Thursday 6 October 2011

Analysis - Bahrain may need Saudi help to plug budget gap | Reuters

Saudi Arabia is likely to step in and help Bahrain plug a budget hole next year if oil prices keep falling as ratings downgrades in the wake of social unrest make it costly for the island state to issue foreign debt and the Saudis seek to keep restive elements in the region in check.

Saudi troops have already been brought in this year to help quell Bahrain's worst social revolt since the 1990s, which left at least 30 dead and pushed Bahrain's economy to its first quarterly contraction in January-March since the global financial crisis in 2008.

Supporting Bahrain is strategically vital for Saudi Arabia's Sunni government given the island's proximity to regional rival Iran, which claimed Bahrain ahead of the island's 1971 independence from Britain.

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