DHAKA TRIBUNE

Long Form

Friday, January 3, 2014

Democracy at crossroads

Life, and the economy at a standstill due to the ongoing political unrest

Rajib Dhar

Ifty Islam n

patient in intensive care or a slow-moving train wreck Im not sure which of these analogies best describes the state of democracy in Bangladesh maybe both? There is clearly no glory on either side and Bangladeshs democracy and the bulk of the people are the casualties. The elections on Jan 5 will go ahead but with 153 seats out of 300 uncontested due to the opposition boycott, the ruling AL have already won what is widely recognised internally and externally as a non-credible election. The US, EU and Commonwealth have all refused to send electoral observers. When we look ahead to what might happen in 2014, a compromise between the two major parties looks increasingly like wishful thinking and we may need an external shock to get democracy, or at a minimum the economy, back on track. Business leaders and ordinary citizens are becoming increasingly frustrated and horrified by political events but the $64,000 question is what will force change and what comes next?

Hence once can see 5 main possible scenarios: 1) An AL led government forcefully stays in power for its next 5 year term this seems the least likely scenario; 2) The opposition BNP/Jamaat street agitation forces the Al government to announce fresh election in an exact replay of 1996, albeit with the AL and BNP roles reversed. 3) The President declares a state of emergency, the army is deployed. There is a new election in which all parties contest and the BNP will most likely win. 4) A new political party emerges to challenge the AL and BNP and wins the new elections in much the way that Arvind Kejriwal and his Aam Aadmi Party did in the recent Delhi elections. Alternatively, even if they dont win a majority, they secure enough votes to be a swing variable to the main two parties in a new coalition government. 5) After a state of emergency, we see a repeat of an army-supported neutral or technocratic caretaker government that exercises a longer-term mandate as in 2007-08.

The population, and indeed the economy cannot withstand more than a further 3-6 months of the current situation; something has to give and a new political equilibrium needs to be found in 2014

The economic cost from the opposition blockades has been worse than any previous round of political turmoil. So what end game to the current political impasse is in prospect for 2014? Firstly, notwithstanding both the Dec 29 BNP March on Dhaka (which the government has successfully stopped ironically mimicking the opposition with a blockade of their own) and the call on Dec 28 by a number of leading civil society groups for the election to be postponed, it will almost certainly take place on Jan 5 and a new Awami League government will take office on Jan 6. But the 153 uncontested seats and extremely low prospective turnout as a result of the BNP boycott will immediately call into question the credibility, legitimacy and hence sustainability of this new Government. The BNP and their Jamaat allies will almost certainly resume and most likely intensify their street violence, blockades and hartals (strikes) to force new elections.

There is often a lot of discomfort in discussing army interventions in the domestic Bangladeshi political dialogue, as scenario 5 would be extra-constitutional. But since Bangladesh has seen army-backed regimes for almost half of the countries history since Independence in 1971, and the last army-backed government was only 5 years ago, it is clearly a risk if the political situation deteriorates further. What one can say is that the Bangladesh army appears to be the least partisan, or politicised, of all state institutions and enjoys a degree of respect and credibility with the population. Anecdotal evidence suggests they remain reluctant to become involved and it seems likely that a majority of senior officers would prefer the political parties to find a solution. But the critical unanswered question right now is how confident are we that a compromise and a solution between the political leaders is likely that can defuse the current stalemate and chaos in the country?

The views of the foreign powers, most notably the US, EU and to some extent India will be important as will the attitude of the UN. India appears to be the only major country to openly support the re-election of the AL government. But the recent visit by Indias foreign secretary, a bureaucrat, to visit all the political parties in Dhaka and express a preference for Al re-election, has been perceived as unwanted intervention by India in the sovereign affairs of Bangladesh, and has fuelled a growing element of anti-Indian sentiment among the population. While fears of BNP election win, allowing increased Jamaat influence, is understandable, it is important for India to avoid having a hostile neighbour on its eastern as well as western flank, especially given the strategic importance of Bangladesh in fighting terrorist elements in the NE provinces of India known as the Seven Sisters. There has been at least some recognition of this in public with Indias External Affairs Minister Salman Khurshid stating on Dec 29 that We dont take sides on what happens in elections in a friendly country. For democracy to prosper, there should at least be a commitment that violence will not be allowed to distort the democratic process. However, he also acknowledged that there were differences with the US, particularly in the dealing of the present government (in Bangladesh) with some of their own internal situations ... Khurshid suggested that Indias understanding of Bangladesh would be helpful to the US, stating: While US is at some distance from Bangladesh, we are right next to it. However it is far from clear that Indias geographic proximity gives it either a better understanding of Bangladeshs political dynamics or more importantly the right to dictate. Would India be comfortable about Chinas foreign minister coming to Delhi and meeting Congress and BJP to influence their upcoming elections because they are Indias larger neighbour with an economy four times as big and common borders? But political reality does still suggest external influence, particularly from the US and UN, will be important behind closed doors. A leading political commentator, David Bergman, stated in his New Age op-ed on Dec 29, the role of the United Nations will be closely watched as seven years ago Bangladesh was facing an election crisis similar to the one the country is now experiencing, when its resident coordinator in Dhaka took action that many believe instigated the army to seek a state of emergency that lasted for nearly two years. He stated: On January 11, 2007, Renata Lok Dessallien issued a public statement threatening the Bangladesh armys involvement in peacekeeping operations if it supported the elections that were due to take place later that month. In

an apparent direct response, on the same evening, the army chief Moeen U Ahmed marched into the office of the president and self-appointed caretaker chief Iajuddin Ahmad and compelled him to proclaim a state of emergency. In this context, the emergency in South Sudan this past week and the need for additional UN Peacekeeping forces at short notice resulted in Secretary General Ban-Ki Moon calling PM Hasina requesting an extra battalion of Bangladeshi soldiers. So this lever does not appear to be open for now. But the political situation remains extremely fluid and international pressure may shift again if political violence escalates and the law and order situation in the country deteriorates to crisis levels. Indeed the evidence from the rest of Asia has been that the most successful economies have prospered under authoritarian regimes such as China or Vietnam currently, or South Korea under President Park. Alternatively hybrid regimes defined by a democracy but one where one party stays in power, notably Singapore. The Economist Mar 27, 2013 article Autocracy or Democracy noted that growth induced democracy in East Asia, democracy did not lead to growth. They compared North and South Korea, which were both poor in 1950 and under dictatorial regimes from the end of the Korean War until 1980. From 1980, per capita incomes diverged. The same year South Korea began democratising. But South Koreas better institutions developed due to dictators policy choices. Moreover, in a study of 100 economies from 1960 to 1990, Robert Barro found that prosperity tends to inspire democracy. Bangladesh is also a prime illustration of the Iron Law of Oligarchies, a theory developed by Belgian sociologist Jan Michels. The political elites secure both financial resources and patronage while in power to secure an iron grip on power that is to some extent self-perpetuating or at the very least difficult to break. Both political parties dispense money at national all the way to grass-roots levels to secure both political agitation and votes. Patronage is used quite systematically and strategically to maximise political benefits. It has been estimated that the cost of re-election in even a rural parliamentary seat in Bangladesh is $500,000, a massive multiple of MP salaries. A sad state of affairs but unfortunately the realpolitk of Bangladesh is guilty of polarisation and vengeful power politics. Ironically Bangladeshs current democracy is dominated by two ladies who rule their parties with an iron fist in as authoritarian a manner as one can imagine. There is absolutely no tolerance for dissenting voices even among senior ministerial colleagues. While the political system was based on the British system of parliamentary government with the PM primus

We have crossed a Rubicon or a point of no return on the need to move to a new order, and away from the politics of violent agitation that characterises the two political parties

inter pares, or first among equals, this is as far from the truth as one can get. So internal party reforms within both the AL and BNP will require a dramatic change within the parties or both of the current party leaders to retire. Alternatively a third political party or force would need to emerge, but the failure of someone of the stature of Nobel Prize winner Professor Yunus to achieve this during the caretaker regime period of 2007-08 underlines the difficulties. There have been protests in the past few months by a broad range of business and civil society groups: from FBCCI, the apex corporate trade body, to the BGMEA, which represents the powerful RMG sector. But it is patently obvious that neither political leader is listening, and the pursuit of power and the winner-takes-all nature of Bangladeshi politics is drowning out all reasonable calls for a compromise. An external shock is likely to be necessary to force change, rather than voluntary altruism, or concerns on the plight of their electorate and the suffering of innocent casualties, in motivating either leader to change course and compromise. Things remain uncertain, but the population, and indeed the economy cannot withstand more than a further 3-6 months of the current situation; something has to give and a new political equilibrium needs to be found in 2014. Let me conclude by stating my own preference: a political system that gives Bangladesh an economy that achieves 8%+ growth this will require, alongside a focus on capturing a bigger chunk of the China relocation trade in the RMG sector and increase sectoral exports to $30bn by 2015, fostering other export sectors in footwear, toy assembly, light engineering and shipbuilding. Foreign direct investment and the establishment of multiple economic zones have to be prioritised to deliver substantial new infrastructure projects to overcome energy and transportation/logistical blocks. Education and vocational training has to be increased to take advantage of Bangladeshs demographic dividend and see remittance growth increase to $30bn in 2020 as Bangladeshis move into higher value-added jobs overseas.

The citizens of Bangladesh should think carefully about what kind of government best suits their interests. Im a supporter of democratic freedoms, but democracy that is confined to having the right to vote only, is an insufficient goal in itself given that the political system fails to provide a higher standard of living, and more critically, safety and security for its citizens. My preference would be for a national government for Bangladesh that includes technocrats as well as politicians from both the AL and BNP, which would be in power until Bangladeshs 50th anniversary in 2021, when we will have seen average growth rates of 8% and the emergence of a new generation of political leaders. I accept that I dont know how we form this national government. However, I believe we have crossed a Rubicon, or a point of no return on the need to move to a new order, and away from the politics of violent agitation that characterises the two political parties. I am upbeat about Bangladeshs economic prospects when we look beyond the near-term political turmoil of the next 6 months. Bangladeshs economy has continued to exceed expectations; given a stable environment, an enabling environment, and vision from a future government, a dynamic private sector powered by a young population of 160 million will likely surprise to the upside, and reward the patience of long-term investors who look beyond the current political battleground. As the recent election of Arvind Kejriwal as the seventh chief minister of Delhi illustrated, the electorate is capable of upturning the political order when corruption and poor governance fails to deliver. Im not sure what the Black Swan event will be for Bangladesh politics, but I am hopeful we will be surprised by the outturn. I remain optimistic that the current political morass, characterised by mindless and pointless violence of the political parties, will be a precursor for a re-generation of a political system in Bangladesh that prioritises the welfare of its citizens over its politicians. l Ifty Islam has worked as an economist and Banker in London, New York and Dhaka.