History of Bahrain - Independent Bahrain

Independent Bahrain

After World War II, Bahrain became the centre for British administration of the lower Persian Gulf. In 1968, when the British Government announced its decision to end the treaty relationships with the Persian Gulf sheikdoms, Bahrain joined with Qatar and the seven Trucial States (which now form the United Arab Emirates) under British protection in an effort to form a union of Arab emirates. By mid-1971, however, the nine sheikhdoms still had not agreed on the terms of union. Accordingly, Bahrain sought independence as a separate entity declaring independence on 15 August 1971, and becoming formally independent as the State of Bahrain on 16 December 1971.

At independence, the permanent Royal Navy presence in Bahrain ended and the United States Navy moved onto the 10 acres (40,000 m2) previously occupied by British operations. The installation later grew into Naval Support Activity Bahrain, headquarters for the United States Fifth Fleet.

The emirate emerged just as the price of oil skyrocketed after the 1973 Arab-Israeli war; while Bahrain's own reserves were being depleted the high oil price meant there was massive capitalisation in the Kingdom's neighbours. The Kingdom was able to exploit the situation thanks to another war in the Levant in 1975: the Lebanese Civil War. Beirut had long been the financial centre of the Arab world, but the outbreak of hostilities in the country had an immediate impact on the banking industry. Bahrain offered a new location at the centre of the booming Persian Gulf with a large educated indigenous workforce and sound fiscal regulations. Realizing the opportunity to become a financial centre resulted in growth in other industry in the country.

This bolstered the development of the middle class and gives Bahrain a very different class structure from its tribal dominated neighbours. Although there had long been a large Indian presence in Bahrain, it was at this time that mass migration to the Kingdom began to take off with subsequent consequences for the Kingdom's demographics, as large numbers of third world immigrants from countries such as the Philippines, Pakistan, Egypt and Iran were attracted by better salaries than at home.