The overthrow of the Sheikh Hasina’s dictatorial government in Bangladesh by students and the populace last week is a startling outcome of the economic nightmare that many so-called developing economies are experiencing now: stagnant trade, rising debt interest costs and severe austerity being imposed by the IMF and private capital in return for ‘financial aid’.
Bangladesh was regarded as an economic success story up to the government’s fall – at least in the Western media and among mainstream economists. The IMF was forecasting that Bangladesh’s GDP would soon exceed that of (tiny) Denmark or Singapore. Its GDP per person was already bigger than neighbouring India’s. The country’s average GDP growth over the past decade, according to government statistics, was around 6.6%. As late as April this year, the World Bank reckoned that Bangladesh would grow by 5.6% this year, led by its highly successful garment industry, which relies on cheap labour sweat shops to gain market share globally. It accounts for more than 80% of the country’s exports. The government was forecasting that by 2025, Bangladeshi factories would produce 10% of the world’s apparel.
But beneath the surface, the rise of the economy was based on faltering profitability for Bangladesh capital. The relative recovery in profitability after the global Great Recession of 2008-9 began to reverse from 2013, leading up to the pandemic slump in 2020.
The crisis came quickly this year. Within weeks of the World Bank’s’ optimistic April report, the reality emerged: the economy was deteriorating fast. Huge infrastructure projects were failing and eating into resources, riddled as they were by corruption. Rising interest costs on borrowing, higher inflation and falling export demand drove many companies into default with over $20bn in ‘non-performing loans’. The government handed out huge subsidies (billions) to private companies to ensure electricity coverage in the country. The rich shareholders prospered and took the opportunity to siphon their wealth out of the country; while remittances from Bangladeshis working abroad fell back.
In contrast to the rich, the majority of the country’s 170m people suffered. Most Bangladeshi garment workers are women (50-80%), while the better-paid factory supervisors tend to be men. Most of the women earn just a minimum wage — 8,000 taka, or about $80 per month. With rising food prices, that’s nowhere near enough. “All daily goods like rice, eggs, vegetables — everything is getting more expensive,” said Taslima Akhter, president of Bangladesh Garment Workers Solidarity, a labour group. “Also the price of gas for cooking [at home] and electricity [in factories]. So this is a big problem for workers and the industry.”
A BBS survey conducted in the middle of 2023 revealed that around 37.7 million people experienced moderate to severe food insecurity in the country. More than a quarter of families were taking out loans to cover the cost of daily necessities, including food. A survey by the South Asia Network on Economic Modeling, a think tank, showed that 28% of households resorted to borrowing money to survive. The average amount of loans per household in the country nearly doubled between 2016 to 2022.
Bangladesh had been registering increases in life expectancy for decades. In 2020, it reached 72.8 years, the highest to date. But since then, the pattern of growth has been broken. In 2021, there was a decline to 72.3 years onwards. The mortality rate for children under five years of age, newborns, and children under one year has increased.
There has been a drop in students at the secondary-school level and an increase of NETT (not in employment, education, or training) among the youth population. According to the BSVS-2023, the share of children between five and twenty-four years not in educational institutions has risen since the COVID-19 pandemic. In 2020, at the onset of the pandemic, 28% were out of educational institutions; by 2023, the share reached 41%! Around 40% were neither in school nor in employment, up 10% pts in eight years. The student protests that brought down the government were triggered by the job quota system that reserved 30% of government jobs for families of 1971 war veterans (mainly government families). Protesters demanded the replacement of the quota with a merit-based system.
In June 2024, the IMF admitted that “stubbornly high international commodity prices and continued global financial tightening have amplified macroeconomic vulnerabilities” Foreign exchange reserves declined sharply due to interventions to prop up the Bangladesh currency , the taka. FX reserves plummeted from $46bn in 2021 to just $19bn.
The taka fell over 20% against the US dollar, driving up the costs of servicing foreign debt. The external account went into deficit by up to 4% of GDP a year.
The government was forced to turn to the IMF for ‘relief’. The IMF approved a small package of $3.3bn in early 2023. Then this year that was raised to $4.7bn designed to relieve pressure on the FX. And the IMF handed over $1.1 bn in June.
But now all is in flux. After a brutal attempt to suppress the protests with the army and police killing over 300 people, Hasina finally fled the country. A temporary government has been formed under Nobel Peace Prize winning economist Muhammad Yunus to lead an interim government. But don’t expect any improvement under his administration (read this: https://www.cadtm.org/Bangladesh-Who-is-Muhammad-Yunus-the-new-primer-minister). Yunus will again turn to the IMF for support in return for which the IMF will impose severe austerity measures.
The Bangladesh economic crisis is being repeated across the Global South – in Kenya where riots have ensued to reverse IMF-demanded tax rise; in Pakistan where the government has turned for the seventh time to the IMF for funding; in Egypt which is on the brink of default; and in Nigeria, where hunger rules. And of course, Argentina.
And the IMF surcharges any debtor that fails to pay on time, which only makes loan repayment harder. The number of countries paying surcharges annually has nearly tripled in 5 years, from 8 in 2019 to 23 in 2024. Over the past six years, the IMF charged $7 billion in surcharges.
Through 2033, CEPR estimates that the IMF will charge approximately $13 billion in surcharges. Argentina alone will owe an estimated $6 billion, followed by Ukraine, with a debt of nearly $3 billion. On average, surcharges will represent 26% of all charges and interest levied on surcharge-paying countries. For some borrowers, such as Costa Rica and Ecuador, surcharges will represent even more.
In my next post, I shall discuss a new report by the World Bank which shows that the Global South is not just failing to ‘catch up’ with the Global North, but instead is falling further behind.
Michael Roberts Blog 
Get real Mr Roberts! Hasina was overthrown by another US ‘colour revolution’! You have got to stop getting your information from imperialist sources.
“Hasina told ET, “I resigned, so that I did not have to see the procession of dead bodies. They wanted to come to power over the dead bodies of students, but I did not allow it, I resigned from premiership. I could have remained in power if I had surrendered the sovereignty of Saint Martin Island and allowed America to hold sway over the Bay of Bengal. I beseech to the people of my land, ‘Please do not allow to be manipulated by radicals.’”
As MK Badrakumar says:
“[T]he hatchet man of the colour revolution in Bangladesh is none other than Donald Lu, the incumbent Assistant [US] Secretary of State for South and Central Asian affairs who visited Dhaka in May. “
https://www.indianpunchline.com/sheikh-hasina-speaks-up-on-us-plot/
MK goes on:
“A background check on Lu’s string of postings gives away the story. This Chinese -American ‘diplomat’ served as political officer in Peshawar (1992 to 1994); special assistant to Ambassador Frank Wisner (whose family lineage as operatives of the Deep State is far too well-known to be explained) in Delhi (1996-1997); subsequently, as the Deputy Chief of Mission in Delhi from 1997-2000 (during which his portfolio included Kashmir and India-Pakistan relations), inheriting the job, curiously enough, from Robin Raphel, whose reputation as India’s bête noire is still living memory — CIA analyst, lobbyist, and ‘expert’ on Pakistan affairs.”
I rest my case.
This does not negate Michale’s analysis though. There is no doubt that Bangladesh had a CIA backed coup. The installation of Md. Yunis confirms the fact. But the failure of Bangladesh economy is the failure of IMF-WB led Neo Liberal growth model.
Agreed but that’s not the picture Roberts painted, in fact, he opens his piece thus:
“The overthrow of the Sheikh Hasina’s dictatorial government in Bangladesh by students and the populace last week…”
Which is simply untrue, there was a Western-engineered ‘colour revolution’. Yes, the economy is buggered by Western banks, the IMF etc but there are two stories here, one is economic, that’s the one Roberts feels comfortable dealing with and the other is strategic and ideological and yes, the two are intimately connected but Roberts falls back into a typical Western view of countries outside the imperialist heartland and I, for one, are sick of this view. Assumptions are made so let’s move on, nothing to see here… I note also, you are the only person to respond on this issue, which speaks reams does it not?
Just because the CIA and consorts are fomenting a colour revolution whose main aim (the installation of a military base in the Bay of Bengal) does not mean that the game has already been played. The social and economic problems described by Michael Roberts have indeed led to exasperation and a popular uprising. As for the social massacre, you can count on the IMF and its famous structural adjustments, everything of value will fall into the hands of the big groups, and without even a coloured revolution.
barovsky In your quote, Hasina claimed in the same breath to have defied the US over St. Martin island and “sway” over the Bay of Bengal and that the “radicals” are agents aiming to service the US. The thing is, I’m not quite ready to take her word for the first claim, though yes it may be gospel. As for the second, I am quite sure that there are such agents in the streets, especially in the student movement. The primary agents are not Hasina’s “radicals” though, but the army and Yunus and others, however. In that aspect, Hasina I think is definitely misrepresenting and her word cannot for a foreign observer be taken at face value.
As for the second, it seems to me there is a strike movement also engaged in action. And I am reluctant to say their rejection of the Awami League is reactionary, not yet. The fall of Hasina could a phase in a larger, genuinely revolutionary movement roughly analogous to the fall of Mubarak in Egypt. I’m not sure it is more like the coup against Diem in Vietnam. It may all be no more significant in the long run than the Filipino People’s Revolution (sic) against Marcos. I’m just reluctant to commit to dismissing it all as just another successful color revolution.
Barovsky, I think that Michael is trying to analyze degenerate, irrational capitalist economies (like the US’s) with classical marxism, which after all is the only rational approach for understanding finance/industrial capitalism. But this is not the same system which began its evolution during the more than 100 years(and endless wars) and is now suicidal, genocidal, and ecocidal monster intent in killing the goose that lays capitalism’s golden egg: surplus value.
A couple of posts ago (“The Fed Fails..”) I criticised Steven Johnson for his remark that the logic in “Capital 1” is unsuitable for analysing the current global economic conditions. Actually he was right. But I forgot to say so in defending Marx by trying to show that, even before “Capital” was published, in Grundrisse, Marx had envisioned–given the revolutionary conditions of his own day–what the world would look like in the absence of revolution in the advanced Western states: a chaotic, barbaric world looking much like ours.
Of all the advanced industrialised counties in the world, China is the only one with a rational view of things and should be supported by anyone who hopes for change rather than extinction.
I’m not saying she’s a saint but the very fact that the US deposed her surely illustrates the fact that the Empire saw her as a danger and yes, as I pointed out in my other response here, the issue of Bangladesh’s parlous economic state is surely connected and we can criticise her for her economic programme (or lack). But my point stands, namely that Roberts knee-jerk reaction falls into the typical Western view of Hasina as being ‘undemocratic’. His opening comment could have appeared in the NYT or the Guardian.
Our host believes in democracy plus planned economy, so far as I can tell. And this seems to be nothing new either. NYT and the Guardian also believe in democracy and tend to ignore economics (not seeing a class content in the first place, but typically believing in a democracy as the just reconciliation of classes.) In that sense the entire post is in opposition to the NYT and Guardian denial that economics matters. As loyal citizens, the NYT and the Guardian accept the government position as the default, or so my reading.
Hasina’s prescription to save Bangla Desh from imperialist oppression appears to be to suppress “radicals,” not generals capitulating to foreign influence. This is not impressive. Also, it seems unlikely that 450 of 600 police stations were burned by enraged petty bourgeois students following the Gene Sharp playbook. It’s the generals who have coopted a couple of student “radicals” in junior ministries in the interim cabinet.
Watch this space?
Now that the answers have multiplied, I’ll add my two cents.
I’d begin by saying that till last month I knew just this about Bangladesh: its capital is Dakha; its one of the most population-dense countries in the world, and one of the poorest in South Asia; it partitioned from Pakistan in the the early 70s and is a Muslim-majority country; and being mostly plain and close to sea level, it’s one of the large countries that stands to be most affected by the climate crisis.
That’s it. Less than one paragraph of information. So I can’t claim to have become a Bangladesh specialist in the last month. I know a couple more things now, but I have to be cautious in what I say.
And I’ll say this: if it’s true that the US is happy to see Hasina go, that doesn’t negate the fact that the insurrection was driven by real grievances. If memory serves, the army chief who told her to pack up and leave was a close relative put by her in the post a few days prior.
I think a lesson we may take from this debacle is that the US will take any opportunity to get what it wants, so colour revolutions will be attempted here and there, and have probably been before Gene Sharp even drafted the ways to get them going systematically.
And the real issue for leaders in the US’s crosshairs is how to prevent them from being successful. I’d hazard a guess that maybe, just maybe, a step in that direction is to actually do something to engender prosperity and share its fruits with the general population?
Another thing: if it’s true that Bangladesh was trying to derive some prosperity from China’s BRI, and that’s what the US was trying to thwart, why, I remember vk said here a while ago: “China is under no obligation to help any capitalist country” (not verbatim, quoting from memory).
So here’s a cautionary tale that just getting money for infrastructure from China in the form of loans without austerity strings isn’t enough. China will get its ports, railroads and motorways to boost its trade, but the partner countries, so long as they remain capitalist, will basically expand the prosperity of their local elites, with some trickle down that will hardly relieve the economic misery of their populations.
So, political instability is a possibility, a near-certainty, in countries like Bangladesh, and maybe it’s a wonder why Hasina lasted so long. If you make your country into low-hanging fruit for imperialists, don’t be surprised if you’re the fall girl/guy when they go and pick it.
Venezuela at least had the sense to remove US influence from the armed forces early into Chávez years, to create a national militia to make things harder for an army-driven coup d’état (I’m pretty confident the IRGC also play that role in Iran, so it’s not a left-exclusive tactic), and to actually attempt to create a bottoms-up system of local governance with the communes, and we don’t see colour revolutions working there, which is why the US had to resort to an embargo.
Bangladesh, to me, looks like an example of a comprador elite whose nominal leader outlived her usefulness and was removed in a reshuffling of decks that happens to benefit the US. Just another day in capitalism’s periphery.
A very smug and arrogant response. So Hasina is (or was) part of a comprador class? Hmm… as I understand it, a comprador class is in the pay of the colonialists, thus why get rid of her?
Because that’s what always happens? Like, how’s Hasina different from Ngo Dinh Diem and others who aligned with the US and at some point became damaged goods and were removed from power (and from the living, in some cases) to help preserve the status quo? If memory serves, many of them like Idi Amin ended their days, like Hasina likely will, living in luxury in exile. Like that book goes, “if we want everything to remain as it is, everything needs to change”.
That’s why I called her a fall woman. She may be pissed at the US’s role in her ouster, but that doesn’t mean she didn’t provide her opponents the shovel they used to dig her political grave. Or are you gonna say that Ngo’s death was bad for South Vietnam just because the US orchestrated it?
So yeah, the US will get another military base in the strategic Bengal Bay. I bet they’re popping the champagne, having been expelled from the Sahel. But Dr Roberts has outlined the economic reasons that made Hasina’s removal so easy for the forces that did it; they don’t put her in a positive light; and all those things may be true at the same time.
very instructive analysis. Too many of us ignore the suffering in such countries
Referencing this link https://ft.pressreader.com/v99c/20240814/281578065969794 I put this comment on a Unite Group Chat as this FT report on Bangladesh clearly shows people taking the law into their own hands. “This is a current example of dual power that accompanies a revolutionary situation. Unless workers complete the revolution, counter-revolution will follow as surely as night follows day.”
It could be said that we are entering an expanding pre-revolutionary period globally. It is clear more and more populations are no longer willing to live in the old way. This makes what we say and do all the more important.
Western apparel brands appropriate billions of dollars in profit from the labor of four million Bangladeshi garment workers, leaving the workers and their families in poverty while the brands’ owners are among the world’s richest billionaires. The biggest fortune in Scandinavia (H&M), in Spain (Zara), in Japan (Uniqlo), and huge fortunes in the USA (Nike, Gap) are the result of this exploitation; while the Bangladesh factory owners also enjoy relative wealth and are the backbone of the Bangladesh ruling class. There is no clearer example of the dictum, “the poverty of the many is the condition of the wealth of the few.”
This is a textbook neoliberal crisis. Not much to add.
Bangladesh is one more evidence that it is a myth to state that China and Russia are coopting the Global South to usurp the American imperial throne. The Third World obeyed the First World to the letter for more than forty years; it paid the price in blood and gold while they could, and only abandoned the global architecture when it became absolutely unbearable.
The Global South is aligning with China and multipolarism out of sheer desperation, not because of some anti-social-democratic/Stalinist/authoritarian/Orientalist conspiracy.
After 16 years of looting and brutal rule, the people have revolted. Students and workers have shaken the regime, forcing Hasina to flee the country; in some regions, the police have fired on demonstrators, and the clique in power intends to hold on, thanks to the support of the military and judicial apparatus,
The proletariat is calling for the paralysis of the country through a general strike, the people are called upon to arm themselves to defend themselves against the forces of repression, if Hasina has fled, the army is determined to maintain the bourgeois apparatus in place, the military police judges, and are ready to pull out of their baggage a bourgeois puppet as a figment of a new democracy,
Popular committees have been formed, which is a step in the right direction, for an overthrow and the constitution of a people’s power,
Every time interest rates are tightened, developing countries find themselves in difficulties, their foreign exchange reserves are depleted, which adds to the difficulties of the economy. Add to this the rising price of energy, and a comprador class ends up putting the country’s workers on their kneecaps. The whole problem lies in the fact that the rates of the world’s reserve currency are the privilege of a single country and that the fluctuation of rates in first world countries is one of the corrective effects of speculation and the inflating of bubbles, which does not correspond to productive economies that need credit at affordable rates for investment and raw materials on the markets. Tightening interest rates sends the country straight to the IMF, in an international economic climate that is not favourable, to say the least.
I”m sure Mr. Roberts uses the most impeccable sources that can be found in the circumstances.