The Historical Roots of US Sponsored Regime Change in Bangladesh: The 1975 Military Coup and its Aftermath
What we are witnessing in Bangladesh is a continuous process of U.S. sponsored regime change, largely conditional upon the demise of democracy coupled with the stranglehold of IMF-World Bank “strong economic medicine”.
The 2024 regime change consisted in US support of the opposition party, channelled through the U.S embassy in Dhaka against the government of Sheik Hasina who is the daughter of the late Sheik Mujib who was assassinated in 1975.
Ironically, The Voice of America (November 15, 2023) has casually acknowledged the role of US Ambassador Peter Haas, and his support of “pro-democracy and rights activists and critics of the Sheikh Hasina regime.”
“… the US had already taken to pressure Bangladesh to conduct future elections in such a manner as to produce the desired outcome Washington sought…
[The Voice of America] admits that the Awami League (AL) party, which had ruled in Bangladesh up until the recent, violent protests, had accused US Ambassador Haas of interfering in Bangladesh’s internal political affairs and specifically of supporting the opposition Bangladesh Nationalist Party (BNP) as well as street violence on its behalf” (Brian Berletic)
In 1992, I visited Bangladesh, conducted field work in both rural and urban areas, largely with a view to assessing the process of impoverishment and economic dislocation engineered by the Washington Consensus. My thanks to friends and colleagues in Bangladesh who supported me in this endeavour.
When I look back, there is long history of U.S. sponsored regime change not to mention assassinations.
Sheik Hasina is the daughter of the late Prime Minister Sheik Mujib who was assassinated in 1975. Her entire family including here mother, brothers and sisters, were killed. Hasina, daughter of Sheik Mujib together with a sister were in Germany when it happened in August 1975.
Prime Minister Sheik Hasina chose the leave the country. Last week, on the 16th of August, she accused the U.S. of conducting a coup d’Etat against her government:
“I resigned, so that I did not have to see the procession of dead bodies. They wanted to come to power over the dead bodies of students, but I did not allow it, I resigned from premiership. I could have remained in power if I had surrendered the sovereignty of Saint Martin Island and allowed America to hold sway over the Bay of Bengal.
I beseech to the people of my land, ‘Please do not allow to be manipulated by radicals.’” (Times of India)
Video: Will a U.S Military Base Threaten India or China
The Saint Martin’s Island is strategically located on the Southern coastal tip of Bangladesh.
We stand in solidarity with the people of Bangladesh
The following text on the history of US sponsored coups was drafted in the early 1990s. It was published in the first edition of my book (Chapter 7) entitled
The Globalization of Poverty, Impacts of IMF and World Bank Reforms, Third World Network, Penang, Institute of Political Economy, IBON Books, \Manila, 1997.
Michel Chossudovsky, Global Research, August 23, 2024
Bangladesh: Under the Tutelage of the Aid Consortium
by
Michel Chossudovsky
The 1975 Military Coup
The military coup of August 1975 led to the assassination of President Mujibur Rahman and the installation of a military junta. The authors of the coup had been assisted by key individuals within the Bangladesh National Security Intelligence and the CIA office at the American Embassy in Dhaka.[1] In the months which preceded the assassination plot, the US State Department had already established a framework for “stable political transition” to be carried out in the aftermath of the military take-over.
Washington’s initiative had been firmly endorsed by the Bretton Woods institutions: less than a year before the assassination of Sheik Mujib, Dhaka’s international creditors had demanded the formation of an “aid consortium” under the custody of the World Bank. Whereas the “structural adjustment” program had not yet been launched officially, the Bangladesh economic package of the mid-1970s contained most of its essential ingredients. In many respects, Bangladesh was “a laboratory test-case” – a country in which the IMF “economic medicine” could be experimented with on a trial basis (prior to the debt crisis of the early 1980s). An economic stabilization program had been established: devaluation and price liberalization contributed to exacerbating a situation of famine which had broken out in several regions of the country.
Image: Sheikh Mujibur Rahman (From the Public Domain)
In the aftermath of Sheik Mujib’s overthrow and assassination, continued US military aid to Bangladesh was conditional upon the country’s abiding by the Imo’s policy prescriptions. The US State Department justified its aid program to the new military regime on the grounds that the government’s foreign policy was “pragmatic and nonaligned”. The United States was to support this non-alignment and help Bangladesh in its economic development.[2]
The Establishment of a Parallel Government
Bangladesh has been under continuous supervision by the international donor community since the accession of General Ziaur Rahman to the presidency in 1975 (in turn assassinated in 1981), as well as during the reign of General Hussein Mahommed Ershad (1982-90).[3] The state apparatus was firmly under the control of the IFIs and “aid agencies” in collusion with the dominant clique of the military. Since its inauguration, the “aid consortium” has met annually in Paris. The Dhaka government is usually invited to send observers to this meeting.
The IMF had established a liaison office on the fourth floor of the Central Bank; World Bank advisors were present in most of the ministries. The Asian Development Bank, controlled by Japan, also played an important role in the shaping of macro-economic policy. A monthly working meeting, held under the auspices of the World Bank Dhaka office, enabled the various donors and agencies to “coordinate” efficiently (outside the ministries) the key elements of government economic policy.
In 1990, mounting opposition to the military dictatorship, as well as the resignation of General Hussein Mahommed Ershad, accused of graft and corruption, was conducive to the formation of a provisional government and the holding of parliamentary elections. The transition towards “parliamentary democracy” under the government of Mrs. Khaleda Zia, the widow of President General Ziaur Rahman, was not conducive, however, to a major shift in the structure of state institutions. Continuity has in many respects been maintained: many of General Ershad’s former cronies were appointed to key positions in the new “civilian” government.
Establishing a Bogus Democracy
The IMF-sponsored economic reforms contributed to reinforcing a “rentier economy” controlled by the national elites and largely dependent on foreign trade and the recycling of aid money. With the restoration of “parliamentary democracy”, powerful individuals within the military had strengthened their business interests.[4] The government party, the Bangladesh National Party (BNP), was under the protection of the dominant clique of the military.
Image: Sheikh Hasina Wajed (Licensed under GODL India)
With the restoration of formal democracy in 1991, the daughter of assassinated president Mujib Rahman, Sheikh Hasina Wajed of the Awami League Party became the leader of the opposition. With public opinion focussing on the rivalry in parliament between the “widow” and the “orphan”, the dealings of local power groups, including members of the military, with the “aid agencies” and donors passed virtually unnoticed. The donor community had become, in the name of “good governance”, the defender of a bogus democratic facade controlled by the armed forces and allied closely to the fundamentalist movement Jamaat-i-islami. In some respects, Begum Zia had become a more compliant “political puppet” than the deposed military dictator General Ershad.
Supervising the Allocation of State Funds
The “aid consortium” had taken control of Bangladesh’s public finances. This process, however, did not consist solely in imposing fiscal and monetary austerity: the donors supervised directly the allocation of funds and the setting of development priorities. According to a World Bank advisor:
We do not want to establish an agreement for each investment project, what we want is to impose discipline. Do we like the list of projects? Which projects should be retained? Are there “dogs” in the list?[5]
Moreover, under the clauses of the Public Resources Management Credit (1992), the World Bank gained control over the entire budgetary process including the distribution of public expenditure between line ministries and the structure of operational expenditures in each of the ministries:
Of course we cannot write the budget for them! The negotiations in this regard are complex. We nonetheless make sure they’re moving in the right direction (. . .). Our people work with the guys in the ministries and show them how to prepare budgets.[6]
The aid consortium also controlled the reforms of the banking system implemented under the government of Mrs Khaleda Zia. Lay-offs were ordered, parastatal enterprises were closed down. Fiscal austerity prevented the government from mobilizing internal resources. Moreover, for most public investment projects the “aid consortium” required a system of international tender. Large international construction and engineering companies took over the process of domestic capital formation to the detriment of local-level enterprises.
Undermining the Rural Economy
The IMF also imposed the elimination of subsidies to agriculture – a process, which contributed, as of the early 1980s, to the bankruptcy of small and medium-sized farmers. The result was a marked increase in the number of landless farmers who were driven into marginal lands affected by recurrent flooding. Moreover, the liberalization of agricultural credit not only contributed to the fragmentation of land-holdings (already under considerable stress as a result of demographic pressures), but also to the reinforcement of traditional usury and the role of the village money lender.
As a result of the absence of credit to small farmers, the owners of irrigation equipment reinforced their position as a new “water-lord” rentier class. These developments did not lead, however, to the “modernization” of agriculture (e.g. as in the Punjab) based on the formation of a class of rich farmer-entrepreneurs. The structural adjustment program thwarted the development of capitalist farming from the outset. In addition to the neglect of agricultural infrastructure, the Bretton Woods institutions required the liberalization of trade and the deregulation of grain markets. These policies contributed to the stagnation of food agriculture for the domestic market.
Image: A jute field in Bangladesh (Licensed under CC BY 2.0)
A blatant example of restructuring imposed by the IMF pertains to the jute industry. In spite of the collapse of world prices, jute was one of Bangladesh’s main earners of foreign exchange in competition with synthetic substitutes produced by the large textile multinationals. Unfair competition?(. . .) The IMF required, as a condition attached to its soft loan under the enhanced structural adjustment facility (ESAF), the closing down of one third of the jute industry (including public and private enterprises) and the firing of some 35,000 workers.[7] Whereas the latter were to receive severance payments, the IMF had neglected to take into account the impact of the restructuring program on some three million rural households (18 million people) which depended on jute cultivation for their survival.
Dumping US Grain Surpluses
The deregulation of the grain market was also used to support (under the disguise of “US Food Aid”) the dumping of American grain surpluses. The “Food for Work” programs under the auspices of USAID were used to “finance” village-level public works projects through payments of grain (instead of money wages) to impoverished peasants thereby destabilizing local-level grain markets.
It is worth noting that US grain sales on the local market served two related purposes. First, heavily subsidized US grain was allowed to compete directly with locally produced food staples thereby undermining the development of local producers. Second, US grain sales on the local market were used to generate “counterpart funds”. The latter were, in turn, channeled into development projects controlled by USAID – i.e. which by their very nature maintained Bangladesh’s dependency on imported grain. For instance, counterpart funds generated from grain sales (under PL 480) were used in the early 1990s to finance the Bangladesh Agricultural Research Institute. Under this project, USAID determined the areas of priority research to be funded.
Undermining Food Self-Sufficiency
There is evidence that food self-sufficiency in Bangladesh could indeed have been achieved through the extension of arable lands under irrigation, as well as through a comprehensive agrarian reform.[8] Moreover, a recent study suggested that the risks of flooding could be reduced significantly through the development of appropriate infrastructure.
The structural adjustment program constituted, however, the main obstacle to achieving these objectives. First, it obstructed the development of an independent agricultural policy; second, it deliberately placed a lid (through the Public Investment Program [PIP] under World Bank supervision) on state investment in agriculture. This “programmed” stagnation of food agriculture also served the interests of US grain producers. Fiscal austerity imposed by the “aid consortium” prevented the mobilization of domestic resources in support of the rural economy.
The Fate of Local Industry
The war of independence had resulted in the demise of the industrial sector developed since 1947 and the massive exodus of entrepreneurs and professionals.[9] Moreover, the economic impact of the war was all the more devastating because no “breathing space” was provided to Bangladesh by the “aid consortium” to reconstruct its war-torn economy and develop its human resources.
The structural adjustment program, adopted in several stages since 1974, provided a final lethal blow to the country’s industrial sector. The macro-economic framework imposed by the Bretton Woods institutions contributed to undermining the existing industrial structure while, at the same time, preventing the development of new areas of industrial activity geared towards the internal market.
Moreover, with a fragmented agricultural system and the virtual absence of rural manufacturing, non-agricultural employment opportunities in Bangladesh’s countryside were more or less non-existent. Urban-based industry was limited largely to the export garment sector which relied heavily on cheap labor from rural areas. According to the IMF resident representative in Dhaka, the only viable industries are those using abundant supplies of cheap labor for the export sector:
What do you want to protect in this country? There is nothing to protect. They want permanent protection but they mainly have a comparative advantage in the labor-intensive industries.[10]
From the IMF’s perspective, the garment industry was to constitute the main source of urban employment. There are some 300,000 garment workers most of whom are young girls. Sixteen percent of this labor force is children between the ages of 10 and 14. Most of the workers come from impoverished rural areas.[11] Production in the factories is marked by compulsory overtime and despotic management: wages including overtime (1992) are of the order of US$ 20 a month. In 1992, a public gathering of garment workers was brutally repressed by the security forces. According to the government, the demands of the workers constituted a threat to the balance of payments.
Remi Holdings highest scoring LEED-certified Garment factories in Bangladesh and highest in the world. (Licensed under CC BY-SA 4.0)
The Recycling of Aid Money
Whereas many aid and non-governmental organizations are involved in meaningful projects at the grass-roots level, several of the “poverty alleviation schemes”, rather than helping the poor, constitute an important source of income for urban professionals and bureaucrats. Through the various local executing agencies based in Dhaka, the local elites had become development brokers and intermediaries acting on behalf of the international donor community. The funds earmarked for the rural poor often contributed to the enrichment of military officers and bureaucrats. This “aid money” was then recycled into commercial and real-estate investments including office buildings, luxury condominiums, etc.
“The Social Dimensions of Adjustment”
With a population of over 130 million inhabitants, Bangladesh is among the world’s poorest countries. Per capita income is of the order of US$ 170 per annum (1992). Annual expenditures on health in 1992 were of the order of $ 1.50 per capita (of which less than 25 cents per capita was spent on essential pharmaceuticals).[12] With the exception of family planning, social expenditures were considered to be excessive: in 1992-93, the Bangladesh “aid consortium” required the government to implement a further round of “cost-effective” cuts in social-sector budgets.
Undernourishment was also characterized by a high prevalence of Vitamin-A deficiency (resulting from a diet made up almost exclusively of cereals). Many children and adults particularly in rural areas had become blind as a result of Vitamin-A deficiency.
A situation of chronic starvation prevailed in several regions of the country. The Bangladesh “aid consortium” meeting in Paris in 1992 urged the government of Mrs. Khaleda Zia to speed up the implementation of the reforms as a means of “combating poverty”. The government of Bangladesh was advised (in conformity with World Bank president Lewis Preston’s new guidelines) that donor support would only be granted to countries “which make a serious effort in the area of poverty reduction”.
In 1991, 140,000 people died as a result of the flood which swept the country (most of whom were landless peasants driven into areas affected by recurrent flooding). Ten million people (almost ten percent of the population) were left homeless.[13]
Not accounted, however, in these “official” statistics were those who died of famine in the aftermath of the disaster. While the various relief agencies and donors underscored the detrimental role of climatic factors, the 1991 famine was aggravated as a result of the IMF-supported macro-economic policy.
First, the ceilings on public investment in agriculture and flood prevention imposed by the donor since the 1970s had been conducive to the stagnation of agriculture.
Second, the devaluation implemented shortly after the 1991 flood, spurred on a 50 percent increase in the retail price of rice in the year which followed the disaster. And this famine was all the more serious because a large share of the emergency relief provided by the donors had been appropriated by the privileged urban elites.
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Notes
[1] According to the study of Lawrence Lifschutz, Bangladesh, the Unfinished Revolution, Zed Books, London, 1979, part 2.
[2] According to a report of the US State Department published in 1978, quoted in Lawrence Lifschultz, op. cit., p. 109.
[3] General Ziaur Rahman becomes head of state as Commander in Chief of the Armed Forces in 1975 during the period of martial law. He was subsequently elected president in 1978.
[4] Interview with the leader of an opposition party in Dhaka, February 1992.
[5] Interview with a World Bank advisor in Dhaka, 1992.
[6] Ibid.
[7] Many of the smaller jute enterprises were pushed into bankruptcy as a result of the liberalization of credit.
[8] See Mosharaf Hussein, A. T. M. Aminul Islam and Sanat Kumar Saha, Floods in Bangladesh, Recurrent Disaster and People’s Survival, Universities’ Research Centre, Dhaka, 1987.
[9] See Rehman Sobhan, The Development of the Private Sector in Bangladesh: a Review of the Evolution and Outcome of State Policy, Research Report No: 124, Bangladesh Institute of Development Studies, pp. 4-5.
[10] Interview with the resident representative of the IMF, Dhaka, 1992.
[11] Seventy percent of the garment workers are female, 74 percent are from rural areas, child labor represents respectively 16 and 8 percent of the female and male workers. See Salma Choudhuri and Pratima Paul-Majumder, The Conditions of Garment Workers in Bangladesh, An Appraisal, Bangladesh Institute of Development Studies, Dhaka, 1991.
[12] See World Bank, Staff Appraisal Report, Bangladesh, Fourth Population and Health Project, Washington DC, 1991.
[13] See Gerard Viratelle, “Drames naturels, drames sociaux au Bangladesh”, Le Monde diplomatique, Paris, June 1991, pp. 6-7.
The Globalization of Poverty and the New World Order
- Author: Michel Chossudovsky
- ISBN Number: 978-0973714708
- Year: 2003
- Product Type: PDF File
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This book is a skilful combination of lucid explanation and cogently argued critique of the fundamental directions in which our world is moving financially and economically.
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