The ruling secular Awami League (AL) largely won January Parliamentary elections that saw a low voter turnout due to being boycotted by its historical opponent, the Bangladesh Nationalist Party (BNP). The latter’s key demand of a neutral caretaker government during the election process to avoid vote rigging was rebuffed by the AL. Aware of the lack of post-poll legitimacy and being criticized by the international community, the AL claims to be open for new elections this year provided a deal is found with BNP. A political solution is definitely needed to stop the chaotic domestic situation that has characterized Bangladesh in the run-up to elections. Meanwhile, strikes, violent protests (with a record of victims last year), road blocks and business disruption are likely to continue until a compromise is reached.

Impact on country risk

The AL-dominated government’s last year of its four-year mandate was plagued by deadly textile factory collapses, high violence and radicalisation of BNP supporters due to judicial proceedings (leading to jail and death sentences) against their historical leaders – notably the Islamist BNP-led coalition member Jamat-e- Islami- during the International Crimes Tribunal. Therefore, in a more polarised country, the AL risks losing fresh elections if these are fairly organized. Given its fear to be the target of retaliatory actions if BNP returned to power, the AL will probably resist new elections despite rising domestic and international pressure. As a consequence, a reluctant army might have to intervene as in 2007, when an interim military- backed government was installed until elections were organised end 2008. Until a political compromise is found, Bangladesh’s highest social instability and political violence in years is going to harm the economy, including the key garment sector. Against the odds however, Bangladesh’s top industry still recorded strong performances in H22013, highlighting again its resilience.

Analyst: Raphaël Cecchi, r.cecchi@credendogroup.com