Bahrain flag

Bahrain country brief

Overview

The State of Bahrain comprises an archipelago of islands with a total size of 760 sq. km (less than one third the size of the Australian Capital Territory), situated in the Persian Gulf, to the East of Saudi Arabia and to the West of Qatar.  Bahrain also shares a maritime border with the Islamic Republic of Iran.  Bahrain has a population around 1.2 million people. The majority of Bahrainis are Shi’a Muslims, while Bahrain’s traditional rulers are Sunni Muslims.

In 1783, the Sunni Al-Khalifa family captured Bahrain from the Persians.  During the 19th century, the Al-Khalifa family secured its hold on the islands of Bahrain by entering into a series of treaties with the United Kingdom to make Bahrain a British protectorate.  The archipelago attained its independence in 1971. 

Facing declining oil reserves, Bahrain has developed a strong aluminum production and manufacturing industry and has become an international banking centre. It has also styled itself as a tourism destination and plays host to several international sporting events, including a Formula One Grand Prix.

Political overview

System of Government

Bahrain’s Head of State is King Hamad bin Isa al-Khalifa, who acceded to the throne in 1999. The monarch appoints a Prime Minister, currently Khalifa bin Salman al-Khalifa.  Bahrain has a bicameral National Assembly (al-Jamiyh al-Watani), consisting of the Shura Council (Majlis Al-Shura) and the Council of Representatives (Majlis Al-Nuwab). The 40 Shura Council representatives are appointed by the monarch. The 40 Council of Representatives members are elected by an absolute majority vote in single-member constituencies to serve 4-year terms. A second, runoff round is held if no candidate receives an absolute majority in the first round.  Parliamentary elections were first held in 2002. The next Parliamentary elections are scheduled to occur in October 2014.

After boycotting the country's first round of democratic elections under the newly-promulgated Constitution in 2002, Shi’a political societies participated in 2006 and 2010 in legislative and municipal elections and Wefaq, the largest Shi’a political society, won the largest bloc of seats in the elected lower-house of the legislature on both occasions.

Recent developments

In early 2011, with the backing of Gulf Cooperation Council (GCC) capitals, King Hamad declared a state of emergency amid a wave of violent street protests between mainly Shi’a protestors, demanding reforms, and the police, security forces, and Sunni supporters of the government.  The GCC deployed a contingent of mostly Saudi and Emirati forces to guard critical infrastructure in an operation named “Peninsula Shield”.

The unrest, which saw many deaths and injuries and mass arrests, was eventually quelled by the authorities.  The Bahrain Independent Commission of Inquiry (BICI), formed in June 2011 on the order of the King, to investigate abuses during the unrest and state of emergency, released its final report in November 2011.  The King subsequently endorsed the report, undertaking to implement in full its recommendations. These include improving policing procedures, reinstating fired workers, rebuilding some mosques, and establishing a compensation fund for those affected by the unrest and crackdown.  

As part of efforts to prevent further unrest, the Government subsequently revived a National Dialogue on political reform, including key opposition groups. The dialogue made very slow progress and was suspended after opposition groups withdrew from the talks in January 2014. However, reconciliation talks continue under the patronage of Bahrain’s Crown Prince. The country has continued to experience intermittent street protests, unrest, violent attacks and arrests.

Foreign Policy

Bahrain’s primary foreign policy focus has traditionally been on its Gulf Cooperation Council neighbours, with the 2011 unrest further solidifying these bonds.  Bahrain also plays a key role in regional security architecture.  It hosts the U.S. Navy's Fifth Fleet and participates in U.S.-led military coalitions.  

Bahrain is a member of the United Nations, International Monetary Fund, World Bank, World Trade Organization, Organization of Islamic Cooperation and Organization of Petroleum Exporting Countries.

Bilateral relations

The Australia-Bahrain relationship is long-standing, predating the establishment of formal ties with other Gulf countries.  Australia maintained a Consulate-General in Bahrain from 1964 until 1986.  There is no Bahraini mission accredited to Australia; our Embassy in Riyadh is accredited to Bahrain.  Bahrain provides port access to Australian naval ships.

Economic Overview

Facing declining oil reserves, Bahrain has invested strongly in communications and transport infrastructure, and worked to attract multinational businesses. As a result, it has one of the most diversified economies in the Gulf.

As part of its diversification plans, Bahrain implemented a Free Trade Agreement (FTA) with the US in August 2006, the first FTA between the US and a Gulf state. Bahrain's economy, however, continues to depend heavily on oil.  Petroleum production and refining account for more than 60 percent of Bahrain's export receipts, over 60 per cent of Government revenues, and 11 per cent of GDP (exclusive of allied industries

Other major economic activities are production of aluminium - Bahrain's second biggest export after oil – finance, construction and tourism. Bahrain competes with Malaysia as a worldwide centre for Islamic banking and continues to seek new natural gas supplies as feedstock to support its expanding petrochemical and aluminium industries. In 2011, Bahrain experienced economic setbacks as a result of domestic unrest. Bahrain's reputation as a financial hub has come under increasing competition regionally, notably from Dubai and to a lesser extent Doha.

Trade and Investment

Australia and Bahrain have had a commercial relationship for many years.  In 2013, exports were $665 million and imports $75 million.  The figures exclude Australian exports transhipped to Bahrain through Dubai, and alumina exports.  Australia’s exports mainly comprised alumina, meat, live animals and dairy products. Australia’s major import from Bahrain is aluminium.

There are also opportunities for Australian business to assist Bahrain in developing arable land, improving productivity, and optimising available water resources.

Information on doing business and opportunities in Bahrain

High level visits

April 2014: Minister for Agriculture Barnaby Joyce visited Bahrain with industry delegation.

January 2012: Then Minister for Agriculture, Fisheries and Forestry, Senator Joe Ludwig, visited Bahrain with industry delegation.

December 2010: Then Foreign Minister the Hon. Kevin Rudd visited Bahrain for the Manama Dialogue.