Bahrain: why it matters to Saudi Arabia | beyondbrics – FT.com

Bahrain’s military has just seized control of much of the capital after clashes between anti-government protesters and riot police. The violence has got many people outside the Middle East looking at the island state for the first time. But does it matter to business and investors?

The answer is yes. Not so much because Bahrain is a financial centre and home to the US Navy’s Fifth Fleet. But because Bahrain has the potential – belied by its tiny size – to inspire political ructions in Saudi Arabia, the world’s biggest oil producer. That explains why the protests have exacerbated jitters in the Middle East’s already shaky stock markets.

The Bahrain protests are led by resentful Shia Muslims, who live in the only country in the world where a Shia majority population is ruled by a Sunni minority. They make up 60 to 70 per cent of the population and are demanding more political freedom from the ruling al-Khalifa family.