Hasina Seeks Modi's Help to Survive Bangladesh's Economic Crisis
By Riaz Haq
CA
Shaikh Hasina, the Prime Minister of Bangladesh, recently visited New Delhi to seek political and economic assistance from the Indian Prime Minister Narendra Modi. The 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".
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. Both Bangladeshi and Indian officials have reportedly said that Sheikh Hasina "has built a house of cards "
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 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 readymade 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 .
(Riaz Haq is a Silicon Valley-based Pakistani-American analyst and writer. He blogs at www.riazhaq.com )
