After Hasina, Bangladesh needs a foreign policy reset

The remarkable downfall of Bangladesh's leader Sheikh Hasina was shocking in its speed, but the prime minister's hasty escape to India as angry protesters converged on her Dhaka residence on Aug. 5 was not a total surprise. The signs of deep rot have been clear for several years. Bangladesh's "economic miracle," which lifted so many out of extreme poverty, was beginning to sour. There was also growing frustration at Hasina's manipulation of national elections, curtailing of personal freedoms and undermining of institutions.

Economics and politics were inextricably linked in the slide of Bangladesh: corruption and mismanagement burdening the economy were essential for sustaining the patronage networks that kept an increasingly unpopular autocrat in power. A massive win for Hasina's Awami League in the January 2024 election, after the opposition Bangladesh Nationalist Party boycotted, failed to mask the seething discontent.

There was still little sense of the regime's looming collapse when a group of students began protesting on July 1 against an unpopular quota system for government jobs. The protests gradually morphed into a mass movement calling for Hasina's resignation. Ultimately, a combination of the protesters' determination and Hasina's own arrogance brought down her government.

With remarkable speed, an improbable interim government was sworn in on Aug. 8 after negotiations between the army chief, the president and student leaders. Leading the caretaker administration is Nobel laureate Muhammad Yunus, the protesters' preferred pick and a non-partisan figure widely admired for his integrity. It marks a stunning turnaround for the man known as the "banker to the poor" for pioneering microfinance initiatives; Hasina had waged a long, personal vendetta, hitting him with numerous charges.

Within Bangladesh there is now a mix of unease about the future and some optimism that Yunus can get the economy back on track while spearheading political reforms to rebuild democracy and prevent another dictator from emerging. It is a monumental challenge. But the diverse composition of the interim government, ranging from student leaders to technocrats, is an excellent first step.

Despite the temporary nature of the interim government, and a constitutional requirement to hold elections within 90 days, there is a widespread expectation that a constitutional workaround will be found to give Yunus, now 84, the time he needs to pursue major changes on both the political and economic fronts. The consensus seems to be that Yunus will likely serve for at least a year, possibly two. It is critical that any extension of his term be done in a way that preserves the legitimacy of his administration and as well as an ongoing mandate for reform.

Yunus will face the challenge of keeping in check the BNP and the Awami League, both capable of bringing masses onto the streets to push their agendas, while satisfying the army and the student movement. His first and most urgent task will be to re-establish rule of law and prevent reprisal attacks, including on minority Hindus; almost as many people have been killed since Sheikh Hasina fled as died during the protest movement that toppled her.

Meanwhile, Bangladesh's international partners, while welcoming the change and the prevention of a catastrophic massacre, are now scrambling to respond.

The country with arguably the most at stake is India, Bangladesh's influential neighbor, which was completely blindsided by recent developments. New Delhi was Hasina's strongest backer during her 15 years in power, and it was where she turned for sanctuary on Aug. 5 when the army made clear it was not going to massacre protesters closing in on her residence.

New Delhi's staunch backing for an unpopular leader has already cost it strategically by aligning it with her failed rule and amplifying pre-existing anti-Indian sentiment in Bangladesh. India now needs to tread carefully and avoid creating any perception it is undermining the interim government, and by extension the aspirations of the Bangladeshi people.

Many Indian commentators have pinned Hasina's fall on foreign interference, with some even claiming the U.S. had "trigger[ed] a coup" for geopolitical reasons. But the evidence suggests that this could not be further from the truth. While Bangladesh has become something of a geopolitical battleground due to the rise of China, Hasina was generally adept at managing international relationships in order to maintain her grip on power.

Western countries have generally overlooked the regime's democratic shortcomings, corruption and human rights abuses, instead prioritizing relations with Dhaka. Some in Bangladesh argue that this made them complicit in Hasina's authoritarian behaviour, because their silence only emboldened her.

Assuming the caretaker administration is extended past 90 days, the West will find in Muhammad Yunus a more natural partner than the combative Hasina. He will try to drive forward political and economic reforms, and it is hard to imagine donors turning down any reasonable requests he makes for technical or financial support. As the major buyers of Bangladesh garments -- which generate 85% of export income -- strong relations with the U.S. and Europe are also essential for maintaining economic stability. At the same time, Yunus will also likely try to keep from relying too heavily on the West. As someone who was victimized by Hasina, he too might harbor some resentment at the West's failure to rein her in.

This means that in addition to looking to the European Union and the U.S., Dhaka will also be cultivating relations in its own region. Big-spending development partners such as China and Japan could benefit. Yunus will look for financial support to fix Bangladesh's infrastructure and maintain economic stability in the short-term amid declining foreign exchange reserves.

China, in particular, had shown growing dismay at Hasina's reliance on India, which had seen Indian companies trump Chinese counterparts on some major projects, such as management of Mongla port and a dam on the Teesta River. Beijing made its displeasure clear when Hasina visited in July; it refused to give her the billions of dollars of economic assistance she was expecting, prompting her to cut the visit short.

Nevertheless, geography dictates that India will continue to be Bangladesh's most important partner. Once New Delhi comes around to the new reality in Dhaka, there is no reason why it should not be able to get bilateral relations back on track. It can accelerate this process by actively engaging with political forces beyond the Awami League, such as the interim government and the newly empowered BNP, which for now appears the most likely to win a future election.

Although India has tended to view the opposition party as antithetical to its interests, the BNP would likely be open to greater engagement -- indeed, it attempted to persuade New Delhi prior to the January 2024 election that it was not a threat. Establishing a working relationship with the BNP would better position India to retain influence beyond the interim government, regardless of the election outcome.

Finally, Myanmar will be one of the interim government's major foreign policy challenges. Since Myanmar's military takeover in February 2021, the Arakan Army, an ethnic armed group, has seized control of almost the entire border with Bangladesh, including areas of Rakhine state from where Rohingya refugees fled in 2016-17. Bangladesh hosts almost 1 million Rohingya in camps near the Myanmar border. Under Hasina, Dhaka hewed closely to India's approach to Myanmar, continuing to engage Naypyitaw on repatriation and ignoring overtures from the Arakan Army.

Bangladesh urgently needs to develop its own policies that reflect the changes in Myanmar over the past three years. Most urgently, a humanitarian crisis is brewing over the border that if left unaddressed could see another major influx of Rohingya. The day Hasina was being forced from power, the Arakan Army attacked the town of Maungdaw, the military regime's last stronghold in northern Rakhine State, leading to the deaths of more than 100 Rohingya who were trying to flee. The interim government member responsible for the foreign ministry, Touhid Hossain, has recently advocated for greater engagement with the Arakan Army, signalling a potential policy shift.

Under Hasina, Bangladesh's foreign policy was mainly a tool for keeping the regime in power; with some skill, she routinely played off international partners against each other. But Yunus's interim government now has the chance to reset and advance policies that serve the interests of Bangladesh, and not a single person or party.

Originally published in Nikkei Asia.