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In recent weeks, hundreds of opposition leaders have been arrested on suspicion of conspiring against the rulers of Bahrain. Official reports claim that the suspects belong to a Shiite terrorist network that intended to overthrow the al-Khalifah family. The royal family, perhaps in order to fend off criticism, sought to give the recent tension a regional slant, claiming that the accused were in contact with foreign governments, i.e., Iran. These events invite examination of Bahrain as a test case of the ability to promote even basic political reform in the Arab world, and as a barometer of local tension between Sunnis and Shiites and tension between Iran and the Arab world.

Although Bahrain was the first of the small Gulf states to produce oil (1932), its oil reserves were emptied and most of its revenues now come from its serving as a regional and international center for banking and tourism. Given the size of the archipelago (700 square kilometers) and its central location in the Gulf, Bahraini rulers must balance the kingdom's interests among the interests of its strong neighbors. American security guarantees are necessary for defense and deterrence, and the kingdom “earns” them by hosting the US Fifth Fleet’s headquarters and providing token assistance to the American war effort in Afghanistan and Iraq. To offset this pro-American foreign policy and in order not to encourage Iranian aggression, Bahrain allows Iranian businesses to operate on its territory, avoids criticizing Iran publicly, and often announces that it will not allow its territory to be used for an attack on Iran’s nuclear facilities.

While the Bahraini ruling family is Sunni, it is estimated that over 70 percent of the population of some 1 million (only half of whom are citizens) are Persian and Arab Shiites. After succeeding his father in 1999, King Hamad bin Isa al-Khalifa passed a string of reforms that he said would in part improve relations with the Shiites. Nevertheless, Bahrain’s Shiites, who have an inferior political, economic, and social status and are not able to attain senior positions in the bureaucracy and the military, are among those who oppose the king’s rule. Shiite political grievances – especially that the main Shiite association, al-Wefaq, holds almost half of the seats in the lower house (which is significantly weaker than the upper house, the Shura Council, appointed by the king) – surface from time to time.

With the withdrawal of British forces from the Gulf in the early 1970s, the shah of Iran demanded sovereignty over Bahrain, but in a 1970 UN referendum, the residents voted to retain their independence, a decision later anchored in UN Security Council Resolution 278 that was even ratified by the Iranian Majlis. In the wake of the Islamic Revolution in Iran, pro-Iranian riots broke out in Bahrain, and since then, demonstrations feature Iranian flags and pro-Iranian slogans. And while Iran’s claims to sovereignty over the island are not new, the comment by Nateq-Nouri, a close adviser to Iranian leader Khamenei in February 2009, to the effect that “until it received its independence, Bahrain was the fourteenth district of Iran, and was even represented in the Iranian Majlis,” caused a major storm in Bahrain and led to widespread displays of solidarity with Bahrain in the Arab world, including Morocco’s decision to cut off diplomatic ties with Iran.

There have also been serious periods of tension between the states, especially on the issue of Iranian support for the Bahraini opposition and failed Iranian attempts at subversion in the 1980s and 1990s. In December 1981 and again in June 1996, for example, Bahrain publicly accused Iran of attempting a coup in the kingdom. In most cases, however, it was not possible to prove direct Iranian involvement, and therefore Iran could deny the charges and maintain extensive commercial ties with the emirate, along with its covert activities.

While Bahrain and Iran are attempting to calm the tensions and conduct normal relations, Iran has nonetheless positioned itself as a significant threat to the stability of the Gulf regimes. Indeed, the ethnic-religious structure in Bahrain makes it fertile ground for Iran. The general fear in the Gulf is that the Islamic Republic’s hegemonic aspirations, as well as the decisive progress in its nuclear program, are liable to cause the Shiites to feel greater confidence and act to undermine stability. This causes Bahraini authorities, and to a large extent, Kuwait and Saudi Arabia as well, to deal with their Shiite citizens as a fifth column.

The achievements of the Shiites in Iraq and Lebanon and the rising status of Iran may have sparked the political awakening and increasing demands among Shiites in Bahrain in order to correct their inferior status. Yet not only did the king’s attempt to contain the protests by allowing greater Shiite participation in the political process not stem the violent protests; it actually made them even more frequent and severe. And although it is not possible to rule out Iranian involvement, even indirect, in the violent protests, recent events can also be seen in the context of the elections scheduled to take place in late October. Authorities are eager to weaken the opposition's demand to strengthen the Parliament’s authority, institute free elections, and improve the Shiites' economic, political, and social status.

Even if the reforms instituted by the king are relatively far-reaching for the Arab world, his authority relative to the entire system of government, including the Parliament, has remained uncircumscribed. The Parliament lacks real legislative authority; and freedom of expression and association are limited. According to the opposition, the authorities also artificially increase the relative representation of Sunni election districts and even give many Sunnis citizenship – 100,000 in the past decade – in order to increase their relative numbers in the population.

Local human rights organizations accuse the authorities of excessive use of force against demonstrators and of torturing arrested opposition activists. The authorities continue to use the press law to limit coverage of controversial issues, including government corruption. The “protecting society from terrorism” act includes broad definitions of the war on terrorism, and makes it possible to arrest a person for fifteen days without an indictment or judicial oversight. There have been reports in recent weeks that Bahraini authorities have blocked hundreds of websites, including political websites and the sites of newspapers and human rights organizations, and that they have further increased surveillance on religious figures and activities in mosques.

Egypt's President Mubarak was perhaps referring to events such as these in Bahrain (or in Kuwait, which claims to have recently exposed a sleeper network of Iranian spies on its territory) when he charged recently that “there are new dangers threatening the stability of the Gulf region.” And in fact, events in Bahrain raise fears that Iran, in addition to inciting the Shiites, has even placed sleeper cells intended to harm government stability and Western interests. In this context, the Americans are certainly following the increased incitement on the island with concern, if only because of the upgrading of the Fifth Fleet headquarters, which in recent years has been a target of growing local protests.

It is possible that the recent wave of arrests is part of an attempt by Bahrain and other countries in the region to weaken their Shiite opposition prior to a possible clash with Iran. Iran is likely, if it has not done so already, to exploit the basic weakness of Sunni Arab regimes in the Gulf and their complex relations with the Shiites in their territory to gain the allegiance of local Shiite populations, and to signal that it is capable of undermining the Gulf's stability in the event that its nuclear facilities are attacked.