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A DELICATE BALANCING ACT

October 22, 2022 | Expert Insights

Enunciated astutely by the Bangabandhu, the late Mujibur Rahman, Bangladesh's foreign policy is based on the principle of “Friendship with All and Malice towards None.” While the policy may have survived the first 50 years of the nation’s existence, the question is whether the country can run with the hare and hunt with the hounds.

Background

Relations between nations are a jigsaw puzzle, and the puzzle pieces will keep changing in fluid multi-polarity. It makes it challenging for observers to piece it together, track the emerging picture and finally give it a firm shape cogently and accurately.

China’s Belt and Road Initiative (BRI) in Bangladesh is an enigma. China had committed to investing USD 40 Billion in Bangladesh when the MoU was signed in 2016, knowing well that India would not be a part of the BRI. This is the second largest commitment in South Asia after Pakistan (USD 62 Billion). Without connectivity through India, the project is a lame duck since the initiative's objectives are based on seamless connectivity.

The expected continuation of Xi Jing Ping in power for the third term will see the renewed impetus to his brainchild, the BRI. Both China and Bangladesh have gone too far ahead to let the ambitious BRI projects fail, irrespective of what is happening in neighboring Sri Lanka, where Chinese exposure is much smaller; for President Xi Jinping, a failure would be politically disastrous. On the other hand, post the pandemic, and in a desperate global economic situation, Bangladesh is financially vulnerable, dependent upon Chinese investments and Indian and American goodwill. So far, Bangladesh has avoided the so-called 'China Debt Trap.’ 

To expand its regional trade through less expensive land connectivity, Bangladesh has long been requesting direct transit of goods to and from Bangladesh to Bhutan / Nepal through India. The issue was raised once again by Prime Minister Sheikh Hasina during her recent trip to India. However, on the Indian side, there are security concerns and fears of misuse of the facility to smuggle contraband goods into India’s sensitive border regions.

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Analysis

Tensions between India and China have remained high despite some progress on the northern Himalayan frontiers, where both sides have claimed to be de-escalating and lowering troop levels. This has a spillover effect on any trade connectivity that China and Bangladesh may contemplate through Indian territory.

China and Bangladesh look at the strategic Chumbi Valley, a narrow Tibetan enclave into the 'Chicken's Neck' or the Siliguri Corridor joining mainland India to its seven eastern states, as a potential conduit for their overland trade. Under existing circumstances, India is unlikely to concur with any such proposal.

While India was disappointed when China strong-armed Sri Lanka to permit its electronic surveillance ship 'Yuan Wang-5' to dock in Hambantota, despite strong Indian protests, it did not reduce its commitments to the economic survival of the island nation. To quote The Times of India, 19 Sep 2022, “With a total of USD 968 Million in loans in four months of 2022, India has emerged as Sri Lanka’s largest bilateral lender overtaking China in the process”.

This should not go unnoticed by India’s neighbors to cement long-term trust in India. Bangladesh is a close and valued ally, especially under Prime Minister Sheik Hasina's leadership. Both sides are eager to further strengthen this mutually beneficial relationship, notwithstanding Chinese investments.

While India may continue to deny transit facilities to Bangladesh for its regional land trade, there are other ways it can improve Bangladesh's external trade. As per media reports, discussions on a Comprehensive Economic Partnership Agreement (CEPA) are also on. The significance of the CEPA with India is that Bangladesh does not have a trade pact with any country, despite China and Japan pressing them. This regional economic integration is a strong incentive for Bangladesh (especially the robust anti-India lobby within its polity) to maintain good relations with India.

While Bangladesh has been showing remarkable growth figures in its GDP, year to year, its future must look beyond its current dependence upon garment manufacturing. The future generation of Bangladeshis aspires to the sunrise fields of high technology, where India has much to offer, with the added advantages of proximity, lower living cost, and cultural similarities. The youth, especially, are excited by India's flourishing start-up ecosystem and wish to collaborate with Indian start-ups.

The next few years could see China pushing to open an alternative to the BCIM (Bangladesh China India Myanmar component of BRI) through Bhutan. There is a possibility that China will utilize the road, storage, and habitat facilities built up in the Chumbi Valley / Doklam to open a trade route to Bhutan and then seek its extension to trade with Bangladesh, transiting through India. China could take up the matter directly with India and simultaneously exert pressure on Bangladesh to take it up.

This could pose a severe challenge to India’s closest allies in the subcontinent-Bhutan and Bangladesh, a potential minefield that all three must navigate with extreme caution. If security concerns are laid to rest by decisive affirmative actions by China, India, too, could benefit from this connectivity. Sadly, there appears little hope for this as the situation on our borders has not been fully resolved. In fact, the long-standing Confidence Building Measures between the two Asian giants lie in tatters, with little hope for their resurrection in the near future.

Assessment

  • India-Bangladesh relations have matured over the last half a century, so they should not remain hostage to a regime-sensitive affliction. The current dispensation in Dhaka has cultivated excellent working relations with New Delhi on several accounts. This should not stagnate, especially in light of the general elections scheduled next December.
  • The world is rapidly undergoing transformational changes, with geopolitical contestations changing well-established equations. A new cold war is looming, and with China raising the stakes in its race towards global primacy, old friends like India, and even the U.S., may not be so tolerant of Dhaka's dalliance with Beijing, especially if they have security undertones.