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International relations

China's economic clout chills Bangladesh-India relations

Dhaka warned against becoming a theater for proxy wars between regional powers

Bangladeshi Prime Minister Sheikh Hasina Wazed is welcomed by President Xi Jinping to Beijing's Diaoyutai State Guesthouse in July 2019.   © Reuters

DHAKA -- India has intensified diplomatic efforts in recent weeks to shore up its once solid alliance with Bangladesh, but frostier than normal relations between the two South Asian nations may have opened a crack in the door to China.

Riva Ganguly Das, India's high commissioner in Dhaka, has been winding up her posting but has been able to meet with only three ministers. Her attempts over four months to pay a farewell call on Prime Minister Sheikh Hasina Wazed have so far been fruitless.

In April, China's Beijing Construction Group beat out Indian competition to secure a $250 million contract for an airport terminal in the northeastern city of Sylhet close to Bangladesh's sensitive border with India. The deal reportedly set off alarm bells in New Delhi.

In June Bangladesh got a major lift in relations when China opened its market to 97% of Bangladesh's products -- some 8,000 items in all.

Dhaka described the windfall as "economic diplomacy," but China's growing economic leverage has cast a shadow over its much older relationship with India.

India's Prime Minister Narendra Modi welcomes his Bangladeshi counterpart, Sheikh Hasina Wazed, to Hyderabad House in New Delhi in October 2019.   © Reuters

Bangladesh has also turned to China for finance of a water management project along the Teesta river. The Water Resources Ministry requested nearly $1 billion from China after a water sharing accord with India sat in limbo for eight years because of stiff opposition in West Bengal state.

"India's discomfort about the growing Bangladesh-China bonhomie is palpable," Ali Riaz, a political science professor at Illinois State University, told the Nikkei Asian Review. He predicted that China's expanding trade and investment in Bangladesh will seriously undermine Indian influence. 

Riaz, who is also a senior fellow at Atlantic Council, a Washington think tank, warned Dhaka against becoming "the theater for a proxy war" between the two regional powers.

A particularly bitter twist came last year when India passed the Citizenship Amendment Act, which fast-tracked naturalization for non-Muslim migrants from Afghanistan, Bangladesh and Pakistan. Hasina called the law "unnecessary." It came on the heels of a program to register nationals in Assam. These developments stoked fears of a Muslim exodus from the northeastern Indian state into Bangladesh. Dhaka strongly denounced both moves, and cancelled some ministerial visits.

"Our relations with India remain as good as before," Bangladesh's Junior Foreign Minister Mohammad Shahriar Alam told Nikkei. The government has so far only mentioned the need for distancing from diplomats during the COVID-19 pandemic as a reason for Hasina's elusiveness, but the chill in relations is quite apparent.

China and India are Bangladesh's biggest trade partners, with annual trade deficits of $12 billion and $8 billion respectively. Bangladesh's exports to the countries are around $1 billion each.

On his first visit to Dhaka in 2016, Chinese President Xi Jinping promised more than $20 billion for 27 infrastructure projects under the Belt and Road Initiative. Many believe Bangladesh must tread carefully to ensure relations with India are not frayed excessively by China's various schemes.

"We can't dislodge our neighbor," foreign affairs analyst Mohammad Touhid Hossain told Nikkei. Hossain was permanent secretary at the foreign ministry for three years until 2009. Bangladesh has a long list of complaints against its giant neighbor, that range from river flows to unfair business practices. "India encircles us on three sides," said Hossain.

Bangladesh is on track to achieve the United Nations Developing Country status by 2024, rising from its current least-developed status. That should involve forging partnerships with countries like the U.S., according to M. Humayun Kabir, a former ambassador to the U.S. who is now acting president of the Bangladesh Enterprise Institute, a Dhaka think tank.

Other players may also be facilitating greater Chinese influence. Some major projects, such as the Padma bridge being constructed by China Major Bridge Engineering, and a river tunnel in southeastern Chittagong by China Communications Construction, also have Chinese financial backing. Bangladeshi government-owned companies are involved in both projects. "Their actions may not be favorable to the national interest," said Hossain.

"Our aspirations should be to maintain good relations with both India and China," Kabir told Nikkei. "It is good for South Asia to promote common interests such as reducing poverty and unemployment."

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