Bangladesh, a rapidly growing economy on the Bay of Bengal, and the United States’ Indo-Pacific strategy. This evolving partnership seeks to deepen American involvement in the Indian Ocean Region (IOR) amid a significant shift in international politics. The intersection of these interests aligns with Washington’s broader goals in the Indo-Pacific and Bangladesh’s economic aspirations.
At the heart of this shift is Bangladesh’s interim government, led by Chief Advisor Mohammad Yunus, a Nobel laureate known for his work in microfinance and poverty alleviation. Backed by President Joe Biden’s administration, Yunus has positioned his government to leverage US resources for economic recovery and strategic cooperation. As Bangladesh looks to replenish its depleted foreign exchange reserves and rebuild after years of autocratic mismanagement, Washington views Dhaka as a crucial ally in solidifying its strategic presence in the IOR. However, this promising partnership carries both significant opportunities and substantial risks.
Under Yunus’s interim leadership, Bangladesh faces a series of critical economic challenges. The previous administration, led by Sheikh Hasina, left behind a nation grappling with mismanagement, cronyism, and depleted financial reserves. Years of economic stagnation, exacerbated by high inflation and mounting debt, have left the new government with the urgent task of restoring financial stability. Bangladesh requires substantial foreign investment and support to stabilize its economy and regain public confidence. In this context, the US appears as a potential source of investment, providing the funds necessary for economic revitalization.
Washington’s interest in Bangladesh is not merely economic; it is also deeply strategic. As part of its broader Indo-Pacific strategy, the US seeks to counterbalance China’s growing influence in the region and maintain freedom of navigation in the Indian Ocean. The Bay of Bengal, situated between South and Southeast Asia, offers the US Navy a critical vantage point from which to monitor activities in the region, including China’s operations along the China-Myanmar Economic Corridor (CMEC).
For the Yunus administration, the key challenge is securing external financial support while avoiding overdependence on any single global power. The interim government, composed of professionals from prominent NGOs and academic institutions, has limited experience in statecraft, which raises concerns about its ability to navigate these complex international dynamics.
US-Bangladesh Relationship
The evolving relationship between Bangladesh and the US is grounded in mutual strategic and economic interests. Washington played a significant role in supporting the popular movement that led to the removal of Sheikh Hasina’s autocratic government in August 2024. This regime change, backed by a US-endorsed student movement, has opened the door to a more pro-Western government under Yunus.
For the US, Yunus represents an opportunity to strengthen its position in the Indo-Pacific. His openness to Western collaboration aligns with the Biden administration’s goals of reinforcing democratic governance and promoting economic growth in strategically important regions. The removal of trade barriers and the easing of trade restrictions across the Indo-Pacific are likely to lead to exponential growth, benefiting both nations.
The strategic value of Bangladesh, particularly its coastal areas and the Bay of Bengal, cannot be overstated. The US views Bangladesh as a potential asset in its broader strategy to counterbalance China’s presence in the region. The Bay of Bengal, with its proximity to key maritime routes and regional chokepoints, is a critical theater for both commercial and military activities. The US Navy’s access to this region would enable it to better monitor the operations of the People’s Liberation Army (PLA), especially as China continues to expand its influence through the Belt and Road Initiative (BRI).
Regional Power Dynamics: Bangladesh, India, and China
Bangladesh’s newfound strategic importance has also highlighted tensions between the US and India, two major democratic powers with divergent interests in the region. While the US has supported Bangladesh’s democratic transition, India remains skeptical of the recent changes in Dhaka. India had maintained close ties with the former Sheikh Hasina government, viewing her regime as a stabilizing force in the region and an ally against China.
India’s opposition to the removal of Hasina’s government has created a rift between New Delhi and Washington. The two countries, though aligned on many strategic issues, differ sharply on the Bangladesh question. India’s support for Hasina’s autocratic government, despite its human rights violations, stems from a desire to maintain regional stability and counter China’s influence in Bangladesh. However, by supporting regime change in Dhaka, the US has signaled its commitment to democratic values, even at the risk of alienating a key regional ally.
This divergence in US and Indian policy has significant implications for regional power dynamics. India is unlikely to welcome increased US influence in Bangladesh, particularly if it involves the installation of US surveillance systems or naval forces in the Bay of Bengal. India’s primary concern is that Washington’s growing presence in Bangladesh could undermine its own regional influence and weaken its strategic position in South Asia.
China, too, is closely monitoring the developments in Bangladesh. Beijing has invested heavily in Bangladesh’s infrastructure through the BRI, funding projects like the Karnaphuli Tunnel, the Cox’s Bazar airport, and various railway lines that connect Bangladesh to Myanmar. These investments are not only economic but also strategic, as they enhance China’s military presence in the region. The Bay of Bengal is a key area of interest for the People’s Liberation Army-Navy (PLAN), which has established a submarine base there to protect China’s maritime interests.
China in Bangladesh
China’s support for the Yunus government is driven by its desire to protect its investments and maintain its strategic foothold in the region. Beijing views Bangladesh as a crucial link in the Belt and Road Initiative, particularly the China-Myanmar Economic Corridor. This corridor, which extends from China’s Yunnan province to the Bay of Bengal, offers China a direct route to the Indian Ocean, bypassing the Strait of Malacca—a vital but vulnerable maritime chokepoint.
Beijing’s investments in Bangladesh also serve to enhance the security perimeter of the PLA-Navy, integrating the coastal regions into China’s broader strategic defense network. The Karnaphuli Tunnel and other Belt and Road-funded projects have not only improved Bangladesh’s infrastructure but also strengthened China’s position in the Indian Ocean.
For Bangladesh, balancing its relationships with both China and the US will be critical to maintaining its sovereignty and avoiding becoming a pawn in great power competition. While China has provided much-needed infrastructure investment, the US offers security guarantees and access to the global financial system. Striking a balance between these competing powers will require diplomatic finesse, something the current interim government may lack.
Internally, Bangladesh faces significant challenges that could undermine the Yunus administration’s ability to capitalize on its partnership with the US. The country is still recovering from 15 years of autocratic rule, marked by corruption, political repression, and economic mismanagement. Restoring public trust in government institutions and ensuring economic stability are top priorities for the new administration.
Economic and political stability are intertwined in Bangladesh. Yunus must address the concerns of the Bangladeshi people, many of whom are frustrated by rising unemployment, inflation, and the lack of opportunities. The success of the new administration will depend on its ability to implement cost-effective solutions to these problems and avoid further economic decline.
One of the immediate tasks for the Yunus government is to strengthen Bangladesh’s political institutions. The country’s fragile democratic institutions need to be reinforced to prevent the resurgence of autocracy and ensure the smooth transition to a fully functioning democracy. This will require building a strong civil society, promoting transparency, and ensuring the rule of law.
The international community, particularly the US, has a vested interest in supporting Bangladesh’s democratic transition. However, Washington must also be mindful of the risks involved. If the Yunus administration fails to deliver on its promises of stability and economic growth, there is a risk that Bangladesh could descend into political chaos. Such an outcome would benefit China, which seeks to disrupt Bangladesh’s democratization process to protect its interests in the region.
The emerging partnership between the US and Bangladesh holds immense promise but also carries substantial risks. For Bangladesh, the opportunity to secure foreign investment and improve its strategic position in the Indian Ocean is a chance to recover from years of autocratic mismanagement. For the US, Bangladesh offers a valuable ally in its efforts to counterbalance China’s influence in the Indo-Pacific.
However, the path ahead is fraught with challenges. Bangladesh must navigate the competing pressures from Washington, New Delhi, and Beijing while fostering internal democratic growth and maintaining economic stability. Whether the country can successfully manage these competing interests will determine its future trajectory and its role in the Indo-Pacific. In this rapidly evolving geopolitical landscape, Bangladesh stands at a precarious crossroads, with both tremendous opportunities and significant risks lying ahead.
