Then-prime minister Sheikh Hasina’s downfall on August 5 reshuffled the diplomatic and trade cards in Bangladesh. Little more than a month after the despised leader’s departure, the new head of the interim government Muhammad Yunus, who has inherited an economy on the brink of collapse, has turned to the US, which was highly critical of his predecessor. The Democratic administration has been a long-standing supporter of Yunus, and on Sunday, September 15, during the high-level US delegation’s visit, the 2006 Nobel Peace Prize winner said that he was seeking Washington’s support “to rebuild the country, carry out vital reforms and bring back stolen assets.”
The visit has marked a new beginning between Washington and Dhaka. The US was one of Bangladesh’s biggest foreign investors during Sheikh Hasina’s 15-year rule, but relations between the two countries were strained, particularly when Washington imposed sanctions against its elite paramilitary unit the Rapid Action Battalion, accused of serious human rights violations. However, the “Iron Begum” has remained on good terms with China and Russia as well as India where she is exiled
Over the weekend, the delegation, made up of trade and development policy players and led by Brent Neiman, the deputy under secretary for the US Treasury Department, said that it was ready to offer technical and financial assistance for the interim government’s reforms. And on Sunday, the US Agency for International Development (USAID) signed an agreement to provide just over $200 million in aid.
Textile industry disrupted
Once held up as a model of economic success, Bangladesh was the recipient of a $4.7 billion bailout program from the International Monetary Fund (IMF) in 2023. On September 11, the leader of the interim government said that to replenish foreign exchange reserves and stabilize finances, he would also seek $5 billion from the country’s main creditors: The IMF, the World Bank and the Japan International Cooperation Agency (JICA). “We are also seeking lower interest rates and longer terms for loans from Russia and China,” he said in his televised address to the nation.
Bangladesh is under pressure to pay its import bills, particularly for energy. The revolution disrupted the textile industry, the country’s main source of foreign currency, and at the end of July, its foreign exchange reserves stood at just $20 billion – enough to cover about three months’ worth of imports. The finance ministry is in talks with Russia about the Ruppur nuclear power plant project. According to the Financial Times, Gautam Adani’s group has warned the new government that Bangladesh’s arrears of $500 million owed to the group had become “unsustainable.”
Opaque contracts
Yunus’ government is questioning the opaque and costly infrastructure contracts negotiated under Sheikh Hasina, including the controversial agreement with Adani Power for the supply of imported electricity from the Godda power plant in India. Hasina’s administration is suspected of publishing inaccurate data on Bangladesh’s exports, inflation and GDP, and a White Paper on the management of the country under the previous regime is currently being prepared.
“A core message from the US will likely be emphasizing the strong (and oft-overlooked) economic ties the relationship has long enjoyed, and pledging to build on that cooperation while supporting econ[omic] reforms,” said Michael Kugelman, the director of the South Asia Institute at the Wilson Center in Washington. “This strictly bilateral focus is important and desirable for a relationship that in DC is often seen (understandably) through a lens of great power competition,” the researcher posted on X.
In India, the fall of Sheikh Hasina, New Delhi’s staunchest ally, was seen as a geopolitical victory for the US. The Indian media, largely pro-power, circulated false statements attributed to Hasina blaming the US for her eviction. The US State Department has denied any involvement.
source : lemonde