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Dhaka

At the Strategic Crossroads

The real challenge is whether Dhaka can continue engaging all major powers while preserving the strategic autonomy that has long underpinned its foreign policy

By Atif Shamim Syed | August 2026

The collapse of Sheikh Hasina’s government in August 2024 marked far more than the end of a political era in Bangladesh. It triggered one of the most significant geopolitical realignments in South Asia, which quickly evolved into a strategic contest involving India, China, the United States, Japan, the European Union and the Gulf states. Almost two years later, Bangladesh finds itself at the heart of an increasingly competitive Indo-Pacific, where its geography has become both its greatest strategic asset and its greatest vulnerability.

For more than a decade, Hasina’s Awami League government provided political continuity and a highly predictable foreign policy. Guided by Sheikh Mujibur Rahman’s principle of “Friendship to all, malice towards none,” Dhaka maintained relations with all major powers while simultaneously deepening ties with India. Security cooperation expanded, cross-border insurgencies declined, connectivity projects flourished, and bilateral trade grew steadily. For New Delhi, Bangladesh became a cornerstone of its “Neighborhood First” policy, and a vital gateway to India’s northeastern states.

But this partnership generated domestic criticism. Opposition parties and many younger Bangladeshis argued that the Awami League leaned too heavily towards India while longstanding disputes remained unresolved.

Hasina’s decision to seek refuge in India after her ouster reinforced public perception that Dhaka had become overly dependent on New Delhi. The interim administration led by Nobel Peace Prize laureate Muhammad Yunus sought to reset that narrative, signalling that Bangladesh’s foreign policy would no longer revolve around any single external partner.

This recalibration has unfolded amid intensifying geopolitical competition. With a population of nearly 180 million, a growing manufacturing sector and a strategic location on the Bay of Bengal, Bangladesh has emerged as one of the Indo-Pacific’s most important middle powers. Today, virtually every major power views the country as an indispensable strategic partner rather than merely a development recipient.

China has been particularly quick to consolidate its influence. Already Bangladesh’s largest trading partner and a leading source of infrastructure finance, Beijing has strengthened engagement not only with the BNP government but also with opposition parties, business leaders and civil society. By cultivating relationships across the political spectrum, China appears intent on safeguarding its interests regardless of future political upheavals.
Recent Chinese commitments in manufacturing, logistics and renewable energy reflect Beijing’s long-term economic ambitions. Defense ties are equally significant. China remains Bangladesh’s principal supplier of military equipment, providing naval vessels, aircraft, armored vehicles, missile systems and air-defense platforms. This partnership is likely to endure.

On the other hand, the United States has also adjusted its approach. During U.S. President Joe Biden’s administration, bilateral relations were frequently strained by disagreements over democratic governance, electoral credibility and human rights, including sanctions on members of Bangladesh’s Rapid Action Battalion. But under the Trump administration, Washington has placed greater emphasis on strategic competition with China, maritime security and resilient Indo-Pacific supply chains.

Consequently, Bangladesh’s strategic position on the Bay of Bengal has gained renewed importance in American thinking. Defense cooperation has expanded through joint military exercises, coast guard collaboration, maritime domain awareness and disaster-response programs. At the same time, the United States remains one of Bangladesh’s largest export markets, particularly for ready-made garments, while American firms increasingly view the country as an attractive manufacturing alternative as global supply chains diversify beyond China.

The contrast between Washington and Beijing remains evident. China generally separates economic cooperation from domestic political concerns, whereas the United States continues to emphasize governance, transparency, labor rights and institutional reform. Bangladesh’s challenge is to preserve access to Western markets and technology while benefiting from Chinese investment without becoming overly dependent on either.


India, too, is revising its strategy. Although political relations cooled after Hasina’s departure, geography ensures that cooperation remains unavoidable. Shared rivers, a long border, energy interdependence, counterterrorism coordination and regional connectivity bind the two countries together. For India, Bangladesh remains essential to the stability of its northeastern states and broader regional integration. For Bangladesh, India remains an indispensable neighbor whose cooperation is critical for trade, electricity imports, water management and transit. Neither country can afford prolonged strategic estrangement.

Dhaka’s greatest diplomatic strength has long been its ability to cultivate diverse partnerships without becoming permanently aligned with any single geopolitical bloc

At home, Bangladesh’s political landscape has become increasingly fluid. Bangladesh’s politics is no longer dominated by the Awami League and the Bangladesh Nationalist Party (BNP). Jamaat-e-Islami has regained visibility, new reform-oriented groups have emerged, and the Awami League itself faces profound questions about its future. This evolving political environment will inevitably shape Bangladesh’s foreign policy choices, making institutional stability and strategic consistency more important than ever.

However, framing Bangladesh’s foreign policy solely as a contest between Washington and Beijing would be very simplistic. Dhaka’s greatest diplomatic strength has long been its ability to cultivate diverse partnerships without becoming permanently aligned with any single geopolitical bloc.

Japan exemplifies this approach. While China has financed much of Bangladesh’s large-scale infrastructure, Tokyo has quietly established itself as one of the country’s most trusted long-term development partners. Through the Japan International Cooperation Agency (JICA), Japan has invested heavily in transport networks, energy, urban infrastructure and industrial development. The Matarbari Deep Sea Port, one of Bangladesh’s most significant infrastructure projects, is expected to strengthen maritime connectivity and integrate the country more deeply into Indo-Pacific supply chains. Japan’s emphasis on quality infrastructure, technology transfer and private-sector investment has earned broad acceptance across Bangladesh’s political spectrum.

Europe remains equally indispensable. The European Union is Bangladesh’s largest export destination. For Bangladesh, preserving preferential access to European markets through the GSP+ framework has become a strategic priority. Achieving that objective will require continued progress on labor rights, environmental standards, governance and institutional reform. These are not merely regulatory obligations but investments in Bangladesh’s long-term competitiveness.

Beyond these traditional partners, Bangladesh is steadily expanding ties with other influential economies. South Korea offers expertise in advanced manufacturing and digital technologies. Singapore remains a vital financial and logistics hub. Türkiye has broadened defense cooperation, while the Gulf states continue to provide essential energy supplies and employment opportunities for millions of Bangladeshi workers whose remittances remain a pillar of the national economy.

After years of growth averaging above six per cent, the economy faces mounting challenges, including inflation, pressure on foreign exchange reserves, weaknesses in the banking sector and softer global demand. Although manufacturing remains resilient, sustaining long-term growth will require structural reforms to strengthen public finances, improve financial governance, attract higher-value investment and enhance productivity. As preferential trade arrangements gradually diminish following LDC graduation, economic diplomacy will become increasingly inseparable from national security.

The Rohingya refugee crisis continues to test Bangladesh’s diplomatic and humanitarian capacity. Nearly a decade after the mass displacement from Myanmar, more than one million Rohingya remain in camps around Cox’s Bazar. International donor fatigue, deteriorating security conditions and Myanmar’s continuing internal conflict have made prospects for voluntary repatriation increasingly remote. What began as a humanitarian emergency has evolved into a long-term strategic challenge affecting Bangladesh’s economy, internal security and international diplomacy. A durable solution will require sustained cooperation among the United Nations, ASEAN, China, India, the United States and other regional stakeholders.

Against this backdrop, Bangladesh’s greatest strategic asset remains its ability to preserve autonomy through diversification rather than alignment. Geography ensures that India will remain an indispensable neighbor. China will continue to play a central role in infrastructure and defense cooperation. The United States will remain essential for trade, technology, and maritime security. Japan will underpin high-quality infrastructure, while Europe will continue to serve as Bangladesh’s most valuable export market. These relationships need not be mutually exclusive if managed with strategic discipline.

The current BNP government inherits one of the most complex strategic environments in the country’s history. It must reassure India that bilateral cooperation remains strong, deepen economic engagement with China without creating unsustainable dependencies, preserve privileged access to Western markets, strengthen ties with Japan and other middle powers, and navigate an increasingly fragmented international order.

Therefore, the defining question is not whether Bangladesh should choose between Beijing, Washington or New Delhi. That is a false choice. The real challenge is whether Dhaka can continue engaging all major powers while preserving the strategic autonomy that has long underpinned its foreign policy.

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