By Jayanta Roy Chowdhury
Amidst the drama of a tense power struggle between Bangladesh’s interim government and the army and multiple political and humanitarian crises, the former South Asian “tiger economy” is experiencing a continued economic meltdown.
For India, its nearest neighbour, both the political crisis and the economic disaster in the making can have huge repercussions which need to be understood and managed in New Delhi’s own self-interest.
The Bangladesh army is patrolling the streets of Dhaka after a stand-off with the Muhammad Yunus regime, sparked in part by the latter’s desire to grant a passage — through Chittagong to Myanmar’s Rakhine state — to the United Nations at the insistence of US diplomats.
The army fears the “humanitarian corridor” through which supplies would be taken to the Arakanese people who have been rebelling against Myanmar will draw it into a regional war in which it sees no stakes for Bangladesh. It also deeply resents suspected efforts to change its power structure by replacing its chief, General Waker uz Zaman, with an ambitious pro-Islamist staff officer favoured by Yunus and by placing a newly appointed National Security Adviser who possibly holds an American citizenship over him in the chain of command.
To force out the interim government, the army has made it clear that major issues like the Arakan corridor can only be decided by an elected government and that must be put in place by end-December, a call which seems to have unnerved Yunus.
Attempts by the former banker, who is now on a tour of Japan to garner political support for his “fight” with the army, have not proven successful. While one major party — Bangladesh Nationalist Party (BNP) — has cold-shouldered him, the other — Awami League (banned by the Yunus regime recently) — has vowed to unseat him. Together, these parties have traditionally accounted for two-thirds to three-fourths of all votes cast in any election till date in Bangladesh. All other parties including the Bangladesh Jamaat-e-Islami and the newly formed “king’s party” of pro-Yunus students whose support he banks on, pale into insignificance in terms of popular mandate.
To add to Yunus’s woes, the BNP has supported the army’s demand for quick polls and an immediate road map for elections. The army itself has stated that it will no longer tolerate the anarchic situation into which the nation has slid and has started cracking down on armed gangs which had made life in Bangladesh precarious, if not right down dangerous, and which were seen by many as patronised by the new crop of Islamist parties. Many members of former terror modules who were freed during the “August revolt” had made common cause with these armed gangs, though many others who were ideologically committed have been waiting in silence to start a new campaign which could cause untold misery in both Bangladesh and in nearby states of India.
Popular support for the “Gana-abukhyan” or “People’s movement”, which saw Sheikh Hasina exiting Dhaka in August last year, is also fast fading with people fed up with rising unemployment, industrial decline, attacks on women and minorities, looting of households and bulldozing of symbols of the country’s liberation war openly mouthing support for the previous regime.
Over 140 factories have shuttered or been burnt down. Labour strikes over unpaid wages coupled with energy shortages have disrupted production and forced buyers of global readymade garment brands to hunt for other supply sources, leading to a boom in textile trade out of India, Vietnam, and Cambodia. Nearly 150,000 workers have lost their jobs so far in Bangladesh, with women being the biggest losers. Bangladesh’s GDP growth fell to 5.78% in 2023 from 7.10% in 2022. The World Bank projects a further decline to 3.3% in FY25, the lowest in 36 years. External debt has doubled from $51 billion in FY17 to $103 billion by December 2024, while foreign debt repayment surged 25% to $3.5 billion in the first 10 months of FY25, straining reserves. Foreign direct investment has declined sharply to $104.33 million in the July-September quarter of FY25, the lowest in six years. As a result, the Dhaka Stock Exchange has been in free fall since the August regime change, and has seen its index contracting by a fifth during these 10 months.
The problem for India is, of course, that with an anti-India, anti-liberation war regime in Dhaka, one could face a “pincer attack” from terrorist groups going on the rampage possibly with support from the state apparatus of both Pakistan and Bangladesh. In a worst-case scenario, Bangladesh could make common cause with Pakistan and/or make the “pincer attack” scenario take on an even more sinister shape which could see India preparing for an extremely expensive three-front war.
The industrial decline of Bangladesh and the concomitant chaos there is also sure to push tens of thousands of migrants into India through the porous border, especially into the Northeast where the terrain makes fencing or policing far more difficult than elsewhere. The cost of this migration would not only be a strain on India’s limited resources but also on the demographics of a sensitive region, causing its own political repercussions.
The question that policymakers must now ask is, how does India resolve the situation? India has said it wants early and inclusive elections — diplomatese for stating that it supports the army’s and BNP’s demands for elections by December, and that it also wants the Awami League to be allowed a level playing field in the polls.
The best option is to let Bangladesh sort out its own mess. However, weak governments have a tendency not to fall by the wayside but remain in a state of constant crisis as the Yunus regime is now displaying. His government is unlikely to walk out of power without several nudges and shoves. Actors within Bangladesh must give those shoves and nudges, but India, as the responsible and interested neighbour, must ensure that those moves occur and occur with the least bloodshed on the volatile streets of Dhaka, without causing a fresh humanitarian crisis.
The writer is former resident editor-East, Press Trust of India.
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