(Updates with U.S. comment in 11th paragraph.)
Feb. 9 (Bloomberg) -- Mohammed Ibrahim Yacoub had a haircut, took a shower and left home with a friend as police clashed with Shiite Muslim protesters near his home in Sitra, Bahrain on Jan. 25. That was the last time his family saw their 18-year-old son alive.
There are competing narratives of what happened to Yacoub. His family, who are Shiites, say he was hit by two police cars that were chasing him, then detained, tortured and taken to hospital where he passed away. The government says he died as a result of complications from sickle-cell anemia following his arrest for vandalism.
Yacoub’s is one of several contested deaths in the run-up to the Feb. 14 anniversary of last year’s mass anti-government rallies. They were suppressed at a cost of at least 35 dead, exacerbating divisions between Bahrain’s Shiite majority and Sunni royals that may flare again as activists call for renewed protests. Violence has hurt the economy and fueled the rivalry between Saudi Arabia, which sent troops to help the crackdown, and Shiite-ruled Iran, accused by Bahrain’s authorities of encouraging the unrest.
There are “tensions in Bahrain that do have the potential of boiling over and creating economic instability,” Farouk Soussa, chief economist for the Middle East at Citigroup Inc. in Dubai, said in a phone interview. “There are no illusions that what happened over the past year was a one-off.”
Pearl Roundabout Demolished
Protesters say they will attempt to march to the former Pearl Roundabout, the center of last year’s rallies. The roundabout has been demolished by the government and the surrounding area turned into a restricted military zone. Demonstrators attempting to reach it in December were met with tear gas, stun grenades and rubber bullets, according to the Bahrain Youth Society for Human Rights.
The opposition says several people have died after torture, like Yacoub, or tear gas inhalation, allegations the government denies.
Shiites represent about two thirds of the nation’s population of 1.2 million, according to the U.S. State Department. In demonstrations in February and March, they demanded democratic representation and equal economic opportunities, saying that they faced discrimination in jobs and housing and that the elected parliament lacks power.
The ruling al-Khalifa family invited troops from Saudi Arabia and other Gulf countries to help restore order. Thirty- five people died in the two months from Feb. 14, according to the Bahrain Independent Commission of Inquiry.
‘Blood and Martyrs’
Government measures to restore calm include the release of some political detainees and the reinstatement of staff fired for allegedly supporting the protesters. King Hamad convened what he called a “national dialogue” and announced plans to constitutional changes that he said would widen representation in government. Al-Wefaq, the largest Shiite group, rejected the efforts, saying they don’t address the central issues of majority rule and economic justice.
“After all the blood and the martyrs, people cannot go back to the old system,” Abdul-Jalil Khalil, one of 18 Wefaq lawmakers who quit parliament last year, said in a phone interview.
Michael Posner, the State Department’s top human rights official, urged restraint ahead of the Bahrain anniversary. Speaking to reporters at the U.S. Embassy in Manama he condemned violence against police, called for more reforms and said that “there really is a need to turn the page on the events of last year.”
Last year’s protests have hurt tourism, real estate and the retail industries, contributing to an estimated $2 billion loss to the economy in 2011, according to the Bahrain Chamber of Commerce & Industry. That bill may climb with new protests.
Shift to Dubai
“Political unrest will continue to drag on the attractiveness of Bahrain as a center for financial services, conferences or tourism,” said Edward Bell, Middle East and North Africa economist at the Economist Intelligence Unit. “Other GCC countries look more politically stable,” and companies may shift operations to Dubai or Qatar if instability persists, he said.
BNP Paribas SA will continue operations in Bahrain, Jean- Christophe Durand, the Paris-based lender’s head for the Middle East and Africa, said in a phone interview yesterday, denying speculation that it may quit the country. Societe Generale SA said last week it will move its private banking office in Bahrain to the United Arab Emirates to help cut costs.
Bahrain’s BB All Share Index has slumped 23 percent in the past year, three times as much as the Bloomberg GCC 200 Index of regional stocks.
Bahrain, an island nation about four times the size of Washington DC, is the only one of the six Sunni Muslim monarchies in the Gulf Cooperation Council to have a majority- Shiite population.
Tensions that have simmered in Shiite villages throughout the past year are spreading to the capital, Manama, and disrupting life for Bahrainis and expatriates who aren’t directly involved in the political clashes.
Tear gas fired by police at the Shiite village of Sanabis on a weekend last month drifted to a popular mall across the highway, forcing customers to leave and diners at an outdoor restaurant to move indoors. Protesters started using Molotov cocktails in their confrontations with riot police, prompting the U.S. Embassy to relocate staff. They burned tires early today in Manama and several villages, disrupting traffic.
Polarization has also disrupted commercial life. The government has tried to maintain the appearance of business as usual, holding a garden fair, an autumn festival and Bahrain’s annual air show. Attendees at the latter event could see the smoke rising from surrounding villages, where tires were lit in protest.
Shiite and Sunni groups have demanded boycotts of businesses belonging to members of the other sect. One of those targeted was Jawad Business Group, owned by one of Bahrain’s biggest Shiite families.
Faisal Jawad, the group’s chief executive, said he lost “several millions” as a result of unrest. Jawad dismissed the campaign against his food, fashion and restaurant retail business as “childish,” and said he’s planning to expand regardless.
“I will be finished if I stay at home,” Jawad said in a Feb. 2 telephone interview. “I’m Bahraini. I belong here.”
Jawad said he believes King Hamad is “doing his best to bridge these gaps” between Shiites and Sunnis, and Bahrainis should “give him a chance.” Jamal Fakhro, first deputy chairman of the king’s advisory body, the Shura Council, echoed that view and said that opposition groups should take up their grievances in parliament and dialogue, not the streets.
“If they want to lead a change, they should put their hands in the hand of the government and the ruling family,” he said. “Unless their aim is to overthrow the ruling family.”
In Sitra, Yacoub’s family, struggling to come to terms with their son’s death, say he was remote from such political arguments, and never took part in protests. He hadn’t been troubled recently by sickle cell anemia or seen a doctor for it since the age of five, said his father, Ibrahim Yacoub.
“He died for no reason,” said his mother, Amina Abdul- Wasi.
--Editors: Ben Holland, Louis Meixler
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