BUSINESS NERVOUS, BUT NOT HURT, BY JMB ATTACKS

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 006191

SIPDIS

E.O. 12958: DECL: 12/15/2015
TAGS: PTER ECON EFIN EAID PREL BG BG
SUBJECT: BUSINESS NERVOUS, BUT NOT HURT, BY JMB ATTACKS


Classified By: Econ Chief David Renz; reason 1.4(d)


1. (C) Summary: The business community in Bangladesh is
thus far unaffected by increasing violence by the JMB.
Business leaders are concerned, however, that escalating
violence will at some point begin to take its toll, yet they
are reluctant to press aggressively for government action. A
high-profile attack on a commercial or diplomatic target
could significantly affect commercial interests and impact
the broader economy. End summary.


2. (U) Jamaat'ul Mujihedin Bangladesh's (JMB) escalating
campaign of violence over the last four months has rattled
Bangladesh's business community, but has yet to have any
economic impact on their businesses. EconOff spoke with a
cross section of business leaders during the week of December
11th to gauge their reactions to the ongoing attacks. While
all expressed concern with the growing violence, none
identified any discernable impact to their business
operations.


3. (U) There are anecdotal stories of businesses needing to
reassure international contacts about the safety of traveling
to Bangladesh for business meetings. These reports are
consistent with similar stories following other violent acts
in Bangladesh that have attracted international media
attention, and are not indicative of any heightened concern
by the international business community.


4. (U) To the contrary, the general manager of the Sheraton
reports his hotel is fully booked, as are most of the hotels
frequented by western businessmen in Dhaka. This is a key
indicator of continuing business confidence in Bangladesh
because it is largely the result of international buyers
visiting Bangladesh to place orders for the Spring and Summer
clothing collections, which typically occurs annually from
mid-October through mid December.


5. (U) The business community also took comfort from the
opening of two major trade exhibitions without incident. The
month-long Dhaka International Trade Fair opened December 10
and includes exhibiters from 13 countries. A few days later,
the Bangladesh Knitwear Manufactures and Exporters
Association (BKMEA) launched its second annual exposition.


6. (U) EconOff spoke with numerous exhibitors at both events
about their reaction to the JMB attacks. Most expressed
dismay over the violence, yet EconOff also perceived an
unspoken sense of resignation to this new level of violence
in the country. A common refrain was the belief that the BNP
led government could quickly put an end to the violence and
control the JMB, if it wanted to do so. Many speculated
about alliance partner Jamaat Islami's possible ties to JMB.
None, however, thought that their commercial interests had
suffered in any way from the recent violence.


7. (C) Business leaders are concerned about the potential
impact a further escalation of violence might have on their
business interests. According to BKMEA President Fazlul
Hoque, Bangladesh's ready-made garment sector has continued
to thrive following the end of quotas under the multi-fiber
arrangement in part because of the country's reputation for
relative stability and as a moderate Muslim democracy. He
noted that the industry got its start in part because buyers
shifted their sourcing away from Sri Lanka due to political
violence in that country. Although he does not see an
immediate threat to Bangladesh's industry, he recognizes that
a loss of confidence by international buyers could
significantly affect the industry. Once lost, Bangladesh
would be hard pressed to regain buyer's trust and confidence.


8. (C) Mamun Rashid, CEO of Citibank in Bangladesh,
expressed similar concerns during a December 12 meeting with
Charge d'Affairs and EconOff. He described Citibank's
color-code system for rating country risk, saying Bangladesh
remained at the most favorable "green" level. As violence
continues, however, Bangladesh could be downgraded, causing
Citibank to reduce the number and range of services it offers
and undermining plans to expand its operations in Bangladesh.


9. (C) Rashid expressed particular concern about the risks
to Citibank if JMB continues to escalate its attacks. In
part, this reflects Citibank's exposure as a high profile
U.S. company, making it an attractive choice for a "western"
target. Rashid is also concerned, however, that Citibank's
active involvement in supporting development in Bangladesh's
rural communities, especially its micro-credit lending
activities for rural women, puts it and the participants in
its programs at greater risk of attacks from JMB or other
religious fundamentalists. Rashid is reviewing the company's
security posture in response to the recent JMB attacks, but
does not plan to reduce the company's commercial activities
at this time.


10. C) Like other business leaders, Rashid expressed little
confidence in the government's response thus far to JMB
violence. He too attributed this to lack of political will
stemming from a myopic focus on securing reelection or,
failing that, denying success to the opposition Awami League.
The BNP is still in denial, said Rashid, and is convinced
that "outside forces" are driving the JMB.


11. (C) Yet Rashid and other business leaders are hesitant to
openly confront the government. The poisonous relationship
between the BNP and AL, and the "the two ladies" in
particular, leaves the business community caught in the
middle, reluctant to take any actions that might align them
with either party. As a result, there was little substance
to PM Zia's meeting on December 11 with leaders of the major
chambers of commerce and trade associations to discuss a
response to the JMB attacks. According to Haque, the
business people present did not want to risk a confrontation,
and so limited their remarks to urging the government to take
stronger action to prevent further violence.


12. (C) Comment: One hallmark of business in Bangladesh is
its ability to adapt to changing circumstances in a difficult
political and commercial environment. In one sense, JMB's
attacks simply add another dimension to the established
background of political violence against which businesses
already operate. As such, those attacks have caused little,
if any, disruption. But flexible does not mean unbreakable;
indeed, the shift could occur suddenly. An attack on a major
commercial interest, such as the mega-mall Bashundara Center,
or on western diplomatic or commercial interests could
fundamentally alter the calculus of doing business in
Bangladesh, with visible repercussions for the economy of
Bangladesh. End comment.
CHAMMAS