A Bumpy Road for Bangladesh's New Government

Bangladesh is typically seen as one of the world's worst basket cases. Desperately poor, racked by environmental disasters and plagued by corrupt and ineffective government, its chief export has long been its own people. Every year, several hundred thousand impoverished Bangla-deshis leave home in search of better opportunities abroad. Just last week, a rights group in Bangkok accused the Thai military of forcing up to 1,000 Bangladeshi migrants, who'd attempted to reach the country in flimsy boats, back out to sea, where many of them are believed to have drowned.

Bangladesh has also lately attracted the worried attention of Western security agencies due to the growing Islamic radicalism of its 150 million Muslims. The country has long harbored various insurgent groups seeking independence in India's remote northeast. But in the last few years, it has also begun to play host to a variety of jihadi groups suspected of helping to carry out attacks against both Western and Indian targets, including the 2008 bombings in Jaipur and Delhi.

This month, however, featured some rare good news from Dhaka. Sheikh Hasina, the 61-year-old daughter of the country's slain independence leader, was sworn in as prime minister after an election deemed largely free and fair, signaling Bangladesh's return to democracy after nearly two years under a military-backed caretaker government. It was a remarkable turn: the coup leaders voluntarily ceded control back to the people. Even more impressive, thanks to a series of electoral reforms the caretaker government put in place, Bangladeshi democracy is arguably in far better shape today than it was in 2007, when it was pushed aside.

In the late December election, Hasina's Awami League won a landslide victory with none of the fraud and bloodshed that have marred previous polls and that prompted the army to seize power two years ago. Anti-incumbency was the election's primary theme, says Mustafizur Rahman, executive director of the Centre for Policy Dialogue, a think tank in Dhaka. Both the Bangladesh National Party (BNP), which controlled parliament from 2001 through 2006, and the Awami League, which held power from 1996 to 2001, have a history of dirty politics. But the Awami League did a far better job presenting "new faces" this time around, Rahman says. That helped it win an enviable mandate: along with its allies, the League now controls 260 of the parliament's 300 seats.

But Hasina's government faces a daunting array of challenges. The most pressing of these is inflation, which has hovered above 10 percent for much of the year. Forty percent of the country's population lives on less than one dollar a day. And recent price hikes have pushed some four million Bangladeshis back below the poverty line, according to the World Bank. Hasina has vowed to lower food costs immediately, and will be helped by slumping global commodity prices. If she can improve food security, that could well convince more of her countrymen to stay put, instead of emigrating.

Yet thanks to other economic woes, the government will be hard-pressed to sustain the food subsidies on which Bangladeshis depend. Exports to the United States and Europe, Bangladesh's biggest overseas markets, have crashed since the recession hit, and remittances from the nine million Bangladeshis working abroad—a key source of the government's hard currency—have plummeted. The World Bank estimates that GDP growth could drop below 5 percent this year, too slow for the country to meet its goal of halving the number of people living in poverty by 2015.

Then there is the looming energy crisis. Bangladesh currently produces enough power to meet just 60 percent of its demand, and recent gas shortages have shuttered factories, dealing a further blow to the teetering economy.

Still, India and Western powers hope the new government will address their other big source of concern: Bangladesh-based terrorism. Analysts argue that the Awami League tilts toward New Delhi and may grant its requests to crack down. And Bangladesh's main Islamist party saw its parliamentary holdings drop from 17 seats to 2 in the December poll, suggesting the public is disillusioned with Islamic radicalism. Hasina may also have a personal motivation to crack down on extremists: one jihadi group tried to assassinate her in 2004.

India, though, is not taking any chances. Earlier this month, New Delhi decided to speed construction of a fence along the two countries' shared 4,000km border—a sign of how far Bangladesh still has to come.

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