How much longer can Bangladesh’s economic boom hide its political busts?

Bangladesh’s Prime Minister Sheikh Hasina was unequivocal about where the blame lay. Not with the police officers whose gunfire had just killed four protesters and injured dozens more, but with the mischief-makers who’d sparked the protest in the first place. As the dust settled on the recent riot in the town of Bornahuddin, prompted by an inflammatory Facebook post, the country’s Prime Minister said reckless social media users were creating “anarchy” and warned that anyone found guilty of similar offenses in future would face stern action.

Hasina told her audience that nothing should be allowed to detract from Bangladesh’s progress in recent years. To her supporters, it’s just further evidence of her tireless crusade to rebuild Bangladesh. To critics, however, it’s just another page from a deeply cynical playbook, which has used economic progress to mask repression and autocracy—a strategy which is finally running out of road.

It’s the economy!

Since coming to power in 2009, Hasina and her Awami League party have staked their entire regime on economic transformation. They’ve pledged to turn Bangladesh into a poverty-free country through a bold strategy that augments the country’s core strength in garment manufacturing and adds a burgeoning technology sector upheld by Bangladesh’s young population.

For what these pledges are worth, they’ve produced some undeniable results. Poverty has been noticeably reduced – even if the pace at which this is the case has significantly slowed since 2017 – and per capita income has risen 149 percent. After legal protection for foreign firms was strengthened, foreign investment increased three-fold as the economy adopted a more export-based model, greatly benefitting the country’s most important industry, garment manufacturing.

Not all is well

Hasina has been able to use these economic successes as a distraction from the ever-lingering socio-political tensions that, as the recent riots showed, are always lurking beneath the surface. The need to maintain economic stability has also been used as a justification to implement repressive policies, more or less quietly so. The problem is of course that the narrative of stability, growth and success can only be upheld as long the economy delivers. Unfortunately for Hasina, this is no longer guaranteed.

There have long been signs that behind the headline-grabbing gains, Hasina’s regime is wreaking lasting damage. Bangladesh has fallen to 105th in the World Economic Forum’s economic competitiveness list. According to Transparency International, it’s now the thirteenth most corrupt country in the world. Years of cronyism have fed a bloated, inefficient public sector and sucked billions of dollars from the public purse, exacerbating a liquidity shortage that is slowly but surely squeezing the country’s banks. The fact that the main state lenders are riddled with inefficient political appointees is another significant problem.

The International Monetary Fund has urged Hasina’s regime to undertake a series of essential reforms. So far, they have been ignored. But slowly, inexorably, the stormclouds are gathering. Recent analysis found that the Bangladeshi economy was at its lowest point in 10 years. External debt has reached an all-time high, and a widening deficit in the balance of payments is hampering Bangladesh’s currency. Perhaps most significantly of all, the banking sector is facing an ever-greater number of non-performing loans, which in turn could have disastrous consequences for Hasina’s economic project. If businesses can’t get credit, the recent growth is impossible to sustain.

Looking behind the curtain

As the façade crumbles, the dirt behind is coming more noticeably to the fore, exposing the reasons why the PM has been much less keen to talk about politics. After all, she and her Awami League have faced accusations of building a de facto autocracy ever since 2011, when they scrapped the tradition of holding elections under a caretaker government. Since then there’ve been allegations of unlawful killings, arbitrary arrest and the systemic use of torture; many high-profile critics have simply disappeared in mysterious circumstances. Even before Sunday’s bloodshed, Hasina had turned Bangladesh’s social networks into a minefield with a law designed to punish online critics with jail time.

The various concerns about Hasina’s regime crystallized in the Bangladeshi elections at the end of 2018, which had been billed as the most competitive since she took power. Instead they were overshadowed by the detention of major opposition figures—including former PM Khaleda Zia—and sustained attacks on anti-government rallies. In the end Hasina won 96% of the parliamentary seats, the sort of result which even Kim Jong-un might regard as one-sided.

In the aftermath of the election, key opposition figure Kamal Hossein, a former member of Hasina’s own party, led a backlash against alleged voting irregularities, backed up by reports from Transparency International which showed foul play in practically every single constituency. So far, however, the story has barely percolated the global consciousness. The international media has continued to focus on Bangladesh’s economy, rather than Hasina’s heavy-handed politics.

The writing on the wall

Even now that the economic momentum has begun slowing down, Hasina hasn’t been knocked off her stride. She still appears at global economic summits to talk up Bangladesh’s ‘development miracle,’ wowing foreign businesspeople with glitzy pitches about the investment haven that awaits them. Earlier this month she appeared at a World Economic Forum summit in New Delhi, vowing to create an economic hub for the entire South Asian region.

Throughout her 10-year reign, the Prime Minister has managed to keep politics and economics separate, maintaining a constant focus on one and sweeping the other under the carpet. But now, the two are intertwined: without urgent reforms, Hasina’s economic miracle will grind to a halt. And then the truth of her regime will emerge — without distractions.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.