MANAMA -- Bahrain must couple political liberalization with financial transparency and tighter controls on graft if it is to secure the foreign investment required to ween the Persian Gulf state's economy away from oil, analysts say.

The government is planning massive programs of infrastructure spending over the coming years to reorient the economy towards tourism and cushion the population from the social fallout as the archipelago's oil revenues dry up.

Five huge new hotel complexes requiring billions of dollars in investment are planned in a bid to copy nearby Dubai's success as a holiday destination, while the government also plans five major new housing developments to cater for the needs of the kingdom's poor.

"Tourism is at the heart of the government's program to relaunch the economy," according to Bahrain's economic development council head Jamal al-Hazim.

"Investments in tourist projects that are underway top 1.84 billion dollars, while projects worth 357 million dollars have already obtained the government's green light" he told AFP in June.

Bahrain airport is also due to undergo a 170-million-dollar expansion, to hike annual capacity to 15 million passengers from six million, according to aviation officials.

Analysts say the capital outlays required can only be met from foreign investors who will demand far greater openness and transparency from the kingdom's civil servants and businessmen.

"Transparency and the fight against corruption form a universal language that has always been well received by investors," said analyst Khaled al-Abdullah.

"We have no choice but to look to foreign investors given the limited capital available from the domestic private sector and the dependence of the economy on oil. "The priorities which have been announced of improving the standard of living of the population and focusing on job creation and the fight against poverty require us to attract capital."

The social expenditures alone are set to create a deepening hole in government finances.

After years of surplus, the budget deficit is projected to hit 400 million dollars this year, 685.5 million in 2003 and 702 million dollars in 2004, according to official figures.

"In this context, the fight against corruption becomes essential," says investment analyst Ibrahim Sharif, adding that lack of transparency has long handicapped the kingdom's economic takeoff.

But Sharif added that "political and economic stability are also vital for the success of the government's tourism development plans," given the sector's vulnerability to any suggestion of unrest.

King Hamad launched a gradual program of political liberalization when he succeeded to the throne in 2000, ending a wave of unrest through the 1990s.

The first parliamentary elections in nearly three decades were held in October after the approval of a national charter in a referendum.

Abdullah said the elections were a good start, despite a boycott by some opposition groups angered by the creation of an appointed second chamber alongside the elected Parliament.

But the political liberalization needed to be coupled with greater transparency and accountability, he stressed.

Bahrain is the first gulf state to have run out of crude for export, producing only a fraction of its domestic needs and relying on imports from Saudi Arabia to cover well over 80 percent of refining capacity.