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* Gulf pledges $20 bln for Bahrain, Oman; Saudi sends troops
* Small concessions but scant movement on bigger demands
Gulf Arab states led by Saudi Arabia are relying on money, and now military might, to quell protests in their oil-exporting region but are unlikely to halt the unrest without making significant political concessions.
So far, the autocratic rulers of the Gulf show few signs they are willing to make game-changing moves toward democracy, let alone share their near-absolute powers with their citizens.
Saudi Arabia sent troops into Bahrain on Monday as part of a Gulf force that would also include police from the United Arab Emirates to help calm weeks of protest, mainly by the Shi'ite Muslim majority. Bahrain's opposition called it a declaration of war.
The move came days after Gulf states pledged $20 bln in a so-called "Marshall Plan" to Sunni-led Bahrain and Oman, which has also seen a wave of protests by Omanis demanding jobs and a greater say in government in the normally sleepy sultanate.
"This is the first time in this entire popular uprising where a monarchy is actually really threatened … If a monarchy falls then all the monarchies are subject to that kind of pressure," Dubai-based security analyst Theodore Karasik said.
"It shows authorities will not put up with this kind of behaviour like we saw in Bahrain," he added.
But the move is a gamble. Even if this combination of carrot and stick succeeds in quelling Bahrain protests for now, governments across the Gulf region are increasingly exposed as calls for democracy in the Arab world gain momentum.
Besides Bahrain and Oman, that is perhaps particularly true for Saudi Arabia, the world's top oil exporter and most powerful Gulf state, which fears concessions to largely Shi'ite demonstrators in Bahrain could embolden its own Shi'ite minority just across the water.
Saudi Shi'ites have already held small protests over the past three weeks in the east, centre of the Saudi oil industry, to demand the release of long-held detainees. Kuwait — which has a sizeable Shi'ite minority — has also seen protests. Only the UAE and Qatar have so far seemed immune.
"It is going to be very difficult to see your neighbour change while you maintain the status quo," said Saudi activist Mohammed al-Qahtani, saying he didn't foresee protests stopping despite the decision by Saudi Arabia and its allies to raise the stakes.
"At some point they will realise they must basically institute certain changes."
Gulf states, often with growing young and web-savvy populations whose demands for change grow bolder by the day, appear willing to make some reforms, but so far not ones that would substantially alter the political playing field.
Gulf countries need to create thousands of jobs to deal with unemployment, despite large oil and gas revenues. Governments are used to hiring large white and blue collar expatriate populations and have trouble finding jobs for nationals.
Around 60% of Saudi Arabia's population of 18 mln is thought to be under 30 and the country has some eight million foreign residents. Youth unemployment could be as high as 39%, according to John Sfakianakis, chief economic at Banque Saudi Fransi.
RELYING ON OIL WEALTH
In Bahrain, where the most mainstream protesters are demanding a constitutional monarchy, the government has sacked several minor cabinet ministers, and offered a national dialogue and more jobs.
But it has not caved in to demands that it sack the entire government or the prime minister, a member of the ruling family who has been premier for 40 years. Oman's ruler has also made some changes, sacking ministers and agreeing to cede some legislative powers to a partially elected council. The move was met by protesters with both hope and scepticism, and it was unclear how much would be changed.
A cabinet shuffle has been expected in Saudi Arabia that could bring in some younger faces, while in Kuwait parliamentarians have promised to discuss giving more rights to stateless Arabs. But none of these moves would make governments significantly more democratic or threaten the all but absolute power of kings and ruling families.
The Gulf states, all allies of Washington which has urged reform in the region, are trying to use oil wealth to quell dissent by exchanging relative prosperity for political quietude, a tradeoff that has helped keep their governments stable for decades.
"I think the money is good, that it alleviates suffering of people. But at the same time it has to come up also with other forms of relaxation," said Khaled Maeena, editor of the Saudi daily Arab News, referring to the GCC aid package.
Last month, Saudi King Abdullah returned to Riyadh after a medical absence and announced $37 bln in benefits for citizens in an apparent bid to curb dissent. Other countries like the UAE and Kuwait have also offered financial perks, but have taken pains not to link them to Arab dissent.
Gulf Arabs do complain about economic deprivation. Bahraini Shi'ites complain of jobs discrimination, while Omanis say too many jobs go to foreigners. Saudis complain infrastructure development does not match the country's vast wealth.
But financial measures alone do not appear to be enough to pacify a younger generation of Gulf Arabs.
"The huge age gap between the young population and the ruling elite makes it nearly impossible for the ruled and the rulers to communicate and understand each other. We practically speak two different languages," Saudi blogger Ahmad Al Omran wrote in a recent op-ed piece in The Guardian.
"We are sick and tired of the status quo; we want change and we want it now. The demands are clear and simple: a constitutional monarchy, the rule of law, justice, equality, freedom, elections, and respect of basic human rights. Is this too much to ask in this age and time?" he added.
