Dr. Arvind Kumar*
The South Asian political landscape has always been volatile and has become increasingly so post recent coup in Bangladesh. These developments have vast geopolitical and geo-economic implications not only for that country but also for its neighbors, especially India and as well as the world generally. Economic dislocation and deepened public discontent have led to the ouster of the Prime minister Sheikh Hasina. She was forced to resign from her office, flee the country, and is seeking temporary asylum in India. This turmoil shall have far-reaching consequences, including destabilization of governments, economic downturns, and increased regional conflicts. Heightened tensions may lead to military confrontations, disrupt trade, and exacerbate humanitarian crises. Additionally, political instability could hinder development, weaken regional cooperation, and invite external influence, further complicating efforts to maintain peace and security in the region. Social unrest could also lead to mass migrations, exacerbating existing challenges. Prime Minister Narendra Modi extended his best wishes to Nobel laureate Professor Muhammad Yunus, who was sworn in as the head of Bangladesh’s caretaker government today and expressed hope for a swift return to normalcy in Bangladesh. He called for the safety and protection of minority communities in the country.
The deputy spokesperson for UN Secretary General also expressed hope for an inclusive process of forming the government. The geopolitical fallout of the Bangladesh crisis is variegated: it has had an impact on internal stability, regional dynamics, economic conditions, and international relationships. There have been regional repercussions due to the instability arising out of the crisis in Bangladesh, which affects neighbouring countries like India, Myanmar, and Nepal. Through all this, India is deeply concerned about the stability of Bangladesh. This is because political instability may lead to an increase in cross-border tensions along the border, hence a security challenge. Political instability coupled with economic instability in Bangladesh may give way to increased migration into the neighbouring countries, particularly India. It may create resource pressure and social and political tensions in host countries.
Economic and Social Implications
The key reason is that Bangladesh happens to be one of the top trading partners for some of the South Asian countries. In case of instability, disruption in trade can affect regional supply chains and henceforth hinder regional economic growth. It scares foreign investment from coming to Bangladesh and the wider region. To investors, South Asia may appear to be a high-risk area, and this hurts economic development. A good breeding ground for extremist groups is created by political instability. That has security implications for the whole region since extremist activities can spread across borders. Border Security: The increased migration, and the possible infiltration of these extremist groups, can mount pressure on border security for both India and Myanmar. The conflict spillover from Myanmar’s Rakhine state into Bangladesh, with refugees and even military personnel crossing over, brought another layer of complexity into the geopolitical situation.
Not just India, but even China has its stakes in Bangladesh. That volatility could reflect upon the China projects in its Belt and Road Initiative in Bangladesh-neighbour. Gross human rights violations and a non-democratic process in Bangladesh drew condemning remarks from the United States and European nations, further vexing an already tricky situation with threatening enforcement of sanctions or cutting off aid. Border issues are a major concern given Bangladesh’s instability, more precisely about Indian borders. Both domestic and international extremist organizations can exploit the situation for their interest. The crisis will have effects on the bilateral relations of Bangladesh with its strategic partners: India, China, and the United States. It might, therefore, shift to crisis management by seeking to stabilize the situation and secure strategic interests through diplomatic efforts. It will affect trade, investment, and regional economic relations. The geo-economic implications of Bangladesh’s political and economic crisis are huge: it affects internal stability and its regional and global economic relations. The export sector in Bangladesh, especially the garment industry, has been hard hit by the crisis. Production and transportation were disrupted, delaying and cancelling orders. This marred the country’s reputation as a reliable supplier in the world market. Import Costs The depreciation of the Taka made imports more expensive thus exacerbating the trade deficit. Expensive imports in this period, considering items such as fuel, food, and raw materials, have increased, heaping more pressure on the economy. Fearing political instability and economic uncertainty, foreign investors have stayed away. Bangladesh has remained a less favourite destination for investment due to concerns over issues relating to governance, corruption, and the rule of law.
Bangladesh has sought financial assistance from agencies like the International Monetary Fund and the World Bank to help shore up its sinking economy. An approval for a $4.5 billion bailout package from the IMF was granted to the country, while the World Bank and other multilateral agencies provided complimentary support. These financial packages almost always come with conditions that require economic reforms and austerity measures. It is always politically challenging to implement such conditions, which may lead to further social unrest. India is watching the situation in Bangladesh very closely, being one of the largest trading partners. Political instability, especially economic instability in Bangladesh, will surely have implications on the bilateral trade and investment flows2. Besides these, there are concerns relating to spillover effects in terms of increased migration and security challenges. Huge investments, especially infrastructure investments, by China, are under the BRI umbrella. The crisis could easily affect these projects and the strategic interests of China in the region.
The Way Forward
To ensure a stable Bangladesh and a peaceful South Asia, we need to enhance regional cooperation through platforms like SAARC (South Asian Association for Regional Cooperation) or BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation). A series of negotiations among key stakeholders and attempts to decrease the tensions by probably making concessions from both sides may be required to help stabilize the political situation. Moreover, foreign partners, including neighboring countries and international organizations, would be eager to play a mediating role in the conflict and democratization processes. Open and continuous dialogue between South Asian countries is crucial to resolving disputes, whether territorial, political, or economic. Diplomatic channels should be used to de-escalate tensions and promote peaceful negotiations. Joint efforts in economic development, security, and disaster management can build mutual trust and reduce tensions. Economic development must be inclusive to reduce poverty and social unrest. Focus should be on job creation, infrastructure development, and equitable distribution of resources to ensure sustainable growth. We need to bolster democratic institutions, ensuring free and fair elections, rule of law, and respect for human rights. This will create a stable political environment that can withstand internal and external pressures. Collective efforts are needed to combat extremism and terrorism, which threaten regional stability. This requires intelligence sharing, coordinated security operations, and addressing the root causes of radicalization, such as poverty and lack of education. Open and continuous dialogue between South Asian countries is crucial to resolving disputes, whether territorial, political, or economic. Diplomatic channels should be used to de-escalate tensions and promote peaceful negotiations. A vibrant civil society and independent media are essential for holding governments accountable and ensuring transparency. Encouraging these sectors can help prevent authoritarianism and promote good governance not just in Bangladesh but in all South Asian countries if they want to work towards a future marked by stability, prosperity, and peace, benefiting the entire region.
*Editor, Focus Global Reporter
