Bangladesh on a knife edge: Why India needs to wake up to the economic crisis and political instability looming in the east

Bangladesh on a knife edge: Why India needs to wake up to the economic crisis and political instability looming in the east

Protests and violence are so routine in Bangladesh that treating the ongoing crackdown on opponents of Sheikh Hasina as anything other than the noise generated by the election might seem like a stretch. From the latest deaths of opposition activists in police shootings, and the opposition Bangladesh Nationalist Party (BNP) demanding an “interim” administration that could ensure electoral transparency, to an angry Hasina vowing not to never let “arsonist terrorists” take over – that is Bangladeshi politics par excellence. Even Western criticism, visible in a recent joint statement by ambassadors calling for free, fair and peaceful elections, and Indian and Chinese silences, is nothing new.

But the fact is that Bangladesh is on the cusp of a political shift it has not witnessed since 2009. Hidden in this old-fashioned, high-tension politics between two known rivals and a politicized military are unexpected signals that point to a deeper tumult.

First, public frustration with the ruling Awami League (AL) is wide and deep enough that fears of a crackdown have dissipated. Second, the economic situation is so bad that even Hasina’s top allies are reconsidering their options as election funding sources shrink. Third, neither Hasina nor the BNP have answers to fix the economy or meet public expectations.

The current focus on violence around the BNP’s upcoming mass rally in Dhaka ignores the fact that the BNP has staged a series of rallies across the country with surprisingly large public turnout. That this has happened despite government attempts to limit travel by forcing the closure of public transport – even in traditional AL strongholds such as Khulna and Faridpur – offers reason for pause. How can the BNP, considered politically dead until recently, mobilize mass support? For, to his own surprise, he appears as a broker of disparate grievances against a government disconnected from the people.

After all, Bangladesh’s hugely significant and world-celebrated macroeconomic improvements do not automatically translate into wealth redistribution and institutional integrity. It was always the litany of microeconomic problems and the daily political coercion inflicted by corrupt party and state officials that were Hasina’s Achilles’ heel. That’s why people took long boat rides or walked for hours in the face of government-mandated bus and train closures to reach the Khulna rally, which in retrospect may mark a turning point.

While these events emboldened the opposition, they prompted loud outbursts from Hasina, promising more police repression and media intimidation. This is what makes the next Dhaka rally dangerous: Hasina risks losing both ways. If she uses force to break up the protests, she will push more people in the direction of the opposition. But if she does not halt these protests, it could damage Hasina’s image as a strong person and bolster the political momentum of the opposition. It’s a classic trap, and the questions for Hasina and her allies are: can we save face without further alienating people? If not, should the government become more aggressive?

The answers lie in the political economy of Bangladesh. The double shock of the pandemic followed by Russia’s invasion of Ukraine has turned Dhaka’s macroeconomic growth story upside down. Based on a pattern of compromised institutions, basic social spending, and constrained silence from opponents and the media, this macroeconomic history would sooner or later have knelt under its own contradictions. But the enormity and timing of these external shocks prove to be force multipliers for Hasina’s opponents. The financial squeeze is not yet a foreign debt crisis, but the austerity measures will only worsen the cost of living situation. Moreover, a crisis in the banking sector reduces Hasina’s internal patronage networks, essential for political survival.

A sign of tension in this regard is the series of multi-billion dollar loans granted to the S Alam Group by Islami Bank, Social Islami Bank and First Security Islami Bank. Why would Hasina’s top financier, who owns stakes in many Bangladeshi banks, take out huge loans to supposedly buy hotels and shopping malls in Singapore when the economy is facing an acute crisis? The move ties Bangladesh’s financial future to a single company and could potentially trigger a Sri Lanka-style meltdown. Under investigation, this case indicates various possibilities, none of which are promising. If the S Alam group did this with Hasina’s permission, then it could be an “exit loan” that ignites a long political fuse that could implode the economy, but not under Hasina. But if this happened without Hasina’s approval, then she has a Brutus in the mix.

This begs the question: what does the BNP have to offer if – and this is a big if – it somehow comes to power? This is where the story gets darker. The BNP’s revival is driven by widespread anti-Hasina sentiment, not because it has a broader vision of governance. The unexpected success of his rallies united the party behind its polarizing leader-in-exile, Tarique Rahman, with public sympathies for an ailing Khaleda Zia still intact. Few of the BNP’s promises to shun Chinese finance, mend ties with India, steer clear of Islamist radicals, or establish democratic and institutional integrity will survive the impact with a struggling economy and a restless population.

The first and proven political logic that is then likely to guide the BNP is to secure its bases and ensure that it remains in power. Even if it takes a lenient approach to Hasina, the party is unlikely to invest in institutional transparency or democratic building, given the mounting costs of failure. In the medium term, it could even take an Islamic populist turn and switch to Beijing to mitigate the political risks of economic turbulence. It’s happened before and Hasina probably understands it better. If the BNP is committed to ousting him tomorrow, Hasina could focus more on sinking the day after tomorrow, hoping to regain influence today.

It is the structural inevitability of history’s repetition that makes the present moment fraught with risk. There is an urgent need for a calibrated intervention behind the scenes by regional powers, particularly India, to ideally prevent or, at a minimum, contain the consequences of the storm that is brewing in Bangladesh. If current approaches don’t work – New Delhi has channels with Hasina’s opponents – then different strategies might be needed. The last thing the subcontinent needs is a serious disruption to the livelihoods and hopes of Bangladeshis. For it will only add to India’s geopolitical woes in its east where endemic violence and Chinese interference continue to thwart New Delhi’s geoeconomic aspirations.

The writer teaches at SOAS University of London and is the author of The enemy of my enemy: India in Afghanistan, from the Soviet invasion to the American withdrawal

#Bangladesh #knife #edge #India #wake #economic #crisis #political #instability #looming #east

Leave a Comment

Your email address will not be published. Required fields are marked *