As police crack down on demonstrators in Bahrain, trying to counter a growing pro-democracy protest movement inspired by events in Egypt and Tunisia, analysts say widespread dissatisfaction with societal inequality and anger about broken promises over reform have brought people out to the streets.

"You basically have a system of apartheid in Bahrain," Theodore Karasik, director of research and development at the Dubai-based Institute for Near East and Gulf Military Analysis, told Deutsche Welle. "While the Sunni minority has access to the good jobs and most of the country's wealth, the Shiite majority lives in poor conditions."

"That's the bottom line," he added.

While much of the outside world might think of Bahrain as another wealthy Persian Gulf state with an abundance of gleaming skyscrapers and oil sheiks, the reality on the ground for the Shiite majority, around 70 percent of the population, is quite different.

Karasik, who recently spent several weeks in the kingdom, describes a place of marked inequality - cities full of wealthy neighborhoods with well-kept lawns and upscale boutiques not far from Shiite-majority villages with broken streets, shoddily constructed houses and abandoned building sites covered with graffiti, much of it critical of the government.

Bahrain won its independence from the UK in 1971 and since then, has regularly experienced civil unrest because of tensions between the Sunni elite, including the Sunni Al-Khalifa family which has ruled Bahrain since 1782, and the Shia majority, who complain they are marginalized, repressed and kept out of most jobs in the government, the security forces and the business community.

"There are slums around the capital Manama, which is quite unusual for the region," Kristian Coates Ulrichsen, a research fellow at the London School of Economics and Political Science, told Deutsche Welle. "They are hotbeds of discontent."

Violent crackdown

That discontent has spilled over in the last few days as protestors hit the streets demanding political reforms. The death of a protester earlier this week brought larger crowds out to Manama's Pearl Square and appears to have pushed the royal family, which is closely allied with the rulers of neighboring Saudi Arabia, to attempt to nip the protests in the bud and avoid a repeat of the events that recently transpired in Egypt.

"I think the regime panicked where the protests got so big," said analyst Ulrichsen. "It seems like advocates in the government of a hard-line approach have won out over advocates of reform."

The European Union's foreign policy chief, Catherine Ashton, said Thursday she was "very concerned" after the deadly overnight anti-government protests. She called on Bahraini authorities "to fully respect and protect fundamental rights."

Underlying problems

While per capita GDP is relatively high in Bahrain, $40,400 (29,800 euros) according to 2010 estimates, the country, about the size of Singapore, has endured civil unrest for decades. An uprising from 1994 to 1999 demanded social and economic reforms. The conflict was defused in 1999 when Sheikh Hamad became emir and set out on a cautious course of economic reform.

In 2001, voters approved a National Action Charter that would transform the country into a constitutional monarchy. The next year, Hamad declared himself king and decreed that a National Assembly be formed.

"He has tried to establish the trappings of democracy, but in fact, Bahrain is still an absolute monarchy," said Ulrichsen.

While the lower house of parliament, the Council of Representatives, is elected, the upper house, the Shura Council, is appointed by the king and enjoys equal powers to the lower chamber. The government and major ministries are largely controlled by members of the ruling family. The prime minister, the king's uncle, has been in power since 1971 and has built up a powerful system of patronage.

Even the economy, once riding high on oil revenues and its role as the Gulf's banking center, which it took over from Lebanon, is facing future decline. These days, oil money is anything but guaranteed as reserves are expected to dry up within the next two decades and much of the region's financial business has moved to Dubai or Abu Dhabi.

"The economy has not been able to create jobs for Bahrainis and there's a real problem of economic diversification," Ulrichsen said.

He added that the past six months have seen unrest building, starting with the run-up to parliamentary elections in October which many people said were neither free nor fair.

The 10th anniversary of the National Action Charter on Feb. 14 - which the government had planned to be a lavish spectacle and glowing endorsement of itself - turned into a day of protest, with online activists demanding it be the day of "revolution in Bahrain."

Earlier, as Egypt was boiling, Bahrain's ruling family made its first move to head off local unrest by increasing food subsidies and social welfare payments. The king also ordered a payment of 1,000 dinars (1,960 euros) to each Bahraini family.

"It was packaged as a gift and a kind of royal benevolence, but of course it was just an attempt to buy popular support," Ulrichsen said.

It hasn't worked.

Neighborhood worries

Western powers, and Bahrain's neighbors, are watching events unfold with unease. Both Saudi and Western officials fear majority rule in the kingdom could help their adversaries in Shiite-ruled Iran.

The United States is also alarmed because Bahrain is a key ally in the highly strategic Persian Gulf region, home to more than half of the world's oil reserves, and hosts the US Navy's Fifth Fleet.

Saudi Arabia, which is joined to Bahrain by a causeway, is particularly nervous, experts say. It exercises great influence over the island and its royal family has close ties to King Hamad bin Isa Al-Khalifa.

"If the monarchy (in Bahrain) was in danger, I think the Saudis would intervene," said Dubai-based analyst Karasik.

Saudi Arabia, the world's biggest oil exporter, also does not want to see a Shiite uprising spill over into its own eastern providence, where Shiites are also in the majority and have long demanded more fairness from the government. The eastern province is crucial to Saudi Arabia since that is where most of the country's oil is located.

"For the Saudis, it's an especially sensitive situation," Ulrichsen said. "They are watching it very, very carefully."

Author: Kyle James
Editor: Sabina Casagrande