One year after the crackdown on mass anti-government protests in its capital’s Pearl Roundabout, Bahrain has again been witnessing – yet smaller scale – protests and violent clashes over the past month, despite reconciliatory efforts by the government. Indeed, a compensation fund has been established for victims of last year’s protests and Bahrain’s King Hamad pledged his commitment to implement the reforms that had been recommended by the Bahrain Independent Commission of Inquiry (BICI) last November. During the past month, criticism was however not only heard in the streets, but also coming from the Shia opposition, from the BICI report’s author (for failing to implement its recommendations) and from the UN High Commissioner for Human Rights (for the use of disproportionate force against protesters).
Impact on country risk
Anti-government protests in Bahrain are importantly related to sectarian divisions between the Shia majority and the Sunni elite. As long as these divisions are not adequately addressed, political instability is likely to continue, impacting the economy through a smaller presence and less investments by foreign companies in the island, lower tourism receipts and capital outflows. So far, however, these negative effects of the unrest on the Bahraini economy have been mitigated by high oil prices and support from neighbouring Saudi Arabia. The latter is reported to be pressing for a resolution to the current stalemate between government and opposition.
Analyst: The Risk Management Team, email@example.com