ON AUGUST 5th Muhammad Yunus was expecting to stand trial in Dhaka, Bangladesh’s capital, in a trumped-up corruption case that might have put him in prison for life. Barely two days later Mr Yunus, a Nobel laureate, economist and social entrepreneur, was appointed the head of Bangladesh’s army-backed interim government. Sheikh Hasina, the prime minister for 20 of the past 28 years, had resigned and fled the country following weeks of student protests, which violent repression by state forces had failed to quash. The streets of Dhaka, previously patrolled by armed soldiers and police, were filled with students directing traffic and cleaning up buildings ransacked by looters, including the parliament. Overnight, years of autocratic rule had been replaced with hope for democratic renewal.
Can that be fulfilled? Restoring constitutional order will be hard, partly because it is unclear who will fill the vacuum left by Sheikh Hasina’s sudden departure. Her Awami League (AL) party is discredited. Khaleda Zia, the leader of the Bangladesh Nationalist Party (BNP), which has taken turns with the AL in dominating the country’s politics since independence from Pakistan in 1971, has been freed from jail. But she is 78 and unwell, and Sheikh Hasina’s campaign against her party has left the BNP in tatters.
The former prime minister’s authoritarian rule also prevented the emergence of new, more liberal forces. Islamist parties, which have grown more potent in recent years, may seek to fill the gap. The challenge is all the greater because Bangladesh is now a geopolitical battleground between China, India and the West.
Some initial signs are hopeful. The army, which stepped in after the prime minister fled to India, has shown restraint. General Waker-uz-Zaman, the army chief, promised to form an interim government the same day. He bowed to protesters’ demands the next day, by letting Mr Yunus lead the caretaker administration.
Mr Yunus’s first task, if he is sworn in as expected on August 8th, will be to ensure the country is peaceful so that politics can resume. The movement that chased out Sheikh Hasina started in July when students began to protest against a quota system that awarded 30% of all government jobs to descendants of freedom fighters in Bangladesh’s war of independence; the protesters argued that the system chiefly benefitted members of the AL. The government tried to suppress the demonstrators, killing hundreds.
When the courts at last scrapped the quota, the protests had already begun channelling years of pent-up frustration with Sheikh Hasina’s authoritarianism and cronyism. The protesters’ anger was evident earlier this week in the ransacking of her residence and attacks on police stations and the homes of AL ministers. Mr Yunus clearly recognises the risk of continued unrest: on August 7th he called on people to “stay calm and help those around you to stay calm.”
Mr Yunus’s next priority will be to revamp Bangladesh’s politics. That will require more than just quickly organising new elections. The country’s courts and other democratic institutions need to be repaired. Political parties’ influence in universities—long a source of unrest—will need to be curtailed. And new political forces need to be given time and space to organise themselves. Without those steps, a fresh election could easily play into the hands of Islamist groups or a regrouped BNP, which also suffers from cronyism.
The third big challenge for Mr Yunus is to navigate a complex geopolitical landscape. India, Bangladesh’s largest neighbour, presents the biggest source of potential tension. It has close historical ties to the AL, seeing it as a secular bulwark against Islamism in the region. In the last decade, wary of China’s growing influence in South Asia, India expanded trade, energy and military ties with Sheikh Hasina’s government. Now India, as well as hosting the iron lady in exile, faces a hostile Bangladeshi public, many of whom resent its support for her. It is also under pressure at home to help protect the estimated 10,000 Indian nationals in Bangladesh, as well as the 14m-strong Hindu minority there.
Indeed, Bangladesh’s interim government and any successor may be more inclined than Sheikh Hasina to turn to China for financial and other assistance. Not that she was averse to that. Under her rule, China became Bangladesh’s biggest trade partner, its second-biggest foreign investor, its third-largest creditor and its principal source of military technology. Still, to avoid becoming too dependent on China, she was careful to nurture relations with India and other partners.
Complacency, then worries all round
The crisis in Bangladesh is troubling for America and other Western governments too. They have long shared India’s concerns about instability and Islamism there. After the free and fair election in 2008, Bangladesh went through a period of relative stability and rapid growth. Western governments saw it, for a while, as a regional success story, thanks to its vibrant civil society and thriving garment industry. Between 2000 and 2016 the share of the population living in extreme poverty fell by two-thirds. By 2020 Bangladesh had surpassed India on several indicators, including GDP per person (at market prices) and female participation in the labour force.
Over the past decade that optimism gave way to mounting concern as Sheikh Hasina rigged a series of elections and jailed hundreds of political opponents, including Mrs Zia, the BNP leader (who has been prime minister twice). America, in particular, grew increasingly outspoken in its criticism of Sheikh Hasina’s conduct. It also imposed sanctions on an elite Bangladeshi police-force unit for alleged human-rights abuses in 2021, and on a former army chief of staff in 2024 over his alleged involvement in corruption.
Even so, Western governments avoided imposing heavier penalties on Sheikh Hasina’s government. That was partly because of their concerns about China’s growing clout in the developing world. But it was also a consequence of America’s closer ties to India, which has often been touchy about Western interference in its neighbourhood.
Western officials may now be questioning the merits of that approach. America and its allies still have considerable leverage in Bangladesh, not least because it is in the middle of a $4.7bn bailout from the International Monetary Fund (in which America has the most voting power). Bangladesh wants to strike a trade deal with the European Union, the biggest market for its exports. In 2029 the country’s exports are due to lose their tariff-free access to the bloc. Japan has influence too, as Bangladesh’s biggest aid donor.
China will no doubt attempt to exploit its economic and military ties to Bangladesh, as well as antipathy towards India in the BNP and the broader public. It may offer short-term financial assistance to help replenish the country’s foreign-currency reserves (Sheikh Hasina sought $20bn in loans from China on a visit there in July). It could pledge to boost investment in Bangladesh. And it could promise to import more from there to help boost bilateral trade, which has grown from $3.3bn in 2009-10 to nearly $24bn in 2022-23 (mostly consisting of Chinese exports).
Still, China’s largesse is limited these days by its own economic problems—and its wariness of debt linked to Belt and Road, its huge infrastructure-aid programme, which has been scaled back in recent years to focus on smaller “high-quality” projects. After a series of attacks on Chinese workers at projects in Pakistan, the Chinese authorities may also be reluctant to prop up a government in a country with a long history of political unrest and Islamist violence.
In the short term the priority for all the countries involved in Bangladesh is political stability. Looking further ahead, perhaps the best hope is that they find a way to coexist, as they largely have in Sri Lanka since its government was toppled in 2022 (in somewhat similar circumstances). But as great-power rivalry intensifies, the risk is that it makes the interim government’s efforts to reboot Bangladesh’s politics even more difficult. Toppling Sheikh Hasina was challenging enough. ■