Bangladesh Country Update

Opposition Turning up the Pressure

Political stability is unlikely to be threatened to any significant degree in the near term, as the governing Grand Alliance claims more than two-thirds of the seats in the 330-member National Assembly, and the dominant position of Prime Minister Hasina Wazed’s Awami League, which controls a majority of seats on its own, all but rules out the possibility that divisions among the governing parties might endanger the survival of the regime before the completion of its term in early 2014.
That said, elevated levels of public discontent over chronic power shortages and high inflation will provide the main opposition Bangladesh Nationalist Party (BNP) with an opportunity to galvanize an anti-government protest movement. Indeed, the opposition launched a political general strike in early July, and local reports indicate that the mass walkout has effectively shut down services in cities across the country. Leaders of the security forces have made clear that they are intent on maintaining order, and are prepared to use force if necessary to do so. Opposition leader Begum Khaleda Zia has warned that the BNP and its allies will step up the pressure if police resort to violence.
Zia called the strike in response to the government’s approval of a constitutional amendment that abolished a 15-year-old requirement that control of the government be handed over to a caretaker administration ahead of a general election. The practice came under criticism after the caretaker government installed ahead of an election scheduled for 2007 refused to cede control, a move that received the backing of the military. The near two-year delay in holding the election was among the reasons cited by the Supreme Court when it ruled that the caretaker model is unconstitutional.
The BNP insists that the transfer of government control to a temporary regime is essential to ensuring a fair election, and has pledged to continue pressuring Hasina’s administration until the amendment is repealed. As that is not likely to happen, political tensions are likely to remain high for the foreseeable future.
The militancy of the opposition is in part a reflection of the personal animosity between Hasina and Zia, which has been reinforced by what Zia and her supporters perceive to be her disrespectful treatment by her rival. The recent issuance of an arrest warrant for Zia’s son, Tarique Rahman, on charges related to a grenade attack on an Awami League political rally in 2004 will only add fuel to the fire.
There is a temptation to see the recent eruption of unrest as part of the groundswell of popular rebellion that has swept through North Africa and the Middle East over the past several months. However, unlike the autocratic regimes that have fallen since the beginning of the year, Bangladesh is a democracy, albeit a fragile one. Moreover, the strategy of rolling political strikes (hartals) has been a consistent feature of the political landscape going back to the early 1990s. Given the current regime’s overwhelming dominance in the Parliament, there is little danger that the government might be toppled as a result of street demonstrations as long as the military remains committed to maintaining order and upholding the constitution.
One caveat is warranted, however. The Grand Alliance dubbed its campaign manifesto the “charter for change,” and the results of the December 2008 election were a clear signal that voters were fed up with the political struggles of the past. Evidence that the old patterns are reasserting themselves will increase the risk of disillusionment that encourages a turn toward radicalism, a development that could invite further meddling by the armed forces.
Vulnerable to Shocks
For the time being, the bigger threat lies in the possibility that fear of provoking street protests could discourage Hasina’s government from pursuing the reforms required to create a more inviting business climate, which is essential to the regime’s chances of even partially making good on its pledge to reduce poverty.
The government has taken steps to boost the power supply, but efforts to contain inflation will fall short as long as global food and fuel prices remain high. Financial support from the IMF and other multilateral agencies will provide protection against a sharp slide in the local currency. However, inevitable pressure from unions for steep wage increases to offset the erosion of purchasing power will create the potential for fiscal slippage that could jeopardize the timely disbursement of funds, with potentially significant implications for both currency stability and inflation.

Economic Forecasts for the Three Alternative Regimes