At one time in history Bahrain was a part of Iran (Persia), as were parts of Saudi Arabia. There is long historical animosity between the Shiite and Sunni branches of Islam, and between Saudi Arabia and Iran (Persia). For centuries, Persia was the dominant empire in the region. Many of the current borders and even countries today were creations of the Western powers (primarily Britain and France) following the end of World War 1, the 1919 Treaty of Paris and the end of the Ottoman Empire. The countries and borders often had little to do with historical and tribal borders. At the centre of it all was oil. The Middle East/North Africa Arab countries have been ruled by autocratic and sometimes despotic leaders for decades. The people have generally lived in poverty while the rulers often lived in obscene luxury. The economic base of most of the countries is oil, led by Saudi Arabia but also Iran, Iraq, Kuwait, the United Arab Emirates, Libya, Algeria, Qatar, Oman, Egypt, Syria and Brunei. Bahrain at one time had oil. Even Israel (a democracy amongst the Arab autocratic countries) has some oil and some potential huge reserves of oil and gas that lie off the coast of both Israel and Gaza. The history of the region has been one of co-opting by the West, led by Britain and France following WW1, and later by the US. The story was played out in country after country of co-opting the leaders or assisting in setting up rulers from elsewhere. This was seen in Bahrain, whose Sunni rulers were originally from Kuwait and had co-opted the British in the early 19th century to protect their rule. Britain maintained its fleet in Bahrain until turning it over the US officially in 1991.
The uprising that started in Tunisia in January 2011 quickly spread to Egypt, then Bahrain, Yemen, Libya and others. Oil prices at the time were around $90 a barrel. Initially the markets did not think there was much of an issue; over the next month prices mostly trended downward, bottoming on February 15 near $84. It was on that date that President Gaddafi of Libya used military force on protestors. On February 22 oil prices gapped higher from $86 to $95 and have never looked back. Oil prices today are over $108. The Middle East produces 56 per cent of the world’s daily oil needs. Much it of goes through two key choke points – the Straits of Hormuz that connect the Persian Gulf with the Gulf of Oman and the Arabian Sea, and the Bab el-Mandab between the Horn of Africa and the Middle East and a link to the Red Sea, the Suez Canal, the Mediterranean and Indian Ocean. The Straits of Hormuz – only 21 miles wide at their narrowest – are between Oman and Iran. Some 17 per cent of the world’s oil passes through the Straits or 15 to 17 million barrels daily, limited to a channel two miles wide. It is the world’s most important oil chokepoint. The Bab el-Mandab is located between Djibouti and Yemen, two areas where there is now considerable unrest. The Bab el-Mandab is 18 miles wide at its narrowest, within which another two-mile channel sees an average of three to four million barrels of oil per day pass through.
Libya holds the largest estimated oil reserves of any African country, at 40 to 50 billion barrels. It has the world’s tenth-largest reserve holdings, well behind Saudi Arabia, Venezuela and Canada. Libya produced about two per cent of global daily production, or 1.7 million barrels. But Libya produces the world’s lightest crude and it is highly prized. Its lost production can be replaced to some extent by Saudi Arabia, the only country with any real production room. But the fact remains that Libya’s oil is highly prized, and numerous foreign oil companies were operating there. Demands that he step down were met with derision by Gaddafi. Libya threatened to expel the foreign oil companies. This would directly impact Western economic interests. On March 19, under the cover of protecting civilians and blessed by the United Nations, French war planes attacked Gaddafi forces to protect the rebels at Benghazi. Russia, China and Germany abstained at the UN vote and since then both Russia and Germany have criticized the operation, which has now turned into a NATO operation. Its end game is unknown. The likely outcome of the continuing unrest is unknown. The region is of huge strategic interest to the West, because of the oil. That they have supported and continue to support despotic regimes with little regard for their own people is well known. Unrest is nothing new to the region, particularly on Sunni-dominated Bahrain that has a history of unrest from the majority Shiite population.
But while eyes are on Libya, they should be on Bahrain. Here the majority Shiite Muslims (70 per cent) are ruled by an autocratic (and Sunni) constitutional monarchy. The Shiite majority do not benefit from the wealth of the country and are largely shut out of government. Saudi Arabia, an absolute monarchy, also has a significant Shiite population (20 per cent), mostly living in poverty. Despite both Bahrain and Saudi Arabia being countries of huge wealth, unemployment particularly amongst young people is quite high. Saudi Arabia sent troops to assist the rulers of Bahrain. According to such sources as Stratfor, it is suspected that Saudi Arabia did so with the approval of the US, and in turn Saudi Arabia backed the bombing of Libya. The Economist noted in its headline article of March 26 that “the West is locked into a military alliance with Bahrain – home to the US 5th Fleet – and its royal family’s protector Saudi Arabia.”
Across the Gulf lies Iran, which is not a friend of the West. Iran has the world’s fourth-largest reserves of oil. Iran is Shiite. It is openly backing the majority Shiite population in Iraq, assisting Shiite Hezbollah in Lebanon, and has provided backing to the Shiites in Bahrain and Saudi Arabia. The one major country not under the control of the West is Iran. Here, the West has claimed that Iran is trying to obtain nuclear weapons. (Iran is largely surrounded by countries with nuclear weapons: Pakistan, India, China, and Russia, the US in Afghanistan and Iraq, and Israel.) With Iran openly and covertly supporting some of the uprisings, the risk of an accident in the Persian Gulf is real. That could trigger a broader war where competing interests of the west (US, Britain and France) could clash with those of Iran, Russia and China. And at the heart of it all is oil. Where oil prices would go in such a scenario is impossible to say, but even a spreading of the unrest to Saudi Arabia with its own restive Shiite population could shoot prices to $150 or higher. And if oil prices soared the Western economies could tumble into a steep recession or even depression, dependent as they are on cheap oil to run their economies. Oil prices have had many ups and downs since the Arab oil embargo of 1973-74, coincident with the West losing its grip on the region it once controlled with little opposition. But the region is a bubble of boiling tribes and divergent interests with oil at its core. And that spells big trouble
It all makes for a deadly brew of trouble that is boiling and bubbling.