A caretaker leader, Muhammad Yunus, must try to rebuild democracy

As exits go, it was dramatic. On August 5th Sheikh Hasina, the prime minister of Bangladesh, fled the country she has ruled with an increasingly harsh grip since 2009. She was driven out by a vast display of people power on the streets of Dhaka, the capital, and will be replaced by a caretaker government, backed by the army and led by Muhammad Yunus, a Nobel peace laureate. Like him, many Bangladeshis are calling it a “second liberation”, half a century after independence.

As exits go, it was dramatic. On August 5th Sheikh Hasina, the prime minister of Bangladesh, fled the country she has ruled with an increasingly harsh grip since 2009. She was driven out by a vast display of people power on the streets of Dhaka, the capital, and will be replaced by a caretaker government, backed by the army and led by Muhammad Yunus, a Nobel peace laureate. Like him, many Bangladeshis are calling it a “second liberation”, half a century after independence.

Yet to meet the promise of the moment, Bangladesh must do more than oust an ageing autocrat: it must also clean up a rotten political system. The good news is that the economy is resilient and civil society is robust. The problems are venal political dynasties and the enfeebled institutions that have failed to stand up to them. Mr Yunus has a short time to set the country on a democratic path. His success or failure will shape the lives of 173m Bangladeshis, and influence the rivalry between China, India, Russia and the West.

Bangladesh has been in turmoil for some time. A rigged election in January confirmed the country had descended into thuggish one-party rule. In July mass student protests erupted against the reimposition of reservations of 30% of government jobs for descendants of veterans of the war of liberation in the 1970s, which protesters saw as patronage for supporters of Sheikh Hasina’s party, the Awami League (al). The unrest became a broader uprising and the government responded with a shoot-to-kill curfew. Over 450 people have died.

After the army withdrew its support for Sheikh Hasina rather than spill more blood, mobs ransacked her palace. They vandalised statues of her father, who led Bangladesh to independence, and around whom Sheikh Hasina had built a personality cult. Mr Yunus, 84, a revered microfinance pioneer, finds himself in charge. It is not yet clear who will be in his administration, how it will work or for how long.

For much of the time since Bangladesh broke off from Pakistan in 1971, it has endured either military rule or a messy form of democracy, in which power has alternated between two dynasties, the al and its rival, the Bangladesh Nationalist Party (bnp). Things looked up in 2008, when Sheikh Hasina won a free election. Economic growth, already robust, approached 7% a year for the next decade, fuelled by garment manufacturing. Rising incomes and feisty ngos helped cut poverty, boost literacy and get more women into jobs. Bangladesh was a star among emerging markets. Diplomatically, Sheikh Hasina had close ties to India but also forged military and commercial links with China and sought cordial relations with the West.

However, at home she grew ever more oppressive. Many opposition politicians were locked up before January’s farcical election; the bnp boycotted it. Bangladesh’s economic model began to show strain. Two-fifths of young people lack regular employment. The al exercises control over the allocation of everything from teachers’ jobs to graduate openings in business. Since 2020 inflation and capital flight have undermined stability. The country’s foreign reserves have fallen by more than half since 2021, to $19bn. In 2023 it took out a $4.7bn loan from the imf to stabilise its balance of payments. From the street corner to the boardroom, disillusion has spread.

Mr Yunus faces an immensely difficult task. His priority should be to restore order and prevent waves of retributive violence, which have blighted Bangladeshi politics in the past. This means ensuring that the caretaker government, while run by technocrats, also includes representatives of the protesting students and of all political parties, including the al.

Even harder will be to avoid some pressing dangers. The country could fall prey to Islamist extremism, as Pakistan has. If the financial squeeze worsens, Bangladesh could become dependent on China for cheap loans and arms. That would destabilise relations with neighbouring India and could erode democracy even further. And a fresh election might restore an unreformed bnp to power. Having suffered persecution under Sheikh Hasina, its leaders are eager to take charge again. Yet their party also has a record of thuggery and cronyism.

Mr Yunus needs to work fast. The unelected caretaker government must not remain in office for too long lest it lose legitimacy or, worse, its military backers are tempted to cling to power indefinitely. Mr Yunus should therefore aim to hold proper elections on a reasonable timescale, but first he will have to clean up institutions that Sheikh Hasina captured, such as the electoral authority and the courts. When it comes to the economy, the government should raise more external funding to lower the risk of a balance-of-payments panic, and press for a crucial new trade deal with the European Union. The existing generous terms under which Bangladesh exports its garments will expire in 2029. In the coming years, the country will lose its broader status as one of the least developed countries, which grants it various trade and financing privileges.

Most important, Mr Yunus must urge the political system to open itself to new ideas and leaders, reflecting the aspirations of the country’s young, growing and increasingly urban population. This requires it to ensure that new parties can form and campaign without harassment. It also means asking the al and bnp to install new leaders who are not part of the founding dynasties. Sclerosis at the top has poisoned politics.

A tall order in Bengal

Despite its daunting problems, which also include a severe vulnerability to climate change, Bangladesh has advantages. Unlike most troubled countries, it has an economy capable of rapid growth. And in Mr Yunus it now has a leader with moral authority. Western powers should help him, especially if his military backers try to meddle. America, Europe and Japan are Bangladesh’s biggest markets and big sources of finance, so they have influence. India, which has often backed strongman rule, needs to do its bit: if it wants a stable neighbourhood it should urge democratic renewal and offer financial support. Bangladesh matters; it must not be allowed to fail. ■

Excerpts: The Economist