BAHRAIN — Here in this little island kingdom just off the coast of Saudi Arabia, all the complexities and contradictions of the Middle East and the Arab world seem to come together.

Bahrain is staunchly Arab, yet also realistically positive toward the United States and Britain, its two major allies. It is at the heart of the global finance and communications networks, yet it is also carefully traditional. It has modest oil wealth (minuscule by Mideast standards) and mouth-watering freedom from income tax, but it is not just another oil state, living off its underground natural resources. It is striving cautiously to be democratic, with parliamentary elections looming under a new constitution, but retains, nonetheless, some of the features of a semifeudal estate under the control of a long-established and respected ruling family, headed by the emir, now styled as king.

It is an open society — far more so than its big, austere Saudi neighbor — yet far from relaxing all controls on the media. In the current atmosphere of crisis it would be very happy to see the back of Iraqi President Saddam Hussein and all his works, yet would much prefer disputes in the region to be settled by dialogue and compromise rather than violent war. Of course, the Bahrainis want Israel back in its box, but that dispute is all far away across oceans of desert. The Arab obsession with the fate of the Palestinians is muted.

The contradictions and ambivalences do not end there. Bahrain is the meeting point of outside cultures and forces in the region, as it has been for centuries. From across the Persian Gulf to the east comes the baleful influence of the Iranian mullahs, fueling a strong Shiite Muslim minority, the hard core of whom wave Hezbollah flags and refuse to participate in democratic reforms. They also take to the streets protesting against any attack on Iraq, despite Iran and Iraq having been at each other’s throats in bloody combat only a decade and a half ago. They may fear Iraq, but, unlike their more hardheaded rulers, they hate and fear America more.

Further east lies the world’s largest pool of plentiful cheap labor — the Indian subcontinent. Like those of the other Persian Gulf states, all of Bahrain’s traditional trading links were with India, not the Mediterranean and Europe. When the British influence dominated the Middle East in the first half of the last century, it was from Vice Regal Delhi that the British ran their vast imperial network throughout the Persian Gulf region. Today, like their neighbors, the Bahrainis draw heavily at the well of immigrant workers to sustain their construction and service industries, which underpin a relatively high living standard.

Bahrain is small and finds it possible to contain all these rival pressures and attitudes within a stable and modern system. Its steps toward democracy fit in with a broader vision of a Middle Eastern future in which democratic states will somehow live happily side by side. American policymakers, when asked what they think would follow a regime change in Baghdad, single out Bahrain and its even smaller, although richer, neighbor Qatar, as examples of the way forward.

On the other hand, Iraq and Syria remain outright dictatorships suffering the full catastrophe of closed economies, police states and oppressive central direction. Bloody uprisings and internal revolt look more certain in the future for them than gentle reform, whether or not assisted from outside. Probably the same applies to non-Arab Iran across the Gulf.

But how the Western vision of emerging Middle Eastern democracy is supposed to dovetail with the far-from-open kingdom of Saudi Arabia, the region’s territorial giant and by far the world’s biggest oil producer and owner of oil reserves, is far less easy to predict.

Like its small neighbor, to which it is now physically linked by a massive four-lane causeway, the kingdom of the Saudis is riven by contradictions and ambivalence. Wanting to be good friends with the overwhelming superpower, America, it also wants to keep in with Islamic radicalism. Wanting above all to maintain semifeudal stability, it also wants to be an integrated part of the global capitalist system. Embarrassed by the heavy implication of young Saudis in last year’s horror of September 11, it nonetheless continues to tolerate, appease and even indirectly finance extremist Islamic ideologies.

This is a situation of precarious ambivalence in the heart of the world’s most sensitive region. For all the brave talk about new oil sources elsewhere and less oil dependence, all parts of the world, East and West, remain as reliant as ever on Middle Eastern oil and gas flows. For Japan, the dependence remains enormous; for the awakening giant China, it is growing fast; for the U.S., which used to have such high hopes of reducing oil imports, the reliance on imports is practically greater than ever.

Each weekend, armies of Saudi residents, both nationals and expatriates, pour across the causeway to relax, spend their money and breathe the freer air of cosmopolitan Bahrain. The little island kingdom thus acts as a sort of release valve from the caldron of pressures and the constricting atmosphere next door.

This is the kind of role Bahrain has skillfully played for centuries past, while different empires rose and fell and wars raged through the region. How it will survive the turbulence and tensions that lie just ahead is anybody’s guess. But the chances are that if and when the tyrants have been toppled, the feudal regimes reformed, the religious fanaticism confronted and contained, oil prices restabilized and the world economy revived, little Bahrain will still be there, balancing many competing worlds as it has always done.

In the Middle East, small looks more beautiful than ever.

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