Bahrain is a small island 'nation', sandwiched between Saudi Arabia. It is a small oil Sheikhdom ruled by the Sunni bedouin al-Khalifa tribe while most of the population is Shia. There are frequent complaints of discrimination.
Bahrain is one of the better places to live in in the Muslim world, with a GDP of about $20,000 per capita. This apparently, is insufficient to keep the population of just over 1 million docile and apathetic to the rampant corruption and authoritarian rule (unlike their southern neighbor, Qatar).
The makeup of Bahrain's population, as well as its historical links to the Persian empire means that often there is an Iranian connection. Ahmadinijad has declared only two years a go that Bahrain is rightfully owned Iranian sovereign territory that will be reclaimed.
Now, reclaiming does not necessarily mean the invasion of 50,000 Revolutionary Guard troops on little rubber dingies. The ouster of the Sunni al-Khalifa 'King' (that's how he refers to himself, so I will allow him the joy before he is kicked out), by an Iranophile Shia Sheikh could be sufficient.
But right now Iran has its own problems. It will be ironic if an Iran sympathetic regime was to rise exactly when the Islamic Republic topples :)
Of course Bahrainis have many legitimate grievances against their government, which is a sort of absolute monarchy. But out of all the autocratic regimes in the Middle East, a relatively affluent oil Sheikhdom is not the natural candidate for social unrest.
I personally do not think Iran is directly behind it. Iran has naturally saw itself as the protector of Shia's worldwide, and they definitely encourage a rise to power of Shia populations. But I think they are pretty busy right now with their own regime survival.
The Saudis and Americans are paying close attention right now to the events. The US has a major base on the island. The Saudis are afraid that a successful revolution by the Bahraini Shia majority would lead to a similar occurrence in its own Shia dominated regions, which are incidentally the major oil producing regions.
-QP
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