By Angus McDowall
RIYADH (Reuters) - Gulf Arabs began a summit to discuss a closer union on Monday, part of a strategy by wealthy Sunni Muslim monarchies to counter Shi'ite Muslim discontent in Bahrain and Iran's growing influence.
Gulf sources said the meeting was primarily aimed at setting the stage for closer union between Bahrain and Saudi Arabia, who are concerned about discontent among their Shi'ite subjects against the ruling Sunni dynasties.
Gulf Arabs accuse Iran, the Shi'ite power which is seeking to extend its sway in the region, of fomenting the unrest - a charge Iran denies.
They are also worried that an international standoff over Iran's nuclear program might spark an armed conflict that could suck them unprepared into a confrontation with a more powerful neighbor across the waterway.
"The summit will discuss all the points, including the points of union," said Bahraini Foreign Minister Khalid bin Ahmed Al Khalifa after preparatory talks in Riyadh on Sunday.
Bahraini Information Minister Samira Rajab said on Sunday: "I expect there will be an announcement of two or three countries. We can't be sure but I have a strong expectation."
The tiny island state, which like other Gulf states is ruled by a pro-U.S. Sunni dynasty, has been wracked by a revolt among its majority Shi'ites for more than a year, after temporarily suppressing it in March 2011 with the help of Saudi troops.
The U.S. Navy's Fifth Fleet, which patrols Gulf waters and key oil shipping lanes, is also based in Bahrain.
Gulf Arab states are already tied together militarily, politically and economically under a Gulf Cooperation Council (GCC). But the union currently under discussion is meant to empower one country to come to the aid of another if it feels threatened, as happened in Bahrain.
Analysts say that by joining up with Bahrain, Saudi Arabia would gain more control over its tiny neighbor's security and send a message of Sunni Arab unity to Iran.
Riyadh fears Bahrain's pro-democracy protests have the potential to spill over into its own Shi'ite-populated Eastern Province region, home to major oilfields.
When leaders of the Gulf Cooperation Council, which also includes Kuwait, Qatar, the United Arab Emirates and Oman, met in December, Saudi King Abdullah called on the six to move "to the stage of unity in a single entity".
The meeting set up a committee to study the proposal and report to the leaders at the next summit. However, few details are available on the nature of the union being considered.
According to a document used in the discussions, the union calls for economic, political and military coordination and a new decision-making body based in Riyadh, replacing the current GCC Secretariat.
Saudi Arabia, the world's top exporter, is by far the largest and most powerful of the Gulf Arab states.
While Gulf analysts say smaller GCC members are averse to further integration, fearing a loss of sovereignty and influence in a region of traditional feuds, politicians from Bahrain have speculated about a confederation with Saudi Arabia.
The ruling Al Saud family enjoys close personal ties with Bahrain' Al Khalifa clan and Saudi citizens regularly travel across the 25-km causeway to Bahrain on weekends.
No Saudi official was immediately available to comment.
BAHRAIN UNREST FESTERS
Monday's discussions between the six ruling dynasties, taking place in a lavish Riyadh palace, will be closely watched on the streets of Bahrain where the main opposition has denounced the idea of greater union.
"The aim of the Saudi regime in the future is the exclusion of Shi'ites in Bahrain," senior opposition Wefaq official Jasim Husain said on Sunday.
He spoke a day after protesters burned tires and clashed with police. Some 81 people have died in violence during 15 months of unrest, according to activists. Bahrain's government says demonstrators were responsible for many of the deaths.
Saudi Arabia believes the unrest in Bahrain and among its own Shi'ite minority has been stirred by Iran, its Shi'ite rival across the Gulf.
The two powers have backed opposing sectarian factions in Iraq, Syria and Lebanon and Riyadh has urged the United States to strike at Iran's nuclear program, which it fears is aimed at developing an atomic bomb, something Tehran denies.
Another perceived threat spurring Gulf Arab integration is al Qaeda, whose militants have flourished in the disorder arising from the uprising in Yemen, on Saudi Arabia's southwest flank. It led to the departure of Yemen's long-term ruler.
However, not all Saudis think integration is a good idea.
"If we join with Bahrain we risk importing their problems," said Abdullah al-Shammari, a Saudi political analyst.
Some of the other GCC members might also oppose further convergence of the 31-year-old council for fear their independence will be curtailed by Riyadh.
"Qatar sees this all as Saudi's way of undermining the Gulf states' bilateral relations," a source close to the Qatari government said on Friday.
(Editing by Reed Stevenson, Sami Aboudi and Jon Boyle)