meed-logo

line1 line2 line3
SIGN IN / REGISTER

Foreign policy issues cloud Bahrain’s horizon

8 November 2023

MEED’s December 2023 special report on Bahrain also includes: 

> Bahrain waits for major infrastructure projects
> Bahrain takes renewables strides
> Bahrain charts pathway to net-zero future
> Bahrain banks have cause for cheer

 

Bahrain’s Sheikh Khalid bin Hamad al-Khalifa, first deputy chairman of the Supreme Council for Youth & Sports and head of the Bahrain Olympic Committee, flew into Doha on 28 October to watch his compatriots take on Japan in the final of the Asian Men’s Handball Qualification Tournament for the 2024 Paris Olympics.

Sheikh Khalid was welcomed on arrival by Qatar's Sheikh Thani bin Hamad al-Thani in what was another sign of the ongoing process of rapprochement between the two countries, following the 2017-21 boycott of Qatar by Bahrain, the UAE and Saudi Arabia.

The rebuilding of the bilateral relationship has been a slow process. Indeed, Bahraini officials complained on several occasions in 2022 that Qatar had repeatedly declined to take up its offer of talks.

However, the process picked up momentum in early 2023, with several meetings at the headquarters of the Gulf Co-operation Council in Riyadh. In mid-April, the two sides agreed to restore full diplomatic relations, although they have yet to reopen embassies or appoint new ambassadors.

Regional tensions

Other foreign policy issues are causing greater diplomatic headaches these days. As one of the two Gulf countries to sign normalisation deals with Israel, Bahrain has found itself in a difficult position in light of the Hamas attack on Israel on 7 October and the subsequent heavy bombardment of Gaza by Israeli forces.

That issue rose to the fore on 2 November, when the Council of Representatives issued a statement saying the Israeli and Bahraini ambassadors to each other’s country had returned home and there had been a “cessation of economic relations”.

This was initially taken by many commentators to mean that diplomatic relations had been broken off, but the reality appears to be a suspension rather than a formal severance of ties. The Bahrain government subsequently issued a statement confirming its ambassador to Tel Aviv had returned home “some time ago” and the Israeli ambassador to Manama had also left. There had been protests outside the embassy since the Hamas-Israel war began.

In addition, direct flights between Bahrain International airport and Tel Aviv airport “stopped as of several weeks ago”, Manama said.

However, the statement made no mention of diplomatic relations being cut. The Israeli government meanwhile said that bilateral relations were “stable”.

However, there is clear potential for the war to escalate and the Bahrain-Israel relationship to worsen. Speaking at the 10th emergency special session of the UN General Assembly on 1 November, Bahrain’s ambassador to the UN, Jamal Fares al-Ruwaei, warned about the risks that Israel’s bombing of Gaza could radicalise a new generation. “Such scenes of death and destruction can create entire generations filled with accumulated anger and thirst for vengeance,” he said.

The authorities in Manama will be watching closely in case future protests against Israeli actions include explicit challenges to the Bahrain regime itself.

Economic headwinds

On the economic front there have also been challenges. Italian energy major Eni recently pulled out of the offshore Block 1 licence it secured in May 2019. An exploratory well was drilled on the block in mid-2021.

Bahrain has also yet to make any significant progress on the Khaleej al-Bahrain offshore field, which was discovered in April 2018.

In a more positive development, a $7bn upgrade of the Bapco refinery is due to enable a ramp-up of production to about 380,000 barrels a day by mid-2024, which should bolster government revenues, though there have been some reports of delays.

Bahrain’s headline real GDP growth estimate for 2023 has meanwhile been curbed to 2.7 per cent in the latest update from the Washington-based IMF, down from an estimate of 3 per cent in April. This is down from an estimated 4.9 per cent growth in 2023 and comes amid an extension of Opec+ oil production cuts. Real GDP is forecast to rise back to 3.6 per cent in 2024.

Although high oil prices have bolstered the country’s fiscal position over the past two years, the government has also had to continue trimming public spending to bring its budget closer to balance. In 2023, Bahrain is running an estimated fiscal deficit of 5 per cent of GDP.

Capital Intelligence sovereign analyst, Dina Ennab, predicts the budget deficit will fall to 5 per cent of GDP in 2023, compared to 6.1 per cent in 2022. It could fall further, to 3.6 per cent of GDP by 2025, “provided the government continues to contain public spending and improves revenue mobilisation”, she wrote in a mid-October ratings review.

This is still a far larger deficit than the government has been aiming for. In early June, the government issued its two-year budget for 2023-24 and said it was targeting a deficit of less than 1 per cent of GDP in 2024.

Under the Fiscal Balance Programme launched in 2018, the government had initially aimed to balance its books by 2022, but the year before that deadline – and amid the Covid-19 pandemic and lower oil revenues in 2021 – it pushed the target date back to 2024.

The government’s forecast revenues of BD3.1bn ($8.2bn) in 2023 and BD3.5bn in 2024 are based on a conservative target of oil prices averaging $60 a barrel. The IMF estimates that the country will need an oil price of $108.3 a barrel to balance its budget this year, falling to $96.9 a barrel in 2024 – both figures are by far the highest in the GCC.

Should instability spread around the region, there could be the sort of spike in oil prices that would, in theory, bring the budget into balance, but the wider geopolitical and macroeconomic consequences would almost certainly be broadly negative for Bahrain and neighbouring countries.

Image: Sheikh Khalid bin Hamad attends Olympiad qualifier in Doha. Credit: Bahrain News Agency

https://image.digitalinsightresearch.in/uploads/NewsArticle/11276847/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Populous wins Bahrain Sports City contract

    21 April 2026

     

    US-based engineering firm Populous has won a BD5m ($13.5m) contract for the Sports City development at Sakhir in Bahrain.

    The contract was awarded by Bahrain’s Ministry of Works, Municipalities Affairs & Urban Planning.

    The scope covers pre-contract consultancy services, including finalising the masterplan and internal infrastructure, completing phase 1A design works and preparing tender documents.

    Populous is a specialist sports venue designer that formerly operated as part of HOK Group.

    The contract was first tendered in 2021, when Populous emerged as the sole bidder.

    At the time, it was reported that Sports City would include Bahrain’s largest sports stadium and a multi-purpose indoor sports arena.

    The project is expected to provide renewed impetus to Bahrain’s construction and transport sector, which has struggled in recent years, with the total value of awarded contracts falling for a third consecutive year.

    According to regional project tracker MEED Projects, about $400m-worth of contracts had been awarded in Bahrain by the end of October last year – less than half the $1.2bn recorded during the same period the previous year.

    The sector has yet to return to pre-pandemic levels. Before 2020, Bahrain consistently awarded more than $2bn in contracts annually, peaking at nearly $4bn in 2016.

    Bahrain’s construction industry is forecast to record average annual growth of 4.9% in 2026-29, supported by investments in transport infrastructure and renewable energy projects aligned with Bahrain’s Economic Vision 2030.

    Vision 2030 includes the BD11.3bn ($30bn) Strategic Projects Plan, unveiled in October 2021, encompassing 22 national infrastructure projects. It also includes plans to create five new cities by 2030: Fasht Al-Jarm, Suhaila Island, Fasht Al-Azem, Bahrain Bay and the Hawar Islands.

    Growth over the forecast period is also expected to be driven by investments under the National Renewable Energy Action Plan, which targets a 30% reduction in carbon emissions by 2035, compared to 2015 levels, and aims to achieve net-zero emissions by 2060.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16487784/main.jpg
    Yasir Iqbal
  • Entries now open for MEED Projects Awards 2026

    21 April 2026

    Enter the awards

    The MEED Projects Awards in association with Mashreq 2026 have officially opened for entries, inviting companies, developers, contractors and project teams to submit their projects for the region’s most prestigious construction awards.

    For over 15 years, the MEED Projects Awards have celebrated the Middle East and North Africa’s most ambitious and transformative projects, recognising technical excellence, innovation, sustainability and delivery impact. Past editions have highlighted landmark developments that set new benchmarks for the region’s built environment, including internationally recognised projects such as Burj Khalifa and Louvre Abu Dhabi.

    “The MEED Projects Awards are the gold standard for recognising outstanding achievements in construction across Mena, showcasing the region’s technical and design excellence while bringing the industry together to celebrate and connect over the very best projects of the year,” said Ed James, head of content and research at MEED.

    “As a long-standing partner of the MEED Projects Awards, Mashreq is proud to support a programme that is recognised for its independence, credibility and industry impact. These awards celebrate projects that set benchmarks for excellence and contribute meaningfully to the region’s development,” said Arun Mathur, executive vice-president and global head of contracting finance at Mashreq.

    Winners are chosen through a rigorous, independent judging process, led by a panel of more than 50 senior industry experts representing developers, contractors, engineers and project specialists. The awards celebrate projects across a wide range of sectors, including Building, Transport, Energy, Water, Healthcare, Education, Hospitality, Culture, Industrial, Power, Small Projects and Developments.

    Being shortlisted or winning a MEED Projects Award places a project among the region’s elite, offering regional recognition, global exposure and industry credibility.

    Submissions are now open, with full category details and entry guidelines available on the official entry platform.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16487756/main.gif
    MEED Editorial
  • Work advances on Saudi Maaden mine renewables project

    21 April 2026

     

    Local contractor Arabian Qudra Company is advancing construction works on an integrated solar photovoltaic (PV) and battery energy storage system (bess) project at the Al-Baitha bauxite mine in Saudi Arabia.

    The off-grid facility will integrate an 8MWp solar PV array with a 30MWh bess, allowing the mine to operate almost entirely on renewable energy.

    Emerge, a joint venture of Masdar and EDF Power Solutions, is developing the project, including managing financing, design, procurement, construction, operation and maintenance.

    Last August, MEED reported that Maaden Bauxite & Alumina Company (MBAC), a subsidiary of Saudi Arabian Mining Company (Maaden), had signed a 30-year power purchase agreement with Emerge to supply its Al-Baitha bauxite mine with renewable energy.

    Arabian Qudra Company was subsequently appointed as the engineering, procurement and construction (EPC) contractor, with works beginning at the start of 2026.

    The firm is a subsidiary of Abunayyan Holding Company, a privately owned Saudi industrial group.

    The project is expected to generate around 17,300MWh of electricity annually and provide a continuous 24/7 power supply. It will reduce carbon dioxide emissions by approximately 13,800 tonnes a year.

    According to projects tracker MEED Projects, construction is expected to be completed in early 2028.

    Maaden Solar 1

    Maaden is also in the early stages of developing Maaden Solar 1, potentially the world’s largest solar process heat plant. 

    MEED previously reported that US-based GlassPoint had partnered with Saudi Arabia’s Ministry of Investment as a first step towards construction of the planned $1.5bn project.

    In 2025, Spain-headquartered Cox Energy signed a collaboration agreement with the client to participate in the project. The client had been expected to invest approximately $31.1m in the first phase of the project.

    Once complete, Maaden Solar 1 will be a 1,500 megawatt-thermal (MWth) facility. A timeline for the project remains unclear, with construction not expected to begin until at least 2027.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16487404/main.jpg
    Mark Dowdall
  • Egypt to build Olympic Village project on Red Sea

    21 April 2026

    Egypt has moved to back a major new sports development on the Red Sea coast, officially assigning a 225-acre plot for a planned Olympic Village in the Red Sea Governorate.

    The site is located opposite the resort destination of El-Gouna, giving the project access to an established tourism corridor.

    The development is intended to strengthen Egypt’s ambition to become a hub for international sports tourism, with facilities designed to support large-scale regional and global championships.

    Plans include stadiums and purpose-built arenas designed to meet Olympic-level requirements, enabling the complex to accommodate multiple sports and event formats.

    To support visiting delegations and spectators, the Olympic Village is expected to include on-site hospitality facilities, including a hotel.

    The project is intended to operate as an integrated, self-contained destination capable of staging regional and international tournaments, while also leveraging the Red Sea’s year-round appeal for camps, friendlies and seasonal training programmes.

    According to UK analytics firm GlobalData, Egypt’s residential construction sector is expected to grow by 8.3% from 2026 to 2029, supported by investments in the housing sector and the government’s focus on addressing the country’s growing housing deficit amid a rising population.

    The commercial construction sector is expected to register real-term growth of 6.6% in 2026-29, supported by a rebound in the tourism and hospitality markets and an improvement in investment in office buildings and wholesale and retail trade activities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16485900/main.jpg
    Yasir Iqbal
  • Algeria launches oil and gas licensing round

    21 April 2026

    Algeria has launched a new bid round offering seven exploration blocks to international companies.

    The round was launched by the National Agency for the Valorisation of Hydrocarbon Resources (Alnaft), which manages and regulates the upstream oil and gas sector in the country.

    The blocks are located in the regions of Ouargla, Illizi, Touggourt and El-Bayadh. Both oil and gas assets are included.

    The blocks on offer are:

    • Est Bordj Omar Driss 1
    • Illizi Centre 1
    • El-M’Zaid Nord
    • El-Borma 2
    • El-Hadjira 3
    • El-Benoud Est
    • Touggourt Sud

    Technical evaluation of bids will cover exploration, development and production optimisation plans.

    All bids – except those for Est Bordj Omar Driss 1– will also be assessed against financial criteria, including the bidder’s participation rate in financing upstream operations.

    Successful bidders will access the assets through contracts with Sonatrach, either via production service agreements or participation agreements, depending on the block.

    Algeria is currently seeing an uptick in demand for its gas exports due to the disruption to exports from Qatar and the UAE in the wake of the US and Israel’s attack on Iran on 28 February.

    READ THE APRIL 2026 MEED BUSINESS REVIEW – click here to view PDF

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16478927/main.png
    Wil Crisp