Bahrain country brief

Overview

The Kingdom of Bahrain comprises an archipelago of islands with a total size of 712 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 west of Qatar. Bahrain also shares a maritime border with the Islamic Republic of Iran. Bahrain has a population around 1.2 million people, almost half of whom are foreign nationals. 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. Bahrain also hosts international gatherings such as the annual Regional Security Summit (Manama Dialogue) organised by the International Institute for Strategic Studies.

Political overview

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, run-off round is held if no candidate receives an absolute majority in the first round. Parliamentary elections were first held in 2002.

In early 2011, amid a wave of violent street clashes between mainly Shi’a protestors demanding reforms, and the police, security forces, and Sunni supporters of the government, King Hamad declared a state of emergency. The Gulf Cooperation Council (GCC) deployed forces to restore order in an operation named “Peninsula Shield”. The country continues to experience intermittent street protests, unrest, violent attacks, bombings and arrests.

Constitutional amendments in 2012 increased the powers of parliament. The most recent parliamentary and municipal elections were in November 2014. Large numbers of independent candidates were elected. Al-Wefaq and a group of smaller Shi’a opposition parties boycotted the elections.

Foreign Policy

Bahrain’s primary foreign policy focus has traditionally been on its GCC neighbours. 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. In December 2014, the UK and Bahrain announced a new defence arrangement which would improve on-shore facilities at Mina Salman, where UK warships are based and supported at the Salman Naval Base. The GCC Summit in Doha in December 2014 announced the establishment of a joint GCC naval force to be stationed in Bahrain.

Bahrain is a member of the United Nations, International Monetary Fund, World Bank, World Trade Organization, GCC, League of Arab States, Organisation 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. It has achieved some diversification, but oil revenue is still 80 per cent of total revenue. Low oil prices place pressure on the national budget, which has a growing deficit. The IMF estimates that real GDP growth slowed slightly to 4.7% year-on-year in 2014. The non-oil sector saw strong growth in construction and hotels and restaurants. In 2015, forecasters expect oil production to be flat in an environment of continuing low oil prices, leading to lower real GDP growth.

Aluminium is Bahrain's second biggest export after oil. The state holds a majority stake in Aluminium Bahrain (Alba), one of the world’s largest smelters, which announced strongly rising net profits in 2014 and plans to expand production. Bahrain continues to seek new natural gas supplies as feedstock to support its petrochemical and aluminium industries. In response to fiscal pressures from the effect of low oil prices, the Government is gradually lifting the price of gas supplies to industry.

Other major economic activities are finance including Islamic banking, construction and tourism.

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.

Trade and Investment

Australia and Bahrain have had a commercial relationship for many years. In 2013-14, Bahrain was Australia’s third largest export market in the Middle East and North Africa. Our merchandise exports were worth $707 million (this figure excludes goods trans-shipped to Bahrain through Dubai, and alumina, one of our largest exports). Australia’s exports mainly comprised alumina, meat, motor vehicles, dairy products and wheat. During his visit in April 2014, the Minister for Agriculture announced the resumption of exports of livestock to Bahrain, under the Australian Exporter Supply Chain Assurance System. Australia’s imports were worth $68 million, the principal item being aluminium.

There are opportunities for Australian business to assist Bahrain in developing arable land, improving productivity and optimising water resources. A small number of Bahraini students (around 100) are enrolled in Australian education institutions.

A priority for the Australian Government is the resumption of free trade agreement negotiations with the Gulf Cooperation Council, including Bahrain.

High level visits

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

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

December 2010: The then Foreign Minister, the Hon. Kevin Rudd visited Bahrain for the Manama Dialogue. 

Updated April 2015


Last Updated: 18 August 2014