Bahrain’s Robin Hood

This post has been updated to include an emailed statement from the Bahrain Economic Development Board. 

He is a hero to protestors; a villain to the government.

Earlier this month, Nabeel Rajab, Bahrain’s most talked-about human rights activist, was jailed for 3 years: one year for each of three cases related to participating in peaceful protests on the island kingdom.

His response: “Jail me 3 years or 30, I will never give up,” tweeted Adam Nabeel, quoting his father after the trial.

[caption id="attachment_464" align="aligncenter" width="300"] Nabeel Rajab, Bahraini human rights activist, by Conor McCabe for Flickr, July 2011[/caption]

The bold words only served to cement his image as both a warrior against an oppressive regime in the eyes of a majority Shi’aa population and a criminal and reprobate who was asking for trouble, in the eyes of a minority Sunni-led government.

But, as with most fairytales and their fair share of villains and heros, the story is not always as clear cut as “good” and “evil”.

In the version of Little Red Riding Hood that we’re all familiar with, the tale ends with Riding Hood being saved from the clutches of the wicked wolf by the woodsman.

In fact, the original French version (by Charles Perrault) was not quite as nice.  In this version, “foolishly riding hood takes the advice of the wolf and ends up being eaten. And here the story ends. There is no woodsman – no grandmother – just a fat wolf and a dead Red Riding Hood,” Jamie Frater writes in the blog Listverse.

The future of Bahrain is similarly grim.

Mr Rajab will remain in prison for the time being; protestors are still shouting in the dark. Influential governments will continue to endorse the ruling regime and big cheques will encourage these same institutions to look the other way, tarnishing the image of Washington and London because of their support for some pro-democracy uprising but not others that are not in their interests.

It’s also understood that more than a year after the worst protests in Bahrain when many banks and the stock exchange temporarily shut down, bankers, corporate staff and businessmen are still leaving the island.  Business is weak and the outlook is dismal. 

“Nothing has changed much,” said one Bahraini who recently left the country.

“Those [banks and financial institutions] who wanted to leave have already left, and it’s very unlikely that financial institutions looking to set up shop in the region will choose Bahrain,” the Bahraini said.

Several foreign banks have moved from Bahrain after a political crisis between the majority Shi’aa and minority Sunni-controlled government.   The latest figures from Bahrain also show the economy shrunk in the second quarter with many important sectors impacted by political unrest that has weighed on the tiny Gulf island and oil producer:

  • Output in the hydrocarbon sector, which accounts for almost a third of Bahrain’s roughly $28 billion economy, fell 7.7% quarter-on-quarter during April-June after a 13.9% slide in the previous quarter, the data showed, according to Reuters.
  • Financial corporations’ output decreased 1.2%, worse than a 0.4% fall in the first quarter.
  • The construction sector shrank 0.7% quarter-on-quarter after a 10.2% jump in January-March.

Adding fuel to the fire, Bahrain’s jewel in the crown, the Grand Prix went ahead as normal this year but garnered only $295 million, according to the website of the government-run Economic Development Board (EDB), against the usual $500 million earned.   The race was cancelled a year earlier.

The EDB has however shrugged off the bad press and instead said Bahrain’s GDP growth will reach 4% this year.  In an emailed statement, an EDB spokesperson said:

Bahrain’s economy continues to grow in spite of very challenging global economic conditions, and Bahrain remains on track for another year of economic growth in 2012.  The EDB expects GDP growth to reach approximately four per cent in 2012

Whilst certain sectors have inevitably been impacted by regional and global circumstances, other sectors and specific sub-sectors such as manufacturing, ICT, asset management and insurance, continue to achieve sustainable expansion.

The spokesperson said a number of private sector investments in Bahrain shows the outlook remains positive.  Among the most recent investments are Dubai International Capital’s Ishraq Holding, which set up a Holiday Inn Express in Bahrain with $40 million of financing.

[caption id="attachment_481" align="alignright" width="300"] Talal Al Zain heads PineBridge Investments, by World Economic Forum for Flickr, 2012[/caption]

PineBridge Investments, an asset management company headed by former Mumtalakat CEO and Gulf Air chairman, also recently opened their MENA headquarters in Bahrain.

Readers may want to note that PineBridge Investments’ non-executive chairman is Mervyn Davies, former UK Minister of State for Trade, Investment and Small Business.

But there is no denying today the situation is desperate:

The majority Shia population continues to lead pro-democracy protests against the minority Sunni-led government. Clashes have become increasingly violent in recent months, but unrest has largely been confined to the Shia villages on the outskirts of the capital, saving central Manama’s business district from the instability that left lasting damage after the height of the protests in February and March 2011,” writes Simeon Kerr, who has reported extensively on Bahrain for the Financial Times.

There may not be barricades up in Manama’s financial district but problems persist.  Bahrain’s carefully developed image as a transparent and business-friendly centre has been badly damaged.

No happy ending is on the horizon.

One Comment

  • Kenny
    Posted September 4, 2012 at 11:23 am | Permalink

    It seems that the current situation in Bahrain is unsustainable; they will not be able to maintain the current level of well fair given the quick escape of investments in the financial sector and no petro dollars to fill the gap. However the heavy financial and political Saudi backing can keep them afloat in the medium term. I have been hearing news from friends working in the financial sector in Bahrain that business is not the same and a lot of the financial institutions are already considering moving their Middle East headquarters to the UAE.

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