Thursday, Mar 17, 2011
DUBAI (Zawya Dow Jones)--The entry of Saudi troops into Bahrain, part of broader security assistance provided by the Gulf Cooperation Council, or GCC, underlines the gravity of the political situation in Bahrain and a worrying geopolitical dimension to the region's recent flare-up of unrest, ratings agency Moody's said.
"We believe that there is a substantial risk that the medium-term credit fundamentals of Bahrain will be impaired by the present crisis, which seem unlikely to be resolved in the near future," Moody's said in an emailed report late Wednesday. "Rising tensions between Saudi Arabia and Iran, which has condemned the intervention, have negative implications for political stability in the wider region."
On Wednesday, Bahraini security forces carried out a violent crackdown against protesters to drive them from the center of the capital Manama, and imposed a curfew across much of the city, as the island kingdom attempted to end weeks of demonstrations. That move was the latest escalation in a conflict between protesters, drawn mostly from Bahrain's Shiite Muslim majority, and the Sunni Muslim ruling al-Khalifa family.
Tensions rose Monday with the arrival of 1,000 troops from Saudi Arabia and 500 police from the United Arab Emirates, despite warnings from the U.S. that such a move could worsen the situation. The presence of the troops has heightened fears of a sectarian conflict and of possible involvement by Iran, Saudi Arabia's main rival for regional influence.
Moody's said the intensity and determination of the current anti-government protests are novel and have been amplified by events elsewhere in the Arab world, particularly the uprisings in Tunisia and Egypt. Against this context, there is a substantial risk that Bahrain's credit fundamentals will be impaired by the present crisis, notwithstanding the short-term benefits of rising oil prices, it added.
The ratings agency placed Bahrain's A3 sovereign ratings on review for possible downgrade on Feb. 23.
"Our monitoring of political developments across the Middle East region could result in further rating actions if we are convinced that the deteriorating political situation is likely to endure and that it presents a significant threat to particular countries' medium-term credit fundamentals," Moody's said.
-By Tim Falconer, Dow Jones Newswires; +9714 446-1690; tim.falconer@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
17-03-11 0445GMT
