By Satyaki Chakraborty
Over six weeks have elapsed since the visit of Indian Foreign Secretary Vikram Misri to Dhaka on December 9, where he engaged in extensive discussions with his Bangladeshi counterpart aimed at stabilizing the deteriorating relations between the neighboring countries. Recent developments, however, indicate that the interim government led by Dr. Mohammad Yunus is significantly strengthening ties with Pakistan, particularly in the defense sector, which raises security concerns for India.
The interactions between the Bangladeshi army and the Pakistan defense forces commenced soon after the downfall of the Hasina government on August 5 of last year. Initially limited to visits from mid-level army officials, this week, the chief of Pakistan’s intelligence, Lt. General Asim Malik, arrived in Dhaka for discussions with his Bangladeshi counterpart. Although both nations have not officially disclosed the specifics of their discussions, it is evident that they centered around intelligence sharing collaboration.
Earlier this month, a Bangladeshi army delegation traveled to Islamabad, where they held talks with Pakistan Army Chief General Syed A Munir about strengthening strategic defense relations. While no official details were released, it is apparent that the discussions included developing a cooperative strategy regarding India, which shares over 4,000 kilometers of border with Bangladesh. Notably, in November, Bangladesh imported 35,000 specialized rifles from Pakistan and agreed to provide training for a segment of Bangladeshi troops by the Pakistan army. Additionally, a Pakistani naval vessel made its inaugural visit to Chittagong port late last year.
As Bangladesh pursues defense engagements with its former enemy Pakistan, China is also making significant moves to establish new avenues of business and economic collaboration with Bangladesh. Beijing had a frosty relationship with Sheikh Hasina during her visit as Prime Minister in July last year. However, recent talks between Chinese officials and Bangladesh representatives reflected a softer diplomatic approach, with China offering several concessions previously denied.
China has informally agreed to extend the repayment timeline for loans and is considering Bangladesh’s request to lower interest rates, hoping to alleviate the strain of its foreign debt. This discussion was held during a five-day visit by Touhid Hossain, a foreign advisor in the Yunus government, who met with Chinese Foreign Minister Wang Yi. China ranks as Bangladesh’s fourth-largest lender, with loans amounting to approximately $7.5 billion since 1975, following Japan, the World Bank, and the Asian Development Bank.
During the meeting, Hossain proposed lowering the interest rate on Chinese loans from 2-3% to 1%, while also requesting an exemption from commitment and management fees and an extension of the repayment period from 20 to 30 years for both preferential buyer’s credit and government concessional loans.
In response, Wang acknowledged Bangladesh’s commendable repayment history and agreed to consider extending loan maturity periods and addressing the request for lower interest rates, as communicated by the Bangladesh foreign ministry.
Hossain also engaged with Luo Zhaohui, the chairman of the China International Development Cooperation Agency, regarding Chinese loans. He urged Luo to increase concessional loans and grants as well as the volume of funded projects in Bangladesh, to which Luo positively responded, requesting a list of priority projects. Luo also indicated that China might consider larger initiatives in Bangladesh, with some funding provided as grants, leading to a reduction in the average interest rate on Chinese loans.
The discussions also encompassed funding projects related to the metro rail and the Southern Infrastructure Development Initiative (SIDI) in Bangladesh. During Hossain’s bilateral talks with the Chinese foreign minister, China pledged to continue providing duty-free and quota-free access for Bangladeshi products for three years following the country’s graduation from the least-developed nation status in 2026.
Wang conveyed China’s plan to designate three to four hospitals in Kunming for the treatment of Bangladeshi patients and welcomed Bangladesh’s proposal to establish a specialized tertiary-level Chinese hospital in Dhaka. This gesture celebrates the 50th anniversary of diplomatic relations between Bangladesh and China, with both nations expressing readiness to organize various activities to commemorate the occasion. Wang further invited Bangladesh to consider participating in Chinese President Xi Jinping’s three global initiatives: the Global Development Initiative, the Global Security Initiative, and the Global Civilisation Initiative.
Recognizing Bangladesh’s strategic location, both countries underscored their commitment to ongoing cooperation under the Belt and Road Initiative. China has expressed its desire to see Bangladesh’s economic development align with its own growth prospects and has assured continuous support for projects that enhance the livelihoods of the Bangladeshi people, as stated by Wang.
The two nations also deliberated on the financing of projects including the Dasherkandi sewage treatment plant, the upgrading of Mongla Port, and expanding digital connectivity and 4G service. Despite the Bangladesh foreign ministry’s prior endorsement of joining the China-led regional body RCEP, the Yunus government has yet to submit an official membership application.
In parallel, Pakistan is actively expanding its economic interests in Bangladesh. Over the past two months, Islamabad and Dhaka have discussed trade prospects, with Pakistan now seeking a full-scale meeting of the Pakistan-Bangladesh Joint Economic Commission (JEC) to usher in a new era in bilateral economic relations. Bangladesh is preparing for this and has instructed its ministries to identify sectors where Pakistan could potentially replace Indian supplies. While Islamabad has made considerable progress in pinpointing replacements, Bangladesh is still finalizing its list as there are uncertainties about the extent to which it could benefit from shifting supply sources from India to Pakistan.
The JEC meeting, spearheaded by Pakistan’s foreign ministry, represents a strategic move to offer concessions to Bangladesh, considering the added logistical costs due to distance compared to India. Bangladesh has already requested duty-free access for ten product categories spanning 104 items, while Pakistan is promising a Free Trade Agreement (FTA).
As for the United States, there has been little advancement recently, as the newly appointed Charge d’Affaires in Dhaka, Tracey Ann Robertson, only assumed her role on January 11 this year. The US embassy has not received new directives following Trump’s inauguration on January 20, and South Asia is currently not a priority for the new administration. Nonetheless, Dhaka’s political circles anticipate that Dr. Yunus may exit his interim role as more direct attention from Trump turns towards Bangladesh. Dr. Yunus is presently attending the World Economic Forum in Davos, which concludes on January 24, where he has met numerous heads of state and business leaders to discuss Bangladesh’s situation, while also seeking signals from Trump’s advisors.
India’s options remain constrained for the moment, as Bangladeshi officials are unwilling to engage in serious discussions until India addresses their request for the extradition of Sheikh Hasina, a demand that India has rejected. The future political landscape in Bangladesh will significantly influence these dynamics. Until then, both China and Pakistan stand to gain the most from the new administration while India watches from the sidelines. (IPA Service)
