Bahrain - which name means "two seas" - was one of the first states in the Gulf to discover oil and to build a refinery. It never reached the levels of production enjoyed by Kuwait or Saudi Arabia, and so has had to diversify its economy.
The Muslim country is ruled by a Sunni king, whose family holds the main political and military posts. The divide between the Shia majority and the Sunni rulers has led to long-running tension in the kingdom, which has sporadically boiled over into civil disobedience.
The government called in the Saudi military to crush protests by demonstrators demanding a greater say in government in early 2011. Shia leaders have long alleged systematic discrimination in jobs and services.