Business Friendly Bahrain

Bahrain's entrance visa proudly sports (or did when I was there) the slogan "Business Friendly Bahrain," a reflection of its low corporate taxes, low import duties, and, compared to elsewhere in the Gulf, generally open and relaxed environment for employees of the sort of multinational corporations meant to be enticed to do business there. Now, obviously, this carefully branded image of a Gulf business oasis has taken a tremendous hit since February. But more interesting is the way the Bahraini government's strong desire to limit any further erosion of its "Business Friendly" label is being used by both sides--the authorities and the opposition--for their own purposes.

Notable among the various Bahrain new items of the past week was Moody's widely-publicized downgrade of Bahrain's sovereign bond rating from A3 to Baa1 with a negative outlook. In a statement, Moody’s Investors Service explained,

“The main driver underlying Moody’s decision to downgrade is the significant deterioration in Bahrain’s political environment since February."

That makes sense enough.

Even more symbolic of the image Bahrain attempts to promote abroad, however, is its annual Formula 1 race, which had been scheduled to take place March 13. The race holds a special place in the hearts of many Bahrainis and is seen as a sign of the country's post-oil economic development and, more generally, its international relevance. Yet at the same time it is also a political flash-point, as opponents understand that the visibility of the event affords a prime opportunity to raise political grievances in the company of international visitors and media.

Indeed, it is a running joke in Bahrain that no matter how many political opponents are arrested throughout the year, come February or March they will all be granted royal pardon in order to appease government critics in the run-up to the race. This exact thing happened at the beginning of the current crisis, and it happened also when I was in the country in 2009, when some 170 mainly Shi'a detainees (most of whom were arrested for burning tires and the like during the post-'Ashura' protests of early 2009) being pardoned in mid-April just days before the race. In interviews with over a dozen Sunni and Shi'i political leaders as part of my dissertation research, all acknowledged that political expediency underlies this annual rite.

Though pre-March pardoning time has come and gone, the Formula 1 race continues to loom large on the Bahraini political landscape. In particular, many see the announced June 1 end of the State of National Security as a signal to the outside that things in Bahrain have returned to business as usual--and stable enough for a rescheduling of the Formula 1 race for later in the season. Opposing voices, including that of Human Rights Watch, have argued that Bahrain should not be rewarded with the race until it cleans up its political act.

Enter the Bahraini opposition. If the government means June 1 to signal a return to normalcy in Bahrain, protesters have not failed to recognized that this is an opportune time to act as spoiler à la their protests in previous years coinciding with the Formula 1 event. (To be sure, the sight of tens of thousands of people gathered on the side of Sh. Salman Highway along the rather lengthy route to the track in Sakhir is a poignant one for foreign attendees and VIPs.)

Thus the opposition has scheduled a "Return to Martyrs' Square" demonstration (the purpose of which is self-explanatory, I think) on June 1, though rumor has it this may be delayed until the 3rd, a Friday, for extra post-prayer effect. And its media arm has been busy putting together some nice Internet fliers, some containing specific instructions for different areas of Bahrain. For example,


And:


And:


I guess you get the idea: they're going back. (For about 100 more, see here.)

For its part, predictably, the Bahraini government has already promised to crush any attempt to retake the ground around the former monument. The General Director of the Armed Forces Marshall Khalifa bin Ahmad said in as early as May 11 that the army will meet protesters with "200%" of its March response in such an event.

Yet demonstrators--and, more importantly, senior opposition leaders--remain undeterred. In an exceptionally powerful Friday sermon yesterday (Ar.), the usually reserved Sh. 'Isa Qasim has encouraged protesters not to give up hope and warned the government that ordinary people are being backed into a political corner, forced to choose between surrender and more violent behavior. (For more see the video below.)


The Bahrain Mirror (Ar.) offers a good analysis.

And 'Sh. 'Ali Salman gives a fiery Friday sermon of his own (Ar.), connecting the situation in Bahrain to the arrest of the war criminal Mladic, which he says is "an international message to those who violate human rights."

So, then, mark the date: June 1 (or 3). Will the government push back the end of martial law to avoid the "Return to Martyrs' Square" at the cost of the Formula 1 race and further blows to its status as "Business Friendly Bahrain?" Will there be a Second Battle for the Pearl Roundabout?

Update: Moody's has now also downgraded the long-term deposit ratings of three of Bahrain's banks: BMI, BBK, and the National Bank of Bahrain, all of which it has given negative outlooks.

And Gulf Air is laying off more employees, though this time for business rather than political reasons.