President George W. Bush and King Hamad bin Isa Al Khalifa met earlier this year to discuss trade links between the two nations

he Gulf nation of Bahrain comprises 40 islands between the Qatar peninsula and eastern Saudi Arabia and could accurately be described as a nation of firsts. It was the first Gulf country to discover oil, the first to introduce a public education system, the first to embrace universal suffrage and the first to sign a free trade agreement with the USA, its close friend and ally for the last 50 years.

A British protectorate until its independence in 1971, Bahrain’s revenue flow was once in thrall to the ebb and tide of the Arabian peninsula. Pearling was the mainstay of the Bahraini economy in the early part of the 20th century, and the major contributor to the Kingdom’s wealth until the discovery of oil in 1932.

Bahrain, though, does not share the infinite resources of its oil-exporting powerhouse neighbors Saudi Arabia and the UAE – recent geological surveys suggest that the Kingdom’s wells may run dry within two decades – thus after independence a decision was made to diversify the national economy. At that time, Lebanon was the regional leader in banking and finance. When civil war broke out in the Middle Eastern country, Bahrain stepped in to fill the void. Three decades later, Bahrain is the leading banking center in the Middle East and has taken bold steps to position itself as a notable service economy and to expand its already extensive downstream activities. According to figures released by the Economist Intelligence Unit, Bahrain’s GDP is set to grow by 30% over the next five years, with GDP per capita rising to $24,000 by 2011

“Through civilization and diversification, we were able to make Bahrain what it is today,” says Prime Minister of Bahrain Sheikh Khalifa bin Salman Al Khalifa. “The reforms implemented through His Majesty King Hamad have emphasized this concept, at the same time reinforcing the process of legalizing and institutionalizing the Kingdom and fomenting a strategy based on progression and human development. This is why Bahrain now enjoys a distinct environment of development on all levels.”

H.H. Sheikh Khalifa bin Salman Al Khalifa, Prime Minister of Bahrain

Sheikh Khalifa is the longest-serving prime minister in the world, having held his office for 37 years, and is the uncle of the reigning monarch, King Hamad. Lauded for his business acumen, the prime minister has been a linchpin of Bahrain’s transition from an absolute monarchy to a progressive democracy. Sheikh Khalifa’s policies saw him awarded the 2006 UN-Habitat Scroll of Honor for his ‘impressive efforts in lifting the living standards of all Bahrainis through an active focus on poverty alleviation and modernization while preserving Bahrain’s cultural heritage.

“The government’s efforts to develop education are ongoing and we aim to link educational development with the job market to provide specialized labor, and in return decrease unemployment to the lowest possible level,” says the prime minister. “Development is continuous and we pay special attention to education and training as the major pillar of achieving human development

Religious tolerance, a high standard of living and an evolving democracy underpin Bahrain’s emergence as a regional leader in economic diversification. Buoyed by a business friendly environment, a cosmpolitan workforce and world class infrastructure, Bahrain is the region’s financial center.

The U.S. Heritage Foundation rates Bahrain’s economy as the most open in the Middle East, and places it 19th in the world out of 157 countries reviewed. United States Ambassador to Bahrain Adam Ereli says that “doing business here is as easy as doing business in the U.S.”

“We have implemented an economic development strategy that takes into consideration the uniqueness of Bahraini society while at the same time relying on individual initiative, economic freedom, private sector encouragement, the attraction of foreign investment, income resources diversification and the promotion of human development,” Sheikh Khalifa continues. “We view the Bahraini citizen as being the real and prevailing fortune of this country.”