On 13 January 2011, Hillary Clinton, in the background of the then evolving Tunisian Revolution, criticised Arab leaders for lack of political reform and widespread corruption in their countries, warning that Arab states risk “sinking into the sand of unrest and extremism” should they fail to liberalise their political systems and regulate their economies. Although she was right to focus on governmental corruption, the more pressing issue appears to be the widening gap between Shia and Sunni communities and the increasing possibility of a sectarian crisis in the Gulf.

Conditions for Shias vary among the Gulf monarchies, but had until recently been broadly improving across the Gulf Cooperation Council (GCC). Those gains, however, look fragile amid a mood of rising sectarian tension due to three main factors: protracted socio-economic difficulties caused by corruption, anti-Shiite discrimination, and a subsequent rise in Shia activism; dominance of a Shia government in Iraq; and a perceived rise in the Iranian influence and power in the region, leading to growing fears on the side of GCC governments of worse to come in the event of trouble with Iran.

In Bahrain, hundreds of Shia activists have been detained as part of a sweeping offensive launched last summer against perceived threats to the state, which was followed by Shiite-led riots and rallies. Furthermore, the Bahraini government has revoked the citizenship of Ayatollah Hussein Mirza Najati, who has close ties to Iraq’s Shia cleric Grand Ayatollah Ali al-Sistani, while Yasser al-Habib, a Shia activist, has been stripped of his Kuwaiti citizenship because, according to the Interior Ministry, he had sought to stir up conflict among Muslims. In Saudi Arabia, in spite of King Abdullah’s efforts, Shiite communities in the Eastern Province still suffer from anti-Shiite discrimination and are considered as ‘the enemy’, and Human Rights Watch reports that the UAE government has been deporting Shia Lebanese, alongside Palestinians from the Gaza Strip, for about a year now. Meanwhile, fears of Shia Iran have reached new heights in the region, where arms deals worth $122.8bn have been signed with American companies.

Since 1979, GCC states have, to various extents, aligned themselves with Sunni communities, and states practices have been principally orientated toward the manipulation of sectarian differences and fears. This is evident in the fact that in stand-offs between government and opposition forces, high-ranking officials regularly appear to be trying to undermine opposition unity by driving a wedge between Sunnis and Shiites.

Moreover, deep cynicisms about Shiite loyalty to the state are grounded in the structure of Shiite religious authority, which crosses national boundaries, with Shiites emulating clerics from Iran and Iraq. Additional fears of foreign influence and doubts about the communities’ loyalty are generated by Shiites appropriation of the political symbols of Hezbollah, and Shia leaders’ failure to articulate a specific and consistent political vision. As such, there is an ambiguity regarding Shiite intent, which, combined with a history of political agitation, has heightened distrust of their motives.

Sunni-Shiite animosities have their origins in the 7th century, and hence the Shia-Sunni divide is understood by Muslims in a historical context. Much of that understanding is implicit and unspoken, because sectarian prejudice is not admitted openly in the Muslim world. As a result, state officials tend to downplay the issue, claiming that the risk of imminent violent confrontation is low. Although there is certain truth in this, considerable ill-will persists among many Shia communities, because underlying issues, such as anti-Shia discrimination in education, public and private sectors, and land ownership, have not been adequately addressed; and the ingredients of a sectarian conflict are present.

IMF Regional Economic Outlook projects that GCC states continue to face significant economic vulnerabilities due to their continued dependence on oil and fluctuation in oil prices. As a result, it prescribes market diversification via expansion of the private sector as the best strategy in order to confront medium and long term challenges. A strong private sector, in turn, requires a well-educated and highly motivated labour force, certainty about regulatory policies and fair competition practices, and societal stability so to be able to attract Foreign Direct Investment.

Education, particularly in Bahrain and Saudi Arabia, remains difficult for many Shiite students, who complain about prejudice and open hostility from Sunni instructors. Employment in the public sector, especially security apparatus, is rare, and promotion prospect for those who get them are literally non-existent. Although more difficult to confirm, discrimination also appears prevalent in the private sector. The result is disproportionate poverty and disillusionment for Shiites, which endangers social and market stability by generating confrontational tendencies among Shiite communities.

From a strategic point of view, moreover, Shia-Sunni enmities have significantly undermined GCC countries’ efforts to put an end into the Israeli-Palestinian conflict, and have also reduced their ability to secure their interests in Iraq and Lebanon. They have also made them vulnerable to Iranian attempts to alienate the common from the royals.

Israel has been relatively successful in creating an anti-Iranian alliance through securitisation of “Shia Crescent”, evident in the Saudi-Jordanian-Egyptian triangle, which is to counter perceived Iranian interferences in Arabs’ business, thereby providing Israel with more space for political manoeuvring. Meanwhile, GCC states, in spite of their anxiety about Iran’s increasing influence in Iraq and Lebanon, have remained unwilling to full-heartedly commit to stabilisation of Iraq and Lebanon. They conceive Hezbollah as an arch enemy and have concerns with domestic consequences of a semi-democratic, Shia-dominated government in Baghdad.

As such, stakes are high for the GCC governments, and should they choose to do nothing or attempt to preserve the status-quo, social unrest becomes inevitable. The current situation is inherently unstable, and recent uprisings in Bahrain are indicators of widespread dissatisfaction and a strong desire for change among the public. Hence, ruling elites are better advised to initiate the change, as opposed to regulating it, thereby paving the way for establishment of more inclusive political systems in their countries.

There are important bridges to be built between Shiite and Sunni communities. Shiites have largely been marginalised and stigmatised as a result of excessive paranoia since Iran’s Islamic Revolution. Remedying this will require Sunnis coming to terms with the character and structure of transnational Shiite religious authority and the communal nature of their political activism. For their part, Shiites should seek to cooperate with potential allies in government and thus strive to find ways of forging relationships with governmental sectors that are willing to accomplish change on the ground.

And within all these, a huge responsibility falls on the shoulders of King Abdullah of Saudi Arabia. As the custodian of holy shrines, he has the authority to employ the concept of “the Peace of Mecca” to facilitate region-wide dialogues focusing on Islamic pluralism and sectarian tolerance in order to increase inter-sectarian interactions and understanding at an official level. There will almost certainly be opposition, no least from within the Al-Saud family, to such an undertaking, with some claiming that radical reforms would play into the hands of the most extreme Sunni activists. Although there are some merits to this, there should be a realisation that these reforms have been long-overdue, and thus the very survival of regimes may be endangered should they be postponed again.

Finally, while GCC’s sectarian challenge is a matter that demands a shift in internal political will, the international community still has a role to play. The United States in particular should expand its efforts to help the governments see through much needed reforms. This is so, given that, among other factors, world energy security is closely tied to stability in this part of the world. Any instability in Bahrain, for instance, could easily spill over into the Shia dominated Eastern Province of Saudi Arabia – home to the largest oil fields in the world and only 85 kilometres away from Bahrain – thereby jeopardising global security by interrupting oil production.

Ultimately, though, the sectarian threat is a challenge that must be tackled by regional states, which in essence requires them to give up on their habit of being “well-cared for clients”.