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Bangladesh Changes Government: What Future for Dhaka?
The power vacuum created by the end of Sheikh Hasina’s government concluded with the appointment of Muhammad Yunus, a renowned economist, and Nobel Peace Prize laureate in 2006, as Prime Minister. However, the end of the Hasina era opens new prospects on both domestic and regional levels. Balance and equidistance seem to be the two guiding principles of the new Bangladeshi political course currently.
On Sunday, September 8, Mohammad Tajul Islam, Chief Prosecutor of the Bangladesh International Crimes Tribunal, announced that he had begun the process of requesting the extradition of former Prime Minister Sheikh Hasina from India. Hasina had resigned on August 5 and fled to India following widespread anti-government protests that began in July and were harshly repressed by the government. According to the latest available data, 11,000 people were arrested, and over 600 were killed in clashes with the police. The prosecutor expressed his intention “to prosecute Hasina for the massacres committed during the repression of the protests”.
Hasina, the daughter of Sheikh Mujibur Rahman, the first president of independent Bangladesh, who declared independence from Pakistan in 1971 and was violently deposed by a military coup in 1975, became leader of the Awami League in 1981 after a period of exile in India. The Awami League, founded by her father, has been central to Bangladeshi politics.
During her terms as Prime Minister, first from 1996 to 2001 and later continuously from 2009, the socio-economic conditions of Dhaka improved significantly due to expansive macroeconomic policies. Substantial investments were made in various sectors, with the textile industry emerging as a key priority, turning it into the backbone of Bangladesh’s economy and making Dhaka the third-largest textile exporter globally. Several Special Economic Zones (SEZs) were also established, attracting considerable foreign investment. Numerous cash transfer programs and subsidies for the poor were launched, including rural subsidies and microcredit schemes, particularly through Grameen Bank, an organization founded by the current ad interim Prime Minister, Muhammad Yunus, in 1976. Consequently, Bangladesh’s GDP rose from $102.5 billion in 2009 to $460.2 billion in 2022, with GDP per capita growing from $698.52 in 2009 to $2688.31 in 2022. These economic policies lifted millions out of extreme poverty. However, this economic improvement occurred within a context characterized by centralization of power, repression, restricted press freedom, human rights violations, and an unstable macroeconomic environment. Inflation and youth unemployment rates stood at 9.73% and 15.74%, respectively. Protests were triggered by the decision to reintroduce a quota system in public sector jobs, a policy that reserved a percentage of jobs for descendants of “freedom fighters.” Initially set at 30%, the quota was reduced to 5% following the protests.
In response to the power vacuum, President Mohammed Shahabuddin, in office since 2023, appointed Muhammad Yunus as head of government on August 6, following requests from the student movement that led the anti-government protests. Yunus, Nobel laureate and pioneer of modern microcredit, is tasked with leading the country towards new elections.
In his national address on August 25, 2024, Yunus outlined his government’s short-term goal: the restoration of democracy and pluralism. The interim government has rehabilitated two major opposition parties – the Bangladesh Nationalist Party (BNP) and Jamaat-e-Islami (Jel) – both of which had been marginalized by Hasina’s government. For the BNP, Yunus has legitimated its leader, Khaleda Zia, who had been ousted from Bangladeshi politics in 2018 due to corruption charges. Simultaneously, the ban on Jamaat-e-Islami was lifted, although the party had been previously accused of ties to Islamic terrorist groups. This decision, in a country where 90% of the population is Muslim, could have implications for the secularism of the state, especially considering recent attacks on the Hindu minority (comprising 10% of the population).
Yunus’s government – despite its interim status, which remains uncertain given the lack of clarity on election dates – has already initiated institutional reforms. It appointed a new Chief Justice of the Supreme Court and a new Governor of the Central Bank, both institutions having faced accusations of a lack of independence in recent years. Yunus has also signaled his intention to prosecute those responsible for the violence committed by the army during the protests, a stance confirmed by the signing of the International Convention for the Protection of All Persons from Enforced Disappearance (ICPPED). This, coupled with a promise to reform the police force, suggests that Yunus seeks to steer the country toward greater legality and transparency.
The significance of this leadership change extends beyond domestic politics, impacting the regional stage and drawing attention from major Indo-Pacific and global actors, including India, China, Russia, and the United States. Dhaka’s geopolitical centrality allows it to navigate regional and international rivalries, accepting aid and support while avoiding excessive dependency.
New Delhi has emerged as a key partner for Bangladesh, both economically, with trade between the two countries reaching $13.1 billion in 2022, and in security, given their shared 4,000 km border and joint anti-terrorism operations. From India's point of view, it would therefore be necessary to maintain excellent relations with Dhaka, also in view of the growing anti-Indian sentiment in Bangladesh. From Dhaka’s perspective, in addition to the economic aspect, cooperation with India offers access to important infrastructure and connectivity projects, while at the same time maintaining a certain degree of autonomy regarding the regional policy of the People’s Republic of China. In fact, Beijing is Dhaka’s number one trading partner, with a significant share of military supplies. It is also involved in numerous infrastructure projects, and it is intensifying dialogue with political actors currently in opposition, as evidenced by the meetings of the Chinese ambassador in Dhaka, Yao Wen, with the secretary of the BNP, Mirza Fakhrul Islam Alamgir, and with some senior leaders of Jel, both of which took place after Hasina's escape. The Chinese objective seems to be to establish stable and fruitful relations, given the potential political weight that these actors could assume in the near future. On the geopolitical level, Dhaka’s choice to maintain good relations with Beijing is motivated by the same reasons as its policy towards India, which is to avoid excessive dependence on a single country and to remain equidistant in the Sino-Indian rivalry.
Dhaka has demonstrated the same balancing act in its relations with the Russian Federation and the United States. Moscow serves as a strategic partner in the energy-security domain. A notable example of this is the construction of Bangladesh’s first nuclear power plant in Rooppur, which was built with Russian technical and financial assistance. In terms of security, the Kremlin is one of the country's primary suppliers of military equipment. From Moscow’s perspective, as expressed by its ambassador to Dhaka, Aleksandr Mantysky, during meetings on August 27 with Prime Minister Yunus and the aforementioned BNP secretary, there appears to be a clear intention to support Bangladesh's political transition. There is also significant cooperation in the trade of fuel, fertilizers, wheat, and, most importantly, liquefied gas.
From the perspective of the United States, the change in Bangladesh’s government leadership presents an opportunity to increase its influence in the Indo-Pacific region. Under the former Prime Minister Sheikh Hasina, relations between Dhaka and Washington were primarily focused on commercial matters. However, with the new Yunus-led government – or a potential government led by other parties such as the BNP or Jamaat-e-Islami – there could be a shift toward greater openness towards the White House, fostering a mutually beneficial relationship. For Dhaka, this would mean balancing the influence of its traditional partners, while for Washington, Bangladesh could emerge as a strategic interlocutor in the Indian Ocean, with the potential for advantageous cooperation not only in economic terms but also in political, diplomatic, and security domains.
