By Andrew Hammond

DUBAI | Mon Jun 4, 2012 1:00pm EDT

(Reuters) – Bahrain justified moves to ban a small Islamist group on Monday by saying a radical Shi’ite cleric based abroad was its spiritual leader, while the move was seen by some as a renewed warning to leading Shi’ite opposition party Wefaq.

The U.S. ally has been in turmoil as democracy protesters from among the Arab state’s Shi’ite Muslim majority continue with protests and civil disobedience while the Sunni ruling Al Khalifa family rejects demands for an elected government.

The justice ministry said the Islamic Action group, or Amal, committed administrative violations including holding meetings inside Shi’ite houses of worship against regulations, as well as “following a religious source of emulation who calls openly for violence and hatred”, state news agency BNA reported.

The Iraq and UK-based cleric in question is Sayed Hadi al-Modarresi, an Iraqi who once lived in Bahrain before he was accusing of plotting a coup after the 1979 Iranian revolution.

Modarresi belongs to a school of thought within Shi’ism that believes that a group of clerical jurists should rule, rather than the single jurist who rules in Iran.

Amal says the government is trying to put pressure on the party to accept a national dialogue with the government aimed at ending the political crisis which grew out of protests that erupted 16 months ago.

It was the only one of seven legal opposition groups to overtly reject the overtures, saying talks could not take place while protest leaders including from Amal are in prison.

Former Wefaq member of parliament Matar Matar said the move to disband Amal presaged a possible attack on Wefaq itself.

“It’s easy to target Amal because they do not join the other opposition societies in their activities,” he said. “Now government hardliners feel they have more room to maneuver.”

The government threatened to close both Wefaq and Amal last year during a crackdown on the protests when they initially erupted in the wake of uprisings in Egypt and Tunisia. But intervention by U.S. officials appeared to shoot down the plan.

The government warned clerics last month against incitement to violence, sectarianism, harming the economy and insulting state institutions, and an advisor said it was aimed against Sheikh Issa Qassim.

Qassim led a pro-democracy protest of some 100,000 people in March, and in January he said followers should “crush” security personnel who hurt women. Qassim is not connected to any party, but is a spiritual guide to Shi’ites in Bahrain.

The main opposition party Wefaq has led weekly mass protests for reforms.

“The more interesting thing will be whether the dissolution of Amal signals a new, more legal-based tack with which to go after a much bigger prize in Wefaq,” said Justin Gengler, a Bahrain researcher based in Qatar.

The BNA statement asked other parties to take note. The ministry “renews its demand that political groups adhere to the constitution and respect the law,” it said.

The ministry was referring to a law governing political associations which opposition parties say are restrictive and should be reformed.

The opposition want to remove the upper house of parliament which is appointed by King Hamad and has the power to neutralize legislation proposed by the elected chamber. Wefaq has come first in previous elections, dominating the Shi’ite vote.

The government released rights campaigners Nabeel Rajab and Zainab al-Khawaja last week – prominent leaders of attempts to stage protests inside Manama – after criticism of Bahrain at the U.N. Human Rights Council in Geneva, which called on Manama not to harass activists in contact with the United Nations.

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