LONDON – Spending the last few days here in Britain it has been difficult to avoid the growing fracas surrounding the London School of Economics and its increasingly embarrassing ties with Libya.

Yesterday, LSE’s Director (President, in American university-speak) resigned amid the growing scandal. For those who may have missed it the basic details are these: Col. Muammar Qaddafi’s son, Saif al-Islam Qaddafi, studied at LSE from 2003 to 2008. The school awarded him a doctorate based on a thesis entitled “The role of civil society in the democratisation of global governance institutions.” In retrospect, this ought to have been the first of many red flags: Muammar Qaddafi’s son and heir-apparent writing about democratization and civil society? It is true that Libya, officially at least, styles itself a ‘people’s democracy’ as outlined in the rambling writings of Col. Qaddafi in his Green Book. Anyone with even passing familiarity with Qaddafi’s Libya, however, knew all of that to be nonsense.

LSE is now investigating allegations that Saif’s dissertation was ghost-written, but in better times it was happy to take his tuition money and, apparently, asked few embarrassing questions about his supposedly deep and growing commitment to democracy and human rights. Why would it do such a thing? Well, shortly after being awarded his degree Saif offered to donate about $2.4 million to the school. The money was not his or the Libyan government’s, mind you. Rather it was to come from the Qaddafi Foundation, a ‘private’ organization registered in Switzerland. According to this morning’s Financial Times precisely two LSE faculty members went on record opposing the school’s acceptance of the cash. One of them, the late Fred Halliday, pointed out that to say the foundation was independent of Qaddafi and his government was “a legal fiction”. LSE Director Sir Howard Davies, who resigned yesterday, wrote to Halliday that “we have taken soundings from other Middle East experts, who have taken a different view, and especially argued that rejecting this gift would now send the wrong message.”

Today, of course, accepting the gift (or rather the $500,000-ish that LSE initially took) looks like a pretty terrible idea. So does Saif’s degree, in the wake of a televised speech late last month in which he promised to defend his father’s regime “to the last bullet” and dismissed protestors as “drunkards and thugs.” LSE’s separate decision to accept a $3.5 million contract to run executive education programs for Libyan civil servants is also looking dodgy at best.

LSE’s experience with the Qaddafi regime is the first instance of academic chickens coming home to roost, but I fear it is not going to be the last.

Almost any journalist who has spent a lot of time in the oil-rich parts Middle East over the last few decades has had at least one eyebrow-raising encounter with some businessman or local official who holds an advanced degree from a second or third-tier American or (more often) British university but can barely put two sentences together in English. One could never prove anything, of course, but it was always hard to avoid the conclusion that some of these schools were happy to award degrees with very few questions asked in exchange for large tuition payments and the implicit promise of future donations.

The higher-class version of this involves better known universities and endowed chairs, programs or academic research centers. Some institutions have even set up degree-granting campuses in parts of the Middle East – a practice that is very lucrative financially but carries significant reputational risk if the universities involved fail to convince the wider world that a Cornell degree earned and awarded in Qatar or an NYU degree from Abu Dhabi is exactly the same thing as one earned and awarded on the institution’s home campus.

Mercifully, I do not make my living raising money for academic institutions. I am well-aware that it’s a tough time to be in the fundraising business, but one has to ask what, exactly, LSE was thinking and whether in this and other instances the lure of big money did not wind up overwhelming common sense? Will my own alma mater, Harvard’s Kennedy School of Government, soon be equally embarrassed to have bestowed on the widely-respected scholar Joseph Nye the title of “Sultan of Oman Professor of International Relations”? Oman is not Libya – not by any stretch. At the same time, anyone who thinks that Sultan Qaboos (in power since 1970) has any serious democratic inclinations is, frankly, delusional.

My father used to say that we are each the guardian of our own integrity. LSE’s mistake was to take Libya’s money while telling itself that since it did not intend to let the donation corrupt the institution nothing bad would come of it. ‘Everyone will understand that <insert name of prestigious university here> would never allow itself to be bought for a donation,’ the theory goes, ‘so where is the harm so long as we know ourselves to be uncorrupted?’ Especially, one might add, since seven-figure donors don’t walk in the door every day.

I suspect that the mess at LSE is only the first such embarrassment that the Anglo-American academic world is going to see. This is unfortunate but, unlike many events of the last six weeks in the Middle East, it was probably predictable.

What are we to make of the seemingly abrupt turn events in Bahrain have taken over the last 48 hours? Just two days ago the small kingdom’s security forces doubled-down on repression, attacking sleeping women and children camped at the Pearl Roundabout and then beating medical first responders who tried to help the wounded. Now, the country’s Crown Prince is set to meet with demonstrators, the security forces have pulled back and protestors have again taken control of the roundabout – one of Manama’s main traffic choke points.

The answer, as Gary Sick suggested Friday on PBS’ Newshour, may lie in the hints of a schism within the royal family.

One of the most puzzling elements of Friday’s brutal assault by the security forces was the fact that it came a short time after King Hamad had appeared on television to give a fairly conciliatory speech. It was noteworthy, however, that the attacks were led by Bahrain’s internal security police – a force that reports directly to the Prime Minister, Sheikh Khalifa bin Salman Al-Khalifa. The PM is the king’s uncle and has held his job ever since Bahrain declared independence from Britain in 1971.

King Hamad came to power in 1997 following the death of his father, Sheikh Khalifa’s older brother. In the early years of his rule Hamad seemed to want to open Bahrain’s political system. That is hardly surprising. The last years of his father’s rule were marked by increasingly frequent unrest among Bahrain’s majority Shiites. The protests of the mid-90s were put down ruthlessly (though never with the sort of force we saw this week), but they were also generally small and rarely made their way into the capital. The unrest was confined to villages that, while only a short drive from downtown Manama, were a world away from the cosmopolitan lives of well-off Bahrainis and western expatriates. I remember arriving in Bahrain in late 1995 and being stunned to discover that my Irish and Australian hosts were not even aware of the riots that had taken place barely three miles from their apartment a few weeks earlier.

On taking power, the new Emir (it was only a few years later that Hamad promoted himself to “King”) appeared to understand that something had to change. In 2002 he allowed elections to take place for Bahrain’s parliament, which his father had suspended shortly after independence three decades earlier. The parliament’s powers, however, remained severely circumscribed and the country’s Shia majority came to complain that electoral constituencies are drawn in ways designed to dilute their strength as voters. The result, most critics will say, has been a country whose leaders talk about reform and openness a lot but tend to give away very little of consequence. Years ago, writing for Lonely Planet, I noted that people often say Bahrain is a liberal country when what they really mean is that it is liberal by the standards of its neighbors – i.e. Saudi Arabia and Iran. I made that comment in reference to social norms, but under King Hamad it can be said to apply to politics as well.

Anywhere in the Gulf it is always difficult for outsiders to know what is really going inside a ruling family, but it has long been widely believed that Hamad’s modernizing instincts, limited though they may be, are at odds with his uncle’s view of the world. Moreover, while Sheikh Khalifa is not king he does command both the loyalty of the security forces and the support of a significant faction within the royal family (though before we make Khalifa out to be the exclusive villain of this piece it is worth asking exactly how many absolute monarchs, over the course of history, have willingly ceded significant power to democratically-elected leaders).

That analysis, of course, is largely a combination of hearsay and educated guessing, but it would serve to explain the sporadic and, at times, hesitant nature of political reform in Bahrain over the last 14 years. It would also imply that the appointment of the 41-year old, US-educated Crown Prince, Sheikh Salman Bin Hamad, as the government’s key negotiator is a good thing.

It has been noted almost everywhere that Bahrain’s rulers are Sunni Muslims while the protestors overwhelmingly come from the country’s large Shiite Muslim majority. It is important to add, however, that based on what we have seen this week it is not accurate to call the protests sectarian in nature, not yet, at least. Bahrain’s Shia are a large majority of the population, they do have legitimate grievances against the current regime and the Al-Khalifas. For the most part, however, they have not expressed those grievances in religious terms. What we have seen on television are rallies for democracy and justice. That is not to say that things might not change – but if we in the West fall into the trap of assuming that any country dominated by Shiites is automatically going to become an Iranian satellite we risk alienating potential allies at best, and, at worst, turning our fears into a self-fulfilling prophecy.

Moreover, it needs to be said that Bahrain, while authoritarian, is not a police state on the model of Syria, Libya or even Mubarak’s Egypt. There are a lot of prosperous, middle class Bahrainis who are reasonably happy with things the way they are – and that group includes more than a few Shiites. In so small a country, any move toward comprehensive change will need to address their hopes and fears as well.

The Wild Card in all of this is, and will be, the role of the Saudis. Just about anyone who knows anything about Bahrain seems to agree on one thing at the moment: the Al-Saud are not going to allow Bahrain’s royal family to be overthrown. As the respected Middle East scholar Toby Jones told the New York Times recently: “Saudi Arabia did not build a causeway to Bahrain so that Saudis could party on weekends. It was designed for moments like this, for keeping Bahrain under control.”

If King Hamad is serious about reform he is now truly walking a tightrope. On the one side are demonstrators who will demand far more now, after the shedding of blood, than they might have settled for a week ago. On the other are his powerful uncle and the giant neighbor on which Bahrain is, in many ways, dependant. Both are likely to urge him to give no ground, fearing the inevitable result will be the emergence of a mini-Iran just a few miles across the water from the large and not-terribly-well-treated Shia population of Saudi Arabia’s Eastern Province.

Can the king manage the delicate act of preserving his, and his family’s, position while ceding real power? My own sense is that there is no way the Al-Khalifas can continue to hold absolute power without resorting to a bloodbath that would destroy both Bahrain’s economy and its relationship with the West. Doing so might give some of the other ruling families around the Gulf cause to rejoice – but only temporarily, and only if they are astonishingly short-sighted.

The best argument for supporting democratic change in the Middle East is a moral one. But even if one puts that aside there is another, chillingly practical, case to be made: in putting down a genuinely democratic, popular uprising rulers do not prevent change, they only postpone it, even as they guarantee that the next round of unrest will be worse than the one they have just suppressed.

Expats who have spent time in the tiny Persian Gulf kingdom of Bahrain have probably spent the last week or so in a state of shock. Bahrain has always been a live-and-let-live sort of place. The violence of the last few days is unprecedented.

Except that it’s not.

Without wanting to go off on too much of a tangent here, few people in my experience are more isolated from the cultures around them than western expatriates living in the Persian Gulf and Bahrain, in this regard, has always been something of an extreme example.

Most Americans or Europeans who have visited will remember a small, socially relaxed city. Bahrain Island is about 30 miles north-to-south and 11 miles east-to-west at its widest. The southern half of the island, however, is mostly uninhabited. The country’s population of 1.1 million (about half of whom are actually Bahrainis) is mostly crammed into the northern end of the main island (in the capital, Manama, and in various small towns and villages to its south and west) and onto the neighboring island of Muharraq, where the airport is located. The US navy base you may have read about – the home port for the Fifth Fleet – is just south of downtown Manama in an area called Juffair (though there is also a huge military airfield in the southeast corner of Bahrain Island, the exact function of which neither American nor Bahraini officials are much inclined to talk about). The protests of the last few days have been taking place at the Pearl Roundabout, about two miles west of the base (i.e. at the other end of the city center).

In an irony of history, Bahrain was once the richest place on the Arab side of the Gulf but is now, arguably, the poorest. Britain established a protectorate over Bahrain in the mid-19th century. After WWI the island became the UK’s administrative headquarters for all Gulf affairs. As a result, Bahrain, in the 1920s and 30s, offered far more advanced infrastructure, better schools and better medical care than any place else in the Gulf. American missionaries built a hospital in Bahrain as far back as 1903 (to this day it carries the mailing address: PO Box 1, Manama, Bahrain). Bahrain was even the first place on the Arab side of the Gulf where oil was discovered a fact that, in the 30s, added even more to its prosperity. The oil did much to mitigate the collapse of the pearl industry in the early 30s, following the Japanese invention of cultured pearls (the importation of which is still banned in Bahrain).

After WWII, however, when the Gulf oil industry really took off, it quickly became clear that Bahrain had far less oil or gas than any of its neighbors. The British pulled out in 1971 and when oil prices skyrocketed a few years later, in the wake of the 1973 Arab-Israeli War, Bahrain, with its well-developed infrastructure, was well-positioned to serve as the commercial and communications hub for the region. In later years it also emerged as a banking center and developed a lucrative shipyard repair industry.

Overseeing all of this were/are the Al-Khalifa family, Bahrain’s rulers since the mid-18th century (by far the longest tenure of any of the Gulf’s ruling families). The Al-Khalifas are Sunni Muslims. The bulk of Bahrain’s population (about 70%), however, are Shiites, many of whom are at least partly of Persian ancestry. The Shiites believe, with more than a little justification, that the ruling family and the rest of Bahrain’s elite – virtually all Sunnis – have cornered both political power and the national wealth.

The result has been consistent political unrest since the early 90s – a fact of which even many expats living in Bahrain have often been unaware. Ignorance was an easy thing to cultivate. This was partly because past protests were never anything like those of the last few days and partly because the expat community lives in a bubble far removed from the dirt poor villages west of Manama.

The result has been a generation of rising political tension in Bahrain – one that, this week, has finally boiled over.

More on that tomorrow.

Gordon's column from Wednesday's Gulf News.

What was most surprising about Hillary Clinton's Iran comments was the lack of reaction they elicited here at home.

Aside from the fairly obvious observation that Atlanta-Dubai-Abu Dhabi-London-Vermont is an awful lot of travel to undertake in just over four days, a few observations spring to mind after this latest quick trip.

First, the growth of Dubai has hit some speed bumps, but remains both impressive in scope and slightly unsettling in its implications. There is little doubt that Dubai and its real estate-driven boom have been hit harder than most by the global economic downturn. This article, which appeared in London’s The Independent last Thursday, offers a glimpse of Dubai’s building frenzy in what may prove to be its terminal throes. Even allowing that a lot of construction sites are now sitting idle, it remains astonishing how far down the road toward Abu Dhabi the Dubai sprawl now creeps. The ‘unsettling’ part comes from the fact that we still do not know how deep and broad the financial damage to the emirate has really been and, as The Independent article seems to indicate, finding out is going to be very difficult.

Second, Abu Dhabi has changed a lot since my last visit in 2005. Unlike Dubai, however, the change has less to do with cosmetics than with the structure of the city and government themselves. There is a concerted attempt to modernize and systematize public administration in the emirate. The website of Abu Dhabi’s Executive Council (the main governing body of Abu Dhabi, as opposed to the broader federal government of the UAE) states that the emirate aspires to be “among the five best governments in the world” (when I asked a senior local official who the current five are he mentioned Singapore and the Netherlands). The longer-term question is whether this aspiration can really be translated into reality in a city-state that remains, for all practical purposes, a privately-held family business.

Third, the wave of goodwill President Barack Obama is now riding should not be underestimated. One Abu Dhabian, upon discovering I am American, went on at length about how impressed he was by President Obama’s respectful behavior while visiting a mosque in Turkey last month. This was only the most striking of several such conversations over the course of my trip. Of course, high expectations can also lead to bitterly dashed hopes, so with opportunity comes danger. Still, it was nice to make an overseas trip in which every conversation did not begin on a confrontational note. It has been a while since that happened.