Political Risk Analysis - Khaleda Conviction To Escalate Political Tensions - APR 2018

BMI View: Clashes broke out nationwide in Bangladesh following the conviction of opposition BNP chairperson, Begum Khaleda Zia, for the embezzlement of funds intended for the Zia orphanage. We are downgrading Bangladesh's short-term political risk score to 58.1 (from 60.0 previously) out of 100, as we believe that this verdict is likely to worsen political tensions and result in continued social unrest over the coming months.

Clashes between Bangladesh Nationalist Party (BNP) supporters, the police, and Awami League (AL) demonstrators broke out across major cities in Bangladesh following the conviction of BNP chairperson and ex-prime minister, Begum Khaleda Zia, on corruption charges. We expect this conviction to escalate political tensions between the ruling AL government and the BNP opposition, which will likely see politics-driven social unrest persist in the run-up to the national elections which must be held before January 2019. Therefore, we are revising our short-term political risk score downwards to 58.1 (from 60.0 previously) out of 100 to reflect this risk.

Details And Background About The Conviction

On March 21, 2014, the Dhaka court framed corruption charges against six individuals, including Khaleda and BNP Senior Vice Chairman, Tarique Rahman after the Anti-Corruption Commission(ACC) alleged that the BDT21mn (USD252,000) transferred from the United Saudi Commercial Bank to Khaleda Zia's orphanage fund was part of an embezzlement scheme. However, the trial was delayed for several years as Khaleda reportedly skipped more than 100 hearings due to health and other reasons. The trial eventually resumed in October 2017 after Khaleda's return to Bangladesh from London, and the court convicted the BNP chairperson to five years imprisonment for corruption charges on February 8.

Violence erupted across major cities across Bangladesh following the verdict, with BNP supporters clashing with the police and activists from the ruling party. It was reported that the police fired rubber bullets at demonstrators in the city of Sylhet and tear gas at thousands of opposition supporters escorting Khaleda to the magistrate court in Dhaka. At least five police officers were reported to be injured and two vehicles torched in the Dhaka clashes. By February 11, around 4,200 party leaders and activists had been arrested over the protests against the verdict.

Social Stability Risks Rising
Bangladesh - Short-Term Political Risk Score

Social Unrest To Continue Across The Country

Despite having no seats in parliament as a result of its election boycott in 2014, Khaleda and the BNP still possess considerable political clout and boast a solid support base. Given that the conviction is perceived by the opposition as an attempt to prevent Khaleda from participating in the upcoming elections, we expect social unrest to persist in the lead-up to the general elections. BNP supporters will likely continue to take to the streets to express their dissatisfaction with the government and call for Khaleda's release. Given the history of street protests turning violent, this is likely to lead to clashes with government forces and AL supporters, causing socioeconomic disruptions and weighing on political stability.

Although Khaleda is likely to appeal her verdict, the conviction will still affect the opposition leader's ability to stand in the upcoming general elections which must be held by end-January 2019. We expect the appeal process to be fraught with delays, and Bangladesh's constitution prohibits anyone convicted for more than two years from running in the elections. There is also a likelihood that AL might decide to bring the elections forward to capitalise on the BNP's temporary disarray, further escalating existing tensions as BNP supporters protest the perceived unfairness of the government's move.