Relations with Iran have deteriorated as a result of the unfolding crisis in Bahrain. In late March a Kuwaiti court sentenced three individuals, allegedly members of an Iranian spy ring, to death. According to officials, the two Iranians and a Kuwaiti had served in the Kuwaiti military until their arrest in May 2010. Separately, three Iranian diplomats accused of having connections to the spy ring have been expelled from the country. Iran has denied the allegations of espionage and in retaliation has deported several Kuwaiti diplomats. The moves come amid deteriorating relations between members of the Gulf Co-operation Council (GCC) and Iran on the back of turmoil in Bahrain and the increasingly sectarian framing of the crisis in the region. Bahrain has put three individuals accused of working as spies for Iran on trial, and the GCC continues to issue stern warnings against alleged Iranian interference and provocation. Kuwaiti efforts to mediate between the opposition and the government in Bahrain have been rebuffed by the latter.

The increasingly sectarian politics in the region could also prove domestically divisive in Kuwait where around 30% of the population is Shia. Sectarian conflict in Kuwait has been largely absent since the 1980s, but sensitivities have recently been exacerbated by the government's contribution of naval vessels to a GCC military mission in Bahrain. Although the decision to refrain from sending ground troops has been lauded by Shia groups, others have criticised the move and pushed for Kuwait to take a more active stance in support of Bahrain's Sunni royal family. Public rallies by Kuwaiti Shia in solidarity with their Bahraini coreligionists have been followed by counter rallies in support of Bahrain's ruling family denouncing alleged Iranian interference. The fallout over Bahrain led Saleh Ashour, a Shia MP, to ask to question Sheikh Mohammed, the foreign minister, over what he argued was the government's failure to act on the alleged defamation of Kuwaiti Shia families and other political figures on Bahraini television. The government's resignation was welcomed by some Kuwaitis as a means to avoid Mr Ashour's questions, which, they argued, could have further stoked sectarian tensions.