Bahrain

D

Banking and Currency

After 1975, when the Lebanese Civil War began, Bahrain took over much of Lebanon’s financial services industry, especially in the form of offshore banking units (OBUs). These OBUs are units of large multinational banking companies that operate in small (usually island) countries and dependencies where regulation is not as strict as in their home countries and taxes are not as high. Today Bahrain is home to OBUs from all over the world. Although declining oil revenues and instability caused by civil unrest have hurt the banking sector, Bahrain remains a significant financial center. In 1989 the government established a small stock exchange, which it linked to Kuwait's stock exchange in 1997.

Bahrain’s currency is the Bahraini dinar (0.40 dinars equal U.S.$1; 2005), issued by the Bahrain Monetary Agency. In rural areas many transactions are made by bartering and trade rather than with money.

E

Foreign Trade

Bahrain has been a trading center since ancient times. For thousands of years Bahrainis produced dhows (boats), pearls, and various fruits and vegetables for trade. Today, oil is the focus of international commerce in the country. More than one-third of Bahrain’s imports consists of crude oil from Saudi Arabia, which is processed in Bahrain’s petroleum refineries. Other imports include machinery and transportation equipment, food, and chemicals. Exports include petroleum and petroleum products, aluminum, and manufactured goods. Bahrain’s major trading partners are Saudi Arabia, India, Japan, the United States, and the United Kingdom.

Bahrain belongs to a wide range of international and regional economic organizations. Because of its reduced oil production, Bahrain is not a member of the Organization of Petroleum Exporting Countries (OPEC), but it is a member of the Organization of Arab Petroleum Exporting Countries (OAPEC), which seeks to coordinate Arab oil policy. Bahrain is a founding member of the Gulf Cooperation Council (GCC) and has participated in various council initiatives aimed at promoting economic cooperation among its members. Following independence in 1971, Bahrain became a member of the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund (IMF).

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V

Government

The al-Khalifa family has ruled Bahrain since 1783. Bahrain gained full independence from Britain in 1971, adopted a constitution in 1973, and substantially revised the constitution in 2002. Under the 2002 revision, Bahrain is a constitutional monarchy ruled by a king (prior to 2002, the al-Khalifa ruler was called an emir). The constitution states that the succession of the office of king automatically passes from ruler to son, making Bahrain unique among the monarchies of the Persian Gulf in this regard.

A

Executive and Legislature

The king appoints a prime minister and a cabinet called the Council of Ministers. Members of the al-Khalifa family hold almost all of the top political posts. The constitution also provides for a bicameral legislature known as the National Assembly. The two houses of the National Assembly are the Consultative Council, whose 40 members are appointed by the king, and the Chamber of Deputies, whose 40 members are elected by direct popular vote. All citizens 18 years of age or older can vote. Both appointed and elected legislators serve four-year terms. All legislation approved by the National Assembly must be ratified by the king in order to become law.

B

Political Parties and Local Government

Political parties are technically forbidden, although informal political groups emerged in 1973 when the National Assembly was elected. In 2001 legislation was approved permitting the formation of political societies, similar to democratic political parties. The principal Shia political society is al-Wifaq al-Witani (National Accord) Islamic Society. The two main Sunni political societies are al-Assala al-Islamiyah (Islamic Purity) Society and the National Islamic Tribune Association, which is the political arm of the Islah (Reform) Society. The main secular political group is the leftist National Democratic Action Society.

Bahrain is divided into numerous municipalities, administered from Manama by a central council whose members are appointed by the king. Thus, the central government largely controls local governmental affairs.

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