Browse
related articles
Only now, amid the wreckage of six months of violence and brutal government repression, those passport stamps serve as a grim reminder of what Bahrain has lost, and may never recover.
At least 30 Bahrainis were killed and thousands injured in clashes with the army during anti-government protests in February and March.
The violence led to the imposition of emergency law, which was revoked on June 1. However, opposition groups have since claimed that as many as 400 people, most of them from the country's majority Shi'a population, are on trial on charges stemming from the protests.
There have been claims that medical workers who treated protestors were rounded up and tortured in custody, and clerics have accused the police of breaking up religious gatherings with tear gas and rubber bullets.
Political situation remains cloudy
As might be expected, the island's business community has suffered significantly as a result of the unrest, and the government's response to the protests. Analysts polled by Reuters recently expected the country to post deficits of 1.4% of gross domestic product (GDP) in 2011 and 1.7% for 2012, while unnamed Bahraini businessmen told daily newspaper Al-Watan the country stood to lose between $300m and $500m as a result of the cancellation of the Bahrain Grand Prix.
"The political situation in Bahrain is still very precarious and business confidence is badly shaken, which is evident in both its stock and debt markets," says Gus Chehayeb, associate director of research at investment bank Exotix.
"The stock market is still down 6% since the start of the year and the sovereign's 5-year CDS is still 50bp higher than before the large scale protests erupted in Manama - CDS is now at 231, down from a high of 360 on 15 March," he adds.
According to Chehayeb, the stock market would have fallen "significantly lower" if it wasn't for its small market cap of $19bn, and its narrow investor base, comprised mainly of "local insiders" and government institutions.
Nevertheless, business confidence has sharply deteriorated across the tourism and financial services industries, and Chehayeb warns that the island's former reputation as a stable offshore banking haven has been badly damaged.
"Real estate consultancies are reporting that hotel occupancy rates have fallen below 30% recently, from over 75% one year ago," he notes. "We are also seeing an exodus of capital by individual and institutional investors from Bahrain to Western Europe and more stable GCC countries, such as the UAE, and hearing reports that several financial institutions are moving their offices from Bahrain to Dubai."
Some companies relocate staff
Even those who are less sure about the immediate impact on Bahrain's reputation as an offshore banking hub, admit that international firms - and their staff - are losing enthusiasm for remaining on the island. And while Bahrain is still a valuable conduit for money from Saudi Arabia, the Middle East's largest economy, it cannot afford to lose the support of key financial houses looking for a hub from which to base their regional operations.
"Bahrain is still a major offshore banking market, and a lot of Saudi money goes through Bahrain to its ultimate destination," says Raj Madha, an analyst with Rasmala Investment Bank.
"However we did see at the beginning of the crisis that there has been some reduction in offshore banking assets, and we also heard of a lot of financial services companies relocating their staff to Dubai on a temporary basis," he continues.
"The longer the tension continues in Bahrain, the stronger the possibility of firms relocating staff on a semi-permanent basis.
Staff
