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Bahrain diversifies into the 1990s.

Bahrain was the first Arab Gulf country to export oil and it will be the first to face a future substantially without oil. It will have to build on its experience as a financial, trading and tourist centre to guarantee prosperity into the next century. In this Special Report on Bahrain, Mushtak Parker surveys the island's prospects for successful diversification in the 1990s.

"OUR COUNTRY WITH its unique development characteristics must face the challenges imposed by the world economy. I am certain that with the help of its partners and business associates, Bahrain will secure steady economic progress and growth, to the benefit of its traditions and cultural values." Karim Ibrahim al Shakar, Bahrain's ambassador to Britain, is confident about the country's future. "We in Bahrain are fully aware of the responsibility for our own economic development, which we aspire to achieve without sacrificing the values that give us our special identity and cultural richness," he told businessmen and bankers in London.

Bahrain's identity in the region is special. It was the first Gulf state to discover oil and to have an oil-based economy in the 1930s. It was the first state in the region to use demographic studies in economic planning and to provide extensive statistical information available to private business. It was also the first Gulf regional base for scheduled airline services and has developed over the last three decades as the centre for regional finance, services, distribution systems and industry. It introduced the region's first duty-free port legislation and industrial areas. It leads the region in international trade marks, patents and intellectual property rights legislation, which is based on Western patents laws. It was the first country in the Middle East to install a satellite communications system. Its position as a centre for some of the world's most advanced equipment is unrivalled in the area.

Bahraini planners are keen to portray the country's future as a Gulf equivalent of Singapore, "a model for small, island nations". They are confident that it can once again expand as an offshore banking centre offering an increasingly sophisticated range of services. It aims to become the principal tourist destination of the region, serving local markets (particularly Saudi Arabia) and multi-destination international tours. It also hopes to attract international companies to establish their regional headquarters locally, as well as dominating the local conference and exhibition market.

Bahrain has shown a uniquely relaxed lifestyle which blends traditional tastes with that of the various expatriate communities from Europe and Asia. Even during the Gulf crisis, Bahrain managed to maintain its poise despite the effects on its economy. The government has responded admirably to the demands of economic liberalisation, which in the area of foreign investment has seen the country becoming the first in the Gulf to allow 100% foreign-owned firms and to remove the requirement of local sponsorship of such companies - changes which only a few years ago would have been unthinkable in the Gulf context.

With the tide of economic and political liberalisation sweeping the world, some of the Gulf states have also indicated that they are willing to edge towards greater democratisation, mainly through the setting up of consultative assemblies of councils. Bahrain's ruler, Sheikh Isa bin Salman al Khalifa, and his prime minister, Sheikh Khalifa bin Salman al Khalifa, have both expressed support for the "reintroduction of democracy in the political life of Bahrain," although some interested sections of society would like the pace of "democratisation" be speeded up to reflect the country's economic dynamism.

In December, Sheikh Isa announced details of the promised consultative council. Its 29 members are all appointed, drawn from business, professional, religious and academic backgrounds. Many are former members of the national or constituent assemblies of the 1970s. The council is chaired by Ibrahim Humaidan, who heads the Bahrain Telecommunications Corporation (Batelco) and is a former public prosecutor and lawyer.

After an inaugural session in January, the council is scheduled to meet in two annual sessions in October-December and March-May. The role of the council will be to comment on draft laws submitted to it by the ruler before final approval.

Bahrain's rich heritage, derived from the influences of successive civilisations, certainly should help the country towards both economic and socio-political maturity perhaps over the next decade. Its half a million or so population, two-thirds of which are Bahrainis, are certainly up to facing both challenges.
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Title Annotation:Special Report
Author:Parker, Mushtak
Publication:The Middle East
Date:May 1, 1993
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