Bahrain’s ruling family seems to have weathered the storm brought on by the Arab Spring and is looking to show the world that business is back to normal. In a Q&A, Frederic Wehrey, who recently traveled to Bahrain, assesses the situation in the country and whether there is hope for political transition.

Wehrey says reform is at an impasse with internal divisions within both the ruling family and opposition. And the resumption of U.S. weapons sales to Bahrain did not help Washington’s capacity to push change in the right direction.

Are political reforms moving forward in Bahrain?

The major reform milestone was the issuance of the Bahrain Independent Commission of Inquiry’s report in November. Commissioned by King Hamad bin Isa al-Khalifa, the report charges that security personnel relied on excessive force to quell the uprising and specifies very clear steps that the Bahraini government has to take.

Right now, however, the general consensus is that the government has not made concrete progress on reform.

In May, the king announced some amendments to the constitution that were framed as reforms, but the main Shia opposition party, al-Wifaq, quickly rejected them as cosmetic offers that left the real power in the hands of the ruling family.

A major stumbling block is the 2002 constitution, created unilaterally by the king, that subordinated the elected parliament to an unelected “upper house,” the Shura Council, which holds ultimate veto authority. In the eyes of many activists, this was a staggering blow to the country’s democratic progress.  Parliament thus has no real authority—it can’t legislate real laws, it can’t hold ministers accountable, and it can’t monitor corruption. The parliament is now referred to by some opposition critics as a “debating society.”

Reform is clearly at an impasse. But the real story behind the stalemate is factionalism on both sides. Within the royal family, there is a division between the pro-reform side led by the crown prince and the hardliners, among whom a trio—the prime minister, the royal court minister, and the commander of the defense forces—holds a great deal of sway. They are well entrenched and trying to undercut the authority of the crown prince.

On the opposition side, there was an institutionalized opposition, al-Wifaq, that participated in elections, sought dialogue, and remains pragmatic. That party, however, is now under pressure from the more radical youth who led the protests that erupted in 2011 and are much bolder in their demands.

The presence of these more radical and fractured currents makes it very difficult to reach a compromise or for the United States to find an interlocutor in Bahrain.

What does the ruling family want?

The real power and ultimate authority over the instruments of repression reside with the hardline faction of the government. Crown Prince Salman bin Hamad al-Khalifa is granted some room to negotiate, but none of that really amounts to anything. Any opening is calculated and calibrated.

Still, the regime has made some attempts to curtail its tactics in the streets. Security forces have shown a bit more restraint when facing protests.

The turning point for the ruling family was the Formula One Grand Prix in April. The Bahraini regime is sensitive to the country’s image as a hub of commerce and liberal values and is competing with Dubai and Qatar as a place for global business. The regime saw the race as an opportunity to show the world that Bahrain is back to normal.

And this is exactly what happened. Despite scattered protests, the race was staged without major incident. The regime walked away thinking of itself as the victor—and now that the United States has resumed arms sales to the country there is a business-as-usual feeling in Bahrain.

Throughout Bahraini history there have been protests and waves of repression followed by promised reforms that placate the opposition. This is precisely what has happened over the last year. After the harsh crackdown and attempts at dialogue, multiple avenues are now being pursued—a media clampdown, arrests, and cosmetic reforms—to quiet the opposition.

What does the opposition want? Is the opposition speaking with one voice?

The root problem is that the opposition is not united. Al-Wifaq wants reforms within the system and is amenable to the al-Khalifa family staying in power with more checks and balances.

Al-Wifaq’s position came under fire after the protests broke out and more and more Shia voices began to openly call for the ouster of the al-Khalifa family. The harder line is attracting an increasingly large following and carrying greater weight within the country.

The followers of the February 14 Youth Movement, a somewhat amorphous network of youth communicating via Facebook and Twitter, are the ones out on the street. They are very radical and provocative and are challenging al-Wifaq’s role as the leading opposition group. They also loudly criticized the U.S. arms deal.

Al-Wifaq is losing support to the February 14 Youth Movement and its talks with the regime have broken down.

Have the political protests in Bahrain been quieted? What is the threat of renewed, violent protests?

Protests persist in villages across the island, but they are at a relatively low level. The main protests are planned for major events, most recently Formula One’s return to Bahrain. The protests are so hard to predict because they are being directed by the amorphous youth coalition without party control—al-Wifaq does not have command over the protesters.

At this stage, it is a relatively managed situation with tensions simmering just underneath the surface. The real apex of violence is over for now as the regime has realized this is not in its interest—the stronger security crackdowns do not sell well internationally.

What is Bahrain’s immediate outlook?

Tensions will most likely be managed and chaos will be contained. I do not see the opposition having enough clout or organization to mount more sustained protests. And the regime has certainly gotten much smarter about how to respond. With this being said, there could be a galvanizing event that alters the landscape, but for now the ruling family has the upper hand.

How has political instability impacted Bahrain’s economy?

Tremendously. The economy is a real sore spot for the regime. The Formula One race was intended to show that Bahrain is a beacon for business, but the economy is weak following the crackdown—banks pulled out and hotels remain empty. The country will continue to rely on subsidies from Saudi Arabia and the stark economic discrepancies between Shia and Sunni areas will continue to inflame tensions.

Another key story is that the crown prince wants to liberalize Bahrain’s economy, but his economic projects have been dismantled by hardliners. More anti-liberal policies are prevailing.

How does the Sunni-Shia divide in the population influence political developments?

Sunni-Shia tensions certainly exist. Shias are excluded from serving in government, certain types of jobs, the security forces, and the army.

That said, those divisions wouldn’t matter so much if the government were more representative. The emergence of Sunni-Shia schisms in Bahrain in many ways reflected what was happening in the region—the civil war in Iraq and the events in Lebanon were felt in Bahrain. This forced people to take sides as the region was in some ways dividing itself by religion.

The regime has skillfully played the Shia card, saying that any move toward democracy is a Shia bid for power and a power play by Iran. It’s working. People are divided along sectarian lines in jobs, in schools, and in communities.

The reform movement, at one time, included cooperation between Shias and Sunnis as both tried to promote democracy. And from the vantage point of those in power, the best way to fracture this cooperation was pitting groups against each other. This is not to say that there are not Sunnis in the opposition today, but the government’s efforts have been effective.

Is Bahrain serving as a proxy battlefield for the rivalry between Iran and Saudi Arabia?

Bahrain is not a proxy battlefield. The tensions between Iran and Saudi Arabia are magnified on the island nation, but Iran does not have proxies in the country even though there are Iranian voices at times laying claim to Bahrain. It is important to look at Bahrain independently of the Saudi-Iranian rivalry.

The Sunnis and the monarchy have long accused the Shias of wanting to implement an Islamic republic. But al-Wifaq does not want to emulate the Iranian model and even puts Iran at arm’s length. There is very little evidence of Iran’s material meddling in the country even though Tehran rhetorically supports the uprising. The Shias in Bahrain are nationalists.

With this being said, the big regional player is Saudi Arabia. There is a credible argument to be made that the Saudis do not want a democratic Bahrain with a Shia majority in power because that would have ramifications for its own Shia population and would give Iran an opening. But the Iran issue is mostly used as an excuse—the real issue is democratization.

The Saudis played a major role by intervening in Bahrain last year to subdue the uprising. The military suppression undermined the crown prince’s attempt at dialogue with the opposition and effectively shattered any hope of compromise with al-Wifaq.

Is there any interest in the closer regional federation proposed by Saudi Arabia?

Saudi Arabia’s proposal to transform the Gulf Cooperation Council (GCC) into a closer union involving tighter military, political, and economic links was greeted with suspicion by most countries. But hardliners in the Bahraini government welcomed the idea.

Riyadh sees a deeper union as an opportunity to bolster its allies in Bahrain. The new initiative gives the al-Khalifa family an escape route to avoid the difficult issues of political reform.

The proposal has obviously antagonized Shias in the country and the opposition is calling for a referendum on it. The idea also provoked tensions with Iran. Tehran resurrected its claim to Bahrain as a result of this union attempt.

The smaller Gulf countries have always had a problem with Saudi attempts to impose its will on the GCC. They guard their own independence and there are historical territorial tensions, so it was hardly surprising that the other GCC countries would oppose the initiative.

When Saudi forces intervened in Bahrain it was technically under the guise of the GCC, but it was principally a Saudi move. The GCC did band together at that time because of the fear of the Arab Spring crashing over into the Gulf. But this does not negate the fact that there are long-standing differences between Saudi Arabia and other GCC countries.

Why did the United States resume arms sales to Bahrain?

When the United States held up $53 million in arms sales last year, the obvious motive was concern over the repression going on domestically and the desire to see some progress on reform.

The United States resumed arms sales by moving forward with turbo-fan upgrades for the F-16 fighter jet and providing Bahrain with advanced air-to-air missiles, harbor patrol boats, and a frigate. Ostensibly this is because the equipment is used for external defense and the United States is engaged in an effort to help modernize the Bahraini military. Washington made a point to say that this resumption does not include items directly tied to internal crowd control. The result, however, is debatable.

Washington’s thinking is that the weapons being sold can be separated from the ones used for domestic control. The flawed logic with this contention is that when the United States halted the munitions transfers, Bahrain simply went to other suppliers, including Brazil and China. The Bahraini regime notably turned to Turkey for its Cobra armored vehicles to fill in for the gap left without U.S. Humvees. These vehicles are considered by many to be more effective than American-supplied Humvees in patrolling the narrow streets in Shia villages.

There was a great deal of criticism in Bahrain when arms sales were stopped that Washington is an unreliable security partner. The recent release alleviated this a bit, but among many hardliners and others in government there is a fear that they cannot count on the United States. They saw what happened to Hosni Mubarak. Any attempt at mediation by Washington is seen as siding with the Shias and cozying up to al-Wifaq.

Symbolically, the resumption really sent a signal to the opposition that its demands do not trump other U.S. interests in Bahrain. The arms sales are a reward for the regime when there has not been any progress on reform. The announcement was meant to signal support for the crown prince’s reform efforts—he was in Washington at the time—but this logic does not hold, as it really is a victory for the hardliners.

The United States arguably lost its biggest stick when it resumed arms sales.

How should the United States respond?

That is a tough call. The parties are at a deadlock and there are no easy ways to move reform forward.

There is a need for external mediation and the opposition has called for this, but the government has rejected outside involvement in talks, saying it is an internal matter.

In the meantime, some of the most effective U.S. measures have been publically calling out Bahrain’s excesses. The opposition points to this and argues that backdoor channels can only do so much.

One major thing that the United States could do would be to move its Fifth Fleet out of Bahrain. This would certainly be a blow to the country, but even the opposition warns that this is not a good option. It would simply empower the hardliners even more and push them further into the Saudi embrace. The U.S. presence is a check on the Bahraini regime.