The American naval base in Bahrain is a big spender in the local economy. It is probably fair to write about the contribution of the US naval base amidst escalating tensions over Iran's nuclear programme.

Last week, Iran threatened to close the Strait of Hormoz if attacked. The channel is uniquely vital by virtue of serving as route to 40 per cent of global oil supply.

Bahrain serves home to the Fifth Fleet and US Naval Forces Central Command (NAVCENT). The American military presence in Bahrain goes back to 1946, long prior to the country's independence from Britain in 1971.

According to Vice Adm. Kevin Cosgriff, who was in charge of NAVCENT and Fifth Fleet until last week, the naval base in Bahrain contributes some $150 million annually to Bahrain's local economy.

The amount comprises about 1.5 per cent the value of Bahrain's gross domestic product (GDP), certainly a sizable contribution. Vice Adm. Cosgriff released the statistics during a speech organised by Bahrain's Businessmen Society.

Of the amount, $62 million is spent on housing, $28 million on other living expenses, $21 million on commercial activities, $11 million on hotels, another $11 million on human resources, $10 million in the form of operating expenses, $4 million on goods purchased at the base and $3 million on other matters including promotions.

Yet, the figure does not include personal expenses made by US military personnel. Some 3,000 people are assigned to the base.

Undoubtedly, actual spending statistics surpasses $150 million. Still, the full economic impact of the Fifth Fleet should be much stronger by taking into account the multiplier effect. Every Bahraini dinar ($2.65) spent in the economy creates some four dinars.

Still, the financial value of the naval base should increase further once American authorities agree to allow dependents and other family members of the US military personnel return to Bahrain.

Some 650 family members and non-essential people were evacuated from Bahrain in July 2004 due to concerns over the safety.

It is believed that regional tensions at large, notably adverse spillover effects of American military invasion of Iraq, served as motive for the decision. However, restrictions were eased in April 2007 with the return of family members on tourist visas for 14 days.

To be sure, the American naval base is credited for helping turning Juffair into a lively place in the country. Located in the eastern part of the capital city of Manama, Juffair is regarded as one of the most active regions of Bahrain even during late hours. The place is full of restaurants, cafes, hotels and as well as car rental firms.

Also, the place is noted for having some of the most futuristic structures in Bahrain. This is partly to meet accommodation of people associated with the base.

Still, Juffair is nowadays popular as a residence for Bahraini professionals, partly for providing choice and possibly security. American and Bahraini intelligence officers patrol the area around the clock.

Arguably the presumed security could vanish in case of breakup of hostilities between the US and Iran. The change of command on July 5 of NAVCENT and the Fifth Fleet sent shockwaves in the concerned circles.

This reflected the fact that Vice Adm. Cosgriff was known for arguing for diplomatic channels for solving the crisis with Iran over its controversial nuclear programme.

Still, Vice Adm. Cosgriff only assumed the job on February 27, 2007. Last May, he told ABC News that war with Iran would be "pretty disastrous" with aftershocks felt throughout the region. He could not be more correct.

The writer is a Member of Parliament in Bahrain.