Karishma Vaswani: People power has won in Bangladesh, for now

Sheikh Hasina could have left gracefully. Instead, Bangladesh’s prime minister resigned and fled to neighboring India, ending her 15-year-long rule as chaos has engulfed the nation. The army wasted no time stepping in to form an interim government, although what shape that will take is still unclear.

The military needs to find a swift path to a peaceful transfer of power. Any delay will risk damaging the country’s reputation with the international financial community even further — at a time when Dhaka needs funds and investment to revive its flailing economy. Stability in a region that has long lived under the shadow of violent extremism is also under threat, while the chaos will present an opportunity for China, whose ambitions have so far been well-balanced against India’s under Hasina’s regime.

Once among the most impoverished countries in the world, Bangladesh witnessed a remarkable turnaround in recent years. A young and energetic workforce helped make it the world’s second-largest clothing exporter behind China, manufacturing for large fashion brands like Hennes & Mauritz AB, Gap Inc. and Inditex SA’s Zara. In 2022, it was on course to become a $1 trillion economy by 2040, according to the Boston Consulting Group.

The good times didn’t last. A combination of the pandemic and financial mismanagement took their toll on the emerging economy, and two years ago it reached out to the International Monetary Fund and other international lenders to prevent collapse. It’s the third country in the region, after Sri Lanka and Pakistan, forced to knock on the IMF’s door in recent times. All the instability is adding to uncertainty in South Asia.

Financial health was not the only issue. The political protests over the last month have been a lightning rod for a wide range of problems from acute unemployment to a flagging private sector, Lutfey Siddiqi, visiting professor at the London School of Economics’ foreign policy think tank, told me. “There’s also anger at the sheer lack of empathy and condescension with which Hasina has responded to those worries,” he said.

The prime minister’s ruling Awami League has most recently been in power since 2009, but elections have been regularly boycotted by the opposition, and widely condemned as being insufficiently free and fair. She capitalized on a storied legacy as the daughter of Sheikh Mujibur Rahman, Bangladesh’s founding father, going on to become the world’s longest-serving female leader, but in recent years has clamped down on press freedom and quashed public debate. Economic mismanagement has only made grievances worse.

Her entrance into political life was marked by personal tragedy. Hasina’s father was assassinated in a military coup in 1975, when she was 28. The army murdered 18 people that day, including her parents and three siblings. Hasina, who was in Germany at the time, fled to India with her sister and lived in exile there until she returned to her homeland in the 1980s. She was in and out of home detention until 1996, when she first became prime minister.

Hasina was credited for bringing much-needed stability and turning the economy around. But in the last decade her rule was marked by protests against an increasingly authoritarian regime. More recently, police launched a brutal crackdown on demonstrators who have been on the streets since June to voice their discontent over a proposed government jobs quota. More than 100 people died last weekend, adding to the toll of at least 300 since citizen anger flared. The rage has morphed into something deeper — a disillusionment with Hasina’s government that many among the 170 million strong population view as corrupt and ineffective.

There are regional implications for Hasina’s dramatic exit. It puts renewed pressure on India, which has relied on her to keep potential terrorist threats at bay as well as provide a bulwark to China’s growing influence in the region. New Delhi will be worried about who will replace her and what that will mean for security risks on its border, and the new government’s relations with Beijing.

China is Bangladesh’s largest trading partner. In 2022, trade between the two grew by 10.7% to $27.79 billion from $12 billion in 2014. Dhaka was the first South Asian country to join the Belt and Road Initiative, Beijing’s ambitious global infrastructure program. In July, Bangladesh asked for a $5 billion loan from Beijing to help it grow its economy. In the current power vacuum, the U.S. will be mindful of China’s appeal. American officials have for too long turned a blind eye to Hasina’s growing autocracy in an attempt to keep her on side. That could come back to haunt them.

For now though, it will be domestic considerations that will dominate — and rightly so. The country has to begin the difficult process of rebuilding. The first tasks for a new government will be quelling the protests and steadying the economy. Negotiations with the IMF for more funds in the face of dwindling foreign exchange reserves should be a priority. The military needs to get out of the way, and convince citizens that it is serious about putting together a new administration and calling for fresh elections. The people of Bangladesh have spoken, and they want a bigger say in their future. It’s time they got it.

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Karishma Vaswani is a Bloomberg Opinion columnist covering Asia politics with a special focus on China. Previously, she was the BBC's lead Asia presenter and worked for the BBC across Asia and South Asia for two decades.

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