While Tunisia and Egypt celebrate a new dawn, Bahrain – one of the first countries to flare up with protests after Tunisia’s Jasmine Revolution – is left to question the financial implications of revolution when its ambitions are less successful.
Despite weeks of protests, the ruling Khalifa family remains fully in charge. But the island nation’s economy has suffered. The first blow came when the Bahrain Grand Prix, the opening race of the 2011 Formula One season, was cancelled. At a reported cost of $150m (€107m), the Bahrain International Circuit was a typically grandiose gesture by the Khalifa family to boost the country’s international standing, and the race’s cancellation is a visible reminder of the effect of the civil unrest.
That’s not all. Ratings agencies Standard & Poor’s and Moody’s have both lowered Bahrain’s government bond and credit ratings. “The political turmoil in Bahrain was the main driver behind our recent decision to place the country’s ratings on review for possible downgrade,” says Tristan Cooper, senior credit officer at Moody’s Sovereign Risk Group. “The rising political temperature in the Middle East is worrying and we have acted to downgrade ratings in other countries that have been affected. We are keeping a close eye on political developments across the region.”
Cancellations outside of motorsport abound in Bahrain, with the Middle East Economic Digest choosing to relocate the Middle East Project Finance 2011 seminar, scheduled for last week, from Bahrain to Dubai. Eighteen events at next month’s Spring of Culture festival have also been called off. Non-essential travel to Bahrain is being discouraged.
The longer the protests continue – and they do – the dimmer the chance of any significant change occurring. Should the Pearl Monument protesters be successful in their aims at removing the Khalifa family from power, then a new, more representative government will have to pick up the pieces of a country in which international confidence has been shattered.
Despite this, the mood at the protest site is undiminished, and last Saturday an estimated 250,000 attended a rally at the Pearl Monument celebrating the return of the self-exiled opposition politician Hassan Mushaima. From the racetrack to the towering glass monuments of the waterfront financial district, however, Bahrain’s majority may soon learn that revolution comes at a cost.