Gulf states are not expected to face full-scale revolts thanks to a golden bargain under which their rulers trade a share of their oil wealth for political quiescence, but Bahrain is among the most vulnerable to popular pressure.

"There's a deep sense of frustration among large segments of Bahraini society," said Toby Jones, professor of Middle Eastern studies at US-based Rutgers University.

"If there was one place in the Gulf that I was going to predict that there would be something similar (to Egypt), it would be Bahrain," he said.

Bahrain is a small oil producer with a majority Shiite population that has long complained of discrimination by the ruling Sunni Al-Khalifa family, well before popular uprisings in Tunisia and Egypt emboldened activists across the region.

Across their island country, Bahrainis sounded car horns and waved Egyptian flags on Friday night when news broke that Egyptian President Hosni Mubarak had stepped down.

The first protests in Bahrain since the events in Egypt and Tunisia unfolded are expected to take place on Monday.

King Hamad bin Isa Al Khalifa, trying to defuse the tension, said he would give 1,000 dinars ($2,650) to each local family, and the government has indicated that it may free minors arrested under a security crackdown last year.

"I think it is no coincidence that the government has chosen this time to announce new grants to all Bahraini families," said Jane Kinninmont, analyst at the Economist Intelligence Unit, who expected Mubarak's fall to strengthen protesters in Bahrain.

Diplomats said the early concessions could blunt the scale of the protest.
 

Non-OPEC Bahrain, which unlike its Gulf Arab peers has little spare cash to throw at social problems, said last week it would spend an extra $417 million on social items, including food subsidies — a reversal of attempts to prepare the public for cuts in subsidies.

Shadi Hamid, analyst at the Brookings Center in Doha, said protests in Bahrain were unlikely to draw support from across sectarian lines, and this could limit the size of demonstrations in a country with just over half a million Bahrainis.

"Not everyone in Bahrain agrees that democracy is a good thing because that will put the Sunni minority's power at risk," he said.

Villages in Bahrain regularly see night-time clashes between security forces and Shiite youths erecting barricades and attacking police with fire bombs.

The government launched a security crackdown last August against some Shiite groups to stop this, but it has loosened its grip since the revolts in Egypt and Tunisia.