In Bahrain corruption and dispossession, it’s just Business

Special Report: In Bahrain, a symbol at the heart of revolt
By Frederik Richter and Martin de Sa’Pinto

MANAMA/ZURICH, Jun | Thu Jun 16, 2011 11:25am EDT

MANAMA/ZURICH, Jun (Reuters)- Until a few months ago, the twin towers of the Bahrain Financial Harbour development — clad in green glass and shaped like over-sized toy sea-horses — were symbols of the island state’s role as a regional financial hub.

Today the towers have taken on a different significance: concrete expressions of the way business and politics so often merge in the Gulf and, as a result, targets in the unrest that has roiled Bahrain and the wider Middle East since the beginning of the year.

Built by Gulf Finance House, a listed investment company run by Bahraini businessman Esam Janahi, the towers have also come to embody the ruling al-Khalifa family’s fight to preserve its power and protect the vast wealth of the country’s economic elite.

Land in the Gulf Arab region is largely controlled by a small number of ruling families who use it as a kind of currency, doling out plots to favored families and developers to forge political relationships and make money. For it to work, the system depends on businessmen like Janahi, merchants who ostensibly operate independently from the state but whose success rests, at least in part, on political connections.

Janahi, whose net worth local bankers estimate was several hundred million dollars before the global financial crisis, used his close ties to the al-Khalifas to build the centerpiece of the Bahrain Financial Harbour. He could then point to the development as a model to help secure further land deals from rulers and governments across the Middle East and as far away as India, convincing investors to put up billions of dollars for property projects, most of which have never been built.

GFH was far from the only firm to turn sand into money. The basic game plan was played out dozens of times by various companies across the Gulf in the past decade or so. But Janahi and his firm were among the biggest. …more