Muhammad Yunus arrives at the airport in Dhaka, Bangladesh on the 8th (©Reuters)
The recent developments in Bangladesh do not augur well for India and Japan. It seems the present caretaker government has not been able to stop the bout of violence against the country's minorities.
Bangladesh is an important part of Japan's "free and open Indo-Pacific" (FOIP) policy. For India too, Bangladesh is important as it is a gateway to its Northeastern region. Moreover, there have been many connectivity initiatives between India's Northeast and Bangladesh.
However, after the fall of Sheikh Hasina earlier in August 2024, things have taken a turn for the worse. This has grave security implications both for India as well as for Japan.
What are the options?
One, of course, would be to keep the channels of communication open with the interim government in Bangladesh. Without that, Japan and India would lose whatever little influence they have in that country.
It is worth mentioning that in September 2023, the Japan International Cooperation Agency (JICA) signed a loan agreement with the Government of Bangladesh to provide an Official Development Assistance loan of up to ¥217.6 billion JPY (about $1.5 billion USD) for the Matarbari Ultra Super Critical Coal-Fired Power Project.
Significantly, the caretaker Muhammad Yunus government has received support from the President Joe Biden-led United States government. However, things might change soon once Donald Trump is sworn in as president in January 2025. Trump had already flagged the atrocities on minorities in Bangladesh during his election campaign.
Bangladesh already had a bout of Islamist violence when terrorists attacked the Holey Artisan cafe in Dhaka in 2016. Twenty-two people were killed, mostly foreigners. Seven Japanese nationals were among the dead.
Latest Developments
In a positive development, the Indian Foreign Secretary Vikram Misri paid a successful visit to Bangladesh recently. India has many levers of influence in Bangladesh. For one, New Delhi exported more than $1 billion worth of electricity to Bangladesh in 2023-24.
Nevertheless, New Delhi will have to work with other players in the region to bring stability to Bangladesh. The Bangladeshi government has also been pressuring the Indian government for the return of Shiekh Hasina. India gave shelter to the former prime minister. New Delhi also had close ties with the earlier Awami League government, led by Shiekh Hasina. It is a relationship dating to the time of her father, Shiekh Mujibur Rahman, the founding father of Bangladesh.
Japan and Bangladesh
Why is Bangladesh important for Japan?
For Japan, Bangladesh has also been an important player. After the civil war in Myanmar broke out, Japan looked for safer places to invest and Bangladesh provided a safe destination.
Furthermore, Japan and Bangladesh have a long relationship. Tokyo recognized the People's Republic of Bangladesh on February 10, 1972, soon after it secured its independence from Pakistan. In addition, many Bangladeshi students go to Japan to study. Among them, many also chose to stay in Japan for work.
As of June 2023, there were nearly 350 Japanese companies with operations in Bangladesh. A decade earlier in 2014, the same figure stood at 183. In the interim, Japan Tobacco acquired a Bangladeshi company in 2018 through the country's single-largest private sector foreign direct investment. The deal was worth $1.47 billion USD.
Tokyo has reasons to be worried about the present goings-on in Bangladesh. For example, there is fear about the growing radicalization in the country. At the same time, the new government in Dhaka could be friendlier to China than Japan. Beijing already has a foothold and Bangladesh has also joined the China-led Belt and Road Initiative.
The Road Ahead
The road ahead is not going to be smooth for Japan and India in Bangladesh. It seems there could be considerable upheaval ahead in the country's immediate future. Radicalization in Bangladesh could also affect the Bangladeshi community in Japan. In turn, that is something Japan will need to monitor.
There is no denying that the present developments in Bangladesh present huge challenges to both India and Japan. Hence, the two need to join their efforts to bring about stability in Bangladesh. Already the Japanese economy has been under strain since the outbreak of the COVID-19 epidemic and Japanese companies have been looking at alternate destinations for investment.
China has been slowly losing favor among Japanese companies because of the strains in the bilateral ties. Furthermore, many Japanese businessmen have been harassed or arrested in China in recent months. Violence against Japanese nationals has also been a problem.
With President-elect Trump coming into office, Japan would also worry whether tariffs would be raised on Japanese exports. If so, this could be a big blow to the Japanese economy.
In addition, Japan has significant investments in the Northeastern part of India. There is always a concern that the turmoil in Bangladesh could impact Japanese projects there. Indeed, Tokyo planned to connect the Japanese-backed projects in Bangladesh and Northeast India.
For now, however, Tokyo and New Delhi have no alternative but to wait and watch.
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Author: Dr Rupakjyoti Borah
Dr Rupakjyoti Borah is a Senior Research Fellow with the Japan Forum for Strategic Studies. The views expressed here are personal.
