Tuesday, March 15, 2011

Bahrain's central location and geopolitical importance to the US and KSA

The tsunami in Japan has not only swept away many cities and town in Japan, it has also swept away the main-stream media's coverage of continuing civil unrest in some of the MENA countries.  What perfect cover for the Kingdoms of Bahrain and Saudi Arabia, and UAE, to take strong action against the protesters in Bahrain:

Troops from Saudi Arabia and police officers from the United Arab Emirates crossed into Bahrain on Monday under the aegis of the Gulf Cooperation Council to help quell unrest there, a move Bahraini opposition groups denounced in a statement as an “occupation.”
Sheik Abdullah said the U.A.E. had dispatched 500 police officers with the Saudi forces and that other Gulf states would also send troops. His remarks suggested an escalating intervention.

Opposition groups said Monday that the Saudi intervention was a declaration of war. Protests that began with calls for democratic reform and an end to Shiite discrimination are now calling for regime change.

“The entry of the Saudis does not mean these people are going to go back to their villages quietly,” says Toby Jones, a Gulf expert at Rutgers University. “It raises the stakes.”

Meanwhile, a pro-government parliamentary bloc on Monday called on the king to impose martial law after 100 people were reportedly wounded Sunday. Police attacked the mostly Shiite protesters who were blocking a highway leading to the financial district in the capital Manama. They used tear gas and rubber bullets against the demonstrators, but were unable to disperse them.

Clashes between protesters and Sunni government supporters also erupted on the campus of a university in Sakhir. Those events followed large protests on Friday, in which hundreds were wounded when protesters marching to government offices were attacked by police and government supporters who carried sticks and clubs.
Saudi Arabia has moved quickly to quell stirrings of protest within its own kingdom in recent weeks. It’s unclear whether Bahrain actually asked for assistance, or whether it was imposed by its larger neighbor, says Jones. “It could very well be that Riyadh made a phone call and said ‘we’re coming,’” he says.
Bahrain, a small island with a population of about 1 million people (about half being an ex-pat labor force; Background Note: Bahrain), has a number of features that make it an important geopolitical pawn:

1) Most of the Kingdom of Saudi Arabia's (KSA) oil fields are located in its Eastern Province, near Bahrain or in the Persian Gulf

Oil Field
Production Rate
5 mbd
Safaniya (offshore)
1.5 mbd
1.2 mbd
0.9 mbd
0.5 mbd
0.5 mbd
Abqaiq Field
0.4 mbd
Abu Safah (offshore)
0.3 mbd

There are several other smaller fields and some additional fields farther away (Map of Oil and Gas Fields in Saudi Arabia (2005)), but the eight fields in tha table account for about 10 mbd, which is about what KSA's crude oil production equaled in 2009, according to the BP statistical review.

2) Bahrain's government derives most of its income from the oil and gas industry and this is heavily supported by the KSA.

The first Gulf state to discover oil, Bahrain's reserves are expected to run out in 10-15 years. Accordingly, Bahrain has worked to diversify its economy over the past decade and has stabilized its oil production at about 40,000 barrels per day (b/d). Revenues from oil and natural gas currently account for approximately 10% of GDP yet currently provide about 75% of government income. The state-owned Bahrain Petroleum Company refinery built in 1935, the first in the Gulf, has a capacity of about 260,000 b/d. Saudi Arabia provides most of the crude for refinery operation via pipeline. Through an agreement with Saudi Arabia, Bahrain also receives half of the net output and revenues from Saudi Arabia's Abu Saafa offshore oilfield.
Government revenues continue to be largely dependent on the oil industry. Bahrain has received significant budgetary support and project grants from Saudi Arabia, Kuwait, and the United Arab Emirates.  Background Note: Bahrain

As I recently demonstrated in Survey of Oil Exports from North Africa, Bahrain's net petroleum exports are reaching zero right now, and therefore net exports as a source of government income has dried up. However, the income generated from the Abu Safah field, apparently given as a gift from the KSA, will continue to sustain the Bahrain government, at least until it also runs out.
3) Bahrain is majority Shiite, but the region has been ruled by Sunni kings for the past 200 years. The ruling family and the majority of government, military, and corporate leaders are Sunni Muslims (Background Note: Bahrain).

Shi'ite villages are marked by unpainted concrete walls, potholed streets and poor lighting. Few have access to the beaches and harbors that were once the mainstay of a pre-oil boom fishing and pearling industry — massive reclamation projects have stolen the sea front. Sunni villages are well maintained, have good drainage and many even claim a small harbor or beach. Shi'ites control 30% of the economy, even though they represent 65% of the population.
"You won't see many Sunnis here," Sharif told TIME. "They have been told by the government that the Shi'ites want to take over the country." Of course it isn't true — "We want to choose our leaders, not be the leaders," one protestor said — but the fear is deeply ingrained in a Sunni minority population that has ruled over this Shi'ite-majority nation for more than 200 years.

The Bahrain protests are led by resentful Shia Muslims, who live in the only country in the world where a Shia majority population is ruled by a Sunni minority. They make up 60 to 70 per cent of the population and are demanding more political freedom from the ruling al-Khalifa family.

The family has close relations with Saudi Arabia’s Sunni rulers (part of the majority in that country) and it is via Sunni-Shia relations that events in Bahrain could have repercussions in Saudi Arabia, which is connected to Bahrain by the 25km King Fahd Causeway.

4) KSA is majority Sunni, but the Eastern Province, next to Bahrain, is majority Shiite. For instance, the March 11 "day of rage" protests that did occur, occurred in Hofuf and Qatif in the Eastern Province:

Hundreds turned out in two Saudi Arabian cities Friday to protest on what had been billed as a "day of rage," according to activists, though a planned demonstration in the Middle Eastern nation's capital failed to materialize.
The streets of Qatif, a predominantly Shiite city in eastern Saudi Arabia where several protests have taken place in recent days, were quiet early Friday.
These demonstrations came a day after more than 100 people had gathered in Qatif, according to two witnesses and an activist.

At some point, the witnesses said, Saudi security forces shot to disperse the crowd. It was unknown if the forces fired rubber bullets or more lethal ammunition. Those injured were taken to Qatif Central Hospital for treatment, the activist and witnesses said.

A veteran Middle East hand concurs: "I don't see any revolution in Saudi Arabia. There, the problem lies in the Eastern Province, and this is linked to the troubles in Bahrain, for both are majority Shia." Even if not on the brink of collapse the Saudi regime has a choice: merely repress demonstrations or begin a process of gradual reform.

Much more troubling is the situation in Bahrain. The Middle East vet­eran e-mails: "Bahrain seems to me in very deep trouble. The hope is that somehow cooler heads in the royal family and among the Shia leadership can work out progress toward a constitutional monarchy. If that fails, disaster looms. Repression by force by the King will leave the place a powder keg with constant demonstrations and low-level violence, which inter alia will ruin the economy. If the Saudis intervene, it means a kind of colonial war against the Shia and means even more violence; the country will be lost. All that helps only Iran."

5) The US navy fifth fleet is headquartered at Barain, and the Muharaq Airfield and Sheik Isa Airbase are used by the US air force as a base of operation in the Persian Gulf, including its patrol of the Strait of Hormuz. Graphic: Bahrain’s strategic importance

6) Iran (majority Shiite) gets blamed for insighting the protests in Bahrain.  I have little doubt that the USA, KSA and Sunni King of Bahrain will play this up as justification for the recent actions to put down the protests.

Bahrain-Iran relations have been strained since the discovery in 1981 of an Iran-sponsored coup plot in Bahrain. Bahraini suspicions of the Iranian role in local unrest in the mid-1990s remain. Background Note: Bahrain

Saudi Arabia has the world’s largest oil reserves, which Iran would like to control as well.  A pro-Iran Bahrain would provide Tehran a platform from which to seed Saudi Shia insurrection much as it did in Iraq.  No telling what might happen if Saudi Shiites sitting atop the kingdom’s oil fields cooperate with Iranian agents.    
The Bahrain crisis is different from the unrest elsewhere, because Iran is likely at its center.  For now, America’s best course of action is to be silent, unlike our interference in the Egyptian crisis.  Let the affected nations—Bahrain and Saudi Arabia—resolve the situation without our meddling.
Bahrain would also provide Iran access to transit channels for oil tankers leaving Saudi Arabia’s loading facilities.  Iran’s Revolutionary Guard navy could use that access to create coastal minefields—a capability it possesses—to control shipments, or soldiers could sabotage ships, as in a terrorist group's attack on a Japanese oil tanker last summer.  Both ways, the effect is to slow exports, making crude oil prices skyrocket, which helps Iran’s economy and its hegemonic leverage.
Mr. Maginnis, retired Army lieutenant colonel Bahrain's No Egypt

The toppling of the government of Bahrain by a Shiite movement would potentially embolden Shia in Saudi Arabia, who live primarily in the oil-rich northeast near Bahrain. It also would weaken the U.S. military posture in the region. And it would demonstrate Iranian power.

If the Saudis intervened in Bahrain, the Iranians would have grounds to justify their own intervention, covert or overt. Iran might also use any violent Bahraini government suppression of demonstrators to justify more open intervention. In the meantime, the United States, which has about 1,500 military personnel plus embassy staff on the ground in Bahrain, would face the choice of reinforcing or pulling its troops out.
Unlike Libya, where the effects are primarily internal, the events in Bahrain clearly involve Saudi, Iranian and U.S. interests. Bahrain is also the point where the Iranians have their best chance, since it is both the most heavily Shiite nation and one where the Shiites have the most grievances.

But the Iranians have other targets, which might be defined as any area adjoining Saudi Arabia with a substantial Shiite population and with American bases. This would include Oman, which the United States uses as a support facility; Qatar, headquarters of U.S. Central Command and home to Al Udeid Air Base; and Kuwait, the key logistical hub for Iraqi operations and with major army support, storage and port facilities. All three have experienced or are experiencing demonstrations. Logically, these are Iran’s first targets.

I doubt that regime change will happen in Bahrain, at least not this time around.  The stable flow of oil out of KSA, and other OPEC member in the Persian Gulf, is just too important to the West (and the Kings) to allow anything like what happened in Eygpt, or, what may happen in Libya.  I think that the recent intervention taken by the KSA and UAE in Bahrain sets the roadmap that will be followed should civil unreast other countires (e.g., Kuwait, Qatar, Oman, Yeman) in the Middle East puts the existing regime in jeapordy.

As the KSA heads towards zero net exports in the 2020s, and consequently, their petroleum income declines, I expect to see these kind of uprisings to occur more and more frequently.  Eventually, regime change will occur in KSA, and, Bahrain and the Eastern province of KSA, will likly be a focal point of conflict.

---March 17, 2011 followup---

The events of the last 48 hours demonstrate the hard put-down of the protesters, with Bahrain security forces leveling the protester's encampment in the Pearl Roundabout in the capital, Manama, and, the leaders of the protesters being arrested:

"The US, which counts both Bahrain and Saudi Arabia among its allies, has called for restraint, but has refrained from saying whether it supports the move to deploy troops.

Hillary Clinton, the US secretary of state, who was speaking in Egypt, said Bahrainis must "take steps now" towards a political resolution of the crisis.

Iran, meanwhile, has warned against "foreign interferences".

"The peaceful demonstrations in Bahrain are among the domestic issues of this country, and creating an atmosphere of fear and using other countries' military forces to oppress these demands is not the solution," Hossein Amir Abdollahian, an official from the Iranian foreign ministry, was reported by Iran's semi-official Fars news agency as saying."

A day after hundreds of Bahraini troops forcefully cleared out a central square of reform-seeking protesters, the authorities arrested major opposition figures early Thursday, the next stage of a crackdown that has the opposition in a tailspin.
A number of other political opponents were also detained by security officials as it became clear that the Bahraini government, which sought last month to mollify protesters clamoring for democratic reform, had decisively shifted tactics to forceful repression.
The crackdown placed the United States in an awkward bind. The United States, which bases its Fifth Fleet here, has struggled to balance its strategic interest in placating Bahrain and its ally, Saudi Arabia, its fears that Iran is exploiting the anger of Bahrain’s majority Shiite protesters, and American democratic principles. American officials have held off backing the protesters while urging Bahrain’s leaders to exercise restraint. That advice was ignored.

I think that it is signifcant that the Saudi’s, UAE and other members of the Gulf Coalition Council (GCC) pretty well ignored the USA’s pleas for a “political resolution” and to “exercise restraint,” and instead put down the protesters hard in a show of force.  The signal to protesters in other GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) should be clear: if you protest we will also put you down hard.  This will not be like Egypt or Libya.  The USA during this whole affair appears to be irrelevant.

The other thing that I find significant is the solidarity of support for the Bahrain protesters from the other Shiite-majority countries in the MENA: Iran, Iraq, Lebanon:

The Shi'ite ruling bloc in Iraq has denounced the deployment of troops from Saudi Arabia and other Gulf states in Bahrain, where a Sunni royal family has called in aid from its neighbors to help quell an uprising by mainly Shi'ite protesters.

Confrontation between Shi'ites and Sunnis in the Gulf risks worsening Iraq's own sectarian divide after years of war.
Since U.S. forces toppled Sunni dictator Saddam Hussein in 2003 and allowed Iraq's Shi'ite majority to take power, Baghdad has had uneasy relations with its Sunni Arab neighbors who are wary of the rising clout of regional Shi'ite power Iran.

In a parliamentary session on Thursday, some Iraqi Sunni lawmakers joined Shi'ites in calling on the Bahraini government to meet the demands of protesters and urging Arab countries not to meddle in Bahrain's affairs.

"We call on all the countries not to interfere in Bahraini affairs ... we don't want to flood the region with foreign interventions where the only losers would be the people," lawmaker Salman al-Jumaili of the Sunni-backed, secularist Iraqiya bloc told parliament.

Iran has strongly criticized the intervention in Bahrain by Arab states. Street protests against the intervention have also been held in Lebanon, which along with Iraq and Bahrain is one of three Arab states where Shi'ites outnumber Sunnis.

The power vacuum created by USA military’s planned exit from Iraq in Dec 2011 (US troops and military posts in Iraq) and the heavy-handed tactics of Sunni Kingdom's military against Shiite citizen protesters in Bahrain, could be a unifying force for Shiite-majority countries, with of course, Iran leading the way.  This could put the GCC, led by the Saudis, in direct confrontation with a coalition of Iran, Iraq, and Lebanon, with Bahrain (and the Eastern Province of KSA) as the focal point. 

---March 18, 2011 followup---
The recent turmoil and regime change in the MENA could be signaling a broader change in relationship between the US and certain key countries in the MENA. 

McAlvany’s weekly commentary (The End of Oil and Dollar Stability; ~18 min mark) presented an interesting perspective on the MENA countries, especial KSA.  In particular, is the suggestion that the US approval of regime change in Egypt and Tunisia could signal the end of a longstanding strategy for the US to support these regimes, in exchange for “strategic interests,” such as the oil.  In essence, the grand strategy in the past has been that US acts as a protector of these regimes in exchange for petrodollar status.    See also Thicker than Oil: America’s Uneasy Partnership with Saudi Arabia.

KSA’s King Abdullah, and other king/leaders in the GCC are likely feeling betrayed, and, are wondering if the US would also be happy to see them to be deposed, similar to Egypt’s Hosni Mubarak.  

The GCC’s unilateral action in Bahrain, and now, the hesitance of some GCC members to send troops into Libya are signs of this change:

Jordan and Qatar have signaled willingness to help in the effort to stop Qaddafi from wiping out the final pocket of the rebellion against his 42-year rule. But, Saudi Arabia and the United Arab Emirates, the most significant players in the Arab League, are resisting American and European pleas to put a Muslim face on the action.

In statements to the Wall Street Journal and others, Saudi diplomats have suggested that given the lack of trust between the Sunni royal houses of the Persian Gulf and the Obama administration, the Arab powers are resisting Western requests for help.

The Saudis on Thursday moved swiftly to suppress protests in their own nation and continue to aid their Sunni cousins in Bahrain with an effort to crack down on an Iranian-backed Shiite uprising there.

American opposition to the Saudis’ use of force to quell the conflict in Bahrain and silence the small but growing protest movement in their own country has deepened the rift between Washington and Riyadh that first opened when Obama ignored Saudi pleas and cut loose longtime U.S. ally, Egyptian President Hosni Mubarak.

The concern among the Saudis centers around setting standards for the use of force to intervene against regimes in the region. The Saudi royals are clearly bracing for things to get worse with unrest there and don’t want to set a precedent that could leave them fighting Shiite rebels under the threat of Western military intervention.

King Abdullah's planned speech today is expected by some to announce reforms such as replacing some government ministers, steps to reign in government corruption and more food subsidies.  However, we should also be looking for signs in the speech that portend a change in relationship with the USA.

King Abdullah's short speech today reflected the Saudi version of kick-the-can-down-the-road: more money for everyone!  More for the civil servants, military and the religious police.  The handouts including those announced earlier in the month now total about $100 billion, or about $40000 per capita for KSA’s 26 million population.  There was one interesting item that caught my eye, however: the creation of 60,000 more military and security jobs (employment for the young men).  This suggests to me that KSA is expecting trouble (internal and external) and that they will have to deal with it themselves.  

Meanwhile there are more protests in Iraq Iraqi Shiites Protest Bahrain Crackdown at the behest of Moktada al-Sadr:

The protests were a show of Shiite solidarity against the Sunni ruling class of Bahrain with echoes of Iraq’s own sectarian history – the American invasion here upended decades of oppression by a Sunni government over an impoverished Shiite majority – but the demonstrations were also weighted with deeper meaning for Iraq’s own current politics.

In his ability to move his supporters from the mosque to the street, Mr. Sadr is perhaps the most pivotal Iraqi public figure aside from the prime minister, and the Friday protests were another signal to the political class here of Mr. Sadr’s power.

 ---March 19, 2011 followup---

Well, I’m going to leave this topic for now, but for readers interested in more background, I refer you to this recent article: The ancient loathing between Sunnis and Shi'ites is threatening to tear apart the Muslim world:
The consequences of this split have been devastating. For although only 10 to 15 per cent of the Muslim world are Shi’ites, they are concentrated in strategically vital areas.
A  round 85 per cent of the Iranian population is Shi’ite. Similarly, 70 per cent of Bahrain is Shi’ite, though the Sunnis rule the nation. In Yemen, around half the population are Shi’ite. In Saudi Arabia, where Sunnis make up 85 per cent of the population, the Shi’ites are the majority in the eastern province where most of the oilfields are.
This is a recipe for worsening conflict. We could now be witnessing a repeat of the storm that swept through the world after the Iranian revolution of 1979, when the Shi’ites overthrew the Shah of Persia, and Ayatollah Khomeini urged the overthrow of Sunni dictatorships and monarchies throughout the region.
There is a chilling echo of that today as the Iranian regime vociferously backs the Shi’ite rebels in Bahrain and encourages upheaval in the eastern province of Saudi Arabia.
In response, the Sunni rulers of Saudi Arabia are determined to crush all sparks of Shi’ite rebellion in Bahrain, which is why they have sent in troops. We may be in the first stages of a major conflagration between the Saudi Wahabbi bigots and the Iranian Shi’ite zealots.
Although the rhetoric in this article is a bit over the top, it does do a nice job of comparing the Shiite and Sunni populations in some of the MENA countries:

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