beyondbrics

Manmohan Singh left Dhaka on Wednesday having had the shine firmly wiped off a visit that was meant to mark the beginning of strengthened bilateral ties between India and Bangladesh. The unexpected absence from the trip of Mamata Banerjee, chief minister of neighbouring West Bengal, made it a case of one step forward, two steps back for trade and business ties between the two countries.

Banerjee, who was meant to accompany Singh on a two-day trip that prioritised trade and transit cooperation – the first visit by any Indian prime minister in twelve years – pulled out on Sunday in what has been termed a show of ‘petulance’ by sources quoted in the Indian media. Her unexplained absence (neither Banerjee nor her department have given any official reason for her last-minute withdrawal) put the kibosh on a river-sharing agreement which was billed as the cornerstone of the Indian trip.

According to rumour, Banerjee was unhappy with the proposed water-sharing treaty over the Teesta river, which runs through West Bengal and Bangladesh. The agreement would have ended decades of tension about sharing water from a river that is a source of irrigation for farmers on both sides of the border.

In a sign of Dhaka’s disgruntlement, a proposed agreement over cross-border transit, which would have allowed India to use Bangladesh’s southern seaports, was subsequently shelved at the much billed summit.

Banerjee’s actions are a source of embarrassment for the Indian government, which has been courted by Sheikh Hasina (pictured with Singh) since her election as Bangladesh’s prime minister in 2009. An editorial in the Daily Star, Bangladesh’s largest English daily, claimed the ‘impetuous’ minister’s actions were “a big let-down for Bangladesh and an insult to the Indian Prime Minister”.

But Bangladesh and Hasina seem to have been victims of centre-state political relations in India, rather than proving to be a less attractive destination for Indian investment, according to Sadiq Ahmed, vice chairman of the Policy Research Institute in Dhaka.

“Water-sharing has always been serious and sensitive issue in India’s states,” Ahmed told beyondbrics.

“Banerjee’s failure to show up was not anticipated in Dhaka but a broad agreement over river-sharing at the central level means an arrangement will be done.”

Manmohan Singh – who was given red-carpet treatment upon arrival on Tuesday – said “both sides worked very hard to arrive at a solution that would be acceptable to all”. But the aborted plans will open his counterpart  Hasina, to criticism from her political opponents and, for some in Bangladesh, reinforce fears about doing business with their near neighbours.

In the long-term however, Dhaka seems to have little choice but to press forward with greater ties with Asia’s third largest economy.

“Economically, the two countries have to move forward, especially Bangladesh” added Ahmed. “The river agreement was always expected to be tough but if signed, it will open up more areas of cooperation, namely transit links”.

A number of notable arrangements were signed during the trip. Duty-free access to India for 46 Bangladeshi textiles products will relieve the country’s huge trade deficit: imports from India topped $4bn in 2010-11 but exports the other way were worth just $400m. The two governments also agreed on the demarcation of the Indo-Bangladeshi border, which at 2,500 miles is the longest India shares with any neighbour.

So even as the red-carpet is rolled away on this occasion, Dhaka has little option to put up with the political machinations of its  prosperous neighbour, as it continues to court India’s attention.

Related reading:
India: courting Dhaka at last, beyondbrics
Bangladesh waking up to impact of Yunus case? beyondbrics
Marxism in West Bengal: good for growth? beyondbrics
Bangladesh at the crossroads, FT