BAHRAIN -- Here in this little island kingdom just off the coast of Saudi Arabia, all the complexities and contradictions of the Middle East and the Arab world seem to come together.

Bahrain is staunchly Arab, yet also realistically positive toward the United States and Britain, its two major allies. It is at the heart of the global finance and communications networks, yet it is also carefully traditional. It has modest oil wealth (minuscule by Mideast standards) and mouth-watering freedom from income tax, but it is not just another oil state, living off its underground natural resources. It is striving cautiously to be democratic, with parliamentary elections looming under a new constitution, but retains, nonetheless, some of the features of a semifeudal estate under the control of a long-established and respected ruling family, headed by the emir, now styled as king.

It is an open society -- far more so than its big, austere Saudi neighbor -- yet far from relaxing all controls on the media. In the current atmosphere of crisis it would be very happy to see the back of Iraqi President Saddam Hussein and all his works, yet would much prefer disputes in the region to be settled by dialogue and compromise rather than violent war. Of course, the Bahrainis want Israel back in its box, but that dispute is all far away across oceans of desert. The Arab obsession with the fate of the Palestinians is muted.