to persist for the rest of the decade and could
worsen significantly. Manama will claim publicly that
it can offer a job to any Bahraini who seeks one, but it
will continue to insist privately that Shias be excluded
from sensitive positions in government and the private
sector. Because Sunnis cannot be found in sufficient
numbers or with adequate skills, more foreign workers
will be hired, particularly for defense and security
jobs. At a time when unemployment is growing, this
practice will come under increasingly sharp public
criticism.
We believe that the threat to Bahrain's stability from
Shia extremists is growing, although the dissident
factions lack a leader and a catalyst for a successful
revolution. Isa Ahmad Qassim, the founder of both
the Islamic Enlightenment Society and the Islamic
Call Party in Bahrain, could become such a leader.
The government will probably be reluctant to impris-
on or exile him, perhaps fearing that to do so would
rally popular support around a new martyr.
The failure of the Shias to develop a common,
communitywide institution or leadership stems as
much from government vigilance as Shia fecklessness.
We believe, however, that stricter repression of the
Shias by Bahrain's security services could provide the
spark needed to organize the Shia masses into a single
group led by a local version of Khomeini. Security
officials could, we believe, contain a single act of
terrorism by the IFLB or Dawa but probably would
not detect the operation beforehand. They admit they
would be hard pressed to contain widespread rioting
or civil disorder if the Shias were to take to the
streets.
Implications for the United States
The United States has had close political and military
relations with the ruling family in Bahrain since 1949
when Manama first extended home porting privileges
to the US Navy. Although some privileges were
withdrawn in the mid-1970s, Bahrain continues to
allow ship visits and offer its facilities to the US Navy
and to CENTCOM. In the past few years the rela-
tionship has grown even closer with Manama's deci-
sion to purchase US military equipment and to use the
US Army's Corps of Engineers to supervise construc-
tion of a new airbase. These relationships are mostly
with the Crown Prince and the Bahrain Defense
Force, however, and US interests remain dependent
on the continued favor of the Amir and the Prime
Minister.
We believe that a shift in power within the Al Khalifa
family would not significantly alter Bahrain's rela-
tions with Washington. The Al Khalifa want the
protection that the US military presence gives it,
although senior family members worry that US re-
gional policies-particularly perceived support for
Israel-put them at serious risk both from Iran and
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from domestic opposition elements. Because of these
concerns, we believe it unlikely that they will agree to
expand the defense relationship or conclude new
agreements on pre-positioning US equipment. Mana-
ma, however, will continue to look to Washington for
assurances of support against an Iranian threat while
it relies on Riyadh to fund military programs.
We do not believe that Bahrain's likely normalization
of relations with Moscow will degrade relations with
the United States. Manama's assumption, however,
that the Soviets had a hand in the coup that resulted
in the ouster of South Yemeni President Ali Nasir
Muhammad al-Hasani in January 1986 will probably
delay normalization of relations until next year. Ma-
nama will remain suspicious of Soviet intentions in the
Persian Gulf and will not be eager to receive Soviet
diplomats. According to the US Embassy, however,
following recognition of the USSR by Oman and the
United Arab Emirates last fall, the Amir has hinted
that Bahrain does not want to be the last Gulf state to
do so.
In our view, US relations with Bahrain would suffer if
the Al Khalifa family were forced to share significant
power with nonroyal Bahrainis. A new government
with commoners in important posts or with an elected
National Assembly would probably be more national-
istic in outlook. It probably would seek a less conspi-
cious US presence in Bahrain by cutting back existing
security arrangements. If popular disaffection grew, a
new government probably would also put distance
between itself and Washington in a bid for popular
support.
The greatest danger to US interests in Bahrain comes
from the extremist Shias backed by Iran. Although
the radicals have focused their operations on Bahraini
targets so far, they could direct attacks against the
large US diplomatic and military presence in Bahrain
as part of their efforts to discredit the Al Khalifa. A
takeover of the government by Shia extremists would
certainly cause a rapid deterioration in relations with
the United States and would further endanger US
personnel and facilities in the country. Moreover, a
radical Shia takeover could precipitate conflict with
Saudi Arabia. Riyadh is committed to defending a
Sunni regime in Bahrain and would probably expect
Washington to support its efforts to prop up Al
Khalifa rule.
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Appendix A
The Bahraini-Saudi Causeway:
Highway to Heaven and Hell
The decision in 1980 to build a link between Bahrain
and the Saudi mainland reflects Saudi concern about
the security of the Al Khalifa government. Worried
that resurgent Islamic fervor among Bahrain's Shias
might incite rebellion, the Saudis suggested building a
causeway that would make possible the rapid deploy-
ment of Saudi ground forces to Bahrain. The
causeway's opening is being delayed by disputes over
communities in Bahrain and Saudi Arabia. Bahrain's
history of Shia tensions and the Iranian-inspired coup
attempt in Manama in 1981 heightened Riyadh's
fears about increased religious zealotry and potential
dissent among the 400,000 Saudi Shias in the king-
security, customs, and social issues,
Background
Construction of the $600 million, 25-kilometer pro-
ject, begun in late 1981, has been fully funded by
Saudi Arabia. US officials say work on the four-lane
highway, which will run from Bahrain's west coast to
Al Khubar on the Ash Sharqiyah (Eastern Province)
coastline of Saudi Arabia near Dhahran, should be
completed in April. The causeway consists of alternat-
ing sections of bridge and embankment-five bridges
and seven embankments-plus two artificial islands.
A public corporation to manage the causeway was
named in December. Headed by the Saudi Minister of
Finance and National Economy Muhammad Aba al-
Khayl and Bahrain's Minister of Development and
Industry Yusif al-Shirawi, the corporation will deter-
mine immigration and customs procedures and future
development plans. Limits on use of the causeway
have not been announced, but US Embassy sources
speculate that private cars may be banned, expatriate
use may be restricted, or prohibitive tolls assessed to
keep access limited.
Security Problems
We believe that security officials on both sides of the
causeway are most concerned about the possibility of
expanded contacts between members of the large Shia
There is some evidence of cooperation between Saudi
and Bahraini Shias in antigovernment subversion that
could be facilitated by the causeway.
reported meddling on the causeway itself, a Bahraini
who had lived in Saudi Arabia was arrested in late
April 1985 for attempting to plant explosives near the
pilings on the Saudi end of the project. We believe the
Saudis will try to ensure maximum control over
possible dissidents filtering into the Eastern Province,
where there is a heavy concentration of potential
military and economic targets. Saudi security person-
nel also will probably step up harassment of Eastern
Province Shias as a warning when the causeway
opens.
Economic Shifts
Although the economic impact of the causeway is
uncertain, hopes are high, particularly in Bahrain,
that it will be a development and financial boon. US
officials report that Bahrain's business community
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anticipates the causeway will stimulate industrial
growth by giving local industry access to a much
larger market. Bahraini landlords hope the causeway
will increase land values and the demand for office,
residential, and hotel space. Manama is also planning
a sizable expansion of its airport facilities and expects
an increase in port traffic as Bahrain becomes a more
important transshipment point. Labor officials expect
an improvement in Bahrain's labor market when
Bahrainis can commute to jobs in Saudi Arabia.F_
We see little reason for such optimism. Bahrain's
industries face competition from Saudi companies,
while a decision by the Saudis to restrict Bahraini
access to its financial markets could keep the banking
as well as the real estate market in Bahrain depressed.
Moreover, small shopkeepers as well as members of
Bahrain's wealthy merchant families are worried that
easy consumer access to cheaper Saudi markets will
cut into their profits. This will be especially true for
consumer durables and products like gasoline that are
subsidized in Saudi Arabia but not in Bahrain. F_
Social Strains
Much of the speculation on the impact of the cause-
way has centered on the contrast between puritanical
Saudi Arabia and the relatively liberal environment of
Bahrain. Bahrain has often been described in the
international press as Saudi Arabia's playground,
with its bars and nightclubs easily accessible to Saudi
jetsetters. Bahraini businessmen are eager to
capitalize on the tourist trade, but vacationing Saudis
frequently cause trouble on the small island. The
Embassy in Manama says many drink too much and
cannot restrain themselves around Western women.
US officials say Bahraini authorities are concerned
about an increase in drunk driving if Saudis drive onto
the island via the causeway. These Saudis now num-
ber in the hundreds on weekends, and many Bahrainis
fear that this will increase to thousands once the
causeway is open.
Bahrain is likely to come under increasing pressure
from Sunni and Shia fundamentalists in Bahrain as
well as in Saudi Arabia who object to the permissive
social climate. According to US officials, many
Bahrainis are concerned that Bahrain will become a
brothel for Saudi Arabia-already a common theme
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Appendix B
Bahrain's Left:
No Signs of Life
Bahrain's two leftist factions-the Popular Front for
the Liberation of Bahrain (PFLB) and the National
Front for the Liberation of Bahrain (NFLB)-have
been unable to take advantage of current economic
woes or growing Shia dissatisfaction to rebuild their
organizations. We agree with the judgment of
Bahrain's officials that neither poses an immediate
threat to the country's stability, although their activi-
ties could become disruptive over the long term.
The PFLB and the NLFB are pro-Soviet, Marxist
parties that have been active in Bahrain for more than
two decades. Their supporters include Sunnis and
Shias. Most of the leadership apparently has been
Sunni, while the rank-and-file members have been
predominantly Shia. Both groups receive assistance
and safehaven from Syria and some aid from the
USSR. In recent years they have concentrated their
efforts on disgruntled youth and labor but have had
little success in attracting recruits or building
networks inside Bahrain. They have not grown in
membership in more than a decade. The Embassy
estimates that the NLFB has less than 700 members
in Bahrain, while the PFLB probably numbers less
than 500.
We believe that the leftist groups' failure to attract a
new audience reflects a declining interest in their
ideology. Sunni and Shia youth are more interested in
religious revivalism than class struggle, while workers
appear to be shunning both leftist trade union activi-
ties and the government-sanctioned labor committees
that have been set up in the larger industrial plants.
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Appendix C
Bahrain's Liberation Movements:
A Framework for Insurgency
The following list of indicators, developed in a CIA
study of incipient insurgencies, is intended as a frame-
work to help judge if dissident factions have or are
developing the capability to oppose the regime. Ac-
cording to the study, successful insurgent groups are
functionally organized, their ideology is simple, and
their goals are easily obtained. We believe that,
measured by this framework, none of the major
Bahraini liberation groups threatens the regime, but
the two Islamic fundamentalist organizations are
developing the capability to challenge the Al Khalifa
government and become full-fledged insurgencies.
Characteristic O High probability
Islamic Front
Islamic Call
National Front
Popular Front
b
bili
O
for the
Party (Dawa)
for the
for the
Moderate pro
a
ty
Liberation of
Liberation of
Liberation of
O Low probability
Bahrain
Bahrain
Bahrain
Numbers of young and/or skilled people recruited for training or
O
O
O
0
indoctrination in Iran, Syria, Lebanon, or the USSR
Ideological proselytizing in rural areas, with overt political
O
O
O
0
preaching and demonstrations during Ashura
Contacts with known extremists in Iran, Syria, Saudi Arabia's
O
O
O
O
Eastern Province, or Lebanon
Discovery of "cells" in urban areas
O
O
O
O
Reports of people receiving terrorist/guerrilla training
O
O
O
O
Discovery of arms and materiel caches, collections of police
O
O
O
O
uniforms or military clothing, stockpiling of explosives
Evidence that a group has access to or has stolen weapons,
amateur band transceivers, radios, directional antennas, printing
O
0
O
0
presses
Evidence of robberies, kidnapings for ransoms, or other crimes
O
O
O
O
Evidence of money, arms materiel, or safehaven provided by
O
O
O
O
foreign governments or insurgent groups
Use of violence, including bombings, attacks against the ruling
family, government personnel or strategic facilities, or foreign-
O
O
O
0
owned property
Reports of infiltration into the government, labor unions, or social
O
O
O
O
clubs
Terrorist attacks in foreign countries directed against Bahrain's
O
O
O
O
diplomatic community
Production and circulation of radical propaganda
O
O
O
O
Establishment of front organizations
O
O
O
O
Evidence that the number of sympathizers-people who are not
O
O
O
O
formal members but who tacitly support the radicals-is growing
Declassified in Part - Sanitized Copy Approved for Release 2011/12/20: CIA-RDP88T00096R000200200003-6
 Declassified in Part - Sanitized Copy Approved for Release 2011/12/20: CIA-RDP88T00096R000200200003-6
Secret
Secret
Declassified in Part - Sanitized Copy Approved for Release 2011/12/20: CIA-RDP88T00096R000200200003-6