Sunday, January 29, 2012

How the Failure of Gulf Air Explains the Failure of Bahrain

Among the more interesting headlines this week is the likely impending collapse of Gulf Air, Bahrain's national carrier and not so long ago the region's dominant airline. Though it has not yet been decided what to do with the struggling company--the Gulf News reports that a "parliamentary ad-hoc committee" is set to discuss the available options, though it's difficult to believe that the final decision would be taken there--even in the best case scenario its operations are certain to be downsized considerably unless Rupert Murdock randomly turns up in Manama looking to invest a billion or so dollars.

More notable than Gulf Air's failure per se--companies come and go all the time, of course--is the way this collapse mirrors the larger disintegration of Bahrain socially, politically, and increasingly economically. And it's not simply that both are on the road toward failure; rather, the causes themselves are eerily similar. Indeed, it is not too far off to say that the failure of Gulf Air explains the failure of Bahrain.


I won't claim to have studied the internal financial records of Gulf Air, but it should not come as a surprise that this sprawling, state-owned corporation with a very large operating budget has faced accusations of widespread corruption. In fact, as recently as January 14, 2012, an anti-corruption panel proposed by the Bahrain Transparency Society specifically singled out the cases of Gulf Air and ALBA for investigation. This comes after a 2007 "crackdown" saw an executive and eight employees investigated on suspicion of misappropriating funds. To what extent continued corruption has contributed significantly to Gulf Air's $500 million-plus annual operating loss is impossible to know, but one can presume safely that it hasn't helped.

In similar fashion, did the continued appropriation (and gifting) of public lands by Bahrain's ruling family and friends cause protesters to leave their homes in February 2011? Did the uprising start because Khalifa bin Salman reportedly paid 1BD for the plot of land that would become the Bahrain Financial Harbor? Perhaps not. But it certainly added fuel to the fire, as demonstrated in the following:

More generally, the pilfering of Bahrain's lands and coffers is a problem most Bahrainis can agree upon, even if many Sunnis are afraid to join the charge against it for fear of association with the opposition. With al-Wifaq out of the picture, however, the present parliament can now take up the cause while avoiding this usual pitfall. Ironically, that is, Bahrain's current opposition-less parliament is more likely to take on an activist role than when al-Wifaq occupied 18 of 40 seats. Hence its present involvement in the Gulf Air issue. The Gulf News article referenced above tells that "[t]he lower chamber has been pushing hard to make the airline leaner and twice called for appointment of new leaders."

Government as a Confederation of Fiefdoms

The division of the state into independent bureaucratic fiefdoms is a phenomenon not limited, obviously, to Bahrain. The entire Arab Gulf bears witness to this holdover of tribal governance, wherein particular ministries (and sub-ministries, and offices) are the personal domains of individuals, awarded their posts as a coalition government distributes cabinet portfolios--that is, according to their relative influence. The upshot is a hierarchy of government descending in principle from the head of state--here, King Hamad--in a sort of ministerial family tree.

(Note: this chart was sent to me a while back and is not my work.)

This governmental structure begets two immediate consequences. The first is one discussed here often, namely the inherent danger of internecine competition. That is, what happens when the state's organizational tree does not descend from a single node but has multiple trunks? Well, then you have the case of Bahrain, where one finds at least three different trunks headed, respectively, by King Hamad, Khalifah bin Salman, and the Defense Minister and his brother. The extent and implications of these intra-Al Khalifa divisions are well known. They are aptly summarized by a recent observation of erstwhile BICI chief Cherif Bassiouni, who in an interview said that King Hamad must choose between "the unity of the [ruling] family" and "the unity of the country." (See video below.)

For now we simply note this first effect as it does not bear directly on the discussion of Gulf Air here. (Although this Financial Times story seems to suggest otherwise, namely that Gulf Air and its holding company Mumtalakat are close to the Crown Prince and ruffled conservative feathers in being among the first companies to reinstate sacked employees after the crackdown.)

The second upshot of this design of government is that ministers and other top officials enjoy a freedom of action in proportion to their relative standing within the ruling family, a situation not only conducive for competition, as noted already, but also for capricious behavior in line with personal interests rather than those of the state. To wit: the foreign minister's decision two weeks ago to bar government employees from traveling on Gulf Air indefinitely following the latter's refusal to eject a paying customer from Sh. Khalid's preferred first class seat on a return flight from Malaysia. Suffering already from a sharp drop in passenger numbers that has put it on the verge of collapse, Gulf Air must now deal with a powerful royal nursing an offended sense of dignity.

Cutting Off the Nose to Spite the Face

Which leads directly to the final way in which the failure of Bahrain's airline is a microcosm for the failure of Bahrain itself: measures taken ostensibly "to safeguard the nation from terrorists" in fact have only served to mire the country further into chaos. Here of course I refer to Bahrain's post-uprising decision to cancel Gulf Air flights--its most lucrative flights, in fact--to Iran, Iraq, and (until June) Lebanon, out of supposed concern that terrorists could somehow smuggle weapons and/or themselves into Bahrain; or that Bahrainis could travel to Iran to train with the Revolutionary Guard and MacGeyver and come back equipped to conduct asymmetrical warfare despite a total lack of non-Molotov-based weapons. As one Gulf Air "insider" told the Gulf News, "You cannot expect the company to soar if its wings are clipped by suspending highly profitable routes."

Here much could be said about the continued political and security strategy employed by the government, and about how in its near-hysterical fear of Shi'a empowerment the state has merely emboldened and disillusioned ordinary Shi'a many times over. Bahrain's priority now is protecting riot police against increasingly-violent demonstrators, rather than obviating the need for their use in the first place through meaningful political reforms. Though it continues to mull the appropriate actions in response to the BICI report's damning charges, and though the same practices condemned in the BICI's report continue to claim the lives of protesters and others, still the state's "reform" initiative continues to revolve around reorganization of the forces charged with confronting protesters. Condemned for punching protesters in the face, Bahrain's solution is to wear softer gloves, rather than to stop punching or to call off the fight.

More accurately, police will be given "a fire-resistant outfit, a helmet to protect the head, face and neck, and other tools to protect their chest, back, arms, shoulders, legs and feet. They will also be provided with shields and sticks that meet international standards. They will be given gas and sound bombs as well as guns that fire rubber bullets." This "modernization of equipment," says Sh. Rashid in an official statement, "continues to assist policemen in performing their duties." You know what might also assist policeman in performing their duties? Not having to face off with angry Shi'a villagers every night.

About the latter the BNA tells simply: "He [Sh. Rashid] also spoke about the recent rioting in residential areas, considering that as a threat to civil peace. He called upon the people to end the issue and move forward and be more united." So the Interior Ministry's solution to the political standoff inciting ordinary citizens to brave bodily harm in order to make their demands known is to say, "Hey, guys, get over your revolution and the detentions and deaths and torture of your friends and family members; get over the fact that you have no reasonable expectation to influence government policy, much less play a efficacious role in deciding it; just get over it and be more united."

Bahrain's solution to its political crisis: "Hey, opposition: get over it and be more united."

Of course, this is not even to mention the other unintended consequence of the state strategy of dealing with the ongoing conflict, namely the newfound political awakening of ordinary Sunni citizens, recently treated here at length. To this development we may now add another: Mahmud al-Yusif reports on a meeting yesterday at Bahrain's revered Al-'Aruba Club (not that Aruba) involving some 200 people and headed by one-time Minister of Education and Minister of Health 'Ali Fakhru. Its purpose was to "define a route to get back to the negotiation table using the Crown Prince’s agreed principles of discussion" from February. That so many and such a diverse set of groups have taken it upon themselves to try to find a way out of the crisis would seem to suggest a distinct lack of government initiative to do the same.

Update: We might add yet another similarity between the cases of Gulf Air and Bahrain: investor flight. An article in the Gulf Daily News reports that many Bahrainis, including many "big families," are "making contingency plans" for leaving the country--and they're taking their money with them.
One Bahraini, who did not want to be named, said he had plans to move to Dubai because he did not want to live in an environment filled with violence.

"I have even booked my tickets and have my passport with me, just in case I need to go quickly, because February 14 is coming up and we don't know what will happen," he told the GDN.

"I know people who bought houses in Saudi Arabia and Dubai and a lot of big families have transferred money."

He said citizens were being forced to leave their homes and jobs to move to other countries because the government had not taken strong actions. ...

Another Bahraini said her parents had contingency plans to move to Kuwait if the situation in the country deteriorates. ...

"My mother has all the documents ready in a folder which literally says 'Plan B' and includes selling some of our property to survive in another country.

So far, neither international investors nor foreign patrons (read: the United States) have followed suit in abandoning Bahrain. As for the latter in particular, the U.S.'s recent conspicuous lack of involvement is indeed difficult to interpret.

Update 2: Several columns in Al-Watan detail the Al-Fatih Awakening's most recent rally at the Clock Roundabout in al-Riffa', which evidently was dispersed for a lack of permit. Al-Zayani writes that this Sunni mobilization due to the state's "toleration of a type of extremism" will serve to "generation another" type of extremism, telling,
The day before yesterday, Al-Fatih National Unity Gathering organized a mass mobilization at the Clock Roundabout despite the cold weather to protest against not arming the security forces and leaving them vulnerable to all types of terrorism, killing and weapons.

The day before yesterday, the youths of the southern region also issued a statement warning that any targeting of the security forces in the southern region or in any other region and any targeting of university girls would not be tolerated and that they had already prepared a plan “as it was published” to ensure security for all areas and that they had all the necessary force and equipment to maintain it.
I.e., more Sunni militias coming to a Bahrain near you.

Update 3: And in case you missed it at FP: "Obama administration using loophole to quietly sell arms package to Bahrain." Imagine that.

Update 4: The secret government-opposition talks rumor mill is spinning up. Sawt al-Manama (via BahrainOnline) reports that 'Abd al-Jalil Khalil has invited King Hamad to "a dialogue with the opposition." At the same time, yesterday's Gulf News cites an Al-Ayam article (which quotes an anonymous source) claiming that "contacts have started between some 'political societies with strong influence on the local scene with the aim to prepare the ground for a national dialogue that will result in bringing Bahrainis together and reinforcing national unity.'" Is everyone ready for a National Dialogue #2?

Update 5: Iran's Green Movement is planning renewed mass protests for... February 14. Wait, so are Bahraini Shi'a supported by Iran or by the Iranian opposition? I'm so confused.

Also, the AP lobs the first salvo in the upcoming onslaught of Feb. 14 anniversary analyses.



  2. lots of bull shit in this article.

  3. Justin - I think a relevant and important point is the question of Bahrain's viability as an independent sovereign nation. I am thinking here about small land area, disproportionately large population, tribal and sectarian politics, limited resources, and no Singaporean style magic wand to make economic miracles (mainly due to a failure in vision and leadership / ability to execute).

    In fact, isnt the government and its groupies already answering the question of viability? Arent their calls for GCC unity and Confederation with KSA the product of this realization?

    If you look up the history, Gulf Air and other GCC ventures from the old days, are the product of not only Bahraini corruption, but equally GCC corruption. In any case, what goes on in Bahrain is no different than any where else in the Gulf. All the big boys have their hand in the cookie jar, the only difference is the other Sheikhdoms have more financial resources to cover their tracks and share some crumbs with the poor.

  4. @Salman: I would not disagree with anything you said.

    On this issue of viability, I indeed debated expanding on the final point (in Update 1) about "investor flight" to include the logical consequence of this economic decline: namely, the increasing dependence of Bahrain upon Saudi subsidies, and the obvious political implications.

    1. in effect, the length of the political crisis puts more pressure on the government and the economy, meaning we'll need more help from saudi. the more help we get from saudi, the more difficult it becomes for the government to make any real concessions (saudi influence will stop real reform from taking place)

    2. As a Bahraini , I dont know wether to cry or laugh when I know that my country's national integrity is only kept together because the ruling family fears losing its power (if we acutally became one with saudi arabia)

  5. the analysis in this blog is quite rational and logical. i think the anonymous post that came earlier from the disgruntled reader is a sign of frustration that he/she doesn't have anything to respond with, which is the case in most political debates when opposition and pro-government go head to head. keep up the good work.


  7. Murdoch, not Murdock.
    MacGyver, not MacGeyver.
    Just saying.

    Keep up the good work.

  8. Actually those mistakes were meant purposely as a commentary on modern society's intellectually-stifling preoccupation with "correct" spelling and grammar.

    Joking. Thanks.

  9. I found your blog website on google and check just a few of your early posts. Continue to keep up the excellent operate.
    World entertainment

  10. Do you seek funds to pay off credits and debts ? Do you find yourself in a bit of trouble with unpaid bills and don’t know which way to go or where to turn? What about finding a reputable Debt Consolidation firm that can assist you in reducing monthly installment so that you will have affordable repayment options as well as room to breathe when it comes to the end of the month and bills need to get paid? Wesley Loan Company is the answer. Email (HAMMERS.CREDIT@OUTLOOK.COM)

    We offer the following types of loans
    *Debt Consolidation Loans
    *Business Loans
    *Personal Loans
    *Home Loans
    *Car Finance
    *Commercial Loans
    *Investments Loans

    Note:We give you loan with a low interest rate of 4% and loan duration of 1 to 10 years to pay back the loan .Do not keep your financial problems to your self in order for you not to be debt master or financial stress up, that is why you must contact us quickly for a solution to your financial problems. It will be a great joy to us when you are financially stable. Email {HAMMERS.CREDIT@OUTLOOK.COM}

  11. Hello Am Mr. Jubrin Mohamed, Am Legitimate and reliable Loan lender. I offer all kinds of packages of Loans. I give out loans on a clear and understandable terms and conditions at 3% interest rate. From $2000 to $5000000 USD, Euro And Pounds Only. I give out Business Loans, Personal Loans, Student Loans,Car Loans And Loans To Pay Off Bills. If you are interested kindly Contact us: