Bangladesh Country Forecast: A Year After Hasina Uncertainty Prevails

Abstract

A year after deposition of Ms Sheikh Hasina and the Awami League, political uncertainty continues to rock Bangladesh with multiple forces which had been either compromised or suppressed finding the freedom to act on the streets and the public space. The new revolutionaries – anti reservation students movement formed the National Citizens Party with the hope of creating a Naya [New] Bangladesh a democracy free from authoritarianism. These are now in confrontation with the older parties in the political spectrum. Anti Awami League sentiment is high and many of these forces are pouring on the streets of Dhaka with vigilantism rampant. The interim administration led by Chief Adviser Professor Mohammad Yunus who has been a victim of Sheikh Hasina’s alleged victimization has the onerous responsibility of delivering reforms and holding free and fair polls.

A pathway is being charted out with likelihood of polls by April 2026. Meanwhile, the Army has stayed on the sidelines while attempting to quell the internal security space. There is international support to the Interim Administrations reforms while regionally the antipathy developed with the most significant neighbour of the country India, is causing turbulence having an economic impact. The economy is the main victim of the political instability in the past one year with growth sputtering while the U.S. plans to impose 30 % tariffs implies more pain ahead.

International Relations

The United Nations [UN] and European Union [EU] support for reforms will be sustained. Cooperation between the UN and Bangladesh interim administration is expected to continue. Differences over humanitarian corridor to Rakhine State possibly resolved, with the UN indicating support in case the two sovereign states resolve the issue bilaterally.  UN has also called for inclusive elections and is expected to monitor the preparations and conduct of the same.

Chief Advisor Professor Mohammad Yunus’ visit to the UK in July turned out to be a mixed success with the denial of a meeting with Prime Minister Keir Starmer ostensibly due to scheduling issues. Interim Administration claimed that the UK government has assured cooperation in recovery of money allegedly laundered by the Awami League and cohorts.  There is huge uncertainty over United States tariffs on Bangladesh. With 35 percent tariff imposed by the Trump administration, set to take effect on August 01, Dhaka is expected to scramble for reduction to the levels of countries as Vietnam at 20 %, a rival in the global garment exports market. Adequate time and diplomatic capital needs to be invested in negotiating at the trade/tariff as well as diplomatic level with the Trump Administration to obtain relief, however Dhaka’s approach so far has been laidback to say the least.

Radicalization among Bangladeshi migrant workers abroad has emerged as a serious concern for both Bangladesh and host countries, particularly in Southeast Asia and the Middle East after exposure of the Bangladeshi Radical Militant Group (GMRB), recently dismantled by the Malaysian police. There could be stringent checks and entry barriers in the days ahead.

Regional Relations

Trade, transit, border killings/push ins, Sheikh Hasina extradition, treatment of Hindu minority, North East reference by Professor Yunus and China/Pak issues are seen as the main differences with India. Bangladesh is expected to have gone soft on the issue of push ins from India as a list has been provided by Indian authorities and those who were pushed in have been all identified as citizens of the country. Demand for extradition of former Prime Minister Sheikh Hasina may increase with the ICT publishing notices in newspapers for the same. India is unlikely to heed to these considering this as a political request beyond the purview of the extradition treaty. Meanwhile there are concerns of India attempting to revive the Awami League which is the Party on which New Delhi has been dependent over the decades.      

An emerging axis between Bangladesh, China and Pakistan is another factor that is expected to irk India. China and Pakistan are expected to exploit the vacuum with the anti India stance of the Interim Administration. An attempt to provide support to militant groups operating in the North East will see further deterioration of relations with India.

The proposed Bangladesh-Myanmar humanitarian corridor debate may continue but with limited scope of resolution. The UN initially suggested the corridor to facilitate aid delivery to Myanmar’s Rakhine State, which is facing a severe humanitarian crisis. However, Bangladesh’s interim government, led by Chief Advisor Muhammad Yunus linked the corridor to the repatriation of Rohingya refugees, making the issue complex.

Political Developments

Powers of the Chief Adviser under Bangladesh’s caretaker system grant him significant discretion over the election timetable. However, political reality is that a broad consensus has emerged among more than 20 major political parties, who strongly favor holding national elections by December. Chief Advisor Mohammad Yunus is possibly attempting to balance demands by traditional parties as the Bangladesh Nationalist Party [BNP] and new political voices led by the National Citizen’s party [NCP] comprising elements of the students anti reservation movement demanding reforms first with a view to preventing another spell of authoritarian rule. The NCP’s vision is rooted in a powerful grassroots movement. But turning “Naya Bangladesh” from slogan to reality will require strategic alliances, electoral success, and sustained public trust. The newbies so to say may not have the political experience to mobilise voters in the coming polls, at the same time indefinite postponement on the plea of “July Charter,” or reforms first may not be a viable option.

As a possible compromise, in his meeting with Tarique Rehman Vice President of the BNP, Yunus has assured polls before Eid in February next year but with caveats of completion of reforms. Thus, there is an uncertainty which is expected to mar political space in Bangladesh. There is possibility of a rift in the staunch allies of the past, Bangladesh Jamaat-e-Islami and the BNP essentially due to a belief by the former of a pact with the Chief Advisor due to joint statement issued after meeting between Tarique Rahman and Yunus. Meanwhile political pressure for trial of former Prime Minister Sheikh Hasina is expected to build up. Civil-military relations were of some concern are now seen equanimous after meeting of the Chiefs of the Army and Navy for greetings on Eid.

Internal Security

Approximately 71.5% of youth in Bangladesh have said mob violence is steadily increasing across the country and significantly affecting daily lives of young people, according to a recent survey conducted by the South Asian Network on Economic Modeling (Sanem) indicating the level of internal disorder in the country. Thus, law and order, crime and criminal gangs, Rohingya groups and Chittagong Hills Tract militancy involving the Kuki-Chin National Army (KNA), is expected to continue. Bangladesh Army will remain the lead for law enforcement.

The Rohingya crisis poses a complex and evolving security challenge. Rohingya refugee camps in Cox’s Bazar have seen a rise in armed groups and criminal networks. Rival factions—including the Arakan Rohingya Salvation Army (ARSA) and Rohingya Solidarity Organization (RSO)—have been involved in turf wars, extortion, and recruitment, sometimes forcibly, of young refugees as per reports by the International Crisis group but denied by the Interim Administration. This trend will have to be observed with caution as it could be a precursor to increasing internal and external challenges for security in Bangladesh.

Radicalization among Bangladeshi migrant workers abroad has emerged as a serious concern for both Bangladesh and host countries, particularly in Southeast Asia and the Middle East.

Defence

With geopolitical instability and a neighbour – Myanmar in state of civil war, Bangladesh will face fresh defence and security challenges. Sustaining equanimity in civil military relations with the interim administration with a view to ensuring security of the country at large will be focus of the military. The foreign policy and defence policy deviations from traditional stance is likely to be resisted by the military. Capacity building particularly of maritime threats will remain in focus. Allegations of rights violations by Bangladesh military personnel in para-military and police organisations as enforced disappearances are likely to keep the military under diverse pressure from time to time. The role of the Army Chief in preventing a political collapse of the Interim Administration also assumes importance.

Economy

World Bank in Global Economic Prospects report has kept Bangladesh's growth projections unchanged – at 3.3% for FY2024-25, 4.9% in FY26 and 5.7% in FY27.  Bangladesh's economy has faced obstacles due to political uncertainty, but stability may be on the horizon. An election timeline and support from the IMF and World Bank have eased some worries. Strong remittance inflows seen an increase in foreign exchange reserves, however with the Middle East in turmoil, how this will manifest remains to be seen. Export income could be seriously impacted if there is no further relief on tariffs by the United States presently set at a high of 35 %. Improvements are evident in the banking sector with tightening regulations which will have to be sustained for normalization and overcoming the impact of a long-time unitary administration under the Awami League.

Criticalities and Uncertainties

Key Criticalities	Managing divergent expectations of elections. Civil military relations, Reforms versus Elections challenge, transforming to a Naya Bangladesh, Countering forces of  fundamentalism and terrorism, India Bangladesh Relations Rohingya repatriation, Growing militarisation of Bay of Bengal, Myanmar Bangladesh relations., Managing Economy. Corruption at high level.
Key Uncertainties	Coup within military and government, India Bangladesh relations, Transition to a New Bangladesh. Myanmar Bangladesh Relations. Balancing relations with India and China, Refugee management, Rohingya repatriation. Economic challenges