Increased Unrest in Bangladesh

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Journal of Political Risk

By Anders Corr, Ph.D.

A few weeks ago Corr Analytics predicted a likely increase in Bangladesh unrest due to steps leading to the criminalization of the Islamist political party, Jamaat-e-Islami (canalyt.com).

With today’s arrest of a Jamaat-e-Islami party official, the predicted unrest materialized. A demonstration that clashed with police resulted in at least 61 injured. Demonstrators threw crude bombs at police, who responded with tear gas and rubber bullets. The Bangladesh Nationalist Party (BNP) — the main opposition in parliament — is now more closely allied with Jamaat-e-Islami. The BNP called for a General Strike on Thursday (Associated Press).

Given the extensive business interests and relatively strong alliance of Bangladesh with the West, it is paramount to maintain the country’s relative stability. Given the pro-Islamist outcomes of the Arab Spring events, it would not be advised to risk another such movement in Bangladesh. The US and other Western ambassadors to Bangladesh should encourage moderation of the Bangladesh Government with respect to Islamist political parties. Not doing so risks further increases in unrest, a less stable investment environment, and potential increases in Bangladesh-originated terrorism.

JPR Status: Commentary

Death of Hugo Chavez

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With the death of President Hugo Chavez of Venezuela today, expect increased political stability in Latin America. President Chavez was an activist in international politics, encouraging ideological conflict of the anti-Western and anti-market variety. He used his country’s oil wealth to magnify his voice and achieve these ends. Investments in Venezuela and Latin America will be safer without Chavez.

Concerns that his likely successor, Mr. Maduro, will be more radical (Wall Street Journal) are almost certainly overblown. Mr. Maduro’s comments on foreign influence in the country, and his expulsion of two US diplomats, are likely meant to solidify political support among Chavez supporters. This is a short-term political strategy on the part of Mr. Maduro, without long-term effect on the Venezuelan investment environment.

Effects of terrorist veterans returning to the West from foreign wars

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Thomas Hegghammer of the Norwegian Defence Research Establishment recently found that most terrorists originating in the West (Europe, Australia, or the US) conduct their terrorism in conflict zones such as Iraq or Afghanistan. These terrorists are defined as “foreign fighters”. When these foreign fighter veterans return to the West, they are more likely to complete attacks, which are more likely to be lethal (American Political Science Review, volume 107, no. 1, Feb 2013, “Should I stay or should I go? Explaining variation in Western Jihadists’ choice between domestic and foreign fighting.”)

As the wars in Iraq and Afghanistan wind down, we can expect countervailing effects on terrorism in the West. On the one hand, there presumably will be less reason to conduct terrorism, as terrorists use these wars as justification for their actions. On the other hand, foreign fighter veterans will be returning to the West, increasing the quantity, militancy, and experience of the pool of potential domestic terrorists. New justifications for terrorism — for example Western intervention in Mali and Syria — can always be found by those so inclined.

Microfinance Report by the Economist Intelligence Unit (EIU)

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The Economist Intelligence Unit produced an insightful and detailed report on global microfinance in 2012, available at http://www.eiu.com/Handlers/WhitepaperHandler.ashx?fi=EIU_MICROFINANCE_2012_WEB_1.pdf&mode=wp&campaignid=microscope2012.

Bangladesh, Philippines, and Nepal are covered, among many other countries. Philippines takes 4th place in overall microfinance business environment rankings. Bangladesh takes 41st place, and Nepal 44th. EIU ranked a total of only 55 countries, so Bangladesh and Nepal are near the bottom. Rates to borrowers are high. In Bangladesh a 27% rate cap decreases the quantity of loans available (inflation of 7-12% in 2012), and in Nepal, government subsidies have kept rates at a comparatively low 18-24% (inflation of 7-9% in 2012). In the Philippines, there are only 1 million micro-finance borrowers of 77 million total population (http://www.census.gov.ph/content/philippines-population-expected-reach-100-million-filipinos-14-years).

Given the high interest rates and limited penetration of microfinance, it is unlikely in its current manifestation to have a large effect on development or stability in Nepal, Bangladesh, or the Philippines.

New People’s Army in the Philippines

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The New People’s Army (NPA), an insurgent group in the Philippines, attacked a Del Monte supplier in Bukidnon Province yesterday, causing property damage and casualties (http://www.miamiherald.com/2013/02/19/3242109/1-killed-in-suspected-philippine.html). Despite NPA claims regarding the effect on the environment of the company’s expansion, the attack was likely sparked by failure of the company to pay sufficient extortion money to the rebel group.