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Since the overthrow of the despotic Hasina regime in August 2024, Bangladesh has been facing a complex set of regional conflicts along with economic challenges and political instability. The August 2024 uprising offered an opportunity to improve governance and stabilise the econom, but various regional and domestic challenges are slowing the process.
During Sheikh Hasina's 16-year rule under the Awami League, she exercised significant power which led to high levels of white-collar crimes and extensive financial corruption. These financial corruptions resulted in an annual illicit outflow to the tune of US$6 billion notwithstanding massive siphoning of billions of dollars annually through trade mis-invoicing. Her rule also saw an endemic corruption at all levels of the government.
Hasina's own immediate family has also been alleged to be deeply involved in financial corruptions, not to mention the extended family. It has been alleged that her niece (a Labour member of the British Parliament) and her mother (Hasina's sister) who live in London, were involved in various financial corruptions involving graft and influence peddling. Similar allegations have also been made against her son, who is now a US citizen residing in the US. An estimated US$20 billion were allegedly laundered out of the country during the 15-year rule of the despotic and kleptocratic regime of Sheikh Hasina (FE, May 28). According to the Guardian (May 24), UK's National Crime Agency (NCA) froze £90 million of London property linked to the Hasina regime. The Financial Times also reported that Sheikh Rehana, sister of Sheikh Hasina and mother of former UK City minister Tulip Siddiq, had lived at the property.
It has been alleged that Hasina received US $6 billion from a Russian company involved in building the Rooppur nuclear power plant in Bangladesh, facilitated by her niece who was previously a junior minister in the UK government. Hasina's niece and her mother (Hasina's sister) received 30 per cent out of this Russian bribery money and Hasina and her two children pocketing the remaining 70 per cent.
Therefore, the country is now grappling with slow economic growth, limited fiscal buffer due to multiple shocks and the impact of global uncertainty, including political uncertainty. Bangladesh not only faces domestic challenges but must also address repercussions from events in neighbouring countries, which include activities involving India, insurgency in Myanmar, and conflicts between India and Pakistan. Overall, Bangladesh is now navigating both internal instability and external recalibration.
Bangladesh experiences domestic challenges and must also manage the impacts of events in neighbouring countries, such as hostile actions involving India, insurgency in Myanmar, and fallouts from conflicts between India and Pakistan.
Amidst an array of domestic challenges, Bangladesh's interim government faces armed conflict at its Myanmar border and an ongoing refugee crisis. The Bangladesh-Myanmar border has been the scene of frequent clashes and tension, particularly between Myanmar's military and the Arakan Army. These conflicts, including those involving the Rohingya, have resulted in cross-border incursions, civilian casualties, and the displacement of people. An estimated 1.2 million Rohingyas are sheltered in Bangladesh now. Ethnic armed groups in Myanmar are fighting the Myanmar army for self-determination.
It is reported that Bangladesh is in contact with the Arakan Army to protect its border and support Rohingya repatriation. In late April, Bangladesh's Foreign Affairs Adviser announced that Bangladesh agreed to the UN's request to set up a humanitarian corridor along its border with Myanmar's Rakhine state for refugees. Dhaka's willingness to support this initiative reflects its humanitarian legacy but also represents a complex decision, one with profound implications for Bangladesh's national security, regional stability and international standing.
While it is a humanitarian initiative, many in India see it as part of a trend of foreign involvement in India's strategic area. India has increased security measures around the Siliguri Corridor, known as the "chicken neck," a crucial connection to its northeastern states, due to Bangladesh's growing relations with China and the UN proposal for a humanitarian-aid corridor into Myanmar's Rakhine State.
South Asia has never been a unified geopolitical entity, but it possesses a unique geographical identity. The British formed a colonial geopolitical entity in the mid-19th century, which included present-day Bangladesh, India, Pakistan, and briefly Myanmar. The region extends beyond the British colonial construct of the mid-19th century encompassing not only Bangladesh, India and Pakistan but also Bhutan, Maldives, Nepal and Sri Lanka.
The region is currently characterised by various conflicts, both inter-state and intra-state, often driven by a combination of factors such as historical grievances, border disputes, ethnic and linguistic tensions, and frequently the involvement of external actors. The primary conflict is the ongoing dispute over Kashmir, which has resulted in multiple wars between India and Pakistan, including one that occurred last month.
Bangladesh-India relations have seen a significant change since the removal of Sheikh Hasina's Awami League party, now in tatters, has long-standing ties to New Delhi and Hasina herself was considered as a client of India. In fact, bilateral relations between Bangladesh and India have hit a seriously low level over the last 9 months.
The Awami League, Hasina's party was recently banned by the Bangladesh government under the country's anti-terror laws. Her departure signifies the end of an era in the India-Bangladesh relationship, marked by unprecedented subservience to India.
Since Hasina's overthrow, India has been involved in hostile activities along the Bangladesh border, with reports of ties to Hasina and her associates with the aim to help regroup them to destabilise the interim government in Bangladesh. Delhi's silence on Bangladesh's extradition request for Hasina has further worsened bilateral relations. Hasina's hostile comments towards Yunus and members of the interim government, along with Delhi's inaction, are seen as efforts to destabilise the interim government. In fact, anti-Hasina sentiment is intertwined with hostile public sentiment towards India.
Bangladesh is India's biggest trading partner in South Asia. India is the second biggest trading partner of Bangladesh in Asia. In 2023, Bangladesh-India trade saw India exporting $11.3 billion to Bangladesh, while Bangladesh exported $1.89 billion to India, resulting in a significant trade deficit for Bangladesh. Evidently, India enjoys a huge trade surplus with Bangladesh. Though India is having a positive balance of trade with Bangladesh, Bangladesh still struggles to gain access to Indian markets.
In response to bilateral trade-related tensions following Hasina's removal from power, India has been applying economic pressures on Bangladesh by restricting the movement of Bangladeshi products transiting through Indian land ports, especially Ready-Made Garments (RMGs). Targeting Bangladesh's vital RMG sector sent an unmistakable signal that deteriorating political relations have now spilled over into economic ties. As trade-related tensions between India and Bangladesh have been rising, India now also has banned importation of a range of products from Bangladesh.
As anti-India sentiment intensifies, Dhaka may feel compelled to reassert a more independent or even oppositional posture. Economic and strategic pressures, combined with India's ongoing hostile posturing are contributing to political and economic challenges in Bangladesh.
Civil-society actors and nationalist voices are converging around a shared opposition to what they view as the Indian government's involvement in Bangladesh's internal politics-particularly given India's sheltering Hasina and many of her party members and its continued support for the banned Awami League.
Following an attack by insurgents in Indian occupied Kashmir, India launched military strikes against Pakistan, while Pakistan retaliated with its own military strikes. None appears to have gained much from the brief encounter and it was essentially a battle of egos. Despite initial declarations of a ceasefire and talks, both countries continued to accuse each other of violations.
It has been reported that India's recent military encounter with Pakistan, despite Pakistan's fragile economy, was adversely affected by Chinese involvement. India is also a poor and stagnant economy but with Hindu supremacist zeitgeist that has gripped the country under Prime Minister Narendra Modi and his Hindu supremacist party BJP will only further compound its economic and political crises. A case in point is a number of insurgent groups have emerged following Modi's August 2019 Hindutva inspired revocation of Article 370 of the Indian Constitution, which granted singular Kashmir autonomy.
India under Hindu supremacist Modi is a shining example of a self-indulging and self-adulating leadership. This type of leadership results in government incompetence and suffering. India is now the 4th largest economy in the world in terms of the size of the Economy (GDP), yet its per capita income, according to the IMF reporting, is US$2,880 in 2025. This ranks India around 143rd globally in terms of nominal GDP per capita with about two-thirds of Indians having a living standard like Sub-Saharan Africa.
China recently hosted a trilateral meeting with Pakistan and Afghanistan, announcing plans to extend the China-Pakistan Economic Corridor (CPEC) into Afghan territory - a move India has long opposed due to its passage through Pakistan-controlled Kashmir. The strengthening cooperation between China, Pakistan, and Afghanistan indicates a significant shift in the strategic balance of South Asia, prompting concerns in India.
Bangladesh along with Sri Lanka, Nepal, Bhutan, and Maldives cannot remain bystanders to the India-Pakistan conflict. As a strategic actor in the region, Bangladesh may now look to recalibrate its foreign policy in response to the aftershocks of the conflict in the region.
In a broader context, the intensifying economic and strategic competition between China and the US, as well as between India and China, have contributed to pushing all South Asian countries including Bangladesh towards instability. The economic policy of US President Donald Trump may now further impact India's development prospects and could unwittingly favour China's continued growth and position as a significant global power.
Chiana's first ever white paper on national security published in the middle of May clearly shows that it sees itself an indispensable global power, not just a regional power, ready to play a more assertive role in global affairs, challenging US dominance in the process.
Under such changing circumstances notwithstanding its limited economic power, India's ability to materialise its hegemonic aspirations using bullying tactics against Bangladesh and other neighbours will face further serious limitations. In fact, Indian hegemony is in peril now. India should come to senses that her puppet Hasina is gone forever and she must deal with the evolved reality in Bangladesh. In the long run Indian aggressiveness would be counterproductive to her economic, political and most importantly, national security.