Beginning in Tunisia in late 2010, civil unrest swept through the Arab world, leading to the fall of longstanding authoritarian governments in Tunisia, Egypt and Libya. In Bahrain, a sustained campaign of civil disobedience began on February 14, 2011. By March 14, the joint military force of the Gulf Cooperation Council (GCC) entered Bahrain to help the Al Khalifa Sunni ruling dynasty restore internal order. Since that operation, Bahrain appears to be on the verge of entering a vicious cycle of repression and protests as riots between civilians and the police are multiplying in Shi`a villages. The latest unrest is similar to the uprising of 1994-1999, when Bahrain was the theater of continuous violence that only ended with the arrival to power of the current king, Hamad bin Isa Al Khalifa. To end the unrest, the new king promised a set of political and economic reforms in 2001 called the National Action Charter. Yet the crushing of demonstrations in 2011 could mean the end, or at least postponement, of many of these reforms.
Although the constitutional monarchy promised in the National Action Charter of 2001 never came to be, the socioeconomic component of the reform program went rather far, especially its labor market regulations. Far from being politically neutral, the socioeconomic reform caused a change in the power coalitions in the kingdom, with the main opposition party, the Shi`a al-Wifaq, siding with the reformist faction of the ruling dynasty against the old guard and its supporters in the private sector.
This article explains the recent shift in the balance of power in Bahrain. To be prepared for how the political environment may change in Bahrain in the months ahead, understanding this changing power dynamic is essential.
The Cooptation of Al-Wifaq
The change in the power equation in Bahrain began when the country’s main opposition party, al-Wifaq, was coopted into the parliament. Having boycotted the 2002 parliamentary elections to protest the king’s decision to modify the constitution, which curtailed the powers of parliament, al-Wifaq decided to participate in elections four years later in 2006. Its main goal was to insert itself into the halls of power in the hope of influencing at least part of the decision-making process. It also participated in the 2010 elections despite gerrymandering, government pressure and full-fledged fraud that, in 2006, prevented it and its allies from gaining the absolute majority of seats. From that point forward, it was clear that it had consciously decided to participate within the regime’s rules.
This shift in al-Wifaq’s strategy was the result of its analysis that the geostrategic context was highly unfavorable to Bahrain’s transformation into a genuine democracy. There are two key reasons for this. First, Bahrain’s dependence on Saudi Arabia makes it highly unlikely that any genuine alteration of dynastic rule will occur. The course of events in 2011 confirmed this assessment, as the fate of the civil uprising was ultimately decided in Riyadh. Since the British withdrawal from the Gulf in 1971, Bahrain’s ruling Al Khalifa family view the Al Sauds as the last resort guarantors of their survival in power. Additionally, Saudi Arabia plays a critical role in the archipelago’s economic strength since the majority of the Bahraini state budget relies on revenues of the Abu Sa‘fa oil well, of which Bahrain and Saudi Arabia share sovereignty. The oil well is entirely operated, and hence controlled, by the Saudi oil company ARAMCO.
Second, the Bahraini regime is supported by the United States, rendering any full-fledged regime change difficult. Al-Wifaq understands the priority of the U.S. administration, which is Bahrain’s stability to both safeguard its Fifth Fleet headquarters as well as to avoid the possible spillover of Bahraini disturbances to the oil-rich GCC neighbors. As al-Wifaq views the situation, the United States would be ready to support concessions from the regime to the opposition, but Washington would disapprove of overt confrontation. This is the exact sequence of events that played out in 2011. Moreover, in the eyes of some U.S. analysts, the experience of extensive Iranian interference in Iraq after the Shi`a opposition gained power makes al-Wifaq’s identity as a Shi`a Islamic movement an impediment to complete trust.
To combat the perception that it is a sectarian party, al-Wifaq has tried to present itself as a national movement seeking unity among various segments of the population, while at the same time retaining its status as the primary representative of the Shi`a population in Bahrain, building on networks of mobilization previously established by the older Shi`a Islamic movements, most notably al-Da`wa. In parliament, one of al-Wifaq’s main agendas was the advancement of the socioeconomic reforms started in 2006 by Crown Prince Salman bin Hamad Al Khalifa, of which an important element was the so-called “labor market reform.”
The aim of the reform was to tackle unemployment which, on the eve of the 2011 uprising, many observers deemed was as high as 20% despite the government’s insistence that it averaged 4%. To encourage nationals to work in the private sector rather than the saturated public sector, it sought both to improve the professional training of Bahraini nationals and to render less attractive to employers the cheap and compliant expatriate laborers, who occupy the majority of the private sector’s jobs. To increase the cost of expatriate labor, a tax on expatriate employees was imposed on companies, which was transferred to a fund for domestic professional training. It also created unemployment insurance, financed through taxation on employees and employers.
The labor market reform quickly gained the support of al-Wifaq, which saw it as a way to legitimize its participation in parliament and win over a significant part of the audience of the non-coopted opposition groups, most notably al-Haqq (the Right), of which many among its rank-and-file are unemployed young men and women. Besides the political support it granted the reform, al-Wifaq mobilized its strong networks among the trade unions to fight the resistance of the private sector by establishing the trade unions as de facto monitoring organizations of the implementation of the new labor law. In some private companies, trade unions went as far as to enroll many of the expatriate workers.
Tension in the Dominant Coalition: The Private Sector, the Crown Prince and the Hardliners
This unprecedented level of cooperation between al-Wifaq and the government aroused the anger of the private sector. A pillar of the dominant coalition at least since the oil boom of the 1970s, it has developed in the shadow of the state, benefiting from state spending, the restrictive commercial law and the pro-employer labor law. Yet the socioeconomic reforms that are ongoing since the enthronement of King Hamad in 1999 are progressively cutting back its advantages. In 1999, a new commercial law allowing 100% foreign direct investment ended a key mechanism of protection against international competition. The labor market reform put a financial burden on companies, which many businessmen deemed unbearable. They are also adamantly against the still pending project of reforming health care financing which, if adopted, will oblige employers to pay health insurance to their expatriate workers.
In brief, the full implementation of socioeconomic reforms necessitates a complete change of culture for the national business community, which many businessmen are unwilling to accept. They saw the cooperation between the government and al-Wifaq in the framework of the labor market reform literally as treason, blaming the opposition for having fabricated the issue of unemployment from beginning to end and the government for having believed them. In the eyes of many businessmen, there is no unemployment in Bahrain in the sense that those who claim to be unemployed do not want, nor are they able, to work in the private sector.
Their resistance has intertwined with the dynamics of intra-dynastic factionalism that have been fostered after succession. Since his arrival to power, King Hamad has struggled to gain independence from his uncle Khalifa bin Salman Al Khalifa, who he had no choice but to maintain in the office of prime minister—a position he has held since independence in 1971. The strongman under his father’s reign, Khalifa is a businessman who has many interests in real estate in Bahrain and abroad. He is said to be the unavoidable intermediary and bribe-taker in any big project developing in the country and, as such, is the main intermediary between the dynasty and the business community. He is hated by the opposition, who consider him as a partisan of the iron fist, which he implemented during the uprising of the 1990s.
The private sector has found the prime minister to be their best ally in fighting the labor market reform. Thanks to him, they obtained a significant reduction in the level of the tax on expatriate workers. They overtly praised Khalifa for his wise and moderated approach in the affair, with many going as far as saying that he should be the main person in charge of running Bahrain’s affairs, hardly an allusion to the shift of power to Crown Prince Salman that was sanctioned in 2008 when his father granted him and his Economic Development Board the control of 16 ministries. This view, it should be noted, was held by both Sunni and Shi`a businessmen, being the reflection of the corporate ethos of the private sector beyond the different ethno-religious identities of its individual members.
In this context, the Saudi-led intervention in Bahrain on March 14, 2011 was not only to end the uprising, but it also threw support behind the prime minister’s faction, reversing the ascendant move of the crown prince whose attempt at keeping the door of dialogue open was probably deliberately halted by Riyadh. The uprising and the conditions of its repression also entailed a rapprochement between the prime minister and the two main hard line figures of the dynasty who have been on the rise since at least 2009: the army commander, Khalifa bin Ahmed Al Khalifa, and his brother, the Royal Court Minister Sheikh Khalid bin Ahmed Al Khalifa. The opposition considers the latter as having become the strongman of the regime in recent years. Before the uprising, they would only dare murmur his name. Considering him as particularly potent and harmful, they said he was the main supporter of the sectarian Sunni groups that have since gained visibility during the uprising as the vanguard of counterrevolution.
In recent months, there have been increasing signs that the hardliners altogether are doing everything in their power to counter many of the decisions made by the king to appease the opposition. This results in an incoherent policy from the government. On the one hand, it causes the opposition to trust the government less. On the other hand, both the opposition and the reformist faction of government know that they need each other to keep the balance of power weighted in their favor. The way that these power coalitions evolve in the coming months will be critical to deciphering the situation in Bahrain.
Dr. Laurence Louër is research fellow at Sciences Po. Paris, where she is posted to the Centre d’Etudes et de Recherches Internationales (CERI). She is editor-in-chief of the quarterly peer-reviewed journal Critique International. Dr. Louër was a permanent consultant at the Direction de la prospective of the French Ministry of Foreign Affairs. She is an Arabist and specializes in Middle East affairs. She is the author of To Be an Arab in Israel (London, Hurst/New York, Columbia University Press, 2007), Transnational Shia Politics: Political and Religious Networks in the Gulf (London, Hurst/New York, Columbia University Press, 2008), and Shiism and Politics in the Middle East (London, Hurst/New York, Columbia University Press, forthcoming 2012).
 This assessment has been expressed to this author at various occasions during fieldwork in Bahrain since 2002.
 For more details on the history of Shi`a political Islam in Bahrain, see Laurence Louër, “The Limits of Iranian Influence Among Gulf Shi`a,” CTC Sentinel 2:5 (2009).
 These details are based on the author’s interviews with Bahrain’s business community in October 2010.
 Steven Wright, Fixing the Kingdom: Political Evolution and Socio-Economic Challenges in Bahrain (Doha: Center for International and Regional Studies, 2008).
 Caryle Murphy, “Bahrain Becomes Flashpoint in Relations Between US and Saudi Arabia,” Global Post, April 13, 2011.
 Patrick Cockburn, “Power Struggle Deepens Divisions among Bahraini Royal Family,” Independent, September 27, 2011.