Charting New Courses: Pakistan’s Assessment of Bangladesh’s Economic and Diplomatic Navigation

Islamabad can learn not just from Bangladesh’s economic policies but also its foreign policy whereby Dhaka while giving precedence to its interests has managed to cultivate robust economic relations with major economies.

While referring to Bangladesh’s economic progress and how it has overtaken Pakistan in recent years, Pakistan PM Shehbaz Sharif said: “I was quite young when we were told that it’s a burden on our shoulder. Today you all know where that ‘burden’ has reached (with respect to economic growth). And we feel ashamed when we look towards them.”

Sharif made this point during an interactive session with Pakistan’s business community on April 24, 2024, held at the Sindh Chief Minister’s residence in Karachi, Pakistan’s commercial capital.

Bangladesh’s economic success and balanced foreign policy

Despite certain challenges, Bangladesh has retained a steady growth rate of over 7% over the past decade though the growth estimate for 2023-2024 is estimated to be below 6% (5.7%). The South Asian nation’s relationship with China both in the economic and strategic spheres has grown significantly in the past decade. Bilateral trade between Dhaka and Beijing was nearly $23 billion in 2022-2023. Chinese investments in BRI-related projects in Bangladesh are estimated at $10 billion. Dhaka also signed a defence cooperation agreement in 2002 with Beijing.

China is also the primary arms supplier to the South Asian nation. Bangladesh, while maintaining robust ties with China, has also cultivated strong economic ties with other countries including Japan and India.

 Bangladesh’s ties with India

India-Bangladesh bilateral trade in 2022-2023 was $15.9 billion (Bangladesh has emerged as India’s largest trade partner in South Asia). Both countries are also likely to begin talks about a Free Trade Agreement (FTA). India has also provided credit lines, to the tune of $ 8 billion to Bangladesh for infrastructural development.

India – Bangladesh relationship has witnessed significant improvements in areas like connectivity and energy alongwith bilateral trade.

It is not just bilateral trade, the relationship has witnessed significant improvements in areas of connectivity and energy. In 2023, a rail link connecting Akhaura and Agartala was inaugurated this will help in connecting India’s North East with Bangladesh. In 2023, Bangladesh gave India access to Chattogram and Mongla ports for transit and trans-shipment of cargo vessels. This is an important step as it would reduce time and cut the cost of goods being transported from mainland India to northeastern states. Ties between New Delhi and Dhaka, in several spheres, are thus continuing to expand.

Timing of Sharif’s statement

The Pakistan PM’s statement comes at an important time. First, Pakistan has been trying to improve ties with one of its neighbours Iran after ties between both countries dipped after strikes. The Iranian President Ebrahim Raisi visited Pakistan from April 22-24, 2024. During Raisi’s Pakistan visit, both sides agreed to enhance bilateral trade and discussed the possibility of finalising a Free Trade Agreement (FTA) between both countries. Energy cooperation between Iran and Pakistan was also high on the agenda, with both sides discussing the Iran-Pakistan pipeline (the project has been in limbo for over a decade due to geopolitical uncertainty).

Also Read: Navigating Geopolitical Waters: Assessing Iran-Pakistan Relations Amidst Regional Tensions

The US has warned Pakistan of sanctions if Pakistan attempts to build economic relations with Iran. Pakistan’s Defence Minister Khawaja Asif has responded strongly to this remark.

Second, Pakistan has also been considering of re-opening bilateral trade with India via the Wagah (Pakistan)-Attari (India) land crossing. In August 2019, Pakistan had snapped trade, via this land route, after the revocation of Article 370 in Jammu and Kashmir.  Deputy Prime Minister and Foreign Minister, Muhammad Ishaq Dar while addressing a press conference in London, in March 2024, had said that Pakistan was re-considering the resumption of trade with India.

During the interaction with Shehbaz Sharif on April 24, 2024, Arif Habib, Chairman of the Arif Habib group recommended that channels with India be opened. Earlier, several prominent Pakistani businessmen have pitched for re-opening trade with India. It would be pertinent to point out, that President Asif Ali Zardari in 2012 had pitched for Pakistan-India to follow the India-China model, where economic relations were de-linked from their differences on crucial issues. This may seem utopian given the several geopolitical economic changes in South Asia and the India-China economic relationship itself being impacted by the deterioration of ties since 2020. At the same time, there is scope for the resumption of economic engagement between both countries albeit in an incremental manner. There has been a growing demand in Punjab (India) for the resumption of bilateral trade.

Pakistan has become more dependent on China as a result of the China-Pakistan Economic Corridor (CPEC) and the deterioration of ties with the US.

However, due to the China-Pakistan Economic Corridor (CPEC), Pakistan has become more dependent on China, and ties with the US have deteriorated. In recent months, it has seemed to improve ties with other countries with a special focus on the Gulf. Pakistan PM Shehbaz Sharif’s two visits to Saudi Arabia (April 6-8, 2024 and April 27-29, 2024) is a strong reiteration of this point is

Having a working relationship with neighbours is important for all countries. Sharif’s reference to Bangladesh’s economic progress is important. Islamabad can learn not just from Bangladesh’s economic policies but also its foreign policy whereby Dhaka while giving precedence to its interests has managed to cultivate robust economic relations with major economies including India.

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