The demand from Dhaka for the extradition of Sheikh Hasina to Bangladesh is a ploy of the interim government of Bangladesh headed by Mohammed Yunus to divert public attention from the deep crisis that the economy of the country is facing.
The economy of Bangladesh is in a nosedive since the ouster of Sheikh Hasina as the Prime Minister. Unemployment is rising and so also the prices of essential commodities.
The banking sector is in a crisis, faced with a crippling liquidity crunch; particularly the Islamic banks which prefer to follow Sharialaws over sound banking practices.
Sheikh Hasina’s son Sajeeb Wazed has described the demand for extradition of his mother to Bangladesh as “witch-hunt,” and accused the Mohammed Yunus government of “weaponising the judiciary.”
She has been accused of orchestrating extrajudicial killings, enforced disappearances and a crackdown on the student movement in 2024 to remove her from power.
Yet, as former Indian High Commissioner in Bangladesh Pinak Ranjan Chakraborty has pointed out to the Voice of America, when Hasina was sent to India for her own safety by the Bangladesh military there was no case against her. This will complicate the process of extradition.
The Bangladeshi authorities know that extradition which is a judicial process that requires solid evidence of a crime will not be easy.
Besides, the extradition treaty between India and Bangladesh has clauses for political exception as well as clauses for fair treatment and safety. Unless these conditions are fulfilled, extradition may be denied.
The Mohammed Yunus government has started a witch-hunt against Sheikh Hasina because it is unable to deal with the mounting economic crisis facing Bangladesh.
The rise in the prices of essential commodities has hit the common Bangladeshi people hard.
The World Bank has lately expressed concern at the rising prices of essentials in Bangladesh; mainly food items like rice, wheat, pulses, sugar edible oil, ginger, garlic, onion and potato. The price of an egg had shot up to Rs 15 lately.
As a desperate measure to control prices, the government now plans to sell some vegetables at subsidized prices for the low income groups as part of a pilot project in Dhaka.
According to the plan, the government will purchase potatoes, onions and green chillies directly from farmers and sell them at designated spots in areas where people with low-income live.
Reports from Dhaka indicate an alarming picture of the economy of Bangladesh being in a rapid nosedive, with over one million people becoming unemployed since August 5 last, the day Sheikh Hasina fled to India.
Numerous commercial and industrial establishments are closing due to a liquidity crisis. Entrepreneurs are unable to import essential raw materials and other items required for sustaining business.
Because of mob anarchy, rampant extortion, threats, intimidations and a hostile environment that is a threat to foreign nationals, dozens of ‘buying houses’ that used to coordinate the procurement of readymade garments from local factories for large buyers, mostly in the United States, Britain and European Union countries, have closed their offices; putting the textile industry which is the mainstay of the economy of Bangladesh in a crisis.
Most of the 6.5 million workers in the garment sector of Bangladesh risk losing their jobs as international buyers are shifting their orders to alternative sources.
The growing influence of extremist groups in Bangladesh like Ansarullah Bangla Team, an affiliate of al-Qaeda, Harkat-ul-Jihad-al-Islami Bangladesh, Jamaat-ul-Mujahideen Bangladesh and Islamic State are adding to their lack of confidence.
Bangladesh is now grappling with a slower growth of the gross domestic product.
Enjoying a GDP growth rate between six and eight percent under the Hasina regime even during the pandemic, now the forecast for the growth rate has dropped below six percent in the current year and the next.
The value of Bangladeshi ‘taka’ has fallen sharply against the dollar, standing at only $0.0082.
The repayment of loans taken to build some of the mega projects is falling due.
According to one report from Dhaka, foreign loans worth $43 billion have been incurred to build 20 mega projects though some of these have brought little tangible economic benefit to Bangladesh.
The worst crisis facing the economy of Bangladesh is, however, in the banking sector; crippled by a liquidity crunch.
The main reasons for the shortage in liquidity are the high volume of nonperforming loans, slow growth of deposits, slow recovery of loans and a lack of confidence in the banking sector due to scams; particularly among banks operating under Sharia laws.
A fundamental principle of Islamic banking practice is the prohibition on collection and payment of interest by lenders and investors; but this undermines the basics of standard banking practice.
According to a report in Daily Star of Dhaka, the volume of nonperforming loans in the banking sector in Bangladesh reached nearly Taka 285,000 crore in September last; nearly 17 percent of total outstanding loans.
With capital locked in bad loans, many lenders, particularly Shariah-compliant ones, are finding it difficult to meet the demands of depositors or extend new loans.
“The money which has escaped the banking system in the form of non-performing loans has not returned. Lenders are struggling to make up for those lost funds,” CEO of Mutual Trust Bank Syed Mahbubur Rahman has been quoted in Daily Star.
The bad loans are unlikely to be recovered, banker Anis A. Khan has explained. “This has created a liquidity gap as funds from these bad loans are not being recycled into the banking system for new lending.”
Loans have often not been repaid because the whereabouts of owners of some business houses incurring them are not known since the fall of the Awami League government.
Those with political affiliations to the previous regime are refraining from keeping their money in the banking system for fear of vengeful raids by government agencies.
Some businessmen have sold their assets and fled the country, despatching the money abroad through underhand channels. The confidence of people in the banking system has been eroded.
People want to withdraw money from the banking system, with deposits dwindling. International rating agency Moody’s has downgraded the rating of the banking system of Bangladesh to “very weak” from “weak.”
The solution lies in improving the overall business climate which does not look likely in the present situation in Bangladesh.
