Money talks in Bahrain. In fact it never really shuts up. The ruling family continues to splurge on a series of vanity projects despite a growing clamor of alarm from international analysis warning that the tiny island kingdom's finances are fast swirling down the toilet. On its own, the financial downturn would be worrying for Bahrain. But coupled with the kingdom's ongoing crackdown on repression, it's terrifying. This week the International Monetary Fund predicted that Bahrain could run out of money in less than five years. Such warnings have been streaming in from financial experts this year. In February, credit rating agency S&P awarded Bahrain a "negative" outlook form a previously "stable" one, followed in March by a downgrade from Moody's rating agency. It also placed it on review for further downgrade, noting that "Deterioration in the domestic or regional political environment, resulting in disruptions to oil production and/or foreign investments in the economy, would also be highly credit negative." Then in June Fitch's agency downgraded Bahrain from BBB- to BB+.
All of these downgrades mean that this year, for the first time since 1999, all the major rating agencies consigned Bahrain into what financial experts dismissively call junk territory. Also in June, Forbes reported that the World Bank cut its forecast for Bahrain's GDP growth this year to 2.2 percent, compared to the 2.7 percent it had predicted in January. The economy is set to slow further in the following years, with the World Bank forecasting growth of 2 percent in 2017 and 1.9 percent in 2018." The Bahraini authorities, understandably, are trying to talk up their economy, but addressing plummeting world oil prices is like trying to negotiate with gravity. In an effort to address the emergency, Bahrain's government cut subsidies on gas this year, and for meat and poultry last October as the economic crisis began to bite deep. Undeterred, the kingdom's ruling family have found plenty of money for all sorts of other things. The king helped pay for the UK Queen's lavish 90th birthday celebrations in May, earning himself a hilarious Forrest Gump-type cameo in the royal box at Windsor during the party. Last month it was announced the king would be gifting the people of Pakistan "a state of the art nursing institution" in Islamabad, and his son - Prince Nasser - is funding a new professional cycling team in Bahrain with an estimated annual budget of around $15 million. Why should the United States care about any of this? Well, because Washington will feel its own pain if Bahrain slips into economic or political chaos. The United States has very serious military investments based in Bahrain, and instability caused by financial ruin or political chaos, or a combination of both, would be cataclysmic for U.S. interests. The last few months of bad financial news has also been accompanied by a sudden, sharp and extensive targeting of those who complain about the regime. Leading human rights activists and opposition leaders have been forced into exile, jailed, or been given long sentences after sham trials. It's a frightening twofer, where the ruling family not only steers the economy into meltdown but threatens anyone who might organize to criticize it. Yet Washington seems to be doing little about the disaster beyond saying it wishes it weren't happening. That's not enough. The Obama Administration must show leadership on Bahrain. It should stop arming the dictatorship and introduce visa bans for those credibly linked to human rights abuses. It can't afford to do anything less.