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Policy and Institutional Change

Policy Ruptures

Amid the political convulsions of the famine, a series of ruptures in public policy shifted Bangladesh onto a development pathway from which no subsequent government, elected or otherwise, has substantially deviated. This period appears to have consolidated certain ideas about the essentials of development among the political, bureaucratic and business elites. Yang says the Great Leap Famine transformed the Chinese development project by wreaking 'drastic cognitive changes... among both elites and masses', most of whom had anyway been uncertain about the radical collectivization that caused the catastrophe (1996, 240). Something similar could be said here. The brief flirtation with socialism (and, for a time, with secularism and democracy) was now at an end; the ideology of the state emerged as a distinct form of 'Bangladeshi' nationalism in which beating the 'basket case' label was a motive force.[1] While both secularism and democracy have re-emerged among the political desires of (some) Bangladeshis, the ideals of 'socialism' have been replaced by a lightly pro-poor persuasion of globalized capitalism, notable mainly for the extent to which its emphasis on protecting the poorest is reconciled with its emphasis on economic growth through the exploitation of labour in international markets.

The development pathway on which Bangladesh set off at this time was the first steps towards the road it has now travelled for several decades, bordered on the right by an emphasis on the market principle as the means of unleashing growth and ensuring efficient distribution, and on what remains of the left by a safety net, a set of provisions to protect the poorest and most vulnerable from the worst consequences of unfettered global capitalism. This pathway is aggressively pragmatic, devoid of principle other than the imperative of avoiding annihilation from the elements and the volatilities of a global economy. But at first it was an emergency exit, an early instance of Naomi Klein's 'shock doctrine', a world away from the deliberated, hopeful plan for just progress plotted by the early development planners.[2]

The first break with the leftism of the liberation government was the Awami League government's capitulation to donor pressures over macroeconomic management starting in 1974. Rehman Sobhan documents how Western aid donors held the country hostage till they adopted policies the World Bank deemed correct, in a textbook case of the use of aid as 'leverage' (Hayter 1971). Before the famine, under the intellectual leadership of the Planning Commission, the country had been all set to steer an independent path to development as a sovereign nation. In response to donor efforts to impose aid conditionalities in March 1973, Mujib supported the Commission, stating firmly that 'the nation may suffer but it would not die' (Sobhan 1982, 182). Donors were aware that this 'strident nationalist spirit could not feed Bangladesh' (p. 172) and kept up the pressure. The First Five Year Plan, the development plan for the new nation, was published under unpropitious circumstances: a moment of global commodity inflation, floods, and rapidly declining public authority. It was at this moment of acute vulnerability, when the fragile new state most needed the sort of external support it had received in 1972,[3] that 'donors tended to become much more eloquent about their various concerns over the development policies of the regime' and to push for currency devaluation, monetary stabilization, cuts in public subsidies, and in general market-friendlier policies (Sobhan 1982, 191).

In April 1975, the government agreed to devalue the taka; it had already conceded ground on investment policy by raising caps on investment, but through 1974 and 1975 the government continued to reverse reforms, and donors became clear that this was not a regime with which they or the Western interests they represented could do business. Donors kept 'Bangladesh twisting in the wind' through 1974 (Sobhan 1982, 193), cutting down on aid commitments at the moment of its greatest economic crisis. Given Bangladesh's dependence on external financing at this time, there can be little doubt that aid relations wittingly played a significant part in the political crisis that followed. A key point of contention between Bangladesh and the World Bank was that of the new country's share of debt accrued as part of East Pakistan. The government of Bangladesh contested its liability for loans from which the West had chiefly benefited, but eventually was forced to accept liability of $150 million for ongoing projects, as a result of intense lobbying on behalf of Pakistan by the World Bank (Sobhan 1982, 174-7). As a demonstration of power, it was gruesomely effective.

The second and more decisive break came with Zia. There was 'a radical change' in aid relations after 1975, as aid donors, particularly the World Bank, looked more favourably upon the new regime (Sobhan 1982, 196). Evaluating Zia's rule, Akhtar Hossain argues that the Awami League's economic mismanagement set the bar against which all subsequent regimes would be judged (Hossain 1996a; Hossain 1996b). Zia lacked the 'policy baggage' that came with Mujib, and borrowed ideas from 1960s Pakistan (see also Bertocci 1982; Maniruzzaman 1988). The basic facts of the Zia regime are as follows: it established an institutional culture of military-bureaucratic rule, including clamping down on protest or dissent (with declining effectiveness over time); overturned the progressive, pluralist constitution by removing provisions for secularism and socialism, including declaring Islam the state religion, rejecting the secularism of the liberation struggle; reoriented foreign relations towards the Middle East and Western aid donors; and shifted economic and social policy in directions favoured by the new external allies, notably towards greater market orientation with a visible pro-poor edge. The Zia regime brought a degree of economic stability and some improvements in security, presiding over a period without any major catastrophes from the environment or the markets. All of this was possible because the organized left were under siege; the Awami League in disarray, in hiding, or discredited; and even if the masses had organization or leadership, they would have been too traumatized and exhausted to resist. Eventually, Zia too proved unequal to managing contending elite demands, and was assassinated in yet another military coup—the final of a reported twenty-seven attempts in the period 1977-81. The old political settlement was quickly restored, however, under General Ershad, who ruled till he was unseated by a democratic uprising in 1990. But the building blocks of the national development project were by then firmly in place.[4]

Donor pressure for reform was undoubtedly heavy-handed, but it may not be correct to see these reforms as forced wholesale upon a recalcitrant ruling elite or accepted without resistance, whether in the Mujib or the Zia period. The options available to Bangladesh were always off a limited menu, and many within the Planning Commission and the regime recognized the need to stabilize the macroeconomy and accelerate economic growth (Sobhan 1982). It is telling that, nonetheless, on the priority matter of food policy, World Bank prescriptions to privatize public grain procurement and eliminate food rationing were resisted by successive governments of all stripes for several decades after the famine. Common fears were about the public perception of food security (or perhaps faith in the state's capacity to protect the population against food crisis), by the masses fearful of grain speculation and public sector employees resistant to the loss of their subsidies (Adams Jr 1998; Sobhan 1982; Franda 1981b; Clay 1979; Chowdhury 1988; Chowdhury 1986). Donors were using aid as leverage, but were mainly levering open a door that policy elites knew needed opening if they, and the nation-state, had a chance of surviving.

The political motivations for this policy shift were tactically diverse. While its external agenda was shaped by the material need to satisfy Western donors and the symbolic need to distinguish itself from Mujib's secularism for the Islamic world, internally the energy and resources of the new regime were absorbed by satisfying bureaucratic and industrial elites disempowered or discontented by liberation. The spoils of the state were once again divided up, this time with military spending shooting up from 7 to 20 per cent of the budget; civil servants disciplined for disloyalty under Awami League were reinstated with the benefits they had enjoyed in the Pakistan era; ceilings on investment and restrictions on trade were lifted and de-nationalization came under consideration (Islam 1984). Yet amid this elite jostling for a space at the table, from Zia's time onwards, a certain watchfulness emerged with respect to the needs and concerns of the rural masses. This included a tendency (borrowed from the 'Basic Democrats' approach of Pakistan authoritarian rulers) to engage them in local participation, through Village Governments and the Village Defence Force, set up as institutions for local order and development in lawless 1976.

Like economic policy, the participatory turn of Zia's rule was as pragmatic as it was programmatic. Like Zia himself, public policymaking in this period came to be characterized by opportunism, a certain ruthless expedience, but also caution, a tendency to see which way the wind would blow.[5] The famine and its aftermath had created conditions under which policies to protect against subsistence crises were politically expedient not only because they could look well to aid donors, but also because they were (believed to be) vital to regime survival due to what famine meant for political legitimacy. The reorientation of public policy reflected this new priority:

[Zia] was for a strong government that would be able to deliver the goods—a government that would be acceptable to the majority of the people, the Islamic world, the international aid agencies, and, perhaps, the military.

(Chowdhury et al. 1996, 25)

Under conditions of such extreme and widespread hunger, 'the food problem [is] indistinguishable from the totality of the development problem' (Osmani 1991, 307), and food security became a key focus of the Zia regime. Avoiding a repeat of the famine 'remained uppermost in the minds of donor programmers and government policymakers for the next 20 years'; what had been learned was that poor people faced famine when food prices rose: managing public stocks, including of food aid, was key, and rationing probably worsened, rather than helped, the situation (Atwood etal. 2000, 153). Over the next twenty years, food and agriculture policies gradually used procurement and pricing policies to move in the direction of increased production and stable prices, while simultaneously reducing the regressive subsidies through the rationing system, and targeting what remained to the vulnerable poor. All of this was supported by a system that was geared towards responding to shocks, through price monitoring, scalable food transfers and subsidies, and deregulating foodgrain trade.[6]

Zia's regime set the direction for this reorientation of food policy, with a characteristic blend of elite-pandering, donor-placating, and popular participation. Technocratic rather than political advice was taken, including from bureaucrats from the elite Civil Service of Pakistan (CSP) corps who were reinstated to run Ministries of Rural Development and Cooperatives and Agriculture (also Industry and Planning); they developed a 'clear and unambiguous development strategy for Bangladesh [which] discarded the socialistic pretensions of the Mujib regime' (Maniruzzaman 1988, 200). Zia threatened to remove the ration system, but in fact rationing was extended to the military and other 'essential priority' groups on his watch, and it was only when facing another food crisis and episode of inflation in 1978 that the PFDS was put firmly on the agenda for reform (Banerjee etal. 2014). While donors continued to press for the abolition of rationing, for government, the capacity to manage food consumption remained vital to public policy well into the 1980s (Chowdhury 1986).

Like the Awami League government, Zia ensured that agriculture policy continued to favour the crucial rural elite class, but there was now less effort to control prices and production, and fewer subsidies for farmers (Hossain 1996a). Local elites were kept satisfied with new programmes of rural credit and a vast programme of canal digging, as part of a World Food Programme- supported food-for-work programme. To this day, local elites reap rich rewards in the form of infrastructure from the free labour of food-insecure agricultural wage labourers. Zia lacked Mujib's charisma and populist appeal, but he earned popularity by showing up at these sites. An iconic image of Zia, much used by the BNP, has him in a peaked cap, trademark sunglasses, and genji or undershirt (the garment of a working man, although worn with jeans—not the usual attire of the peasant); the suggestion is that he has been at a worksite, possibly even doing manual labour, something Bengali upper-middle classes would consider degrading even for symbolic value (see also Franda 1981c). The famous images of Mujib, by contrast, always have him in full rhetorical flow, entrancing vast audiences with his oratory.

Less than two decades after the famine, Osmani argued that the notion that Bangladesh had successfully avoided famine since 1974 remained untested. Chronic hunger had become an even more serious problem, partly because of efforts to prevent famine. The country still lacked robust, redistributive modernizing agricultural policies and the only notable improvement was a stronger rural bias in the PFDS. When food crises threatened in 1979 and 1984 it was lucky enough to have reoriented the PFDS, and to have a healthy foreign exchange reserve and good aid relations to get it out of a tight spot (in 1987).[7] Osmani is correct: these three factors would not necessarily be sufficient to prevent famine in future, as was seen in 2008, where neither good aid relations, a pro-poor PFDS, nor a healthy bank balance, but market prices saved the day. What has changed since 1974 is a path rupture in food policies: a pragmatic approach to food (by extension, development) policy in which the domestic elites and international actors are kept on board, while also keeping an eye on how the masses are faring at the margins. That is, the technical details of institutional change matter, but less, overall, than the powerful political motivation to avoid famine.

  • [1] Like most Bangladeshis, Zia was said to have been incensed by the label and determined toturn the country from a basket case to 'a basketful of hopes' (Islam 1984, 571).
  • [2] Klein (2007). Two firsthand sources on the twists and turns in the process of developmentplanning in early Bangladesh are Sobhan (1982) and N. Islam (2003). For the World Bank/aiddonor perspective on this period, see Faaland and Parkinson (1976).
  • [3] And which it received again in 1979, when the more aid-amenable Zia regime was facingfloods and famine. See in particular Osmani (1991).
  • [4] Authoritative sources on the 'Zia episode' include Islam (1984); Zafarullah (1996); Maniruzzaman(1988). See also Franda (1981c); Franda (1981a);Jahan (2005).
  • [5] Zia 'spouts the rhetoric of the international development establishment but remains both apragmatist about implementation and, in many ways, a rather conservative Bengali Muslim'(Franda 1981c, 368).
  • [6] There are a number of good sources on these developments, many of them published in theaptly titled Ahmed et al. (2000). On the PFDS, see Chowdhury (1988);Chowdhury (1986);AdamsJr (1998);Atwood et al. (2000);Osmani (1991). On the politics of food policy, see Raihan (2013);Islam (2012). For a summary, see Hossain and Jahan (2014).
  • [7] See also Crow (1984);E. Clay (1985);Ahmed etal. (2000);Atwood etal. (2000).
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