Bahrain

Bahrain seems to have escaped a lengthy Kuwait-style impasse over the budget, but the fact that King Hamad had to concede to the demands of MPs - for additional funding to maintain the BHD50 inflation allowance - could suggest that the government is losing control somewhat. As in Kuwait, this is positive for democracy, but not necessarily for stability and the business environment. As the economic climate worsens, public dissatisfaction could well turn against foreign investors, meaning that the government is forced to rein in the investor-friendly economic outlook it has been projecting over the last few years.

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