This record is a partial extract of the original cable. The full text of the original cable is not available.

S E C R E T SECTION 01 OF 05 MANAMA 000864 
 
SIPDIS 
 
DEPT FOR NEA DAS DIBBLE, NEA/ARP, NEA/PI 
CAIRO FOR STEVE BONDY 
 
E.O. 12958: DECL: 06/06/2029 
TAGS: PREL PGOV PINR KPAO KMPI BA
SUBJECT: PART II: PARTING THOUGHTS ON BAHRAIN'S POLITICAL 
AND ECONOMIC SITUATION 
 
REF: MANAMA 863 
 
Classified By: Ambassador Ronald E. Neumann.  Reasons 1.4 (B)(D). 
 
This is part II of my parting reflections on Bahrain. 
Reftel, Part I is the summary. 
 
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Political 
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¶1.  (S) Bahraini politics remain a complicated balancing act 
in a small polity.  By no means is it a full democracy, but 
it is going in the right direction with parliament making 
real trouble and forcing real changes.  If not always wise in 
their actions, the deputies can scarcely be discounted as 
non-entities. They are slowly developing new habits of 
dialogue across sectarian lines. 
 
¶2.  (S) The second chamber, the consultative council, has 
proved that it is more than a rubber stamp for the government 
as was predicted.  It has established its own progressive 
agenda.  A core of 10-15 members with professional and 
governmental experience has provided balance to the 
inexperienced and sometimes emotional deputies.  The 
consultative chamber has also developed common ties with the 
deputies, which were not predicted. 
 
¶3.  (S) I believe increasingly that the two-house structure 
was wise.  It prevents a zero-sum game developing between the 
parliament and the government.  This will be all the more 
necessary should the Shia opposition enter the next election 
where they would win a significant number of seats. 
 
¶4.  (S) However, it is not certain that the four-party, 
largely Shia rejectionist opposition will choose to enter 
those elections.  At this point, I think they will boycott. 
Despite extensive criticism -- above all from the Shia elite 
-- for having missed a significant opportunity through the 
last boycott, the rejectionists remain obdurate.  While they 
frame their stance on legal and constitutional arguments, I 
think they are really rejecting democratic participation in a 
bid for immediate political power.  There is no doubt that 
they have chosen to fight on the ground on which they are 
least likely to win; the monarchy has everything to lose from 
the ultimate concession that the opposition seeks. 
 
¶5.  (S) In rejecting participation, Al-Wifaq and its allies 
have forfeited potential political gains they might have 
achieved from leading parliament.  The rejectionists are left 
with a thus far sterile strategy of mobilizing their youthful 
and unemployed political base to force confrontation in hopes 
that it will rally the broader community support it enjoyed 
during the 90s' uprising.  Confrontation has fostered a 
bargaining game that could develop momentum towards the 
informal dialogue democracies need to reach compromise.  As 
of now, the game is sterile because obtaining justice is more 
important to the rejectionists than achieving practical 
political goals.  The absence of an off-line discussion 
continues to bedevil the development of participatory 
politics. 
 
¶6.  Meanwhile, Shia have broken with Al-Wifaq and voted. 
Shia deputies in parliament will fight for their seats. 
Others are likely to break with Al-Wifaq if it again 
boycotts.  These strains could cause intra-Shia violence in 
¶2006. 
 
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The King 
-------- 
 
¶7.  (S) The king has been too adroit to give the 
rejectionists the crackdown that they want.  Political reform 
and modest economic growth have created incentives to avoid 
confrontation.  When confrontations occur, the king has 
authorized only enough force to maintain essential order. 
Violators are frequently pardoned.  When I asked him, the 
king admitted that he intends to avoid confrontation through 
the next election. 
 
¶8. (S) The price for this is increased lawlessness among 
young people. Petty crime and attacks on the south Asian 
community have risen.  Although not alarming, this is making 
the business community uneasy.  The appointment as interior 
minister of the king's close confidante and former BDF chief 
of staff could herald a new effort at law and order.  If so, 
it will come along with recruitment of new Shia police 
recruits.  I would hazard a guess that these new recruits 
will lead any aggressive law and order campaign in the Shia 
villages.  The crown prince told me that when the GOB decides 
to enforce the law, it wants the community behind the police. 
 
¶9. (S) Overall, King Hamad remains a skillful, intuitive 
political leader with  enormous confidence in his own 
judgment.  His close friends tell me that he has a strong 
belief in his own tie to the Bahraini people.  The king is 
sometimes impetuous, but he is prepared to change course 
rapidly if he finds himself in a box.  He has gained enough 
goodwill from his early reforms that he can ride out a good 
deal of criticism, although it is true that the pace of the 
early reforms led many to expect much more rapid change in 
succeeding years. I think we will not see that pace again. 
The king believes that a significant period is going to be 
needed for the evolution of political habits in Bahrain. 
 
¶10. (S) He has a long-term vision of equalizing power between 
Sunni and Shia communities while ruling as the arbitrator 
between them; ultimate power will remain his.  Yet, I believe 
Hamad is prepared to devolve more power to the parliament. 
He has told me that he would approve a political party law 
and has even encouraged some deputies to draft one.  He has 
not lifted a finger to protect ministers who were under 
attack, perhaps even seeing this as a way of undercutting his 
uncle the Prime Minister.  He has allowed the parliament to 
gradually force changes in pensions, social security, and 
probably in press and labor laws, although these are still 
being debated. 
 
¶11. (S) The king will not cause a major rupture in the family 
by removing his uncle the Prime Minister.  I believe that 
Hamad views such a family rift as both politically unwise and 
perhaps unmannerly.  But he is speedily undercutting his 
uncle in significant ways.  The tendering board has limited 
corruption.  The former housing ministry has passed to a 
clean minister.  The latest move in interior removes one of 
the last old guard of the PM and moves the position into 
Hamad's orbit.  The movement is much too slow for many, but 
after watching it for nearly three years, it is clear that 
the power will continue to pass steadily, if somewhat 
jerkily, to the king and his son Crown Prince Salman.  With 
power will come more political liberalization and economic 
reform. 
 
¶12.  (S) Hamad's weakness is that he has no detail men around 
him.  In fact he is not interested in detail.  His preference 
is to, as he says, "find the right man and let him work the 
details."  The drawback is that the right man must often wait 
a long time until the wrong man is removed.  I suspect few 
tell the king bad news but he knows this; I never found him 
closing his ears so long as I told him hard truths politely 
and in private. 
 
---------------- 
The Crown Prince 
---------------- 
 
¶13. (S)  Crown Prince Salman remains his father's right-hand 
man in economic reform.  He lost some prestige last year when 
his well-known preference for a deeper cabinet reshuffle was 
beaten back by his uncle, Prime Minister Khalifa.  Salman has 
retrenched by focusing on economic areas where he can win. 
He seems to be injecting himself more into security and 
intelligence matters.  If this develops it will strengthen 
his base.  He remains extremely popular among both Shia and 
Sunni Bahrainis.  For some time the crown prince will be 
careful and will remain limited in the changes he can produce 
on his own.  He has said he will not be prime minister and 
wants this role eventually to pass out of the royal family. 
However, that may take some years. 
 
------------------------------------- 
Prime Minister Shaikh Khalifa bin Isa 
------------------------------------- 
 
¶14.  (S)  Despite real political losses, Shaikh Khalifa 
remains powerful because he and his team have the experience 
and knowledge to manage the day-to-day details running the 
government.  I believe that Shaikh Khalifa is not wholly a 
negative influence.  While certainly corrupt he has built 
much of modern Bahrain.  He is dedicated to Bahrain. But he 
is a traditional Arab.  His preference for old ways and old 
ministers will remain a drag on the pace of reform. 
 
----------------------------------- 
A Society Growing More Conservative 
----------------------------------- 
¶15.  (S)  During my time on the island, Sunni and Shia alike 
have grown more socially conservative.  At the first 
university graduation I attended perhaps 60 percent of the 
women had head coverings; the last was in excess of 95 
percent.  The reasons for this are many, from backlash 
against the dislocation of globalization to resentment of 
drunken Saudis in the streets on the weekend.  The 
constituency of the Islamists is growing, increasing the 
political strength of the more radical fringe elements.  Some 
areas, like opposition to alcohol or risque public singers, 
reverberate across the Sunni/Shia divide.  In other ways a 
growing, but still small, radical Sunni presence intensified 
the differences.  Thus far, the government has approached the 
Islamist current timidly.  That strategy won't work forever. 
My guess is that the king will follow the same path he has 
with the Shia; letting the excesses build up social 
irritation on which he can finally move with public support. 
 
¶16.  (S)  Beyond a particular security dimension that 
concerns us, the Islamists are primarily a challenge to the 
future character of Bahrain.  The businessmen, intellectuals, 
social liberals and others who want a freer society in the 
future are beginning to think about how to resist 
conservative pressures.  They have not yet coalesced. But 
they are talking about action where last year they ran from 
politics.  In this, Bahrain is a small representative of a 
social struggle throughout the Arab world. 
 
---------------------------------------- 
Regional Situation and the U.S. Alliance 
---------------------------------------- 
 
¶17.  (S)  Bahrain is vulnerable to tensions from the outside. 
 The Khobar shooting was 35 miles from Manama.  The king, 
prime minister and crown prince are unified in their 
determination to preserve the U.S. alliance as the 
cornerstone of Bahrain's external security.  They know this 
increases their vulnerability to criticism from pan Arab 
sentiments and ever-growing resentment of our Palestinian 
policies.  They, and particularly King Hamad, have elected to 
take a more public stance in support of key U.S. policies 
than is the norm for Arab leaders, betting that this will 
strengthen our ties.  They deeply believe we should do more 
to rebalance our Palestinian policies, but they recognize 
Bahrain lacks the leverage to induce us to change. 
 
¶18.  (S) Whether by government management or popular 
understanding, we have been fortunate that Bahrain's security 
relationship with us has not been a major focus of public 
concern.  Demonstrations about U.S. policy have focused on 
the Embassy and not on the naval base.  Since we are not 
quite sure why this is we are limited in our ability to 
forecast what political events might trigger public strains. 
Ultimately the alliance works because the GOB wants it and 
the king and royal family will defend the relationship.  But 
as liberalization continues we have to be more and more 
sensitive to the need to measure carefully actions that might 
trigger public attacks on the security relationship. Pushing 
an ICC exclusion (Article 98) in the face of Abu Ghraib is 
symptomatic of ignoring our problem. 
 
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The Economy 
----------- 
 
¶19.  (S) Economic problems massively underpin political 
instability.  The economy has advanced with both budget 
surpluses and growing jobs, but unemployment, concentrated 
particularly in the Shia ranks and a growing youth bulge 
remain.  With few natural resources, stagnant oil production, 
and an expanding population, Bahrain is paying the price for 
having structured an economy based on low wage, south Asian 
labor rather than high productivity, better paid Bahrainis. 
Economic reforms, which we support strongly, are, at best, 
only a portion of what is needed to break out of this 
misdirected model.  Powerful members of the business 
community and royal family have vested interest in the 
current system.  Raising the productivity level of young 
Bahrainis to make economically feasible paying a living wage 
is also a long-term project.  Until Bahrain makes headway 
with these intractable issues, unemployment will fuel the 
discontent of the opposition. 
 
¶20.  (S) There is a growing divide between the very wealthy 
and the very poor.  This feeds the sense of frustration and 
grievance.  Until the economy improves there is the risk that 
the frustrations will move either back into demonstrations in 
the street or into political challenges through the 
parliament that may not be containable by the methods used so 
far. 
 
¶21.  (S) King Hamad knows this and it is driving a number of 
economic decisions.  The crown prince's court is engaged in 
an intensive effort with labor and business to identify a way 
forward.  Paradoxically, the troubles in Saudi Arabia may 
lead to some increase in regional service business or the 
dependence of those engaged in such business moving from the 
eastern province to Bahrain.  By the same token, a terrorist 
incident in Bahrain or rapid departure of the foreign 
community could seriously imperil this state's security. 
 
--------------------------------- 
What It All Means for U.S. Policy 
--------------------------------- 
¶22.  (S)  Basically, we are on the right track.  We continue 
to publicize legitimate grievances by means of actions 
ranging from the human rights report to periodic quiet 
conversations that I've had with the most senior leadership 
to keep them moving forward with reform.  We are continually 
telling the opposition that we will not save them from their 
own stupidities and urging them to get in the game.  This 
will all come into fresh focus in the next election.  Until 
then, NDI, as the chosen vehicle of U.S. support for 
democracy, has done a magnificent job in keeping doors open 
across the political spectrum and working to develop improved 
habits and practices of democracy.  We must continue to fund 
those efforts lavishly. 
 
¶23.  (S)  We continue to see that many of the habits of 
democratic practice are not established.  Compromise is not 
an immediate virtue.  The Arab propensity to look for justice 
may even be in opposition to the "half a loaf" notion of 
democratic compromise.  Civic society is weak.  There is no 
habit of going to the courts to settle political issues.  We 
are working on all of these fronts with our quiet MEPI-funded 
programs for strengthening judicial reform, civic education, 
and civic society.  In doing so we have to be careful not to 
become our own worst enemy.  The American imprimatur is not 
welcome in vast portions of the Arab world, including 
Bahrain.  Our desire to take credit and to put a U.S. label 
on programs will often be antithetical to their success.  But 
success in building stability and democratic habits are our 
real objectives.  We have to keep that in focus when are 
tempted to take short-term public credit. 
 
¶24.  (S)  Bahrain is far from perfect, but it is one of the 
best examples in the Arab world of economic reform.  If other 
societies are going to be encouraged to pay the politically 
painful prices of similar reforms, they need to see success 
for reform in Bahrain.  By signing the FTA and validating 
Bahrain's direction, we have made it in our interest as well 
as Bahrain's to seek investment and job growth.  Recognizing 
that we cannot order the private sector to invest, we must 
nevertheless do everything in our power in the next year to 
encourage effective, focused business dialogues on both 
sides.  Absent the need to support another war, I believe 
this will be the leading bilateral policy challenge of the 
immediate future. 
 
¶25.  (S) Every program suffers to some extent from being 
executed in a hostile, public climate.  I believe we have 
done as much or more than any mission our size in fighting 
the media battle from placements to interviews by senior 
embassy staff, to the use of speakers.  I am sure this 
tradition will continue, but until the media climate changes, 
every other program, outside perhaps the security and 
military fields, will operate with a drag.  Fundamentally 
this is a difference over policy not packaging.  To the 
extent that packaging can help, it is speakers, personal 
contacts and two-way visits that preserve the fragments of 
dialogue and mutual understanding that exist.  My own belief 
from three years in this media climate is that every dollar 
of face-to-face contact is worth one hundred spent in the 
electronic media that is either ignored or almost 
instantaneously rejected. 
 
¶26.  (S)  Despite the difference and the hostile media 
climate we have come a long way in an already excellent 
relationship with Bahrain.  We have excellent people, both 
American and local staff.  They are dedicated, working often 
long hours and sometimes at risk.  We have stretched them 
terribly with the demands of two wars and support for Iraq. 
These are issues far larger than this small post, but it will 
be important that this post, like many others, continue to 
receive the expanding support that it has gotten over the 
last three years.  Our interests are growing and we must not 
return to the contracting resource policies of the past. 
NEUMANN