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* Gulf Arabs to weigh union idea at summit in mid-May

* Seek to counter regional protest movements, Iran’s clout

* Bahrain’s resurgent unrest is most immediate concern

By Andrew Hammond

DUBAI, April 29 (Reuters) – Wary of Iran and regional

protest movements, Gulf Arab states are pushing ahead with plans

for a political union that would involve joint foreign and

defence policies, the Saudi foreign minister said in a speech at

the weekend.

The comments by Prince Saud al-Faisal come two weeks ahead

of a summit of U.S.-aligned Gulf leaders in Riyadh that will

review an outline for such a union after Saudi King Abdullah

first floated the idea last December.

A Gulf-based Western diplomat said the proposal was driven

mainly by Saudi fears that the restive Shi’ite Muslim majority

in Bahrain could topple the island kingdom’s Sunni Muslim

rulers. He said an announcement of progress on a federation

between the two to launch the union could be made at the summit.

Shi’ite-led unrest is resurging in Bahrain a year after the

ruling Al Khalifa family brought in Saudi and United Arab

Emirates troops to help suppress an uprising seen by Gulf rulers

as sectarian in nature and driven by Shi’ite giant Iran.

A visit this month by Iranian President Mahmoud Ahmadinejad

to the island of Abu Musa, also claimed by the United Arab

Emirates as its own, has stoked the concern of conservative Gulf

Arabs about Iranian influence in the oil-exporting region.

“Cooperation and coordination between the countries of the

Gulf Cooperation Council (GCC) in its current format may not be

enough to confront the existing and coming challenges, which

require developing Gulf action into an acceptable federal

format,” Prince Saud said in a speech delivered on his behalf by

his deputy to a GCC youth conference in Riyadh on Saturday.

“The Gulf union, when it is realised, God willing, will

yield great benefits for its peoples, such as in foreign policy

with the presence of a supreme Gulf committee coordinating

foreign policy decisions that reorders group priorities and

realises group interests,” he said.

Gulf leaders fear Bahrain will fall into the orbit of

anti-Western, clergy-ruled Iran if the Shi’ite opposition wins a

stake in government and the Al Khalifa family, distant relatives

of Saudi Arabia’s Al Saud, loses some of its extensive powers.

Bahraini security forces clash with Shi’ite protesters on

most days in various areas of the country while opposition

parties stage mass protests every week.

The opposition, led by the Shi’ite Islamist Wefaq party,

denies Iran links, points to Sunnis and secularists in its ranks

and says it only wants a say in how Bahrain is run.

GCC A RESPONSE TO REVOLUTIONARY IRAN

The GCC was formed in 1980 in the wake of the Islamic

Revolution in Iran, and the outbreak of the Iran-Iraq war, by

Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain, a

grouping including major world oil and gas producers.

But the Gulf elite – a club of Sunni autocrats providing

military facilities to the United States – have watched with

alarm as Iranian-allied Shi’ites rose to power in Iraq after a

U.S.-led invasion in 2003 and Iran advanced a nuclear energy

programme they fear will give Tehran atomic bomb capability.

The Saudi royal, son of King Faisal who died in 1975, cited

that programme as well as the advent of Arab uprisings last year

as challenges that required the GCC to rethink its relations.

He said that defence integration would be “an alternative to

defence policies based on transitory alliances based on passing

interests, since they are linked to changing interests”.

Riyadh’s faith in Washington took a hit when the United

States exerted pressure to help push Hosni Mubarak from power in

Egypt during an uprising last year. The arrival of Saudi troops

in Bahrain signalled Riyadh’s intention to prevent the

Shi’ite-led protest movement threatening any of the Gulf

monarchies.

The Gulf-based Western diplomat said a federal framework

could allow Riyadh to permanently station troops in Bahrain.

Despite talk of union, however, rivalries among Gulf rulers

run deep. The UAE has refused to join a planned monetary union

and territorial disputes have held up many economic projects.

Saudi objections have delayed plans to build a causeway

between Qatar and Bahrain, while Bahrain has been unable to buy

natural gas from Qatar.

A government-allied parliamentarian in Bahrain told Reuters

last week that he did not expect any such union declaration at

the summit in Riyadh planned for May 14.

Bahraini opposition leaders have warned against any union,

which is likely to provoke protests. Protesters described the

Saudi intervention last year as an occupation.

But while anti-Saudi graffiti lines walls in Shi’ite

districts, pro-government figures look to Saudi Arabia as a

bulwark against Shi’ite empowerment and some have publicly

called for union as salvation from Iran and Shi’ites.

(Editing by Sami Aboudi and Mark Heinrich)