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| Bahrain
The island kingdom of Bahrain, connected by a causeway to eastern Saudi Arabia, sits atop sizable natural gas and oil reserves. Those natural resources, and the base Bahrain provides for the US Fifth Fleet, underpin the kingdom’s strategic alliance with Washington.
By royal decree in 2002, Bahrain held the first universal-suffrage elections in the Arab Gulf states, which were also the first elections in which Bahraini women could vote and run for office. Opposition forces had been demanding such contests since the regime dissolved the National Assembly and suspended the constitution in 1975, and the regime had frequently repressed this demand by force. The king retains the power to amend the constitution and arbitrarily dissolve the elected lower house of the parliament, and the royally appointed upper house can overturn the lower house’s legislation.
Unlike in other small Gulf states, native Bahrainis comprise more than 60 percent of the population, meaning that the country has an indigenous working class along with a complement of guest workers. Unemployment and poverty are concentrated among Shiites, who are at least two thirds of the native population. The ruling Khalifa family is Sunni.
Though hydrocarbons are the basis of the economy, predictions of dwindling reserves have led to economic diversification. During the Lebanese civil war, Bahrain attracted some of the finance and banking interests formerly based in Beirut. In 2004, the kingdom signed a free trade agreement with the US, partly to lure foreign investment.
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