Understanding India’s Bangladesh policy

Historically, Sheikh Mujeeb and his daughter Sheikh Hasina have enjoyed the support of the successive Indian governments. In the forthcoming general elections it is difficult to infer if India still supports Hasina.  

Indian External Affairs Minister Dr Subramaniam Jaisankhar’s recent address in New Delhi to celebrate the ninth anniversary of the Bharatiya Janata Party has created conflicting reactions in the Awami League and the Bangladesh Nationalist Party.

Dr Jaisankhar iterated in his address in New Delhi what prime minister Narendra Modi signed in the joint declaration namely India’s commitment not to interfere in Bangladesh’s forthcoming general elections.

These developments could also be the game-changer for holding Bangladesh’s next general elections freely and fairly and dealing with the existential threat that a flawed national election would pose for the country.

The statement has disappointed the Awami League, making many of its followers apprehensive. Bangladesh’s foreign minister Dr AKA Momen openly sought New Delhi’s help for a fourth consecutive term for the Awami League on an official visit to New Delhi in 2022. His plea was widely reported in the Indian and Bangladesh media.

Bangladesh’s opposition parties led by the BNP have been in the political wilderness since the Awami League came to power in January 2009. They have been oppressed, incarcerated and subjected to enforced disappearances and other forms of oppression.

The US-west-UN and international rights organizations have accused the Awami League in recent times of the violations that are protected by UN charters with Bangladesh on the cusp of its next general elections.

India had stood steadfastly behind the Awami League till Dr Jaisankhar’s recent statements. It provided seminal support to the Awami League to become and remain the dominant power in Bangladesh. While New Delhi remained silent, the US-led west became vocal against the Awami League up until the Indian prime minister’s Washington visit.

Two instances underline India’s prime role in placing the Awami League in its present position of dominance.

India’s former president Pranab Mukherjee’s soft corner for the Awami League and Sheikh Hasina were open secrets in Bangladesh, thanks to his prolific writings. He wrote that he had assured General Moeen U Ahmed not to worry about his safety and future after his military rule had ended when the latter met him in February 2008 in New Delhi.

Many now believe that the former Indian president won the general over on the side of the Awami League. The Awami League won the December 2008 elections by a landslide. Its victory was expected but not the margin. General Moeen U Ahmed supervised the general elections.

The other instance of India’s interference in Bangladesh’s domestic politics was the infamous visit of the Indian foreign secretary Sujata Singh to Dhaka before Bangladesh’s 2014 general election. She arm-twisted President HM Ershad, many say blackmailed, to participate in the 2014 elections. India’s interference allowed the Awami League to hold the 2014 elections that the BNP-led opposition boycotted.

India’s interference helped the Awami League to also abort the BNP-Jamaat’s movement for the restoration of the caretaker government system that it had forced the BNP to adopt in the constitution as the 13h amendment in 1991–96 with Jamaat and Jatiya Party as allies.

Sheikh Hasina claimed while leading the 1991–96 movement that the caretaker government system was the panacea for changing government peacefully in an emerging democracy. She wanted the caretaker government system to be in the constitution ‘forever.’

India’s interference also legitimized the 15th amendment under which the Awami League held the 2014 elections. The BNP’s effort to establish the amendment as the Awami League’s constitutional mechanism for its BAKSAL vision failed because India led the Awami League’s claim that the BNP and Jamaat were supporters of Islamic terrorism and Islamic fundamentalism that the US-led West accepted wholeheartedly. The result of the 2014 elections was a shame not just to Bangladesh but also to all those who supported it. There was no election to 154 of the 300 seats.

Bangladesh’s present crisis is similar but more dangerous than that it faced leading to the 2014 elections with important changes down the road. One perceptible change has been in India’s role in the 2018 elections. New Delhi stayed away from it despite repeated appeals by the Awami League for help. The Awami League even claimed in making its desperate appeals to New Delhi, leading to the 2018 elections that many hundreds and thousands of its supporters would be killed if it lost power.

The Awami League still won in 2018 elections. It had, meanwhile politicized the civil bureaucracy, the law enforcement agencies and the Election Commissioner in its favour in such a manner that they ensured ballot boxes managed votes to be stuffed in its favour the midnight before the election.

The 2018 elections earned the ‘midnight elections’ nickname. The BNP flagged the futility of participating in a general election under the 15th amendment but was forced to take part in it because it would have, otherwise, lost its registration for abstaining from two consecutive general elections. It was no wonder, therefore, that the Awami League won 293 of the 300 seats in the 2018 elections.

Dramatic changes have occurred in the international order since Bangladesh’s 2018 election. Islamic terrorism and Islamic fundamentalism that had made the US-west-UN allow the Awami League to do anything to remain in power leading to the 2014 and the 2018 elections are now out of the radar.

These powers have now come together for democracy, human rights and a free and fair general election in Bangladesh at a time when it is clear that the country cannot withstand another election similar to the 2014 and 2018 elections. It is now also clear that there cannot be any election in Bangladesh under the 15th Amendment without pushing the country towards an existential crisis.

India which was an ally of the US-West in Bangladesh’s controversial 2014 and 2018 elections, nevertheless, had remained silent about the dramatic changes. It kept Bangladesh across its political divide, waiting, aware that its role would be very crucial.

Most Bangladeshis were not inclined to believe that the US-west-UN would not be able to force a peaceful change of government in Bangladesh without India. A great many believed that New Delhi and Washington would, in the end, back a fourth term for the Awami League.

India’s Prime Minister Narendra Modi’s recent visit to Washington answered Bangladesh’s waiting, almost. Narendra Modi did not speak for the Awami League as its supporters expected. He agreed instead through paragraph 36 of the 58-paragraph joint declaration of the summit to support ‘freedom, democracy, human rights, inclusion, pluralism, and equal opportunities for all citizens.’

Thus, by interpretation, he dittoed the recent initiatives of the United States in Bangladesh for democracy and human rights, particularly for holding Bangladesh’s next general election in a manner where every voter would be able to vote freely, fairly and without fear.

 

Pakistan: Ship breaking faces bleak outlook

According to Seatrade Maritime News, Pakistan’s Gadani Beach could become a ghost town as the ten-kilometre strip, home to more than 130 ship breaking plots, fails to adapt to the Hong Kong Convention rules.

Following the accession of Bangladesh and Liberia to the IMO’s Hong Kong Convention (HKC), the global standard will now enter force on 26 June 2025. It’s been a long time coming, having been originally adopted by the IMO in 2009, but it now has major implications for owners seeking to dispose of end-of-life ships.

Apart from rogue outsiders who still operate vessels in some regions where the global safety framework carries little weight, owners and operators will come under growing pressure to ensure that end-of-life ships are disposed of as safely and responsibly as possible.

As the third largest ship recycling nation, Pakistan recyclers are likely to find it increasingly hard to attract sellers. Unlike the other two ship dismantling subcontinent nations – India and Bangladesh – the country’s yard owners and managers have made few moves, if any, to upgrade facilities to meet HKC standards.  

“Gadani really has become virtually redundant as a viable subcontinent recycling destination,” declared GMS, the world’s largest cash buyer of end-of-life ships, in its most recent weekly report.

The warning coincides with a deepening economic crisis in Pakistan which has forced the country to seek emergency funds from the International Monetary Fund (IMF). Last week, it was revealed that a tentative agreement had been reached between the state and the IMF for a US$3 billion emergency bail-out. However, this has not yet been formally agreed. 

One result of the country’s financial crisis is that the central bank has been forced to limit or refuse to issue letters of credit to fund end-of-life ship acquisitions. Therefore, significant ship recycling deals have not been possible anyway.

Meanwhile, Eid holidays have resulted in a quiet week spell across the recycling sector as a whole. GMS said that any price ideas that were mooted remain noticeably below the market and not worth considering at this time. “Until we see liquidity issues ease in the industry, we are not likely to make much sense of local markets,” the firm added. 

GMS estimates that Bangladesh breakers continue to offer the sharpest prices, with container ships typically at around US$625 per ldt, tankers at US$605, and bulk carriers at US$575. Theoretical price levels in India and Pakistan are around US$60 to US$80 below these levels. Meanwhile, typical prices prevailing in Turkey last week were US$340, US$330, and US$320 for the three ship types respectively. 

 

 

QatarEnergy to sign long term LNG supply deal with Bangladesh

QatarEnergy will sign a long-term liquefied natural gas (LNG) supply deal with Bangladesh's state-owned gas company Petrobangla on Thursday, the second Asian sales deal to be sealed for Qatar's North Field expansion project.

The 15-year agreement is for the supply of 2 million tons annually, Petrobangla's Chairman Zanendra Nath Sarker told Reuters.

Supplies are set to start in January 2026, he said.

The agreement will be one of many to come this year as state-owned QatarEnergy secures sales for its mega expansion of North Field, a source with direct knowledge of the new contract agreement, who did not wish to be identified, said.

Qatar is the world's top LNG exporter and competition for LNG has ramped up since the start of the Ukraine war, with Europe in particular needing vast amounts to help replace Russian pipeline gas that used to make up almost 40% of the continent's imports.

But Asia, with an appetite for long-term sales and purchase agreements, has been ahead so far in securing gas from Qatar's massive production expansion project.

This will be Bangladesh's second long-term deal with Qatar as it desperately looks for long-term LNG deals at a cheaper rate after prices spiked following the Ukraine war last year.

The contract will be QatarEnergy's second to Asia since it started selling the gas expected to come on stream from the North Field expansion project.

The two-phase expansion plan will raise Qatar's liquefaction capacity to 126 million tons per year by 2027 from 77 million.

Qatar's first Asian deal, with Sinopec, the longest to be signed at 27 years for the supply of 4 million tons a year, was followed by the state-owned Chinese company taking a 5% stake in the equivalent of one North Field East LNG train.

QatarEnergy's sales and purchase agreements to supply Germany with around 2 million tons of LNG annually through a partnership with ConocoPhillips cover at least a 15-year period.

Bangladesh has a 10-year LNG import deal with Oman Trading International. That LNG is priced at 11.9% of the three-month average price of Brent crude oil plus a constant price of 40 cents per million British thermal units (mmBtu).

Under its first 15-year deal with Qatar, Bangladesh pays 12.65% of the three-month average price of Brent oil plus a constant of 50 cents per mmBtu.

The North Field expansion project will help guarantee long-term supplies of gas globally. North Field is part of the world's biggest gas field that Qatar shares with Iran, which calls its share South Pars.

QatarEnergy chief Saad al-Kaabi said last week there was big demand for LNG and that he expects by the end of the year to have signed supply deals for all the gas expected to come on stream from the North Field expansion.

 

Iran hosts Asian Clearing Union summit

The 51st Asian Clearing Union (ACU) summit, mainly focusing on de-dollarization, kicked off on Tuesday at the Central Bank of Iran (CBI).

On the first day of the two-day event, expert committees from the delegations attending the summit held meetings to discuss preliminary issues.

The summit is attended by the governors of the central banks of the ACU member countries in addition to Russia.

The Governor of the Central Bank of Russia Elvira Nabiullina arrived in Tehran on Monday to attend the event.

In the 51st ACU summit, the members are set to discuss various issues including the amendment of the Union's statutes in order to facilitate the acceptance of new members, and determining the new currency basket of the member countries in order to settle exchanges without the need for euro or the dollar.

Exploring the feasibility of using digital currencies of central banks for cross-border payments and the unveiling of the interbank messaging network of the member states of the Union are also among the major topics on the summit’s agendas.

Asian Clearing Union is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.

The main objectives of the clearing union are to facilitate payments among member countries for eligible transactions, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade and banking relations among the participating countries. 

Currently, the members of ACU are the central banks of Iran, India, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, Sri Lanka, and Myanmar.

The central banking authorities of member countries have issued detailed instructions and modalities for channeling monetary transactions through the ACU. Membership in the ACU is open to central banks located in the geographical area of ESCAP and non-ESCAP.

 

Record heatwave scorching much of Asia

A record-smashing heatwave has been scorching South and South-east Asia, with temperatures so searing in places like India’s West Bengal that people there are frying eggs under the heat of the noonday sun, reports The Straits Time.

Meteorologists have been tracking temperatures of as high as 45 deg C in India, Thailand and Myanmar, and 42 to 43 deg C in Bangladesh, Laos, Vietnam, Nepal and China. These are temperatures that most of these countries have not experienced in decades.

Populations across the continent are cranking up their air-conditioners and electric fans, seeking shelter in shopping malls and in their offices, or praying for rain.

People are dying of heatstroke as they gather in thick, large crowds under the sun, and students are landing in hospitals as their schools bake in the heat.

Power grids are stretched beyond their capacities, and farmers are looking at failed harvests.

The continent is experiencing the worst April heatwave in its history, said climatologist and weather historian Maximiliano Herrera, who tracks extreme weather on his Twitter account.

“It will just get worse,” he warned.

Climatologists and scientists say this is just the start of a long dry spell that will likely be exacerbated by the El Nino weather phenomenon forecast to hit later in 2023. Asia will have to brace itself for even warmer days ahead, they warn.

At least 13 people died from heatstroke in India’s western Maharashtra state after attending a state award ceremony on Sunday that drew over a million people.

In Ahmedabad, the most populous city in Gujarat state, the air had been so hot and humid that asphalt on a freshly laid road did not harden, but instead melted.

At least two other states in India – Tripura in the north-east and West Bengal in the east – have ordered schools to shut this week as the temperature rose above 40 deg C.

In the Philippines, where the temperature hit 37 deg C, close to 150 secondary schoolchildren in a province south of capital Manila suffered heatstroke after a power outage hit their school. Seven of them fainted; two had to be taken to a hospital. The school has classrooms crammed with some 60 students each, and only electric fans to cool them.

The surge in power demand is already straining power grid capacities in poorer nations like Bangladesh, which is being forced to cut power to millions of people.

India is also warning of blackouts as higher use of air-conditioners and irrigation pumps depletes fuel used by its power plants.

But scientists are not laughing. It is warmer now because of climate change, they say.

Dr Fahad Saeed, regional lead for climate policy at Climate Analytics said, “This year’s record heat in Thailand, China and South Asia is a clear climate trend and will cause public health challenges for years to come.”

India’s scorching temperatures are making its population of over 1.4 billion – set to become the world’s largest – more vulnerable to illness and hunger, he said.

China has already seen major disruptions to industrial production in recent years because of extreme weather. It was gripped by a severe drought in 2022 that impacted the Yangtze River – a key conduit used to irrigate farms and power the massive Three Gorges Dam power station.

 

Bangladesh: Hasina accuses US of seeking regime change

Bangladesh Prime Minister Sheikh Hasina has accused the United States of seeking a regime change in the country. “They are trying to eliminate democracy and introduce a government that will not have a democratic existence,” Hasina said in Parliament. “It’ll be an undemocratic action.”

Hasina’s criticism of the United States comes at a time when Washington has pulled up her party – the Awami League – on issues related to human rights.

In December 2022, several former and current leaders of the Rapid Action Battalion were sanctioned by the United States. The RAB, an elite Bangladesh paramilitary unit, is alleged to have carried out enforced disappearances and extrajudicial killings on behalf of the government.

In the same month, American Ambassador Peter Haas had met families of victims of alleged enforced disappearance under Hasina’s rule. This included the family of Sajedul Islam Sumon, a leader from the Opposition Bangladesh Nationalist Party.

In February this year, Derek Chollet, the US State Department counselor, had expressed concern about the decline of democracy in Bangladesh. He had warned that this would limit American cooperation with Dhaka and urged Hasina to ensure free and fair elections.

 

Iran to expand trade ties with Bangladesh

Iranian President Ebrahim Raisi urged the growth of commercial and trade links with Bangladesh while reiterating his administration’s commitment to fostering connections with other Muslim nations.

In a phone conversation with Bangladeshi Prime Minister Sheikh Hasina on Monday, Raisi emphasized the need for Islamic nations to unite and support Palestine while denouncing the Zionist regime’s aggressions, particularly the brutal Israeli actions in Al-Aqsa Mosque and against the fasting Palestinian worshippers.

Raisi expressed congratulations to the government and the Muslim people of Bangladesh on Eid-al-Fitr and stated that Iran’s foreign policy is built on bolstering ties with all nations, particularly those in the Islamic world.

He also expressed optimism for strong ties between Bangladesh and Iran, particularly for the advancement of economic and commercial cooperation.

Sheikh Hasina, for her part, vehemently denounced the criminal activities of the Zionist regime against the Palestinian people, saying, “Supporting the oppressed people of Palestine and condemning the aggressions of the Zionist regime is the fixed position of the government and the people of Bangladesh.”

She stressed the need for improving connections with Iran, particularly in the commercial and economic spheres, as well as regional cooperation.

 

Bangladesh to repay Russian nuclear power plant loan in Chinese yuan

Reportedly, Bangladesh will repay a US$318 million loan owed to the state-owned Russian firm Rosatom in Chinese yuan so that construction can continue on a nuclear power plant in the country.

Dhaka had been unable to make the payment in US dollars since Russia’s February 2022 invasion of Ukraine. The US and European sanctions barred Moscow from accessing the dollar-denominated international banking system.

Moscow initially wanted Dhaka to make the payment in rubles for the US$13 billion Rooppur plant, said a Rosatom official on the condition of anonymity.

“Both countries agreed to make transactions through yuan,” the official told BenarNews, adding the decision was made on Thursday.

“The ruble created some complications as it is not an official currency for Bangladesh’s foreign payments.”

Mezbaul Haque, a spokesman for the nation’s central bank, Bangladesh Bank, told BenarNews that the yuan is one of five official currencies for foreign exchange. The others are the US dollar, the British pound, the euro and the yen.

Uttam Kumar Karmaker, the head of the European affairs wing of the Bangladeshi Finance Ministry’s economic relations division, told The Washington Post that the transaction was yet to be completed because payment details needed to be resolved.

Russia is constructing as well as financing 90% of the total cost for the Rooppur Nuclear Power Plant (RNPP) in Pabna, a district in northwestern Bangladesh. In late 2017, the Russian state-run nuclear energy firm Rosatom began building the plant, which is expected to be ready in mid-2023.

Dhaka’s decision to make the loan repayment in yuan was a positive one, a former lead economist at the World Bank’s Dhaka office said on Monday.

“The decision is a timely one for both Dhaka and Moscow, as over 90% of the work on the project has been completed,” Zahid Hussain told BenarNews.

Observers had anticipated delays at the plant since February 2022 when the Russia-Ukraine conflict began, although Bangladesh Prime Minister Sheikh Hasina said last year that Dhaka would not stop doing business with Moscow.

Still, Bangladesh blocked a Russian ship from entering a local port just before Christmas because of  US sanctions on the vessel linked to Moscow’s war in Ukraine. The ship was carrying cargo for the Rooppur plant.

Then in January, Bangladesh banned the entry of nearly 70 US-sanctioned Russian ships.

Russia was not happy, and a month later summoned Bangladesh’s envoy to Moscow and said the ban did not bode well for the cooperation between the two nations.

In its statement, the Russian Foreign Ministry spoke obliquely of the help it is providing Bangladesh, saying that blocking its ships may have a negative impact on the prospects for our cooperation in various fields.

Hasina counts Russia as one of her strongest allies. The ties between her Awami League party and the Russian state date to Bangladesh’s war of independence in 1971, which the Soviet Union supported.

Immediately after she returned to power following the 2008 election, Hasina signed a treaty with Russia to build the Rooppur nuclear power plant. The costliest infrastructure project ever undertaken in Bangladesh, it has solidified ties between the two countries.

A Rosatom official told BenarNews in February that the Russian firm planned to send some light equipment for the plant via air.

“Most of the heavy materials have already been sent to the site,” said the official in Bangladesh, who asked not be named because he was not allowed to talk to the media.

“If needed, the company would use such vessels which are out of sanctions, in the future,” the official said to BenarNews.

 

 

 

 

 

 

Bangladesh: PM Hasina slams United States

Prime Minister Sheikh Hasina on Monday called the country’s leading national daily an enemy of the people and claimed Washington was working to bring an undemocratic party to power in Bangladesh in the upcoming election.

The unusually strong remarks to Bangladesh’s parliament came on the same day US Secretary of State Antony Blinken was hosting Dhaka’s top diplomat, A. K. Abdul Momen, at the Department of State in Washington.

While speaking in parliament, Hasina, leader of the Awami League party, did not name which so-called undemocratic party she believed the United States wanted in power.

“America can change power in any country it wants. [They] want to bring such a government here which will not have any democratic existence,” she said.

Hasina also accused Washington of supporting corrupt people in Bangladesh.

“[The US] is speaking against corruption. Now it can be seen that it is advocating on behalf of those convicted in corruption case[s],” she said.

Again, Hasina did not name which people, although the main opposition Bangladesh Nationalist Party (BNP) chairwoman Khaleda Zia has been convicted in two graft cases. An ailing Khaleda’s prison term has been suspended since the COVID-19 pandemic.

The US has in recent months urged Bangladesh to ensure free and fair elections, amid reports of the government muzzling critics and the opposition. The election is scheduled for December 2023 or January 2024.

US Secretary of State Antony Blinken in a statement congratulating Bangladesh on its Independence Day also urged a commitment to democratic norms and human rights. Some observers said this was unusual for a communiqué of this kind.

On Monday, the top US top diplomat again referenced the Bangladesh elections.

He told his Bangladesh counterpart Momen that Washington was committed to continuing to work together, to find ways to strengthen and deepen the relationship, to address as well economic development and human rights.

“And of course, we’re looking – the world is looking – to Bangladesh for its next elections, to make sure that they set a strong example for free and fair elections for the region and for the world,” Blinken said, according to a State Department statement on remarks exchanged by the two diplomats before their meeting in Washington.

For his part, Momen said that Bangladesh had sacrificed millions of lives for independence, for upholding democracy, human rights, justice, and human dignity.

Former Bangladesh diplomat M. Humayun Kabir, who has served as envoy to the United States, told BenarNews that Hasina’s comments show there could be a communication gap between the two countries.

“The remarks of Prime Minister Sheikh Hasina made it clear that there is a huge gap of understanding between Washington and Dhaka,” he said.

“But this is not a proper time to say anything about the ultimate relations between the nations; I think we need to observe it more closely.”

Hasina also slammed a leading Bangla daily news organization. “Prothom Alo is an enemy of the Awami League, Prothom Alo is an enemy of democracy and Prothom Alo is an enemy of the country’s people,” she said.

The daily was last month hit with two cases under the draconian Digital Security Act, for allegedly “undermining the country’s independence.”

A correspondent for the daily was arrested – and later released on bail – for his report which quoted a daily laborer as saying, “We need independence guaranteeing fish, meat and rice.”

The daily’s editor was also slapped with charges under the act for the report which was published on Bangladesh’s Independence Day.

Prothom Alo Executive Editor Sajjad Sharif told BenarNews that the daily had little to say about the PM’s remarks.

“[We] are doing our journalism maintaining all professional ethics. We have no favor or conflict with any political parties,” he said.

Hours after Hasina’s comment four people entered the office building of the news outlet shouting “Boycott Prothom Alo.” The building’s security guard, Mesbaul Haque, told BenarNews no police complaint was registered as Prothom Alo dismissed it as a “small incident.”

Hasina’s targets on Monday also included 2006 Nobel Peace Prize winner and Grameen Bank Founder Muhammad Yunus, who is often openly vilified by her government.

He [Yunus] is a very favorite person of the US. The country never raised the question of how this person, who was the managing director of Grameen Bank … got millions of dollars,” she said.

“Did they [the US] ever want to know from where the managing director, who used to draw a salary from the government, got millions of dollars? They didn’t.”

Yunus and some of his colleagues from Grameen Telecom, a company he founded, are being investigated by Bangladesh’s anti-graft agency for alleged involvement in laundering money to the tune of US US$300 million (31.8 billion taka), and embezzling from the employees’ welfare fund.

Last month, 40 global public figures, including rock singer Bono and former US Secretary of State Hillary Rodham Clinton, had urged Bangladesh to stop harassing the Nobel laureate.

In an open letter, they said Yunus had not benefited financially from his involvement in the company.

“Rather, he has devoted himself to the poverty-fighting missions of the many organizations he has established and lives modestly in Dhaka,” the letter said.

Courtesy: The Bangladesh Chronicle

 

Bangladesh: Quest for ensuring energy security

Bangladesh was in the middle of an energy crisis last year, with rampant electricity shortages owing to the protracted Russia-Ukraine conflict which has had implications for the entire South Asia. The latter half of last year saw Bangladesh facing a shortage of 1000-1500 MW electricity on a daily basis, resulting in regular hour-long episodes of load shedding. Yet, it was more than the comfort of its citizens at stake, if the problem of frequent power cuts was not dealt with.

Bangladesh, one of the fastest growing economies in the world is largely dependent on the export of textiles and readymade garments. In fact, Bangladesh is one of the largest garment exporters in the world, making the garment industry its biggest source of foreign exchange. The looming energy crisis was, and if not dealt with properly, will, continue to affect the efficient operation of the Bangladeshi garment industry. The workers in the industry operate within a strict time frame in order to meet their international clients’ deadlines. It is an energy intensive industry and frequent power cuts on a daily basis would result in many industries relying on generators – so that the flow of work is not disrupted- driving the production costs up, ultimately affecting the efficacy of the industry and its desirability for foreign clients and investment.

Energy generation has been a priority for the Awami League government since they took office more than a decade ago and it is clear that Sheikh Hasina understands the importance- now more than ever- of a long-term energy security plan through regional cooperation. For that purpose, Bangladesh has, over the last decade increasingly looked at India for collaboration and support in the energy sector.

The inauguration of the India-Bangladesh Friendship Pipeline (IBFPL) a few days ago is the most recent manifestation of this strategy. The 131.5 km long pipeline connecting Siliguri in West Bengal to Parbatipur in Dinajpur district of Bangladesh will supply one million metric tons per annum of diesel to the seven districts of north Bangladesh. As Bangladesh imports most of the fuel for electricity, the cost reduction aspect of transporting diesel- from each barrel now costing 5 dollars (when earlier it cost 8 dollars per barrel)- is extremely important along with the shortened transportation time.

Furthermore, prioritizing the energy security of the traditionally backward North Bangladesh is in line with Sheikh Hasina’s policy of ensuring equitable distribution of the benefits of development equally across all regions in Bangladesh. The Rangpur and Rajshahi districts of North Bangladesh have also been the focus of other development projects under Sheikh Hasina’s leadership. Traditionally, the western part of the country has been worse affected by poverty than the eastern part. In 2010, a year after Awami League had come into power, Rangpur had a poverty rate of 42.3%. This was the impetus for launching the Northern Bangladesh Integrated Development Project in 2013 that was aimed at infrastructural development and greater availability of and accessibility to public services in order to reduce the regional disparity in economic development.

Apart from this, Sheikh Hasina, having being encouraged by Prime minister Narendra Modi to allow Indian companies entry in the power generation sector of Bangladesh during his Dhaka visit in 2015, had signed US$4.5 billion worth of deals with the Indian government, that would allow private companies as well as companies run by the government of India to sell electricity in Bangladesh.

One of these deals involved the Bangladesh Power Development Board (BPDP) signing a 25-year Power Purchase Agreement (PPA) with Indian billionaire Gautam Adani’s Adani Power (Jharkhand) in 2017. Under this agreement, Adani Power is to build a 1600 MW coal power plant, worth US$1.7 billion in Godda, Jharkhand, to supply power to Bangladesh.

With Bangladesh gaining a strong presence within South Asia as well as outside of it, India has also sought to increase energy cooperation with Bangladesh. This is evident from the Modi-Hasina summit in September of last year and India’s aim to expand cooperation and dialogue amongst the BBIN countries (Bangladesh, Bhutan, India and Nepal).

The Sheikh Hasina government has proved itself adept at balancing great powers while securing investments that best suit their interests. The Russia-Ukraine war has likely expedited Sheikh Hasina’s policy of reaching out to alternate sources of investment for the energy sector, like the oil rich gulf countries for example. She recently spoke at the Doha Investment Summit, calling for the formation of a joint trade and investment committee by both Bangladesh and Qatar governments.

She especially welcomed Qatari investment in the energy sector. Nearer to home, it has steadily strengthened its relationship with its key neighbour, India. Now, the revitalisation of energy trade with India might also lead to energy trade with Nepal and Bhutan, thus opening up hitherto unexplored opportunities for harnessing the hydropower potential of its Himalayan neighbours. This would help Bangladesh access renewable energy at low cost, facilitating a smooth transition into green energy, which is the only viable future of energy generation.

Courtesy: South Asia Journal

Bangladesh inaugurates submarine base

Prime Minister Sheikh Hasina on Monday inaugurated Bangladesh’s first submarine base near Kutubdia Island, Cox’s Bazar, via a video conference from the capital.

The US$1.21 billion (127 billion taka) base serves as home port for two refurbished Chinese submarines purchased in 2016 to enhance Bangladesh’s naval capacity, after the demarcation of its maritime boundary with.

“We do not want war with anyone. But we must be prepared to give a befitting response if anyone attacks us,” Hasina said in an online message to naval officials gathered at the new base, BNS Sheikh Hasina, in Pekua, about 322 km (200 miles) southeast of Dhaka.

“I believe, by building the base, BNS Sheikh Hasina, Bangladesh Navy’s capacity to protect its maritime boundary is further enhanced,” she said, according to a transcript of her remarks.

The prime minister said that since she assumed power again in 2009, her government had added 31 warships including four frigates, six corvettes, four large patrol craft and five diesel-powered craft.

In November 2016, Bangladesh paid the Chinese government US$205 million (21.5 billion taka) for the submarines, named Nabojatra (New Journey) and Joyjatra (Victory March). Hasina commissioned them on March 12, 2017.

That same day, she laid the foundation stone for the base in Pekua near the Kutubdia channel in the Bay of Bengal. During its construction, the submarines were housed at a naval base in Chittagong.

At the time they were commissioned, Bangladesh’s military communications unit described the submarines as conventional diesel-electric powered craft, 76 meters long and 7.6 meters wide. It said the submarines could reach a maximum speed of 17 nautical miles per hour.

The statement said they were fitted with torpedoes and mines and would be capable of attacking enemy ships and submarines.

“The Chinese will help us build the base and impart training to our personnel to operate the submarines and base. The Chinese submarines will not come here. The base is for our submarines,” Faruk Khan, chairman of the parliamentary committee on foreign affairs, told BenarNews in 2019.

Retired Maj. Gen. Abdur Rashid, a defense analyst, said the base would enhance the capacity of the Bangladesh Navy to protect the vast sea region.

“Given the growing importance of the Bay of Bengal, Bangladesh must enhance the capacity of its navy to protect its sovereignty and thwart all security challenges and non-traditional security threats,” Rashid told BenarNews.

“Bangladesh procures weapons and military hardware from China as the United States and other countries usually do not sell those to us,” he said.

“The launching of the submarine base will definitely enhance our maritime power,” he added.

 

India-Bangladesh Friendship Pipeline

India-Bangladesh Friendship Pipeline is a bilateral energy project that has the potential to significantly enhance energy cooperation between Bangladesh and India.

The pipeline will provide Bangladesh with a reliable source of natural gas, improve energy security for both countries, and help support their efforts to achieve sustainable energy development.

The pipeline will boost economic growth and development in both countries by creating new business and investment opportunities in the energy sector. Hence, the India-Bangladesh Friendship Pipeline represents a new era of energy cooperation between India and Bangladesh and is expected to play a key role in supporting the bilateral relationship between the two countries for many years to come.

This is the first cross-border energy pipeline between India and Bangladesh, built at an estimated cost of INR 377 crore, of which the Bangladesh portion of the pipeline built at a cost of approximately INR 285 crore, has been borne by the Government of India under grant assistance.

The Pipeline has a capacity to transport one million ton per annum of High-Speed Diesel (HSD). It will supply High Speed Diesel initially to seven districts in northern Bangladesh.

The India-Bangladesh Friendship Pipeline is a bilateral energy project between India and Bangladesh that has the potential to significantly enhance energy cooperation between the two countries. It is significant for its interconnectedness since it goes through the border of Bangladesh and India.

It will also pave the way to regional integration in terms of energy as well. The pipeline will ensure stability in the energy domain of Bangladesh, which is expected to help meet Bangladesh’s growing energy demand and reduce the country’s dependence on imported fuel.

Besides, other regional actors will be benefitted from it also. Therefore, a new era of energy cooperation will be experienced.

A long-term deal for the pipeline sale of high-speed diesel from India to Bangladesh was signed by NRL and BPC in April 2017. The next year, in October, NRL and BPC agreed to a second, 15-year agreement for the sale of gas oil (diesel) to Bangladesh.

The India-Bangladesh Friendship Pipeline is seen as a significant step forward in the bilateral relationship between the two countries, particularly in the energy sector. Energy cooperation has been a key focus for both countries in recent years, as both Bangladesh and India face a growing demand for energy to support their respective economic growth and development.

The pipeline is expected to enhance energy security for both countries and help support their efforts to achieve sustainable energy development. All these are happening while the world is going through a surge of oil prices with a disruption in the supply chain for the ongoing Ukraine war. Over the next sections, the significance of the pipe and the way forward will be discussed.

The pipeline, which costs INR 337.08 billion, would transport fuel from the state-owned Numaligarh Refinery (NRL) marketing terminal in Siliguri, West Bengal, to the Bangladesh Petroleum Corporation’s Parbatipur storage (BPC).

As per a senior NRL official who spoke to PTI under the condition of anonymity and was quoted by our New Delhi-based correspondent, the mechanical work on the bilateral project—which is being funded by India—was finished on December 12 of last year.

The 130-km IBFPL’s groundbreaking ceremony was held in September 2018 with the prime ministers of Bangladesh and India participating via video conference.

Markedly, Narendra Modi, the prime minister of India, and Sheikh Hasina, the prime minister of Bangladesh, reached an agreement to finance this pipeline in 2017 which has an annual capacity of one million metric tons. It is probable that the 130-km India-Bangladesh Friendship Pipeline (IBFPL), which will be used for cross-border energy transfer, will begin this year and there are efforts going on at the highest level of the governments.

Nasrul Hamid, the state’s minister of power, announced on January 16 that an experimental pipeline will begin bringing in fuel from India in June 2023. 126.5 km of the 131.5-kilometer pipeline is in Bangladesh, and 5 km is in India.

The pipeline will bring some major changes in the domain of cooperation between the two countries. The next sections will shed light on it.

Firstly, one of the key benefits of the India-Bangladesh Friendship Pipeline is that it will provide Bangladesh with a reliable source of natural gas, which is a cleaner and more efficient energy source compared to other fossil fuels like coal and oil.

This is expected to help reduce air pollution and greenhouse gas emissions in Bangladesh, which will have positive impacts on public health and the environment. Additionally, the pipeline is expected to help improve energy access and affordability in Bangladesh, particularly in rural areas.

Secondly, the pipeline will help enhance energy security for both countries by reducing the reliance on imports of fuel and other energy sources. The pipeline will provide Bangladesh with access to a reliable source of natural gas from India, which will help reduce the country’s dependence on imported fuel and improve its energy security. At the same time, the pipeline is also expected to help enhance India’s energy security by providing it with an opportunity to export its surplus natural gas to Bangladesh.

Thirdly, the India-Bangladesh Friendship Pipeline will boost economic growth and development in both countries. The pipeline will create new business and investment opportunities in the energy sector, particularly in the natural gas sector. This will attract new investment and create new jobs in both countries, which will help support their efforts to achieve economic growth and development.

Fourthly, the diversification of Bangladesh’s energy industry is aided by the import of diesel from India. Bangladesh’s current heavy reliance on natural gas as its main energy source makes it susceptible to changes in price and supply. Diesel’s inclusion in the energy mix gives the nation a more reliable and secure energy supply.

Diesel is a flexible fuel that may be used in a wide range of sectors, including industrial, transportation, and agriculture. Its import from India will not only increase the energy supply’s dependability but also lessen the nation’s reliance on a single energy source. Additionally, people and businesses in Bangladesh may pay less for energy because diesel is a very inexpensive fuel when compared to natural gas.

Finally, Bhutan and Nepal would also benefit from the pipeline project. The two nations will have the chance to take part in the regional energy market and have access to a reliable energy source. The BIBN region’s economy will grow and become more stable as a result of the regional integration of the energy industry. The pipeline project fits in with the region’s overarching goal of enhancing integration and connectivity in South Asia. The BIBN nations are trying to establish a unified and integrated regional energy market, which will increase energy security and stability for the area. The pipeline project will act as a catalyst for increased regional integration and collaboration in other fields including trade.

Since the pipeline project is a shining illustration of how close India and Bangladesh are to one another. The pipeline project will strengthen the already-established commerce and cultural exchanges between the two nations.

 

Bangladesh exports reported at US$4.63 billion for February 2023

Bangladesh export earnings were at US$4.63 billion in February 2023, the lowest in four months; although overall receipts rose 7.81%YoY led by apparel, leather and leather goods shipments.

Last month’s receipts took the total proceeds from the shipment of goods to US$32.44 billion during first eight months of the current financial year. The growth moderated to 9.56%.

The latest data comes at a time when apparel exporters are complaining about falling orders from global clothing retailers as high inflation erodes the purchasing capacity of consumers in Europe and the US, the two biggest export destinations for Bangladesh.

The impact of the weak global demand is already visible for other major sectors such as jute and jute goods, frozen fish and shrimp.

Garment exporters say the overall shipment in volume declined but receipts increased in value.

“We are getting orders for high-value clothes. This has helped us post positive growth in earnings,” said Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

“Once we were used to getting orders to make jackets worth US$15-US$20. Now we are receiving orders to make jackets that are sold at US$100. This is a very positive development.”

Earnings from apparel exports, which accounted for about 85% of national shipments in July-February, rose 14.06%YoY to US$31.36 billion.

Knitwear exports brought home US$17.06 billion, up 13.21% as compared to a year earlier. Woven shipment generated US$14.30 billion, a spike of 15.08%.

Bangladesh has performed well in new markets too, said the BGMEA chief.

“But overall export declined in quantity. If we take into account the expansion of factories in the past two years, we will see that a number of them are running below capacity,” said Hassan, also the Managing Director of Giant Textiles.

The war in Ukraine, geopolitical tension and high consumer prices has eroded the buying capacity of consumers in Europe and the US. “For this, we are worried,” he said.

“But the good news is a number of buyers have shown interest in placing higher orders. So, Bangladesh’s share in the global apparel market will increase in 2023.”

Leather and leather products exports rose 6% to US$832 million in eight months. Other major sectors – home textiles, jute and jute goods, frozen and live fish and agricultural products – suffered more than 20% decline in earnings.

Frozen fish and shrimp exporters recorded a nearly 22% decline and fetched US$318 million.

“The volume of exports has declined too. It has resulted in a stockpile as the shipment is not taking place as it should be,” said Md Amin Ullah, President of the Bangladesh Frozen Foods Exporter Association.

“Exporters are selling products at reduced rates in order to bear operational expenses.”

He expressed a hope for a rebound in export receipts from frozen fish and shrimp, grown mainly in the southwestern coastal region.

Amin said because of the falling imports, there will be a shortage of products in the western market.

“The demand will improve as people can’t stop eating despite the war. So, prices will rise.”

Helal Ahmed, Chief Operating Officer of Janata Jute Mills and Sadat Jute Industries Ltd, also expects a revival in export earnings in the second half of 2023.

Exports from jute and jute goods, one of the few sectors for which raw materials are locally available, plunged 24% to US$610 million in the eight months.

The sector suffered drops in shipment for the shrinking demand for jute yarn among carpet makers, the main user of jute yarn. The use of alternative yarn following a spiral in prices of jute in Bangladesh has also affected the export performance.

Ahmed said reduced prices of jute would lead to increased use of jute yarn, “The situation is expected to improve.”

A sharp depreciation of the taka against the US dollar has made exports from Bangladesh attractive in the global markets. The local currency has lost its value by about 25 per cent against the American greenback in the past one year.

“Besides, orders for garments from major markets will shift away from China. So, there is an opportunity to elevate garment shipments,” said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.

He said the prices of cotton, yarn and other items have increased and the latest export earnings figure reflects the price effect of the garment items shipped.

“The growth is price-driven to some extent as the prices of raw materials have increased. Until now, the demand side remains depressed.”

The trade expert called for an increased focus on regional markets as demand is growing there.

“At the same time, productivity would have to be raised and the cost of doing business would have to be brought down.”

 

Bangladesh: Massive withdrawals from Islamic banks

According to The Daily Star of Bangladesh, deposit flow to Islamic banks in Bangladesh registered a fall in the fourth quarter of 2022, the first such decline in eight years, in a sign of erosion of confidence among savers owing to loan irregularities.

Data released by the Bangladesh Bank showed that total deposits in Islamic banks declined to Tk 409,949 crore at the end of December 2022, down 2.71% from Tk 421,375 crore in September 2022.

This means Islamic banks lost Tk 11,426 crore in deposits in the three months, according to the October-December 2022 quarterly report on Islamic banking of the central bank.

Full-fledged Islamic banks, now numbered 10, were the biggest sufferers as they lost Tk 11,842 crore in the fourth quarter from the third quarter. They collectively held deposits of Tk 379,951 crore in December, down 3% from Tk 391,792 crore in September.

Conventional banks with Islamic banking windows recorded a marginal decline in savings in the fourth quarter, while banks with Islamic banking windows registered a 2.94% increase in the flow of savings.

Islamic banks, however, recorded a 4.28%YoY deposit growth in the fourth quarter. Yet, the growth was the lowest since 2014, the year when the central bank started to release the quarterly report on Islamic banking.

The data came at a time when a number of Islamic banks, including Islami Bank Bangladesh (IBBL), the largest private bank in terms of deposits and investments, suffer from liquidity dearth resulting from withdrawals by many depositors after reports on alleged loan scams surfaced.

The liquidity crunch prompted the central bank in December to pump funds at 8.75% into a number of Islamic banks, including IBBL, to enable them to meet emergency financing needs and comply with regulatory requirements.

As of December 29, IBBL took Tk 8,000 crore under BB’s special arrangement. Four other Shariah-based banks — First Security Islami Bank, Social Islami Bank, Union Bank and Global Islami Bank — took Tk 6,790 crore.

Analysts say the fall in deposits at the Islamic banks is an indication of the drop of customers’ confidence owing to the allegation of loan scams, particularly at IBBL.

The central bank is investigating allegations of gross irregularities at IBBL over the disbursement of loans amounting to Tk 7,246 crore among nine companies last year.

“It is expected. Customers have withdrawn deposits mainly as a precautionary move,” said Ahsan H Mansur, Executive Director of the Policy Research Institute of Bangladesh.

“The confidence crisis is still there.”

With the fall in deposits, the overall market share of Islamic banks dropped to 25.81% in the deposit segment in December, down from 28.43% three months ago.

As such, the overall availability of excess liquidity at the Shariah-based banks reduced to Tk 12,871 crore at the end of 2022, from Tk 17,525 crore at the end of the third quarter, a decrease of Tk 4,654 crore.

Shah Md Ahsan Habib, a Professor at the Bangladesh Institute of Bank Management, said Shariah-based banks had enjoyed an edge over conventional banks for years in terms of deposit collection. So, a number of banks have opened Islamic banking branches and windows to attract deposits.

Data on deposits showed that Islamic banks have been displaced by conventional banks, he said.

“It seems that the confidence of a section of people has eroded following reports on loan irregularities.”

In a recent report, global ratings agency Moody’s Investors Service said Islamic banks in Bangladesh are more vulnerable to the tightening of liquidity than conventional banks because they have smaller liquidity buffers.

One reason that Islamic banks have weaker liquidity cushions is that the central bank has more relaxed liquidity requirements for them to support the growth of the sector.

Another reason is that Islamic banks are prohibited from holding conventional interest-bearing government bonds, and there is a limited amount of liquid shariah-compliant instruments.

“The profitability of Islamic banks is already weaker than that of conventional banks because they are more reliant on term deposits, which results in narrower spreads between financing yields and deposit costs than the system-wide level,” said the agency.

Monzur Hossain, Research Director of the Bangladesh Institute of Development Studies, thinks the recent media reports related to irregularities might have prompted the deposit withdrawal.

“Once the deposit figures of all types of banks become available, it will be clear whether the decline is a general trend or Islamic bank-specific,” he said.

A spike in imports, declines in remittance inflows and high inflation have drained liquidity out of the Bangladeshi banking system, said Moody’s report.

Despite the decline in deposits, investments by Islamic banks grew 4.9% to Tk 405,202 crore at the end of December from Tk 386,221 crore in September. The growth stood at 14.6% from the Tk 353,448 crore witnessed at the end of December 2021, according to BB data.

Mansur, a former official of the International Monetary Fund, said governance has to be ensured and irregularities that have taken place have to be addressed to regain the confidence of depositors.

“Islamic banks have to do the repair to regain the trust of people,” said Prof Habib.

 

IMF flags debt restructuring hurdles

There are some disagreements over restructuring debt for distressed economies, the chief of the International Monetary Fund said on Saturday on the sidelines of a G20 meeting.

India's G20 presidency comes at a time when its South Asian neighbors Sri Lanka, Bangladesh and Pakistan are seeking urgent IMF funds due to an economic slowdown caused by the COVID-19 pandemic and the Russia-Ukraine war.

China, the world's largest bilateral creditor, urged G20 nations on Friday to conduct a fair, objective and in-depth analysis of the causes of global debt issues as clamor grows for lenders to take a large haircut, or accept losses, on loans.

"On debt restructuring, while there are still some disagreements, we now have the global sovereign debt roundtable with consideration of all public and private creditors," IMF Managing Director Kristalina Georgieva told reporters after the roundtable she co-chaired with Indian Finance Minister Nirmala Sitharaman.

"We just finished a session in which it was clear that there is a commitment to bridge differences for the benefit of countries."

Apart from restructuring debt, regulating cryptocurrencies is another priority area for India, which Georgieva agreed with.

"We have to differentiate between central bank digital currencies that are backed by the state and stable coins and crypto assets that are privately issued," Georgieva said.

"There has to be very strong push for regulation... if regulation fails, if you're slow to do it, then we should not take off the table banning those assets, because they may create financial stability risk."

 

 

 

Russia and Ukraine major source of wheat for Bangladesh

According to reports, Russia and Ukraine have become major source of wheat for Bangladesh after India’s ban of its shipment, thanks to a United Nations and Turkey brokered grain deal that allowed moving the cereal from Ukraine over the Black Sea.

Importers said they started importing wheat from both countries a couple of months after the deal in July last year which enabled them to offset a shortfall in imports resulting from India’s ban in May last year.

The neighbouring country had become a major source of wheat for Bangladesh as businesses found imports cheaper and convenient due to the shorter shipment period, low freight cost and geographic proximity, said the US Department of Agriculture in a report on Bangladesh earlier.

The report said India accounted for 67% of Bangladesh’s total wheat import, followed by Canada, Ukraine, Australia and Russia in marketing year 2021-22.

“Our imports from the Black Sea region came almost to a halt for several months after the war began,” said Abul Bashar Chowdhury, chairman of BSM Group, a Chattogram-based commodity importer.

“Now, Ukraine and Russia are gradually becoming a major source for low protein wheat,” he said.

Bangladesh produces around 1.1 million tons of wheat against an annual requirement of 7.5 million tons, meaning the rest is imported.

In fiscal year 2021-22, the country imported more than 4 million tons of wheat. And between July 01, 2023 and February 15, 2023 this fiscal year, the import amounted to 1.7 million tons in total, according to data by food ministry.

Russia, Ukraine and Canada were now major sources of the grain after the Black Sea deal, said Md Aminul Islam, managing director of Nabil Group, one of the largest importers of wheat.

Overall import from the three countries would be around 1.4 million tons so far this fiscal year, he said.

“Availability of wheat is not an issue now. There are supplies in the international market,” he said.

“The problem is now opening of letters of credit for banks’ lack of interest amid dollar shortage. Wheat imports will increase if this problem is over,” Islam said.

The Black Sea Grain Initiative brokered by the United Nations and Turkey last July allowed grain to be exported from three Ukrainian ports, reports Reuters.

The agreement was extended by a further 120 days in November and is up for renewal again in March, it says.

However, it takes longer now for importing wheat from Ukraine because of several checks on the way, said Taslim Shahriar, senior assistant general manager of the Meghna Group of Industries.

“It will be great if the war ends,” he said.

He said the situation in the Ukraine-Russia region was important for Bangladesh as the region was a key source of wheat.

So, further extensions of the Black Sea grain deal are vital for a smooth supply of wheat to Bangladesh, Taslim added.

Negotiations will start in a week on extending a United Nations-backed initiative that has enabled Ukraine to export grain from ports blockaded by Russia after its invasion, said Reuters on Friday quoting a senior Ukrainian official as saying.

The Black Sea Grain Initiative created a protected sea transit corridor and was designed to alleviate global food shortages, with Ukraine’s customers including some of the world’s poorest countries, said Reuters.

Developing nations such as Somalia and Eritrea also rely heavily on imports of wheat from Russia, it said.

“Renewal of the deal is important for us. Otherwise, it will be a problem for us too,” said Islam of Nabil Group which imported nearly 350,000 tons of wheat so far this year.

The company imported 1.8 million tons of the grain in 2022, he added.

 

Bangladesh succumbs to US pressure and bars Russian ships entering its maritime territory

The Bangladesh government has imposed restrictions barring the entry of 69 Russian ships into its maritime waters in line with US and EU sanctions.

This means that Russian vessels will not be able to bring in shipments of imports, stop for fueling, anchor in the area, or even use sea routes.

The government has sent notices to the relevant ministries, agencies, ports, shipping services, and international organizations regarding the new restrictions.

As a result of these new sanctions, Bangladesh will find it difficult to conduct any trade with Russia.

Bangladesh’s most expensive mega project, the Rooppur nuclear power plant, is being built with the support of Russia. A significant portion of the equipment and materials for that project is imported from Russia. Recently, a shipment from Russia carrying materials for the project was barred from entering Bangladesh’s maritime boundary amid diplomatic pressure from the US.

The ship attempted to dock at India’s Haldia Port to deliver its shipment but was turned away there too. It eventually returned to Russia with its cargo.

“At the request of the Ministry of Foreign Affairs, the 69 vessels from Russia which were embargoed by the United States have been banned from entering ports in Bangladesh,” said Captain Sabbir Mahmood, registrar of Bangladesh ships at the Mercantile Marine Office, citing the content of the notice.

The ban covers a wide range of ships, including oil tankers and cargo vessels, operated by seven companies. The restrictions mean that no import or shipping agents can import goods from any country using these Russian ships.

“The ban on ships bearing the Russian flag was jointly imposed by the United States and the European Union,” said Azam J Chowdhury, chairman of the Bangladesh Ocean Going Shipowners Association, or BOGSA. “If any product comes to Bangladesh on these ships, then Bangladesh will also be added to the ban. The bulk of our international trade is with the EU and the US.”

The sanctions were imposed due to Russia’s ongoing invasion of Ukraine.

“As such, we believe that in the overall assessment of the interests of Bangladeshi businesses, the Russia situation will not significantly impact the transportation of goods for global trade.”

Bangladesh has 197 ships that travel in the deep sea, accounting for less than 10 percent of the country’s total trade in international goods.

If Bangladesh businesses stay abreast of the situation, the ban should not have a significant impact on shipping or costs, the BOGSA chief said.

However, some import agents who have had long working relationships with these Russian vessels may be impacted, Azam noted.

Russia is not on the list of the top 20 countries that Bangladesh trades with, according to data from Bangladesh Bank. Nearly 87 percent of all imports come from those countries.

Bangladesh mainly imports wheat and petroleum products from Russia and exports garments to the country.

 

Bangladesh: IMF Approves US$4.7 Billion Assistance

The International Monetary Fund’s US$4.7 billion loan program won’t be a miracle worker for the Bangladesh economy. The program would hold the economy back from falling off the cliff from the whiplash of the pandemic and the Ukraine war and turn it towards the right track.

“The authorities made the right decision to come to the Fund — and most importantly, to come to the Fund early,” said Rahul Anand, the IMF’s mission chief to Bangladesh.

Turning to the IMF when the country is already in crisis could make the adjustments particularly hard on people — a situation confronting Pakistan and Sri Lanka. But Bangladesh is not in crisis, Anand said.

“Just like countries around the world, Bangladesh is dealing with the impact of global shocks — first from the pandemic and then from the ongoing war in Ukraine,” he added.

In that vein, the program’s immediate task is to prop up the country’s shrinking foreign exchange reserves, which has already hit businesses and ordinary people hard.

While the IMF would make US$476 million immediately available, the lender’s impact would be beyond that: it would give the other multilateral agencies, such as the World Bank, to make more funds available for Bangladesh.

This along with the import curbs placed by the government will shore up the gross foreign reserves to US$30 billion by the end of the fiscal year, according to the IMF’s projections.

As per the lender’s balance of payments and investment position manual (BPM6), gross foreign reserves calculation does not include the various funds that the Bangladesh Bank has formed from the reserves as well as the loan guarantees provided for Biman, the currency swap with Sri Lanka, the loan to Payra Port Authority and the below-investment-grade securities. These account for about US$7.5 billion.

When these components are taken out, the IMF projection matches the government’s expected foreign currency reserve position at the end of fiscal 2022-23: US$37.7 billion.

Gross reserves would increase to US$34.2 billion in fiscal 2023-24 and to US$40 billion in the following year, as per IMF’s projections. It would hit US$46.4 billion once the program ends.

Other than restoring macroeconomic stability by way of the reserves, the program would also give impetus to some long-due structural reforms such as raising more tax revenues, scaling up social spending, modernizing the monetary policy framework, strengthening the financial sector and building climate resilience.

“While confronting challenges resulting from the global headwinds, the authorities need to accelerate their ambitious reform agenda to achieve a more resilient, inclusive and sustainable growth,” said Antoinette Monsio Sayeh, the deputy managing director of IMF, in a press release.

Thanks to the reforms ushered in by the program, Bangladesh’s tax revenue would increase from 7.8% of GDP this fiscal year to 8.3% next year and then 8.8%. At the end of the program, it would be 9.4% of GDP, as per the IMF’s projections.

The program would insist on cutting back on subsidies, which would free up more resources for social and development spending.

“Not all subsidies are helping the poor and vulnerable. In Bangladesh where gas and electricity are being subsidized, the rich drive more cars and use more air conditioning,” Anand said.

Rationalization of untargeted subsidies will free fiscal resources to strengthen social safety nets and increase development spending.

Substantial investment in human capital and infrastructure will be needed to achieve Bangladesh’s aspiration to reach upper-middle income status by 2031 and meet the Sustainable Development Goals.

By the end of the program, the size of the annual development program would increase from the existing 5.2% of GDP to 6.5%, as per the IMF’s projections.

Public investment would increase from 8.8% of GDP this fiscal year to 11.2% of GDP in fiscal 2025-26, when the program ends. Subsequently, Bangladesh’s real GDP growth would be back to 7% by fiscal 2024-25.

This fiscal year, the growth would be 5.5%, as the IMF’s projections, which is in line with other multilateral lenders’ forecasts.

Earlier last month, the WB pared back Bangladesh’s growth forecast for this fiscal year by 1.5% to 5.2%. In December last year, the government revised down the growth forecast from 7.2% to 6.5%.

The IMF will disclose the specifics of the loan program in the coming days.

The mandatory conditions would be a minimum level of net international reserves and domestic revenue collection and a ceiling on the government’s budget deficit, The Daily Star has learnt from people involved in the negotiations with the IMF staff mission to thrash out the terms for the loan.

Implementing the income tax law, setting up an asset management company to dispose of soured loans, bringing down the banking sector’s default loans to within 10% and raising the capital adequacy ratio to the BASEL 3 requirement of 12.5%, are among the reforms agreed upon.

Periodically adjusting the fuel price through a formula and increasing remittance receipts through formal channels are also on the task list.

A social spending floor and better targeted social safety net programs, market-based exchange rate interest rate, developing the capital and bond market, expanding and diversifying exports and modernizing the monetary policy framework and reporting on net foreign reserves are the other agreed reforms.

The interest rate on the loan would be about 2.2%. Of the US$4.7 billion, US$1.4 billion can be repaid over a 20-year horizon with a grace period of ten years. The remaining amount must be paid back within ten years; the grace period for a portion of the sum is 3.5 years and for another portion 5.5 years.

 

Bangladesh: Opposition seeking US help

I am obliged to refer to a letter by the Coalition for Human Rights & Democracy in Bangladesh (CHRD Bangladesh) to Donald Lu US Assistant Secretary of State for South and Central Asian Affairs. CHRD has appreciated sincere and commendable works during visit of Donald Lu to Bangladesh on January 14-15, 2023.

It has also referred to its earlier letter dated January 08, 2023, emphasizing the importance of Donald’s visit in view of the ongoing volatile political situation generated by the anti-democratic practices by the administration of Prime Minister Sheikh Hasina in the face of the people’s countrywide movements against her rule.

The people are seeking the end of her fascist regime, which they call illegal because it continued to capture power since 2009 through massive election fraud. Bangladeshis want free and fair elections under a neutral authority. We look forward to the materialization of your objectives at the soonest.

The CHRD Bangladesh may take this opportunity to highlight a few core foreign policy objectives of the US administration: Human Rights, Freedom of the Opposition’s Political Activities and Election Integrity.

Human Rights Human rights still remain a far cry in Bangladesh. The regime apparently maintained a slight pause in its repressing activities during your visit, but intensified them on the people and the opposition immediately afterwards, as if in retaliation of the pressure of your visit.

The human rights violations by the notorious Rapid Action Battalion (RAB) and police might have shown slight improvements since the US sanctions in December 2021, but their routine abuses against the people continued unabated, much of which perhaps escaped the attention of the monitoring agencies.

On January 21, 2023, a RAB member in Dhaka was caught trying to rob a car carrying passengers coming from overseas. Few people can talk, much less criticize, the regime under the draconian Digital Security Act (DSA).

They continue to be severely penalized for mild words against the Sheikh family and the ruling elites. 

In Bangladesh today, only the ruling Awami League has the freedom of activities which include extortion, social crimes and attacks on the political opposition. The opposition parties have little or restricted political activities (lately as prescribed by the ruling authority).

The RAB, police and the party thugs continue to flex their muscles against the opposition and prevent or disrupt their peaceful gatherings and activities. Their attacks on the party gatherings of the Bangladesh Nationalist Party (BNP) on December 07 and 08, 2022 sent many to their graves, hospitals and jails. Even during your team’s presence in Dhaka on January 14-15, 2023, their terror acts continued on the peaceful gatherings of the opposition in Mymensingh, Chittagong and other cities, sending many to hospitals and jails with multiple charges against each.

Reportedly, 24,000 members of the BNP have been taken to custody since early December of 2022. As of now, tens of thousands of them are in jails, booked under about 3.5 million fictitious charges. 

With the scrapping of the election-time Caretaker Government (CTG) by Sheikh Hasina immediately upon becoming the Prime Minister, the election system in Bangladesh totally collapsed. It became a symbol of heightened corruption and irregularities. No national or local level election had an iota of fairness or honesty.

Everything was controlled and managed by the ruling coterie to make its chosen candidates the winners. As such, as you may note, Sir, the representatives in the parliament, as well as the elected positions in the local bodies, almost entirely belong to the ruling class. In other words, the opposition has no say in any of these forums or anywhere. Any future elections to be free and fair, the existence of these fraudulently elected partisan elements will be a serious blockade.

The Election Commission and the election officials are carefully selected by the government to serve its purpose. With absolute control on the administration down to the lowest levels, including the election apparatus, the opposition is either unable or not allowed to make any electioneering activities or have its presence at the polls.

In many cases, suspected opposition voters were driven away by the Awami League thugs and their votes were proxied in favor of the ruling candidates. In addition, rounding up and sending the opposition leaders and activists to jails prior to elections had been routine tasks of the loyal RAB and police.

The results of the past 14 years are before anyone to examine and judge. Consequently, the country has fallen into a one-party authoritarian dictatorship since 2009. Under the chosen Election Commission, election officials and its fraudulently elected local bodies, the general public has no chance to exercise its free franchise during the polls.

As such, a fair and credible election under the present administration is a simple impossibility. The US may also ponder why the Hasina regime is vehemently opposed to elections under a CTG (citing constitutionality of her own vicious creation).

According to most observers, the ruling government is so unpopular and detested by the people that it has no chance of winning even a comfortable number of seats, let alone winning in a fair election. In view of the above situation, and with a view to ensuring credible elections in Bangladesh, the following steps are extremely essential:

Elections must be held under a neutral Caretaker Government, members of which should not be allowed to seek any elected positions. Prior to that, the government should step down and the parliament be dissolved. They (immediate past government) should have no role in the CTG.

The Election Commission and other election related officials should be reconstituted with neutral and non-partisan elements.

All controversial and partisan officials in the administration, including law enforcement agencies and the military should be removed. Even known partisan officials in the judiciary should also be either removed or suspended. This is needed to ensure the neutrality of the election-time administration.

All authoritarian tools, such as the RAB and DSA should be suspended during the elections.

Honorable Sir, it may be appreciated that if the people of Bangladesh can freely choose their representatives to run the government, most of the other problematic issues like democracy, human rights, freedom, corruption etc. will be resolved automatically. Under a corruption-free and accountable government, the country will be expected to move forward to greater progress and security, both locally and globally. It is the unelected or fraudulently elected or illegal regime that causes problems for the people and the world.

Finally, unless the future elections in Bangladesh are credible, fair and participatory, all the sincere efforts of the US will end in futility. The CHRD Bangladesh certainly does not desire such an outcome from your visit, Honorable Sir.