US wants Bangladesh to join India in countering China. But what is it offering in return?

Washington, having allowed Delhi to be the arbiter of Dhaka’s destiny for the best part of a decade, has suddenly expressed an interest in the future of Bangladesh.

To what end? Is it because it is miffed that there is way too much Chinese money pouring in? And if they got their way, what would be on offer?

Would they merely say: Be happy with the $4 billion to 5 billion goods trade deficit? Bangladesh sells around $7 billion in apparel. In return, the US sells less than $1 billion worth of machinery and steel. Very occasionally, it sells Boeings. Its biggest single item is a billion-dollar worth of agricultural products.

Then again, Germany, with a population of only one-quarter of the US, buys $6 billion worth of stuff from Bangladesh. You can see where the political pressure points are if there is a standoff and which local business magnates will be keen not to rock the apple (or apparel) cart.

China vs America

China is a big challenge. Bangladesh only sells $0.5 billion, but buys over $11 billion from China. There lies the grand opportunity.

But it requires a strategy and a change in attitude. If language is an issue, then where is the drive for widespread learning? Are local companies receiving sufficient support to participate much more in trade fairs or benefit from trade financing?

How is the campaign to join Regional Comprehensive Economic Partnership going? There is hardly any noise about this in the media or general conversation. Too many seem too content to look west for markets and only accept stuff (and bridges) from the east.

If you want to “arrive” by 2041, the way to do it is to start selling gear to the east.

All the while, China is constructing infrastructure in Bangladesh, vital for a modern, industrial economy.

America’s response to the Belt and Road Initiative remains as promises in press conferences. Where is its Build Back Better, say, on the Bay of Bengal? A BBBBB or B5 project?

One obnoxious coal-friendly senator may be killing off Biden’s flagship initiative in the US itself, but you can bet that if America came up with a real Marshall Plan for the Bay, any objecting political wallah would be despatched to the Andamans forever.

But if it cannot rebuild in its own country, how can the US do so abroad?

I am not suggesting that Bengalis or Tamils are mercenaries. It is just that they appreciate that roads, rail and bridges are the real-world equivalent of the servers and cables of the digital world. Nothing moves without them.

And ideally, South Asia’s people would really, really want to escape poverty and become moderately prosperous by 2047 (some even dream of 2041).

Money power

In theory, the US could reduce its military budget by $300 billion a year and still outspend China and Russia combined. It could then put that $300 billion annual “peace dividend” into a budget for global development and climate change. Think of the soft power and eternal gratitude. But it cannot.

Here is the thing. Money only becomes available when defence and missile manufacturers get to see it. American bridges may rust away but Raytheon has its very own secretary in the office. Congress is on the payroll, so to speak, too.

One might say that China and Japan even help pay for the Pentagon indirectly. The US has been the world’s largest debtor since August 15, 1971, when Nixon delinked the dollar from gold.

China alone owns a trillion-dollar worth of treasury bonds. Wars in Asia (Korea and Vietnam) destroyed the creditor status of the US but not its credit rating.

The World Bank and International Monetary Fund normally tell states which are deep in debt that they have to cut budgets, implement austerity and repay debt. However, they do not pressure Washington like they do Buenos Aires, Islamabad (and a hundred other capitals).

Instead, the US sells treasury bonds and the world lends them the money. Why? Because we live in a dollar-denominated world. It is always a free roast lunch for the US and thin gruel for the rest.

But they now have a problem. Because America has off-shored much of its industry when it signed off pandemic stimulus checks for a few trillion dollars, its citizens pressed “buy” on their screens and the factories in China (not America) cranked up the machines to produce all those smart TVs and must-have stuff.

China had a trade surplus of $677 billion last year and a record foreign trade of $6 trillion.

Global financial system

The US is an increasingly hollowed out, financialised economy. Its one saving grace is that it continues to control the global financial system. It threatens to cut Russia off the Society for Worldwide Interbank Financial Telecommunication financial network. There are discernable signs of an alternative forming. The Chinese and Russians are quietly constructing and connecting their own versions (Cross-Border Inter-Bank Payments System and SBFS, respectively).

China has no intention of making the Renminbi (Yuan) a reserve currency. However, this decade we will see ever-larger volumes of trade of Iranian and Russian energy, resources and products with China, in their currencies or Yuan (definitely not the dollar).

With the Regional Comprehensive Economic Partnership set to become the core of the global economy, one can envisage similar moves in East, Southeast Asia and maybe south Asia lubricating regional supply chains. That is when the fun will begin.

This helps explain why America is on a permanent war footing. Its language is all democracy, rights, and rule of law, but its actions revolve around military alliances, economic sanctions and regime change.

Blinken would be ecstatic if Dhaka were to join Delhi in a containment strategy against China. But what on Earth is in it for Bangladesh in that misadventure?

This article first appeared in Dhaka Tribune.