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Bahrain’s bond risk surged to the highest in almost three years amid opposition calls to escalate the conflict with the government ahead of the Feb. 14 anniversary of anti-regime riots.

Renewed political unrest may hurt the government’s efforts to revive the economy and win investors back after growth slowed and Standard & Poor’s and Moody’s Investors Service cut the island kingdom’s credit ratings last year. Any escalation of anti-government protests would be “destructive” for the economy and security, according to comments from the Bahrain Chamber of Commerce & Industry on the state-run Bahrain News Agency last Tuesday.

“Bahrain’s public finances are weaker than elsewhere in the Gulf,” Liz Martins, a Dubai-based senior economist for the Middle East at HSBC Holdings, said by e-mail. “Growth is much slower since the political unrest last year and there is some sense that the issues that came to the fore then haven’t been resolved. This could constrain risk appetite in 2012, among companies, consumers and investors alike.”

The cost to insure Bahrain’s debt against non-payment for five years jumped as much as 47 basis points this year to 430 on Jan. 30, the highest since May 2009, according to data provider CMA, which is owned by CME Group. It was at 397 at the end of last week.

By comparison, credit-default swaps for Saudi Arabia rose two basis points to 130, while those for Dubai fell 36 to 409. The swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a nation or company fail to adhere to its debt agreements.

Demonstrators belonging mainly to the nation’s Shiite majority have stepped up agitations against the government, holding unlicensed rallies and starting an anti-police campaign. The tensions led to road closures and trapped some staff in their offices in the capital and the adjacent diplomatic area that houses the central bank and the finance ministry. The opposition has also called on supporters on Twitter and Facebook to boycott malls and stop dealing with banks and using credit cards.

Protests demanding greater rights from the country’s Sunni Muslim rulers have hurt tourism, real estate and the retail industries contributed to an estimated $2 billion loss to the economy last year, according to the Bahrain Chamber of Commerce & Industry. Last year’s unrest prompted the six-nation Gulf Cooperation Council to send a Saudi Arabian-led military force into the island-kingdom and approve a $10 billion aid package. Shiites represent about two thirds of the nation’s population of 1.2 million, according to the US State Department.

“We’re entering a period of exceptional turbulence in the next couple of months,” Farouk Soussa, chief economist for the Middle East at Citigroup, said from Dubai. “We would expect this low-level conflict between the government and the Shiite community to continue until their issues are addressed.”

Geopolitical tensions in the Middle East “will impact the risk behavior toward Bahraini credit,” Sergey Dergachev, who helps manage $8.5 billion of emerging-market debt at Union Investment Privatfonds in Frankfurt, said in an e-mail.

Still, the island nation’s economy may fare better this year than in 2011, according to the Bahrain Economic Development Board. Economic growth is accelerating and may reach 3 percent to 4 percent this year, said Sheikh Mohammed bin Essa Al Khalifa, chief executive officer of the Board, in Davos. Last year, the central bank cut its initial forecast for a 5 percent expansion in 2011 by two percentage points.

On Jan. 25, Standard & Poor’s affirmed its long-term debt rating for Bahrain at BBB. The outlook is placed as negative.

The Gulf region’s smallest economy may still draw strength from its advantages in some sectors, Edward Bell, Middle East and North Africa economist at the Economist Intelligence Unit, said by phone from London.

“It could probably try and reinforce its position as an Islamic finance center or provide things like wealth management or back-office things like accounting or day-to-day management of the services industry,” said Bell.

Bahrain’s credit risk is approaching that of Dubai, the sheikhdom that was on the verge of defaulting in 2009 until neighboring Abu Dhabi extended a $20 billion bailout. Default swaps for Bahrain were six basis points below those of the emirate on Jan. 30, the narrowest spread since October 2008, according to CMA.

Bloomberg