US embassy cable - 05DHAKA1180

C O N F I D E N T I A L SECTION 01 OF 02 DHAKA 001180 
 
SIPDIS 
 
E.O. 12958: DECL: 03/16/2015 
TAGS: PGOV, PREL, BG 
SUBJECT: PM TO WORLD: DON'T TREAD ON US 
 
Classified By: P/E Counselor D.C. McCullough, reason para 1.4 d. 
 
1. (C) Summary. PM Zia, speaking in parliament, warned 
"foreigners categorically that Bangladesh will not be run by 
any diktats or orders of any foreign force."  Her 
assertiveness reflects the BDG view that the geographical 
breadth of Bangladesh's economic and political ties insulates 
it from international pressure.  The BDG is sensitive to its 
image and in particular the optics of its relationship with 
the U.S., but such leverage requires deft handling and is 
limited to issues that don't directly affect the ruling BNP's 
core interest, which is retaining power.  End Summary. 
 
Zia Lashes Out 
-------------- 
 
2. (SBU) On March 15, Prime Minister Begum Khaleda Zia, in 
her valedictory address for the closing parliamentary 
session, warned multilateral agencies and foreign countries 
against interfering in Bangladesh's domestic affairs.  "I 
want to tell them firmly that we won't put up with such 
interference.  We don't care for anyone's browbeating and 
dictation....We'll build the nation with the help of 28 crore 
hands of its 14 crore people."  She specifically excluded 
unnamed Islamic organizations from this group, denied there 
is Islamic extremism in Bangladesh, characterized the recent 
arrests of several militants as a law and order matter, 
denounced the Awami League (AL) for boycotting her speech, 
and accused the AL of conspiring with foreign agencies to 
oust her government and project Bangladesh as a failed state. 
 
3. (SBU) Her speech followed last week's criticism by Finance 
Minister Saifur Rahman of the World Bank meeting on 
Bangladesh in Washington, and allegations that foreign 
diplomats here are interfering in domestic affairs. 
 
The BDG Perspective: No Need to Change Direction 
--------------------------------------------- --- 
 
4. (C) The handful of BNP leaders around the PM who make the 
big decisions have a narrow but to them logical outlook: 
 
-- Their top priority is retaining power so they can make 
more money and keep at bay the opposition who they believe, 
with some reason, would punish them if it returned to office. 
 
-- The next election, in early 2007, should be manageable for 
the BNP if it can preserve its alliance with Jamaat Islami 
and prevent significant defections from other parties to the 
AL.  Thus, its focus should remain on back-room political 
party deal-making, and not on constituency politics as we 
understand them.  Civil society is strong but is generally 
oriented to development, not politics, and it therefore lacks 
the energy or the interest to challenge the BNP frontally. 
 
-- The AL and the rest of the opposition have repeatedly 
shown their inability to exploit public dissatisfaction with 
BDG performance or sympathy for the AL in the wake of 
political violence against it.  The AL has failed to find an 
issue, like military dictatorship in 1990, to rally the 
masses. 
 
-- Although Bangladesh is a two-party system, political 
allegiance is not necessarily zero sum.  The BNP's three 
coalition partners are all unhappy with their role in the 
coalition but would think at least twice before joining the 
AL, which is why Ershad's Jatiya party and the Islamist IOJ 
have spurned, at least for now, recent AL feelers. 
Threatening Ershad with a return to jail on pending 
corruption charges is effective leverage to keep the 
opposition divided. 
 
5. (C) Economically, the BNP believes its macro-economic 
policies are working and that five percent annual growth is 
respectable.  Partly because the current system is 
dysfunctional, corrupt, and malleable, it works well for 
them, and they have no interest in changing it.  In addition, 
BNP and many Bangladeshi businessmen truly believe that 
alarmist foreign press reporting stems from Indian and AL 
manipulation.  The BNP's indulgence of Islamists is grounded 
in their confidence that they can control, and use, them 
better inside the coalition than outside. 
 
6. (C) With most bilateral and multilateral aid going to 
non-governmental sources in Bangladesh, an aid suspension 
would have limited political impact on the BDG.  In fact, the 
BDG would likely play the nationalist card by asserting that 
the suspension was the result of an Indian and AL conspiracy 
to hurt Bangladesh. 
 
Friends with Deep Pockets 
------------------------- 
 
7. (C) The BNP believes that the international community 
lacks the motivation, the ability, and the will to squeeze 
the BDG on governance.  The geographical breadth of its 
political and economic ties shields Bangladesh from concerted 
foreign pressure, provided there is no dramatic rocking of 
the boat.  The BDG knows that a few countries, like the U.S. 
and the UK, might try to press it on governance, but that 
Japan, Korea, China, Malaysia. and some EU countries would 
demur.  China remains an important partner, as we'll see when 
the Chinese premier visits here in April, and Japan's 
priority is political continuity to ensure sanctity of 
contracts. 
 
8. (C) To refute allegations that Bangladesh is on the 
precipice, the BDG notes the sharp up-tick since last year in 
foreign investor interest in Bangladesh.   Major projects 
include: 
 
-- In October, Egypt's Orascom bought Sheba telecom for $50 
million in cash and $10 million in debt repayment. 
BanglaLink, Orascom's wholly-owned subsidiary, launched 
mobile service in nine cities on February 14 and is supposed 
to go nationwide by the end of the year.  BanglaLink is 
expected to invest $150 million this year and another 
$100-150 million in 2006. 
 
-- Tata's $2 billion steel and gas project, after a hiccup 
during the SAARC summit postponement, seems to be back on 
track with the target of a December ground-breaking. 
 
-- The UAE's Dhabi Group last week turned in MOU's to the 
Board of Investment (BOI) totaling $1 billion, partly in 
telecoms. 
 
-- This week, a Saudi group called "High Tech International, 
Inc," led by a former Saudi Labor Minister, finished initial 
discussions with BOI on building a $2 billion, 200,000 bpd 
refinery in Bangladesh. 
 
-- Also this week, Saudi billionaire investor Prince Alwaleed 
Abdul Aziz made a high-profile visit to Dhaka, expressing 
interest in setting up world-class hotels in Dhaka and 
Chittagong.  A team of experts is reportedly due next month 
to follow up. 
 
-- The U.S. firm CMG is aggressively lobbying the BDG for a 
$300 million, 500 MW power project in Megnabhatt. 
 
Potential USG Leverage 
---------------------- 
 
9.(C) Played selectively and deftly, the "shame" card can be 
effective as we saw in mobilizing the BDG to fight 
trafficking in persons.  The recent arrest of several 
Islamist militants and local BNP officials charged with Shah 
Kibria's assassination also reflects sensitivity to their 
international and domestic image.  The "shame" card could 
probably be used to create more political space in the 
upcoming elections. 
 
10. (C) Given the importance of the U.S. to Bangladesh as a 
market, an emigration destination, and as potential restraint 
on India in times of crisis, all Bangladeshi governments want 
good bilateral optics with the U.S.  Ending Bangladeshi 
peacekeeping opportunities would be a major political 
embarrassment for the BDG and a financial blow to the 
military as an institution and as individuals.  More severe 
actions, however, like visa sanctions or a general freeze on 
bilateral engagement, would encourage the BDG to expand its 
relations with the Middle East, China, and North Korea. 
THOMAS