By Reed Stevenson and Erika Solomon
MANAMA/DUBAI (Reuters) - Bahrain launches a national dialogue on Saturday but majority Shi'ites are skeptical the ruling Sunni monarchy is willing to offer the sort of concessions that could heal wounds caused by a crackdown on pro-democracy protests.
The kingdom, which hosts the U.S. Navy's Fifth Fleet, has accused its majority Shi'ite population of leading pro-democracy protesters according to a sectarian agenda backed from Shi'ite power Iran, across Gulf waters.
In March, Bahrain's Sunni rulers imposed emergency law, inviting Saudi Arabia and the United Arab Emirates to send troops and tanks into the island as local forces cleared the streets of protestors.
Inspired by uprisings in Tunisia and Egypt that toppled rulers in those countries, Bahrain's Shi'ites called for fairer political representation as a way to end what they believe was systematic discrimination in access to jobs and social services.
"We need to ensure this dialogue quickly offers real political situations to create stability," said Wefaq spokesman Khalil al-Marzouq. "Otherwise the situation will explode again."
King Hamad bin Isa al-Khalifa said "all options" were on the table" for negotiation at the conference on the tiny Gulf island nation, which is expected to last for at least a month.
But with protests erupting daily in the Shi'ite villages ringing the capital Manama, opposition groups complain they are under-represented at the meeting and warn democratic reforms must come quickly to avoid more unrest.
Reflecting the deep societal divide and mistrust of the talks, Wefaq, the leading Shi'ite opposition group, had not decided whether to attend the gathering just 24 hours before the start.
Bahrain has offered some concessions ahead of Saturday's talks. It established a panel to investigate deaths and arrests that Shi'ites bore the brunt of after the protests, and plans to withdraw most, though not all, Saudi troops.
National dialogue spokesman Isa Abdulrahman said the dialogue offered an opportunity for reform and easing Sunni and Shi'ite divisions that threaten the country.
"The goal is to reach a consensus with everyone, it's not about a vote. This is about bringing together all elements of Bahraini society to heal this nation so that it can move forward to a brighter future," he told Reuters.
The forum has received hundreds of proposals for discussion and if delegates agree some reforms, the king could later sign them into law.
However, critics are skeptical much will come of a forum. Just 35 of the 300 seats have been given to opposition groups, who say they will be unable to push for increased powers for a lower parliament whose authority is neutered by the king's appointed upper Shura council.
"We looked at the other names, and so many of them we know are with the government. How is this going to be a dialogue?" asked one Wefaq official, who asked not to be named.
The government says it wants to be sure no part of society is marginalized, but opposition groups who have joined talks say they will walk out if the talks do not prioritize political reforms, which they hope could calm the seething Shi'ite street.
The tiny Gulf Arab state has spent weeks preparing for the talks, which it says will discuss political, economic, social and legal reforms that could ease longstanding grievances.
On Wednesday, King Hamad announced set up an independent, international commission to investigate the protests and the handling of the crackdown.
"A lack of confidence has prevailed and vision has been blurred by rumors," he said, pointing to the necessity of a probe to ease frustrations in the country.
The move was hailed by rights groups such as Amnesty International, but opposition groups say the commission's funding by the king throws its neutrality into doubt.
But any positive gesture has been overshadowed by the recent sentencing of eight prominent Shi'ite opposition leaders to life in prison, a move that roiled Shi'ite villages.
The rallying cry "Down down (King) Hamad" is now mixed with the refrain: "No dialogue with al-Khalifa."
Night and day, dozens of riot police cars patrol the Shi'ite villages that ring the capital Manama and most villagers say reconciliation is still out of reach.
"It's infuriating - the police camp out here at night, they watch us all day," shouted Ahmed, an angry teenager watching from his home as police set up a checkpoint outside his dusty ramshackle village of Karzakan.
"They want our leaders to go to dialogue with a gun to their head, how is that consensus?"
(Editing by Jon Boyle)