Political economy in Bangladesh

A major fight has been going on in Bangladesh with respect to the Awami League’s return to power.  The Constitution is being amended, the opposition is under legal attack, the military is being restructured, and old criminal charges are being revived.  For instance, Sheikh Hasina has been playing up the anniversary of her father’s (Sheikh Mujibur Rehman) death — celebrated as national mourning day — in order to win political advantage against the Bangladesh National Party.  Her father’s killers were protected by a 1975 ruling which prevented their prosecution.  When she won the elections in 1996, she overturned that law and brought charges against 12 of them — all of whom were later hanged.  A few of the people involved in her father’s assassination are still living abroad.  She also used the occasion to announce the platitudinous campaign to create a “Bangladesh free of hunger and poverty.”

At the same time, the Awami League is pursuing criminal charges against sections of the Jamaat-e-Islami that collaborated with Pakistan in the 1971 war.  There is widespread support for these trials, since no charges have been brought up for the crimes committed (thousands were killed, reports of rape were astronomical).  Here’s how Asia Times puts the trials:

But the government’s focus on razakars – internal collaborators who led, assisted and committed crimes in conjunction with the Pakistani administration then in control of the country – has whipped up controversy in Muslim-majority Bangladesh. The Awami League government of Prime Minister Sheikh Hasina, which was elected in a landslide in 2008 in part on promises of a trial, says it has evidence proving the involvement of senior Jamaat members in the 1971 atrocities. Critics, however, say the tribunal is being used to settle domestic political disputes and runs the risk of unleashing social chaos.

Don Beachler, an associate professor of political science at NewYork’s Ithaca College, said the government has set up the tribunal in part to tar Jamaat-e-Islami as allies of the Pakistani army and “enemies of the Bangladeshi people”. The fact that Jamaat ruled in coalition with the Bangladeshi Nationalist Party – a key rival of the Awami League – from 2001 to 2006 has only provided an “extra motive” to pursue the Islamist movement, he added.

Behind all of this, of course, is the long-standing conflict between the three major players in Bangladeshi politics: the Awami League, the Bangladesh National Party, and the Bangladeshi military.  In fact, the recent Supreme Court ruling about secularism in the constitution and the new laws passed against fatwas have to been seen in this context: the Awami League is using its political power to change the terrain legally enough to prevent a repetition of its previous missteps (which allowed its competitors into power).  At the same time, the military and the BNP have a love-hate relationship which was most acutely demonstrated when they split from one another in the 1990s after their brief collaboration to oust the AL from power.  This is also part of the reason that both the AL and the BNP are suspicious of the military and have prevented it from expanding and growing overmuch.

At the same time, the BNP is in the midst of a crisis of its own with several factions attempting to break away from Khaleda Zia’s leadership.  The BNP is going to try to push an aggressive and activist line against the AL, but this will be made more difficult if it doesn’t have reliable cadres that it can count on.

The government of Bangladesh is pursuing an aggressive strategy of recruiting Foreign Direct Investment, marketing its very low labor costs as the nation’s most attractive feature, but it is coming up against some serious problems.  The Bangladeshi Export Prootion Bureau (EPB) is already trying to set export targets that would be up from the previous year by a fanciful 15%.  They are hoping that most of that will come from a recovery in the global market will allow them to sell more ready-made garments, but this depends on trends that are clearly outside of the control of the small nation.

For instance, there are already rumblings coming from the economic pundits in Bangladesh that the nation has to diversify its exports, since the over-reliance on the garment industry means that the nation is particularly vulnerable to the ups and downs of the global market.  But the kinds of resources that would require are still years away for Bangladesh.

First of all, the nation’s weak infrastructure poses a problem for companies looking to take advantage of Bangladesh’s cheap wages.  And, the lack of developed land suitable for corporate investment has meant that the country had to lose out on several lucrative bids this year.  So, most companies want to set up shop in either Dhaka or Chittagong, but land is not available (it is plentiful in places that most corporations do not want to go).

Secondly, the combativity of the working class even in particularly adverse circumstances means that the labor costs won’t remain low indefinitely.  There are even signs that the pro-business intelligentsia in Bangladesh recognizes the problems that perpetually low wages will pose for business in the long-term.

Because the garment industry is so large, both parties actually have the support of some section of the garment workers (and need that support in order to win elections).  At the same time, industrialists all over the country rely on both parties to do their bidding.  I can’t find a good elections return map that I could set on top of a map of the garment factories, but you can tell from the election returns that the support of both parties in the major cities is pretty substantial.

Moreover, the garment industry is clearly Bangladesh’s most important export industry, accounting for some 80% of the countries total exports.  That means that the fortunes of the Bangladeshi economy are intimately tied to this one industry.  In fact, it was the structural dependency of Bangladesh (its large trade deficit) that prompted Bangladesh to try an attract textile manufacturers to the country in the first place.  (The other way that Bangladesh makes a dent in its large trade imbalance is from its other major export: workers it sends to work overseas).  It only accounts for about 5% of the economy (textiles are a $12 billion dollar a year industry and the GDP of Bangladesh is $240 billion) but it plays a very large role in driving Bangladesh’s growth.  As a result, no matter which party is in power, it needs to woo the garment industry.

This is why the attacks on the labor unions are so important for the state and for business in Bangladesh — it gives them some wiggle-room in a tense economic situation.  Part of the way that the police are making their case against the labor unions in Bangladesh is by torturing them into making confessions against their respective organizations.  The New York Times reported the following:

But labor and human rights advocacy groups said at least one worker has told his colleagues that he was tortured into giving false evidence against himself and other labor leaders before he escaped from custody. Advocates also said that they were worried about the safety of people arrested in recent days.

It should be added, though, that Bangladesh’s problems are not exclusive to the garment sector, with strikes breaking out in the transportation industry and serious grievances in the ship-breaking industry.

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