After years of instability during the 1990s, Bahrain has entered an era of political reform and development, but there are still simmering tensions between ruling Sunni Muslims and the Shiite majority. Bahrain's stability has long been a key U.S. interest -- the small Persian Gulf state has hosted headquarters for U.S. naval forces in the Gulf since the end of World War II. In September 2004, the United States and Bahrain signed a free trade agreement to encourage further reform and signal appreciation for Bahrain's support. This report will be updated.