BANGLADESH SCENESETTER FOR ASSISTANT SECRETARY

S E C R E T SECTION 01 OF 03 DHAKA 000555

NOFORN
SIPDIS

FOR A/S BLAKE FROM THE AMBASSADOR

E.O. 12958: DECL: 05/27/2019
TAGS: PGOV PTER PREL KGOV BG
SUBJECT: BANGLADESH SCENESETTER FOR ASSISTANT SECRETARY
BLAKE

REF: A. DHAKA 535

B. DHAKA 534

Classified By: Ambassador James F. Moriarty. Reasons: 1.4 (b) and (d)

--------------
SUMMARY
--------------


1. (C) Bob, I am glad you are headed our way. We look forward
to welcoming you to Bangladesh, a moderate Muslim-majority
country of nearly 150 million people that is friendly to the
United States. This is a surprisingly hopeful place despite
the daunting problems it faces: recurring natural disasters;
poverty; overpopulation; porous borders attractive to
terrorists; and a political system that features two dominant
parties whose leaders, Prime Minister Sheikh Hasina of the
Awami League and Bangladesh Nationalist Party Chairwoman
Khaleda Zia, revel in petty partisanship.


2. (S/NF) Yet that's only part of the story. Bangladesh has
made huge progress in a number of areas, and is clearly no
longer the "international basket case" once described by a
former Secretary of State. It is now a thriving democracy
that in December 2008 held its freest, fairest and most
credible Parliamentary elections since its independence in

1971. Since taking office in January 2009, Hasina has taken a
strong public stance against Islamic extremism and backed it
up with action, including the sharing of vital intelligence
from captured terrorists of the Pakistani group responsible
for the November 2008 attack on Mumbai. And the economy has
shown suprising resiliency to the global recession and looks
set to continue the record of solid growth since 1991.


3. (C) This fragile balance sheet of positives and negatives
underscores the absolute importance of U.S. Government
engagement to help Bangladesh develop its democracy, its
economy and its counterterrorism capabilities. The denial of
space to extremists in Bangladesh will help our overall
efforts to remove the terrorist scourge from South Asia. The
promotion of democracy and economic development will help
ensure Bangladesh remains a moderate voice on the global
stage sympathetic to President Obama's efforts to reach out
to the Muslim world.

-------------- --------------
BUILDING DEMOCRACY: THE GOOD, THE BAD AND THE UGLY
-------------- --------------


4. (SBU) Bangladesh, the seventh-most populous country in the
world, returned to democracy with Parliamentary elections in
December 2008 after two years of an unelected Caretaker
Government (CTG). The CTG had initiated several reforms to
the country's violence- and corruption-plagued political
system. Among its successes was creation of a new, credible
voter list which included photo identification of more than
80 million Bangladeshis. The Caretaker Government also
prevented intimidation in the run-up to the election and
ensured polling day was peaceful; international and domestic
monitors declared the election free, fair and credible.


5. (SBU) Sheikh Hasina's Awami League won at least in part
due to a positive message promising an end to the
hyper-partisanship of Bangladesh's traditional
"winner-take-all" politics. She filled her Cabinet with many
new faces, pushing from center stage many of the Awami League
politicians closely associated with the dysfunctional
politics of the past. The media, which faced constant threats
from military censors during the Caretaker Government, has
blossomed in recent months, freely criticizing many of the
new Government's policies.


6. (C) Still, Hasina has not yet risen above the
vindictiveness and petty politics that have proven so
debilitating to Bangladesh's democracy. A fight between the
Awami League and the opposition Bangladesh Nationalist Party
(BNP) over the seating chart for Parliament prompted an
opposition boycott of the legislative body's first weeks. The
BNP also reacted with fury to Hasina's efforts to evict the
party's leader, Khaleda Zia, from her home on the Dhaka
Cantonment grounds. (Note: On May 27, the High Court stayed
the eviction notice for three months. End note.) A tearful
personal visit by Zia to Hasina when her estranged husband
died in early May raised some hopes of a detente between the
two ladies, and Hasina reportedly is looking to establish a
back channel of communications with Khaleda Zia. (reftel A)


DHAKA 00000555 002 OF 003



7. (C) The Awami League-dominated Parliament modified an
ordinance approved by the Caretaker Government to establish
elected upazilla (county) governments. The ordinance was part
of an effort to decentralize power and make government less
corrupt and more efficent. The modifications require upazilla
chairmen to follow the advice provided by members of
Parliament on development issues. While the Minister for
Local Government said he expected local officials would
ignore the advice since the law did not include sanctions,
upazilla chairmen have denounced the modifications as
undemocratic and an affront to their authority.


8. (S/NF) Both the fragility and resiliency of Bangladesh's
democracy were underscored by the mutiny of Bangladesh Rifles
(BDR) border guards on February 25-26. In the first hours of
the rebellion, the border guards killed 57 army officers
seconded to the BDR, prompting howls of outrage from army
officers who felt the government should have moved more
quickly to quash the mutiny. The Prime Minister faced hostile
and rude questioning at a tense meeting with hundreds of
officers on March 1, but the encounter seems to have had a
partially cathartic effect. As events unfolded Hasina was
bouyed by strong public support; many newspapers, for
example, praised her for handling the event with poise and
preventing what could have been a much bigger bloodbath.
While grumbling continues among mid-level army officers, we
have seen nothing to indicate a coup might be in the offing.

--------------
SECURITY: THE GOOD, THE BAD AND THE UGLY
--------------


9. (S/NF) Soon after taking office, Prime Minister Hasina
proposed creating a regional task force on security. In one
clear sign her Government was paying more than lip service to
fighting terrorism, its intelligence agencies arrested, and
shared information with the U.S. and United Kingdom derived
from debriefings of, members of the Pakistan-based terror
group Lashkar-e-Tayyiba (LT) operating in Bangladesh. Hasina
also has signaled a strong interest in attacking the root
causes of extremism. For example, she has made reform of
Islamic schools known as madrassas a priority. Specifically,
she wants to bring thousands of heretofore independent
madrassas under government regulation to ensure they do not
disseminate extremist ideologies and their curriculum
prepares students to enter the mainstream economy.


10. (SBU) Still, the border guard mutiny underscored the need
for comprehensive security sector reform, particularly in the
relationship between the civilian government and military,
for Bangladesh to answer effectively the challenge of
terrorism. To push reform forward, the U.S. Department of
Defense Asian Pacific Center for Security Studies (APCSS) is
organizing a workshop on how best to ensure the primacy of
civiliaQontrol over the military and on developing national
security mechanisms. At the same time, Embassy Dhaka also has
secured $100,000 from the Department of State's Office of the
Coordinator fQCounterterroriQfor local workshops to
discuss a regional approach to security. This Track Two
program will include participants from India and other South
Asian neighbors and should stimulate discussion on how best
to tackle border management, terrorism finance and related
regional security issues.


11. (C) The Embassy also plans to help Bangladesh overcome
weaknesses in its law enforcement agencies that hinder the
fight against terrorism. Using 1207 funds, the Mission soon
will launch a community policing program aimed at promoting
better relations between police and the communities they
serve in northwest Bangladesh, long a breeding ground for
Islamic extremists. The Mission also is working to make
Bangladesh's Rapid Action Batallion (RAB) a more transparent
and accountable organization so it can qualify for U.S.
Government counterterrorism training. Two U.S. Marshals are
to arrive in June to review the RAB's internal systems of
accountability and to suggest improvements. Recent arrests of
members of the domestic terrorist group Jama'atul Mujahideen
Bangladesh -- including its most wanted explosives expert --
attest to the RAB's value as a counterterrorism partner.

--------------
DEVELOPMENT: THE GOOD, THE BAD AND THE UGLY
--------------


12. (U) Since 1991, Bangladesh's gross domestic product has
grown on average more than 5 percent per year. Many social
indicators are better than those in India, and average life

DHAKA 00000555 003 OF 003


expectancy has increased to 64 years for both men and women,
from 38 years back in the late 1970s. Bangladesh has dodged
the worst effects of the current global economic crisis, at
least for now. Economists predict Bangladesh's economy will
grow between 5 percent and 6 percent in 2009, down slightly
from the government's target of 6.5 percent growth. Compared
to most other nations, this slowing of growth is modest. Thus
far, Bangladesh's exports, mostly apparel, and remittances
continue to grow, albeit at slower rates than previously. If
the global economic downturn is prolonged, Bangladesh's
economy could be hit harder and threaten the country's
macroeconomic fundamentals, which remain stable for now.


13. (C) Even if Bangladesh weathers the global downturn, it
still must address the challenges it has faced for the last
decade and more: chronic power shortages, decaying transport
infrastructure, a weak education system, a fragile financial
sector, poor governance and low government revenues,
particularly taxes. If the Government can tackle even some of
these problems, growth could rise to 7 percent to 8 percent
annually, a rate needed to truly pull Bangladesh out of
poverty. Donors and investors are standing by to help; U.S.
Government assistance to Bangladesh this year will exceed
$150 million.


14. (C) U.S. investors, particularly in power and energy, are
eager to do business here. Government of Bangladesh leaders,
including the Prime Minister, say they are committed to
creating a favorable business environment that will
strengthen the private sector and attract foreign investment.
Recent actions, however, have raised questions about this
commitment. Attempts to force foreign shipping companies,
such as U.S. firm APL, to sell a share of their Bangladesh
operations to local interests would send a bad signal to
investors if successful. So too would a draft industrial
policy that calls for a slowing of privatization and a
re-opening of inefficient state-owned enterprises.


15. (SBU) Meanwhile, natural disasters continue to bedevil
Bangladesh, the most recent misery coming from Cyclonic Storm
Alia that swept through the south on May 25 and left at least
167 people dead. Media reported on May 31 that thousands of
people remained without drinking water and food as tidal
surges made relief efforts to remote regions particularly
difficult. On May 28, I declared a disaster in Bangladesh and
requested $100,000 in emergency funds for shelter, water,
food and other relief asistance. (reftel B) USAID is
diverting another $195,000 to supply emergency relief items
such as blankets, clothing and survival kits.

--------------
COMMENT: ADVANCING U.S. AGENDA
--------------


16. (C) Your talks with Bangladeshi officials will provide a
critical opportunity to advance U.S. Government interests not
only here but throughout the region. The Bangladeshis are
eager to meet you and will listen attentively to your message
as the clearest indicator to date as to where
U.S.-Bangladeshi relations will be heading. Thus, you might
want to push hard for democratic reform, particularly the
need to rise above political pettiness so that Bangladesh can
overcome its myriad problems. Your encouragement of greater
law enforcement accountability and of security sector reform
will support efforts to deny space to terrorists. Finally,
your urging that Bangladesh create a positive investment
environment would brighten prospects for the sustainable
development needed to escape endemic poverty. Embassy Dhaka
looks forward to a visit that gives our critical engagement
with Bangladesh a hefty push in the right direction.
MORIARTY