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* Demonstrators clash nightly with police

* Family of dead protester hopes to hold funeral

* Virtually no impact within race “bubble”

By Alan Baldwin

MANAMA, April 22 (Reuters) – Formula One drivers will race

in Bahrain on Sunday while rage boils on the streets outside,

among protesters who denounce the Grand Prix as a gaudy

spectacle by a ruling family that crushed Arab Spring

demonstrations last year.

Demonstrators hurling petrol bombs have clashed nightly with

police this week, and security forces responded with teargas,

rubber bullets and birdshot.

The death of 36-year-old protester Salah Abbas Habib – found

sprawled on a rooftop on Saturday after overnight clashes –

provides more fuel for outrage among a Shi’ite Muslim majority

that complains of being marginalised by ruling Sunnis.

His funeral could be held on Sunday if his family recovers

his body, setting the stage for riots on race day.

The luxury sporting event is the government’s chance to

prove that life has gone back to normal in the island kingdom

after security concerns over anti-government demonstrations

forced last year’s race to be cancelled.

Bahrain, a close military ally of the United States, is the

only one of the Gulf monarchies to have been seriously

threatened by Arab Spring protests that brought down the rulers

of Tunisia, Egypt, Libya and Yemen since the start of 2011.

“Our initial demands were to elect a new government but

after the disgusting abuse we received, all the people are

asking for is for the regime to fall,” said protester Ahmed

Madani during a march of 7,000 people on Saturday.

Some banners held up during the march depicted Formula One

race car drivers as riot police beating up protesters.

“STUFF THAT REALLY MATTERS”

The violence outside has had virtually no impact within the

sealed bubble of Formula One, apart from a few staff of two

teams who witnessed a petrol bomb-throwing incident.

Red Bull’s world champion Sebastian Vettel, who starts at

pole position, said shortly after arrival on Thursday that he

thought much of what was being reported was hype.

He looked forward to getting in the car and dealing with the

“stuff that really matters – tyre temperatures, cars”.

But nightly TV images of streets ablaze with clouds of smoke

and teargas are an embarrassment for Formula One and the global

brands that lavish it with sponsorship. Thomson Reuters, parent

company of Reuters, is a sponsor of the Williams Formula One

team.

Jean Todt, president of Formula One’s governing body, the

International Automobile Federation, broke a media silence on

Saturday to say he was sorry “about what has been reported”.

“I am not sure that all that has been reported corresponds

to the reality of what is happening in this country,” he added.

The Bahrain government says it has enacted reforms after

cracking down on demonstrators last year while revolts were

sweeping across the Arab world.

King Hamad bin Isa al-Khalifa, who will attend Sunday’s

race, said in a statement overnight that he wanted “to make

clear my personal commitment to reform and reconciliation in our

great country. The door is always open for sincere dialogue

amongst all our people.”

Bahrain’s government is thought to have spent $40 million to

host the event. While motor sports journalists have been invited

to cover it, reporters from Reuters and some other news

organisations who normally write about Middle East politics have

been denied visas.

Hackers brought down the F1 website intermittently on Friday

and defaced another site, f1-racers.net, to support what they

described as the Bahraini people’s struggle against oppression.

The race has drawn more than 100,000 visitors and generated

over $500 million in spending. It has been a symbol of pride for

the ruling royal family since Crown Prince Sheikh Salman bin

Hamad al-Khalifa brought the first Formula One Grand Prix to the

region in 2004.

The continued hunger strike of Abdulhadi al-Khawaja, one of

14 men jailed for leading last year’s uprising, is further

inflaming the street and his health has entered a critical stage

after over 70 days. His family says he stopped taking water on

Friday, raising fears for his life.

Foreign Minister Khalid bin Ahmed Al Khalifa said on

Twitter: “I wish the hunger striker comes back to his senses.

Nobody wants him to die.”

(Writing by Isabel Coles and Andrew Hammond in Dubai; Editing

by Peter Graff)