Hasina Seeks Modi's Help to Survive Bangladesh's Economic Crisis

[Riaz Haq]

Shaikh Hasina, the Prime Minister of Bangladesh, recently visited New Delhi to seek political and economic assistance from the Indian Prime Minister Narendra Modi. This summit was preceded by Bangladesh Foreign Minister Abdul Momen's trip to India where he said,  "I've requested Modi government to do whatever is necessary to sustain Sheikh Hasina's government".  Upon her return from India, Sheikh Hasina told the news media in Dhaka, "They (India) have shown much sincerity and I have not returned empty handed". It has long been an open secret that Indian intelligence agency RAW helped install Shaikh Hasina as Prime Minister of Bangladesh, and her Awami League party relies on New Delhi's support to stay in power. Bangladesh Foreign Minister Abdul Momen has described India-Bangladesh as one between husband and wife. In an interview with Indian newspaper 'Ajkal,' he said, "Relation between the both countries is very cordial. It's much like the relationship between husband and wife. Though some differences often arise, these are resolved quickly."  Both Bangladeshi and Indian officials have reportedly said that Sheikh Hasina "has built a house of cards". 

Bangladesh PM Shaikh Hasina (L) with Indian PM Narendra Modi

 British Indian analyst Dr. Avinash Paliwal explains Shaikh Hasina's current dilemma as follows: "Politically reliant on New Delhi, she (Hasina) is finding it increasingly difficult to manage the ramifications of India's turn towards Hindu nationalism that misuses migration from Bangladesh and the Rohingya crisis for domestic electoral gain". Justice Surendra Kumar Sinha, Bangladesh's former Chief Justice,  has said India is backing Sheikh Hasina's autocratic government for its own interest. Here's how prominent Indian journalist SNM Abdi explains Indian intelligence agency RAW's influence in Bangladesh: "India wields more influence in Bangladesh than the Security Council’s five permanent members put together. The Research and Analysis Wing (RAW) is the most dreaded outfit in the neighboring country surpassing even the brutally unforgiving RAB (Rapid Action Battalion). Hasina lives in mortal fear of RAW. She knows that she will be toppled if she displeases India. So she has adopted the policy of pleasing India to retain power at any cost".

Bangladesh has received wide acclaim for its remarkable economic success under the authoritarian leadership of Shaikh Hasina over the last decade. She has jailed many of her political opponents and hanged others. She has tamed the country's judiciary and gagged Bangladeshi mainstream media. What has helped her retain power is the fact she has New Delhi's support and she has succeeded in delivering rapid economic growth that has helped improve the lives of ordinary Bangladeshis. However,  a combination of current global inflation and the resulting economic crisis is threatening to unravel this formula.  

Bangladesh's currency has lost 11% of its value against the US dollar in just one week, import bill has soared by nearly 44%, forex reserves of $37 billion are falling and the revenue from ready made garments export and remittances is not keeping pace with the fast rising imports. Bangladesh is now seeking a $4.5 billion loan to cope with the situation. In addition, India has agreed to trade with Bangladesh in local currencies to reduce pressure on forex reserves. 

Bangladesh is not the only economy in trouble. The European Union, United Kingdom, Japan, Sri Lanka and Pakistan are also experiencing severe economic pain. India's forex reserves are falling and its current account deficit is rising as foreign investors pull out. High energy prices and the strong US dollar are hurting most of the world economies. Food and energy prices have shot up due to the Russia-Ukraine war. The US currency driven by aggressive US Federal Reserve policy of rate hikes has reached new highs. A stronger dollar for the US means cheaper imports, a tailwind for efforts to contain inflation, and record relative purchasing power for Americans. But the rest of the world is straining under the dollar’s rise, according to the Wall Street Journal. 

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[Riaz Haq]

Sheikh Hasina: Euphoria in Bangladesh after PM flees to India


https://www.bbc.com/news/articles/clywww69p2vo

Bangladeshi Prime Minister Sheikh Hasina has resigned after weeks of deadly anti-government protests, putting an end to her more than two decades dominating the country's politics.

Ms Hasina, 76, fled the country, reportedly landing in India on Monday.

Jubilant crowds took to the streets to celebrate the news, with some storming the prime ministerial palace, reportedly looting and vandalising parts of her former residence.

Hours after Ms Hasina's resignation, President Mohammed Shahabuddin ordered the release of jailed former prime minister Khaleda Zia and all students detained during recent protests against a quota system for government jobs.


President Shahabuddin said he had chaired a meeting of army chiefs and political representatives.

He said an interim government would be formed, new elections called and a national curfew lifted.

In Dhaka on Monday, police and other government buildings were attacked and set on fire. Protesters attempted to tear down a statue of independence leader Sheikh Mujibur Rahman, Ms Hasina's father.

Army and police units were deployed across the city. Mobile phone service was reportedly cut off for several hours before being restored.

On Monday, protesters were seen carrying out furniture from the prime minister's residence.

Dozens were reported killed on Monday, although the precise toll remained unclear. The AFP news agency reported the toll as 66 dead, though local outlet the Dhaka Tribune said as many as 135 had been killed.

Ms Hasina's departure leaves a vacuum in Bangladeshi politics, which has long been characterised by a rivalry between her Awami League and the Bangladesh Nationalist Party.

The country has experienced several military coups, most recently in 2007.

The US commended the army for its "restraint" and said an interim government should be formed. The EU urged an "orderly and peaceful transition" towards a democratically elected government.

There was no official reaction from neighbour and regional power India.

[Riaz Haq]

India’s Challenge in Post-Hasina Bangladesh

By Sumit Ganguly


https://foreignpolicy.com/2024/12/16/bangladesh-india-relations-has...


After a five-decade hiatus, a Pakistani cargo ship docked in the port city of Chittagong, Bangladesh, last month. The ship’s arrival signaled a significant shift in Bangladesh’s dealings with Pakistan, from which it seceded in 1971. Dhaka has also boosted its acquisition of arms and ammunition from Islamabad and dispensed with its practice of a full customs inspection of Pakistani imports.

These developments have come in rapid succession since Bangladesh’s interim government took over a few months ago. Leader Mohammed Yunus, a Nobel-winning economist, was the consensus candidate after Bangladeshi Prime Minister Sheikh Hasina stepped down under pressure in August. During her last two terms in office, she worked closely with India’s government. (Hasina has received asylum in New Delhi, and Dhaka recently asked Interpol to issue a red notice for her arrest.)

[Riaz Haq]

India's exports to Bangladesh dip amid 'volatile' situation - The Economic Times


https://m.economictimes.com/news/economy/foreign-trade/indias-expor...


The political turmoil in Bangladesh has slowed down exports of gem and jewellery, imitation jewellery, engineering goods and oilmeals from India. The raw cotton, cotton yarn and textiles exporters are facing delays in payments, eve ..

Read more at:
https://economictimes.indiatimes.com/news/economy/foreign-trade/ind...

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Exports to Bangladesh slip 28% in Aug; Crisil flags risk to export-oriented units
Trade data showed that cotton exports, which is India’s primary export commodity to Bangladesh, slipped nearly 10 per cent to 1 billion in August this year compared to 1.11 billion August 2023

https://indianexpress.com/article/business/economy/exports-to-bangl...

Exports to Bangladesh slip 28% in Aug; Crisil flags risk to export-oriented units
indianexpress.com

https://indianexpress.com/article/business/economy/exports-to-bangl...
India’s exports to Bangladesh slipped 28 per cent to $681 million last month compared to $943 million in August last year as protest and violence exacerbated the forex crisis that the neighbouring country is facing, official data released by the Commerce and Industry Ministry showed.


Meanwhile, rating agency Crisil said that the recent developments in Bangladesh haven’t had a significant impact on India’s trade but going forward a prolonged disruption can affect the revenue profiles and working capital cycles of some export-oriented units for which Bangladesh is either a demand centre or a production hub.