Fishing in the Padma
As the finance minister of Bangladesh, A.M.A. Muhith read out on June 6 what he describes as the last budget of his chequered political career, Bangladesh finally sent out a clear message to the world that it was no more the basket case Henry Kissinger once said it was. Within six months of withdrawing the funding request from the World Bank for the $2.9 billion bridge on the mighty Padma, Muhith had allocated taka 68.52 billion ($0.89 billion) for the 6.15 kilometre railroad bridge in his 2013-14 annual budget, driving home that Bangladesh is all set to take up the country’s biggest-ever infrastructure project with its own resources. A day ahead of the budget, the communications minister, Obaidul Quader, had announced that a tender for constructing the bridge worth taka 91.72 billion would be floated on June 30. Obviously, the whole amount will not be spent within a year. The entire project, he said would require taka 205.07 billion at current prices and at least three years to complete.
The Sheikh Hasina Wajed government has thus ended all speculation about how the Padma bridge project will be funded — a project described by economists as a game-changer capable of adding 1.2 per cent to Bangladesh’s gross domestic product growth and by engineers as a construction marvel when completed. It will link 21 southern districts of Bangladesh with the country’s heartland and take domestic connectivity and coastal development to new heights. Muhith has said Bangladesh was more than capable of mobilizing the resources needed to bridge the Padma.
Very few third world countries would have the courage to take the World Bank head on as the Wajed government has done. After it took charge in January 2009, the Wajed-led government negotiated a funding plan for the Padma bridge with a consortium led by the World Bank. The Washington-based global lender was to provide $1.2 billion in concessional credit for the bridge. The Asian Development Bank and the Japanese International Cooperation Agency would put $1 billion together, leaving the Islamic Development Bank and the Bangladesh government to put in the rest of $0.7 billion between themselves.
But in June last year, the World Bank stopped the funding, raising the stink of graft allegations in the award of the project’s consultancy to Canada’s SNC-Lavalin. Three months later, it agreed to consider resumption of funding if some conditions were met. The Bangladesh government agreed to investigate the allegations through its anti-corruption commission and cooperate with an independent inquiry started at the behest of the World Bank. But when the World Bank did not resume funding, the prime minister lost patience and asked Muhith to withdraw the funding request from the World Bank.
Muhith had already started negotiations with India, China and Malaysia (some say even South Korea) just after the World Bank had made graft allegations. By the time he said thanks to the World Bank, he had attractive funding offers from both China and Malaysia with India saying that Dhaka could use its $200 million grant component from a 2010-allocated $1 billion line of credit for the bridge. Muhith described the Chinese consortium offer as “most attractive” because not only was it prepared to fund close to 70 per cent of the project cost and finish the project in three years but also because they offered an easy 20-year payback schedule.
But Wajed is not willing to upset Delhi, which is always sensitive to Beijing’s growing footprint in South Asia, at a time when parliament elections are due in a year in both India and Bangladesh. She is desperate to get India to sign the Teesta water sharing agreement which Mamata Banerjee torpedoed during Manmohan Singh’s Dhaka visit. India has not also been able to implement the land boundary agreement it signed with Bangladesh because the Bharatiya Janata Party is opposing the constitutional amendment needed to give effect to it. Awami League leaders say that unless these agreements are signed and implemented, Wajed will face a questioning electorate and risk accusations that she has got nothing from India after having addressed Delhi’s security and economic concerns comprehensively, not the least by an effective crackdown against the rebels from the Northeast who were based in Bangladesh territory from the late 1980s.
The Malaysian offer was not considered as attractive as the Chinese one but could have been taken when Wajed’s government decided to take a huge risk by deciding to do the Padma bridge on its own. Bangladesh’s economy is in good shape in spite of the frequent opposition strikes. In 2012, the country earned $19 billion in garment exports and netted $14 billion through remittances. Both are likely to rise. For the first time in the country’s history, the treasury reported a current account surplus of $2.8 billion ahead of the budget. But Padma is not an easy river to handle, let alone build a bridge on, and work needs to start before the monsoon for something to show before the elections.
But the risk Wajed has taken is calculated and is no throw of a gambler’s dice, which is evident from her decision to form a “composite military brigade” to supervise and provide security to the project. Because that not merely endows it with a sense of urgency but also keeps the army in good humour. The army has been associated with many key infrastructure projects but this is the biggest of them all.
The possible spin-off seems to outweigh the risks. The decision to do the bridge on the Padma with its own resources sends a clear message to the world that Bangladesh now has the economic fundamentals to emerge as a ‘breakout nation’ capable of handling its biggest infrastructure project so far. That may attract, as Muhith thinks it will, huge foreign investments and spur the country’s growth substantially faster than current projections.
It is a great boost for Bangladesh’s national spirit because it seems to justify in retrospect Sheikh Mujibur Rahman’s decision to break away from Pakistan and create a secular democratic state for the Bengalis, different from military-ruled Pakistan. The vindication of the national spirit will surely boost the electoral prospects for Mujib’s daughter and his party, the Awami League, as it seeks to beat anti-incumbency and get re-elected. The war crimes trial and the Shahbag movement have already given sufficient indication of the mood of the nation and that helped bring the wind back into the Awami League’s sails. If work starts on the Padma bridge soon, it will surely boost the League’s chances, specially in the 21 southern districts which stand to benefit the most. The Awamis could well go to the polls seeking a re-election to complete the Padma bridge and finish the war crimes trials to vindicate the “spirit of 1971”.
Rejecting the Chinese offer after Beijing has already agreed to fund the deep sea port at Sonadia is also smart diplomacy for Wajed, because it does not upset India and also helps her push for the crucial Teesta waters treaty. If the Padma bridge boosts her party’s chances in the south, the Teesta treaty will boost her chances up in the country’s north, where the Awami League is traditionally weak. Ever since Bangladesh returned to democracy from military rule in the early 1990s, power has changed hands after every election. With the caretaker system declared illegal by the court and scrapped by the 15th constitutional amendment, elections are due to be held under the present government by the election commission.
Elections apart, it will be a defining moment for Bangladesh if it finally completes the Padma bridge with its own resources. Apart from improving its chances to achieve Wajed’s goal of becoming a middle income country by 2021, Bangladesh would prove it has arrived.