DUBAI/RIYADH (Reuters) - Saudi Arabia and Bahrain are expected to announce closer political union at a meeting of Gulf Arab leaders on Monday, a Bahraini minister said, a move dismissed by the opposition as a ruse to avoid political reform.
The decision is part of a strategy to increase integration within the Gulf Cooperation Council (GCC), as the organization's six nations fret about Iran's power in the region and the presence of al Qaeda after the Arab uprisings.
Saudi Arabia and Bahrain might initially seek closer union, local media have said, as both share a concern about discontent among Shi'ite Muslims against their ruling Sunni dynasties, and accuse Shi'ite Iran of fomenting it - a charge Iran denies.
Saudi security forces entered Bahrain in March 2011 ahead of a crackdown on pro-democracy protests which had been led mainly by majority Shi'ite Muslims against the Sunni Al Khalifa monarchy, a U.S. ally.
"I expect there will be an announcement of two or three countries. We can't be sure but I have a strong expectation," Samira Rajab, Bahrain's minister of state for information affairs, told Reuters on Sunday. Two of the countries mentioned were Saudi Arabia and Bahrain; Rajab did not name the third.
"Sovereignty will remain with each of the countries and they would remain as U.N. members but they would unite in decisions regarding foreign relations, security, military and the economy."
Despite appearances of unity, there are deep divisions within the GCC, which also includes Kuwait, Qatar, the United Arab Emirates and Oman, as its officials meet in Riyadh on Monday for day-long talks.
Saudi Arabia fears that Bahrain's pro-democracy movement has the potential to spill over into its own Shi'ite-populated Eastern Province region, home to major oilfields.
DISPUTED ISLANDS
Iranian President Mahmoud Ahmadinejad made a surprise visit to an island claimed by the UAE last month, stoking fears among Gulf rulers of growing Iranian influence since the 2003 invasion of Iraq brought Iran's allies and fellow Shi'ites to power there.
With its Fifth Fleet in Manama, the United States sees Bahrain's Al Khalifa family as an ally in stemming Iranian influence in the Gulf, even though Washington has not said it believes that Iran is behind unrest in the kingdom.
Last week, Washington said it would resume arms sales to Manama, drawing condemnation from international rights groups.
Iranian media attacked the plan. "Saudi Arabia's aim in legally occupying Bahrain is to stop the influence of Shi'ites - the majority of the island - on the Shi'ite residents in the eastern regions of Saudi," the semi-official Mehr news agency said.
"The aim of the Saudi regime in the future is the exclusion of Shi'ites in Bahrain."
Bahrain's leading opposition party Wefaq said Saudi intervention was aimed at stopping democratic change.
"The issues facing Bahrain are local, not regional. There is little the Saudis can do: they sent troops but failed because the crisis is still going on, and that's because it requires a political solution," said senior Wefaq official Jasim Husain.
"Any agreement must get the people's approval, not least in Saudi Arabia. I suspect this supposed union is just rhetoric."
Pro-democracy protesters burned tires and clashed with police in Bahrain on Saturday, demanding the release of opposition leaders and rights activists.
Opposition activists say the death toll in the unrest has risen from 35 when martial law ended last June to 81, as police make heavy use of teargas and birdshot pellets. The government says many of the deaths were caused by the protesters' or bystanders' pre-existing poor health.
"GREAT DREAM"
Khalifa bin Salman Al Khalifa, Bahrain's hardline prime minister, is believed to oppose concessions to the Shi'ite opposition. He backs the idea of a union.
"The great dream of the peoples of the region is to see the day when borders disappear with a union that creates one Gulf," the official Bahrain News Agency quoted him as saying on Sunday.
Speaking after foreign ministers met in Riyadh, Khalid bin Ahmed Al Khalifa, Bahrain's foreign minister, told Reuters on Sunday the plans for a union were ambitious.
"All aspects of union are on the table, between all members," he said.
Saudi Arabia and Bahrain are already joined at the hip, though the island's social liberalism could come under threat if a merger took place.
Saudi Arabia allows Bahrain access to an oilfield it owns, providing 70 percent of its budget, while Saudis have traditionally flocked to Bahrain for weekend relief from Islamic restrictions on gender mixing, female driving and drinking alcohol.
Justin Gengler, a researcher based in Qatar, said hardliners including the prime minister, army chief and royal court minister see a union as a way of stopping the empowerment of Shi'ites and preserving the privileges of the ruling family.
A monetary union project has faltered, and other differences also run deep however.
The Arab Spring uprisings have been a challenge for Gulf rulers. Saudi Arabia took action to stop the spread of unrest to Bahrain after being shocked to see Hosni Mubarak fall in Egypt without American intervention to save him.
Rajab said there were "reservations" among some GCC members over the union, while the deputy head of Bahrain's appointed upper house of parliament said he was skeptical.
"I have my doubts," said Jamal Fakhro. "It will not be an easy achievement to have one foreign policy between six countries, unless it's limited to specific issues."
(Writing by Andrew Hammond and Reed Stevenson; Editing by Alessandra Rizzo and Andrew Osborn)