This year marks the 50th anniversary of Bangladesh-Australia relations. Though the relationship has not always been prioritised, this strategic partnership will only increase in importance.
31 January 2022 marked the 50th anniversary of Bangladesh-Australia diplomatic relations. Over the decades, bilateral ties reached new heights as economic, political, and cultural knots grew between Dhaka and Canberra. As Bangladesh, located in the heart of South Asia, has grown its economy and started to manoeuvre its international outlook, Dhaka has surfaced as an important partner on the Australian geopolitical radar in the Indo-Pacific. Bangladesh values Australia as a key partner, one that can assist in its economic development and provide long-term security.
The two countries share historically significant relations. Australia was the fourth country — the first among developed states — to recognise Bangladesh as an independent nation in 1972. Radio Australia’s broadcasting of the declaration of Bangladesh’s independence was one of the first moments the world came to know of the newly liberated Bangladesh.
Though Australia has provided considerable aid and support for the reconstruction of Bangladesh, Canberra did little until recently to forge a comprehensive relationship with Dhaka. Perhaps this is because Australia misperceived Bangladesh as an aid-dependent, impoverished, and politically vulnerable country. However, over time, Bangladesh gradually rose from the ashes and made astounding socio-economic strides to establish itself as a development miracle on the global stage.
A New Narrative
Currently, Bangladesh is a middle-income country, home to 160 million people, and a booming, export-oriented economy. Its economy has grown at an annual average of about six percent for two decades. Bangladesh’s recent announcement of financial assistance to Sri Lanka, the Maldives, and Sudan strengthens the narrative that the country has moved from being a poster child of poverty to an increasingly influential regional state, with the potential to become a significant player in the Indo-Pacific.
Over the past five years Australia has responded to this emerging Bangladesh, and both parties are displaying vibrant efforts to engage economically and politically. The Trade and Investment Framework Arrangement (TIFA) was signed on 15 September 2020. High-level engagement includes repeated telephone calls between Australian Foreign Minister Marise Payne and her Bangladeshi counterpart, Dr A. K. Abdul Momen, and Australian Prime Minister Scott Morrison’s meeting with Bangladeshi Premier Sheikh Hasina during COP26 in Glasgow. These developments demonstrate the changing nature of Dhaka-Canberra ties.
The Coming Bonhomie
TIFA is a signpost that Bangladesh and Australia share many common interests in the evolving geopolitical and geo-economic environment. The first agreement of its kind between Dhaka and Canberra, TIFA provides an institutionalised economic platform allowing access to untapped economic potential by removing trade barriers, attracting investment, and retaining duty-free and quota-free treatment for Bangladesh in the post-Least Developed Country (LDC) graduation period.
To Bangladesh, Australia is an enticing export destination and investment source. Bangladesh-Australia bilateral trade has grown 600 percent over the past decade, reaching US$2.6 billion last year — much faster than trade with nearly any other major country. Ready-made garments (RMG), agriculture, food, and education services are the primary drivers of this trade boom. Bangladesh currently stands as the 32nd-largest trade partner of Australia. Dhaka is keen to be in the top 20 in the next decade by utilising the TIFA, which would burgeon trade volume to $5 billion.
Australia’s relative proximity to Bangladesh, along with its reputation as a reliable partner, makes Australia a particularly attractive trade partner for Dhaka. Although Australia has more than $1.3 trillion worth of investment abroad, its investment in Bangladesh has been poor. Until June 2021, Australian investment in Bangladesh stood at $845 million, which was mostly dedicated to the gas and petroleum sectors. However, there are other priority sectors in Bangladesh that demand investment, such as textiles, manufacturing, energy, and education. Importantly, Australia — the world’s largest liquid natural gas exporter in 2020 — has not yet taken advantage of Bangladesh’s growing demand for energy.
Australia is presently shifting its focus beyond its traditional markets of East Asia due to its growing geopolitical ire with China. Bangladesh can feature strongly in the Australian strategy as an entry point to South Asian markets. Along with its booming economy, Bangladesh’s large, young, increasingly urbanised population and growing middle class should interest a range of Australian exporters and investors.
More Actors, More Factors
Although the ties between Dhaka and Canberra have strengthened, the future remains unpredictable. The dramatic rise of China, the uncertainty of American leadership, and the perils of the pandemic all risk affecting this thriving relationship.
By keeping the geopolitical imperatives in mind, the two countries should address common challenges in the Indian Ocean. Cooperation is essential to their shared security interests — combatting transnational crime and terrorism, and developing maritime and environmental security. Importantly, Bangladesh needs Australian support to find a durable solution to the Rohingya crisis, which is set to enflame regional tensions.
Enhanced cooperation in the domains of climate change, public health, and sustainable development is sorely needed. Australia is home to more than 40,000 Bangladeshi migrants, which opens up avenues for public and cultural diplomacy. Moreover, Dhaka and Canberra should collaborate to strengthen regional cooperation through the global and regional forums such as the Commonwealth and the Indian Ocean Rim Association (IORA), which is currently chaired by Bangladesh.
Undoubtedly, the post-COVID-19 era will be an uncertain time for geopolitics. The race for controlling the Indian Ocean have already heated the tectonic plates of international politics. Dhaka-Canberra ties are not immune to these geopolitical tensions. The bilateral knots, therefore, need to be tightened to maintain peace, and stability in the Bay of Bengal.
Whilst asked about the prognosis for the future of Bangladesh-Australia relations, Jeremy Bruer, the Australian high commissioner to Bangladesh responded that “the future is golden.” The recent Department of Foreign Affairs and Trade (DFAT) annual report projects a glimpse of this golden chapter, emphatically calling for strengthened relationships with other “key partners” in addition to India in the North-East Indian Ocean region.
As part of its Indo-Pacific strategy, Australia should emphasise building economic, security, and defence ties with Bangladesh — an emerging middle power — to complement its relationships with the “big powers” in the region. In the economic realm, Australia also needs to diversify its Indo-Pacific engagements beyond East and Southeast Asia as growth there slows. Comprehensive engagement with Bangladesh, with its thriving economy, large market, and international outlook, could be a prudent move to broaden Canberra’s political and economic engagements.
Conversely, Bangladesh, as one of the next-frontier economies, understands the necessity of attracting new investment and diversifying its economy to temper its dependency on the RMG sector and remittances. As Dhaka’s appetite for investment, energy resources, and skilled labour grows, Bangladesh is compelled to look for new partners. A robust partnership with established regional powers like Australia, could therefore fuel Bangladesh’s economic growth in the post-LDC period.
In their 50th year, Bangladesh-Australia relations might be touted as a classic example of “suboptimal utilisation” — underutilised, underappreciated, and poorly understood. Nevertheless, there is great expectation that a new era of strategic partnership between the distant neighbours has arrived.
Hassan Ahmed Shovon is a Research Assistant at Central Foundation for International and Strategic Studies, Bangladesh. His research interests include security studies, foreign policy and diplomacy, international peace and conflict resolution, political theories, and political economy. He holds Bachelor’s and Master’s degrees in International Relations from University of Dhaka, Bangladesh. He can be reached at firstname.lastname@example.org
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