Bahrain sought to cope with this through developing services to sell to its oil rich neighbors. Bahrain became a financial center for the region with banks that have the reputation for being efficient and sophisticated. A refinery in Bahrain also processes mainly Saudi crude. But the prosperity of these and other services Bahrain provides its neighbors depend on just how prosperous Bahrain's oil rich neighbors are.

At the time of my first visit to Bahrain almost 20 years ago in March 1988, the price of oil was well into a long slump from the record highs it reached during the early years of the Iran-Iraq war. The oil rich states of the region were feeling financially strained for the first time since before the dramatic oil price rise of 1973. As a result, the amount of money flowing from these oil rich states into the Bahraini economy had dropped off dramatically.

How would Bahrain cope? I had not come to Bahrain to discuss this issue, but it was very much on the minds of the Bahrainis I met with, and they all talked about it – including a senior official at the Ministry of Foreign Affairs.

After a long discussion about the Soviet Union and the Iran-Iraq war (both of which are long over), the official began to talk about his own country's economic prospects. "You know," he said sadly, "if a young person asks me what they should study at university, I tell them they probably should not go at all. There are very few jobs for people with humanities or social science degrees. There may be jobs for people with degrees in the natural sciences, but not that many – especially in geology."

"If they want to be assured of a life-long income," he continued, "I tell them to study air-conditioning. For in this part of the world, that is something that we and our neighbors will always need. So long as our neighbors have oil, they will not study this themselves – so why shouldn't Bahrainis make money installing and repairing air-conditioning? Why should Koreans or Pakistanis make all the money there is to be made doing this?"

"It is foolish to be too proud."

This was a phrase that I heard Bahrainis repeat frequently. It was an attitude that set the Bahrainis apart from their wealthier neighbors. At the same time, they did not waste time on self-pity or jealousy over the fact that their oil wealth had run out while their neighbors' would last for decades or even centuries. Instead, the Bahrainis had a clear-eyed view of their situation and pragmatically sought to exploit what advantages they did have. Nowhere was this more evident than in their attitudes toward alcohol and male-female relations.

"Our neighbors in Saudi Arabia and Qatar nobly uphold Islamic virtues," a senior official at the Information Ministry told me. "But men and women being what we are, it is difficult to uphold these virtues all the time. So we in Bahrain welcome our neighbors to come do in our country what they cannot do in their own."

"Our only complaint," he went on, "is that Dubai shares our attitudes. As a result, we lose some business to it. But with the opening of the causeway between Bahrain and Saudi Arabia, our business has increased. Every weekend, hundreds of Saudis drive over from Dhahran."

I had read about this causeway when it was then under construction. I mentioned that some Bahrainis feared it would lead to the imposition of stricter Islamic mores in Bahrain due to the fear that the Saudis could easily use the causeway to launch an invasion.

"The Saudis don't need a causeway to invade us," the official responded. "We are essentially defenseless here. But they are not going to invade and impose their strict type of regime on us. If they did that, where would Saudi officials and soldiers go for the weekend? They don't want to lose the Bahrain where they can go and have a little fun cheaply."

The way Bahrain has coped with the loss of its own oil wealth is through an accurate understanding of its value to its wealthier but more pious neighbors. There can indeed be life after oil.

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Mark N. Katz is a professor of government and politics at George Mason University.