To the government, investment is a foreign policy tool, but foreign investors have shareholders interests in mind.
India has come back with a strong response to the now infamous outburst by Morshed Khan – close down those insurgent camps and stop Bangladeshi authorities from extending logistics support to terrorists and arms-smugglers. That is just as well, for there was nothing to be gained by allowing Khan to get away after making damaging allegations.
By all means, we should ask Bangladesh for an explanation for the tirade of its foreign minister. We should also bring to its governmentâ€™s notice, if we have not already done so, a leading Bangladeshi dailyâ€™s on-the-spot report on madrassas running the countrywide Islamic militant network. But by threatening to advise the Tatas not to go to Bangladesh with an investment of $2 billion, we would be playing into the hands of fundamentalists who are making inroads in the name of religion in a country where people are poor and uneducated. Economic development will save Bangladesh from fanatics and terrorists who are reportedly influenced by Al-Qaedaâ€™s philosophy. [Kuldip Nayar/IE]
Improving trade and investment between Bangladesh and India is in the mutual interest of the two countries. However, with the Bangladeshi government fueling anti-India sentiments, it is quite likely that trade and investment will suffer. While India should not explicitly threaten to hold back investors such as Tata from entering Bangladesh, it would be equally unadvisable to plunge the Tatas into a quagmire just for the sake of assuaging the Bangladeshi government’s sentiments. Ultimately, companies are responsible to their shareholders and would make the call based on their perception of risks and returns.
In the current situation, even without ill-advised outbursts and reflexive Indian government retorts, companies are scarcely falling over themselves to invest in Bangladesh. In fact, if the Bangladesh government is not able to take radical steps to improve the security situation soon, one-way tickets out of Dhaka would be in great demand.
It is fast becoming a Catch-22 — trade and investment are necessary for better bilateral relations but will not come about until bilateral relations themselves improve. If this is to be changed, what India does or does not do is less than half of the equation; whether or not Bangladesh evolves a national consensus over its relations with India is the more important bit.