My arrangement with Khadija was that she would pick me up in her cab outside my hotel in Manama City. I wanted to meet her because women taxi drivers are still a novelty in Bahrain, though not as much as they would be in next-door Saudi Arabia. The two countries are linked by a 16-mile toll road, the King Fahd Causeway, but Khadija would not be welcome on the Saudi side where women are not allowed to drive even private cars. In Manama City, she bowls around in a stylish white London taxi, wearing a black hijab and grasping the steering wheel with white gloves.
I ask her how people react to a woman driver. "They are surprised but then it becomes normal," Khadija tells me through a translator. She is 37, married with a son and used to work as an estate agent, while her husband is a security guard at a government ministry; not long ago, a friend told her that a taxi company was looking for drivers and she decided to apply. Now she works until 11pm, loves the job and isn't worried about being cheated. "They pay or I drive on," she says bluntly. When I ask how the other drivers treat her, the question prompts gales of laughter: "One hundred per cent of the male drivers see her as a threat," the translator tells me.
There are now getting on for 20 female taxi drivers in the kingdom, and they're evidence of the success of a modernising experiment which was begun by the royal family a decade ago. Eight years ago, Bahrain underwent a startling transition from an absolute to a constitutional monarchy; this archipelago with a population of around a million people is still getting used to political campaigns and four-yearly parliamentary elections. It's an experiment that has some limitations: political parties are not allowed and most candidates belong to political "societies" which function like parties in all but name. Ministers are appointed by the King and after the 2006 elections just over half the cabinet were relatives of the royal family; the long-serving Prime Minister, Sheikh Khalifa bin Salman al-Khalifa, is his uncle.
But while the royal family retains a great deal of power, political exiles have been allowed to return home, newspapers have more freedom than in most Middle Eastern states, and there has been a concerted attempt to give women more rights.
At the same time, Bahrain's dilemma – how to create democratic institutions that aren't immediately hi-jacked by Islamist organisations such as the Muslim Brotherhood – is familiar across the Middle East. Bahrain looks and feels modern, an image created by glittering skyscrapers in Manama City and the growing fame of Bahrain's Grand Prix. You will see women in voluminous black robes, but they tend to be visitors from Saudi Arabia. It's a standing joke that wealthy Saudis barrel across the King Fahd Causeway in gas-guzzling limousines, eager to enjoy the bars and casinos that are banned in their own country.
Unlike some Gulf states, Bahrain has a history stretching back several thousand years. The glass-and-steel towers of Manama City are joined by another causeway to the old capital, Muharraq, where wood-shuttered pearl merchants' homes are being turned into museums. Bahrain Fort is a restored 15th-century complex at the northern tip of the archipelago, near Bahrain airport, but the site on which it stands has been occupied for almost 2,500 years. What looks like a set from Lawrence of Arabia was once the capital of the Dilmun, one of the most important ancient civilisations in the region, and it was declared a Unesco World Heritage Site in 2005.
Offshore there are huge oyster beds, once the centre of Bahrain's pearl-fishing industry, which fell into disuse when oil was discovered in 1931. I went out in a modern fibreglass version of a dhow to the shallow water off the al-Dar islands, where a Bahraini diving instructor showed me how to pick oysters by hand from the seabed.
The Khalifa family has ruled Bahrain since the 18th century and the present king, 60-year-old Hamad bin Isa al-Khalifa, has been in power since the death of his father in 1999. As in many Muslim countries, the ruling family follows a different branch of Islam from the majority of the population; the Khalifas are Sunni, while most Bahrainis are Shia. It's hard to believe that this wasn't a factor in the King's decision to start introducing political reforms, and the success of Islamist "societies" in parliamentary elections has exposed – and thus far contained – profound underlying tensions. Official briefings are at pains to characterise the royal family's modernisation programme as the result of "a genuine benevolent attitude towards citizens", but the government has benefited enormously from its support for the US during the Iraq and Afghan wars.
The problem for absolute monarchies is that they do not create conditions in which civil society is able to flourish. In 2002, the results of the first parliamentary elections in Bahrain were ominous for secular politicians: the elected lower house was immediately dominated by Islamist parties and not a single woman candidate was elected. The same thing happened in 2006, when the Al-Wefaq National Islamic Society took almost half of the 40 seats, although on that occasion one woman was successful.
Among the most influential politicians in Bahrain is Dr Salah Ali, a former political exile who now chairs the Al-Menbar Islamic Society, a Sunni group which has seven seats in the lower house and is widely believed to have close links with the Muslim Brotherhood. Dr Ali is a smart politician who talks fluently about the importance of developing Bahrain's democratic experiment "step by step", and his party is expected to endorse female candidates in the elections due to take place this autumn.
But to outsiders there are more intimations of the influence of political Islam in Bahrain than the government might like to admit. An MP from one of the Islamist parties flinched and refused to shake my hand, and there has been a ferocious campaign by Islamists in the lower house to ban alcohol in Bahrain. A leading light in the campaign is Mohammed Khalid, an outspoken MP from the Al-Menbar Society, who has made a name for himself as an opponent of anything he regards as un-Islamic. Mr Khalid embarrassed the government when he hailed terrorists fighting American forces in Iraq as "heroes".
If successful, the campaign to ban alcohol would be an economic disaster for Bahrain, and not just because of its impact on tourism. The country promotes itself as a regional hub for foreign financial institutions, whose employees are happy to be live and work in a state where a Western lifestyle is easily available; the prospect of a couple of years in Manama City would become rather less attractive if the country were to turn itself into a dourly Islamist state like Saudi Arabia. Diplomatic and business sources confirm that Bahrain is under pressure from political Islam, suggesting that the Shia parties in the lower house are worryingly close to Iran. That isn't much comfort to Bahrain's small Jewish population, although the government is fighting back; this is the only Arab nation in the world whose current ambassador to Washington, Houda Noono, is a Jewish woman.
Already nine women candidates have announced that they intend to stand in this autumn's elections for the lower house, and the final total is expected to be around 20. Only one or two are expected to be successful, even though the Supreme Council of Women has launched a programme to empower women politically and economically.
Once again, the influence of the royal family is very much in evidence: the Council is led by the King's wife, Sheikha Sabika bint Ibrahim al-Khalifa, even if its reforms seem to be genuinely popular among ordinary working women. "I am very pleased about what Her Majesty is doing for women," Khadija told me as I sat in the back of her cab.
One of the ironies of Bahrain's democratic experiment is that it depends on the unelected upper chamber, the consultative council (Shura), to defend the state from political Islam and a socially conservative electorate. Two members of the Shura have served in the cabinet: the current Social Affairs Minister, Dr Fatima Balushi, and the former health minister, Dr Nada Haffadh. The latter is a stylish doctor who trained as a surgeon in Egypt and Ireland, and when I met her she reeled off statistics demonstrating the advances made by women in Bahrain, including the fact that 45 per cent of public employees are female. Recent laws have given women paid leave to look after their children while the Shura is trying to establish workplace nurseries "with some resistance from colleagues", according to Dr Haffadh.
"The government is more advanced than the people," Dr Haffadh observed drily. "The elected chamber expresses the will of the people: it doesn't represent ethnic minorities and it's mostly religious. I don't think it represents me as a Bahraini woman." The Shura, by contrast, has only two or three members from Islamist movements, while at least a quarter of its 40 members could be classed as liberals. Another member of the Shura echoed her remarks, observing starkly that if both houses of parliament were elected, "the liberal élite wouldn't be represented".
This is the problem of the Middle East writ large. In the West, it goes without saying that democracy means respect for the rights of the individual, but across the region, Islamist parties are attracting support on programmes that deny the most basic human rights. In Bahrain, the Al-Menbar Society vociferously opposed government plans to ratify the International Covenant on Civil and Political Rights which allows individuals to change their religion. "This means that Muslims could convert to another religion, something against Islamic law, since those who do so should be beheaded," declared a leading Al-Menbar MP, Dr Salah Abdulrahman.
Opposition to the protocol was eventually defeated, allowing Bahrain to ratify the treaty in 2006, but the episode demonstrates the difficulties facing the royal family's modernisation project. It may also be the case that one of the things that attracts foreigners to Bahrain – the absence of income tax – also has a limiting effect on the country's aspirations. Oil revenues are going down and significant public projects, such as the Culture Ministry's plan to rejuvenate Bahrain's pearl-diving industry, are dependent on private investment and support from international bodies such as Unesco. It ties the government's hands, and means that a significant part of the social contract between citizens and the state simply does not exist.
Nevertheless, and despite its limitations, Bahrain's experiment with democracy is being watched closely across the Middle East. "It's having a positive effect on the region, including Saudi Arabia," Dr Haffadh told me. What is undeniably true is that Saudi women, who are among the most cloistered in the world, now have only to cross a bridge to see Bahraini women dress as they wish, enjoy the same legal rights as men – and even drive taxis.
Women's legal rights
* Women can fly aircraft, but must be driven to the airport by a man.
* Since April, the Department of Civil Affairs has offered women a national ID card for travel to countries in the Gulf Co-operation Council. Women can apply for the card by themselves, but still require permission from their male guardians to travel abroad.
* A 2008 royal decree allowed women to enter hotels without a guardian if they have their national ID card with them. The hotel must inform the police of their room number.
* Saudi Arabia's Parliamentary Chairman, Sheik Muhammad bin Ibrahim bin Jbeir, said: "Appointing women as parliament members is out of the question. Nobody even thinks about it, because the issues the parliament deals with are public matters under the responsibility of men."
* Since last year, women can get their own passports without their husband's consent.
* Female MPs have been allowed since 2005.
* Women voted for the first time in 2006 – in segregated polling booths.
* Women still do not have the right to pass citizenship to their children.
* Kuwait's housing law forbids women from owning government-supplied or -subsidised housing that is available to Kuwaiti men as rab al'usra (heads of families). The only exception is for divorced women with children, who can claim a rent allowance if they do not intend to remarry and have no one to support them. However, divorced women are expected to share the government-subsidised housing with their former husbands, who often force them to move out.
* Marital rape is not illegal.
* A woman can divorce on the grounds of being beaten. But if the beating was not severe, the husband can legally claim that it was allowed under the Koran.
* Victims of honour crimes are detained by police (rather than the perpetrators) for their own protection.
* Defendants can invoke a "crime of honour" defence if the victim is a wife or close relative caught in an act of adultery or fornication.
* Men receive more social security benefit than women.
* Marital rape is not illegal.
* A woman has no legal recourse if she is sexually discriminated against.
* Courts that deal with family matters and divorce are all-male Sharia courts.
* In 2002, women were allowed the right to vote.
* If a Bahraini woman married to a foreigner has children, they are not entitled to Bahraini citizenship.
* A woman's testimony in court carries only half the weight of a man's.