Welcome to Foreign Policy’s South Asia Brief.
The highlights this week: Economic stress fuels anti-government protests in Bangladesh, tensions intensify between Pakistan and the Taliban, and foreign direct investment plunges in Nepal in the first half of its fiscal year.
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Welcome to Foreign Policy’s South Asia Brief.
The highlights this week: Economic stress fuels anti-government protests in Bangladesh, tensions intensify between Pakistan and the Taliban, and foreign direct investment plunges in Nepal in the first half of its fiscal year.
If you would like to receive South Asia Brief in your inbox every Thursday, please sign up here.
Mass Protests Challenge Dhaka Leadership
In three consecutive terms in office, Bangladesh’s Awami League party has often ruled with an iron fist. The government was last reelected in 2018, and for much of its current term it has faced little resistance on the streets—mainly because its crackdowns have weakened opponents and critics. Meanwhile, the government delivered big on one of its main promises: economic growth.
But Bangladesh’s economy has taken a major tumble, and a government that staked its legitimacy on economic success finds itself on the defensive. This has emboldened the political opposition, led by the Bangladesh Nationalist Party (BNP), which has staged large protests in recent days, including a massive rally in the capital city, Dhaka, on Saturday. The government now faces one of its biggest political challenges in years, with elections just a year away.
Since taking office in 2009, Bangladeshi Prime Minister Sheikh Hasina’s government has stamped out dissent, arresting opposition leaders and using violence against peaceful protesters. It has responded to the new protests with characteristic muscle: Police have fired live bullets at protesters and detained top opposition leaders. Yet this is only likely to galvanize opposition supporters.
For a while, Bangladesh’s democratic backsliding was accompanied by an economic success story. Multiple factors—improvements in health care and education and the emergence of a powerful garment sector, to name a few—transformed Bangladesh into one of the world’s fastest-growing economies. Hasina can point to many achievements, including a 29 percentage point drop in the poverty rate since 1991 and an expected exit from least-developed-country status by 2026.
But now Bangladesh joins many countries in South Asia and beyond in suffering the consequences of global economic shocks. The COVID-19 pandemic and Russia’s war in Ukraine have sent food and fuel prices soaring. Foreign reserves have plummeted. This summer, Hasina’s government raised fuel prices and rationed electricity, resulting in higher inflation and crippling power cuts that slowed economic activity. New revelations of financial corruption have compounded economic stress and fueled public anger.
This has all provided an opening for the opposition to exploit public discontent about economic stress, as well as to shine a spotlight on the government’s draconian tactics. Protesters are now calling attention not only to Bangladesh’s sputtering economy but also to authoritarianism. The BNP plans to hold nationwide protests on Dec. 24 to press the government to accede to its list of demands, which include the government’s immediate resignation, an end to laws such as the Digital Security Act that violate human rights, and an end to price hikes.
Dhaka will grant few if any of these demands. But coupled with the mass protests, the opposition has put the government in a tough spot. It will be tempted to keep responding forcefully, as it has in the past, to blunt the protests’ impact. But it also faces pressure to rein in its repressive practices from Western trade partners, including Washington, which sanctioned a key Bangladesh security force last year for alleged human rights abuses.
The Awami League often brands its critics as provocateurs. To be sure, some opposition members have also used violent tactics, and there are possible links between opposition ally Jamaat-e-Islami and Islamist terror groups. Accordingly, the government justifies its crackdowns as essential for stability. It will likely keep up this narrative in the weeks ahead while trumpeting its achievements: economic growth interrupted only by unavoidable shocks, new infrastructure projects, and successful counterterrorism operations.
Hasina’s government seeks to rally its base while ensuring continued backing from the West, which has largely embraced it. But the more it stymies peaceful protest and dissent, the less that support can be taken for granted.
Pakistan-Taliban tensions. Until recently, few observers could have imagined Taliban forces firing at Pakistani troops across the border. During the U.S.-led war in Afghanistan, Pakistan aided the group and provided sanctuary and other assistance to Taliban leaders and their families. But last Sunday, an Afghan mortar strike hit a restaurant near the border in Chaman, Pakistan, amid clashes between the two sides. According to Pakistani officials, seven people died and more than 17 were wounded.
The incident marks the deadliest border violence between Afghanistan and Pakistan since the Taliban seized power in August 2021. Taliban forces fired across the border near Chaman again on Thursday—the day the head of U.S. Central Command happened to be meeting Pakistan’s new Army chief, Gen. Asim Munir, at military headquarters in Rawalpindi, Pakistan. Officials said one civilian died and at least 20 people were wounded.
These clashes come amid heightened tensions between Pakistan and the Taliban. In recent months, Taliban fighters have tried to resist Pakistani soldiers building a fence on the border, which the regime disputes. The Taliban have not curbed the presence of the Pakistani Taliban, which have increased attacks in Pakistan from bases over the border.
A hot border with Afghanistan presents a big problem for Pakistan’s government. Islamabad values its border trade with Kabul, which risks interruptions if violence intensifies. It’s also keen to rein in tensions as it focuses on relations with India, which are showing new signs of strain.
New India-China border clash. Last Friday, Indian and Chinese troops clashed along their disputed border in India’s Arunachal Pradesh state. According to Indian reports, dozens of Chinese soldiers made an incursion before being confronted by Indian soldiers who pushed them back across the line of actual control. As is common during such confrontations, much of the violence involved pushing and shoving; Indian media reported that some Chinese soldiers carried clubs and taser guns.
The incident is the worst India-China border clash since deadly violence in the Galwan Valley in Ladakh in 2020, which plunged bilateral relations to their lowest level in decades. Tensions remain today, meaning that any border violence could quickly escalate. This week’s crisis ended promptly, but future ones are likely: New Delhi lacks the capacity to deter them, and one can’t rule out things spiraling out of control. Fortunately, a military-to-military dialogue mechanism can help reduce the chances of escalation.
Sri Lanka’s delayed IMF package. The International Monetary Fund (IMF) is not expected to formally approve a new $2.9 billion bailout package for Sri Lanka’s battered economy by the end of the year. The IMF’s public meeting calendar does not include anything involving Sri Lanka through Dec. 22. Colombo reached a staff-level agreement with the IMF back in June, but its executive board must give its assent before the deal is finalized.
The delay is bad news for Colombo. Fuel shortages have abated in recent weeks, but energy insecurity and food costs remain high, and imported medicines are in short supply. Sri Lanka’s total foreign debt is more than $51 billion, and more than half must be paid off by 2027. Last week, Sri Lanka’s Parliament approved a $15 billion budget that includes a relief package; but it’s mainly an austerity budget meant to increase revenue to meet IMF requirements for funding.
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New data from Nepal’s Department of Industry reveals a gloomy picture of recent investment in the inflation-battered country. Foreign direct investment fell by more than half during the first four months of Nepal’s current fiscal year, which began on July 16. Experts attribute the plunge to global economic struggles and China’s economic slowdown. China is Nepal’s top source of foreign direct investment.
In the last fiscal year, only 30 percent of committed foreign investment was actually delivered, despite recent government interventions to kick-start more funding to Nepal, where poor infrastructure and high transport costs can be an obstacle. Kathmandu has lowered the minimum amount for foreign direct investment transactions and tightened the criteria for business visas to weed out those who are not seriously committed to investment.
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