The ouster of Sheikh Hasina Wazed as a result of student-led protests has thrown politics in Bangladesh into a tizzy. After enjoying power for a good decade and a half, Hasina appeared to have a solid grip at the helm of Bangladesh, looking set for her fourth term that began in the winter of 2024.

The protests erupted seemingly out of nowhere, over the issue of resurrection of a policy of reservation of government jobs for children of the veterans of Muktijuddha, and carried Hasina out of power. The developments were so sudden that even the political opposition was taken totally by surprise and was left grappling for a suitable response to the developments. 

Hasina’s departure, accordingly, has been followed with the appointment of her bete noir of recent times – Muhammad Yunus, the economist and Nobel laureate – as demanded by the agitating students. Sworn in as the Chief Advisor to the Bangladesh President, Yunus is meant to be at the helm of the interim government as the rest of the Bangladeshi political class gets their house in order and makes it to their next elections.

Was this coming?

In the last fifteen years, Bangladesh has made very impressive economic progress. It is now among the largest exporters of ready-made garments (RMG) in the world, and is no longer exclusively dependent on huge volumes of foreign aid as it used to be from the 1980s onwards. It has successfully lifted a section of its population out of economic hardship, and has been witnessing spectacular infrastructural development with a transformative impact on its connectivity – the most spectacular being the bridge over the Padma River, which is an engineering marvel.

It is not an exaggeration to say that Sheikh Hasina has presided over the veritable transformation of the country in the last ten years, comparable in scale to what the country has seen in decades before that. So, what went wrong?

In Bangladesh, as much as in India, a buzz is growing louder by the day that Hasina’s ouster was caused by a ‘foreign hand’ – as in so many other times in the past.  In South Asia, the usual suspect as the foreign hand continues to be the United States. Some sections of the Dhaka society have come to be of the opinion this upheaval is on account of Hasina’s refusal to let the US have access to St. Martin’s Island off the Chittagong coast. 

A different explanation speculates that the fall should have been anticipated when she had to cut short her last trip to Beijing. As the agitating students began to be joined by the political opposition, including the Jamaat-e Islami, speculation began to do the rounds that the ‘conspiracy’ was actually hatched in Islamabad, with the ISI playing a major role – as usual. 

Needless to say, there is little hard evidence for any of these theories.

A little bit of honest reflection may actually indicate a different set of possibilities. While Sheikh Hasina did indeed preside over the economic transformation of Bangladesh, it did not originate with her. Quite a bit of the initial work to develop industrial capacity in the textile sector was actually done by the earlier regimes of Khaleda Zia (1991-96 and 2001-06), and that of the caretaker administration (2006-08). 

Hasina’s contribution was to stay the course and promote it further – in particular with steady and considerable investments in social overhead capital (viz. education in the urban areas of the country). While the spectacular growth of the RMG sector (constituting over 80% of Bangladesh’s total exports) has stimulated the service sector of the country’s economy in a big way, it has had, however, not much by way of forward linkages for the industrial sector, implying that the capital accumulated from the proceeds of the sector has not stimulated the growth of any other industrial sector. 

In other words, it has not generated much employment outside the RMG sector itself, particularly in the unskilled labour market. Accordingly, any casual visitor leaves Bangladesh with the impression that it is a country of extremes – a small community of wealthy people, an oversized community of poor people, and a very small but growing middle class.

Owing to the policies followed in the last two decades, two interrelated developments have come into being. First, the capital that has been accumulating has been deployed either in the commercial sector (especially in the import sector targeting both consumer goods and high-end luxury commodities that the country cannot manufacture) or in developing educational institutions catering to a small urbane section of the society to promote skills that have a value in the global market (to help the flow of remittances which have been crucial to the country’s success story). 

As a consequence, Bangladesh has an oversized import basket, which caters to the interests of a small social group. Additionally, it now has an upwardly mobile social group which is growing in number, without the economy generating nearly as many employment opportunities to absorb that kind of skilled labour.

Second, given the concentration of the resources (through social overhead capital, such as infrastructure and higher education) overwhelmingly in the urban areas, most of Bangladesh has not been benefiting much materially from the country’s prosperity. This is the root of an increasingly vocal social discontent that the political opposition had done its best to harness in its own favour. A good proportion of this discontent was channelized into the Islamist current that has constituted a steadily growing constituency – represented initially by Jamaat-e-Islami, and then also by Hefazat-e Islam – and generally among the educated youth.

Over time, Sheikh Hasina reduced the potency of the political opposition, used governmental authority to subjugate public functionaries and institutions and then refused to hand over power to the caretaker administration at the time of elections, as she was required to. This made her government incrementally acquire authoritarian traits – the main opposition Bangladesh National Party (BNP) refused to participate in ‘sham’ elections, as Hasina and the Awami League were returned to power virtually uncontested in 2014, 2019 and 2024.

As long as the Hasina government could keep a lid on the economic and political discontent through populist measures and policies, and by generating employment through endless infrastructure projects, she was safe. This was largely the reason why she played both China and India – signing up for the BRI and also for an extended credit line from India – which would keep the resources flowing into infrastructure development (and also employment generation). However, that did not generate the kind of white-collar jobs that the more educated section of Bangladeshi youth wanted. 

Hence, the surge in the demand for public sector jobs among the educated youth.

The issue became complicated when the political beneficiaries of the Hasina regime, the Awami League veterans of the Muktijuddha and their progeny kept on demanding an increasing share of the state’s resources. Hasina resorted to using the Muktijuddha as a rationale for reservation in public jobs and thereby tipped the scales against the upwardly mobile educated youth. 

An earlier attempt to do this had to be shelved in 2017, but when she tried to revive it (supposedly at the behest of a judiciary widely believed to have been captured by the regime), all hell broke loose – with precious few immediate signs of the sands shifting. By cracking down on the youths aspiring to public service, Hasina virtually allowed the opposition to close ranks with social forces that they had never previously tapped, generating the critical force that was required to topple her.

What comes next?

The interim administration of Muhammad Yunus has to hold elections soon – the government is speaking of three months; others are saying they may take as long as two years as the previous caretaker administration had done (2006-08). The doubting Thomases point out that given the non-political technocratic character of the administration, real power would probably be exercised by the military from behind the scenes.  

Of course, a military government without a clear exit plan would infringe the conditions for Bangladesh’s trade with the EU (the single largest destination of its RMG exports under the privileged quota), which is thus unlikely to be favoured by the entrepreneurial community in Bangladesh. And, given the fact that the Bangladeshi military does not have the kind of stakes in the country’s economy unlike its Pakistani counterpart, it is too fanciful to think they might choose to resist the business lobby and thus rock the economy in this moment of turmoil.

Two things need to be borne in mind – one in the medium term, one in the long term. In the short to medium run, (if) as and when elections are held, a lot would turn on whether Awami League contests them at all, or not (as the buzz presently suggests). If Awami League does not participate in the polls, then, in an electoral landscape that is essentially bipolar, the forthcoming elections may have as little legitimacy as the last three.

No less importantly, if the Awamis do not contest, the BNP is likely to emerge as the single largest party in the parliament. The BNP has previously contested in alliance with the Jamaat-e-Islami (strong in Chittagong, Rangpur and to an extent Rajshahi) because it failed to attain a parliamentary majority by itself.

If, in the absence of the Awami League, the BNP attains a parliamentary majority by itself, that would reduce the bargaining power of the Jamaat. Such an administration could be more promotive of the interests of the business community if the past is anything to go by.

If, on the other hand, the Awami League runs and holds on to some of its core voters, and/or the Jamaat puts up a strong showing on account of the social infrastructure it has been putting in place (through social welfare, micro-credit, loans to small business, etc), the BNP would have to remain in tandem with the party. In such an eventuality, the pressure would mount on the BNP to engage in the antics of building a welfare state, or at least continue and develop further the kind of populist measures that the Awami regime was carrying out till now. 

A lot would also turn on whether Hasina’s cat’s paw, the Hefazat-e Islam, is now finally tempted to step out of Awami League’s shadow and vie for the so-called Islamic constituency in Bangladesh (characterized by a strong preference for a welfare state approach that political Islam has become a shorthand for in the country). If it runs for seats in the parliament, it would emerge as a competitor for the Jamaat, not the Awamis – and would serve to determine what course the Islamist outfits choose to follow in the medium term.

In the medium to long term, the course undertaken by the next administration could be very significant for the future of the country.

The long-term economic issues indicated above would require very considered policy-making for the foreseeable future in order to generate both economic growth and employment, and at the same time avoid the kind of debt trap that Sri Lanka had fallen into sometime back. But for such policies to become sustainable, a practical consensus between the two poles of Bangladesh’s political landscape would be essential. 

Thus, the political return of the Awami League (or some other outfit representing its social constituency) is essential in the medium run for the political landscape to stabilize. If, on the other hand, Bangladesh is not able to address these critical issues, the political strength of socially conservative and even reactionary forces rallying under the banner of Islam is certain to grow at the expense of both the Awamis and the BNP – creating a considerably different binary along the lines of secularist and Islamist.

In that eventuality, Bangladesh is very likely to implode into a kind of social violence and political turmoil that it has not seen since 1971.

And what of India’s stakes in Bangladesh?

India has never had it so good in Bangladesh as under the Hasina regime in the last 15 years; accordingly, India has never been as generous to her neighbour as in that time. 

Hasina was instrumental in helping India put down insurgency in the northeastern states by denying them the kind of safe haven they had hitherto had there. In return, India has extended Bangladesh a line of credit of over $8 billion under three agreements and has invested heavily in Bangladesh’s power infrastructure – something that was unthinkable before this. It is not for nothing that Hasina came to India directly upon leaving Bangladesh till she could negotiate political asylum for herself somewhere in the West.

Given the high stakes India has developed in the country, it is quite natural for New Delhi to be concerned with developments in Dhaka. In a kind of knee-jerk reaction to Hasina’s ouster, therefore, while New Delhi has steered clear of any attempts that can be misconstrued as ‘interference in internal matters,’ it has voiced its concerns about the safety of the Hindu minority in the country. 

Considering the ground situation in Bangladesh, (where the students have actually pre-empted and prevented the outbreak of communal violence) it is clear that this is more by way of exercising diplomatic leverage over Dhaka. It is equally clear that Dhaka has understood this diplomatese, prompting Yunus to readily pronounce his administration’s determination to safeguard the religious minorities.

However, Yunus has also bluntly aired a grievance that one could hear on the streets of Dhaka for the last ten years – that India invested in Hasina, not in the people of Bangladesh. In voicing that grievance, the current regime is probably flashing the message that it needs India to stay invested in the country, despite the departure of her friend.

India should stay the course in Bangladesh for several reasons. First, if New Delhi gets into a sullen mood and decides to play the bully, Dhaka may return to allowing safe haven to the subdued insurgent groups from the northeast – a distraction New Delhi should do well to avoid.

Second, despite the deeply-held scepticism in a section of the Bangladeshi population that New Delhi wants to control Dhaka, the people are aware of the value of India as a counterweight to China. There is growing discomfort with the kind of stranglehold Beijing has gained in the Bangladeshi economy, running more than sixty huge infrastructure development projects in the country. This prompted Dhaka’s determined pursuit of alternative lines of credit from India and Japan. 

If the interim administration and the next elected (or unelected) government try to get closer to the West (as past BNP regimes had also done), the temptation to reduce dependence on China would grow stronger – giving New Delhi the kind of prospective leverage that she has not had in Dhaka except under Awami League rule. This is thus an opening for India to try being regime-neutral in Bangladesh (as China tends to be almost all over the world). 

If the nature of ties with India becomes a matter of bipartisan consensus in the Bangladesh establishment, the hostility of Jamaat towards New Delhi would become much less effective in shaping Dhaka’s policy towards her neighbour. Together, these two factors could serve to neutralize forces of instability in this part of South Asia in the long term. 

It is thus time to stay the course in Dhaka.

Post scriptum

It is too early to definitively forecast where Dhaka goes from here.

The situation appears somewhat fluid, and if not carefully handled, risks going into a tailspin. Given that India is the only country Bangladesh has a land frontier with (except a very short stretch with Myanmar), the mere prospect of social and political turmoil there has disturbing resonances for India. 

It is, hence, in the interests of both countries that the situation stabilizes in Bangladesh soon, and that Dhaka be given the hand by New Delhi as and when needed (and asked for). 

(The views expressed in this article are the author's own.)