India offers $1-billion line of credit to Bangladesh

After according prime minister Sheikh Hasina a red-carpet welcome at Rashtrapati Bhavan on Monday, India offered a $1-billion line of credit to Bangladesh, New Delhi’s biggest such offer to any country.

India is projecting the state visit as “path-breaking” and one that promises to make ties with the eastern neighbour firmer.

New Delhi wants to have systems in place, so that no matter who is in power in Bangladesh, structures would be there to work within the system. The new thinking was triggered by India’s bitter experience when Begum Khaleda Zia was in power, heading a coalition of radical forces.

Hasina is a great friend of India, but was unable to deliver on promises to Delhi in her last tenure. This time she has already done so, by handing over Ulfa leader Arabinda Rajkhowa and others. She has also cracked down on fundamentalists.

Hasina called on president Pratibha Patil and held talks with prime minister Manmohan Singh at Hyderabad House on Tuesday evening. Manmohan was hosting a banquet for the visiting leader.

India’s quest for big-power status has often been hampered by its inability to have smooth working relations with neighbours. Delhi now realises the importance of ensuring friendly ties with countries in its periphery, considering relations with Pakistan are going nowhere for now.

Before China began seriously pursuing its big-power ambitions, it spent considerable time resolving border disputes and building relations with neighbours, including Russia. India still has a long way to go before it builds a stable neighbourhood.

But the country’s recent phenomenal economic growth has opened a door for Delhi to build bridges.

“We want Bangladesh to know that economic engagement with India will benefit both countries. We want Bangladesh to throw off its hesitation that the Indian economy will swallow it up. Our message to Dhaka and other neighbours is to make use of India’s resurgent economy to benefit the region,” an Indian official said.

Tata’s  $3-billion investment project, which would have built a steel mill, a power plant and  fertiliser units in Bangladesh, was stalled four years ago when Dhaka continued to dilly dally over permission due to fears that it would not benefit Bangladesh.

The $3-billion plan was as much foreign investment Bangladesh could get from 1972 to 2007. Yet, suspicion killed a project which would have given employment to Bangladeshis. Ever since, the Tatas have not renewed interest in that country.

Delhi is hoping this irrational suspicion of India is laid to rest, now that Bangladesh has a friendly government. India is doing its best to reassure Dhaka on closer cooperation.

“India remains committed to giving substantial assistance to Bangladesh and becoming a major partner in its economic development,” foreign secretary Nirupama Rao said on Sunday. Rao said India was addressing several developmental issues of direct interest to Bangladesh, including transport, dredging, power grid, inter-connectivity, human resources development and investment and trade. After refusing for many years, India has at last allowed Bangladesh transit facilities to Nepal and Bhutan.

Anti-India forces, including the ISI, have often used their past links with elements in Bangladesh to push in jihadi groups through the open border. This was at its peak during the Zia regime, but has come down considerably since.

Five agreements, apart from a memorandum of understanding on power cooperation, are to be signed. Both countries will cooperate on giving legal help to solve crime, transfer sentenced persons, combat terror, organised crime and drug-trafficking.