American, Arab and European armed forces may be intensively focused on operations over Libya but something just as dramatic is unfolding on the other side of the Middle East. Although this conflict may not be as violent as the one currently underway in Libya, it is nevertheless highly significant for every country that has even a remote interest in the region.

The drama in question concerns the rebellion in the island kingdom of Bahrain, a small nation barely visible on a map but a geostrategic hub where the Arab world’s most fractious political and social fault lines converge: sectarianism, class, religion and age.

Similar to the other popular uprisings that assembled in Tunisia, Egypt, Jordan, Yemen, Libya and now Syria, the movement in Bahrain was at first relatively peaceful. Bahrainis, ruled by the Al Khalifa royal family for the past two centuries, possess many of the same grievances as Saudis and Iraqis — a corrupted elite, widespread poverty along social lines, wide divisions between Sunnis and Shia and a demographic youth bulge that the government is struggling to cope with.

Citing the powerful examples of Tunisia and Egypt, Bahrainis quickly took the streets in mass to peacefully protest against what they believed was the Al Khalifa’s outdated and repressive political order.

Unfortunately, the peace has evaporated, replaced with tension that could blow of the lid keeping violence at bay. 70 percent of Bahrainis are Shia who have been historically and systematically discriminated against by the Sunni elite. The Al Khalifa family, Sunnis themselves, are in full control of the state’s power.

Fearing that a Shia victory in neighboring Bahrain might inspire its own Shiite population to revolt, Saudi Arabia took it upon itself to dispatch nearly 2,000 soldiers onto the island in order to help the ruling family quell the unrest.

The Al Saud and Al Khalifa families have been close knit ever since the former established the kingdom in 1932. In addition to the two having close relations with the United States and Western Europe, the two royal families travel in the same direction on many interests.

Foremost among them is making sure that their Shia populations are kept away from the halls of power. As Sunni families, both remain convinced that Shia Iran is firmly behind the protests in Bahrain: a claim that the Sunni Arab world has used repeatedly since the Islamic Republic was formed in 1979.

With Washington needing King Abdullah and King Hamad more than the other way around, the Saudi and Bahraini governments can live knowing that the United States will not dare to enforce a no-fly zone over their territories, as it has done in Libya.

The Sunni-Shia divide is, of course, the most persistent in the region. The killing between both sectarian camps escalated exponentially after the fall of Saddam Hussein, when Iraqi Shia (long suppressed by Hussein’s Sunni government) used their majority position to recapture authority in Baghdad. In the process, over 100,000 Iraqi civilians were killed, with much of those casualties attributed to deliberate attacks from both communities. Al Qaeda in Iraq, however weakened it may be, continues to kill Shia pilgrims to this day.

Now Bahrain, previously isolated from sectarian violence, is dangerously coming close to an Iraq like scenario; maybe not as violent, but certainly as destabilizing. The introduction of Saudi troops and the unanimous backing offered by the Gulf Cooperation Council, whose leaders are all Sunni, only enforces radicals on both sides of the aisle.

With Saudi Arabia’s military move in Bahrain, Riyadh has made clear that it will not let its smaller neighbor, however sovereign, to be overtaken by Shia Muslims. If Saudi troops are not withdrawn soon, and if the animosity between the ruling family and the protesters continues, Iran may not be able to bite its lip any longer.

People may be obsessing about Muammar Gaddafi, but it’s the revolt in Bahrain that the world should worry about. A Saudi-Iranian cold war, and a renewed spat of fighting between Sunnis and Shiites, is far more troubling for the Arab world than the fate of Libya’s dictator.