By Erika Solomon and Lin Noueihed
MANAMA (Reuters) - Shouting "down with King Hamad," thousands of Bahrainis buried an activist killed in a crackdown on mainly Shi'ite protesters that has angered Iran and raised tension in the world's largest oil-exporting region.
Mourners carrying pictures of activist Ahmed Farhan, killed on Wednesday, followed a car carrying his flag-covered coffin.
A helicopter buzzed overhead and tanks lined the entrance to Sitra, where Farhan was buried, but they did not disperse the mourners despite a blanket ban on gatherings imposed this week.
"This is a big loss... They can say what they want about us but we are non-violent. We will never use violence," said Yousif Hasan Ali, who was in jail with Farhan, 30, for over two years.
"They may silence this generation but another will rise up to demand revenge for the blood that was shed now."
Bahrain has arrested seven opposition leaders and driven pro-democracy demonstrators from the streets after weeks of protests that prompted the king to declare martial law and sucked in troops from fellow Sunni-ruled Saudi Arabia.
Three protesters died in the security sweep. Three policemen were also killed, hit by cars driven by demonstrators.
Sheikh Issa Qassim, Bahrain's most influential Shi'ite cleric, said in his Friday sermon that Gulf troops would have been better off helping Palestinians in Gaza than entering Bahrain and thanked those who died or resigned in the uprising.
"The violence of the authorities has created a deep, wide and dangerous wound between the government and people," he said.
"The government wants to break our will so we give up our calls for substantial and meaningful reforms, but they will never break our will. They can use tanks and planes to smash our bodies but will never break our souls and our will for reforms."
No troops or police could be seen as thousands of worshippers stood outside Draz mosque after Qassim's sermon, calling for Gulf troops to leave and vowing to fight what they called this "corrupt and oppressive regime."
"Peninsula Shield Out," they called, and "Bahrain is free."
The protest lasted less than half an hour and worshippers dispersed to attend the funeral.
SHI'ITE SYMPATHY PROTESTS
Showing its desire to avoid new violence, the largest Shi'ite party Wefaq told its followers by text message not to provoke police and not to use slogans that offend the royals.
The mourners appeared not to adhere to those requests.
Shaking their fists, mourners shouted "death to al-Khalifa" and "death to Al Saud," referring to the Sunni ruling families of Bahrain and Saudi Arabia.
"I'm not really afraid, the worst is that I get killed and it would be for Bahrain, right? Better to die trying to get our freedom," said Haitham, 45, a Shi'ite from Sitra.
The crackdown in Bahrain has provoked sympathy protests by Shi'ites across the region, including in top oil exporter Saudi Arabia which has sent over 1,000 troops to its tiny neighbor.
Shi'ite Muslim power Iran, which supports Shi'ite groups in Iraq and Lebanon, complained to the United Nations and asked other neighbors to join it in urging Saudi Arabia to withdraw.
"How could one accept a government to invite foreign military forces to suppress its own citizens?" Iranian Foreign Minister Ali Akbar Salehi said in a letter to U.N. Secretary General Ban Ki-moon, also addressed to the Arab League.
In a sign of rising tension, Bahrain said: "Iran's move does not serve security and stability in the Gulf region."
More than 60 percent of Bahrainis are Shi'ites. Most are campaigning for a constitutional monarchy, but calls by hardliners for the overthrow of the monarchy have alarmed Sunnis, who fear the unrest serves Iran, separated from Saudi Arabia and Bahrain by only a short stretch of Gulf waters.
Analysts say the intervention of Saudi Arabia, which worries that protests by Bahraini Shi'ites will incite its own Shi'ite minority, could worsen already poor ties with Iran.
One woman praying at Draz said she was Sunni: "The government is making this a sectarian issue. I see the way my friends are treated and I came here to show solidarity."
Capital flight is starting to put pressure on Bahrain's currency and threaten its position as a Gulf financial center.
Most Western nations have urged their citizens to leave.
Standard & Poor's Ratings Services slashed its long- and short-term sovereign debt rating to BBB/A-3 from A-/A-2 and maintained negative watch.
The ferocity of the crackdown, in which troops and police fanned out across Bahrain, imposed a curfew and banned all public gatherings and marches, has stunned Bahrain's Shi'ites.
Authorities have even torn down the 29-year-old statue at the center of Pearl Roundabout, focal point and symbol of weeks of protests. Before they cleared the protest tents, drills and diggers cut at the base of Bahrain's most recognizable landmark until it collapsed into a mound of rubble.
"It is a kind of psychological victory for the protesters," said Hussein Oraibi, who works in telecoms. "It upset them so much that people were gathering there, they had to go out of their way to pull this down and change the traffic directions."
(Additional reporting by Robin Pomeroy in Iran; Editing by Louise Ireland)