Bahrain: is democracy the wrong priority?

This week Bahrain will hold parliamentary elections for the first time in a generation. These elections will be closely watched in other parts of the Gulf where governments are wondering whether some sort of democratic initiative might be a good idea.

But democracy has a very mixed record in emerging markets. The African experience of post-colonial democracy, for example, has been a decent into dictatorship, anarchy and economic collapse. By contrast the Gulf States have achieved rapid economic growth, greatly increased the standards of living of their populations and must be judged, alongside parts of Asia, as one of the great success stories of their time.

The fact that democracy has had nothing whatsoever to do with this remarkable progress may not be entirely coincidental. And it remains to be seen whether Bahrain's embrace of democracy proves to be a happy experience.

The omens are fairly good. Bahrain is presently bedecked with posters and electoral paraphernalia and around 130 candidates have put themselves forward for the chamber of deputies. Indeed, the democratic process itself was hugely endorsed in a referendum in February 2001, and the Sheikhdom converted to a constitutional monarchy shortly afterwards.

But the elections are being boycotted by four major political groups as a protest about the major powers vested in the upper chamber of this bicameral parliament. The lower house will have the power to examine but not initiate legislation, and that may be a cause of frustration in future years.

Certainly in Kuwait a fractious parliament has reveled in its ability to de-rail government initiatives, while offering nothing much in the way of constructive alternatives. In Bahrain, populist politicians are likely to raise some awkward questions about past government policies, and press for greater localization of the workforce.

Will this help attract private investment from domestic and foreign sources? Certainly the award of a $154 million contract this month for the construction of a grand prix motor racing circuit is a nice indicator that recent reforms are raising business confidence.

So too is the plan, albeit sketchy, for the $1 billion Bahrain Financial Harbor as a repost to the gleaming $2 billion Dubai International Financial Centre, now grabbing the headlines of the world's financial press.

However, the true test will be whether democracy will maintain the stability and security that Bahrain has now managed to re-establish after a difficult era of terrorist bombs in the late 1990s. The danger is always that democracy arouses hopes and aspirations that then can not be met. And that it might actually get in the way - committees, consultations and free votes are unpredictable things - of the kind of economic reform that Bahrain clearly requires.

For in emerging markets those countries that have done best have usually been the ones that went for economic reform before democracy (i.e. Singapore and Hong Kong) and not those that put the top priority on democracy (i.e. India, Kenya).

To be fair, it can be argued that the Bahrain economy has already emerged, and that in such an era of prosperity that democracy is the logical choice. This is certainly what Bahraini citizens going to the polls this week will be hoping.